RCEL US Equity☆

Item 1A. RISK FACTORS

Our business faces significant risks. You should carefully consider all of the information set forth in this annual report, including the following risk factors. Our business, results of operations, and financial condition could be materially and adversely affected by any of these risks, and in such event, the trading price of our common stock would likely decline, and you might lose all or part of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties, and our results could materially differ from those anticipated in these forward-looking statements. See “Forward-Looking Statements” included elsewhere within this Annual Report for a discussion of certain risks, uncertainties and assumptions associated with these statements.

Risks Related to Our Business Operations

We have experienced significant losses, expect losses to continue for the foreseeable future and may never achieve or maintain profitability.

Although we have begun full scale marketing and sales of our products in the United States and other jurisdictions, we have not yet achieved profitability. We had a total net loss of $48.6 million and $61.8 million for the year ended December 31, 2025 and 2024, respectively. We have incurred a cumulative deficit of $408.4 million through December 31, 2025. We anticipate that we may continue to incur losses at least until sales of our products are adequate to fund operating expenses. We may not be able to successfully achieve or sustain profitability. Successful transition to profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure, including in new markets where regulatory approval is in process or pending.

Servicing our debt requires a significant amount of cash and we are subject to a number of restrictive covenants relating to our indebtedness, which may restrict our business and financing activities.

We had previously entered into a credit agreement with OrbiMed Advisors, LLC (as amended, the “Previous Credit Agreement”) on October 18, 2023, most recently amended in the Previous Credit Agreement’s Sixth Amendment, on November 5, 2025 (the “Sixth Amendment”) and incurred $40.0 million of indebtedness secured by substantially all of our assets.

On January 13, 2026, we entered into a new Credit Agreement and Guaranty (the “Perceptive Credit Agreement”), and Security Agreement (the “Security Agreement”), by and among us, as borrower, Avita Medical Americas, LLC, a wholly-owned subsidiary of the Company, as guarantor (the “Guarantor,” taken together with the Company, the “Obligors”) and Perceptive Credit Holdings V, LP as a lender and the administrative agent (the “Lender,” and the “Administrative Agent,” as applicable). The Perceptive Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $60 million (the “Loan Facility”), of which (i) $50 million was funded on the Closing Date (the “Initial Commitment Amount”) and (ii) $10 million will be made available, at our discretion by notice to the Administrative Agent on or before March 31, 2027, subject to satisfaction of a certain net revenue requirement (the “Additional Commitment Amount”). On the Closing Date, we closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender. Simultaneously with the closing of the Initial Commitment Amount, we repaid in full and terminated all of obligations and commitments (other than previously issued warrants) (the “Refinancing Transaction”)[1] under the Previous Credit Agreement.

This level of debt could have significant consequences on future operations, including increasing our vulnerability to adverse economic and industry conditions and limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete.

Our ability to make scheduled payments of interest depends on our future performance, which is subject to interest rate risk, as well as economic, financial, competitive, and other factors beyond our control. We are exposed to risks related to a potential rising interest rate environment for the debt, which could cause our borrowing costs to rise and impact our liquidity. Our business may not generate cash flow from operations in the future sufficient to service our debt in cash while simultaneously making necessary capital expenditures. In addition, if the Company’s net revenue does not equal or exceed a certain amount for upcoming fiscal periods as set forth in the Perceptive Credit Agreement, then the Company will be in default of the Perceptive Credit Agreement.

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[1]Additional details concerning the Perceptive Credit Agreement, the Security Agreement, and the Refinancing Transaction are provided in Item 7, infra.

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If we are unable to generate sufficient cash flow to satisfy payment obligations under the Perceptive Credit Agreement, we may be required to adopt one or more alternatives, such as obtaining additional equity capital on terms that may be onerous or highly dilutive. We may not be able to engage in any of these activities, or such activities may only be available to the Company on undesirable terms, which could result in a default on our debt obligations.

The restrictions and covenants in the Perceptive Credit Agreement may also prevent us from taking actions that we believe would be in the best interests of our business, and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. Our ability to comply with these covenants in future periods will largely depend on the success of our products, and our ability to successfully implement our overall business strategy. We may be unsuccessful in obtaining waivers or amendments to restrictions and covenants in certain agreements with our customers or counterparties. And any breach by the Company of covenants and restrictions in such agreements could result in a default under the Perceptive Credit Agreement, which could result in an acceleration of the repayment of our indebtedness.

We may require additional financing in the future to continue the development and commercialization of our current and future products, which may cause dilution to our existing stockholders. If additional financing is not available, we may have to postpone, reduce or cease operations.

If we are unable to achieve profitability sufficient to permit us to fund our operations, repay indebtedness in accordance with the Perceptive Credit Agreement, and take other planned actions, we may be required to raise additional capital. There can be no assurance that such capital would be available on favorable terms, or available at all. If we raise additional capital through the issuance of equity, the percentage ownership held by existing stockholders may be reduced, and the market price of our common stock or CDIs could fall due to an increased number of shares or CDIs available for sale in the market. If we are unable to secure additional capital as circumstances require, we may not be able to fund our planned activities or continue our operations.

The markets in which we operate are highly competitive and innovative. Our competitors may develop products that render our products less attractive or obsolete and our business may deteriorate.

The markets for our products are highly competitive and our competitors may develop products that may more effectively compete with our products. Our competitors may have significantly more financial and other resources to invest in product development. We must, therefore, continue to develop and market new products, or we risk our products becoming obsolete, in which case, our revenues may decline, adversely impacting our financial condition or our business prospects.

Our success depends, in part, on our relationships with, and the efforts of, third-party distributors.

We rely on third-party distributors for a portion of our sales in countries outside of the U.S. Our distributors may not commit the necessary resources to market and sell our products to the level of our expectations, and, regardless of the resources they commit, they may not be successful. If we are not able to maintain our distribution network, if our distribution network is not successful in marketing and selling our products, or if we experience a significant reduction, cancellation, or change in the size and timing of orders from our distributors, our revenues could decline significantly and lead to an inability to meet operating cash flow requirements, which would have a material adverse effect on our business, financial condition, or results of operations.

Certain of our products are dependent on specialized sources of supply potentially subject to disruption which could have a material, adverse impact on our business.

Due to the cost and regulatory requirements associated with qualifying multiple suppliers, in 2023, we single-sourced some of our material components. To the extent that any of these single-sourced suppliers experience disruptions in deliveries due to production, quality, or other issues, we are potentially subject to similar production delays or unfavorable cost increases. In 2024, we started investing resources to secure additional suppliers for some of our key raw materials, but these efforts only mitigate, but do not eliminate, our supply chain risk.

We rely on third parties to conduct, supervise, and monitor our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain or maintain regulatory approval for or commercialize our products and our business could be substantially harmed.

We rely on clinical research organizations (“CROs”) and clinical trial sites to ensure our clinical trials are conducted properly and on time. While we have agreements governing their activities, we have limited influence over their actual performance. CROs manage and monitor the duties and functions pertaining to clinical trials and we control only certain aspects of our CROs’ activities. Nevertheless, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with applicable protocol, legal, regulatory, and scientific standards, and our reliance on CROs does not relieve us of our such responsibilities.

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We and our CROs are required to comply with the FDA’s GCPs for conducting, recording, and reporting the results of clinical trials to assure that the data and reported results are credible and accurate and that the rights, integrity, and confidentiality of clinical trial participants are protected. The FDA, and comparable foreign regulatory authorities, enforce these GCPs through periodic inspections of trial sponsors, principal investigators, and clinical trial sites. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our future clinical trials may be deemed unreliable and the FDA or other foreign regulatory authorities may require us to perform additional clinical trials before approving any marketing applications.

If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain or maintain regulatory approval for, or successfully commercialize, our products. If any such event were to occur, our financial results and the commercial prospects for our products would be harmed, our costs could increase, and our ability to generate revenues could be delayed. If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Further, switching or adding additional CROs involves additional costs and requires management resources. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which could materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these challenges or delays will not have a material adverse impact on our business, financial condition, or results of operations.

We may encounter substantial delays in further clinical studies necessary to support regulatory applications for additional commercial applications of our technology.

We cannot guarantee that any pre-clinical testing or clinical trials will be conducted as planned or on schedule, or completed at all. As a result, we may not achieve the expected clinical milestones necessary for approval by the FDA, or other regulators, for the use of our products for additional applications or indications in the United States or other countries.

A failure in a clinical study or regulatory application can occur at any stage. Events that may prevent successful or timely

commencement, enrollment or completion of a clinical study or a regulatory application include:

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delays in raising, or inability to raise, sufficient capital to fund the planned trials;

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delays in reaching a consensus with regulatory agencies on trial design;

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changes in trial design;

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inability to identify, recruit, and train suitable clinical investigators;

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inability to add new clinical trial sites;

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delays in reaching agreement on acceptable terms for the performance of the trials with prospective clinical research organizations and clinical trial sites;

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delays in recruiting suitable clinical sites and patients (i.e., subjects) to participate in clinical trials;

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imposition of a clinical hold by regulatory agencies for any reason, including negative clinical results, safety concerns or as a result of an inspection of manufacturing or clinical operations or trial sites;

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failure by any relevant parties to adhere to clinical trial requirements;

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failure to perform in accordance with the FDA’s Good Clinical Practice (“GCPs”), or applicable regulatory guidelines in other countries;

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delays in the testing, validation, manufacturing, and delivery to the clinical sites of the product candidates;

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delays caused by clinical trial sites not completing a trial;

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failure to demonstrate adequate effectiveness;

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occurrence of serious adverse events in clinical trials associated with the product candidates that are viewed to outweigh its potential benefits;

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changes in regulatory requirements or guidance that require amending or submitting new clinical protocols;

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adverse events, safety issues, product recalls, manufacturing or supply chain interruptions, or poor clinical outcomes where RECELL is being used commercially; and

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disagreements with regulatory agencies in the interpretation of the data from our clinical trials.

Delays, including delays caused by the above factors, can be costly and could negatively affect our ability to complete clinical trials for our product candidates. If we are not able to successfully complete clinical trials or are not able to do so in a timely and cost-effective manner, we will not be able to obtain regulatory approval for the use of our products for additional applications or indications, all of which could have a material adverse effect on our business, financial condition, or results of operations.

Product development is an expensive, uncertain and lengthy process.

We have significant product development projects ongoing that, if successful, are intended to continue to improve the consistency and ease for the use of RECELL across indications and wound sizes, as well as expand our portfolio of complementary products. The costs, timeline, and ultimate success of these product development programs are subject to risk and uncertainty. If we are not able to develop and obtain regulatory approval for our new products in a timely fashion and within budget, our business prospects and financial condition may suffer.

Development and commercialization of our products require successful completion of the regulatory approval process and may suffer delays or fail.

In the United States, as well as other jurisdictions, we have been and will be required to apply for and receive regulatory authorization before we can market our products. We may require additional clinical data or approvals from regulatory authorities within the jurisdictions in which we operate to market improved versions of RECELL for the same or additional indications, and from any other jurisdictions in which we seek to market the product. This process can be time-consuming and complicated, and may result in unanticipated delays or fail altogether.

To secure marketing authorization, an applicant generally is required to submit an application that includes the data supporting pre-clinical and clinical safety and effectiveness as well as detailed information on the manufacturing and control of the product, proposed labeling, and other additional information. Before marketing authorization is granted, regulatory authorities may require the inspection of the manufacturing facility and quality systems (including those of third parties) at which the product candidate is manufactured and tested, as well as potential audits of the non-clinical and clinical trial sites that generated the data cited in the marketing authorization application.

We cannot predict whether any additional marketing authorizations will ultimately be granted or how long the applicable regulatory authority or agency approval processes will take. Regulatory agencies, including the FDA, have substantial discretion in the approval process. In addition, the approval process and the requirements governing clinical trials vary from country to country. The policies of the FDA or other regulatory authorities may change, and additional government regulations may be enacted that could prevent, limit or delay the necessary approval of any products we may develop and commercialize. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or elsewhere. If we are slow or unable to adapt to new or changed requirements, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which may impact our ability to achieve or sustain profitability.

Additionally, any future regulatory approvals that we receive may also contain requirements for costly post-marketing testing and surveillance to monitor the safety and effectiveness of the product. Once a product is approved, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export, distribution, and record-keeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submission of safety and other post-marketing reports, registration, and continued compliance with good manufacturing practices (including for any clinical trials that we conduct post-approval).

Finally, per FDA regulations, changes made to products, specifications, or test data evaluation methodology would generally require communication with the FDA. There are several pathways for communicating with the FDA of such changes. As part of such review, the FDA may request additional information, at which time the product may become temporarily unavailable.

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We are highly dependent on our regulatory approval in the United States and failure to maintain that approval would materially impact our business and prospects.

Our business is highly dependent on the PMA we received in September 2018 from the FDA, including subsequent PMA supplement approvals for acute wound indications. This PMA allows us to sell RECELL and RECELL GO in the United States, our current primary market. While we intend to take every action and precaution to ensure that our PMA remains effective, it is possible that the FDA could take a position in the future that requires a modification, temporary suspension or revocation of our PMA. Any such action by the FDA would have a material adverse effect on our business.

Obtaining and maintaining regulatory approval for a product in one jurisdiction does not mean that we will be successful in obtaining regulatory approval for that product in other jurisdictions.

Obtaining and maintaining regulatory approval for a product in one jurisdiction does not guarantee that we will be able to obtain or maintain similar approval in other jurisdictions; further, a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even though the FDA has granted marketing approval for use of RECELL in the treatment of full-thickness skin defects and vitiligo, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product in those jurisdictions if not currently approved. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including the requirement in such jurisdictions of additional clinical studies due to clinical trials conducted in one jurisdiction not being accepted by regulatory authorities in other jurisdictions. In addition, in certain jurisdictions outside the United States, the reimbursement and/or intended price of a medical device must be approved before it can be approved for sale in that jurisdiction.

Product recalls or inventory losses caused by unforeseen events may adversely affect our operating results and financial condition.

Our products are manufactured, stored, and distributed using technically complex processes requiring specialized facilities, highly specific raw materials and other production constraints. The complexity of these processes, as well as strict company and government standards for the manufacture, storage, and distribution of our product candidates, subject us to risks. In addition, process deviations or unanticipated effects of approved process changes may result in production runs of our products not complying with stability requirements or specifications. The occurrence or suspected occurrence of production and distribution difficulties can lead to lost inventories and in some cases product recalls, with consequential reputational damage and the risk of product liability. The investigation and remediation of any identified problems can consume management resources and cause production delays, substantial expense, lost sales, and delays of new product launches. In the event our production efforts require a recall or result in an inventory loss, our operating results and financial condition may be adversely affected.

We face manufacturing risks that may adversely affect our ability to manufacture products and could reduce our gross margins and negatively affect our business and operating results.

Our success depends, in part, on our ability to manufacture our current and future products in sufficient quantities and on a timely basis to meet demand, while managing manufacturing costs, while continuing to adhere to product quality standards and comply with regulatory quality system requirements. We have a manufacturing facility located in Ventura, California where we produce, package, and warehouse RECELL and PermeaDerm. We also rely on global third-party manufacturers for production of some of the components used in RECELL. If our facility or the facilities of our third-party contract manufacturers suffer damage or experience a force majeure event, this could materially impact our ability to operate.

We are also subject to other risks relating to our manufacturing capabilities, including:

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quality levels and reliability of components, sub-assemblies, and materials that we source from third-party suppliers, who are required to meet our quality specifications, some of whom are our single-source suppliers for the products they supply;

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failure to secure raw materials, components, and materials in a timely manner, in sufficient quantities or on commercially reasonable terms;

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inability to secure raw materials, components, and materials of sufficient quality to meet the exacting needs of medical device manufacturing;

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inability to increase production capacity or volumes to meet demand.

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As demand for our products increases, we will have to invest additional resources to purchase raw materials and components, sub-assemblies, and materials, hire and train employees, and enhance our manufacturing processes. If we fail to increase our production capacity efficiently to meet demand for our products, we may not be able to fill customer orders on a timely basis, our sales may not increase in line with our expectations, and our operating margins could fluctuate or decline. It may not be possible for us to manufacture our products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition, or results of operations. Accordingly, we are continually identifying additional third-party suppliers who could serve as replacement suppliers should the need arise.

Compliance with environmental, health and safety requirements is costly and, if not achieved, could result in material financial fines, costly litigation, and a material adverse impact on the business.

Our manufacturing and other processes may involve the use of hazardous materials subject to federal, state, local, and foreign environmental requirements. Under some environmental laws and regulations, we could be held responsible for costs at third-party sites that we have used for waste disposal, or for contamination at our past or present facilities. Failure to comply with current or future environmental laws or regulations could result in significant fines and expenses which could have an adverse impact on our financial condition or business prospects.

We may be subject to civil fines and/or criminal penalties if the FDA determines that we have marketed or promoted our products for off-label usage.

If the FDA determines that our marketing activities constitute off-label promotion, the FDA could impose civil fines or even criminal penalties on the Company and our executives, withdraw or recall our approved product from the market, as well as limit our products from such off-label usage.

We rely on information technology systems for critical business functions and the operations of our business.

We rely upon complex, integrated information technology (“IT”) systems in our business functions including our quality systems to operate our business. If any of our IT systems were to be disrupted or fail, our business could suffer irreparable harm, including financial loss, adverse impact to our operations, and reputational damage.

A cyber security incident could be disruptive to our business, compromise confidential data, cause reputation harm, and subject us to litigation and federal and state governmental inquiries.

We collect and store sensitive business and other information, such as sensitive intellectual property, on our IT systems. Our business operations are dependent upon the secure maintenance of these IT systems and this information. Despite the implementation of security measures, our IT systems and those of our vendors and customers are vulnerable to attack and damage from computer viruses, malware, denial of service attacks, unauthorized access, or other harm, including from threat actors seeking to cause disruption to our business. We face risks related to the disruption of the confidentiality, integrity, and availability of our IT systems and the information that we maintain—or engage a third-party to maintain on our behalf—including unauthorized access, acquisition, use, disclosure, or modification of such information. Cyberattacks are increasing in their frequency, sophistication, and intensity and have become increasingly difficult to detect. Cyberattacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information. Beyond external criminal activity, systems that access or control access to our services and databases may be compromised as a result of human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. A material cyberattack or security incident could cause interruptions in our operations and could also damage our reputation, financial condition, and results of operations.

We receive, collect, process, use, and store a large amount of information from our customers and our own employees, including personal information and other sensitive and confidential information. If threat actors are able to circumvent or breach our security systems, they could steal any information located therein or cause serious and potentially long-lasting disruption to our operations. Security breaches or attempts thereof could also damage our reputation and expose us to a risk of litigation, sanctions, and/or monetary loss. We also face risks associated with security breaches affecting third parties that conduct business with us or our customers and others who interact with our data. While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for damage from all events and related potential liability.

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We are subject to diverse laws and regulations relating to data privacy and security, such as federal and state data protection regulations, including the California Consumer Privacy Act, as amended, and European data privacy laws, including the General Data Protection Regulation. Complying with these numerous and complex regulations is expensive and difficult, and failure to comply with these regulations could result in regulatory scrutiny, civil liability and related fines, or damage to our reputation. In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, increased employee training, and engagement of third-party experts and consultants. The costs incurred to remediate any security incident could be substantial. We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

In addition, we cannot assure that any of our third-party service providers with access to our sensitive or confidential information, or to that of our customers and/or employees, will not experience security breaches or attempts thereof, which could have a corresponding effect on our business.

Tariffs and Changes in Trade Policy Could Adversely Affect Our Business, Financial Condition, and Results of Operations

We currently derive less than 5% of our net sales from international operations and a de minimus portion of our raw materials and components are sourced internationally. The sale and shipment of our products across international borders, as well as the purchase of materials and components from international sources, subject us to U.S. and foreign governmental trade regulations, including those related to duties, and tariffs. Recent shifts in U.S. trade policy and the imposition of tariffs on imports from certain countries, as well as retaliatory tariffs imposed by those countries on U.S. goods, may negatively impact our business, results of operations, and financial condition. We cannot predict the future direction of trade policy or the impact of any future trade restrictions or retaliatory measures that may further impact our business.

Risks Relating to our Industry and Technology

We face competition from the existing standard of care and any future potential changes in medical practice and technology and the possibility that our competitors may develop products, treatments or procedures that are similar, more advanced, safer or more effective than ours.

The medical device, biotechnology and pharmaceutical industries, specifically relating to the areas where we currently or intend to market our products, are intensely competitive and subject to significant changes due to technology and medical practice standards. We may face competition from any number of different sources with respect to any products we develop and commercialize.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than our current products or any future products we develop. Many of our current or future competitors may have significantly greater financial resources and experience in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we may have. Mergers and acquisitions in the medical device, pharmaceutical, and biotechnology industries, or specifically in the wound care markets, may result in increased concentration of resources among a smaller number of our competitors. Other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies necessary for, or complementary to, our products.

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If we are unable to effectively protect our intellectual property, we may not be able to operate our business and third parties may be able to use and profit from our technology, both of which would impair our ability to be competitive.

Our success will be heavily dependent on our ability to obtain and maintain meaningful patent protection for our technologies and products throughout the world. Patent law relating to the technology fields in which we operate continues to evolve. The amount of protection to maintain over our proprietary rights, therefore, is uncertain. Further, the validity and enforceability of our patent portfolio cannot be predicted with certainty. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may be denied, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented. Our patents have expected expiration dates ranging from 2032 to 2033, while our pending patent applications, if granted, would have expiration dates ranging from 2034 to 2043.Furthermore, our issued patents may not be broad enough to prevent competitors from producing products similar to ours, and we have products that we continue to commercialize that were covered by patents that are now expired.

In the ordinary course of business and as appropriate, we intend to apply for additional patents covering both our technologies and products, as we deem appropriate. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or developing competing products and technologies.

We may find it difficult to protect our intellectual property rights throughout the world.

Filing, prosecuting and enforcing patents on all of our technologies and products in every jurisdiction is expensive. Competitors could reverse engineer our technologies in jurisdictions where we have not obtained patent protection to develop their own products. These products may compete with our products and may not be covered by any of our patent claims or other intellectual property rights.

The laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. This lack of protection could make it difficult for us to stop third parties from infringing our patents. Proceedings to enforce our patent rights in the U.S. or foreign jurisdictions could result in substantial cost and divert the efforts and attention of key personnel from other aspects of our business. If we fail to obtain adequate patent protection for our proprietary technology, our ability to be commercially competitive internationally will be materially impaired.

If third parties make claims of intellectual property infringement against us, or otherwise seek to establish their intellectual property rights equal or superior to ours, we may have to spend time and money in response and potentially discontinue certain of our operations.

While we currently do not believe it to be the case, third parties may claim that we are employing their proprietary technology without authorization or that we are infringing their patents. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. If such claims were made, we could incur substantial costs coupled with diversion of key technical personnel in defending against these claims and/or challenging the validity of any asserted patent before a court or administrative agency. Even if we believe such claims are without merit, parties making claims against us may be able to obtain injunctive or other equitable relief that could effectively halt our ability to further develop, commercialize, and sell products. In the event of a successful claim of infringement, courts may order us to pay damages and obtain one or more licenses from third parties. We may not be able to obtain these licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products and have a material adverse effect on our financial condition and business prospects.

Moreover, given the vast number of patents in our field of technology, we may infringe existing patents, and we may infringe patents that may be granted in the future. While we may decide to initiate proceedings to challenge the validity of these or other patents in the future, we may not be successful, and courts or patent offices in the United States and abroad could uphold the validity of any such patent. Furthermore, because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because pending patent claims can be revised before issuance, there may be applications now pending that may later result in issued patents that may be infringed by the manufacture, use or sale of our products. We may fail to identify relevant third-party patents or patent applications, regardless of when filed, or we may incorrectly conclude that a third-party patent is invalid or not infringed by our products or activities.

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We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.

If we choose to go to court to stop someone else from using the intellectual property claimed in our patents, that individual or company has the right to ask a patent office or a court to rule that these patents are invalid and/or should not be enforced against that third party. These lawsuits or proceedings are expensive and would distract our key personnel and consume time and other resources, even if we were successful in stopping the infringement of these patents. In addition, there is a risk that a patent office or a court will decide that our patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions or, even if the validity or enforceability of these patents is upheld, the court may refuse to stop the other party because the competitors’ activities do not infringe our rights. Furthermore, even if our patents are found to be valid and infringed, a court may refuse to grant injunctive relief against the infringer and instead grant us monetary damages and/or ongoing royalties. Such monetary compensation may be insufficient to adequately offset the damage to our business caused by the infringer’s competition in the market.

We could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities.

The development of medical device products such as RECELL involves an inherent risk of product liability claims and associated financial liability and adverse publicity. Any products we may develop could be found to be harmful or to contain harmful substances and expose us to substantial liability and risk of litigation or may force us to discontinue production. We may be unable to obtain or maintain insurance on reasonable terms or otherwise protect ourselves against potential product liability claims that could impede or prevent further business development of any products we may create and commercialize. Furthermore, a product liability claim could damage our reputation, regardless of the claim’s merit or whether liability for such claims is covered by insurance. A product liability claim against us or the withdrawal of a product from the market could have a material adverse effect on our financial condition or business operations. Furthermore, product liability lawsuits, regardless of their success, would likely be time-consuming and expensive to resolve and would divert management’s time and attention, which could seriously harm our business.

The continued successful commercialization of our products for FDA approved and pending indications, will depend in part on the extent to which government authorities and healthcare insurers establish adequate reimbursement levels and pricing policies.

Continued sales of our products depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other healthcare-related organizations, who are increasingly challenging the price of medical device products and services.

Both the federal and state governments in the United States continue to propose and pass new legislation, regulations, and policies affecting coverage and reimbursement rates, which are designed to contain or reduce the cost of health care. Continued federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for our products and may further limit our commercial opportunity.

While many of these initiatives are focused on pharmaceuticals, these measures may impact our products, or analogous measures may be introduced that target our products. For example, the Inflation Reduction Act, or the IRA, was enacted in 2022. Among other things, the IRA replaces the Part D coverage gap discount program with a new manufacturer discounting program (which began in 2025). The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges. The impact of the IRA on our business and the medical device industry cannot yet be fully determined, but is likely to be significant.

The One Big Beautiful Bill Act, which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid program. Such reductions are expected to decrease the number of persons enrolled in Medicaid and reduce the services covered by Medicaid, which could adversely affect our sales of our products.

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There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our products, and we cannot predict the scope of any future changes or the impact that those changes would have on our operations. For example, the Trump administration is aggressively pursuing a pharmaceutical pricing policy that would tie prices in the U.S. to prices in other countries. Adoption of such a mechanism in one part of the healthcare sector lowers the barrier to imposing similar approaches in other sectors of our industry. Cost control initiatives may decrease coverage and payment levels and, in turn, impact the prices that we will be able to charge and/or the volume of our sales. We are unable to predict all changes to the coverage or reimbursement methodologies that will be applied by private or government payers. Any denial of private or government payer coverage, as well as other federal, state, and foreign healthcare reform measures that have been and may be adopted in the future, or inadequate reimbursement, could reduce our revenue and business prospects.

We may be unsuccessful in commercializing our current products or other future products due to unfavorable pricing regulations or third-party coverage or reimbursement policies.

We cannot guarantee that we will receive favorable pricing or reimbursement for use of our products. The rules and regulations that govern pricing and reimbursement for medical products vary widely from country to country or from indication to indication, and within the United States, can also vary widely from one health system or hospital to the next. In some foreign jurisdictions, including the EU and the individual jurisdictions within it, the government largely controls pricing of medical products. In other countries, coverage negotiations must occur at the regional or hospital level. Pricing negotiations can take considerable time after the receipt of marketing approval for a medical product.

As a result, even after obtaining regulatory approval for a product in a particular country, we may be subject to price regulations or limited reimbursement, which may delay or limit our commercial launch of the product and negatively impact the revenue we are able to generate from the sale of the product in that country. Further, such pricing limitations may hinder our ability to recoup our total investment in our current products or other future products. If we are unable to promptly obtain coverage and profitable payment rates from hospital budgets, as well as from either government-funded or private purchasers, for our current products or any future products, this could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.

For example, we presently benefit from various reimbursement codes, including the following:

•

Medicare Severity Diagnosis-Related Groups (“MS-DRGs”), for hospitals with inpatient services.

•

Specific International Classification of Disease, 10th revision, Procedure Classification System (“ICD-10-PCS”) code series describing our “cell suspension technique” for the use of RECELL.

•

CPT codes that describe “skin cell suspension autograft to support physician reimbursement by professional healthcare services and for facility services at ambulatory surgical centers (“ASCs”), and Ambulatory Payment Classifications (“APCs”) for hospital reimbursement for outpatient department services.

There can be no guarantee that the above reimbursement codes will not be withdrawn, reduced, consolidated or otherwise altered in a manner which is not supportive of ongoing commercial use of RECELL.

Our current and future relationships with regulators, HCPs, third-party payors, customers, and consultants will be subject to applicable healthcare laws and regulations, as well as to other laws and regulations addressing fraud and abuse, and failure to comply with such laws could expose us to penalties.

Our business operations, as well as our current and future relationships with regulators, healthcare professionals, third-party payors, customers, and consultants may expose us to healthcare laws and regulations, as well as to other laws and regulations addressing fraud and abuse. These laws regulate our business as well as the financial arrangements and relationships through which we conduct our operations, including how we research, market, sell, and distribute our products for which we obtain marketing approval. Such laws include:

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•

Anti-Kickback Statute: the AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA.

•

False Claims Act: the federal false claims laws including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly making, or causing to be made, a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

•

Data/Privacy Protection: a number of federal, state and foreign laws, regulations, guidance and standards that impose requirements regarding the protection of consumer information that are applicable to or affect our operations.

•

Physician Payment Sunshine Act: the federal transparency requirements regarding payments in the healthcare industry, sometimes referred to as the “Sunshine Act,” require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under federal government healthcare programs, to report annually to CMS information related to payments or other "transfers of value" made to HCPs and nurse practitioners.

•

Anti-Corruption Laws: anti-corruption laws in the U.S. and in other countries where we do business generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under these anti-corruption laws. In addition, we cannot predict the nature, scope, or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered, interpreted or changed.

•

State and Foreign Laws: Each of the laws and categories of laws identified above may have analogues in state law or the laws of other jurisdictions in which we conduct business. These analogous laws may contain additional or different compliance requirements than listed above.

There is no assurance that we will be completely effective in ensuring our compliance with all applicable laws. If we are not in compliance with these laws, we may be subject to civil and/or criminal and penalties, disgorgement, and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations, and liquidity. Likewise, any investigation of potential violations of these laws by respective government bodies could also have an adverse impact on our reputation, as well as on our business, financial condition, and results of operations.

Defending against any allegations that we have violated any such laws can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such allegations that may be brought against us, our financial condition and operations, as well as business prospects, may be impaired.

Macroeconomic and Social Risks

Adverse changes in general economic conditions or uncertainty about future economic conditions, could adversely affect us.

We are subject to the risks arising from adverse changes in general economic market conditions. Uncertainty about future economic conditions could negatively affect our current and prospective customers causing them to delay the purchase of our products. Customer and consumer demand for our products may be impacted by weak economic conditions, recession, equity market volatility or other negative economic factors in the U.S. or other nations. The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength, and sustainability of any recovery from such downturn, are unknown and beyond our control. Poor economic conditions could harm our business, financial condition, operating results, and cash flows.

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Risks Relating to Our Common Stock and CDIs

We have never paid a dividend on our common stock and CDIs and do not intend to do so in the foreseeable future, and consequently, investors’ only opportunity to realize a return on their investment in the Company is through the appreciation in the price of our common stock and CDIs.

We do not anticipate paying cash dividends on our common stock and CDIs in the foreseeable future and intend to retain all earnings, if any, to fund our operations. Even if funds are legally available for distribution, we may be unable to pay any dividends to our stockholders because of limitations imposed by a lack of liquidity. Accordingly, our stockholders may have to sell some or all of their common stock or CDIs (as applicable) in order to generate cash flow from their investment. Our stockholders may not receive a gain on their investment when they sell their common stock or CDIs and may lose some or all of their investment. Any determination to pay dividends in the future on our common stock and CDIs will be made at the discretion of our board of directors (the “Board of Directors” or the “Board” and each director, a “Director”) and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board of Directors deems relevant.

As long as we remain subject to the rules of the Australian Securities Exchange (“ASX”) and of Nasdaq, we will be unable to access equity capital without stockholder approval if such equity capital sales would result in an equity issuance above regulatory thresholds, and consequently, we may be unable to obtain financing sufficient to sustain our business if we are unsuccessful in soliciting requisite stockholder approvals.

Our ability to access equity capital is currently limited by ASX Listing Rule 7.1, which provides that a company must not, subject to specified exceptions, issue or agree to issue during any consecutive 12-month period any equity securities, or other securities with rights to conversion to equity, if the number of those securities in aggregate would exceed 15% of the number of outstanding common shares at the commencement of that 12-month period unless stockholder approval is obtained.

Our equity issuances will be limited by ASX Listing Rule 7.1 so long as we continue to be listed on the ASX and this constraint may prevent us from raising the full amount of equity capital needed for operations without prior stockholder approval.

In addition to ASX Listing Rule 7.1, we are also subject to Nasdaq Listing Rule 5635(d), commonly referred to as the “Nasdaq 20% Rule”, which requires stockholder approval of a transaction other than a public offering involving the sale, issuance, or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock, or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the shares. While less restrictive than ASX Listing Rule 7.1, the operation of the Nasdaq 20% Rule could limit our ability to raise capital through issuance of common stock or convertible securities without jeopardizing our listing status. If we were to violate the “Nasdaq 20% Rule”, the Company would be subject to delisting from Nasdaq and share prices and trading volumes would likely suffer.

There has been relatively limited trading volume in the markets for our common stock and CDIs, and more active, liquid trading markets for such securities may never develop.

Trading in our common stock on Nasdaq and our CDIs on the ASX is often thin and susceptible to wide fluctuations in trading prices due to such limited trading volume and other factors, some of which may have little to do with our operations or business prospects. Limited liquidity in the trading markets for our common stock and CDIs may adversely affect a stockholder’s ability to sell its shares of our common stock or CDIs at the time it wishes to sell them or at a price that it considers acceptable. In addition, if a more active, liquid public trading market does not develop we may be limited in our ability to raise capital by selling shares of common stock or CDIs. We cannot assure you that more active, liquid public trading markets for our common stock and CDIs will develop or, if developed, will be sustained.

The market price and trading volume of our common stock and CDIs may be volatile and may be affected by variability in our performance from period to period and economic conditions beyond management’s control.

The market price of our common stock (including common stock represented by CDIs) may be highly volatile and could be subject to wide fluctuations. This means that our stockholders could experience a decrease in the value of their common stock or CDIs regardless of our operating performance or prospects. The market prices of securities of companies operating in the medical device sectors have often experienced fluctuations that have been unrelated or disproportionate to their operating results. In addition, the trading volume of our common stock and CDIs may fluctuate and cause significant price variations to occur. If the market price of our common stock or CDIs declines significantly, our stockholders may be unable to resell our common stock or CDIs at or above their purchase price, if at all. There can be no assurance that the market price of our common stock and CDIs will not fluctuate or significantly decline in the future.

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Some specific factors that could negatively affect the price of our common stock and CDIs or result in fluctuations in their price and trading volume include:

•

actual or expected fluctuations in our operating results;

•

actual or expected changes in our growth rates or our competitors’ growth rates;

•

results of clinical trials of our product candidates;

•

results of clinical trials of our competitors’ products;

•

regulatory actions with respect to our products or our competitors’ products;

•

reports of one or more patients experiencing adverse events;

•

publication of research reports by analysts about us or our competitors in the industry;

•

our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;

•

fluctuations of exchange rates between the U.S. dollar and the Australian dollar;

•

issuance by us of debt or equity securities;

•

litigation involving our company, including stockholder litigation;

•

investigations or audits by regulators into the operations of our company;

•

proceedings initiated by our competitors or clients;

•

strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

•

sales or perceived potential sales of the common stock or CDIs by us, our directors, executive management team or our stockholders in the future;

•

short selling or other market manipulation activities;

•

announcement or expectation of additional financing efforts;

•

terrorist acts, acts of war or periods of widespread civil unrest;

•

natural disasters and other calamities;

•

changes in market conditions for medical device stocks;

•

our inability to raise additional capital, limiting our ability to continue as a going concern;

•

changes in market prices for our product or for our raw materials;

•

changes in market valuations of similar companies;

•

changes in key personnel for us or our competitors;

•

speculation in the press or investment community;

•

changes or proposed changes in laws and regulations affecting our industry; and

•

conditions in the financial markets in general or changes in general economic conditions.

If research analysts publish unfavorable commentary or downgrade our common stock or CDIs, it could adversely affect our share price and trading volume.

The trading market for our common stock and CDIs depends, in part, on the research and reports that analysts publish about us and our business and industry. If one or more analysts downgrade our shares or CDIs, publish unfavorable commentary about the Company or cease publishing reports about us or our business, the price of our common stock and CDIs could decline. If one or more of the analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our common stock and CDIs could decrease, which could cause our share price or trading volume to decline.

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The requirements of being a public company in the United States and listed on the ASX may strain our resources and divert management’s attention.

As a public company, we are subject to the reporting requirements of the Exchange Act, the U.S. Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act, and the listing standards and the rules and regulations of Nasdaq. We are also subject to the reporting requirements under the ASX Listing Rules due to the listing of our CDIs on ASX. The requirements of these rules and regulations will increase our legal, accounting, and financial compliance costs, make some activities more difficult, time- consuming and costly, and can place significant strain on our personnel, systems, and resources. As a result of our disclosure of information in filings required of a public company, our business and financial condition is more visible, which may result in threatened or actual litigation, including by competitors, stockholders or third parties. If such claims are successful, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.

We are a “smaller reporting company”, under federal securities laws, and the reduced disclosure requirements applicable to such companies may make our common stock less attractive to investors.

We will remain a smaller reporting company so long as (i) our public float remains less than $250 million as of the last business day of our most recently completed second fiscal quarter or (ii) our annual revenues are less than $100 million during our most recently completed fiscal year; and we have no public float; or a public float of less than $700 million.

For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In addition, we are only required to provide two years of audited financial statements in our SEC reports. We will remain a smaller reporting company so long as (i) our public float remains less than $250 million as of the last business day of our most recently completed second fiscal quarter or (ii) our annual revenues are less than $100 million during our most recently completed fiscal year; and we have no public float; or a public float of less than $700 million. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.

General Risk Factors

The Company's cash, cash equivalents and marketable securities could be adversely affected by bank failures or other events affecting financial institutions and could adversely affect our liquidity and financial performance.

We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks, which exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies. The failure or rumored failure of a bank, or events involving limited liquidity, defaults, non-performance, bankruptcy, receivership or other adverse developments in the financial or credit markets impacting financial institutions, may lead to disruptions in access to our bank deposits. These disruptions may adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis. As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure.

Currently, we have full access to all funds in deposit accounts or other money management arrangements. The failure of any bank in which we deposit our funds could reduce the amount of cash that we have available for our operations or delay our ability to access such funds. In the event of such failure, we may experience delays or other issues in meeting our financial obligations, our ability to access our cash and cash equivalents may be threatened and could have a material adverse effect on our business and financial condition.

Future adverse developments with respect to specific financial institutions or the broader financial services industry may also lead to market-wide liquidity shortages.

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If we fail to manage our growth effectively, our business could be disrupted.

Our future financial performance and ability to successfully commercialize our products and to compete in the market will depend, in part, on our ability to manage any future growth effectively. We expect to make significant investments to facilitate our future growth through, among other things:

•

new product development;

•

increasing the use of RECELL in the treatment of full-thickness skin defects;

•

clinical trials for additional indications; and

•

funding of our marketing and sales infrastructure.

Any failure to manage future growth effectively could have a material adverse effect on our business and results of operations.

Our growth and success depend on our ability to attract and retain additional highly qualified and skilled sales and marketing, research and development, operational, managerial, legal, and finance personnel.

Competition for skilled personnel is intense and the unexpected loss of an employee with a particular skill could have a material adverse effect on our operations until a replacement can be found and trained. If we cannot attract and retain skilled scientific and operational personnel for our research and development and manufacturing operations on acceptable terms, we may not be able to develop and commercialize our products. Further, any failure to effectively onboard and train new personnel could prevent us from successfully growing our company.

Item 1B. UNRESOLVED STAFF COMMENTS

None

Item 1C. CYBERSECURITY

Risk Management and Strategy

AVITA Medical has implemented an Information Security Management System (“ISMS”). The Company’s ISMS is a continuous process designed to analyze the potential risks, vulnerabilities, the likeliness of occurrence and the related consequences of cybersecurity threats. The process is based on establishing the context, assessing the risks, and treating the risks. The key concept of the ISMS is to consistently maintain and improve confidentiality, integrity, and availability of information assets that should be protected by the organization on behalf of itself and its clients, and third parties. Once a risk, threat or vulnerability is identified, the Company establishes a risk treatment plan to take corrective action to prevent risks that can be avoided and minimize the ones that cannot. We engage an independent third-party cybersecurity services and consulting firm to continuously review our information security and provide technical oversight. We also conduct internal phishing campaigns and perform an independent penetration test on an annual basis. In addition, we conduct regular security awareness training and testing of our employees. The Company has not had any material cybersecurity incidents.

All related ISMS activities have been structured into a framework consisting of:

1.

Context establishment - Established in accordance with the requirements of International Organization for Standardization 27001 and 27002 (“ISO 27001” and “ISO 27002”). The ISO 27001, Information security management systems, provides a framework and guidelines for establishing, implementing and managing an ISMS and ISO 27002, Information security controls, provides a reference set of generic information security controls including implementation guidance.

2.

Risk Assessment - Relates to an evaluation and identification of risks, threats and vulnerabilities that exist or could exist, identifies the likelihood of occurrence and potential consequences. As part of the risk assessment management prioritizes the assessed risks from low to high based on likelihood and level of impact.

3.

Risk Treatment – will detail the remediation process for risks, vulnerabilities and threats identified to reduce the risk to an acceptable level.

4.

Risk Acceptance- The Company’s risk assessment is evaluated from a Low (1) to a High (3) on the Impact the threat would have on the Company and its operations and the likelihood of occurrence. Threat ratings created from the Impact and probability calculations will result with a value from 1- 9.

a.

Low (1 – 2.99) = Risk level acceptable and no further action deemed necessary

b.

Medium (2 – 5.99) and High (6 - 9) – implement risk management to reduce the risk to an acceptable level

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5.

Risk Communications- Results of the risk assessment are communicated to appropriate levels of management. Report includes the identified risk and vulnerability summaries. Updates will include treatment plans and status updates.

6.

Risk Monitoring and Review - Continuously performed to evaluate any changes or the need for changes. The Company uses the Ontrack software solution (“Ontrack”) to monitor and track all aspects of risk assessment. Ontrack also serves as tool to track any cybersecurity incidents and remediation tasks.

Disclosure of Management’s Responsibility

The Company’s Chief Financial Officer is responsible for overseeing the Cybersecurity Risk Management Program and leading the Company’s efforts to mitigate technology risks in partnership with various business leaders in the organization. For qualifications of the CFO refer to Item 10 of the Form 10-K. We have protocols, policies and tools in place to mitigate cybersecurity risk. These systems also provide the administrative, technical and physical safeguards to ensure the security, confidentiality, integrity and availability of confidential information and personal information from unauthorized access, use, disclosure, alteration, destruction or theft. In addition, we engage an independent third party annually to assess our IT general controls and IT security. Special focus is given to maintaining and improving our alignment with ISO 27001. Additionally, we have a cybersecurity incident response plan in place that provides a documented framework for handling high and low severity security incidents and facilitates coordination across multiple parts of the business. Finally, cybersecurity is integrated into the Company’s training as all employees are required to take monthly security awareness training.

Disclosure of the Board’s Responsibility

While management is primarily responsible for assessing and managing cybersecurity risks on a day-to-day basis, the Company’s Board of Directors oversees management’s efforts to assess and manage such risks. The Board of Directors (through the Audit Committee) monitors the cybersecurity risk assessment and response process. The Audit Committee is briefed by our Chief Financial Officer on our cybersecurity ISMS program and the overall cybersecurity risk environment on at least an annual basis. The briefing may include discussions on topics such as: information security and technology risks, information risk management strategies, cybersecurity risk assessment processes and updates, and updates on cybersecurity and data protection training initiatives for employees.

Item 2. PROPERTIES

Our principal corporate office is located at 28159 Avenue Stanford, Suite 220, Valencia, California 91355. We lease the 17,500 square foot facility under a lease agreement that expires on October 31, 2026. Our production plant in Ventura, California is a 27,840 square foot facility that we lease through September 30, 2030. We also lease a 3,360 square foot storage facility adjacent to our existing production plant in Ventura under a lease agreement that expires on September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. We do not own any real property. We believe that leased facilities are adequate to meet current needs and that additional facilities will, if required, be available for lease to meet future needs.

Item 3. LEGAL PROCEEDINGS

We are currently not aware of any material pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority. From time to time, as an operating business, we are involved in routine disputes (both formal and informal) with customers, partners and employees.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company’s common stock is quoted on the Nasdaq Capital Market under the ticker symbol “RCEL” and the Company’s CDIs are quoted on the ASX under the ticker code “AVH”. One share of common stock on Nasdaq is equivalent to five CDIs on the ASX.

Holders

As of January 26, 2026, the Company had approximately 3 unique stockholders of record of our common stock (which includes 18,051 holders of record of the Company’s CDIs, with each representing 1/5 of a share of common stock, and CHESS Depositary Nominees Pty Ltd, holds the legal title to all of the outstanding common stock underlying the CDIs of the Company).

Dividends

We have never paid cash dividends to our stockholders or to the holders of ordinary shares in the former parent company, AVITA Australia. We intend to retain future earnings for use in our business and do not anticipate paying cash dividends on our common stock and CDIs in the foreseeable future. Any future dividend policy will be determined by our Board and will be based upon various factors, including our results of operations, financial condition, current and anticipated cash needs, future prospects, contractual restrictions and other factors as our Board may deem relevant.

Item 6. [Reserved]

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Objective

The purpose of this Management’s Discussion and Analysis is to better allow our investors to understand and view our company from management's perspective. We are providing an overview of our business and strategy including a discussion of our financial condition and results of operations. The following discussion and analysis of our financial condition and results of operations for the years-ended December 31, 2025 and 2024, should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report.

Overview

AVITA Medical, Inc. (“we”, “our”, “us”) is a leading therapeutic acute wound care company delivering transformative solutions. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events. At the forefront of our portfolio is RECELL® (“RECELL”), approved by the U.S. Food & Drug Administration (the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects. RECELL harnesses the healing properties of a patient’s own skin to create an autologous skin cell suspension, Spray-On SkinTM Cells, offering an innovative solution for improved clinical outcomes at the point of care. In addition, in the United States, we hold the rights to manufacture and exclusively market, sell, and distribute PermeaDerm®, a biosynthetic wound matrix, under the terms of exclusive multi-year distribution and contract manufacturing agreements with Stedical Scientific, Inc. (“Stedical”). We also entered into an exclusive multi-year development and distribution agreement with Collagen Matrix, Inc. dba Regenity Biosciences (“Regenity”). Regenity manufactures and supplies CohealyxTM, an AVITA Medical-branded, FDA-cleared, collagen-based dermal matrix. Under the agreement with Regenity, we hold the exclusive rights to market, sell, and distribute Cohealyx in the U.S., with the potential to expand such commercialization into the European Union, Australia, and Japan.

The single-use RECELL Autologous Cell Harvesting Device (“RECELL Ease-of-Use” or “RECELL EOU”) is approved by the FDA for the treatment of thermal burn wounds and full-thickness skin defects. Our next-generation device, RECELL GO® Autologous Cell Harvesting Device (“RECELL GO”), is FDA-approved to treat thermal burn wounds and full-thickness skin defects. RECELL GO introduces enhanced features that improve consistency and standardization across clinical settings. It consists of two components: the RECELL GO Processing Device (the “RPD”) and the RECELL GO Preparation Kit (the “RPK”). The RPD is a multi-use, AC-powered device that controls the RPK. The RPK contains a single-use cartridge and the RECELL EnzymeTM.The RPD regulates the pressure applied to disaggregate the cells and precisely controls the incubation time of the RECELL Enzyme to optimize cell yield and promote cell viability. RECELL GO miniTM Autologous Cell Harvesting Device (“RECELL GO mini”), which was approved by the FDA in December 2024, is a line extension of RECELL GO, designed specifically to treat smaller wounds up to 480 cm2. It utilizes the same RPD but features a RECELL GO mini Preparation Kit, which includes a single-use RECELL GO mini cartridge optimized for smaller skin samples. These modifications are intended to align with the needs of clinicians treating smaller wounds, and to support broader adoption of the RECELL GO platform in trauma centers.

We are executing a focused commercial strategy centered on approximately 200 U.S. burn and trauma centers that represent the highest value and procedural volume within the acute wound care market. These institutions are core to our commercialization efforts due to their high concentration of complex inpatient cases and consistent procedural throughput. By prioritizing burn and trauma centers, we are targeting the most critical segments of acute wound care to maximize clinical impact and drive adoption across our portfolio.

To further our mission of improving clinical outcomes and establishing new standards of acute wound care, we have outlined the following strategic objectives:

•

Increasing market penetration in U.S. burn centers, positioning RECELL as the standard of care in burn management;

•

Expanding adoption of RECELL for the treatment of traumatic and surgical wounds throughout the U.S.;

•

Commercializing and expanding adoption of Cohealyx as a dermal matrix that supports wound bed preparation and accelerates readiness for grafting;

•

Driving adoption of RECELL GO mini in burn and trauma centers treating smaller wounds;

•

Advancing post-market clinical studies for Cohealyx and PermeaDerm to generate additional clinical and health economic evidence supporting adoption;

•

Expanding internationally through distributor-led commercialization upon receipt of regulatory approvals;

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•

Driving commercial revenue growth, improving operating leverage, generating positive cash flow, and achieving long-term operating profitability; and

•

Pursuing additional business development opportunities complementary to our target acute wound care markets.

Business Environment and Current Trends

Changes in reimbursement rates and coverage policy by third party payors may place additional financial pressure on

hospitals and the broader healthcare system. These changes could reduce demand for our products, particularly if healthcare providers face lower margins or additional administrative burdens. For example, in 2025 the Centers for Medicare & Medicaid Services (“CMS”) designated pricing responsibility for the Current Procedural Terminology (“CPT”) code used with RECELL to the seven regional Medicare Administrative Contractors (“MACs”). MAC delay in establishing and publishing reimbursement rates temporarily slowed clinician use of RECELL. As of January 2026, all seven MACs have established pricing, six of which have been published, restoring reimbursement clarity and supporting a return toward normalized utilization.

The macroeconomic environment may have unexpected adverse effects on businesses and healthcare institutions globally that may negatively impact our consolidated operating results. There remains significant uncertainty in the current macroeconomic environment due to factors including supply chain shortages, increased cost of healthcare, changes to inflation rates, a competitive labor market, tariffs, and other related global economic conditions and geopolitical conditions. If these conditions continue or worsen, they could adversely impact our future operating results.

Geopolitical conditions may also impact our operations. Although we do not have operations in Russia, Ukraine, the Middle East, or Asia, the continuation or threat of military conflicts in these regions or any escalation of conflicts beyond their current scope may further weaken the global economy resulting in additional inflationary pressures or supply chain constraints.

Recent Developments

On January 13, 2026, we closed a five-year credit facility providing up to $60 million in capital with a new lender and refinanced our existing debt, receiving total net proceeds of $6.0 million after repayment of our existing debt and certain fees. As part of the new credit facility, we established trailing twelve-month (“TTM”) revenue covenants aligned with our current operating trajectory. The initial TTM revenue covenant is $68.5 million for the first quarter ending March 31, 2026, and $73 million for the full year 2026. For additional information, see Liquidity and Capital Resources below.

On January 5, 2026, the Board of Directors recognized the contributions of long-time Director (and former Chair of the Board) Lou Panaccio, whose last day of service was December 31, 2025. Following Mr. Panaccio’s retirement, the Board was pleased to announce Joe Woody’s appointment as a new Director pursuant to an offer letter to join the Board as of January 1, 2026.

On October 16, 2025, Mr. Vance, the Chair of the Board of Directors, assumed the position of Interim Chief Executive Officer (the “Interim CEO”) upon the departure of Mr. Corbett from the Company and the Board.

On October 1, 2025, the CMS approved a New Technology Add-On Payment (“NTAP”) for the RECELL® System, applicable to acute non-thermal full-thickness skin defects—such as traumatic injuries and surgical wounds—that require inpatient care and are treated with RECELL in combination with a meshed autograft. This NTAP designation allows Medicare Part A inpatient claims to receive up to $4,875 in additional reimbursement per case, beyond the standard MS-DRG base rate, provided CMS thresholds and coding criteria are met. The NTAP is effective from October 1, 2025, through September 30, 2026, and was granted under CMS’s alternative pathway recognizing RECELL’s FDA Breakthrough Device status, reinforcing its clinical value and supporting broader hospital adoption.

On September 14, 2025, we obtained the CE Mark for RECELL GO under the European Union Medical Device Regulation (“EU MDR”). This allows us to commercialize RECELL GO in Europe and other markets that recognize the CE Mark.

During 2025, we continued to expand the clinical and real-world evidence supporting RECELL and its acute wound care portfolio, with an emphasis on hospital utilization, wound closure outcomes and staged care pathways. Data presented at major burn and wound care conferences highlighted reproducible outcomes in clinical practice and increasing surgeon adoption across diverse patient populations.

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Key studies presented during 2025 included the following:

•

Real-world hospital length of stay (“LOS”) analysis: A registry-based analysis of 741 matched adult patients with deep partial-thickness burns from the American Burn Association’s Burn Care Quality Platform compared RECELL with split-thickness skin grafting. The study demonstrated a statistically significant reduction in hospital length of stay of approximately 5.6 days, or 36%, for RECELL-treated patients, with consistent reductions across burn size subgroups up to 30% TBSA. RECELL-treated patients were more likely to be discharged directly home, supporting conclusions of improved recovery trajectories and hospital throughput.

•

Global systematic review of RECELL clinical evidence: A systematic review of 99 peer-reviewed studies, including 27 comparative analyses and more than 8,000 patients, found that RECELL consistently reduced donor site burden, achieved healing times comparable to or faster than conventional grafting, and demonstrated favorable pain, aesthetic and health economic outcomes across wound types. The authors concluded that the consistency and breadth of evidence support RECELL as an emerging standard of care in wound closure across diverse populations and care settings.

•

Accelerated wound bed preparation with Cohealyx: A June 2025 clinical publication evaluating Cohealyx reported rapid wound bed vascularization and readiness for autografting within approximately 5 to 10 days in a case series of complex full-thickness wounds, compared with the 2-to-4-week timelines typically reported for conventional dermal matrices. This data confirms previously published pre-clinical work. Investigators concluded that earlier readiness for definitive closure may reduce patient burden and complication risk.

•

Temporary wound coverage using PermeaDerm: In a retrospective case series, PermeaDerm was used to temporize mixed-depth and full-thickness burn wounds in patients unable to undergo immediate autografting. Surgeons cited ease of application, reduced operative complexity relative to cadaveric allograft, and the advantage of maintaining direct visualization of the wound bed. The study concluded that PermeaDerm provided safe and effective temporary coverage prior to definitive wound closure.

Sources for the studies referenced above were provided in the relevant press releases we issued from June through November 2025.

In 2025, we initiated two post-market clinical trials, PermeaDerm I and Cohealyx I, to further evaluate the performance of our technologies in the treatment of acute and complex wounds. The PermeaDerm I study is designed to assess cost and clinical outcomes when used as a temporizing treatment, and enrollment in this study has surpassed 75%. The Cohealyx I study is intended to evaluate time to autografting compared to a literature derived performance goal, with enrollment completed we expect data in 2026.

In early 2026, presentations at the Boswick Burn & Wound Symposium extended this evidence to staged wound care strategies, including surgeon-reported cases integrating RECELL, PermeaDerm and Cohealyx on the same patient. Together, these data reflect growing use of AVITA Medical’s integrated portfolio across wound coverage, preparation and definitive closure.

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Results of Operations

Year-Ended December 31, 2025, compared to the Year-Ended December 31, 2024

The table below summarizes the results of our operations for each of the periods presented (in thousands).

Year Ended

Operating expenses:

*nm = not meaningful

Total revenues increased by 11%, or $7.4 million, to $71.6 million, compared to $64.3 million in the year-ended December 31, 2024. The growth in revenues was largely driven by deeper penetration within customer accounts, new accounts for the treatment of traumatic and surgical wounds and, to a lesser extent, new product launches.

Gross profit margin was 82.1% compared to 85.8% in the corresponding period in the prior year. Note that the gross margin for RECELL products only was 84.3% for the year. The decrease in the overall gross margin percentage from the prior year was primarily caused by product mix and higher inventory reserve. We share the average sales price for Cohealyx at 50% and for PermeaDerm at 60%. Although these arrangements are highly beneficial, they inevitably result in an overall decrease in gross margin percentage. Therefore, the product mix is expected to continue to reduce the overall gross margin percentage while increasing the gross profit, and given that costs associated with this revenue do not increase significantly, operating profit increases on a quarterly basis.

Total operating expenses decreased by 9% or $10.4 million to $101.4 million, compared with $111.8 million in the year-ended December 31, 2024.

Sales and marketing expenses decreased by 9%, or $5.1 million, to $53.1 million, compared to $58.2 million in the year-ended December 31, 2024. Lower costs in the current year were related to decreases in salaries and benefits of $1.9 million, stock-based compensation expense of $0.9 million, commissions expense of $0.7 million, professional fees of $0.7 million, recruiting expenses of $0.6 million, and travel expenses of $0.3 million. The decreases are primarily due to the reduction of our sales force as part of cost savings initiatives.

General and administrative expenses decreased by 18%, or $5.8 million, to $27.3 million, compared to $33.1 million in the year-ended December 31, 2024. Lower costs in the current year are due to decreases in stock-based compensation of $3.5 million and salaries and benefits of $2.3 million. The decreases in salaries and benefits and stock-based compensation are primarily attributable to decreased headcount.

Research and development expenses increased by 2%, or $0.5 million, to $20.8 million, compared to $20.3 million in the year-ended December 31, 2024. Higher costs in the current year are due to increases in salaries and benefits of $1.0 million and stock-based compensation expense of $0.7 million, offset by decreases in research and development expenses of $0.8 million and lower other research and development expenses of $0.4 million. The decrease in research and development expenses are due to the capitalization of project costs, specifically internally developed software.

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Other (expense) income, net decreased by $1.2 million to other expense, net of $1.0 million. In the current year, other expense, net consists of $3.3 million in debt issuance costs and $1.4 million related to the change in fair value of loan facility, offset by a non-cash gain of $2.2 million related to the change in fair value of warrants, $0.9 million in income related to our investments, and $0.4 million in other gains, net. In the prior period, other income, net of $0.2 million consisted of $2.7 million in income related to our investments and $0.3 million in other gains, net offset by non-cash charges of $2.5 million due to the change in fair value of the debt and $0.3 million due to the change in fair value of warrant liability.

Net loss decreased by $13.3 million, to $48.6 million, over the $61.8 million recognized in the year ended December 31, 2024. The decrease in net loss was driven by the higher gross profit and lower operating expenses offset by higher other expense, net as described above.

Year-Ended December 31, 2024, compared to the Year-Ended December 31, 2023

The table below summarizes the results of our operations for each of the periods presented (in thousands).

Year Ended

Operating expenses:

*nm = not meaningful

Total revenues increased by 28%, or $14.1 million, to $64.3 million, compared to $50.1 million in the year-ended December 31, 2023. Our commercial revenue was $64.0 million for the year-ended December 31, 2024, an increase of $14.2 million, or 29%, compared to $49.8 million in the year-ended December 31, 2023. The growth in commercial revenues was largely driven by deeper penetration within customer accounts and new accounts for full-thickness skin defects.

Gross profit margin was 85.8% compared to 84.5% in the corresponding period in the prior year. This increase was largely driven by increases in both revenues and the volume of production.

BARDA income decreased to zero, compared to $1.4 million in the corresponding period in the prior year due to the ending of reimbursable clinical trials. BARDA income in the prior year consisted of funding received from the Biomedical Advanced Research and Development Authority, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO100201500028C.

Total operating expenses increased by 29% or $25.3 million to $111.8 million, compared with $86.4 million in the year-ended December 31, 2023.

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Sales and marketing expenses increased by 56%, or $20.9 million, to $58.2 million, compared to $37.3 million in the year-ended December 31, 2023. Higher costs in the current year were related to increases in salaries and benefits and personnel expenses of approximately $8.7 million, commissions expense of $7.4 million, stock-based compensation expense of $1.8 million, $1.2 million in professional fees, $0.6 million in other selling expenses, $0.6 million in travel expenses, and $0.2 million in rent expense, plus $0.4 million in all other expenses, net. The increase in salaries and benefits, personnel-related expenses, stock-based compensation, travel expenses, and other selling expenses are due to the expansion of the sales force to support our growing commercial capabilities. Higher commissions were directly associated with the increase in revenues. The increase in professional fees are primarily due to consulting expenses related to our foreign distribution network. The increase in rent is due to increased office space to accommodate our growing operations.

General and administrative expenses increased by 17%, or $4.9 million, to $33.1 million, compared to $28.3 million in the year-ended December 31, 2023. The increase was attributable to increases in salaries and benefits and personnel expenses of $2.9 million, stock-based compensation of $2.4 million, and rent expense of $0.5 million, partially offset by lower deferred compensation expenses of $0.4 million, lower insurance expense of $0.3 million plus lower other corporate expenses, net of $0.3 million. The increase in salaries and benefits and stock-based compensation are primarily attributable to headcount growth to support the expansion of our business. The decrease in the deferred compensation expense is driven by a lower stock price used to calculate the deferred compensation liability for the deferred restricted stock awards.

Research and development expenses decreased by 2%, or $0.5 million, to $20.3 million, compared to $20.8 million in the year-ended December 31, 2023. The decrease in research and development expenses is primarily due to lower professional fees and development expenses of approximately $4.0 million related to RECELL GO and full-thickness skin defects plus lower other development expenses, net of $0.3 million, partially offset by an increase in salaries and benefits of $2.8 million, an increase in stock-based compensation of $0.7 million, and an increase of $0.3 million in travel expenses, primarily due to the increase in headcount resulting from the deployment of Medical Science Liaisons.

Interest expense increased approximately $4.2 million in comparison to the prior year due to the interest expense related to long-term debt for the full year, for an aggregate principal amount owed of $40 million.

Other income, net decreased by $8.3 million to $0.2 million. In the current year, other income, net consisted of $2.7 million in income related to our investments and $0.3 million in other gains, net offset by non-cash charges of $2.5 million due to the change in fair value of the debt and $0.3 million due to the change in fair value of warrant liability. In the prior period, income consisted of $3.1 million in income from our investment activities, dissolution of certain foreign subsidiaries that resulted in a $9.4 million gain, plus other gains, net of $0.3 million, partially offset by a loss on debt issuance of $1.2 million, debt issuance costs of $0.8 million and the change of fair value for our debt of $1.6 million and change in fair value of warrants for $0.7 million.

Net loss increased by $26.5 million, to $61.8 million, over the $35.4 million recognized in the year ended December 31, 2023. The increase in net loss was driven by the higher operating expenses and lower other income, net, partially offset by higher gross profit as described above.

Liquidity and Capital Resources

Overview

Our Consolidated Financial Statements have been prepared on the basis we will continue as a going concern for the next 12 months. We had approximately $10.2 million in cash and cash equivalents and $7.9 million in marketable securities as of December 31, 2025. We have funded our research and development activities, and more recently our substantial investment in sales and marketing activities, through the sale of our products, the issuance of equity securities, and debt financing. If capital is not available to us when amounts are needed, we could be required to delay, scale back or abandon commercial and development programs and other operations, which could adversely impact our business, financial condition, and operating results.

Based on our liquidity position and current forecast of operating results and cash flows, management determined there is substantial doubt about our ability to continue as a going concern over the next twelve months following the date of issuance of these Consolidated Financial Statements due to our debt repayment obligations, historical negative cash flows, and recurring losses. As a result, we may require additional liquidity to continue our operations over the next twelve months.

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Subsequent to December 31, 2025, on January 13, 2026 (the “Closing Date”), we entered into a Credit Agreement and Guaranty (the “Perceptive Credit Agreement”), and Security Agreement (the “Security Agreement”), by and among us, as borrower, Avita Medical Americas, LLC, a wholly-owned subsidiary of the Company, as guarantor (the “Guarantor,” taken together with the Company, the “Obligors”) and Perceptive Credit Holdings V, LP as a lender and the administrative agent (the “Lender,” and the “Administrative Agent,” as applicable). The Perceptive Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $60 million (the “Perceptive Loan Facility”), of which (i) $50 million was funded on the Closing Date (the “ Perceptive Initial Commitment Amount”) and (ii) $10 million will be made available, at our discretion by notice to the Administrative Agent on or before March 31, 2027, subject to satisfaction of a certain net revenue requirement (the “Additional Commitment Amount”). On the Closing Date, we closed on the Perceptive Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender. Simultaneously with the closing of the Perceptive Initial Commitment Amount, we repaid in full and terminated all of its obligations and commitments (the “Refinancing Transaction”) under the Previous Credit Agreement (as defined below).

During the term of the Perceptive Loan Facility, interest payable in cash shall accrue on any outstanding amounts under the Loan Facility at a rate per annum equal to the greater of (x) the SOFR rate for such period and (y) 4.00% plus, in either case, 7.50%. Upon the occurrence and during the continuance of an event of default, any outstanding amount under the Perceptive Loan Facility will bear interest at a rate of 4.00% in excess of the otherwise applicable rate of interest.

Under the terms of the Perceptive Credit Agreement, and as set forth in a fee letter between us, and the Lender and the Administrative Agent (the “Fee Letter”), we will pay certain fees with respect to the Loan Facility, including (a) an exit fee equal to 5% of the aggregate principal amount borrowed by us under the Perceptive Credit Agreement in the event that we fail to secure shareholder approval of the issuance of the Warrant (as defined below) in accordance with the rules of the ASX (the “Warrant Shareholder Approval”) on or prior to September 30, 2026, and (b) a prepayment premium ranging from 1% to 10% of the amount of the Loan Facility that is prepaid upon any voluntary or mandatory prepayment (including as a result of an acceleration), together with certain other fees and expenses of the Lender.

The Perceptive Credit Agreement contains certain customary events of default, including with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty; failure to perform or observe covenants; material defaults on other indebtedness; insolvency; loss of certain key permits, persons and contracts; material adverse effects; certain regulatory matters; and change of control. Additionally, the Company’s failure to obtain the Warrant Shareholder Approval on or prior to November 30, 2026 shall constitute an event of default under the Perceptive Credit Agreement.

The Perceptive Credit Agreement contains a number of customary representations, warranties and covenants that, among other things, will limit or restrict the ability of the Company and its subsidiaries to (subject to certain qualifications and exceptions): create liens and encumbrances; incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; dispose of or transfer assets; pay dividends or make other payments in respect of their capital stock; redeem or repurchase certain debt; engage in certain transactions with affiliates; and enter into certain restrictive agreements. Among such covenants, the Perceptive Credit Agreement includes a financial maintenance test that requires the Obligors to maintain a specified minimum net revenue for each trailing twelve-month period ending on the last day of a fiscal quarter occurring prior to the maturity date of the Loan Facility. In addition, the Perceptive Credit Agreement requires the Company to ensure that the Obligors maintain in the aggregate at least $5 million of unrestricted cash at all times.

Pursuant to the Security Agreement, all obligations under the Perceptive Credit Agreement is guaranteed by the Guarantor and secured by substantially all of our and the Guarantor’s assets.

On August 12, 2025, we completed a private placement (the “Placement”) on the ASX to institutional and professional investors to raise $14.8 million, or $13.8 million after deducting sales commissions and offering expenses, through the issuance of 17,201,886 CHESS Depositary Interests (“CDIs”), which is the equivalent of 3,440,377 shares of Common stock. Proceeds of the Placement will be used for working capital requirements and will provide additional strategic flexibility to support continued growth of our therapeutic acute wound portfolio.

In connection with the Refinancing Transaction, on January 13, 2026, we repaid all outstanding indebtedness under the Previous Credit Agreement and terminated all obligations and commitments thereunder. As a result, we and the guarantors under the Previous Credit Agreement have no further obligations under the Previous Credit Agreement or the related guarantees other than with respect to warrants previously issued under the Previous Credit Agreement, which remain outstanding.

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On September 30, 2025, we received a waiver related to the trailing 12-month revenue covenant for the third quarter of 2025. On November 5, 2025, we entered into a sixth amendment to the Previous Credit Agreement (the “Sixth Amendment”), which amended the trailing 12-month revenue covenant for the fourth quarter of 2025 to $70.0 million for the quarter ending December 31, 2025, and waived the event of default caused by the “going concern” qualification in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. The revenue covenants for all subsequent quarters remained in effect. In consideration for the Sixth Amendment, we agreed to add $500,000 to the original $40.0 million principal balance, with interest paid on this amount as of November 1, 2025 and during the term of the Previous Credit Agreement and payable along with the original $40.0 million principal balance, either at the maturity date or when and if earlier repaid.

On June 30, 2025, we received a waiver related to the trailing 12-month revenue covenant for the second quarter of 2025. On August 7, 2025, we entered into a fifth amendment to the Previous Credit Agreement (the “Fifth Amendment”), which further amended the trailing 12-month revenue covenants, and waived the event of default caused by the “going concern” qualification in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. In consideration of the Fifth Amendment, we issued 400,000 shares of our Common stock to the Lender.

On February 13, 2025, we entered into a fourth amendment to the Previous Credit Agreement (the “Fourth Amendment”), which amended the trailing 12-month revenue covenants. In consideration of the Fourth Amendment, we issued to the Lender warrants to purchase up to 145,180 shares of our common stock, at an exercise price of $0.01 per share, with a term of 10 years from the issuance date. On March 31, 2025, we received a waiver related to the trailing 12-month revenue covenant for the first quarter of 2025.

On October 18, 2023, we entered into a credit agreement (as amended and modified, the “Previous Credit Agreement”), by and between us, as borrower, and an affiliate of OrbiMed Advisors, LLC, as the lender and administrative agent. The Previous Credit Agreement provided for a five-year senior secured credit facility in an aggregate principal amount of up to $90.0 million, of which $40.0 million was borrowed, less certain fees and expenses. On November 7, 2024, we entered into the third amendment (the “Third Amendment”) to the Previous Credit Agreement. Under the terms of the Third Amendment and subject to our payment of a consent fee to the Lender, we mutually agreed to (1) terminate two additional tranches of available debt in the aggregate amount of $50.0 million and (2) remove the trailing 12-month revenue covenant for the fourth quarter of 2024, which was set at $67.5 million. All revenue covenants for subsequent quarters remained in effect.

The following table summarizes our cash flows for the periods presented:

Year Ended

Net cash used in operating activities $ (31,195 ) $ (48,939 )

Net cash provided by investing activities 12,452 37,363

Net cash provided by financing activities 14,936 3,508

Net decrease in cash and cash equivalents (3,807 ) (8,068 )

Cash and cash equivalents at beginning of the period 14,050 22,118

Cash and cash equivalents at end of the period 10,243 14,050

Net cash used in operating activities was $31.2 million and $48.9 million during the years-ended December 31, 2025 and 2024, respectively. The decrease in cash used by operating activities is primarily attributable to higher gross profit and lower operating costs.

Net cash provided by investing activities was $12.5 million and $37.4 million during the years-ended December 31, 2025 and 2024, respectively. The decrease in cash provided by investing activities is primarily attributable to lower cash inflows from maturities of marketable securities offset by lower cash outflows from purchases of marketable securities and a decrease in cash outflow for capital expenditures in the current year compared to the prior year. The decrease in capital expenditures in the current year is primarily related to the leasehold improvement in the Ventura production facility to enhance manufacturing output and materials related to our RECELL GO RPDs in the prior year.

Net cash provided by financing activities was $14.9 million and $3.5 million for the years-ended December 31, 2025 and 2024, respectively. The increase in cash provided by financing activities was due to the net proceeds received from the Placement offset by decreases in the proceeds from the exercises of stock options and purchases of stock under the ESPP in the current year.

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Capital Management and Material Cash Requirements

We aim to manage capital so that the Company continues as a going concern while also maintaining optimal returns to stockholders, as well as other benefits for our stakeholders. We also aim to maintain a capital structure that ensures the lowest cost of capital available to us. We regularly review our capital structure and seek to take advantage of available opportunities to improve outcomes for us and our stockholders.

For the year-ended December 31, 2025, there were no dividends paid and we have no plans to commence the payment of dividends.

On December 19, 2024, Regenity received 510(k) clearance, as such, we accrued $2.0 million to be paid in January 2025 and recorded $3.0 million in Contingent liability and $5.0 million in Intangible assets, net in the Consolidated Balance Sheets. Under the terms of our amended exclusive development and distribution agreement with Regenity, we have a further obligation to make up to an additional $3.0 million payment on or before January 4, 2027 to guarantee development and manufacturing capacity (and related resources), contingent on positive results of certain clinical studies. With the exception of the milestone payments related to our exclusive development and distribution agreement with Regenity, we do not have any other purchase commitments or long-term contractual obligations, except for lease obligations as of December 31, 2025. Refer to Note 7 of our Consolidated Financial Statements for further details on our lease obligations.

In addition, we have no material off-balance sheet arrangements (as defined in the applicable rules and regulations established by the SEC) that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. While we have no committed plans to issue further shares on the market, we will continue to assess market conditions.

Critical Accounting Policies and Estimates

The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Practices, or U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base those estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

The following listing is not intended to be a comprehensive list of all of our accounting policies. Our significant accounting policies are described in Note 2 to our Consolidated Financial Statements contained elsewhere in this Annual Report. In many cases, the accounting treatment of a particular transaction is dictated by U.S. GAAP, with no need for our judgment in its application. There are also areas in which our judgment in selecting an available alternative would not produce a materially different result. We have identified the following as our critical accounting policies.

Revenue Recognition

We generate revenues primarily from:

•

The sale of RECELL EOU, RPK and mini RPK (collectively, the “RPKs”), PermeaDerm and Cohealyx products to hospitals, other treatment centers, and distributors.

•

Lease revenue for the RPD.

Our sale of the RECELL EOU, PermeaDerm, and Cohealyx products are accounted for under ASC 606, Revenue from contracts with customers (“ASC 606”). Revenue for the RECELL GO is disaggregated between two accounting standards: (1) ASC 606 for the RPKs and (2) ASC 842, Leases (“ASC 842”) for the RPD.

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To determine revenue recognition for arrangements that are within the scope of Topic 606, Revenue from contracts with customers, (“ASC 606”), we perform the following five steps:

1.

Identify the contract with a customer

2.

Identify the performance obligations

3.

Determine the transaction price

4.

Allocate the transaction price to the performance obligations

5.

Recognize revenue when/as performance obligation(s) are satisfied

In order for an arrangement to be considered a contract, it must be probable that we will collect the consideration to which it is entitled for goods or services to be transferred. We then assess the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract.

We determine the transaction price based on the amount of consideration we expect to receive for providing the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract inception for arrangements that include variable consideration, we estimate the probability and extent of consideration we expect to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. We then consider any constraints on the variable consideration and include in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

When accounting for a contract that contains multiple performance obligations, we must develop judgmental assumptions to determine the estimated stand-alone selling price ("SSP") for each performance obligation identified in the contract. We utilize the observable SSP when available, which represents the price charged for the promised product or service when sold separately. When the SSP for our products or services are not directly observable, we determine the SSP using relevant information available and apply suitable estimation methods including, but not limited to, the cost-plus margin approach. We then allocate the transaction price to each performance obligation based on the relative SSP and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.

Most of our contracts have a single performance obligation. As such, we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services. Revenue is recognized net of volume discounts (variable consideration). For our contracts that have an original duration of one year or less, since contract inception and customer payment occur within the same period we do not consider the time value of money. Further, because of the short duration of these contracts, we have not disclosed the transaction price for the remaining performance obligations as of each reporting period or when we expect to recognize this revenue. We have further applied the practical expedient to exclude sales tax in the transaction price and expense contract acquisition costs such as commissions and shipping and handling expenses as incurred.

Revenue recognition for contracts that are within the scope of ASC 606 and ASC 842

We enter into contracts with customers where we receive consideration for the RPKs and do not receive additional consideration for the RPD. As a result, judgment and analysis are required to determine the appropriate accounting, including: (i) whether the arrangement contains an embedded lease, and if so, whether such embedded lease is a sales-type lease or an operating lease, (ii) the amount of the total consideration, as well as variable consideration, (iii) the identification of the distinct performance obligations contained within the arrangement, (iv) how the arrangement consideration should be allocated to each performance obligation when multiple performance obligations exist, including the determination of standalone selling price, and (v) when to recognize revenue on the performance obligations.

For these contracts we consider the guidance under ASC 842 to determine if furnishing the RPD to the customer during the period of use establishes an embedded lease. To determine if the contract contains a lease, we evaluate the customer’s rights and ability to control the use of the underlying equipment throughout the contract term, including any equipment substitution rights retained by us. As the contract conveys the right to control the use of an identified asset for a period of time, the contract was determined to contain a lease. We then evaluated the lease classification based on the below:

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•

Pursuant to ASC 842-30, we will classify a lease as a sales-type lease if: (i) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (ii) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (iii) the lease term is for the major part of the remaining economic life of the underlying asset, (iv) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all (90% or more) of the fair value of the underlying asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

•

Pursuant to ASC 842-30, when none of the sales-type lease classification criteria are met, a lessor would classify the lease as a direct financing lease when both of the following criteria are met: (i) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all (90% or more) of the fair value of the underlying asset and (ii) it is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.

•

Pursuant to ASC 842-30, a lessor would classify a lease as an operating lease when none of the sales-type or direct financing lease classification criteria are met. Further, per ASC 842, a lessor is required to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria of ASC 842 and the lessor would have otherwise recognized a loss at the lease commencement date.

In determining whether the lease components are related to a sales-type lease or an operating lease, we evaluate if the lease transfers ownership at the end of the lease term, the existence of purchase options, the lease term in relation to the economic life of the asset, if the lease payments exceed the fair value of the asset, and if the asset is of a specialized nature. We also evaluate if the lease results in a loss at the lease commencement date. As the lease term is for the major part of the economic life, the lease meets the classification criteria for sales-type lease. However, to determine if the contract results in a loss at the lease commencement date we evaluated the consideration in the contract. The consideration at lease commencement does not contain fixed payments, purchase options, penalty payments or residual value guarantees. The variable consideration is related to the sale of the RPKs. As the variable lease payments are not dependent on an index or rate, the variable consideration is excluded from consideration at contract inception resulting in a loss at lease commencement. As such, we classify the lease as an operating lease.

The contracts contain a lease component, the RPD, and a non-lease component, the RPKs. The lease component will be accounted for under ASC 842 and the non-lease component will be accounted for under ASC 606, as described above. In accordance with ASC 842, the consideration in the contract will be allocated to each separate lease component and non-lease component of the contract. The consideration is allocated to these lease and non-lease components based on the SSP (as described above for contracts within the scope of ASC 606). In accordance with ASC 842, variable lease payments will be recognized once the sale of the RPKs occurs and control has transferred to the customer. Consideration will be allocated to the RPD and RPKs based on the SSP. Consideration related to the RPD will be recognized as Lease revenue and consideration related to the RPKs will be recognized as Sales revenues in accordance with guidance in ASC 606, as described above, upon transfer of control of the RPKs, which generally occurs at the time the product is shipped or delivered depending on the customer's shipping terms.

Assets in our lease program are reported in Plant and equipment, net on our Consolidated Balance Sheets and are depreciated over the useful life of the RPD device's 200 uses, as indicated in the Instructions for Use that were approved by the FDA and expensed as Costs of goods sold in the Consolidated Statements of Operations. The RPD depreciation has a direct relationship to the number of RPKs sold. Based on customer usage, each purchase of RPKs results in a 1/200 depreciation to the RPD.

See Note 5 to our Consolidated Financial Statements included in this Annual Report for additional detail on revenue recognition.

Share-Based Compensation

We measure and recognize compensation expense on a graded-vesting method, for stock options and restricted stock units (“RSUs”), to employees, directors and consultants over the vesting period based on their grant date fair values. Compensation expense for performance-based awards is measured based on the number of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. We estimate the fair value of stock options on the date of grant using the Black-Scholes option pricing model. The fair value of RSUs is based on the closing stock price as determined per Nasdaq at the date of grant.

Determining the estimated fair value at the grant date requires judgment in determining the appropriate valuation model and assumptions, including, risk-free rate, volatility rate, annual dividend yield and the expected term.

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The following assumptions were used in the valuation of stock options:

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Expected volatility – determined using the historical volatility using daily intervals over the expected term.

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Expected dividends – None, based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

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Expected term – the expected term of our stock options for tenure-only vesting has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation. The simplified method was chosen because we have limited historical option exercise experience due to its short operating history of awards granted, the first plan was established in 2016 and was primarily used for Executives awards. Further, we do not have sufficient history of exercises in the U.S. market given our re-domiciliation from Australia to the United States in 2020.

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Risk-free interest rate – the risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award.

See Note 14 to our Consolidated Financial Statements included in this Annual Report for additional detail on share-based compensation.

Warrants

Warrants, other than the Penny Warrants as defined and described in Note 4 to our Consolidated Financial Statements included in this Annual Report, are accounted for in accordance with applicable accounting guidance provided inASC 815, Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815”), as a liability based on the specific terms of the warrant agreement and recorded at fair value. The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in earnings. The fair value of the warrant liability, which is reported within Warrant liability on the Consolidated Balance Sheets, is estimated by us based on the Black-Scholes option pricing model with the following inputs (Level 3):

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Price of common stock

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Estimated expected term

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Estimated exercise price

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Estimated expected volatility

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Estimated risk free interest rate

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Estimated expected dividend rate

Loan Facility

We elected the fair value option (“FVO”) of accounting under ASC 825-10, Financial Instruments (“ASC 825”),to account for the debt. ASC 825 provides FVO election that allows companies an irrevocable election to use fair value at the date of issuance and subsequently remeasure every reporting period. The fair value of the loan facility is reported in the Consolidated Balance Sheets. Changes in fair value are reported in earnings in Other income in the Consolidated Statements of Operations. Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income. We have elected to present interest expense separately from changes in fair value and therefore will present interest expense associated with the loan facility. All costs associated with the issuance of the Previous Credit Agreement accounted for using the fair value option were expensed upon issuance. Refer to Note 6 for further details.

The fair value of the loan facility was determined using a Monte Carlo simulation in order to capture the probability of different potential cash flows outcomes associated with the contractual terms of the instrument. The below assumptions were used in the Monte Carlo simulation (Level 3):

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Estimated risk free interest rate

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Estimated revenue volatility

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Estimated revenue discount rate

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Estimated future revenue projection

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Estimated expected dividend rate

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Income Taxes

Income taxes are accounted for using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that a portion of the deferred tax asset will not be realized.

We review our uncertain tax positions regularly. An uncertain tax position represents our expected treatment of a tax position taken in a filed return or planned to be taken in a future tax return or claim that has not been reflected in measuring income tax expense for financial reporting purposes. We recognize the tax benefit from an uncertain tax position when it is more-likely-than-not that the position will be sustained upon examination on the basis of the technical merits or the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired.

See Note 15 to our Consolidated Financial Statements included in this Annual Report for additional detail on income taxes.

Recent accounting pronouncements

See discussion of recent accounting pronouncements in Note 2 to the Consolidated Financial Statements located in Item 8 in this Annual Report.

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this item.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and supplementary data are attached hereto beginning on Page F-1 and are incorporated by reference herein.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, our management, with the participation of our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2025. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2025.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company, as this term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our management, with the participation of our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.

This report does not include an attestation report of our independent registered public accounting firm regarding our internal control over financial reporting, in accordance with applicable SEC rules that permit us to provide only management’s report in this report.

Changes in Internal Control over Financial Reporting

During the three-months ended December 31, 2025, there were no material changes made in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Inherent Limitations on Disclosure Controls and Procedures

Management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of these inherent limitations, our disclosure controls and procedures may not prevent or detect all instances of fraud, misstatements, or other control issues. In addition, projections of any evaluation of the effectiveness of disclosure controls or other internal controls to future periods are subject to risks, including, among others, that controls may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate.

Item 9B. OTHER INFORMATION

None

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors

Jan Stern Reed 66 Lead Independent Director July 2021 June 2026

Jeremy Curnock Cook 76 Non-Executive Director October 2012 June 2026

Professor Suzanne Crowe 75 Non-Executive Director January 2016 June 2026

Robert McNamara 69 Non-Executive Director June 2023 June 2026

Dr. Michael Tarnoff 57 Non-Executive Director August 2025 June 2026

Joe Woody 60 Non-Executive Director January 2026 June 2026

Cary Vance was appointed Interim CEO of the Company in October 2025 and has served as Chairman of the Board since August 2025 and Director since April 2023. Mr. Vance has over 25 years of extensive leadership experience in the healthcare industry with commercial and operational expertise. He served as the President and Chief Executive Officer of PhotoniCare, Inc., from May 2023 until January 2025. Prior to this appointment, he was President and CEO of Titan Medical, and he served as an independent director for its Board of Directors through November 2024. Previously, Mr. Vance served as President and CEO of XCath, a privately held neurovascular robotics company, having also served in similar roles at OptiScan Biomedical, Myoscience, and Hansen Medical. He supported these companies as they commercialized and transformed markets with their disruptive, enabling, and game-changing novel technologies. Prior to his role at Hansen Medical, he served in various global executive leadership roles at Teleflex, Covidien, and GE HealthCare. Mr. Vance is Lean/Six Sigma Black Belt Certified, NACD Certified, and holds both a Bachelor of Arts degree in Economics and an MBA from Marquette University. We believe Mr. Vance is qualified to continue to serve on our Board as an executive director based on his leadership experience, together with his extensive commercial and operational expertise in the healthcare industry.

Jan Stern Reed was appointed Lead Independent Director in October 2025 and has served as a Director since July 2021. She has more than 35 years of legal, business management, and executive leadership experience primarily in the healthcare industry, and brings significant expertise in corporate governance, compliance, and risk management. Ms. Reed currently serves as a board member of Stepan Co. (NYSE: SCL), a major manufacturer of specialty and intermediate chemicals used in a broad range of industries, and AngioDynamics, Inc. (NASDAQ: ANGO), an industry-leading and transformative medical technology company focused on improving patient outcomes. Previously, Ms. Reed served as Senior Vice President, General Counsel and Corporate Secretary at Walgreens Boots Alliance, Inc., a global health and wellbeing company. Prior to Walgreens, Ms. Reed was Executive Vice President, Human Resources, General Counsel and Corporate Secretary of Solo Cup Company, where she was responsible for the legal, human resources, internal audit, corporate communications, and compliance functions. Prior to Solo Cup Company, she was Associate General Counsel, Corporate Secretary and Chief Corporate Governance Officer at Baxter International, Inc. Ms. Reed holds a Bachelor of Arts degree from the University of Michigan and a Juris Doctor from the Northwestern University Pritzker School of Law. We believe Ms. Reed is qualified to serve on our Board based on her extensive experience in legal, corporate governance, compliance, human resources, audit and enterprise risk management, and general business management and executive leadership.

Jeremy Curnock Cook has served as a Director since October 2012. He is a veteran in the healthcare services and life sciences industries, and has been actively supporting the commercialization of healthcare innovations and helping entrepreneurs build their international businesses over the past 45 years. Mr. Curnock Cook is currently Founder and Managing Director of BioScience Managers, a healthcare investment firm with over $AUS 190M under management. Over his career, Mr. Curnock Cook has successfully managed in excess of US $1 billion in equity investments. Mr. Curnock Cook brings his decades of international experience to our Board. He launched the first dedicated biotechnology fund for the Australian market and is a former head of the life science private equity team at Rothschild Asset Management, an early pioneer and significant investor in the sector. In his early career, he founded the International Biochemicals Group which he successfully sold to Royal Dutch Shell. Mr. Curnock Cook founded a European-focused seed fund with Johnson & Johnson and built the International Biotechnology Trust. Mr. Curnock Cook has served on more than 40 boards of directors in the life science sector in the UK, Europe, USA, Canada, Japan, and Australia. In addition to serving on our Board, Mr. Curnock Cook currently serves on the following boards: International BioScience Managers Ltd (appointed March 2000), Bioscience Managers Pty Ltd (appointed January 2003), REX Bionics Pty Ltd (appointed February 2012), Sheldon LTD (formerly Sea Dragon) (appointed October 2012), Adherium Ltd appointed (April 2015), BioScience Managers UK Ltd (appointed August 2017), Marine Department Ltd (appointed January 2019), JLCC Ltd (appointed December 2019), Tidal Sense LTD (formally CRiL) (appointed November 2020), and Humanetix Ltd (appointed September 2021). We believe Mr. Curnock Cook is qualified to serve on our Board based on his extensive global experience in the life sciences sector, specifically with companies focused on innovation.

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Professor Suzanne Crowe AO has served as a Director since January 2016. Australian-based, she is a physician-scientist, and as a director, has expertise in supporting companies with their medical and scientific strategies. Professor Crowe is an Emeritus Professor at Monash University Melbourne, and she recently retired after 35 years of service as both Associate Director Clinical Research at the Burnet Institute and Senior Specialist Physician in Infectious Diseases at The Alfred Hospital Melbourne. A Fellow of the Australian Institute of Company Directors, she is currently a Director of Sonic Healthcare Ltd, a large global medical diagnostics company. In addition, Professor Crowe served on the board of St. Vincent’s Health Australia Ltd., the country’s largest not-for-profit health and aged care provider, from 2012 to2021. In June 2020, she was appointed as Officer of the Order of Australia in recognition of her distinguished services to health, clinical governance, biomedical research, and education. We believe Professor Crowe is qualified to serve on our Board based on her medical and research expertise, as well as experience in supporting companies with their medical and scientific strategies.

Robert McNamara has served as a Director since April 2023. He has over 25 years of leadership experience in public and privately held companies in the medical device and technology industries. His extensive experience in operations and financial management spans across early-stage, high-growth, and mature companies. Mr. McNamara previously served as a board member, Chair of the Compensation Committee, and member and chair of the Audit Committee for Xtant Medical Holdings (NYSE: XTNT). He is a former member of the Board of Directors and Chair of the Audit Committee for Axonics, Inc. Prior to these appointments, Mr. McNamara served as Executive Vice President, Chief Financial Officer of LDR Holding/Spine. Prior to this role, he served as the Chief Financial Officer of three publicly traded medical device companies including Accuray, Somnus Medical Technologies, and Target Therapeutics. Mr. McNamara holds a Bachelor of Science in Accounting from the University of San Francisco and an MBA from The Wharton School, University of Pennsylvania. We believe Mr. McNamara is qualified to serve on our Board because of his financial expertise, especially with high-growth companies, and his experience with the enterprise risk management and other requirements of U.S. public and private companies within the medical device and technology industries.

Dr. Michael Tarnoff was appointed a Director in October 2025. Dr. Tarnoff spent 23 years of his professional career at Tufts Medical Center, serving in various executive leadership roles, most recently as the Chief Physician Executive and CEO, until 2024. While serving in various leadership positions at Tufts, Dr. Tarnoff served as Chief Medical Officer and Vice President, Medical Affairs at Medtronic, Inc. from 2015 to 2019. Before working for Medtronic, from 2008 through 2015, Dr. Tarnoff was the Corporate Chief Medical Officer and Vice President, Medical Affairs, and before that position, the Chief Medical Officer and Vice President, Medical Affairs of the Surgical Devices division, at Covidien plc. Additional executive leadership experience includes roles serving as Medical Director at GI Dynamics, Inc. from 2006 to 2008, as well as Chief Medical Consultant to the Kendall surgery unit of Tyco Healthcare from 2005 to 2008. After earning a Bachelor of Arts degree from Washington University in St. Louis, Dr. Tarnoff received his medical degree from the University of Medicine and Dentistry of New Jersey. He then completed a general surgery residency at Rutgers Medical School, followed by an advanced fellowship in laparoscopic surgery at the Cleveland Clinic. We believe Dr. Tarnoff is qualified to serve on our Board of Directors based on his extensive medical experience and expertise in clinical innovation, combined with his executive leadership experience.

Joe Woody was appointed a Director in January 2026. Mr. Woody is a seasoned healthcare executive with more than two decades of leadership experience across the medical technology sector, most recently serving as CEO of Avanos Medical from 2017 to 2024, and previously, as President and CEO of Acelity Holdings. His background spans multiple senior executive roles, including with Covidien and Smith & Nephew. Mr. Woody also served on the Board of Directors of AdvaMed, Inc., the largest trade association in the U.S. for the medical device, diagnostics, and digital health technology sectors, for over a decade. We believe Mr. Woody is qualified to serve on our Board of Directors based on his extensive medical technology experience and commercial expertise.

Identification of Named Executive Officers

Name Age Position Date First Elected or Appointed

Cary Vance 60 Interim Chief Executive Officer October 2025

David O'Toole 67 Chief Financial Officer June 2023

Cary Vance is discussed above under “Identification of Directors”.

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David O'Toole isan accomplished financial executive with extensive experience in both public company operations and capital markets, and has served as AVITA Medical’s Chief Financial Officer since June 2023. Prior to joining the Company, Mr. O’Toole served as CFO of Opiant Pharmaceuticals, a biopharmaceutical company developing treatments for addiction and drug overdose, which was acquired by Indivior in March of 2023. Prior to that, he served as CFO of Soleno Therapeutics, a company focused on the development and commercialization of novel therapeutics for the treatment of rare diseases. Prior to Soleno, Mr. O’Toole held the role of CFO for three publicly traded life sciences companies where he built and led high-performance teams. Prior to his CFO experience, he spent over 24 years in public accounting, including 16 years with Deloitte & Touche. He holds a Bachelor of Science in accounting from the University of Arizona and is a Certified Public Accountant (non-active).