When Will Althea Group Holdings Limited (ASX:AGH) Become Profitable?

We feel now is a pretty good time to analyse Althea Group Holdings Limited's (ASX:AGH) business as it appears the company may be on the cusp of a considerable accomplishment. Althea Group Holdings Limited cultivates, produces, supplies, imports, and exports pharmaceutical grade medicinal cannabis in Australia, the United Kingdom, and Canada. The AU$135m market-cap company posted a loss in its most recent financial year of AU$15m and a latest trailing-twelve-month loss of AU$15m shrinking the gap between loss and breakeven. As path to profitability is the topic on Althea Group Holdings' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Althea Group Holdings

According to some industry analysts covering Althea Group Holdings, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$3.1m in 2022. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 116% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Althea Group Holdings' growth isn’t the focus of this broad overview, but, bear in mind that generally pharmaceuticals, 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 Althea Group Holdings has no debt on its balance sheet, which is rare for a loss-making pharma, 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:

There are key fundamentals of Althea Group Holdings 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 Althea Group Holdings, take a look at Althea Group Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

1. Historical Track Record: What has Althea Group Holdings' 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.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Althea Group Holdings' 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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