AVITA Medical, Inc. Stock Compensation Disclosure

14. Share-Based Payment Plans

Overview of Employee Share-Based Compensation Plans

The Company’s former parent company, AVITA Medical Pty Limited, adopted the Employee Share Plan and the Incentive Option Plan (collectively, the “2016 Plans”). Upon completion of the redomiciliation of the Company from Australia to the United States in June 2020 (“Redomiciliation”), the 2016 Plans were terminated with respect to future grants and accordingly, there are no more shares available to be issued under the 2016 Plans. During November 2020, the Company filed a registration statement on Form S-8 to register a total of 1,750,000 shares of common stock which may be issued pursuant to the terms of the 2020 Plan. During June 2023, the Company filed a registration statement on Form S-8 to register an additional 2,500,000 shares of common stock under the 2020 Plan. The increase in shares available for issuance was a result of the stockholders of AVITA Medical, Inc. approving an amendment to the 2020 Plan on June 6, 2023 at the Company’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”). During August 2024, the Company filed a registration statement on Form S-8 to register 428,858 shares of common stock that are issuable upon the exercise of stock options and the vesting of RSUs granted pursuant to individual stock option award and RSU award agreements approved by the Company’s stockholders at the Company’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). During August 2025, the Company filed a registration statement on Form S-8 to register 605,902 shares of common stock that are issuable upon the exercise of stock options and the vesting of RSUs granted pursuant to individual stock option award and RSU award agreements approved by the Company’s stockholders at the Company’s 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”).

On December 22, 2021, the Company’s stockholders approved the issuance of options and RSUs to the Board of Directors in accordance with ASX rules. These awards are subject to the vesting and performance conditions as denoted in the individual agreements (collectively, the “2021 Annual Meeting Awards”). On December 12, 2022, the Company’s stockholders approved the issuance of options and RSUs to the Board of Directors and the CEO in accordance with ASX rules. These awards are subject to vesting conditions as denoted in the individual agreements (collectively, the “2022 Annual Meeting Awards”). On June 6, 2023, the Company’s stockholders approved the issuance of options and RSUs to the Board of Directors and the CEO in accordance with ASX rules. These awards are subject to vesting conditions as denoted in the individual agreements (collectively, the “2023 Annual Meeting Awards”). On June 5, 2024, the Company’s stockholders approved the issuance of options and RSUs to the Board of Directors and the CEO in accordance with ASX rules. These awards are subject to vesting conditions as denoted in the individual agreements (collectively, the “2024 Annual Meeting Awards”). On June 4, 2025, the Company’s stockholders approved the issuance of options and RSUs to the Board of Directors and the CEO in accordance with ASX rules. These awards are subject to vesting conditions as denoted in the individual agreements (collectively, the “2025 Annual Meeting Awards”).

The 2020 Plan provides for the grant of the following grants: (a) Incentive Stock Options, (b) Nonstatutory Stock Options, (c) Stock Appreciation Rights, (d) Restricted Stock Grants, (e) Restricted Stock Unit Grants, (f) Performance Grants, and (g) Other Grants. The 2020 Plan will be administered by the Human Capital and Compensation Committee or by the Board acting as the Human Capital and Compensation Committee. Subject to the general purposes, terms and conditions of the 2020 Plan, applicable law and any charter adopted by the Board governing the actions of the Human Capital and Compensation Committee, the Human Capital and Compensation Committee will have full power to implement and carry out the 2020 Plan. Without limitation, the Human Capital and Compensation Committee will have the authority to interpret the plan, approve persons to receive grants, determine the terms and number of shares of the grants, determine vesting and exercisability of grants, and make all other determinations necessary or advisable in connection with the administration of the 2020 Plan.

The contractual term of stock option awards granted under the 2020 Plan is ten years from the grant date. Unless otherwise specified, the vesting periods of options and RSUs granted under the 2020 Plan are: (i) vest over a three-year or four-year period in equal installments at the end of each year from the date of grant, and /or (ii) subject to other performance criteria, as determined by the Human Capital and Compensation Committee.

Share-Based Payment Expenses

Stock-based payment transactions are recognized as compensation expense based on the fair value of the instrument on the date of grant. The Company uses the graded-vesting method to recognize compensation expense. Compensation cost is reduced for forfeitures as they occur in accordance with ASU 2016-09, Simplifying the Accounting for Share-Based Payment. The Company recorded stock-based compensation expense of $9.5 million and $13.5 million for the years-ended December 31, 2025 and 2024, respectively. No income tax benefit was recognized in the Consolidated Statements of Operations for stock-based payment arrangements for the years-ended December 31, 2025 and 2024.

The weighted-average grant-date fair value of options granted during the years-ended December 31, 2025 and 2024 was $8.06 and $7.55, respectively. The total intrinsic value of options exercised during the years-ended December 31, 2025 and 2024 was $0.3 million and $2.1 million, respectively. Intrinsic value is measured using the fair market value at the date of exercise for options exercised, or at balance sheet date for outstanding options, less the applicable exercise price.

Cash received from the exercise of options was approximately $0.4 million and $2.1 million, for the years-ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, there was approximately $5.2 million of total unrecognized compensation cost related to share-based compensation expense. Of this amount $5.1 million relates to service only share options to be recognized over a weighted average period of 0.66 years.

Restricted Stock Units

Restricted stock units are granted to executives as part of their long-term incentive compensation. RSUs granted to directors as a result of stockholder approval at the Company’s 2021 Annual Meeting, 2022 Annual Meeting, 2023 Annual Meeting, 2024 Annual Meeting and 2025 Annual Meeting are issued pursuant to award agreements between the Company and the holders of such securities. These RSU awards were approved by the Human Capital and Compensation Committee. All RSU awards vest in accordance with the tenure or performance conditions as determined by the Human Capital and Compensation Committee and set out in the contracts between the Company and the holders of such securities. The grant date fair value is determined based on the price of the Company stock price on the date of grant (stock price determined on Nasdaq).

The weighted-average grant-date fair value of the RSUs granted during the years-ended December 31, 2025 and 2024, was $8.73 and $9.51, respectively. The total fair value of shares vested during the years-ended December 31, 2025 and 2024, was $0.9 million and $1.4 million, respectively.

As of December 31, 2025, there was $62,000 of total unrecognized compensation cost related to service only RSU awards to be recognized over a weighted average period of 0.08 years.

2021 Annual Meeting Awards

Awards to non-executive members of the Board of Directors (“Director awards”) under the 2021 Annual Meeting Awards

The Director awards that were granted in 2021 consist of an aggregate 68,600 options and RSUs. A total of 41,400 tenure-based options are RSUs (15,300 options and 26,100 RSUs) vested 12 months from the grant date. A total of 27,200 tenure-based options and RSUs (9,850 options and 17,350 RSUs) vest over 3 three years in equal installment each year.

2022 Annual Meeting Awards

Awards to the CEO under the 2022 Annual Meeting Awards

On December 12, 2022, the CEO was issued an aggregate 226,296 options with 25% of those options vesting annually commencing on September 28, 2023.

Non-Executive Director awards under the 2022 Annual Meeting Awards

The Director awards consist of an aggregate 71,936 options and RSUs (21,580 options and 50,356 RSUs) vesting 12 months from the grant date.

2023 Annual Meeting Awards

Awards to the CEO under the 2023 Annual Meeting Awards

On June 6, 2023, the CEO was issued an aggregate 100,000 options with 33.3% of those options vesting annually commencing on June 6, 2024.

Non-Executive Director awards under the 2023 Annual Meeting Awards

The Director awards consist of an aggregate 82,566 options and RSUs. A total of 52,926 tenure-based options and RSUs (15,876 options and 37,050 RSUs) vest 12 months from the grant date. A total of 29,640 tenure-based options and RSUs (8,892 options and 20,748 RSUs) vest over three years in equal installments each year.

2024 Annual Meeting Awards

Awards to the CEO under the 2024 Annual Meeting Awards

On June 5, 2024, the CEO was issued an aggregate 350,000 options with 33.3% of those options vesting annually commencing on January 3, 2025.

Non-Executive Director awards under the 2024 Annual Meeting Awards

The Director awards consist of an aggregate 78,858 options and RSUs (23,658 tenure-based options and 55,200 RSUs) vesting 12 months from the grant date.

2025 Annual Meeting Awards

Awards to the CEO under the 2025 Annual Meeting Awards

On June 4, 2025, the CEO was issued an aggregate 520,000 options with 33.3% of those options vesting annually commencing on January 21, 2026.

Non-Executive Director awards under the 2025 Annual Meeting Awards

The Director awards consist of an aggregate 85,902 options and RSUs (25,770 tenure-based options and 60,132 RSUs) vesting 12 months from January 21, 2026.

Option Pricing Model

The Company estimates the fair value of tenure-based share options using the Black-Scholes option pricing model on the date of grant.

The valuation of the options is affected by the Company's share price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected share price volatility over the term of the awards and actual and projected employee share option exercise behaviors. The risk-free rate is based on the U.S. Treasury rate for the expected term at the time of grant, volatility is based on the historical volatility. For tenure-based options, the expected term is based on the estimated average of the life of options using the simplified method as prescribed by SAB 107. The Company utilizes the simplified method for plain vanilla options to determine the expected term of the options due to insufficient exercise activity during recent years. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

Employee Stock Purchase Plan

In June 2023, the stockholders approved the AVITA Medical, Inc. Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective on July 1, 2023. On June 30, 2023, the Company filed Registration Statement on Form S-8 to register

1,000,000 shares of common stock under the ESPP, as a result of the Company’s stockholders approving the ESPP at the 2023 Annual Meeting. The ESPP features two six-month offering periods per year, from June 1 to November 30 and December 1 to May 31. The first offering period for the ESPP was July 1 – November 30, 2023. Subsequent offering periods will begin the first trading day of December and June each year. For the year-ended December 31, 2025, 193,338 shares were issued under the ESPP at a purchase price of $4.11, and total proceeds received from the purchase of shares under the ESPP were approximately $0.8 million. For the year-ended December 31, 2024, 171,224 shares were issued under the ESPP at a purchase price of $8.02, and total proceeds received from the purchase of shares under the ESPP were approximately $1.4 million. During the years-ended December 31, 2025 and 2024, the Company recorded $446,000 and $735,000, respectively in ESPP expense and had unamortized expense remaining of $190,000 and $275,000, respectively, to be recognized over a term of 0.42 years. As of December 31, 2025 and 2024, the Company had accrued payroll contributions for future ESPP purchases of approximately $80,000 and $89,000, respectively.

The Company estimates the fair value of the ESPP using the Black-Scholes option pricing model on the date of grant. The valuation is affected by the Company's share price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected term, expected share price, volatility over the expected term and risk-free rate. The risk-free interest rate is based on the U.S. Treasury rate for the expected term at the time of grant, volatility is based on the historical volatility. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.