While some companies burn cash to fuel expansion, others struggle to turn spending into sustainable growth. A high cash burn rate without a strong balance sheet can leave investors exposed to significant downside.
Just because a company is spending heavily doesn’t mean it’s on the right track, and StockStory is here to separate the winners from the losers. That said, here are three cash-burning companies that don’t make the cut and some better opportunities instead.
Health Catalyst (HCAT)
Trailing 12-Month Free Cash Flow Margin: -10.4%
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ:HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Do We Avoid HCAT?
- 4.4% annual revenue growth over the last two years was slower than its software peers
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Cash-burning history makes us doubt the long-term viability of its business model
Health Catalyst’s stock price of $1.99 implies a valuation ratio of 0.5x forward price-to-sales. To fully understand why you should be careful with HCAT, check out our full research report (it’s free).
Kura Sushi (KRUS)
Trailing 12-Month Free Cash Flow Margin: -9.4%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ:KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Does KRUS Fall Short?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Kura Sushi is trading at $73.10 per share, or 43.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including KRUS in your portfolio.
Bark (BARK)
Trailing 12-Month Free Cash Flow Margin: -8.6%
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Why Are We Out on BARK?
- Lackluster 5.2% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $0.79 per share, Bark trades at 40.2x forward EV-to-EBITDA. If you’re considering BARK for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.