With the business potentially at an important milestone, we thought we'd take a closer look at Yidu Tech Inc.'s (HKG:2158) future prospects. Yidu Tech Inc. provides healthcare solutions built on big data and artificial intelligence technologies in Mainland China, Brunei, and internationally. The HK$5.8b market-cap company announced a latest loss of CN¥762m on 31 March 2022 for its most recent financial year result. The most pressing concern for investors is Yidu Tech'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.

See our latest analysis for Yidu Tech

Consensus from 5 of the Hong Kong Healthcare Services analysts is that Yidu Tech is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥302m in 2025. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Yidu Tech's growth isn't the focus of this broad overview, however, keep in mind that by and large 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 Yidu Tech has no debt on its balance sheet, which is rare for a loss-making 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 Yidu Tech 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 Yidu Tech, take a look at Yidu Tech's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:

1. Valuation: What is Yidu Tech 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 Yidu Tech 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 Yidu Tech'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.

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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.