When Will Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Breakeven?

Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rhythm Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the rare neuroendocrine diseases. The US$3.5b market-cap company announced a latest loss of US$265m on 31 December 2024 for its most recent financial year result. As path to profitability is the topic on Rhythm Pharmaceuticals' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

According to the 12 industry analysts covering Rhythm Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of US$113m in 2027. Therefore, the company is expected to breakeven roughly 2 years from now. 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 62%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Rhythm Pharmaceuticals given that this is a high-level summary, but, take into account 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Check out our latest analysis for Rhythm Pharmaceuticals

One thing we would like to bring into light with Rhythm Pharmaceuticals is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Rhythm Pharmaceuticals' case is 67%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Rhythm Pharmaceuticals 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 Rhythm Pharmaceuticals, take a look at Rhythm Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Rhythm Pharmaceuticals 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 Rhythm Pharmaceuticals 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 Rhythm Pharmaceuticals’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.