Adherium Limited (ASX:ADR) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse Adherium Limited's (ASX:ADR) business as it appears the company may be on the cusp of a considerable accomplishment. Adherium Limited develops, manufactures, and supplies digital health technologies that address sub-optimal medication use in chronic diseases in New Zealand, Australia, Europe, and North America. The AU$15m market-cap company announced a latest loss of AU$9.9m on 30 June 2023 for its most recent financial year result. The most pressing concern for investors is Adherium's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Adherium

According to some industry analysts covering Adherium, breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$6.1m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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Given this is a high-level overview, we won’t go into details of Adherium's upcoming projects, but, take into account that typically a healthcare tech company has lumpy cash flows which are contingent on the product 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.

Before we wrap up, there’s one aspect worth mentioning. Adherium currently has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Adherium 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 Adherium 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 Adherium’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.