AVITA Medical, Inc. ($RCEL)

Good morning and thank you for joining this AVITA Medical Quarterly Australian Webinar. I'm Rudi Michelson of Monsoon Communications. AVITA CEO, Cary Vance; CFO, David O'Toole; and Ben Atkins, VP, Investor Relations and Corporate Communications in Australia this week for Brisbane, Sydney, Melbourne roadshow. And this webinar has been arranged, so everyone has the chance to be brief, direct and ask questions on AVITA's progress. Now let me point out, you can submit questions using the Q&A function, and we'll try and get to them after the presentation. I'll now hand over to Cary Vance to begin the presentation.

Thank you, Rudi. It's good to be with you. I appreciate you hosting this event. Let me just start, please, with going back a couple of quarters. I think it's really important to hold the company, myself accountable for what we say each quarter. And that's a culture that's culturally how we run the company and how we expect to communicate externally as well. In November, after being in the role for a few weeks, I came to Australia and I said, I need to get my hand -- get a handle on the business to really understand it at a deep level, where our opportunities are, where our gaps are so that we can solve those things by the end of the year and really be prepared for growth in 2026. When I came back in February, I reported back to you that we had done those things, that I had done those things that I really felt like I understood the business, that we've changed a number of things operationally over that period of time that I had a pulse on the commercial aspect of the business, the people, how we forecast, how we expect we're going to grow going forward, the issues in front of us around reimbursement and around the speed at which we get through VAC committees, et cetera. And so our cost, our OpEx, everything. And so I told you in February that based on what I knew, based on the guidance we had set, based on the trajectory I felt that we are on, that we were going to have a strong 2026 with sequential growth quarter after quarter. With the baseline of that $17.6 million in Q4 of 2025. Now as I report back to you on a $19.3 million revenue Q1, I'm reporting back that, that growth has begun again. My prediction and my intent is to grow sequentially quarter-over-quarter this year so that the company regains a lot of its credibility that I think we lost last year to a good degree and also obtain and regain some of the excitement over the potential the company has to grow in all aspects of our portfolio. What you can expect to hear from me in August is that, that growth trajectory has continued and that it will continue. So I feel really good about the business. I was named permanent CEO a couple of weeks ago. Again, part of that stabilization and building back the company. I think by the end of 2026, we'll look back on '25 as having a number of external headwinds, a number of things that kind of slowed our growth trajectory and that it's kind of a one-off year in that respect and that we're back on track. So let me just talk to you about a few of the things that have occurred over the past quarter of note. Like I said, number one, we're about revenue growth on all of our products, and we went from $17.6 million to $10.3 million. So there were a few highlights in the quarter. One was the BARDA contract. And so I want to make sure you understand what that is and what that isn't. So that $25.5 million is a big number. Now that $25 million over 10 years is only realized if something bad happens at scale in the U.S., which, again, over 10 years could certainly occur. We obviously hope that it doesn't, but we're an acute wound care business. And so while we never want bad things to happen to individuals or to many people all at once, we are gratified to know that our products will help them in that time of need and that our business will benefit from those products being used. So if something happens, they have kind of first right on our safety stock. It doesn't require us to do anything extra, any extra costs associated. We have a safety stock and we just rotate that, and that's what we use as being available for BARDA for that contract. What we are guaranteed is a regular administrative amount of revenue on a monthly basis, which you can generally calculate at about $100,000 a quarter for the next 10 years. And so that's what you can expect. I think moreover, other than the dollars is that it's a great validation by the U.S. government and the burn and trauma surgeons that they coordinate with that RECELL is a crucial part of the planning for disaster relief and for treating patients should that kind of event occur. And so that's great for us from a -- just from a marketing standpoint and from a validation standpoint clinically. Our Cohealyx I interim data, again, this is a post-market study. What's great about it is that we're able to speak about it on an interim basis before we submit that data at the end of the year, and it's published early next year. And essentially, the endpoint for that clinical study is speed to grafting. And speed and speed to healing and speed to grafting is the key going forward, not just now, but in the years to come. Hospitals and clinicians want patients to heal faster for their benefit and for the economic benefit of the hospital itself because it costs quite a bit of money to take care of them. So if you look at the RECELL 36% sooner out of the hospital, reducing length of stay. And you add to that a Cohealyx readiness to graft, which is up to 20 days sooner, so in a week or so as opposed to 3 weeks or so, 3 or 4 weeks with some of the competition, it's a big deal for them. And it's for the patient themselves, you think about that 20-day difference between Cohealyx and some of our competitors, that's 20 days less pain, 20 days less dressing changes, 20 days less chance of infection. And so really powerful, I think, interim data that we've shared. I would encourage any of you to go on our website and watch or listen to the webinar that we did at the American Burn Association Conference. We released some of that data. We talked about some of it with our medical affairs person, Dr. Katie Busch, but then we had 2 physicians there that talked about real world, how are they incorporating Cohealyx in their standard of care and investors and analysts were able to ask questions. And so I think it was extremely powerful to hear their perspective on it. So it's on our website. I would encourage you to listen into that again. RECELL GO was cleared in Australia and New Zealand here close to home. We feel really good about our distributor here in Australia. Just great relationships, aggressive, smart. And now with RECELL GO approval, really have an opportunity to use that to expand the business here and grow the business. We also have a physician who moved from the U.S. who was a heavy RECELL user. She moved to the Alfred in Melbourne here. And so she's already done 3 cases here in the first month that she's been here. So I think there's a lot of momentum in Australia around RECELL and around AVITA, which is great. And then finally, just American Burn Association in April, we had a great presence, a great buzz. We're seen as an innovator in the space. And it was great that Dr. Fiona Wood was there. She received Lifetime Achievement Award at the American Burn Association. She was on podium. She was in the booth. She was stopped in the hallway. People wanted their picture taken with her and so on. So it was an extremely proud moment for us to have our founder there to have -- for her as well to see where this product and where this company has gone. And so just a great presence and a great impact at the American Burn Association Conference last month. We've talked for a year about the MACs, the Medicare administrative contractors and how they took over the payment for physicians on RECELL and how they kind of dropped the ball and didn't publish those rates and weren't paying. That's all been resolved. All 7 MACs have published. All the rates are consistent, and they're making those payments. And they've made payments in -- going back as well that should have been made in the past. And so that's -- our physicians are happy with that. I think for now, what we -- we're doing the usual work of going hospital by hospital, making sure that coders and physicians are aware of, a, they've been published; and b, is there a correct way of doing that? And is there anything we can do to help resolve that? Because we're kind of arm's length away from it, but we do have health care economics people in the field that now are kind of hospital by hospital, making sure we're optimizing the situation. This is what I talked about 6 months ago, I talked about all the headwinds that the company was experiencing VAC committees and the MAC and the sales force changes in April that was a disruption. If you take all three of those things, what I said at the time was those are headwinds that are kind of keeping us from taking off, and they would turn into tailwinds. If you go back, that's the verbiage I used. That's what's happening. So right now, these payments happening with physicians, that's a great thing for us. They make more money if they use RECELL. Before they were making nothing if they use RECELL because of the problem. Now they're making more. And so again, that tailwind has turned into a -- or that headwind has turned into a tailwind. The same thing goes with the VAX. It's kind of a slog through the VAC for Cohealyx and for PermeaDerm, but especially for Cohealyx. But once it comes out of VAC, you have that champion that put it into the vac who's now championing commercial adoption and utilization of Cohealyx. -- again, another tailwind that was a headwind. And even the sales force optimization. So kind of changing and rejiggering the sales force, taking the opportunity to keep the best and to cut the average, let's say. And now that sales force with the great relationships and the great talent that they have fully staffed is really starting to pay dividends around growth. And again, you see that a bit in the numbers for Q1, and you'll continue to see that. Again, this is the Cohealyx I study, some of the details around what I already talked about, on average, 33 days for our competitors, readiness to grafting versus 13 days for Cohealyx as little as 5 days. And on average, kind of that 1.5 weeks or so. You have a couple of quotes here from Dr. Bell and Dr. Casta n. Those are the 2 physicians that were on that webinar at ABA that, again, I encourage you to listen to that. But an extremely valuable competitive dynamic there for us in a competitive space. Think about our business and our portfolio that we're used to competing with RECELL, which is basically competing against the way they've been grafting for 100 years. Don't do things the way they've been done for that long, do it with RECELL. It's economically beneficial, clinically beneficial, all of that. That's been the way we've sold in the past. Now we're a little bit more conventional when it comes to Cohealyx and PermeaDerm, where we have competitors, worthy competitors that we have to have a value proposition that resonates. And the economic proposition here that this reduction in time represents is real as well as obviously workflow in terms of the readiness, the quality of the wound bed and the vascularization in terms of how it will accept that graft, how well the patient will heal. And again, how soon the patient can leave the hospital. And as part of that continuum, this wound bed preparation is a lot of times the thing that holds everything up. And so us being able to graft sooner is a major thing. Let me pass it over to David to just take us through this financial side, please.

Very thanks, and good day to everyone. Nice to be back here in Melbourne again. As Cary mentioned, we had a very strong first quarter, $19.3 million. That compares to $17.6 million in the Q4, roughly a 10% increase sequentially. Even comparing that to Q1 of 2025, that was about a 4% increase. And comparing the revenue -- the quality of the revenue this quarter versus the quality of the revenue in the first quarter of 2025, it's not necessarily comparing apples-to-apples. We had some bulk ordering that was taking place in the first half of 2025. That is not happening any longer. This is all organic growth. And it represents really, in my mind, a high watermark for revenue in the company. We did have a larger revenue at $19.4 million back in Q3 of 2024. But again, not necessarily apples-to-apples. And we see that over the next 3 quarters at $19.3 million, we're going to grow that sequentially. Looking at gross profit margin, we're right at 82%. I expect that to stay there over time. We are at 85% gross margin for RECELL only. And then we have some degradation of the gross margin because of PermeaDerm and Cohealyx because we do the ASP sharing that we've talked about previously, a 60-40 split with PermeaDerm with our partner, aesthetical and then a 50-50 split with our partner, Regenity with Cohealyx. And as those products become more impactful, the gross margin will decrease. But we don't see it going below 80% for the simple reason that we think that RECELL is going to grow even faster than the Cohealyx and PermeaDerm. And as we do that, that 85% on RECELL will offset the degradation you get from the other 2 products. Operating expenses, still very cost disciplined. We did some restructuring, as Cary mentioned, around the sales force last year, about a year from now in 2025. And we took out about $2.5 million, not only in sales, but in some other OpEx. And you can see that, that's where we're tracking now. We're at $24.5 million in operating expenses, down significantly from Q1 of 2025 and pretty steady state to Q4 of 2025. We believe that, that OpEx will stay in that range. Don't see that we need to add headcount. We will be opportunistic. If there is a sales force expansion some place that we need another sales rep, we will do that as long as there's a business case, we're adding another one. But we're at a good place from our OpEx, and we don't need to increase that over the next 12 to 18 months. We did talk a little bit about cash. It's not on this slide, but I do want to mention it. We have $14.3 million of cash at the end of the quarter. We did burn more cash than we expected in the first quarter. I had mentioned in February that we expected that we were going to burn more. It was actually more than I thought it was going to be, primarily because of the fact that we had a slow January. And our cash collections are based on DSO days outstanding of 40 to 45 days. And since we don't -- we only collect, say, the first 45, 50 days of the quarter, if we don't have a strong first month, our cash collections are negatively impacted. That is going to reverse in Q2. We are not going to have the onetime compensation costs that we had in the first quarter. And we had a very strong revenue in March -- February and March. And the demand and sales activity in April and early May have shown that, that momentum is going to continue, which will make our cash receipts for the second quarter to a point where we will burn significantly less cash than we did in the first quarter. I do want to state that we reinforced our revenue guidance of $80 million to $85 million. That's what we had set last -- in the first part of the year, and we're -- we restated that guidance at this point. I'll answer some of the other questions during question and answer, but I'll push it back to Cary for his closing remarks.

Thank you, David. Again, I just want to reiterate what I feel is important at the company, and that is that we have stabilized things. We understand this business. We understand our customers, how they buy, how they use the products. We have a very clear, simple, understandable strategy for growing the business. And that is that we have a very focused number of accounts, burn centers, Level 1 trauma centers. We have -- each of our reps in the U.S., for example, have just a few accounts. They're in there every day. They're in the OR. They have relationships, trusted relationships with physicians. They're selling broader and deeper. So they're getting physicians to use it on different types of cases. We're only about 20%, 22% penetrated in RECELL, and that means smaller wounds, and we have RECELL GO mini. We have economic data that should be convincing to these physicians to use it more often. We also have physicians that don't use it. And I know and we know and we've found out exactly why each one of those doesn't use it. And that's where salesmanship starts. You go to the reasons why they are objecting to using it or using it more often and you address those. You address those through education, through peer pressure, through technology, through data. And so we're in the process of doing that. Also, we've got pull-through on Cohealyx and PermeaDerm. So we have Cohealyx I, PermeaDerm-I that shows readiness to grafting, shows economic data that shows cost savings by using the products. And so we'll be pulling through both those products while we're expanding RECELL and we will be, like I said, growing quarter-over-quarter predictably and substantially and -- which should be, I think, comforting and exciting to investors going forward. And so with that, let me turn it over to Ben to take questions, and we're happy to answer them.

Great. Thank you, Cary. Hope everyone can hear me all right. It's great to be here. Great to be with all of you on the line. We've had a number of questions submitted to us in advance. And I'm going to go through these questions in order, and I will read them out as they have been submitted to us. So Cary, I'll put the first question to you. Could you help us understand who the primary customer is for the RECELL suite of products in the U.S. market and how that shapes the commercial growth opportunity?

Sure. Thanks, Ben. And I just kind of mentioned that. But first of all, I want all of you to know I've spent a lot of time in hospitals as a salesman, as a sales manager, as an executive over the years. So I understand hospitals, how they work, what pain points there are, what drives behavior, number one. Number two, I've spent a good amount of time over the last 6 months in hospitals with our reps, with our customers, understanding the workflow, understanding their transparent feedback about why they like it, what impediments there are and so on. And so those people that we sell to are number one, I think, clinically, trauma surgeons, burn surgeons and their staff. The staff is really important from a workflow perspective and getting them on board and getting them trained and creating awareness. But there's also the department directors that, again, understand the logistics of it and the financials of it. You have buyers. You have administration. So we talk to all of those people because they're all involved in the decision-making, the clinical decision, the economic decision of the products that they use. And so understanding who those champions are, understanding who makes the decisions in an account is extremely important. And so those are the people that we talk to every day, and those are the people we need to understand if we're really going to make a difference.

Moving to the second question, which actually is really three questions in one relating firstly to revenue by product, second to utilization; and third, related to data in relation to our pricing. But I'll start with the first part, which is on revenue by product. Would the company consider breaking out revenue by product segment, so investors can better track which products are gaining traction?

Yes. I think at some point, we will. I think, number one, the amount of revenue from that product needs to become -- needs to be a material amount to make it worth doing. I think that will come in the quarters ahead. So more to come on that. And then just quite transparently, we need to understand more about it, too. So for example, with Cohealyx, we have products that have gone through VAC. They've come out of VAC. They -- that kind of gives us the opportunity to compete. And so we have to get on contract. Once we're on contract, we have to get them to use our product more than the other products. And so 1 quarter in, 2 quarters in, seeing that change from quarter-to-quarter. Every week, I go through the forecasting. We do account by account, by region, by territory, who's buying what, who's -- what's in the funnel around Cohealyx, what's coming out of VAC, how much are they going to buy, all of that. So we're internally in that. And so my comfort level with understanding it, frankly, if I told you I understand it perfectly, I wouldn't be credible. We continue to understand Cohealyx, understand how they're buying it, where they're using it, where we expect them to use it. And so in subsequent quarters, when the revenue becomes more material and where we understand it so that we can consistently communicate that to you about how it's progressing, how people are using it, how we expect it to continue to climb. I mean just generally, we plan on that number going up. But the precision at which we can predict that and communicate that will be better in subsequent quarters. So that's a long way of saying not yet.

Related to that, does that plan also include disclosing procedure volume data over time?

Yes. I don't think we won't get into procedure volumes. I mean I know what they are. And one of the corporate goals that we have and one of the internal strategies and things that we talk about every week is utilization. So what happens before revenue is utilization. We want everybody to use the products and the revenue will follow. And so what we track is which physicians are using which products and for what types of procedure, what types of wounds, how many kits did they use? How much -- how large was the total body surface area burn, for example? And so that's an internal metric that we kind of by account, by physician that we track and we push and we drive and we use modeling -- we don't just use the reps and their relationships and their communication. We also use modeling tools through our sales operations team. We use -- which incorporates AI as well to understand where the business is, where they should be focused, how they should be expanding, what we're missing. So I think investors can rest assured that we are driving that type of thing internally that these are key KPIs for us. But at least in the near term, we're just -- we're not sharing procedure data externally.

The final part of the question was given that studies demonstrate meaningful cost savings and superior patient outcomes, does that give a better pricing power in negotiations with hospitals and payers?

Yes. I mean whenever you look at competing and competitive advantage or powerful data, how do you use that? You use that to get market penetration. You use that to get higher demand. And if you can get price, you get price. I mean we take price every time we can in any product line. And you balance that with the ability to penetrate from a market perspective and what the competition is and what the value prop is. So if you're more expensive, but you're more valuable, you can get away with that. Of course, all of those dynamics and price elasticity, and we look at that every day, and we're early days here. So while we have really valuable data that we think will help us in the marketplace, we have to decide on a regular basis, especially early days, how much price we can take, how much market penetration that will give us, along with the data. We're the new guys on the block in dermal matrix, for example. We're the small guys. And so you balance all of that, the relationships we have. We also have relationships with RECELL and we leverage that. So yes, we look at pricing. We will take pricing any and every day we can, but there are a lot of other things to balance in the competitive framework that we have on a regular basis, especially in early days. So it's a great point to bring up. There's no doubt that we want to expand our margins if we can. But we also want to expand our growth. We want to expand our market share. And so we'll balance all those things going forward.

Go to a separate topic now on the MACs. Now that all 7 MACs have published payment rates, are there still any historical unpaid or disputed claims that are sitting with the hospitals? And what visibility do you have in those being cleared? What is the company doing to support hospitals through that process?

Sure. So I mean we help where we can because we have field-based health care economics market access people that communicate with hospitals directly, with the coders, with administration and with the physicians to help make sure that they're coding properly, that they get paid. And we have to be kind of arm's length, but we have to educate wherever we can. In terms of them getting back payments and adjudicating past claims, the anecdotal data that we get is that they are being cleared up. They are getting paid, but we're not really involved in that other than, again, educating them and making sure they have the proper codes. And so we're not directly involved, but we do support them however we can. And the information we get back is that those things are being handled retroactively.

I'll ask a question initially on Cohealyx and then in a moment, we'll get to the financial position and a question for David. But before we get there, on the Cohealyx and the VAC process, of the approximately 200 target centers, how many have Cohealyx gone through the Value Analysis Committee process so far? And what proportion are currently being served? And in addition to that, how does the total addressable opportunity compare to where things stood in November of 2025 related to Cohealyx?

Yes. So first of all, the TAM or total addressable market in Cohealyx is unchanged from November. We continue to assess that as we move along. So we'll continue to assess that and update that up or down wherever. We want to make sure we're accurate. We're not just throwing numbers out there. In terms of Cohealyx and VAC and progress, of the 200, let's say, it's -- there's about 56 in VAC right now, about 33 have come out of VAC. And so you probably have a little bit more than the 33 that even though they're in VAC, they're buying evaluation product and so on. So it's a really good flow. We have -- it's a really good pipeline. We have 56. We've had 56 pretty much for the last 9 months, but it's not the same 56. So every time 12 to 15 of them come out in the quarter, which has happened in the last couple of quarters, that's how you get to the 33. There's 15 to 30 that have backfilled those. And so if you do the math, 56 and 33, it's about half of those 200 or more are -- have either -- are either in VAC or have come out of VAC. And so that's kind of the proportion now, and we'll continue to update you on that kind of quarter-over-quarter.

David, a question for you regarding the financial position of breakeven. Again, two parts to this. Does the company have sufficient cash runway to reach cash flow breakeven? And before you give the answer, perhaps the second question because it's related, at what quarterly revenue level do you expect to reach operating cash flow breakeven? And based on the current trajectory and cost structure, when do you anticipate reaching that milestone?

Thanks, Ben, and thanks for reading both of those questions because I think it's -- they are related. And we've talked about this a number of times. Our cash -- our operating expenses are pretty stable. The one variable is commissions expense. And if commissions expense go up, then obviously, our revenue is going to go up also. But in general, operating expenses are going to be in that $24 million, $25 million range. Of that, $3 million is considered noncash. So we're in the $22 million range of cash out the door. We are not giving actual guidance on when we're going to cross over. But you can see that if we grow the revenue sequentially from the $19.3 million, and you can pick a number of what you think the sequential growth would be. And if it's 5% to 10% or something like that, you can come to the calculation on when we do cross over cash flow breakeven. We're not far from it given that our cash expenses are in the range of $22 million, and we're generating $19.3 million, 85% gross margin. We just have to grow that revenue sequentially quarterly for the next few quarters, and we'll get to that point. The first question was, do we have enough cash to get to that point of cash flow breakeven? The simple answer, in our opinion, is yes. We have $14.3 million on the balance sheet. The cash burn is going to be dramatically less this quarter. And as we grow revenue, that cash burn is going to continue to decrease over the next few quarters. Would we like to have additional cash on the balance sheet as a small company? The answer is yes. And we're going to address that at some point this summer, if necessary. But I'm confident, Cary is confident, the Board is confident that we can run the business with the cash we have right now, and there is no concerns about having enough cash to get to cash flow breakeven.

David, while we've been presenting a few questions have come in on the Q&A. And I thought you kind of addressed this question around whether or not with future cash and the potential to raise, but I'll ask the question so that we acknowledge it. Recently, the company has registered a shelf. And the question is, can you clarify current thinking on whether additional equity capital will be required to fund operations through to cash flow breakeven?

Yes, I kind of answered that question, Ben. But I'll answer the question around the shelf registration. And the shelf registration in the United States, which is different than here in Australia, every company can put a registration shelf up. It's called an S3. It doesn't mean that we're going to raise cash. It means we have the flexibility and opportunity to take shares off that shelf any time we want, subject to ASX rules, subject to NASDAQ rules, and we could raise additional cash by using that shelf registration. If you didn't have that shelf registration in the United States, you would have to actually file a registration statement every time you wanted to raise cash. And that is a very disruptive sort of process. And so this is a way to have flexibility in case we do need to raise additional cash. I believe at this point in time, like I said, that we have sufficient cash to get to cash flow breakeven. But it doesn't give us the cash we do have, doesn't give us the opportunistic sort of way we want to create or operate this business because there may be other businesses. There may be other products that we want to add to our portfolio. And with the skinny balance sheet we do have, that is not available to us. So we want to grow this business organically with the products we have, but we also want to take -- be opportunistic and put other products in our product portfolio. And with the cash we have, we don't necessarily have the ability to do that.

Thanks, David. Coming back to you, there are a couple of topics which I'm going to approach in turn. The first topic we're going to talk about is international. We had a few questions there, and then the next one will be thinking about sort of future opportunities. So on international, sort of I think two topics I'd like to hear your thoughts on. The first is specifically to RECELL, how you are prioritizing the ramping up of commercialization of RECELL outside of the U.S., particularly in light of some of the recent regulatory groundwork that we've been doing when you look at the CE Mark in Europe, U.K. and you look at the recent certification here in Australia and New Zealand. So we'll do that first. And then the second part of that question is specific to Japan. There have been some questions about the status of Japan. We've been in that market for a while now. What's your assessment of where we are today in Japan? And how do you sort of see that particular market going forward?

Thank you. So when I look at Japan, I look at Australia and New Zealand and then I look at Europe, there are kind of 3 different stories. Number one, before I get into that, we're laser-focused on where our bread is buttered, which is in the U.S., right? So we're not distracted by our international efforts. We're not spending a tremendous amount of dollars in those markets. What we've chosen to do is find really, really strong partners in distributors in those countries that we can work with, that we can work through. That's number one. Number two, as it relates to Australia, I think we talked about it a bit. We're underperforming in Australia. RECELL GO approval will make a big difference, having the distributor that we have will make a big difference. We need to support them. We need to kind of breakthrough. There's kind of an east-west thing in Europe, where on the east side of the country in Australia, we haven't made the progress that we should. So there's just a lot of work to do there, but we're -- we've got a lot of good resources. I expect that to grow. Europe is -- we're 6 months in or less. We're in the process of making sure we understand how the economics, how people are getting paid, the distributor in each country. A lot of times, we lump Europe like it's one thing. It's -- every country is different in terms of payment, in terms of obviously, a different distributor. We're finding out our gaps as well as opportunities. We're not in Europe just for the sake of it so that we can say we are. We're focused on being in countries where we can move the needle, where we can make substantial progress. If there are countries that just -- the climate is not hospitable economically or otherwise, we won't be there. At least we won't be there in the short term. We want to be where we can make a difference clinically, but also economically. Japan has been around for a while. They have meaningful revenue there. But again, fresh set of eyes on the company means a fresh set of eyes in Japan and really understanding the market. I -- the way that I've been running the company and the way that we will run the company is very data-driven. We'll do clinical studies because they'll matter, because they'll make a difference, they'll move the needle in adoption or in revenue. We'll do product development or as David said, in the future, we'll bring on another product because it makes sense in terms of our value proposition or where we're trying to go in the future. It's not -- and I'm not saying this is the way it's been in the past, but I am saying that we won't do things for no good reason. And we're in these countries for a reason because we believe there's potential. We're putting the appropriate amount of resources and spending the appropriate amount of attention trying to make progress in these countries. And so I think investors should know what it is and what it isn't. We're still a high 90s percent business in the U.S. That's where most of the business is, but I think we can make meaningful progress in all of the geographies that we're in. Otherwise, we wouldn't be there.

So as mentioned, we have a couple of questions about the pipeline and future opportunities. So I'll sort of ask again put them both out there and you can take them in turn. The first is, what is the outlook, if any, for cosmetic or aesthetic applications of AVITA's products? And then a question from the audience, what sort of -- what kind of level of resources are you presently dedicating to developing maybe completely new wound care products?

What was the first one, Ben?

The first part is what is the outlook, if any, for cosmetic or aesthetic applications product?

Yes. So okay. Well, that's a good that's a good reference to what I just said, which is we're in spaces that make sense. The reason why we're not in vitiligo in the short term is because economically, from a reimbursement standpoint, we can't make it work. And unless something changes, it's hard to think that we'll be able to do it at any scale. We are opportunistic at the company. So those are the -- there's focus and then there's being opportunistic. So for example, our whole company is focused on these 3 products on 2026 on executing perfectly. There are a group of us that are also picking our heads up from time to time and looking at 2027, '28, '29 and the types of products, the type of resources, type of strategy that we'll need. So we are focused, but we're also opportunistic. I mean we have plastic surgeons and we have even cash pay vitiligo patients and those that treat them that will want RECELL in very small amounts here or there. And so it's not like we don't oblige them or sell products to them. It's just not where our sales force is focused right now. In terms of cosmetic applications, there's been a lot of talk about what RECELL could do or what RECELL could be. We're in conversations with people. We want to understand the science of it. We want to understand the ability to make an impact in any of those spaces. And so we will be -- we're not closed off, but we are focused on what we are going to do. In terms of future product development, whether you look at something we developed ourselves or you look at something that we co-develop with somebody else, a partner or some other technology that we license or that we partner with, all that's on the table as we look at ways to offer more value to our customers. We're already somewhat of a high-touch business. We're in those accounts. We're talking to those physicians. We're in the OR, those patients, when they come there to the hospital or when they're going through surgery, they get a number of different products and procedures along the way. Obviously, some of those are PermeaDerm, Cohealyx or RECELL or the like. And so for us, we will look to develop and enhance what we already have. We will look to potentially develop other products. We do have people working on products, ways to use RECELL in different ways than it's currently being used. And so yes, we look at all of that. We're looking at any ways, short term, midterm, long term that we can enhance or add value to our position and our value proposition in the market.

And perhaps turning to a final topic, and it sort of brings us full circle back to the early conversation on the products. We've talked in the past about not just the products being used individually, but also collectively together for a continuum of a staged surgery, PermeaDerm, Cohealyx and RECELL. Can you maybe just sort of just talk about kind of where we're seeing that in the clinic, the 3 products being used on a single patient? And how that -- and characterize how that relates to the sort of the ASP as you sort of think about the 3 products being used together?

Well, each of the 3 products have to stand on their own. And so if you have any account that doesn't use RECELL, for example, PermeaDerm should be able to compete. Cohealyx should be able to compete on its own and obviously, RECELL as well. So we probably have 20-some accounts that are using all 3 products. As Cohealyx and PermeaDerm come out of VAC, that number will go up as we use the relationships we have to pull through PermeaDerm and Cohealyx as our people are in cases where they intend to use RECELL and in the process prior to use RECELL, they're using a dermal matrix. Obviously, we're having those conversations about using Cohealyx versus maybe what they've been using in the past. That's all part of the process. We would expect there to be some synergies between the products and some of that to be understood more as it's used more, as they're used more in conjunction. So again, I think we feel really good about our customers starting to adopt the full portfolio or at least 2 out of 3 in different cases. We feel really good about that kind of value proposition.

Well, great. Thank you, Cary. I think we've gone through the questions. So I'll just hand back to you for any final thoughts.

Well, I'll just -- I'll say this. I think I understand what happened last year. I know I understand what happened last year. And I think a lot of it had to do with admittedly and maybe an overexuberant guidance and where everything had to happen in a certain time line in a certain way for that to come true. And I think what I've done, what I did in Q4 is understood what happened, understood what was happening, understood our baseline where we're at and the potential that we have. That's why we set the guidance we did. It's not just Cary Vance saying, I'm reaffirming or we're giving guidance of $80 million to $85 million. This has been vetted through all the way down to the rep level. This is what they believe they could do, and we applied our own kind of understanding of what we thought the potential is. That's where we came up with the guidance that where we came up with quotas that were a stretch, but that were fair for our salespeople so that they could be pushed, but they could also win and that we had a guidance that we set and that now we can reaffirm that you all can believe and you can believe that we're going to meet or beat it. And then it's just a matter of us showing you kind of quarter-by-quarter that we're getting there. And so Q1 was step one. And my expectation is that, again, quarter-over-quarter, the credibility that we may have lost last year in some of this process that you'll start seeing that, that is something that now you can start believing again. You can believe that we know our business, that we can predict our business and that we can grow our business and that we're doing it not just from a top level, but throughout the organization, throughout our product line, and it's something that you can feel not only comfortable with, but really excited about and the way that I am because I have a tremendous comfort level in our people and a tremendous amount of confidence in our people, our forecast, our future, and I'm generally and genuinely excited. Reaffirming guidance is -- doesn't say enough about what I think is going to happen going forward. And I'm really excited about it, really excited to lead the business, lead the company and to communicate with all of you on a regular basis about what we're doing, what we've done and be held accountable for what I say is going to happen and help explain it to you because in some ways, it's a very simple business, a very simple trajectory vertically that the company is on. So with that, I just -- I appreciate your time. I appreciate your support. I know a lot of you have been in the stock for a long time. We've tried your patience. My expectation is to make it all worthwhile someday. And again, I just appreciate your support.