When Will Adherium Limited (ASX:ADR) Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Adherium Limited's (ASX:ADR) future prospects. Adherium Limited develops, manufactures, and supplies digital health technologies that address sub-optimal medication use in chronic diseases in New Zealand, Australia, Europe, and North America. The AU$13m market-cap company posted a loss in its most recent financial year of AU$9.9m and a latest trailing-twelve-month loss of AU$8.7m shrinking the gap between loss and breakeven. As path to profitability is the topic on Adherium's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Adherium

Adherium is bordering on breakeven, according to some Australian Healthcare Services analysts. They expect the company to post a final loss in 2024, before turning a profit of AU$6.1m in 2025. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 110% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Adherium's upcoming projects, but, take into account that typically healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Adherium has no debt on its balance sheet, which is rare for a loss-making healthcare tech company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Adherium which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Adherium, take a look at Adherium's company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is Adherium worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Adherium is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Adherium’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.