Radius Health Inc’s (NASDAQ:RDUS) Shift From Loss To Profit

Radius Health Inc’s (NASDAQ:RDUS): Radius Health, Inc., a biopharmaceutical company, develops and commercializes endocrine therapeutics in the areas of osteoporosis and oncology. The company’s loss has recently broadened since it announced a -US$254.24m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$258.85m, moving it further away from breakeven. As path to profitability is the topic on RDUS’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for RDUS.

Check out our latest analysis for Radius Health

RDUS is bordering on breakeven, according to Biotechs analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$45.52m in 2022. Therefore, RDUS is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which RDUS must grow year-on-year. It turns out an average annual growth rate of 40.66% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:RDUS Past Future Earnings June 15th 18
NasdaqGM:RDUS Past Future Earnings June 15th 18

I’m not going to go through company-specific developments for RDUS given that this is a high-level summary, though, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with RDUS is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in RDUS’s case is 86.73%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is RDUS 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 RDUS 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 Radius Health’s board and the CEO’s back ground.
  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.