SUSMEDInc (TSE:4263) Is In A Good Position To Deliver On Growth Plans
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. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.
Given this risk, we thought we'd take a look at whether SUSMEDInc (TSE:4263) shareholders should be worried about its cash burn. In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. We'll start by comparing its cash burn with its cash reserves in order to calculate its cash runway.
How Long Is SUSMEDInc's Cash Runway?
A company's cash runway is calculated by dividing its cash hoard by its cash burn. When SUSMEDInc last reported its March 2026 balance sheet in May 2026, it had zero debt and cash worth JP¥4.0b. Importantly, its cash burn was JP¥482m over the trailing twelve months. Therefore, from March 2026 it had 8.2 years of cash runway. Even though this is but one measure of the company's cash burn, the thought of such a long cash runway warms our bellies in a comforting way. The image below shows how its cash balance has been changing over the last few years.
Check out our latest analysis for SUSMEDInc
How Well Is SUSMEDInc Growing?
On balance, we think it's mildly positive that SUSMEDInc trimmed its cash burn by 3.4% over the last twelve months. But the revenue dip of 40% in the same period was a bit concerning. Taken together, we think these growth metrics are a little worrying. In reality, this article only makes a short study of the company's growth data. This graph of historic earnings and revenue shows how SUSMEDInc is building its business over time.
How Hard Would It Be For SUSMEDInc To Raise More Cash For Growth?
Even though it seems like SUSMEDInc is developing its business nicely, we still like to consider how easily it could raise more money to accelerate growth. 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).
Since it has a market capitalisation of JP¥7.6b, SUSMEDInc's JP¥482m in cash burn equates to about 6.3% of its market value. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.
Is SUSMEDInc's Cash Burn A Worry?
Even though its falling revenue makes us a little nervous, we are compelled to mention that we thought SUSMEDInc's 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. On another note, we conducted an in-depth investigation of the company, and identified 4 warning signs for SUSMEDInc (2 are a bit unpleasant!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts)
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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.