Grace Therapeutics, Inc. (NASDAQ:GRCE): When Will It Breakeven?

We feel now is a pretty good time to analyse Grace Therapeutics, Inc.'s (NASDAQ:GRCE) business as it appears the company may be on the cusp of a considerable accomplishment. Grace Therapeutics, Inc. engages in the development and commercialization of pharmaceutical products for rare and orphan diseases in Canada. The US$41m market-cap company posted a loss in its most recent financial year of US$13m and a latest trailing-twelve-month loss of US$13m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Grace Therapeutics' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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According to the 3 industry analysts covering Grace Therapeutics, the consensus is that breakeven is near. They expect the company to post a final loss in 2027, before turning a profit of US$14m in 2028. So, the company is predicted to breakeven approximately 3 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 53%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Grace Therapeutics given that this is a high-level summary, but, keep in mind that generally pharmaceuticals, 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.

See our latest analysis for Grace Therapeutics

One thing we’d like to point out is that Grace Therapeutics has no debt on its balance sheet, which is rare for a loss-making pharma, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Grace Therapeutics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Grace Therapeutics, take a look at Grace Therapeutics' company page on Simply Wall St. We've also put together a list of important aspects you should further research:

1. Historical Track Record: What has Grace Therapeutics' 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 Grace Therapeutics' 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.