RedHill Biopharma Ltd (RDHL)

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

https://finance.yahoo.com/news/redhill-biopharma-ltd-nasdaq-rdhl-125851022.html

Simply Wall St

Sun, October 30, 2022 at 2:58 PM

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.

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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.