Mach7 Technologies Limited's (ASX:M7T): Mach7 Technologies Limited provides enterprise imaging data sharing, storage, and interoperability solutions for healthcare enterprises worldwide. The AU$134m market-cap company announced a latest loss of -AU$7.1m on 30 June 2019 for its most recent financial year result. The most pressing concern for investors is M7T’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for M7T, its year of breakeven and its implied growth rate.
According to the 3 industry analysts covering M7T, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of AU$900k in 2021. M7T is therefore projected to breakeven around a couple of months from now! How fast will M7T 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 98% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, M7T may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for M7T given that this is a high-level summary, but, bear in mind that typically healthcare tech companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. M7T has managed its capital prudently, with debt making up 5.8% of equity. This means that M7T has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on M7T, so if you are interested in understanding the company at a deeper level, take a look at M7T’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
- Historical Track Record: What has M7T'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 Mach7 Technologies’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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