Avita Medical Earnings: International Expansion Plan Announced

We maintain our AUD 5.60 fair value estimate for no-moat Avita Medical. Third-quarter net loss was USD 9 million versus a USD 10 million loss in the second quarter. Key news was Avita enlisting distribution partner, PolyMedics, to lead its expansion into Germany, Austria, and Switzerland, with a plan to launch in these regions from January 2024. In addition, Avita is planning to actively identify new international distributor partnerships for Australia and more European regions over the next six to 12 months. However, no quantitative details were provided, and like its existing relationship with Cosmotec in Japan where Avita shares 40% of revenue, we expect these regions to contribute a fairly immaterial amount relative to its main U.S. market. Japan contributed just 4% of third-quarter sales and launched in third quarter 2022.