CSAM Health Group AS' (OB:CSAM) Has Found A Path To Profitability

We feel now is a pretty good time to analyse CSAM Health Group AS' (OB:CSAM) business as it appears the company may be on the cusp of a considerable accomplishment. CSAM Health Group AS provides various ehealth solutions in Norway, Sweden, Denmark, and internationally. The kr2.1b market-cap company posted a loss in its most recent financial year of kr36m and a latest trailing-twelve-month loss of kr2.0m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which CSAM Health Group 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.

See our latest analysis for CSAM Health Group

Expectations from some of the Norwegian Healthcare Services analysts is that CSAM Health Group is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of kr28m in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 85% 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.

Given this is a high-level overview, we won’t go into details of CSAM Health Group's upcoming projects, however, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with CSAM Health Group is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of CSAM Health Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – CSAM Health Group's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is CSAM Health Group 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 CSAM Health Group 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 CSAM Health Group’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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