Negative Operating And Free Cash FlowPersistent negative operating and free cash flows indicate the business is not converting operations into sustainable cash. Over 2–6 months this pressures liquidity, forces reliance on external funding, and constrains investment in trials, manufacturing scale-up, or commercialization activities necessary for long-term value creation.
Declining Revenue And MarginsMaterial declines in revenue and gross margin signal weakening core economics and potential competitive or operational issues. Sustained margin erosion and negative net margins undermine reinvestment capacity, reduce ability to scale commercial operations, and raise the bar for achieving profitable, self-sustaining growth.
Eroding Stockholders' EquityA multi-year decline in shareholders' equity reduces the capital buffer against adverse shocks and limits strategic flexibility. Over the medium term this can increase dilution risk from needed capital raises, tighten credit terms, and constrain the company's ability to fund clinical development or commercial expansion without external support.