Aroa Biosurgery Limited (ASX:ARX): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Aroa Biosurgery Limited's (ASX:ARX) future prospects. Aroa Biosurgery Limited develops, manufactures, and sells medical devices for wound and soft tissue repair using extracellular matrix (ECM) technology in the United States and internationally. On 31 March 2024, the AU$195m market-cap company posted a loss of NZ$11m for its most recent financial year. Many investors are wondering about the rate at which Aroa Biosurgery will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Aroa Biosurgery

Consensus from 5 of the Australian Biotechs analysts is that Aroa Biosurgery is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of NZ$7.4m in 2026. So, the company is predicted to breakeven approximately 2 years from now. 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 56% is expected, 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 Aroa Biosurgery's growth isn’t the focus of this broad overview, however, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. Aroa Biosurgery currently has no debt on its balance sheet, which is rare for a loss-making biotech, 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.

Next Steps:

There are too many aspects of Aroa Biosurgery to cover in one brief article, but the key fundamentals for the company can all be found in one place – Aroa Biosurgery's company page on Simply Wall St. We've also put together a list of key factors you should further examine:

1. Valuation: What is Aroa Biosurgery 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 Aroa Biosurgery 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 Aroa Biosurgery’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.