Slow Hospital Onboarding Will Constrain Revenue With Eventual Recovery

Key Takeaways

• Slow onboarding in hospitals and regulatory hurdles may significantly restrict revenue growth and the ability to capitalize on expanding market access.
  
• Heavy reliance on a single core product and growing competition from advanced medtech firms increase both revenue concentration risk and margin pressure.
  
• Ongoing losses, high customer concentration, regulatory uncertainty, and dependence on timely international expansion pose major risks to growth and shareholder value.

Catalysts

A commercial-stage medical device and biopharmaceutical company, develops the Lungfit platform, a nitric oxide (NO) generator and delivery system platform.

• Although Beyond Air is benefiting from long-term increases in chronic respiratory illnesses and the aging population, the pace of hospital contract wins-both domestically and internationally-remains slow due to lengthy purchasing cycles and operational hurdles in hospital onboarding. This persistent delay may substantially limit revenue growth projections in the near to medium term.
  
• While the company's entry into large U.S. hospital purchasing networks like Premier and Vizient expands its market access, penetration of these networks is highly dependent on the successful FDA approval and launch of LungFit PH II. Any regulatory setbacks or missed timelines could prevent Beyond Air from capitalizing on these distribution relationships, directly impacting topline revenue and future operating leverage.
  
• Despite rising demand for infection control and non-pharmaceutical respiratory solutions creating a robust addressable market, increased regulatory scrutiny and compliance costs threaten to slow product rollouts and materially raise operating expenses, eroding anticipated improvements to net margins even as sales potentially increase.
  
• Although Beyond Air's transition from nitrogen cylinder systems to on-demand generators offers substantial gross margin expansion and logistical advantages, the company's reliance on a single core product platform (LungFit) creates concentration risk-any manufacturing, clinical, or regulatory disruption could lead to significant revenue instability and impair long-term earnings growth.
  
• While the global trend toward home-based care and advanced, connected medical devices would normally provide a structural tailwind for the LungFit platform, escalating competition from better-funded medtech firms leveraging both digital and AI-driven respiratory solutions could limit Beyond Air's market share gains and compress future gross margins, particularly as pricing pressure rises in the evolving reimbursement environment.

Beyond Air Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Beyond Air compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Beyond Air's revenue will grow by 119.0% annually over the next 3 years.
• The bearish analysts are not forecasting that Beyond Air will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Beyond Air's profit margin will increase from -880.7% to the average US Medical Equipment industry of 12.4% in 3 years.
• If Beyond Air's profit margin were to converge on the industry average, you could expect earnings to reach $6.2 million (and earnings per share of $1.04) by about August 2028, up from $-42.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 6.3x on those 2028 earnings, up from -0.3x today. This future PE is lower than the current PE for the US Medical Equipment industry at 27.4x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.66%, as per the Simply Wall St company report.

Beyond Air Future Earnings Per Share Growth

Risks

• Despite recent revenue growth, the company continues to operate at a loss with a net loss of $7.7 million in the latest quarter and only $6.5 million in cash on hand, indicating ongoing operating losses could pressure the company to pursue dilutive financings, thereby reducing long-term earnings per share.
  
• More than half of existing contracts are described as multiyear, but with a current customer base only numbering in the dozens and dozens of hospitals, Beyond Air remains highly concentrated and exposed to setbacks or slower-than-expected adoption of LungFit PH, which threatens the stability and ramp-up of future revenue streams.
  
• The company's multi-year revenue guidance for fiscal year 2026 depends heavily on ramping up international sales, but the text acknowledges that international hospital contracts and tenders take several quarters to materialize, creating substantial timing and execution risk to forecasted revenue growth.
  
• Regulatory risk remains significant, as approval and commercial success of the second-generation LungFit system and other pipeline products like NeuroNOS and Beyond Cancer are not assured, with management emphasizing unpredictability in FDA timing and prioritization, thereby potentially delaying expected new product revenue and compressing growth projections.
  
• The company implemented a reverse stock split to regain Nasdaq compliance, which often signals underlying share price or capital structure challenges, raising concerns about potential ongoing volatility or erosion in shareholder value and further impacting long-term share price appreciation.

Valuation

• The assumed bearish price target for Beyond Air is $5.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Beyond Air's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $14.0, and the most bearish reporting a price target of just $5.0.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $50.2 million, earnings will come to $6.2 million, and it would be trading on a PE ratio of 6.3x, assuming you use a discount rate of 9.7%.
  
• Given the current share price of $2.4, the bearish analyst price target of $5.0 is 52.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.