Avita Medical (RCEL) AI Stock Analysis

• Market Cap: $170.77M
• Dividend Yield: N/A
• Average Volume (3M): 264.81K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.24
• Revenue Growth: 32.24%
• EPS Growth: -66.93%
• Country: US
• Employees: 260
• Sector: Healthcare
• Sector Strength: 41
• Industry: Medical - Devices
• EPS (TTM): -0.53
• Shares Outstanding: 26,434,658
• 10 Day Avg. Volume: 435,335
• 30 Day Avg. Volume: 264,806
• PEG Ratio: N/A
• Price to Book (P/B): 1.75
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -8.02
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $16.88
• Price Target Upside: 161.30% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

Avita Medical's stock score reflects a blend of strong revenue growth and technical momentum, offset by severe profitability challenges and high financial leverage. While future revenue projections and product expansions are promising, underlying financial weaknesses and valuation concerns present significant risks.

Positive Factors

Market Potential

Avita's expanded portfolio of wound care solutions drastically increases its total addressable market potential to over $3.5B.

Product Launch

The company's recent commercial launch of new products suggests a revenue inflection may be on the near-term horizon.

Revenue Growth

Avita reiterated its 2025 revenue guidance, expecting sales to be in the range of $100M to $106M, reflecting growth of 55% to 65%.

Strategic Partnerships

The revised distribution agreement for PermeaDerm suggests that demand is surging and that the company is realizing sales synergies through a bolstered product portfolio.

Negative Factors

Earnings Performance

Avita reported 1Q results which included commercial revenue totaling $18.5M, reflecting growth of 67% year over year, but this was shy of Street expectations which were at $20.8M.

Profit Margin

The company reported a healthy quarterly gross margin result of 84.7%, showing strong profitability despite a slight decline from the prior year.

Avita Medical Business Overview & Revenue Model

Company Description

Avita Medical (RCEL) is a regenerative medicine company that develops and commercializes innovative therapies for skin restoration. The company's flagship product, the RECELL System, is designed to harness the body's natural healing processes to treat a variety of skin injuries, including burns, chronic wounds, and scars. Operating primarily in the healthcare sector, Avita Medical aims to provide advanced medical solutions that improve patient outcomes and reduce the need for complex surgical interventions.

How the Company Makes Money

Avita Medical generates revenue primarily through the sale of its RECELL System, which is marketed to healthcare facilities and practitioners for the treatment of skin injuries. The company employs a direct sales model in major markets such as the United States, where it benefits from a strong network of relationships with hospitals and burn centers. Additionally, Avita Medical may engage in partnerships or licensing agreements to expand its market presence and product offerings, though specific partnerships are not detailed here. The company's earnings are driven by the adoption of its technology in clinical settings, reimbursed through healthcare insurance providers, and its ability to demonstrate the cost-effectiveness and clinical benefits of its products in comparison to traditional treatment methods.

Avita Medical Financial Statement Overview

Summary

Avita Medical's financial performance is marred by significant profitability issues and high leverage. Despite a strong gross margin, the deep negative net profit margin and high debt levels pose considerable risks. The company's negative cash flow metrics further highlight the challenges in achieving financial stability.

Income Statement

Avita Medical's TTM revenue growth of 19.7% shows positive momentum, but the company faces challenges with negative profitability metrics. The gross profit margin is strong at 85.7%, indicating effective cost management in production. However, the net profit margin remains deeply negative at -95.5%, with both EBIT and EBITDA margins also negative, reflecting significant operational and financial losses.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 3.73, indicating significant leverage and potential financial risk. The equity ratio stands at 15.1%, suggesting limited equity support relative to total assets. The return on equity is negative at -468.8%, driven by substantial net losses, highlighting challenges in generating returns for shareholders.

Cash Flow

The cash flow analysis shows negative free cash flow growth and operating cash flow, which is concerning. The operating cash flow to net income ratio stands at 0.90, suggesting inefficiencies in converting revenue into cash. Additionally, the free cash flow to net income ratio is 1.04, reflecting the company's continued struggles with cash flow generation.

Breakdown
TTM	Dec 2022	Jun 2021	Jun 2020	Jun 2018	Jun 2017
Income Statement		Total Revenue
58.88M	50.56M	14.26M	20.67M	1.26M	1.18M
	Gross Profit
57.47M	41.69M	11.29M	16.36M	517.47K	675.00K
	EBIT
-54.61M	-40.40M	-42.68M	-61.84M	-18.70M	-12.67M
	EBITDA
-53.74M	-39.57M	-41.53M	-61.17M	-18.55M	-12.53M
	Net Income Common Stockholders
-50.80M	-39.17M	-42.03M	-60.90M	-17.21M	-11.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
116.55M	116.55M	73.64M	106.70M	14.82M	3.79M
	Total Assets
144.34M	144.34M	82.46M	119.49M	23.00M	7.67M
	Total Debt
449.48K	449.48K	1.92M	2.78M	134.25K	0.00
	Net Debt
-26.23M	-26.23M	-71.72M	-103.93M	-14.68M	-3.79M
	Total Liabilities
19.87M	19.87M	10.06M	14.58M	4.01M	2.55M
	Stockholders Equity
124.47M	124.47M	72.40M	104.91M	18.99M	5.12M
Cash Flow		Free Cash Flow
-48.00M	-28.71M	-23.59M	-33.82M	-18.00M	-8.99M
	Operating Cash Flow
-46.24M	-28.04M	-22.75M	-32.96M	-17.51M	-8.56M
	Investing Cash Flow
84.88M	-28.40M	-847.00K	-1.23M	-493.15K	195.25K
	Financing Cash Flow
2.77M	1.32M	77.06M	111.66M	28.77M	8.24M

Avita Medical Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCEL, the sentiment is Negative. The current price of 6.46 is below the 20-day moving average (MA) of 8.74, below the 50-day MA of 8.69, and below the 200-day MA of 10.02, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 28.00 is Positive, neither overbought nor oversold. The STOCH value of 5.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCEL.

Avita Medical Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDXG	76 Outperform	$1.04B	26.14	22.29%	―	5.34%	-50.52%
TMDX	76 Outperform	$4.11B	89.36	22.99%	―	64.43%	―
KRYS	74 Outperform	$3.77B	31.45	13.90%	―	247.53%	118.34%
CNMD	72 Outperform	$1.87B	15.80	12.96%	1.33%	4.20%	43.62%
VCEL	71 Outperform	$2.14B	1,075.44	1.13%	―	14.80%	530.21%
RCEL	55 Neutral	$170.77M	―	-407.50%	―	32.24%	-66.93%
Sector *	52 Neutral	$5.15B	3.02	-44.64%	2.83%	16.44%	-0.47%
KPTI	38 Underperform	$45.96M	―	41.08%	―	1.19%	61.65%