AVITA Medical, Inc.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
RCEL$16.59+5.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001193125-26-338101
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001193125-26-449873
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 71 current paragraphs.
34 unchanged; 27 reworded; 10 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
In August 2026, we announced results from PermeaDerm I, a post-market, multicenter, randomized controlled study of 40 patients across 11 U.S. burn centers comparing PermeaDerm with allograft for temporary wound coverage. The study met its primary endpoint, demonstrating a 70% lower mean product cost per 1% total body surface area treated with PermeaDerm (p<0.001), and showed a 95.7% reduction in preparation time, comparable graft take and wound healing, and no adverse events attributed to PermeaDerm.
Current report
On November 3, 2026, we borrowed an additional $10.0 million under our credit facility with Perceptive. In connection therewith, 150,000 shares of common stock vested under the warrant that we issued to Perceptive on June 5, 2026. The warrant has a per share exercise price of $3.4019.
Current report
Total revenues increased by 53%, or $9.0 million, to approximately $26.1 million, compared to $17.1 million in the same period in the prior year. The growth in revenues was primarily driven by a 50% increase, or $7.7 million, in sales of RECELL. The increase in RECELL sales was due to continued normalization in RECELL utilization following the publication by all of the MACs of reimbursement rates related to healthcare providers use of RECELL and also higher sales of RECELL GO mini in trauma and smaller wounds. RECELL sales also benefited from the commercial team focusing on expanding the number of surgeons using RECELL and also expanding use by surgeons on different sizes of wounds. Cohealyx sales increased 154%, or $1.3 million, primarily driven by more Value Analysis Committees (“VAC”) approvals allowing broader adoption of the product in more facilities. Cohealyx and PermeaDerm represented 8% and 2%, respectively, of total commercial sales.
Current report
Sales and marketing expenses increased by 13%, or $1.5 million, to $13.6 million, compared to $12.1 million in the corresponding period in the prior year. Higher costs in the current year are due to increases in selling expenses of $1.5 million, primarily commission expense, and salaries and benefits of $1.0 million, primarily annual incentive compensation costs, offset by lower professional fees and consulting fees of $0.5 million, stock-based compensation of $0.3 million, and other selling expenses of $0.2 million.
Current report
Research and development expenses increased by 25%, or $1.0 million, to $4.7 million, compared to $3.7 million in the same period in the prior year. Higher costs in the current year are due to an increase in salaries and benefits of $1.4 million, offset by decreases in professional fees of $0.2 million and other development expenses of $0.2 million. The increase in salaries and benefits is due to higher annual incentive compensation costs in the current year as well as the capitalization of project costs in the prior year. The decrease in professional fees is due to lower clinical trial costs associated with PermeaDerm and Cohealyx post-market studies.
Current report
Total revenues increased by 24%, or $13.1 million, to approximately $67.1 million, compared to $54.0 million in the same period in the prior year. The growth in revenues was driven by a 19% increase, or $9.4 million, in sales of RECELL and a 350% increase, or $4.2 million, in sales of Cohealyx. The increase in RECELL sales is due to continued normalization in RECELL utilization following the publication by all of the MACs of reimbursement rates related to healthcare providers use of RECELL and also higher sales of RECELL GO mini in trauma and smaller wounds. RECELL sales also benefited from the commercial team focusing on expanding the number of surgeons using RECELL and also expanding use by surgeons on different sizes of wounds. The increase in Cohealyx sales was primarily driven by more VAC approvals allowing broader adoption of the product in more facilities.
Current report
As of September 30, 2026, we had approximately $10.5 million in cash and cash equivalents. We believe that our existing cash and cash equivalents, together with the Additional Commitment Amount (as described below) and expected revenues, will be sufficient to meet our capital requirements and fund our operations for at least twelve months from the date of issuance of these Consolidated Financial Statements. However, we may be required or decide to raise additional debt or equity financing to support further growth of our operations.
Current report
Subsequent to September 30, 2026, on November 3, 2026, the Company closed on the Additional Commitment Amount. As a result of the Company incurring the Additional Commitment Amount, 150,000 shares of common stock vested under the warrant that the Company issued to Perceptive on June 5, 2026, as described further below.
Current report
We may require additional funds in the future to support continued growth of our operations or for other purposes, and may seek to raise such additional funds through our shelf registration statement on Form S-3 (File No. 333-294790) on file with the Securities and Exchange Commission (“SEC”). However, there can be no assurance that additional financing will be available, either on favorable terms or at all.
Removed paragraphs (10)
Previous report
*nm = not meaningful
Previous report
Total revenues increased by 18%, or $3.3 million, to approximately $21.7 million, compared to $18.4 million in the same period in the prior year. The growth in revenues was largely driven by increased contributions from Cohealyx, RECELL GO mini in trauma and smaller wounds, and continued normalization in RECELL utilization following the resolution of MAC-related reimbursement headwinds.
Previous report
Research and development expenses of $5.1 million were consistent compared to the same period in the prior year.
Previous report
*nm = not meaningful
Previous report
Total revenues increased by 11%, or $4.0 million, to approximately $41.0 million, compared to $36.9 million in the same period in the prior year. The growth in revenues was largely driven by increased contributions from Cohealyx, RECELL GO mini in trauma and smaller wounds, and continued normalization in RECELL utilization following the resolution of MAC-related reimbursement headwinds.
Previous report
Sales and marketing expenses decreased by 9%, or $2.7 million, to $26.4 million, compared to $29.1 million in the corresponding period in the prior year. Lower costs in the current year are due to decreases in selling expenses of $1.5 million, salaries and benefits of approximately $0.8 million, and professional fees of $0.8 million, offset by higher other selling expenses of $0.4 million. The decrease in salaries and benefits is due to the reduction of our sales force as part of cost savings initiatives which began in the second quarter of the prior year. The decrease in selling expenses is due to lower commissions and reduced marketing spend. The decrease in professional fees is due to lower consulting costs. The increase in other selling expenses is due to higher travel spend.
Previous report
During the term of the 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 Loan Facility will bear interest at a rate of 4% in excess of the otherwise applicable rate of interest.
Previous report
Under the terms of the 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 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.
Previous report
The 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.
Previous report
The Credit Agreement contains a number of customary representations, warranties, and covenants that, among other things, will limit or restrict our ability 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 Credit Agreement includes a financial maintenance test that requires us 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, with the first such test occurring as of the fiscal quarter ended March 31, 2026. In addition, the Credit Agreement requires us to maintain, in the aggregate, at least $5 million of unrestricted cash at all times. Pursuant to the Security Agreement, all obligations under the Credit Agreement are guaranteed and secured by substantially all of our assets.
Reworded paragraphs (27)
Previous wording
The following discussion and analysis of AVITA Medical, Inc.’s (“we”, “our”, or “us”) financial condition and results of operations should be read in conjunction with our unaudited Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q as well as the “Note Regarding Forward-Looking Statements” on page 3.
Current wording
The following discussion and analysis of the financial condition and results of operations of AVITA Medical, Inc.’s (“we”, “our”, or “us”) should be read in conjunction with our unaudited Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q as well as the “Note Regarding Forward-Looking Statements” on page 3.
Previous wording
Driving commercial revenue growth, improving operating leverage, generating positive cash flow, and achieving long-term operating profitability; and
Current wording
Driving commercial revenue growth, improving operating leverage, generating positive cash flow, and achieving long-term operating profitability;
Previous wording
Complete analysis of the results of the clinical studies for Cohealyx and PermeaDerm and prepare for submission of the data for publication;
Current wording
Complete analyses of the results of the clinical studies for Cohealyx and PermeaDerm and prepare for submission of the data for publication;
Previous wording
Expanding RECELL internationally through distributor-led commercialization upon receipt of regulatory approvals;
Current wording
Expanding RECELL internationally through distributor-led commercialization upon receipt of regulatory approvals; and
Previous wording
On January 13, 2026, we entered into a five-year credit facility with Perceptive Advisors LLC providing up to $60 million in available capital. At closing, we drew $50 million and used a portion of the proceeds to repay our existing debt, resulting in net proceeds of approximately $6.0 million after repayment of our prior debt and certain related transaction fees. This credit facility includes an option to access an additional $10.0 million through the first quarter of 2027, subject to the achievement of a certain revenue milestone. This facility also establishes trailing twelve-month revenue covenants aligned with our current operating trajectory, including $68.5 million for the quarter ended March 31, 2026, $69.0 million for the quarter ended June 30, 2026, and $73.0 million for the year ending December 31, 2026. As of June 30, 2026, we were in compliance with these covenants. For additional information, see Liquidity and Capital Resources below.
Current wording
On January 13, 2026, we entered into a five-year credit facility with Perceptive Credit Holdings V, LP (“Perceptive”), an affiliate of Perceptive Credit Advisors, LLC, providing up to $60 million in available capital. At closing, we drew $50 million and used a portion of the proceeds to repay our existing debt, resulting in net proceeds of approximately $6.0 million after repayment of our prior debt and certain related transaction fees. This credit facility includes an option to access an additional $10.0 million through the first quarter of 2027, subject to the achievement of a certain revenue milestone (see Note 16, Subsequent Events of the Consolidated Financial Information, for additional information). This facility also establishes trailing twelve-month revenue covenants aligned with our current operating trajectory, including $68.5 million for the quarter ended March 31, 2026, $69.0 million for the quarter ended June 30, 2026, $70.8 million for the quarter ended September 30, 2026, and $73.0 million for the year ending December 31, 2026. As of September 30, 2026, we were in compliance with these covenants. For additional information, see Liquidity and Capital Resources below.
Previous wording
On April 6, 2026, we entered into a ten-year agreement with the Biomedical Advanced Research and Development Authority (“BARDA”), part of the U.S. Department of Health and Human Services, with a total potential value of up to $25.5 million. Under the agreement, we will maintain a supply of RECELL for deployment in burn mass casualty incidents and provide associated readiness and support services. The agreement provides approximately $4.0 million in access and maintenance fees over the ten-year term, with additional potential revenue tied to procurement options exercised by BARDA. Costs to fulfill the BARDA emergency preparedness performance obligation, which consist of billed costs to BARDA incurred in connection with emergency deployment services, are incremental and expected to be recovered.
Current wording
On April 6, 2026, we entered into a ten-year agreement with the Biomedical Advanced Research and Development Authority (“BARDA”), part of the U.S. Department of Health and Human Services, with a total potential value of up to $25.5 million. Under the agreement, we will maintain a supply of RECELL for deployment in mass casualty incidents and provide associated readiness and support services. The agreement provides approximately $4.0 million in access and maintenance fees over the ten-year term, with additional potential revenue tied to procurement options exercised by BARDA. Costs to fulfill the BARDA emergency preparedness performance obligation, which consist of billed costs to BARDA incurred in connection with emergency deployment services, are incremental and expected to be recovered.
Previous wording
Gross profit margin was 81.9% compared to 81.2% in the corresponding period in the prior year. Note that the gross margin for RECELL products only was 86.0% for the quarter, which we believe will remain in this range for future quarters. The increase in the overall gross margin percentage from the prior year was primarily caused by lower volume discounts offset by product mix. The Company shares 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 impact the overall gross margin percentage while increasing the gross profit and, given that expenses associated with this revenue do not increase significantly, the operating profit on a quarterly basis.
Current wording
Gross profit margin was 84.0% compared to 81.3% in the corresponding period in the prior year. Note that the gross margin for RECELL products on a standalone basis was 88.4% for the quarter. We believe gross margin for RECELL products on a standalone basis will be in the range of 85% to 90% for future quarters. The increase in the overall gross margin percentage from the prior year was primarily caused by lower volume discounts, lower inventory reserves, improved manufacturing efficiency, and an increase in average sales price. We share the average sales price for Cohealyx at 50% and for PermeaDerm up to approximately 55%, depending on the products sold. Although these arrangements are beneficial, they inevitably result in an overall decrease in gross margin percentage. Therefore, the product mix is expected to continue to impact the overall gross margin percentage while increasing the gross profit and, given that expenses associated with this revenue do not increase significantly, the operating profit on a quarterly basis.
Previous wording
Total operating expenses decreased by 6% or $1.5 million to $24.6 million, compared with $26.1 million in the corresponding period in the prior year.
Current wording
Total operating expenses increased by 7% or $1.6 million to $24.6 million, compared with $23.0 million in the corresponding period in the prior year.
Previous wording
General and administrative expenses decreased by 8%, or $1.0 million, to $12.0 million, compared to $13.1 million in the same period in the prior year. Lower costs in the current year are due to a decrease in stock-based compensation of $1.9 million, offset by an increase in deferred compensation expense of $0.9 million. The decrease in stock-based compensation is due to higher forfeitures, decreased headcount, and reduced grant activity. The increase in deferred compensation expense is driven by a higher stock price used to calculate the deferred compensation liability.
Current wording
General and administrative expenses decreased by 13%, or $0.9 million, to $6.3 million, compared to $7.2 million in the same period in the prior year. Lower costs in the current year are due to decreases in professional fees of $0.8 million, stock-based compensation of $0.7 million, and other corporate expenses of $0.2 million, offset by an increase in salaries and benefits of $0.8 million. The decrease in professional fees is related to lower legal expenses. The decrease in stock-based compensation is due to reduced grant activity. The increase in salaries and benefits is due to higher annual incentive compensation costs.
Previous wording
Other income, net decreased by $1.8 million to $0.7 million from $2.5 million in the prior period. In the current period, other income, net consists of $0.5 million in income related to our investments and a non-cash gain of $0.2 million related to the change in fair value of the loan facility. The prior period income consisted of non-cash gains of $1.2 million related to the change in fair value of warrants, $0.9 million related to the change in fair value of loan facility, and $0.4 million in income related to our investments.
Current wording
Other expense, net decreased by $0.8 million to $2.0 million from $2.8 million in the prior period. In the current period, other expense, net consists of a non-cash charge of $2.1 million related to the change in fair value of warrants. The prior period income consisted of non-cash charges of $2.2 million related to the amendment of our loan facility and $0.9 million related to the change in fair value of loan facility, offset by $0.3 million in income related to our investments.
Previous wording
Results of Operations for the six-months ended June 30, 2026 compared to the six-months ended June 30, 2025.
Current wording
Results of Operations for the nine-months ended September 30, 2026 compared to the nine-months ended September 30, 2025.
Previous wording
Gross profit margin was 81.8% compared to 82.9% in the corresponding period in the prior year. Note that the gross margin for RECELL products only was 85.5% for the six-months ended June 30, 2026, which we believe will remain in this range for future quarters. The decrease in the overall gross margin percentage from the prior year was primarily caused by product mix. The Company shares 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 impact the overall gross margin percentage while increasing the gross profit and, given that expenses associated with this revenue do not increase significantly, the operating profit on a quarterly basis.
Current wording
Gross profit margin was 82.7% compared to 82.4% in the corresponding period in the prior year. Note that the gross margin for RECELL products on a standalone basis was 86.6% for the nine-months ended September 30, 2026. We believe gross margin for RECELL products on a standalone basis will be in the range of 85% to 90% for future quarters. The increase in the overall gross margin percentage from the prior year was primarily caused by product mix. We share the average sales price for Cohealyx at 50% and for PermeaDerm up to approximately 55%, depending on the products sold. Although these arrangements are beneficial, they inevitably result in an overall decrease in gross margin percentage. Therefore, the product mix is expected to continue to impact the overall gross margin percentage while increasing the gross profit and, given that expenses associated with this revenue do not increase significantly, the operating profit on a quarterly basis.
Previous wording
Total operating expenses decreased by 8% or $4.5 million to $49.2 million, compared with $53.6 million in the corresponding period in the prior year.
Current wording
Total operating expenses decreased by 4% or $2.9 million to $73.7 million, compared with $76.6 million in the corresponding period in the prior year.
Previous wording
Sales and marketing expenses decreased by 5%, or $0.7 million, to $13.6 million, compared to $14.3 million in the corresponding period in the prior year. Lower costs in the current year are due to decreases in selling expenses of $0.9 million, offset by higher other selling expenses of $0.2 million. The decrease in selling expenses is due to lower commissions and marketing spend.
Current wording
Sales and marketing expenses decreased by 3%, or $1.2 million, to $40.0 million, compared to $41.2 million in the corresponding period in the prior year. Lower costs in the current year are due to a decrease in professional fees of $1.3 million, offset by higher other selling expenses of $0.1 million. The decrease in professional fees is due to lower consulting costs.
Previous wording
General and administrative expenses decreased by 10%, or $0.7 million, to $6.0 million, compared to $6.7 million in the same period in the prior year. Lower costs in the current year are due to decreases in stock-based compensation of $0.5 million and professional fees of $0.4 million, offset by an increase in salaries and benefits of $0.2 million. The decrease in stock-based compensation is due to reduced grant activity.
Current wording
General and administrative expenses decreased by 10%, or $2.0 million, to $18.3 million, compared to $20.3 million in the same period in the prior year. Lower costs in the current year are due to decreases in stock-based compensation of $2.4 million and professional fees of $0.5 million, offset by an increase in salaries and benefits of $1.0 million. The decrease in stock-based compensation is due to higher forfeitures, decreased headcount, and reduced grant activity. The decrease in professional fees is related to lower legal expenses. The increase in salaries and benefits is due to higher annual incentive compensation costs.
Previous wording
Research and development expenses decreased by 6%, or $0.7 million, to $10.7 million, compared to $11.4 million in the same period in the prior year. Lower costs in the current year are due to decreases in research and development expenses of $0.5 million and professional fees of $0.2 million. The decrease in research and development expenses is due to lower product testing costs. The decrease in professional fees is due to lower clinical trial costs associated with PermeaDerm and Cohealyx post-market studies.
Current wording
Research and development expenses increased by 2%, or $0.3 million, to $15.4 million, compared to $15.1 million in the same period in the prior year. Higher costs in the current year are due to an increase to salaries and benefits of $1.3 million, offset by decreases in research and development expenses of $0.5 million and professional fees of $0.5 million. The increase in salaries and benefits is due to higher annual incentive compensation costs in the current year as well as the capitalization of project costs in the prior year. The decrease in research and development expenses is due to lower product testing costs. The decrease in professional fees is due to lower clinical trial costs associated with PermeaDerm and Cohealyx post-market studies.
Previous wording
Other income, net decreased by $1.4 million to $0.3 million from $1.7 million in the prior period. In the current period, other income, net consists of a non-cash gain of $0.5 million related to the change in fair value of the loan facility and $0.5 million in income related to our investments, offset by a non-cash charge of $0.6 million related to the change in fair value of warrants and $0.1 million in other income, net. The prior period expense consisted of non-cash gains of $1.5 million related to the change in fair value of warrants and $0.2 million related to the change in fair value of loan facility, plus $0.8 million in income related to our investments offset by $0.8 million in debt issuance costs.
Current wording
Other expense, net increased by $0.7 million to $1.8 million from $1.1 million in the prior period. In the current period, other expense, net consists of a non-cash charge of $2.7 million related to the change in fair value of warrants, offset by a non-cash gain of $0.5 million related to the change in fair value of the loan facility, $0.3 million in income related to our investments, and $0.1 million in other gains, net. The prior period expense consisted of $3.0 million in debt issuance costs and $0.8 million related to the change in fair value of loan facility, offset by a non-cash gain of $1.6 million related to the change in fair value of warrants, $0.7 million in income related to our investments, and $0.4 million in other gains, net.
Previous wording
Our Consolidated Financial Statements have been prepared on the basis that we will continue as a going concern for the next 12 months. We had approximately $9.1 million in cash and cash equivalents and $2.0 million in marketable securities as of June 30, 2026. We have funded our research and development activities, and more recently our substantial investment in sales and marketing activities, through the sales 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 activities and development programs and other operations, which could adversely impact our business, financial condition, and operating results.
Current wording
Our Consolidated Financial Statements have been prepared on the basis that we will continue as a going concern for the next 12 months. We have funded our operations through the sales 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 activities and development programs and other operations, which could adversely impact our business, financial condition, and operating results.
Previous wording
On January 13, 2026 (the “Closing Date”), we entered into a Credit Agreement and Guaranty (the “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 Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $60 million (the “Loan Facility”), of which (i) $50 million was funded on the Closing Date (the “Initial Commitment Amount”), and (ii) $10 million will be made available, at our discretion by notice to the Administrative Agent on or before March 31, 2027, subject to satisfaction of a certain net revenue requirement (the “Additional Commitment Amount”). On the Closing Date, we closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender. Simultaneously with the closing of the Initial Commitment Amount, we repaid in full and terminated all of our obligations and commitments under our previous credit agreement (the “Refinancing Transaction”).
Current wording
On January 13, 2026 (the “Closing Date”), we entered into a five-year senior secured credit facility in an aggregate principal amount of up to $60 million, of which (i) $50 million was funded on the Closing Date (the “Initial Commitment Amount”), and (ii) $10 million to be made available, at our discretion on or before March 31, 2027, subject to satisfaction of a certain net revenue requirement (the “Additional Commitment Amount”). On the Closing Date, we closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the lender. Simultaneously with the closing of the Initial Commitment Amount, we repaid in full and terminated all of our obligations and commitments under our previous credit agreement (the “Refinancing Transaction”).
Previous wording
On the Closing Date, we agreed to issue to the Lender, subject to shareholder approval, warrants to purchase up to 650,000 shares of Common Stock, par value $0.0001 per share, at an exercise price set at the lower of two 10-day VWAPs: (i) the 10-day VWAP ending on the business day immediately prior to the Closing Date, which VWAP is $3.4019; or (ii) the 10-day VWAP ending on the business day immediately prior to the issuance date of the warrants. On June 3, 2026, our shareholders approved the issuance of such warrants. On June 8, 2026, we issued a warrant covering up to 650,000 shares of Common Stock at an exercise price of $3.4019 per share, of which 500,000 shares are immediately exercisable, with an additional 150,000 shares that will vest and become exercisable if we close on the Additional Commitment Amount.
Current wording
On the Closing Date, we agreed to issue to the lender, subject to shareholder approval, a warrant to purchase up to 650,000 shares of Common Stock, par value $0.0001 per share, at an exercise price set at the lower of two 10-day VWAPs: (i) the 10-day VWAP ending on the business day immediately prior to the Closing Date, which VWAP is $3.4019; or (ii) the 10-day VWAP ending on the business day immediately prior to the issuance date of the warrant. On June 3, 2026, our shareholders approved the issuance of such warrants. On June 5, 2026, we issued a warrant covering up to 650,000 shares of Common Stock at an exercise price of $3.4019 per share, of which 500,000 shares were immediately exercisable, and an additional 150,000 shares vested and became exercisable following the closing on the Additional Commitment Amount. Subsequent to September 30, 2026, on October 26, 2026, the lender exercised via cashless exercise their warrant, which was exercisable for up to 500,000 shares of our common stock, whereby we withheld 112,284 shares in respect of the exercise price and issued the remaining 387,716 shares on October 28, 2026.
Previous wording
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.
Current wording
We have incurred operating losses and negative cash flows from operations since our inception. These factors had previously given rise to substantial doubt about our ability to continue as a going concern. Based on our liquidity position and current forecast of operating results and cash flows, management has now concluded that substantial doubt about our ability to continue as a going concern no longer exists, and that we have sufficient liquidity to meet our obligations as they become due within the next twelve months following the date of issuance of these Consolidated Financial Statements.
Previous wording
Net cash used in operating activities was $13.6 million and $20.5 million during the six-months ended June 30, 2026 and 2025, respectively. The decrease in net cash used in operations was primarily due to increased gross profit, decreased operating expenses, and the timing of working capital outlays.
Current wording
Net cash used in operating activities was $14.3 million and $25.8 million during the nine-months ended September 30, 2026 and 2025, respectively. The decrease in net cash used in operations was primarily due to increased gross profit, decreased operating expenses, and the timing of working capital outlays.
Previous wording
Net cash provided by investing activities was $5.9 million and $17.8 million during the six-months ended June 30, 2026 and 2025, respectively. The decrease in cash provided by investing activities is primarily attributable to lower cash inflows from maturities of marketable securities in the current year.
Current wording
Net cash provided by investing activities was $7.8 million and $12.4 million during the nine-months ended September 30, 2026 and 2025, respectively. The decrease in cash provided by investing activities is primarily attributable to lower cash inflows from maturities of marketable securities offset by lower capital expenditures in the current year.
Previous wording
Net cash provided by financing activities was $6.5 million and $0.9 million during the six-months ended June 30, 2026 and 2025, respectively. The increase in cash provided by financing activities is primarily due to the Loan Facility entered into on January 13, 2026.
Current wording
Net cash provided by financing activities was $6.7 million and $14.7 million during the nine-months ended September 30, 2026 and 2025, respectively. The decrease in cash provided by financing activities is primarily due to net proceeds from the private placement in 2025 offset by the net proceeds from the Loan Facility entered into on January 13, 2026.
Previous wording
Subsequent to June 30, 2026, on August 5, 2026, we entered into a Global Amendment of the Distribution and Manufacturing Agreements with Stedical (the “Global Amendment”). Under the terms of the Global Amendment, in exchange for a $500,000 fee we will hold the right of first offer and refusal to expand our exclusive distribution territory to include all or a portion of the European Union, the United Kingdom, and/or Australia. In addition, our share of revenue from PermeaDerm sales will increase to 67% for products sold in sheet form, subject to increased revenue sharing in the event our gross margin on those products exceeds 50%, and to 80% for products sold in glove form, subject to increased revenue sharing in the event our gross margin on those products exceeds 35%. For 2026, we are required to reach total PermeaDerm revenue sharing payments of $1.0 million, with 20% growth minimums each year through 2030. All previous minimum revenue sharing payment requirements under the Distribution Agreement were waived.
Current wording
On August 5, 2026, we entered into a Global Amendment of the Distribution and Manufacturing Agreements with Stedical (the “Global Amendment”). Under the terms of the Global Amendment, in exchange for a $500,000 fee we hold the right of first offer and refusal to expand our exclusive distribution territory to include all or a portion of the European Union, the United Kingdom, and/or Australia. In addition, our share of revenue from PermeaDerm sales increases to 67% for products sold in sheet form, subject to increased revenue sharing in the event our gross margin on those products exceeds 50%, and to 80% for products sold in glove form, subject to increased revenue sharing in the event our gross margin on those products exceeds 35%. For 2026, we are required to reach total PermeaDerm revenue sharing payments of $1.0 million, with 20% growth minimums each year through 2030. All previous minimum revenue sharing payment requirements under the Distribution Agreement were waived.
Previous wording
Also under the Global Amendment, Stedical may pursue the commercialization of PermeaDerm in certain U.S. markets not currently served by us. We will sell PermeaDerm for such sales to Stedical at a ten percent premium to our actual manufacturing costs. For PermeaDerm manufactured for Stedical to sell outside of the U.S., primarily in Asia, we will sell such PermeaDerm to Stedical at $200 per carton plus a 10% manufacturing fee, subject to a reasonable volume cap.
Current wording
Also under the Global Amendment, Stedical may pursue the commercialization of PermeaDerm in certain U.S. markets not currently served by us. We will sell PermeaDerm for such sales to Stedical at a ten percent premium to our actual manufacturing costs. For PermeaDerm manufactured for Stedical to sell outside of the U.S., primarily in Asia, we will sell such PermeaDerm to Stedical at a fixed price per carton plus a 10% manufacturing fee, subject to a reasonable volume cap.
Previous wording
For the six-months ended June 30, 2026, there were no dividends paid and we have no plans to commence the payment of dividends.
Current wording
For the nine-months ended September 30, 2026, there were no dividends paid and we have no plans to commence the payment of dividends.