Shanghai HeartCare Medical Technology (HKG:6609) has a cash burn rate that shareholders should not be too worried about. The company had CN¥745 million in cash reserves in June 2023 and a cash burn of CN¥255 million over the past year, giving it a cash runway of about 2.9 years. While the cash burn is significant, the company is growing well with a 58% increase in operating revenue. However, shareholders should keep an eye on how the company develops.
One concern is the potential dilution for shareholders if the company needs to raise more cash. Shanghai HeartCare Medical Technology’s cash burn of CN¥255 million is about 35% of its CN¥728 million market capitalization, suggesting that shareholders would face dilution if the company were to issue more shares.
Overall, while the cash burn rate is notable, the company’s revenue growth and cash reserves provide some reassurance for shareholders. However, it’s important to also consider other factors such as the compensation of the CEO and additional fundamentals when evaluating the company.