0001193125-26-224107
SEC filingRevenue grew modestly with improved operating leverage, but gross margin compression and persistent cash burn underscore the need for scale.
Revenue increased 4% to $19.3 million, with management attributing growth to Cohealyx, RECELL GO mini in trauma and smaller wounds, and normalization of RECELL utilization following resolution of MAC-related reimbursement headwinds. The MAC rate uncertainty that had slowed clinician use in 2025 has largely dissipated, with all seven regional MACs publishing rates by March 2026. This recovery in burn center utilization, combined with new product contributions, drove the topline improvement. However, the growth rate remains modest, reflecting the early stage of Cohealyx and RECELL GO mini adoption and the concentrated nature of the company's 200-target-center strategy.
Gross margin decreased to 81.7% from the prior year, primarily due to inventory adjustments and product mix. The shift toward lower-margin products such as Cohealyx and PermeaDerm, along with certain inventory adjustments, weighed on margin. Management expects product mix to continue impacting gross margin percentage while increasing gross profit, as expenses associated with this revenue do not increase significantly, potentially improving operating profit on a quarterly basis.
Operating loss improved 26% to -$8.8 million, driven by lower operating expenses. The decrease in net cash used in operations was primarily due to decreased operating expenses offset by the timing of working capital outlays. This reflects ongoing cost discipline, including sales force optimization and lower R&D headcount, without sacrificing revenue growth.
Net cash used in operations was -$10.1 million, nearly flat year-over-year. Capital expenditures were minimal at $19,000, resulting in free cash flow of -$10.1 million. The increase in cash provided by financing activities is primarily due to the Loan Facility entered into on January 13, 2026. While the facility provides additional liquidity, the company continues to burn cash, highlighting the need for scale to achieve self-sufficiency.
Going concern doubt persists due to recurring losses and debt repayment obligations. Management expects product mix to continue impacting gross margin percentage while increasing gross profit, and with expenses not increasing significantly, operating profit on a quarterly basis could improve. The company has no committed plans to issue further shares but will continue to assess market conditions.