iCAD, Inc.'s (NASDAQ:ICAD): iCAD, Inc. provides image analysis, workflow solutions, and radiation therapy for the early identification and treatment of cancer in the United States and internationally. The US$146m market-cap posted a loss in its most recent financial year of -US$9.0m and a latest trailing-twelve-month loss of -US$12.0m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is ICAD’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for ICAD’s growth and when analysts expect the company to become profitable.
According to the 3 industry analysts covering ICAD, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$5.4m in 2021. Therefore, ICAD is expected to breakeven roughly 2 years from now. What rate will ICAD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 87%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving ICAD’s growth isn’t the focus of this broad overview, but, take into account that generally 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.
One thing I would like to bring into light with ICAD is its debt-to-equity ratio of 154%. Typically, debt shouldn’t exceed 40% of your equity, which in ICAD’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are too many aspects of ICAD to cover in one brief article, but the key fundamentals for the company can all be found in one place – ICAD’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:
- Historical Track Record: What has ICAD'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 iCAD’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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