Breakeven On The Horizon For Lunit Inc. (KOSDAQ:328130)

With the business potentially at an important milestone, we thought we'd take a closer look at Lunit Inc.'s (KOSDAQ:328130) future prospects. Lunit Inc. develops and provides AI based software solutions for cancer screening/diagnosis and treatment. The ₩1.9t market-cap company posted a loss in its most recent financial year of ₩39b and a latest trailing-twelve-month loss of ₩39b leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Lunit's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Lunit

Expectations from some of the South Korean Healthcare Services analysts is that Lunit is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of ₩12b in 2025. The company is therefore projected 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 89% 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.

We're not going to go through company-specific developments for Lunit given that this is a high-level summary, however, keep in mind that typically healthcare tech companies, 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.

Before we wrap up, there’s one aspect worth mentioning. Lunit currently has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech 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.

Next Steps:

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

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