Rua Life Sciences Plc's (LON:RUA) Shift From Loss To Profit

We feel now is a pretty good time to analyse Rua Life Sciences Plc's (LON:RUA) business as it appears the company may be on the cusp of a considerable accomplishment. Rua Life Sciences Plc, together with its subsidiaries, provides polymers, services, and products to the medical device industry in Europe, the United States, and internationally. On 31 March 2020, the UK£22m market-cap company posted a loss of UK£816k for its most recent financial year. As path to profitability is the topic on Rua Life Sciences' 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.

See our latest analysis for Rua Life Sciences

Consensus from 2 of the British Medical Equipment analysts is that Rua Life Sciences is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of UK£653k in 2023. So, the company is predicted to breakeven approximately 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 78% is expected, 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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We're not going to go through company-specific developments for Rua Life Sciences given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Rua Life Sciences has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Rua Life Sciences 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 Rua Life Sciences, take a look at Rua Life Sciences' company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Historical Track Record: What has Rua Life Sciences' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rua Life Sciences' 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.

This article by Simply Wall St is general in nature. 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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