When Will Labiana Health, S.A. (BME:LAB) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Labiana Health, S.A.'s (BME:LAB) future prospects. Labiana Health, S.A. develops, manufactures, sells, and markets animal and human health medicine products in Spain, rest of European Union, and internationally. The company’s loss has recently broadened since it announced a €8.9m loss in the full financial year, compared to the latest trailing-twelve-month loss of €9.6m, moving it further away from breakeven. As path to profitability is the topic on Labiana Health's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Labiana Health

Labiana Health is bordering on breakeven, according to the 2 Spanish Pharmaceuticals analysts. They expect the company to post a final loss in 2024, before turning a profit of €1.5m in 2025. 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 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% year-on-year, on average, which signals high confidence from analysts. 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 Labiana Health's upcoming projects, though, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 would like to bring into light with Labiana Health is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Labiana Health 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 Labiana Health, take a look at Labiana Health's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Labiana Health 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 Labiana Health 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 Labiana Health’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. 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.