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Khiron Life Sciences Corp. (CVE:KHRN): When Will It Breakeven?

Simply Wall St

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Khiron Life Sciences Corp.'s (CVE:KHRN): Khiron Life Sciences Corp. operates as an integrated cannabis company in Latin America. The company’s loss has recently broadened since it announced a -CA$19.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CA$25.8m, moving it further away from breakeven. The most pressing concern for investors is KHRN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for KHRN’s growth and when analysts expect the company to become profitable.

See our latest analysis for Khiron Life Sciences

Consensus from the 2 Pharmaceuticals analysts is KHRN is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CA$9.0m in 2021. Therefore, KHRN is expected to breakeven roughly 2 years from today. How fast will KHRN 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 64% 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.

TSXV:KHRN Past and Future Earnings, July 15th 2019

Given this is a high-level overview, I won’t go into details of KHRN’s upcoming projects, though, bear in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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. KHRN has managed its capital prudently, with debt making up 5.3% of equity. This means that KHRN has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is KHRN 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 KHRN 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 Khiron Life Sciences’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.