With the business potentially at an important milestone, we thought we'd take a closer look at Oventus Medical Limited's (ASX:OVN) future prospects. Oventus Medical Limited, a medical device company, develops and commercializes oral appliances for the treatment of obstructive sleep apnoea (OSA) and snoring in Australia, Canada, and the United States. On 30 June 2020, the AU$37m market-cap company posted a loss of AU$10m for its most recent financial year. As path to profitability is the topic on Oventus Medical's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Oventus Medical is bordering on breakeven, according to some Australian Medical Equipment analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$3.7m in 2023. So, the company is predicted to breakeven approximately 3 years from today. 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 61% 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 Oventus Medical's upcoming projects, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that Oventus Medical has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of 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.
This article is not intended to be a comprehensive analysis on Oventus Medical, so if you are interested in understanding the company at a deeper level, take a look at Oventus Medical's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
- Historical Track Record: What has Oventus Medical's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Oventus Medical's board and the CEO’s background.
- 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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