Harmony Biosciences Holdings, Inc.'s (NASDAQ:HRMY) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Harmony Biosciences Holdings, Inc.'s (NASDAQ:HRMY) future prospects. Harmony Biosciences Holdings, Inc., a commercial-stage pharmaceutical company, focuses on developing and commercializing therapies for patients living with rare neurological disorders. The US$2.0b market-cap company’s loss lessened since it announced a US$152m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$74m, as it approaches breakeven. As path to profitability is the topic on Harmony Biosciences Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Harmony Biosciences Holdings

According to the 3 industry analysts covering Harmony Biosciences Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$67m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 45%, 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 Harmony Biosciences Holdings given that this is a high-level summary, though, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Harmony Biosciences Holdings currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Harmony Biosciences Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Harmony Biosciences Holdings' company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Harmony Biosciences Holdings 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 Harmony Biosciences Holdings 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 Harmony Biosciences Holdings’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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