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ResApp Health Limited's (ASX:RAP): ResApp Health Limited develops and commercializes the ResApp technology to provide health care solutions for respiratory diseases. The company’s loss has recently broadened since it announced a -AU$6.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$6.7m, moving it further away from breakeven. 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.
Expectation from Healthcare Services analysts is RAP is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of AU$14m in 2021. So, RAP is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, I calculated the rate at which RAP must grow year-on-year. It turns out an average annual growth rate of 96% is expected, 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, though, keep in mind that generally healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
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. This means that RAP 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.
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 compiled a list of key factors you should further research:
- 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.
- 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.
- 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.