Loss-Making Osmotica Pharmaceuticals plc (NASDAQ:OSMT) Expected To Breakeven In The Medium-Term
Osmotica Pharmaceuticals plc (NASDAQ:OSMT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Osmotica Pharmaceuticals plc, an integrated biopharmaceutical company, focuses on the development and commercialization of pharmaceutical products in the United States, Argentina, and Hungary. The US$262m market-cap company posted a loss in its most recent financial year of US$80m and a latest trailing-twelve-month loss of US$77m shrinking the gap between loss and breakeven. The most pressing concern for investors is Osmotica Pharmaceuticals' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Osmotica Pharmaceuticals
Expectations from some of the American Pharmaceuticals analysts is that Osmotica Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$3.2m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Osmotica Pharmaceuticals' upcoming projects, however, keep in mind that typically pharmaceuticals, 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.
One thing we would like to bring into light with Osmotica Pharmaceuticals is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Osmotica Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Osmotica Pharmaceuticals, take a look at Osmotica Pharmaceuticals' company page on Simply Wall St. We've also put together a list of important factors you should look at:
Historical Track Record: What has Osmotica Pharmaceuticals' 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 Osmotica Pharmaceuticals' board and the CEO’s background.
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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