Negative Cash FlowPersistent negative operating and free cash flows reduce liquidity and limit the company’s ability to fund capex, maintenance, and working capital from operations. Over several months this forces reliance on external financing, increasing cost of capital and constraining capacity investments critical for a manufacturing-heavy CDMO.
Ongoing Losses And MarginsContinued losses and falling margins indicate structural issues in pricing, cost control, or product mix. Over the medium term this erodes retained earnings, weakens return on capital, and limits ability to reinvest in process improvements or quality systems that are essential for sustaining competitiveness in pharma manufacturing.
Rising LeverageAn increase in leverage raises financial risk and reduces flexibility to absorb downturns or fund strategic initiatives. For a capital-intensive CDMO, higher debt servicing needs can crowd out investment in facilities or regulatory compliance, and increase vulnerability to tighter credit conditions over the next several months.