Avita Medical Raises Guidance Again on Strong RECELL and Cohealyx Adoption

What happened

Avita Medical's Q3 2026 revenue surged 53% year-over-year, prompting a second consecutive raise to its full-year forecast, driven by RECELL and initial traction with Cohealyx. This marks a sharp reversal from the reimbursement-driven demand softness seen in 2025, suggesting that advocacy and workflow improvements from RECELL GO are bearing fruit. The inclusion of Cohealyx revenue indicates successful expansion beyond the core burn-center market, which is a key watch item from our prior report. However, the earnings call summary does not address the company's cash position or interest burden, which were concerning at ~$12M cash and growing interest outflows as of mid-2025. While the topline acceleration is positive, we remain vigilant about liquidity and the sustainability of growth without additional financing.

Implication

The raised guidance and revenue acceleration suggest that AVITA is overcoming earlier reimbursement headwinds, and Cohealyx adoption could diversify the revenue base. We will monitor for further details on gross margins, operating expenses, and cash burn to ensure that growth is not being funded by unsustainable means. If the company demonstrates improved cash flow and maintains procedure growth, we would consider upgrading our stance. Conversely, any signs of one-time revenue spikes or deteriorating liquidity would reinforce caution.

Thesis delta

Our previous HOLD/NEUTRAL stance was based on reimbursement pressures and limited balance sheet flexibility. The significant revenue growth and second guidance raise indicate those pressures may be easing, but the earnings call summary lacks detail on cash generation and margins. We maintain a cautious HOLD, with an upgrade bias if liquidity improves.