Avita Medical, Inc.

Good day and thank you for standing by. Welcome to the Aveda Medical Second Quarter 2025 earnings conference call. At this time, all participants are in the listen only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 101 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 101 again. Please be advised that today's call is being recorded. Oh, and I'll hand it over to your first speaker today, Ben Atkins, Vice President Investor Relations. Please go ahead.

Thank you, operator. Welcome to Aveda Medical's Second Quarter 2025 earnings call. Before we begin, I would like to introduce myself. My name is Ben Atkins and I started at Aveda in July, leaving investor relations and corporate communications. With many years of working in life sciences, I am thrilled to be part of Aveda and this team. And I look forward to working with our investor community. Joining me on today's call are Jim Corbett, Chief Executive Officer, and David O'Toole, Chief Financial Officer. Today's earnings release and presentation are available on our website, .avetamedical.com, under the investor relations section. Before we begin, I would like to remind you that this call includes forward-looking statements within the meaning of the Private Security and Litigation Reform Act of 1995. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results to differ materially from any expectations expressed or implied by the forward-looking statements. Please review our most recent filings with the SEC for comprehensive descriptions of the risk factors. Any forward-looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Jim

for his comments. Good afternoon to everyone joining us in the US and good morning to our colleagues and investors in Australia. We have a lot to cover today. I want to begin by grounding us in what defined this quarter, starting with the five key developments shown on slide four. First, commercial revenue for the second quarter was $18.4 million, up 21% -over-year. However, sequential revenue was flat and impacted by a temporary headwind that's become clearer to us since March. During the quarter, we gained a deeper understanding of a meaningful delay in how the Centers for Medicare and Medicaid Services and the Medicare Administrative Contractors implemented the conversion to the new CPT-1 codes for the use of resale, which went into effect in January. This delay, in turn, affected provider reimbursement. And ultimately, demand. To be clear, this is not a product issue, it's a claims processing issue, specifically around how the procedure that utilizes resale is valued and how payment is determined. I'll explain this in more detail shortly. Third, as a result of this reimbursement disruption and its impact on revenue, we've lowered our 2025 financial forecast. That said, we remain confident in a second half rebound as resolution of these payment issues is already underway. More on that in a moment. Fourth, we work with Orboman to secure a waiver for our Q2 trailing 12-month revenue covenant and to revise the covenants for the next four quarters, giving us flexibility as we execute against this updated growth outlook. Finally, we shared what we believe is the most consequential clinical evidence in Aveda's history. A real-world analysis of the US National Burn Registry presented in June at the British Burn Association annual meeting, including over 6,300 patients, showed that resale reduced length of stay by 36% for patients with deep second-degree burns covering less than 30% total body surface area. It confirms what clinicians have told us. Resale doesn't just heal, it accelerates recovery and in doing so reshapes the economics of care. Since the data was presented, we've already seen interest and traction. So let's dig into the headwind I mentioned regarding claims. Turning to slide five, in November last year, the Centers for Medicare and Medicaid Services, or CMS, announced new category one CPT codes for the use of resale in its rules update for 2025. Notably, CMS did not set the payment rate directly as it usually does. Instead, it assigned this task to Medicare administrative contractors, or MACs, through a process called contractor pricing. This happens occasionally when CMS wants to make long-term changes to a code. This work to change a code is underway and will take until January, 2027.