Even when a business is losing money, it’s possible for shareholders to make money if they buy a good business at the right price. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you’d have done very well indeed. Having said that, unprofitable companies are risky because they could potentially burn through all their cash and become distressed.
So, the natural question for Cordlife Group (SGX:P8A) shareholders is whether they should be concerned by its rate of cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. First, we’ll determine its cash runway by comparing its cash burn with its cash reserves.
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You can calculate a company’s cash runway by dividing the amount of cash it has by the rate at which it is spending that cash. When Cordlife Group last reported its June 2025 balance sheet in August 2025, it had zero debt and cash worth S$52m. In the last year, its cash burn was S$9.9m. Therefore, from June 2025 it had 5.3 years of cash runway. While this is only one measure of its cash burn situation, it certainly gives us the impression that holders have nothing to worry about. The image below shows how its cash balance has been changing over the last few years.
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Cordlife Group actually ramped up its cash burn by a whopping 97% in the last year, which shows it is boosting investment in the business. That does give us pause, and we can’t take much solace in the operating revenue growth of 2.8% in the same time frame. Considering both these metrics, we’re a little concerned about how the company is developing. In reality, this article only makes a short study of the company’s growth data. You can take a look at how Cordlife Group has developed its business over time by checking this visualization of its revenue and earnings history.
Cordlife Group seems to be in a fairly good position, in terms of cash burn, but we still think it’s worthwhile considering how easily it could raise more money if it wanted to. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Many companies end up issuing new shares to fund future growth. By comparing a company’s annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).