ResApp Health Limited's (ASX:RAP): ResApp Health Limited develops digital healthcare solutions to assist doctors and allow patients to diagnose and manage respiratory disease. The AU$195m market-cap company announced a latest loss of -AU$5.4m on 30 June 2019 for its most recent financial year result. Many investors are wondering the rate at which RAP will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for RAP’s growth and when analysts expect the company to become profitable.

See our latest analysis for ResApp Health

RAP is bordering on breakeven, according to Healthcare Services analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$3.3m in 2021. Therefore, RAP is expected to breakeven roughly a couple of months from now! How fast will RAP have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 96% 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.

Underlying developments driving RAP’s growth isn’t the focus of this broad overview, but, take into account that by and large healthcare tech companies, 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.

Before I wrap up, there’s one aspect worth mentioning. RAP currently has no debt on its balance sheet, which is rare for a loss-making healthcare tech company, which typically has high debt relative to its equity. RAP currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Historical Track Record: What has RAP's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ResApp 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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