Invacare Corporation's (NYSE:IVC) Path To Profitability

We feel now is a pretty good time to analyse Invacare Corporation's (NYSE:IVC) business as it appears the company may be on the cusp of a considerable accomplishment. Invacare Corporation, together with its subsidiaries, designs, manufactures, distributes, and exports medical equipment for use in home health care, retail, and extended care markets worldwide. The US$327m market-cap company announced a latest loss of US$28m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Invacare'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 Invacare

According to the 4 industry analysts covering Invacare, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$8.3m in 2022. Therefore, the company is expected to breakeven just over a year from now. 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 76%, which is rather optimistic! 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 Invacare given that this is a high-level summary, though, keep in mind that generally 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 issue worth mentioning. Invacare currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Invacare's case is 73%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

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