From startup to Profitable...Let the good times roll...
We feel now is a pretty good time to analyse Vitalhub Corp.'s (TSE:VHI)business as it appears the company may be on the cusp of a considerable accomplishment. Vitalhub Corp., together with its subsidiaries, develops technology solutions for health and human service providers in the hospital, regional health authority, mental health, long term care, home health, and community and social service sectors in Canada, the United Kingdom, and the United States. With the latest financial year loss of CA$2.2m and a trailing-twelve-month loss of CA$2.1m, the CA$123m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Vitalhub's investors mind, we've decided to gauge market sentiment. 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 Vitalhub
According to the 5 industry analysts covering Vitalhub, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$2.3m in 2022. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 190% year-on-year, on average, 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.
Underlying developments driving Vitalhub's growth isn’t the focus of this broad overview, however, bear in mind that typically a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.08% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.