Establishment Labs’ ROIC at -12.48% Falls Short of 9.01% WACC
Establishment Labs’ ROIC stands at -12.48% versus a 9.01% WACC, producing a -1.39 ROIC/WACC ratio that fails to cover its cost of capital. Its returns trail peers like OrthoPediatrics (-6.27% ROIC) and SI-BONE (-10.42% ROIC) and fall far behind LivaNova’s positive 10.90% ROIC.
1. Financial Performance
Establishment Labs reported a ROIC of -12.48% against a WACC of 9.01%, yielding a -1.39 ROIC/WACC ratio. This indicates the company is not generating returns sufficient to cover its cost of capital.
2. Peer Comparison
OrthoPediatrics posted a ROIC of -6.27% versus 8.86% WACC and SI-BONE recorded -10.42% ROIC against 7.50% WACC, both outperforming Establishment Labs in capital returns. LivaNova stands out with a positive 10.90% ROIC over a 7.96% WACC, highlighting efficient capital utilization.
3. Capital Efficiency Challenges
Persistent negative ROIC relative to WACC may pressure investor valuation and restrict funding for growth initiatives. Closing this performance gap will be critical for improving shareholder value and securing future financing.