With the business potentially at an important milestone, we thought we'd take a closer look at Aroa Biosurgery Limited's (ASX:ARX) future prospects. Aroa Biosurgery Limited develops, manufactures, and sells medical devices for wound and soft tissue repair using extracellular matrix (ECM) technology in the United States and internationally. The AU$140m market-cap company posted a loss in its most recent financial year of NZ$11m and a latest trailing-twelve-month loss of NZ$7.6m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Aroa Biosurgery will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 5 industry analysts covering Aroa Biosurgery, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of NZ$4.2m in 2026. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Aroa Biosurgery's growth isn’t the focus of this broad overview, but, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Check out our latest analysis for Aroa Biosurgery

Before we wrap up, there’s one aspect worth mentioning. Aroa Biosurgery currently has no debt on its balance sheet, which is rare for a loss-making biotech, 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:

This article is not intended to be a comprehensive analysis on Aroa Biosurgery, so if you are interested in understanding the company at a deeper level, take a look at Aroa Biosurgery's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is Aroa Biosurgery 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 Aroa Biosurgery 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 Aroa Biosurgery’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.