AVITA Medical Inc (ASX: AVH) shares are having a tough time on Wednesday.
In morning trade, the ASX All Ords stock is down 17% to $3.62.
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Why is this ASX All Ords stock down 17%?
This commercial-stage regenerative medicine company's shares are being sold off this morning after it revealed a softer-than-expected finish to FY 2024.
According to the release, demand for its wound care management and skin restoration devices was below expectations in the fourth quarter. As a result, it now expects commercial revenue to be approximately US$18.4 million for the three months.
While this represents growth of around 30% over the prior corresponding period, it is short of its fourth-quarter guidance range of US$22.3 million to US$24.3 million.
As a result, its revenue in FY 2024 is also going to be short of guidance. Management expects its full year commercial revenue to be approximately US$64.3 million, reflecting growth of about 29% over FY 2023.
Whereas it previously provided FY 2024 revenue guidance of US$68 million to US$70 million.
What went wrong?
The ASX All Ords stock revealed that its guidance miss reflects a combination of factors.
However, slower-than-expected purchasing activity is the primary driver. It notes that several of the company's hospital accounts adjusted their inventory levels at the end of their fiscal year, resulting in reduced purchasing during December.
And while this type of behaviour is common at year-end, the extent was more pronounced than AVITA Medical had anticipated, contributing to less revenue in the quarter.
The good news is that the ASX All Ords stock is expecting normal purchasing activity for these accounts to resume in the first quarter, with deferred purchases from the fourth quarter rolling over.
Commenting on the full year, AVITA Medical CEO Jim Corbett said:
We grew our revenue in 2024 by approximately 29% over the prior year. We achieved this growth despite lower-than-expected fourth-quarter revenue.
We remain confident in our long-term growth trajectory as we continue to scale our business. Our strategic investments in our people and new products position us to continue to drive significant growth and sustainable success. We are focused on executing our plan, delivering value to our shareholders, and improving patient outcomes.
Looking ahead, the company is guiding to commercial revenue in the range of US$100 million to US$106 million in FY 2025. This reflects growth of approximately 55% to 65% over the projected FY 2024 commercial revenue.
Though, it now expects to achieve cash flow break-even and GAAP profitability in the fourth quarter of 2025, instead of the third quarter of 2025.
