TerrAscend Corp. (TSE:TSND): When Will It Breakeven?

We feel now is a pretty good time to analyse TerrAscend Corp.'s (TSE:TSND) business as it appears the company may be on the cusp of a considerable accomplishment. TerrAscend Corp. cultivates, produces, and sells cannabis products in Canada and the United States. The company’s loss has recently broadened since it announced a US$29m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$32m, moving it further away from breakeven. Many investors are wondering about the rate at which TerrAscend will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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Consensus from 3 of the Canadian Pharmaceuticals analysts is that TerrAscend is on the verge of breakeven. They anticipate the company to incur a final loss in 2027, before generating positive profits of US$10m in 2028. The company is therefore projected to breakeven around 2 years from today. 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 105%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving TerrAscend's growth isn’t the focus of this broad overview, though, bear in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

View our latest analysis for TerrAscend

One thing we would like to bring into light with TerrAscend is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 TerrAscend 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 TerrAscend, take a look at TerrAscend's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Valuation: What is TerrAscend 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 TerrAscend 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 TerrAscend’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.