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:
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Increasing market penetration in U.S. burn centers, positioning RECELL as the standard of care in burn management;
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Expanding adoption of RECELL for the treatment of traumatic and surgical wounds throughout the U.S.;
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Commercializing and expanding adoption of Cohealyx as a dermal matrix that supports wound bed preparation and accelerates readiness for grafting;
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Driving adoption of RECELL GO mini in burn and trauma centers treating smaller wounds;
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Advancing post-market clinical studies for Cohealyx and PermeaDerm to generate additional clinical and health economic evidence supporting adoption;
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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
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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:
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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.
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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.
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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.
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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:
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The sale of RECELL EOU, RPK and mini RPK (collectively, the “RPKs”), PermeaDerm and Cohealyx products to hospitals, other treatment centers, and distributors.
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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:
•
Expected volatility – determined using the historical volatility using daily intervals over the expected term.
•
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.
•
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.
•
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):
•
Price of common stock
•
Estimated expected term
•
Estimated exercise price
•
Estimated expected volatility
•
Estimated risk free interest rate
•
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):
•
Estimated risk free interest rate
•
Estimated revenue volatility
•
Estimated revenue discount rate
•
Estimated future revenue projection
•
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).
Nicole Kelsey has served as Chief Legal and Compliance Officer, and Corporate Secretary since July 2024, and as Interim SVP, Human Resources since November 2025. Ms. Kelsey has over 25 years of executive legal experience with expertise in M&A, securities, and corporate governance. Ms. Kelsey previously served as Chief Legal Officer and Secretary for Amyris, Inc., a leading biotech company, and as General Counsel and Secretary of Criteo, a global leader in commerce marketing based in Paris with global operations. Prior to joining Criteo, Ms. Kelsey was the senior securities lawyer for Medtronic, a global leader in medical technology; she served as head M&A attorney for CIT Group, Inc.; was the general counsel and chief compliance officer of a private merchant bank; and was the senior corporate attorney for the international conglomerate Vivendi. Before going in-house, Ms. Kelsey practiced with the law firms of White & Case and Willkie, Farr & Gallagher, in Paris and New York. A Fulbright scholar, Ms. Kelsey holds a Juris Doctor degree from Northwestern Pritzker School of Law and a Bachelor of Arts degree in Political Science and International Studies from The Ohio State University, and is admitted to practice law in New York and Minnesota.
Term of Office
Our Directors are elected for a term of one year and until their respective successors are elected and qualified, or until their earlier resignation, disqualification, or removal. Our executive officers are appointed by our Board of Directors and hold office for such terms as may be prescribed by our Board of Directors and until their successors are appointed, or until their earlier resignation or removal.
Family Relationships
There are no family relationships between our Directors or executive officers.
Involvement in Certain Legal Proceedings
None of our Directors or executive officers has been involved in any of the following events during the past ten years:
a)
any bankruptcy petition filed by or against any business or property of such person or any partnership or business in which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
b)
any conviction in a criminal proceeding or being a named subject of a pending criminal proceeding (excluding traffic violations and other minor offences);
c)
being the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities;
d)
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
e)
being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
f)
being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(40) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Gender Diversity
The 4th Edition of the ASX’s Corporate Governance Principles and Recommendations (the “Australian Governance Principles”) recommend we set measurable objectives for achieving gender diversity in the composition of our Board of Directors, senior executives and workforce generally. As of the date of this Form 10-K, the non-executive Directors of the Company are 33% female, our senior executive team members are 40% female, and our total employee base is 52.5% female.
The Company’s Code of Business Conduct & Ethics (the ”Code”), together with its Equal Employment Opportunity Policy (which forms part of its Employee Handbook) and the Charter of the Board’s Nominating and Corporate Governance Committee, together set forth the Company’s policy to provide equal employment opportunities to all employees and applicants in all Company facilities without regard to race, color, religious creed, sex, national origin, ancestry, citizenship status, pregnancy, childbirth, physical disability, mental and/or intellectual disability, age, military status or status as a special disabled veteran, marital status, registered domestic partner or civil union status, gender, medical condition, genetic information, or sexual orientation in accordance with applicable federal, state and local laws, including the Australian Governance Principles. For more information about the Code, please see the “Code of Conduct” section below. The Company’s Employee Handbook applies to all terms and conditions of employment including, but not limited to, hiring, placement, promotion, termination, layoff, recall, transfer, leaves of absence, compensation and training. The Company’s Code and the Charter of the Board’s Nominating and Corporate Governance Committee are each available on the Company’s website.
Performance Evaluations
The Nominating and Corporate Governance Committee Chair guides the Board of Directors in an annual self-evaluation process to assess the functioning of the Board of Directors, its committees, and its individual directors.
Additionally, each of Audit, Human Capital and Compensation, and Nominating and Corporate Governance Committees conduct annual self-evaluations regarding their composition (including review of the Board member serving as Chair of each such committee) the frequency and length of their meetings, their responsibilities, and the effectiveness of their respective duties.
The Company’s Human Capital and Compensation Committee undertakes a review of the performance of the Company’s CEO and the executive management team annually during the first quarter of each calendar year. The Company’s Human Capital and Compensation Committee completed these performance evaluations for the fiscal year ended December 31, 2025 on or around January 5, 2026.
Code of Conduct
The Code we have adopted constitutes a “code of ethics” as that term is defined in paragraph (b) of Item 406 of Regulation S-K. The Code applies to our executive officers, non-executive Directors, management, employees, and contractors of the Company. We regularly review the Code on an annual basis. If we make any amendments to the Code or grant any waivers, including any implicit waiver, from a provision of the Code, we will disclose the nature of such amendment or waiver on our website. A copy of the Code is available on our website at www.avitamedical.com. The information on our website is not incorporated by reference into this Annual Report.
Section 16(a) Beneficial ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s Directors, certain of its executive officers and other persons who beneficially own more than 10% of the Company’s common shares to file reports of, and changes in, ownership of the Company’s Common Stock (as well as its CDIs) with the SEC. Based solely on the Company’s review of copies of SEC filings it has received or filed, the Company believes that each of its Directors, executive officers, and beneficial owners of more than 10% of the shares satisfied the Section 16(a) filing requirements during the fiscal year-ended December 31, 2025.
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Election of Directors
Our Board of Directors consists of seven members, six of which are non-executive Directors. Directors are elected at our annual general meeting of stockholders and hold office for a term of one year and until their successors have been elected and qualified or until the earlier of their resignation or removal. With the exception of Messrs. Tarnoff and Woody, who joined our Board after the 2025 annual shareholders’ meeting on June 4, 2025 (the “FY25 ASM”), ur Directors were elected at the FY25 ASM, to hold office for a term of one year or until his or her successor is duly elected and qualified. Any newly created directorship or any vacancy occurring on our Board of Directors may be filled only by a majority vote of the remaining members of our Board, and each Director so elected shall hold office until the expiration of the term of office of the Director whom he or she has replaced or until his or her successor is elected and qualified. On October 16, 2025, upon the appointment of Mr. Vance as the Company’s Interim CEO and confirmation that Mr. Vance continue to serve as the Board’s Chair, the Board appointed Ms. Reed as its lead independent Director. Under ASX Listing Rule 14.4, any Directors of the Company (except a managing Director) must not hold office without re-election past the third annual shareholders’ meeting following the Director’s appointment or three years, whichever is longer.
Stockholder Nominees for Director
There have been no material changes to the procedures by which stockholders may recommend nominees to the Board of Directors.
Committees of the Board of Directors
Our Board of Directors has established the Audit Committee, the Human Capital and Compensation Committee, and the Nominating and Corporate Governance Committee, each of which operates pursuant to a written charter adopted and reviewed annually by our Board of Directors. The information on our website is not incorporated by reference into this Annual Report. Our Board of Directors may also establish other committees from time to time to assist the Board of Directors in fulfilling its risk oversight duties. The composition and functioning of all of our committees comply with all applicable requirements of the Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations, and the ASX Listing Rules and also align with the Australian Governance Principles.
Following the retirement of Lou Panaccio, the Board appointed Joe Woody to the Board and each of the Board’s committees, effective January 1, 2026, to serve until the Company’s 2026 annual shareholders’ meeting. As of the date of this report, the composition of Audit, Human Capital and Compensation, and Nominating and Corporate Governance Committees were as follows:
Jan Stern Reed X (1) Member Member Chair (2)
Professor Suzanne Crowe X Member Member Member
Jeremy Curnock Cook X Member Member Member
Robert McNamara X Member Chair (3) Member
Dr. Michael Tarnoff X Chair (4) Member (5) Member (5)
Joe Woody X (6) Member Member Member
(1) Appointed lead independent Director effective as of October 16, 2025
(2) Appointed chair effective as of the fourth quarter 2025 Board meeting (November 5, 2025).
(3) Appointed chair effective as of the first quarter 2023 Board meeting (May 10, 2023)
(4) Appointed chair effective as of the fourth quarter 2025 Board meeting (November 5, 2025).
(5) Committee membership effective as of the fourth quarter 2025 Board meeting (November 5, 2025).
(6) Appointed as member to each Committee effective as of January 1, 2026.
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Audit Committee
Nasdaq Marketplace Rules require us to establish an audit committee comprised of at least three members, each of whom is financially literate and satisfies the respective “independence” requirements of the SEC and Nasdaq, and one of whom has accounting or related financial management expertise. In addition, the ASX Listing Rules and the Australian Governance Principles require us to have an audit committee comprised of at least three members, all of whom are non-executive Directors and a majority of whom are “independent” Directors, and which is chaired by an independent Director who is not the chair of the Board of Directors.
We have an Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Audit Committee assists our Board of Directors in overseeing the accounting and financial reporting processes of our Company and the audits of our financial statements, including the integrity of our financial statements by the Company’s registered public accounting firm, compliance with applicable legal and regulatory requirements, our registered public accounting firm’s qualifications and independence, and such other duties as may be directed by our Board of Directors. The Audit Committee is also required to review the Company’s enterprise risk management on behalf of the Board of Directors.
Our Audit Committee currently consists of six Board members, each of whom satisfies the “independence” requirements of the SEC, Nasdaq Marketplace Rules, the ASX Listing Rules and the Australian Governance Principles. Our Audit Committee is currently composed of Robert McNamara, Jeremy Curnock Cook, Jan Stern Reed, Dr. Michael Tarnoff, Joe Woody, and Professor Suzanne Crowe. Each qualifies as an “independent director” within the meaning of Nasdaq Marketplace Rules and the Australian Governance Principles. Mr. Robert McNamara is the current Chair of the Audit Committee (being an independent Director who is not Chair of the Board) and was appointed to that role as of upon joining the Board on April 1, 2023, following his appointment to the Board of Directors. Our Board of Directors has determined that Robert McNamara is an “audit committee financial expert,” as defined in item 407(d)(5)(ii) of Regulation S-K. The Audit Committee meets at least four times per year. See below for summary of attendance.
The Audit Committee held a total of four meetings during the annual period ended December 31, 2025. The meetings attended by each Director, and the number of meetings that they were each eligible to attend, is as follows:
Audit Committee Meeting Attendance
Meetings attended/Meetings held
Robert McNamara (Chair) 4/4
Professor Suzanne Crowe 4/4
Jeremy Curnock Cook 4/4
Lou Panaccio 4/4
Jan Stern Reed 4/4
Dr. Michael Tarnoff (1) 2/4
Cary Vance (2) 4/4
(1)
Dr. Michael Tarnoff was appointed by the Board of Directors to serve as member of the Audit Committee, effective as of the Board’s fourth quarter 2025 meeting on November 5, 2025.
(2)
Mr. Cary Vance was a member of the Audit Committee until his appointment as Interim CEO on October 16, 2025; following such appointment, Mr. Vance continued to attend, but recused himself of any voting by the Committee for the remainder of the Committee’s meetings in 2025.
Human Capital and Compensation Committee
Our Board of Directors has established a Human Capital and Compensation Committee, which is comprised of independent Directors, within the meaning of Nasdaq Marketplace Rules and also the Australian Governance Principles. The Human Capital and Compensation Committee must be comprised solely of non-executive Directors in accordance with the ASX Listing Rules and must also be chaired by an independent Director in accordance with the Australian Governance Principles. The Human Capital and Compensation Committee is responsible for reviewing the salary, incentives, and other benefits of our Directors, executive officers and employees, and making recommendations on such matters for approval by our Board of Directors. The Human Capital and Compensation Committee is also responsible for overseeing and advising our Board of Directors regarding the adoption of policies that govern our compensation programs. Professor Suzanne Crowe, Jeremy Curnock Cook, Robert McNamara, Jan Stern Reed, Dr. Michael Tarnoff, and Joe Woody are the current members of the Human Capital and Compensation Committee, and each qualifies as an “independent director” within the meaning of Nasdaq Marketplace Rules and the Australian Governance Principles. Dr. Michael Tarnoff was appointed to serve as the Chair of the Human Capital and Compensation Committee (being an independent Director who is not the chair of the Board) in the fourth quarter 2025 meeting (November 5, 2025).
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The Human Capital and Compensation Committee held a total of five meetings during annual period ended December 31, 2025. The meetings attended by each Director, and the number of meetings that they were each eligible to attend, is as follows:
Human Capital and Compensation Committee Meeting Attendance
Meetings attended/Meetings held
Dr. Michael Tarnoff (Chair) (1) 2/5
Professor Suzanne Crowe 5/5
Jeremy Curnock Cook 5/5
Robert McNamara 5/5
Lou Panaccio 5/5
Jan Stern Reed 5/5
Cary Vance (2) 5/5
(1)
Dr. Michael Tarnoff was appointed by the Board of Directors to serve as chair of the Human Capital and Compensation Committee, effective as of the Board’s fourth quarter 2025 meeting on November 5, 2025.
(2)
Mr. Cary Vance was chair of the Human Capital and Compensation Committee until his appointment as Interim CEO on October 16, 2025; following such appointment, Mr. Vance continued to attend, but recused himself of any voting by the Committee for the the remainder of the Committee’s meetings in 2025.
Nominating and Corporate Governance Committee
Our Board of Directors has established a Nominating and Corporate Governance Committee. Under the Australian Governance Principles, our Nominating and Corporate Governance Committee should have at least three members, a majority of whom are independent, and should also be chaired by an independent Director. Professor Suzanne Crowe, Jeremy Curnock Cook Robert McNamara, Jan Stern Reed, Dr. Michael Tarnoff, and Joe Woody are the current members of the Nominating and Corporate Governance Committee and each qualifies as an “independent director” within the meaning of Nasdaq Marketplace Rules and the Australian Governance Principles. Ms. Jan Stern Reed is the Chair of the Nominating and Corporate Governance Committee (being an independent director). The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to serve as members of our Board of Directors, recommending nominees for election at the stockholders meetings or to fill vacancies that arise on our Board of Directors, recommending qualified and experienced directors to serve on the committees of our Board of Directors, reviewing the composition of the Board and its committees, and determining the independence of each Board member. In addition, the Nominating and Corporate Governance Committee is responsible for leading the Board of Directors to complete annual self-evaluations of the Board, its committees, and the individual directors.
The Nominating and Corporate Governance Committee held a total of four meetings during the annual period ended December 31, 2025. The meetings attended by each Director, and the number of meetings that they were each eligible to attend, is as follows:
Nominating and Corporate Governance Committee Meeting Attendance
Meetings attended/Meeting held
Jan Stern Reed (Chair) (1) 4/4
Professor Suzanne Crowe 4/4
Jeremy Curnock Cook 4/4
Robert McNamara 4/4
Lou Panaccio 4/4
Dr. Michael Tarnoff (2) 2/4
Cary Vance (3) 4/4
(1)
Ms. Jan Stern Reed was appointed by the Board of Directors to serve as the Chair of the Nominating and Corporate Governance Committee at the second quarter 2023 meeting of the Board on May 9, 2023.
(2)
Dr. Michael Tarnoff was appointed by the Board of Directors to serve as a member of the Nominating and Corporate Governance Committee, effective as of the Board’s fourth quarter 2025 meeting on November 5, 2025.
(3)
Mr. Cary Vance was a member of the Nominating and Corporate Governance Committee until his appointment as Interim CEO on October 16, 2025 but was in attendance at All Committee meetings in 2025; following such appointment, Mr. Vance continued to attend, but recused himself of any voting by the Committee for the the remainder of the Committee’s meetings in 2025..
49
Board of Directors’ Meetings
The Board of Directors held a total of ten meetings during the annual period ended December 31, 2025. The meetings attended by each Director, and the number of meetings that they were each eligible to attend, is as follows:
Board of Directors' Meeting Attendance
Meetings attended/Meetings held
Cary Vance (Chair) (1) 10/10
Professor Suzanne Crowe 10/10
Jeremy Curnock Cook 9/10
Robert McNamara 10/10
Lou Panaccio (2) 9/10
Dr. Michael Tarnoff (4) 4/10
(1)
Mr. Cary Vance was appointed Chairman of the Board in its third quarter 2025 meeting on August 6, 2025.
(2)
Mr. Lou Panaccio resigned as Chairman of the Board of Directors in its third quarter 2025 meeting on August 6, 2025, with December 31, 2025 as his last day of service.
(3)
Ms. Jan Stern Reed was appointed by the Board of Directors to serve as Lead Independent Director on October 16, 2025.
(4)
Dr. Michael Tarnoff was appointed by the Board of Directors in its third quarter 2025 meeting on August 6, 2025.
Item 11. EXECUTIVE COMPENSATION
The particulars of the compensation paid to the below listed “named executive officers” of our company are set out in the summary compensation below.
o
Cary Vance, Interim Chief Executive Officer
o
David O’Toole, Chief Financial Officer
o
Nicole Kelsey, Chief Legal and Compliance Officer, and Corporate Secretary and Interim SVP, Human Resources
o
James Corbett, Former Chief Executive Officer
SUMMARY COMPENSATION TABLE
The following table sets forth for our named executive officers the following information for the annual periods ended December 31, 2025 and December 31, 2024.
Named Executive Officers: ($) ($) ($) ($) ($)
Interim Chief Executive Officer 2024 - - - - -
(1)
Amounts in this column represent awards of stock options with the aggregate grant date fair value computed in accordance with ASC 718. Amounts in this column represent option awards issued to the individuals noted, based on the fair value determined at the date of grant in accordance with U.S. GAAP. See Note 14, Share-Based Payment Plans to our Consolidated Financial Statements included in Part II, Item 8. “Financial Statements and Supplementary Data” for the assumptions used in determining the grant date fair value of option awards. The vesting of these option awards are subject to various performance or tenure related criteria.
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(2)
Amounts in this column represent all other compensation for the covered fiscal year that the smaller reporting company could not properly report in any other column of the Summary Compensation Table. This includes the non-qualified deferred compensation employer match, 401(k) match, and fringe benefits such as car allowance, accommodations and medical benefits, along with related taxes on grossed up fringe benefits.
(3)
Amounts primarily relate to $29,415 of non-qualified deferred compensation employer match and the Company’s 401(k) employer match contribution.
(4)
Amounts primarily relate to $27,550 of non-qualified deferred compensation employer match and the Company’s 401(k) employer match contribution.
(5)
Amounts primarily relate to the Company’s 401(k) employer match contribution.
(6)
Primarily relates to relocation assistance.
(7)
Amounts primarily relate to $117,000 in severance payments, $53,595 in vacation buy-out and $25,445 in the Company’s 401(k) employer match contribution and group term life insurance premiums.
Employment Contracts
The following table outlines the specified terms of the relevant employment contracts for the named executive officers of the Company. For compensation information of named executives refer to the table above.
(1)
Termination payments for the CFO and CLCO are triggered only in the event of employment termination for involuntary termination without cause or resignation for “Good Reason.”
(2)
“Cause” - For the CFO and CLCO, Cause is defined as (i) conviction of, or a plea of guilty or nolo contendere to, a felony or crime involving moral turpitude; (ii) participation in an act of fraud or theft against the Company; (iii) willful and material breach of any contractual, statutory, fiduciary, or common law duty owed to the Company including without limitation Section 4.1 of this Agreement; (iv) willful and repeated failure to satisfactorily perform job duties; or (v) any willful act that is likely to and which does in fact have the effect of injuring the reputation, business, or a business relationship of the Company.
(3)
“Good Reason” - For the CFO and CLCO, Good Reason is defined as (i) a material diminution in Executive’s authority, duties, or responsibilities in effect at the time of this Agreement; (ii) any reduction in the Executive’s then current base salary; (iii) relocation of Executive’s principal place of work by a distance of fifty (50) miles or more from the Executive’s then current principal place of work without the Executive’s consent; (iv) material breach by the Company of any provision of this Agreement; provided, however, that the conduct described in the foregoing subsections (i) through (iv) will only constitute Good Reason if such conduct is not cured within thirty (30) days after the Company’s receipt of written notice from the Executive specifying the particulars of the conduct the Executive believes constitutes Good Reason.”
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Compensation Principles
The Charter of the Human Capital and Compensation Committee provides a compensation governance framework (the “Charter”). The Charter outlines responsibilities and duties of the members, sets forth the frequency of meetings, establishes and reviews the overall compensation policies and practices of the Company, and also sets forth the process to review and approve the executive compensation program for the Chief Executive Officer and other executive officers, and make appropriate recommendations to the Board of Directors.
Human Capital and Compensation Committee
The Human Capital and Compensation Committee approves or makes recommendations to our Board of Directors on decisions concerning compensation of the executive leadership team (including the Chief Executive Officer) and the Board of Directors on an annual basis to ensure that it is consistent with our short-term and long-term goals. The Company’s CEO makes recommendations to the Human Capital and Compensation Committee for review, modification (if applicable) and approval of the bonus and equity incentive awards for members of the executive leadership team. Then, the Human Capital and Compensation Committee assesses the appropriateness of the nature and amount of compensation (including the overall bonus and equity incentive awards) of our executive officers with the assistance of an external compensation consultant and by reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit from the recruitment and retention of a high-quality executive leadership team and Board of Directors. Additionally, the Human Capital and Compensation Committee reviews and recommends to the Board of Directors the overall annual bonus awards and the annual merit increase for the employees of the Company. The Company’s CEO, together with certain executive officers, regularly discuss the Company’s compensation matters with the Human Capital and Compensation Committee.
Resignation, Retirement, Termination for Cause, or Resignation without Good Reason Arrangements
The Company does not have any agreements or plans other than the current employment contracts in place for the named executive officers that would provide additional compensation in connection with a retirement.
Potential Payments upon Involuntary Termination, Resignation without Good Reason or Change-In-Control
The employment contract provides for the following severance payments upon termination by us without cause or by the employee for good reason (as defined in the particular employment agreement): (i) payment of the employee’s then-current base salary for a period of 12-months for the CFO or CLCO, (ii) a pro-rated target bonus for the period during which the employee was employed in the year of termination, (iii) continued coverage under our group health and benefits plan consistent with the term of the base salary, and (iv) immediate acceleration of unvested stock options and restricted stock unit awards.
52
Outstanding Equity Awards at Fiscal Year-End
The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2025 (in US dollars).
Option awards Stock awards
(1)
Amounts in this column are calculated by multiplying the closing market price of the Company’s stock as of December 31, 2025 by the number of shares or units of stock awards.
(2)
Vests annually beginning on January 21, 2026.
(3)
Vests annually beginning on June 5, 2025.
(4)
Vests annually beginning on June 6, 2024.
(5)
Vests annually beginning on January 3, 2025.
(6)
Vests annually beginning on June 15, 2024.
(7)
Vests annually beginning on July 1, 2025.
Director Compensation
The following table sets forth certain information regarding the compensation earned by, or awarded to, each non-employee Director who served on our Board during the fiscal year-ended December 31, 2025 (in U.S. Dollars). We do not provide separate compensation to our executive Directors, such as Mr. Corbett, who served as our Chief Executive Officer during the fiscal year-ended December 31, 2025 until October 16, 2025. In the case of Mr. Vance, he was compensated as a non-executive director until his appointment as Interim CEO on October 16, 2025.
Fees earned in cash (1) Stock awards (2) Option awards (3) Total
Non-Executive Directors
(1)
Amounts are composed of the following: $70,000 for fees as a Board Member, $35,000 for Lead Independent Director, $20,000 for Audit Committee Chair, $15,000 for Human Capital and Compensation Committee Chair, $10,000 for Nominating and Corporate Governance Chair, $10,000 for Audit Committee Member, $7,500 for Human Capital and Compensation Committee Member, and $5,000 for Nominating and Corporate Governance Member.
53
(2)
Amounts in this column represent awards of restricted stock units with the aggregate grant date fair value computed in accordance with ASC 718. The fair value determined at the date of grant in accordance with U.S. GAAP based on the closing price of our common stock on the applicable grant date. The vesting of these stock awards are service based and subject to continued participant as Board Members.
(3)
Amounts in this column represent awards of stock options with the aggregate grant date fair value computed in accordance with ASC 718. Amounts in this column represent option awards issued to the individuals noted, based on the fair value determined at the date of grant in accordance with U.S. GAAP. See Note 14, Share-Based Payment Plans to our Consolidated Financial Statements included in Part II, Item 8. “Financial Statements and Supplementary Data” for the assumptions used in determining the grant date fair value of option awards. The vesting of these option awards are service based and subject to continued participant as Board Members.
Equity Compensation Plan Information as of December 31, 2025
(a) (b) (c)
Equity compensation plans approved by security holders
2016 Equity Incentive Plan (2) - (1)
Equity compensation plans not approved by security holders - - -
(1)
Upon closing of the Redomiciliation, the 2016 Plan was terminated with respect to future grants and accordingly, there are no more shares available to be issued under the 2016 Plan.
(2)
The 2016 Plan was previously approved and adopted by the shareholders of AVITA Australia, the former parent company.
No securities were purchased on-market:
•
under or for the purposes of an employee incentive plan; or
•
to satisfy the entitlements of the holders of options or other rights to acquire securities granted under an employee incentive plan.
54
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2026 Annual Meeting of Stockholders or an amendment of this report to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2025.
Australian Disclosure Requirements
In addition to the Company’s primary listing on the Nasdaq Capital Market, the Company’s shares of common stock are also quoted in the form of CDIs on the ASX and trade under the ticker symbol “AVH.” As part of our ASX listing, we are required to comply with the various disclosure requirements set out under the ASX Listing Rules. Information satisfying these disclosure requirements (where that information has not been provided elsewhere in this Annual Report) is furnished with this Annual Report as Exhibit 99.1, titled Australian Disclosure Matters for FY 2025.
Item 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or 1% of the average of the Company’s total assets as of the end of the last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons. Since January 1, 2023, the Company has not participated in any such related party transaction.
Director Independence
The Company’s Board of Directors has determined that all members of our Board of Directors, except Mr. Cary Vance, are independent directors for purposes of the rules of Nasdaq and the SEC and for the purposes of the ASX Listing Rules and the Australian Governance Principles. In making this determination, our Board of Directors considered the relationships that each non-executive director has with us and all other facts and circumstances that our Board of Directors deemed relevant, including the beneficial ownership of our common stock by each non-executive director and Mr. Vance’s position as Interim CEO.
The composition and functioning of the Company’s Board of Directors and each of its committees complies with all applicable requirements of Nasdaq and the rules and regulations of the SEC as well as the ASX Listing Rules and the Australian Governance Principles.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accounting Fees and Services
Grant Thornton LLP, the U.S. member of Grant Thornton International Ltd, independent registered public accountants have served as our independent public accountant for the years-ended December 31, 2025 and 2024. The following table sets forth fees billed or accrued by our independent registered public accountants during the years-ended December 31, 2025 and 2024.
Year-Ended Year-Ended
(1)
Audit fees consist of fees for the professional services by the principal accountant for the audit of the registrant’s annual financial statements and review of financial statements included in the registrant’s Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
(2)
Tax fees include the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
55
Pre-Approval Policies and Procedures
The Audit Committee’s policy is for the Audit Committee to approve all audit and non-audit services prior to such services being performed by the independent registered public accounting firm. Before engaging an independent registered public accountant firm to render audit or non-audit services, the engagement is approved by the Company’s Audit Committee or the engagement to render services is entered into pursuant to pre-approval policies and procedures established by the audit committee. The Audit Committee pre-approved all audit services provided by independent registered public accountants during the years-ended December 31, 2025 and 2024.
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PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Annual Report:
(1)
All Financial Statements
See Index to Financial Statements in Part II, Item 8 of this Annual Report.
(2)
Financial Statement Schedules
All financial statement schedules have been omitted since the required information was not applicable or was not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements or the accompanying notes.
(3)
Exhibits
The exhibits listed in the following Index to Exhibits are filed, furnished or incorporated by reference as part of this Annual Report
EXHIBITS
Exhibit Exhibit
Number Description
57
Exhibit Exhibit
Number Description
58
Exhibit Exhibit
Number Description
59
Exhibit Exhibit
Number Description
10.64 Amendment One to Exclusive Development and Distribution Agreement**
19 AVITA Medical, Inc. Insider Trading Policy **
21.1 Subsidiaries of the Registrant **
23.1 Consent of Independent Registered Public Accounting Firm **
97.1 Incentive-Based Compensation Recovery Policy † **
99.1 Australian Disclosure Matters for FY 2025 **
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
† Management contract or compensation plan or arrangement.
* Certain identified confidential information has been redacted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
** Filed herewith
*** Furnished herewith
Item 16. Form 10-K Summary
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AVITA Medical, Inc.
(Registrant)
Date: February 12, 2026 /s/ Cary Vance
Cary Vance
Interim Chief Executive Officer (Principal Executive Officer)
Date: February 12, 2026 /s/ David O’Toole
David O’Toole
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name Title Date
Cary Vance (Principal Executive Officer)
/s/ David O’Toole Chief Financial Officer February 12, 2026
David O’Toole (Principal Financial and Accounting Officer)
/s/ Jan Stern Reed Lead Independent Director February 12, 2026
Jan Stern Reed
/s/ Jeremy Curnock Cook Director February 12, 2026
Jeremy Curnock Cook
/s/ Professor Suzanne Crowe Director February 12, 2026
Suzanne Crowe
/s/ Robert McNamara Director February 12, 2026
Robert McNamara
/s/ Dr. Michael Tarnoff Director February 12, 2026
Michael Tarnoff
/s/ Joe Woody Director February 12, 2026
Joe Woody
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets as of December 31, 2025 and 2024 F-3
Notes to Consolidated Financial Statements F-8
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
AVITA Medical, Inc.
Opinion on the financial statements
We have audited the accompanying consolidatedbalance sheets of AVITA Medical, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidatedstatements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes(collectively referred to as the “consolidatedfinancial statements”). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Companyas of December 31, 2025 and 2024, and the results of itsoperations and itscash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has current debt service obligations and has incurred historical negative cash flows and recurring losses. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2020.
Newport Beach, California
F-2
AVITA MEDICAL, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
As of
ASSETS
Prepaids and other current assets 1,293 2,060
Operating lease right-of-use assets 2,899 3,571
Corporate-owned life insurance (“COLI”) asset 3,116 3,006
Accounts payable and accrued liabilities $ 8,959 $ 6,294
Accrued wages and fringe benefits 7,813 10,451
Current non-qualified deferred compensation (“NQDC”) liability 276 2,094
Loan facility - long-term - 42,245
Non-qualified deferred compensation liability 3,697 2,969
Operating lease liabilities, long-term 2,135 2,840
Contingent liability, long-term 3,000 3,000
Non-qualified deferred compensation plan share awards - 244
Commitments and contingencies (Note 11)
Stockholders' equity (deficit):
Accumulated other comprehensive loss (1,367 ) (1,939 )
Total stockholders’ equity (deficit) (16,650 ) 4,499
The accompanying notes form part of the consolidated financial statements