When Will Evolus, Inc. (NASDAQ:EOLS) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Evolus, Inc.'s (NASDAQ:EOLS) future prospects. Evolus, Inc., a performance beauty company, focuses on delivering products in the cash-pay aesthetic market in the United States, Canada, and Europe. On 31 December 2023, the US$741m market-cap company posted a loss of US$62m for its most recent financial year. Many investors are wondering about the rate at which Evolus 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 Evolus

According to the 7 industry analysts covering Evolus, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$42m in 2026. Therefore, the company is expected to breakeven roughly 2 years 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 65%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Evolus' growth isn’t the focus of this broad overview, though, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Evolus is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

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

1. Valuation: What is Evolus 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 Evolus 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 Evolus’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.