When Will Definitive Healthcare Corp. (NASDAQ:DH) Become Profitable?

By
Simply Wall St
Published
January 19, 2022
NasdaqGS:DH
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Definitive Healthcare Corp. (NASDAQ:DH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Definitive Healthcare Corp., through its software as a service platform, provides healthcare commercial intelligence in the United States. The company’s loss has recently broadened since it announced a US$51m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$59m, moving it further away from breakeven. As path to profitability is the topic on Definitive Healthcare's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Definitive Healthcare

Definitive Healthcare is bordering on breakeven, according to the 10 American Healthcare Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$6.3m in 2023. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 91%, 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.

earnings-per-share-growth
NasdaqGS:DH Earnings Per Share Growth January 19th 2022

We're not going to go through company-specific developments for Definitive Healthcare 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 21% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare’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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