The road to profitability of RedHill Biopharma Ltd. (NASDAQ: RDHL)

We think it’s a good time to analyze RedHill Biopharma Ltd. (NASDAQ: RDHL) As it seems, the company may be on the verge of a huge achievement. RedHill Biopharma Ltd., a specialty biopharmaceutical company, primarily focused on gastrointestinal and infectious diseases. On Dec. 31, 2021, the $135 million market cap company posted a loss of $98 million for its most recent fiscal year. As the path to profitability is the topic of concern for RedHill Biopharma investors, we decided to gauge market sentiment. Below, we’ll provide a high-level summary of industry analysts’ expectations for the company.

See our latest analysis for RedHill Biopharma

According to the 7 industry analysts covering RedHill Biopharma, the consensus is that the break-even point is near. They expect the company to make a terminal loss in 2023, before making a profit of US$53 million in 2024. Thus, the company is expected to break even in about 2 years from today. How fast will the business need to grow year over year to break even by that date? Using a line of best fit, we calculated an average annual growth rate of 63%, which is extremely dynamic. If the business grows at a slower pace, it will become profitable later than expected.

NasdaqGM: RDHL Earnings Per Share Growth March 19, 2022

We are not going to review company-specific developments for RedHill Biopharma since this is a high-level summary, but do consider that generally pharmaceuticals, depending on the stage of development of the product, have irregular cash periods. This means that the significant growth rates ahead are not abnormal as the company begins to reap the benefits of past investments.

One thing we would like to highlight with RedHill Biopharma is its over 2x leverage ratio. As a general rule, debt should not exceed 40% of your equity, which in this case the company has greatly exceeded. A higher level of debt requires stricter capital management, which increases the risk associated with investing in the loss-making company.

Next steps:

There are too many aspects of RedHill Biopharma to cover in a brief article, but the company fundamentals can all be found in one place – RedHill Biopharma’s company page on Simply Wall St. We We have also compiled a list of relevant factors. you should watch:

  1. Evaluation: What is RedHill Biopharma worth today? Has future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether RedHill Biopharma is currently being mispriced by the market.
  2. Management team: An experienced management team at the helm bolsters our confidence in the company – take a look at who sits on RedHill Biopharma’s board and the CEO’s background.
  3. Other High Performing Stocks: Are there other stocks that offer better prospects with a proven track record? Explore our free list of these great stocks here.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.