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Market Sentiment Around Loss-Making Medibio Limited (ASX:MEB)

·3-min read

We feel now is a pretty good time to analyse Medibio Limited's (ASX:MEB) business as it appears the company may be on the cusp of a considerable accomplishment. Medibio Limited, a health technology company, researches, develops, and commercializes mental health technology to assist in the screening, diagnosing, monitoring, and management of depression and other mental health conditions in Australia and the United States. The AU$13m market-cap company announced a latest loss of AU$1.5m on 30 June 2021 for its most recent financial year result. Many investors are wondering about the rate at which Medibio 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 Medibio

Expectations from some of the Australian Healthcare Services analysts is that Medibio is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$100k 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 83% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Medibio given that this is a high-level summary, though, bear in mind that by and large healthcare tech companies, 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.

One thing we’d like to point out is that Medibio has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, 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.

Next Steps:

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

  1. Historical Track Record: What has Medibio'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Medibio'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.