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We feel now is a pretty good time to analyse Oventus Medical Limited's (ASX:OVN) business as it appears the company may be on the cusp of a considerable accomplishment. Oventus Medical Limited, a medical device company, develops and commercializes oral appliances for the treatment of obstructive sleep apnoea (OSA) and snoring in Australia, Canada, and the United States. On 30 June 2021, the AU$24m market-cap company posted a loss of AU$9.8m for its most recent financial year. The most pressing concern for investors is Oventus Medical'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.
Oventus Medical is bordering on breakeven, according to some Australian Medical Equipment analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$5.7m in 2024. The company is therefore projected to breakeven around 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 94%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Oventus Medical's growth isn’t the focus of this broad overview, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. Oventus Medical currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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.
This article is not intended to be a comprehensive analysis on Oventus Medical, so if you are interested in understanding the company at a deeper level, take a look at Oventus Medical's company page on Simply Wall St. We've also put together a list of important factors you should further research:
Valuation: What is Oventus Medical 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 Oventus Medical is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Oventus Medical’s board and the CEO’s background.
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.
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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