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RedHill Biopharma Ltd.'s (NASDAQ:RDHL) Path To Profitability

We feel now is a pretty good time to analyse RedHill Biopharma Ltd.'s (NASDAQ:RDHL) business as it appears the company may be on the cusp of a considerable accomplishment. RedHill Biopharma Ltd., a specialty biopharmaceutical company, primarily focuses on gastrointestinal and infectious diseases. The US$40m market-cap company’s loss lessened since it announced a US$98m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$92m, as it approaches breakeven. Many investors are wondering about the rate at which RedHill Biopharma will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for RedHill Biopharma

RedHill Biopharma is bordering on breakeven, according to the 2 American Pharmaceuticals analysts. They expect the company to post a final loss in 2023, before turning a profit of US$5.9m in 2024. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of RedHill Biopharma's upcoming projects, however, bear in mind that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. RedHill Biopharma currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of RedHill Biopharma 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 RedHill Biopharma, take a look at RedHill Biopharma's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

  1. Valuation: What is RedHill Biopharma 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 RedHill Biopharma 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 RedHill Biopharma’s board and the CEO’s background.

  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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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