Health Check: Which stock just dumped 19% on earnings downgrade?

Dual-listed regenerative medicine company Avita Medical has seen its share price slide ~19% today on a downgrade of its earnings guidance.

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• Wound care company Avita Medical slumps ~19% on downgrade of its earnings guidance

• Infection-control medtech Next Science hit with legal action by a former employee

• Biotech Orthocell achieves third consecutive quarter of record revenue

Dual-listed (ASX and Nasdaq) regenerative medicine company Avita Medical (ASX:AVH) has seen its share price slide ~19% today on a downgrade of its earnings guidance. The fall was flagged before ASX trade after its US shares fell after hours.

Commercial-stage Avita – known for its Recell burns products –  said it now expected Q4 CY24 commercial revenue to be ~US$18.4 million, reflecting growth of around 30% over the same period in 2023.

The company previously provided fourth-quarter guidance in the range of US$22.3m-$24.3m.

Based on these quarterly results, Avita said it now expected full year 2024 commercial revenue to be
~US$64.3m, reflecting growth of about 29% over the full year in 2023.

Previously full year 2024 revenue guidance was in the range of US$68-$70m.

"The revision in fourth-quarter guidance is attributable to a combination of factors, with slower-than-expected purchasing activity being the primary driver," Avita said in an announcement.

"Several of the company’s hospital accounts adjusted their inventory levels at the end of their fiscal year, resulting in reduced purchasing during December."

Avita said while this was common at year-end, "the extent was more pronounced" than anticipated, contributing to less revenue in the quarter and it expected normal purchasing activity for the accounts to resume in Q1 CY25, with deferred purchases from the fourth quarter rolling over.

Next Science faces legal action by former employee

Infection-control-focused medtech Next Science (ASX:NXS) has kicked off the new year dealing with legal issues from a former employee.

Next Science has announced Michael Morello has filed a derivative complaint in the Duval County – Fourth Judicial Circuit Court in Florida, purportedly as a shareholder on behalf of the company and its subsidiary, Next Science LLC, alleging breaches of fiduciary duties and mismanagement against several employees.

The company said Morello was VP, Wound Care Sales at Next Science LLC until December 2023. In May
2024, Next Science LLC started legal against Mr Morello and several former employees for breach of post-employment restraints (non-compete action).

Next Science is headquartered in Sydney with a research and development centre in Florida, USA. The company’s primary focus is on its proprietary XBIO technology to reduce the impact of biofilm-based infections in human health.

"Mr Morello’s complaint makes several claims including that Next Science’s XBIOTM technology has not been approved by the FDA as a biofilm eradication process and that the company did not take adequate measures to address safety concerns about the use of its surgical solution XPERIENCE in breast implant procedures," the company said in an announcement.

Next Science said it confirms that the products it sells are safe, effective, approved by the US Food and Drug Administration (FDA) and promoted within their FDA approved intended use.

"The Board is concerned that the Complaint has not been brought in good faith due to the fact that Mr Morello has sought to tie the derivative complaint to the Non-Compete Action," the announcement said.

"However, the company is following recommended practice in undertaking an independent investigation into the matters alleged.

"Next Science has, in consultation with its insurers, engaged US attorneys in relation to both proceedings and the Company and Next Science LLC will continue to pursue the NonCompete Action against Mr Morello and several former employees for the breach of postemployment restraints."

Orthocell reports third consecutive quarter of record revenue

Perth-based regenerative medicine company Orthocell (ASX:OCC) has reported its third consecutive quarter of record revenue, attributing the increase to growth in sales of its Striate+ and Remplir products.

Orthocell reported revenue of $2.21 million in Q2 FY25, up 9% on the previous record of $2.03m in Q1 FY25 and 46% on pcp. The company said the result was significant given Q2 was traditionally seasonally lower.

Striate+ is Orthocell’s trademarked collagen membrane designed to support dental guided bone and tissue regeneration procedures and is currently sold in the US, Canada, Europe, UK, Australia and New Zealand.

Remplir is Orthocell’s trademarked collagen wrap used for peripheral nerve repair and is currently sold in Australia, New Zealand and Singapore

The company is expecting regulatory approval for Remplir in the US by March/April 2025, opening a US$1.6 billion nerve repair opportunity in the world’s biggest healthcare market.

Orthocell said multiple new international markets were nearing regulatory approvals as the company pushed ahead with its global commercialisation plans.

Island starts phase 2b trial of lead drug in dengue fever

Australian antiviral drug development company Island Pharmaceuticals (ASX:ILA) has commenced the phase 2b clinical trial of lead drug ISLA-101 in dengue fever with the first subjects successfully enrolled.

Progression to the phase 2b cohort follows recommendation of the Safety Review Committee (SRC) after it reviewed positive data from the Island Pharmaceuticals phase 2a trial, which demonstrated safety and anti-dengue activity.

Island said that the phase 2b therapeutic (treatment) arm of the trial would include 10 subjects with an 8:2 randomisation ratio of active treatment to placebo.

The first four subjects have already been enrolled, with the second group of six expected to enrol within the next two weeks.

Dengue fever is the most prevalent mosquito-borne viral disease and according to the World Health Organization the incidence has grown dramatically around the world in recent decades, with no specific treatment.

At Stockhead we tell it like it is. While Orthocell and Island Pharmaceuticals are Stockhead advertisers at the time of writing, the companies did not sponsor this article.

Originally published as Health Check: Which stock just dumped 19% on earnings downgrade?