When Will Alcidion Group Limited (ASX:ALC) Breakeven?

We feel now is a pretty good time to analyse Alcidion Group Limited's (ASX:ALC) business as it appears the company may be on the cusp of a considerable accomplishment. Alcidion Group Limited, together with its subsidiaries, engages in the development and licensing of healthcare software products in Australia, New Zealand, and the United Kingdom. The AU$368m market-cap company’s loss lessened since it announced a AU$3.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$2.7m, as it approaches breakeven. The most pressing concern for investors is Alcidion Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Alcidion Group

Alcidion Group is bordering on breakeven, according to the 2 Australian Healthcare Services analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$1.7m in 2022. So, the company is predicted to breakeven just over a year 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 110%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Alcidion Group's upcoming projects, however, bear 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.

Before we wrap up, there’s one aspect worth mentioning. Alcidion Group currently 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:

This article is not intended to be a comprehensive analysis on Alcidion Group, so if you are interested in understanding the company at a deeper level, take a look at Alcidion Group's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:

1. Valuation: What is Alcidion Group 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 Alcidion Group 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 Alcidion Group’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. 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.
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