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Evolus, Inc.'s (NASDAQ:EOLS) Shift From Loss To Profit

Evolus, Inc. (NASDAQ:EOLS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Evolus, Inc., a performance beauty company, provides medical aesthetic products for physicians and their patients in the United States. The US$422m market-cap company posted a loss in its most recent financial year of US$47m and a latest trailing-twelve-month loss of US$79m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Evolus 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.

Check out our latest analysis for Evolus

According to the 7 industry analysts covering Evolus, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$20m in 2025. So, the company is predicted to breakeven approximately 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 61% is expected, which is extremely buoyant. 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

We're not going to go through company-specific developments for Evolus given that this is a high-level summary, 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.

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One thing we would like to bring into light with Evolus is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Evolus, so if you are interested in understanding the company at a deeper level, take a look at Evolus' company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

  1. Valuation: What is Evolus 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 Evolus 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 Evolus’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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