Here's Why We're Not Too Worried About Kaisa Health Group Holdings' (HKG:876) Cash Burn Situation

We can readily understand why investors are attracted to unprofitable companies. For example, Kaisa Health Group Holdings (HKG:876) shareholders have done very well over the last year, with the share price soaring by 200%. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

Given its strong share price performance, we think it's worthwhile for Kaisa Health Group Holdings shareholders to consider whether its cash burn is concerning. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. Let's start with an examination of the business' cash, relative to its cash burn.

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Does Kaisa Health Group Holdings Have A Long Cash Runway?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. When Kaisa Health Group Holdings last reported its June 2025 balance sheet in August 2025, it had zero debt and cash worth HK$147m. Looking at the last year, the company burnt through HK$39m. That means it had a cash runway of about 3.8 years as of June 2025. A runway of this length affords the company the time and space it needs to develop the business. You can see how its cash balance has changed over time in the image below.

See our latest analysis for Kaisa Health Group Holdings

How Well Is Kaisa Health Group Holdings Growing?

We reckon the fact that Kaisa Health Group Holdings managed to shrink its cash burn by 39% over the last year is rather encouraging. Unfortunately, however, operating revenue declined by 8.5% during the period. On balance, we'd say the company is improving over time. Of course, we've only taken a quick look at the stock's growth metrics, here. This graph of historic earnings and revenue shows how Kaisa Health Group Holdings is building its business over time.

How Easily Can Kaisa Health Group Holdings Raise Cash?

There's no doubt Kaisa Health Group Holdings seems to be in a fairly good position, when it comes to managing its cash burn, but even if it's only hypothetical, it's always worth asking how easily it could raise more money to fund growth. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Kaisa Health Group Holdings has a market capitalisation of HK$227m and burnt through HK$39m last year, which is 17% of the company's market value. Given that situation, it's fair to say the company wouldn't have much trouble raising more cash for growth, but shareholders would be somewhat diluted.

How Risky Is Kaisa Health Group Holdings' Cash Burn Situation?

Even though its falling revenue makes us a little nervous, we are compelled to mention that we thought Kaisa Health Group Holdings' cash runway was relatively promising. Based on the factors mentioned in this article, we think its cash burn situation warrants some attention from shareholders, but we don't think they should be worried. Separately, we looked at different risks affecting the company and spotted 2 warning signs for Kaisa Health Group Holdings (of which 1 is concerning!) you should know about.

Of course Kaisa Health Group Holdings may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.