AVITA Medical, Inc.'s (NASDAQ:RCEL) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at AVITA Medical, Inc.'s (NASDAQ:RCEL) future prospects. AVITA Medical, Inc., together with its subsidiaries, operates as a therapeutic acute wound care company in the United States, Japan, the European Union, Australia, and the United Kingdom. On 31 December 2024, the US$230m market-cap company posted a loss of US$62m for its most recent financial year. Many investors are wondering about the rate at which AVITA Medical will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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Consensus from 10 of the American Biotechs analysts is that AVITA Medical is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$13m in 2026. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 56% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving AVITA Medical's growth isn’t the focus of this broad overview, though, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

View our latest analysis for AVITA Medical

One thing we would like to bring into light with AVITA Medical is its 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 key fundamentals of AVITA Medical 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 AVITA Medical, take a look at AVITA Medical's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is AVITA Medical 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 AVITA Medical 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 AVITA Medical’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.