We feel now is a pretty good time to analyse Evolus, Inc.'s (NASDAQ:EOLS) business as it appears the company may be on the cusp of a considerable accomplishment. Evolus, Inc., a performance beauty company, focuses on delivering products in the cash-pay aesthetic market in the United States, Canada, and Europe. With the latest financial year loss of US$62m and a trailing-twelve-month loss of US$53m, the US$963m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Evolus' investors mind, we've decided to gauge market sentiment. 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 6 industry analysts covering Evolus, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$37m in 2026. Therefore, the company is expected to breakeven roughly 2 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 69% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won't go into details of Evolus' upcoming projects, but, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. 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 Evolus is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, and the company has considerably exceeded this. 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 Evolus 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 Evolus, take a look at Evolus' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:

1. Valuation: What is Evolus 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 Evolus 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 Evolus'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.