RVL Pharmaceuticals plc (NASDAQ:RVLP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. RVL Pharmaceuticals plc, a specialty pharmaceutical company, focuses on the development and commercialization of pharmaceutical products that target markets with underserved patient populations in the ocular and medical aesthetics therapeutic areas in the United States, Argentina, and Hungary. The US$101m market-cap company posted a loss in its most recent financial year of US$83m and a latest trailing-twelve-month loss of US$53m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which RVL Pharmaceuticals 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.

See our latest analysis for RVL Pharmaceuticals

Consensus from 4 of the American Pharmaceuticals analysts is that RVL Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$8.9m in 2025. Therefore, the company is expected to breakeven roughly 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 60%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for RVL Pharmaceuticals given that this is a high-level summary, but, bear in mind that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. RVL Pharmaceuticals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in RVL Pharmaceuticals' case is 82%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of RVL Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – RVL Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Valuation: What is RVL Pharmaceuticals 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 RVL Pharmaceuticals 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 RVL Pharmaceuticals’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.

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