AVITA Medical, Inc. (NASDAQ:RCEL) Q4 2022 Earnings Call Transcript

Jim Corbett: Okay. Perfect. So for clarification, the metric I used was contribution margin for the cost of a rep is equivalent approximately to five RECELL kits. And that our current sales reps in burns-only are averaging in excess of 20. So just as baseline, that’s where we are. So first question is, do we expect that five to be the same for our expanded sales organization? The answer is, yes. It’s the same you’ll be — you’re selling virtually the same kit that is sold at the same price. So therefore, we manufacture it for the same. So the 83% gross profit works still in that equation. Do we think that the market opportunity to be greater than 20 per month exists? Actually very much so. We expect that the potential is quite higher than that, because of course, the market cases, the patients that we are treating are approximately 4 times the number that are in burn.

So we think that opportunity is really rich. Now we have to execute, but that’s a big opportunity for us. I think I got all your questions or did I miss one?

Brooks O’Neil: No, you did, Jim. Thanks a lot. And it’s a pretty exciting opportunity and I can’t wait to see it unfold.

Jim Corbett: Thanks Brooks. Me too.

Operator: Our next question comes from the line of Lyanne Harrison of Bank of America. Your line is now open.

Q €“ Lyanne Harrison: Hi, good afternoon, all. Just a follow up on Brooks’ question. I have one more on that. In terms of, the ramp-up rate it takes for a salesperson to get from zero to five kits a month and then from five kits a month to 20 kits a month, what does that profile look like for the purposes of us looking at what the ramp-up might be for soft tissue?

A €“ Jim Corbett: Yes, Lyanne, it’s a really terrific question. We do have data on that. It’s fairly variable. But on the front end of it is less than half a year. And on the longer end, it’s well under a year. So it’s variable, but we know its months. We know it’s not years. So they pass that five pretty consistently in a short number of months, and then they get more work. In fact when we were launching with burns it was actually harder. We were less proven at that time. And the market was narrower in terms of, the indication we were pursuing. So we actually are very optimistic about the equation that you’re describing. I’d like to give you a more precise answer, but I can — suffice to say its months not a year. And I think that’s probably is as tight as I can make that interval at the moment.

Q €“ Lyanne Harrison: That’s very helpful. And then just a follow-up a question on gross margins. So obviously, seeing slightly — gross margin slightly down this quarter, but over time it’s expanded significantly as volume increased. Do you have an expectation on target gross margin or where you might end up at the end of financial 2023?