We're Hopeful That Intelligent Ultrasound Group (LON:MED) Will Use Its Cash Wisely

Simply Wall St

We can readily understand why investors are attracted to unprofitable companies. 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.

So should Intelligent Ultrasound Group (LON:MED) shareholders be worried about its cash burn? For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). Let's start with an examination of the business' cash, relative to its cash burn.

See our latest analysis for Intelligent Ultrasound Group

Does Intelligent Ultrasound Group Have A Long Cash Runway?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at June 2020, Intelligent Ultrasound Group had cash of UK£10m and no debt. Importantly, its cash burn was UK£3.9m over the trailing twelve months. Therefore, from June 2020 it had 2.6 years of cash runway. That's decent, giving the company a couple years to develop its business. Depicted below, you can see how its cash holdings have changed over time.

debt-equity-history-analysis
debt-equity-history-analysis

How Well Is Intelligent Ultrasound Group Growing?

At first glance it's a bit worrying to see that Intelligent Ultrasound Group actually boosted its cash burn by 2.5%, year on year. Also concerning, operating revenue was actually down by 11% in that time. In light of the data above, we're fairly sanguine about the business growth trajectory. 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 Intelligent Ultrasound Group is building its business over time.

How Hard Would It Be For Intelligent Ultrasound Group To Raise More Cash For Growth?

While Intelligent Ultrasound Group seems to be in a fairly good position, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Companies can raise capital through either debt or equity. 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 UK£37m, Intelligent Ultrasound Group's UK£3.9m in cash burn equates to about 11% of its 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.

So, Should We Worry About Intelligent Ultrasound Group's Cash Burn?

Even though its falling revenue makes us a little nervous, we are compelled to mention that we thought Intelligent Ultrasound Group's cash runway was relatively promising. While we're the kind of investors who are always a bit concerned about the risks involved with cash burning companies, the metrics we have discussed in this article leave us relatively comfortable about Intelligent Ultrasound Group's situation. Separately, we looked at different risks affecting the company and spotted 3 warning signs for Intelligent Ultrasound Group (of which 1 is a bit concerning!) you should know about.

If you would prefer to check out another company with better fundamentals, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt or this list of stocks which are all forecast to grow.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Latest Stories

  • Donald Trump announces he made Christmas speech to deployed troops but ‘fake news’ wasn’t invited

    Speech came hours after Mr Trump golfed in Florida with Lindsey Graham

  • 4 arrested in Mexico crash that killed current, ex-governor

    Four people have been arrested in connection with the 2018 crash of a helicopter that killed a central Mexican governor and her husband — who had preceded her as governor — authorities said Friday. The Agusta 109 helicopter crashed in flames 10 minutes after takeoff on Dec. 24 that year while carrying newly installed Puebla Gov. Martha Erika Alonso and her husband, former Gov. Rafael Moreno Valle, as well as three other people. The Puebla state prosecutor's office said the four suspects worked for a Rotor Flight Services, a company “related to the functioning of the aircraft,” It said the suspects were accused of culpable homicide, damage to another's property and false testimony.

  • Some Russians, dismayed at vaccine exports, call for more doses at home

    Some Russians took to social media on Friday to voice frustration after 300,000 doses of the country's Sputnik V COVID-19 vaccine were supplied to Argentina, arguing that more shots should be made available at home. Though the vaccine is readily available in Moscow, relatively small batches have so far been delivered to many Russian regions as part of a mass inoculation programme, with several reporting receiving 2,000 doses or less so far. Kaliningrad has received 400, according to the Interfax news agency.

  • Boris Johnson 'totally capitulated' on fishing in trade deal, say EU diplomats

    Boris Johnson has "totally capitulated" on fishing in the EU trade deal negotiations, but both sides have compromised, EU diplomatic sources have claimed. On Thursday Mr Johnson finally accepted the bloc’s final offer of returning 25 percent of the value of fish caught in UK waters to British fishermen. It was a “big move”, sources said, because he had been demanding 35 percent of the value of the catch. French officials claimed that the British had made major last minute concessions. The UK and EU settled on a five and a half year transition period before annual negotiations over fishing opportunities would begin. There was satisfaction in Brussels at having forced the prime minister into the climbdown but anxiety he will not be able to sell the deal to hardline Brexiteers in his party. “It won’t be a total victory. It never is,” an EU diplomat said. “I am a little concerned that London has not got the landing rights for the deal with its constituents.” “Whatever happens will be presented as a great victory. The Europeans will yawn,” another source said before confidently predicting that Mr Johnson has the European Research Group of MPs “in his pocket”.

  • Human remains found at blast site of bomb-rigged vehicle playing message that it was about to explode

    Police believe the act was intentional

  • Critics fear Trump could pressure William Barr’s successor for big favors

    Former DoJ officials say they are worried Trump will lean on acting attorney general Jeffrey Rosen for potentially risky favorsWilliam Barr’s abrupt move to leave his post as attorney general this week has spurred fears among Department of Justice veterans that Donald Trump will put new pressures on Barr’s successor to do him big and potentially risky political and legal favors.Former justice department officials say they are worried Trump will lean on Barr’s less experienced successor, the acting attorney general, Jeffrey Rosen, to push policies which Trump has suggested he backs, including naming special counsels to investigate President-elect Joe Biden’s son, Hunter Biden, and using the DoJ to investigate Trump’s baseless charges of widespread election fraud.Critics also fear Rosen could face pressure from Trump to help obtain a legal opinion that would allow Trump to pardon himself by reversing a justice department opinion that dates back to the Nixon era and bars a presidential self-pardon. Such a move would probably trigger widespread outrage.Mounting concerns that Trump will try to squeeze favors from Rosen, who became Barr’s deputy AG in early 2019 without previous DoJ experience, stem partly from Trump’s post-election anger at Barr, despite being arguably his strongest cabinet ally in the run-up to the November electionBut after losing to Biden, Trump has become furious at Barr for not publicly disclosing that Hunter Biden’s taxes were being looked at by a US attorney in Delaware during the 2020 campaign. Trump was also livid over Barr’s statement that there was no sign of significant voting fraud in the elections.At his last press conference on Monday, Barr said he had no intention of naming a special counsel to look into Hunter Biden, or to investigate Trump’s baseless claims of widespread voting fraud.Attorneys general are authorized to name special counsels and last week the Associated Press reported that Trump has floated the idea of tapping conspiracist and lawyer Sidney Powell, who Trump met with at least twice recently to discuss far-fetched election fraud claims, as a special counsel to investigate bogus claims the election was rigged.Paul Rosenzweig, a former prosecutor under Ken Starr when he was a special counsel investigating President Bill Clinton, said Barr’s departure after heavy criticism by Trump seems to signal that Trump wants a “more malleable leader at the head of DoJ – one who will not resist his last-minute aberrations”.“There are many things we might expect Trump to order the department to do in the waning days of his presidency,” Rosenzweig said. “Most likely, is the appointment of a special counsel to probe Hunter Biden. Another is a new Office of Legal Counsel (OLC) opinion, reversing the Nixon-era decision that presidential self-pardons are illegal.”Rosenzweig added it remains to be seen if Rosen “is as malleable as Trump hopes he will be”.Before becoming Barr’s deputy attorney general, Rosen had been the transportation department’s deputy secretary, and spent many years doing corporate legal work at Kirkland & Ellis where Barr used to work.The former DoJ inspector general Michael Bromwich foresees Trump trying to pressure Rosen to do him favors, but urged Rosen to ignore Trump’s pleas, noting that Trump may act on his own too in some matters.“I don’t think we can fully imagine the range of inappropriate actions Rosen could be asked to undertake,” Bromwich said. “Unlike Barr, Rosen is an unknown and enigmatic figure to the outside world, with no reputation outside the narrow circle of people he has worked with. I doubt that he wants his legacy to be kowtowing to the whims of a president who has taken leave of his senses.”Some Trump prodding of Rosen would be hard to pull off, and Trump might just turn for advice to his legal allies, Bromwich added.“I don’t think an OLC opinion on the issue of self-pardon would be worth the exercise for anyone. If it were to conclude that a self-pardon is constitutional, it would be dismissed as a coerced opinion and would further degrade the reputation of OLC,” Bromwich said.“I doubt whether he [Trump] will feel the need to obtain such an opinion. He will choose instead to rely on the legal advice of Rudy Giuliani, Sidney Powell, and the rest of the legal misfits he has surrounded himself with.”“If I were Rosen, I would change my phone number and go on an extended vacation,” Bromwich said. “If that’s not possible, he should make it clear that he won’t do anything that violates his oath to the constitution, or his fundamental sense of right and wrong.”Other DoJ veterans add that any Trump pressures on Rosen to name special counsels to investigate Hunter Biden or unfounded charges of major election fraud had a good chance of being overturned by Biden’s AG given Barr’s statements rejecting the need for them.Paul Pelletier, a former acting chief of the DoJ fraud section in two administrations, said any of Biden’s reported candidates for AG would have the power to remove a special counsel for “good cause”, including “obviously politically motivated investigations”.Besides pressing Rosen for favors, ex-DoJ hands say that Trump’s own actions involving potential pardons of family members and political allies, which Trump is said to be weighing on top of others he made this week, could create legal headaches for him after he leaves office.Some pardons might lead to charges of obstruction of justice, or spur incriminating testimony in investigations of Trump and his business by two New York prosecutors when he departs.Barr noted at his 2019 confirmation hearing that a president’s broad powers to pardon carry risks. While presidents have the right to pardon family members, Barr said that if a pardon to a family member is “connected to some act that violates an obstruction statute, it could be obstruction”.Donald Ayer, who was deputy AG under George HW Bush, noted that Trump might need to consider that some pardons “could boomerang. He may have reason for concern that people he pardoned will be compelled to testify, since once pardoned, and perhaps given some further modest grant of immunity, the people he pardons will have no right to refuse to testify against Trump or anyone else based on the fifth amendment.”

  • Chief hails 'overwhelming' response to boy found in cemetery

    An Ohio police chief is hailing what he called an “overwhelming" response to the story of a young boy found in a cemetery two days before Christmas. Chief David Centner of the Hinckley police department said on Christmas Eve that the child, believed to be about 3 1/2 years old, was doing well “in the loving home" of a Medina County foster family. Police were called shortly after noon Wednesday to Hope Memorial Gardens Cemetery where a witness reported seeing a car speeding away and a little boy “running after the car followed by a dog."

  • Tokyo COVID-19 cases hit record, new strain arrives before New Year holiday

    Tokyo reported a record rise in coronavirus cases on Saturday, as Japan experiences a surge that now includes a new, fast-spreading strain while the government urges people to stay home. Infections of the virus that causes COVID-19 hit a record 949 in the capital just as Japan heads into New Year holidays that normally see people stream from the capital into the provinces. Serious cases were unchanged from a day earlier at 81.

  • Dog crushed to death by owner during confrontation with mugger

    A dog was crushed to death by its owner after she was knocked over during a confrontation with a mugger in an “unprovoked and unacceptable” attack. Norfolk Terrier, Rufus was crushed while the woman tried to pull the thief off her husband. The man, 56 and his 36 year old wife were walking their two dogs in Westminster, central London, when they were approached by a man pushing a bike along the footpath. The man, who wore a face covering and gloves, stopped the pair before pulling the watch off the man's arm, causing scratches to his forearm. The pair began to struggle and it was at this point that the wife tried to pull the mugger away during the attack at 4.15pm in Spanish Place on August 4.

  • Vehicle explosion rocks Nashville on Christmas

    A vehicle explosion shook Nashville, Tennessee early on Christmas Day morning in what Nashille Police Department's Don Aaron described as an "intentional act." "We do believe that the explosion was an intentional act." Fire officials reported taking three people to the hospital, but none were critically injured. Police reported seeing the vehicle when they responded to an emergency call of "shots fired" in the downtown tourist area in the early morning. Without specifying what made it suspicious, police said 'circumstances' about the motor home prompted officers to call the bomb squad. The bomb squad was on the way when the explosion occurred. Andrew McCabe, a former deputy FBI director, told CNN an explosion of this size would be investigated as a possible act of terrorism, whether domestic or foreign. Moments before the blast, police officers went door-to-door in nearby buildings to hustle residents to safety. Police said it was not immediately clear if anyone was inside the motor home when it exploded. Most of the buildings were closed given the hour and Christmas holiday in the heart of the city. The explosion destroyed several other vehicles and damaged several buildings.

  • Judge delays execution of only woman on U.S. death row

    The decision potentially sets up the Trump administration to schedule the execution after President-elect Joe Biden takes office.

  • Trump addresses ‘terrible pandemic’ in Christmas message, then hits out at Republicans abandoning him over election defeat

    Donald Trump and first lady Melania Trump delivered a very traditional Christmas message in which they addressed the “terrible pandemic” and the courageous response of citizens. Shortly after releasing the video on Christmas Eve, Mr Trump was back on Twitter complaining about the lack of support from Republicans whom he claims he saved from electoral defeat but who have now abandoned him.

  • Asia Today: Beijing tells residents to stay put for holidays

    Beijing has urged residents not to leave the city during the Lunar New Year holiday in February, implementing new restrictions after several coronavirus infections last week. Two domestic cases were reported on Friday, a convenience store worker and a Hewlett Packard Enterprise employee. Another two asymptomatic cases were discovered in Beijing earlier in the week.

  • At least 15 dead in delays at South Africa-Zimbabwe border -TV news

    At least 15 people have died in recent weeks on the South African side of the Beitbridge border with Zimbabwe in lengthy queues that have been slowed by coronavirus screening, television news channel eNCA said on Friday. The health ministry, Department of Home Affairs and South African police Local did not respond immediately to Reuters' requests on Friday for confirmation of fatalities that local media outlets attributed to exhaustion and ill health owing to a lack of facilities while waiting to cross the border, sometimes for days. Images and videos on local news channels and circulated on social media showed lines of stationary cars, mainly trucks, stretching for kilometres on the narrow road leading to the inland Beitbridge port that serves as the main crossing point between the countries, and is more busy than usual at this time of year because of a seasonal return of migrants to Zimbabwe.

  • Royal Caribbean tries to block families suing over fatal tour to island of live volcano

    Royal Caribbean, the world's largest cruise company, is trying to prevent victims of the 2019 New Zealand volcanic eruption from suing in the US. Passengers from the Royal Caribbean ship Ovation of the Seas took a trip to White Island, a popular tourist site, last December, when a volcano suddenly erupted, killing 27 visitors and injuring 25 more. Ivy and Paul Reed, from the US state of Maryland, who suffered burns as a result of the eruption, and Australians Marie and Stephanie Browitt, who lost family members because of the eruption, filed separate lawsuits against Royal Caribbean claiming that the cruise line did not properly explain the dangers of visiting White Island. Peter Gordon, a lawyer for the Browitt family, told the Australian Broadcasting Company that Royal Caribbean should have known that the volcano could erupt before allowing its passengers to visit White Island.

  • Military on alert over Trump’s martial law threat: ‘The craziness is unprecedented’

    According to a new report, ranking officers have discussed what they would do if the president declared martial law. President Donald Trump has filed lawsuits after losing the 2020 presidential election and refuses to acknowledge the defeat. A new report claims military leaders have discussed their plan of action if POTUS were to declare martial law toward the last days of his term.

  • Cuomo grants Christmas clemency to 21 people including women locked up for killing abusive partners

    Christmas clemency for women convicted of murder and manslaughter

  • George Blake, last in line of Cold War spies who betrayed Britain, dies at 98

    George Blake, who died in Russia on Saturday at the age of 98, was the last in a line of British spies whose secret work for the Soviet Union humiliated the intelligence establishment when it was discovered at the height of the Cold War. Britain says he exposed the identities of hundreds of Western agents across Eastern Europe in the 1950s, some of whom were executed as a result of his treason. His case was among the most notorious of the Cold War, alongside those of a separate ring of British double agents known as the Cambridge Five.

  • Beaver found in Plymouth among first to be reintroduced to wild in Britain for 400 years

    A beaver rescued by police this week was among the first of its kind to be reintroduced to the wild in Britain for nearly 400 years The 20kg creature had escaped from a specially designed re-wilding enclosure near Poole Farm in Plymouth. Local officers say they were confronted with the “unusual sight” of the beaver at large on Monday and posted a photograph on social media of the runaway creature in the city. They tweeted yesterday: “An unusual sight for one of our crews on Monday night shift: Plymouth's resident beaver spotted out and about! “He has apparently been caught since and is back home for Christmas.” The male had been released into the wild at Forder Valley in November – the first in the city for 400 years. The Eurasian Beaver was originally caught in late September in the wild from the Tay Catchment in Scotland and was released as part of a nationwide trend to reintroduce beavers in the wild. The beaver’s behaviour and actions will now be monitored in the hope that its actions will reduce flooding further downstream and create habitats for wildlife in the Bircham Valley. This comes after a 25kg young male beaver was spotted in Italy for the first time in nearly 500 years, after it walked over the border from Austria or Slovenia into the Dolomites. The first clues that the rodent might be back on Italian soil were noticed by a hunting guide who spends his days roaming the mountains and forests. Forester Reinhard Pipperger had noticed at the time young trees had been felled along a stretch of the Sesto river in Northern Italy. The beaver was later photographed by a camera set up along the river by wildlife rangers.

  • Turkey to require negative COVID-19 test result for travel

    Turkey is enacting precautions for international travel, requiring a negative COVID-19 test for passengers to enter the country starting Monday until March. Health Minister Fahrettin Koca tweeted a statement Friday saying travelers would need to present a negative result from a PCR test taken in a 72-hour window to board international flights en route to Turkey. Previously, tests weren't required for travel to Turkey.