When Will KemPharm, Inc. (NASDAQ:KMPH) Breakeven?

We feel now is a pretty good time to analyse KemPharm, Inc.'s (NASDAQ:KMPH) business as it appears the company may be on the cusp of a considerable accomplishment. KemPharm, Inc., a specialty pharmaceutical company, discovers and develops various proprietary prodrugs to treat serious medical conditions in the United States. The US$236m market-cap company’s loss lessened since it announced a US$63m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$30m, as it approaches breakeven. The most pressing concern for investors is KemPharm'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 KemPharm

According to the 2 industry analysts covering KemPharm, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$946k in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 74% year-on-year, on average, 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 KemPharm given that this is a high-level summary, though, bear in mind that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 15% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.