Adherium Limited (ASX:ADR): When Will It Breakeven?

We feel now is a pretty good time to analyse Adherium Limited's (ASX:ADR) business as it appears the company may be on the cusp of a considerable accomplishment. 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. On 30 June 2024, the AU$11m market-cap company posted a loss of AU$10m for its most recent financial year. The most pressing concern for investors is Adherium's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Adherium

According to some industry analysts covering Adherium, breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of AU$9.7m in 2026. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 120%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Adherium's growth isn’t the focus of this broad overview, though, keep in mind that generally 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 quite unusual for a cash-burning 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 too many aspects of Adherium to cover in one brief article, but the key fundamentals for the company can all be found in one place – Adherium's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

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.