Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Arcutis Biotherapeutics, Inc.'s (NASDAQ:ARQT) future prospects. Arcutis Biotherapeutics, Inc., a biopharmaceutical company, focuses on developing and commercializing treatments for dermatological diseases. On 31 December 2024, the US$1.6b market-cap company posted a loss of US$140m for its most recent financial year. The most pressing concern for investors is Arcutis Biotherapeutics' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Consensus from 7 of the American Biotechs analysts is that Arcutis Biotherapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$44m 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 58% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Arcutis Biotherapeutics given that this is a high-level summary, however, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

View our latest analysis for Arcutis Biotherapeutics

One thing we would like to bring into light with Arcutis Biotherapeutics is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Arcutis Biotherapeutics' case is 68%. 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 key fundamentals of Arcutis Biotherapeutics 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 Arcutis Biotherapeutics, take a look at Arcutis Biotherapeutics' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

1. Valuation: What is Arcutis Biotherapeutics 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 Arcutis Biotherapeutics 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 Arcutis Biotherapeutics’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.