Shares of Avita Therapeutics (AVH.AU) plummeted 20.74% in Friday's trading session following the release of its first-quarter earnings report. The sharp decline came as the company's financial results fell short of analyst expectations, despite showing year-over-year improvements.

Avita Medical, the parent company of Avita Therapeutics, reported a narrower loss of $0.53 per diluted share for the quarter ended March 31, compared to a loss of $0.73 per share in the same period last year. However, this figure missed the analyst consensus of a $0.45 per share loss. Revenue for the quarter rose significantly to $18.5 million from $11.1 million a year earlier, representing a 66.7% increase. Yet, this too fell short of the $20.1 million forecast by analysts surveyed by Visible Alpha.

Despite the negative market reaction, Avita Medical maintained an optimistic outlook, reaffirming its full-year 2025 guidance. The company anticipates commercial revenue between $100 million and $106 million, projecting a robust 55% to 65% growth compared to the previous year. However, investors seemed to focus more on the earnings miss than the positive forward guidance, leading to the substantial sell-off in the stock.