We feel now is a pretty good time to analyse Radius Health, Inc.'s (NASDAQ:RDUS) business as it appears the company may be on the cusp of a considerable accomplishment. Radius Health, Inc., a biopharmaceutical company, develops and commercializes endocrine therapeutics in the areas of osteoporosis and oncology. With the latest financial year loss of US$133m and a trailing-twelve-month loss of US$113m, the US$866m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Radius Health 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.
Radius Health is bordering on breakeven, according to the 7 American Biotechs analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$23m in 2022. The company is therefore projected 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 59%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Radius Health's growth isn’t the focus of this broad overview, though, keep 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. 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. Radius Health currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.
There are key fundamentals of Radius Health 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 Radius Health, take a look at Radius Health's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:
- Valuation: What is Radius Health 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 Radius Health is currently mispriced by the market.
- 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 background.
- 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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