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Aroa Biosurgery Limited (ASX:ARX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aroa Biosurgery Limited, a regenerative medicine company, engages in the developing, manufacturing, and sells medical devices for wound and tissue repair using extracellular matrix (ECM) technology in the United States and internationally. With the latest financial year loss of NZ$396k and a trailing-twelve-month loss of NZ$8.3m, the AU$186m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Aroa Biosurgery's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Aroa Biosurgery
Aroa Biosurgery is bordering on breakeven, according to the 5 Australian Biotechs analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of NZ$2.4m in 2025. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 115% year-on-year, on average, 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 Aroa Biosurgery's upcoming projects, however, bear in mind that typically biotechs, 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.
Before we wrap up, there’s one aspect worth mentioning. Aroa Biosurgery currently has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
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There are key fundamentals of Aroa Biosurgery 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 Aroa Biosurgery, take a look at Aroa Biosurgery's company page on Simply Wall St. We've also put together a list of important aspects you should further research: