When Can We Expect A Profit From Heron Therapeutics, Inc. (NASDAQ:HRTX)?

With the business potentially at an important milestone, we thought we'd take a closer look at Heron Therapeutics, Inc.'s (NASDAQ:HRTX) future prospects. Heron Therapeutics, Inc., a commercial-stage biotechnology company, focuses on enhancing the lives of patients by developing and commercializing therapeutic that enhances medical care. The US$303m market-cap company posted a loss in its most recent financial year of US$111m and a latest trailing-twelve-month loss of US$48m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Heron Therapeutics will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Heron Therapeutics

Consensus from 4 of the American Biotechs analysts is that Heron Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$817k in 2025. Therefore, the company is expected to breakeven just over a year from today. 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 69%, which is rather optimistic! 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 Heron Therapeutics given that this is a high-level summary, though, bear in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Heron Therapeutics currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

1. Valuation: What is Heron Therapeutics 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 Heron Therapeutics 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 Heron Therapeutics’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.