Avita Medical Inc. (RCEL) Cash Flow Statement

The OCF-to-net-income ratio has swung between 0.40 and 1.12 across the ten-quarter window, settling at 0.46 in 2026Q2, meaning the book loss ran nearly twice the reported cash loss in the latest period. Strip out the cumulative $26.2M of non-cash equity compensation and the operating deficit swells to roughly $120M, closely tracking the $128.8M of reported cumulative net losses, which suggests the apparent cash outperformance is largely an accounting artifact of SBC rather than evidence of superior cash discipline.

Annualized free cash flow deficits tell a genuinely improving story: roughly -$58.2M in calendar 2024, -$31.2M in 2025, and -$13.7M in the first half of 2026, a trajectory consistent with the revenue reacceleration and SG&A reductions noted in the income statement work. However, the improvement is not monotonic — the 2026Q1 miss rivals the worst 2025 quarters, driven largely by a $2.2M working capital drag — so investors should monitor whether Q2's narrow burn holds before underwriting a breakeven path against quarterly operating costs near $24.6M.

For a device manufacturer, capital intensity below 1% of revenue is unusual and may indicate either an outsourced, asset-light production model or deferred reinvestment — the data alone cannot distinguish between them. Maintenance capex appears negligible in recent quarters, with Q2 2026 spending of $0.1M running well below quarterly depreciation of roughly $0.6M; the anomalous $1.7M positive capex figure in 2025Q4 likely reflects a disposal or credit and warrants confirmation in the underlying filings.

Cumulative working capital has consumed roughly $2.2M of cash across the ten quarters, but the quarterly variance — from -$6.2M to +$4.0M — suggests lumpy distributor stocking and collection timing rather than a systematic deterioration or improvement in the cash conversion cycle. On that reading, the $1.2M working capital source in 2026Q2 flatters the headline: underlying cash burn excluding working capital was closer to $4.7M, so the sequential improvement versus Q1 may be partly a timing effect investors should not capitalize.

The roughly $35M divergence between book losses and operating cash outflows is largely explained by the $26.2M of non-cash stock compensation plus depreciation and working capital timing, so the cash statement arguably understates the true economic cost of the losses to existing shareholders through dilution. Critically, capital deployment has been zero across all ten quarters — no dividends, no buybacks, no meaningful acquisitions — meaning every dollar raised has been retained to fund operations, a pattern that appears sustainable only while burn continues to compress toward the low single-digit millions.