When Can We Expect A Profit From PainChek Limited (ASX:PCK)?

With the business potentially at an important milestone, we thought we'd take a closer look at PainChek Limited's (ASX:PCK) future prospects. PainChek Limited develops and commercializes mobile medical device applications that provides pain assessment for individuals primarily in Australia and Europe. With the latest financial year loss of AU$12m and a trailing-twelve-month loss of AU$3.9m, the AU$70m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which PainChek will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for PainChek

PainChek is bordering on breakeven, according to some Australian Healthcare Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$6.2m in 2023. The company is therefore projected to breakeven around 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 101%, which is rather optimistic! 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 PainChek's upcoming projects, though, keep in mind that by and large a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that PainChek 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Valuation: What is PainChek 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 PainChek 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 PainChek’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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