NEXGEL, Inc. (NASDAQ:NXGL) Has Found A Path To Profitability

We feel now is a pretty good time to analyse NEXGEL, Inc.'s (NASDAQ:NXGL) business as it appears the company may be on the cusp of a considerable accomplishment. NEXGEL, Inc. manufactures and sells high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels for wound care, medical diagnostics, transdermal drug delivery, and cosmetics in the United States. The US$21m market-cap company posted a loss in its most recent financial year of US$3.2m and a latest trailing-twelve-month loss of US$3.5m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which NEXGEL 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.

View our latest analysis for NEXGEL

Expectations from some of the American Medical Equipment analysts is that NEXGEL is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$528k in 2025. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 62% is expected, 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.

We're not going to go through company-specific developments for NEXGEL given that this is a high-level summary, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing 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:

This article is not intended to be a comprehensive analysis on NEXGEL, so if you are interested in understanding the company at a deeper level, take a look at NEXGEL's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Historical Track Record: What has NEXGEL'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 NEXGEL'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.