Avadel Pharmaceuticals plc (NASDAQ:AVDL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Avadel Pharmaceuticals plc operates as a biopharmaceutical company in the United States. The US$1.6b market-cap company's loss lessened since it announced a US$160m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$157m, as it approaches breakeven. Many investors are wondering about the rate at which Avadel Pharmaceuticals will turn a profit, with the big question being "when will the company breakeven?" Below we will provide a high-level summary of the industry analysts' expectations for the company.

Avadel Pharmaceuticals is bordering on breakeven, according to the 9 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$59m in 2025. The company is therefore projected to breakeven just over a year 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 61%, which is extremely buoyant. 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 Avadel Pharmaceuticals given that this is a high-level summary, however, bear in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Avadel Pharmaceuticals is its relatively high level of debt. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, which in Avadel Pharmaceuticals' case is 44%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Avadel Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Avadel Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Valuation: What is Avadel 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 Avadel 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 Avadel 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.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com