Breaking Down Cara Therapeutics, Inc. (CARA) Financial Health: Key Insights for Investors

You're looking at Cara Therapeutics, Inc. (CARA) and seeing a biotech story that just got a whole lot more complex after its merger with Tvardi Therapeutics in April 2025, so you need a clear-eyed view of the new financial reality.

The numbers from the last twelve months tell a stark tale: the company's trailing twelve-month (TTM) revenue stands at just $7.14 million, but its net loss is a staggering -$70.87 million. That's a massive cash burn against a small top-line number, and it's the core risk you must understand. Still, the balance sheet offers a momentary cushion, showing $37.90 million in cash. The quick math on liquidity shows a strong current ratio of 11.03, meaning it has plenty of short-term assets to cover its immediate liabilities, which is defintely a plus for a development-stage company.

The market has reacted to this transformation and the reverse stock splits, with the stock trading around $5.32 as of mid-November 2025, leading to a market capitalization of roughly $24.33 million. This valuation is a fraction of its former self, reflecting the high-risk, high-reward nature of its new pipeline focused on oncology and chronic pruritus treatments. The question is whether the new entity can translate its clinical assets into revenue fast enough to outrun that burn rate, and that's what we'll break down next.

Revenue Analysis

You need to understand that analyzing Cara Therapeutics, Inc. (CARA)'s revenue in 2025 is really about understanding a massive, deliberate pivot. The company, which completed a merger with Tvardi Therapeutics in April 2025, is no longer the same entity. The old revenue streams are largely gone, replaced by the financial reality of a clinical-stage biotech focused on a new pipeline.

The last meaningful revenue from Cara's original business was in the first quarter of 2025, before the merger. Q1 2025 revenue was $2.57 million, which was a sharp increase of 76.56% from the previous quarter, Q4 2024. But honestly, that jump was a short-term blip in a longer, downward trend, as the full-year 2024 revenue of $7.14 million was a steep decline of -65.96% from 2023.

Here's the quick math: the trailing twelve months (TTM) revenue as of November 2025 sits around $7.13 million USD, reflecting the low base of 2024 and the minimal pre-merger revenue in 2025. That's a tiny number for a publicly traded company, and it underscores the necessity of the strategic change.

Breakdown of Primary Revenue Sources and the Major Shift

The old Cara Therapeutics' revenue was complex, a mix of product sales and partnership payments, not a simple commercial sales model. This structure is what changed most dramatically in 2025.

• Pre-Merger Revenue (Q1 2025): Primarily collaborative revenue from the profit-sharing agreement with CSL Vifor for U.S. sales of KORSUVA (difelikefalin) injection. Plus, there was other revenue from royalties and milestone payments related to ex-U.S. sales, like the one from Maruishi Pharmaceuticals.
• Post-Merger Revenue (Q2/Q3 2025): The merger with Tvardi Therapeutics in April 2025 fundamentally altered the financial profile. Concurrent with the merger, Cara sold its remaining KORSUVA assets and rights to CSL Vifor for a purchase price of $900,000. This means the primary revenue stream from KORSUVA is effectively gone.

The new entity, Tvardi Therapeutics (which now trades under the ticker TVRD, but still carries the CARA history), is a clinical-stage company. This means its revenue is now near-zero from commercial product sales, and any reported income is typically non-core, like a one-time financial gain. For example, the Q2 2025 financial report showed a net income of $4.2 million, but this was primarily due to a non-cash $12.8 million remeasurement gain on Convertible Notes. The Q3 2025 net loss was $5.5 million. The new business model is all about R&D investment in TTI-101, not sales. You're now investing in a pipeline, not a product. For a deeper dive into the new financial landscape, you should read our full analysis: Breaking Down Cara Therapeutics, Inc. (CARA) Financial Health: Key Insights for Investors.

Profitability Metrics

When you look at Cara Therapeutics, Inc. (CARA)'s profitability in the near-term, the direct takeaway is that the company operates at a significant loss, which is typical for a clinical-stage biopharmaceutical company but still warrants a deep dive into the numbers. The recent TTM (Trailing Twelve Months) data, current as of November 2025, shows a stark negative margin across the board, driven by high operating expenses and a low revenue base following its strategic pivot and reverse merger.

For the TTM period ending in late 2025, Cara Therapeutics, Inc. reported total revenue of only $7.14 million. This is the anchor for all profitability ratios, and honestly, it's a very small base for a public company. Here's the quick math on the core profitability margins, which are all deep in the red:

• Gross Profit Margin: -409.66%.
• Operating Profit Margin: -781.23%.
• Net Profit Margin: -992.58%.

A negative Gross Profit Margin (calculated from the TTM Gross Loss of -$29.25 million) means the Cost of Revenue is substantially higher than the revenue generated. This isn't a sustainable model, but for a biotech, it often reflects costs tied to the commercial product KORSUVA (difelikefalin) injection against limited sales, plus potential write-downs or restructuring costs.

Operational Efficiency and Cost Management

The trend in profitability is one of deep, persistent losses, which accelerated in the TTM period. The Net Loss for the TTM period was -$70.87 million. This loss is magnified by the company's recent operational shifts. For example, the net cash used in operating activities accelerated 32% year-over-year to $17.8 million for the first nine months of 2025, which shows a rising cash burn. The company's focus is now on its TTI-109 prodrug program, and R&D spending on the TTI-109 program surged over 10,000% quarter-over-quarter to nearly $2 million, marking it as mission-critical. That's a clear action point for management.

To be fair, the company's negative operational efficiency is a feature, not a bug, of a clinical-stage biotech. The goal isn't profit today; it's a successful clinical trial tomorrow. The company's future hinges on the TTI-109 Phase 1 data, expected in the first half of 2026. This is a high-risk, high-reward profile.

Here is a snapshot of the TTM profitability figures for context:

Industry Comparison and Action

Your action here is to understand the context. Cara Therapeutics, Inc.'s margins are far below the industry average. While large, established life sciences companies were targeting operating margins around 25.7% in recent years, and 57% of executives anticipated margin expansions in 2025, Cara Therapeutics, Inc.'s deep negative margins are more aligned with smaller, low-revenue biotech firms. These smaller players often face negative margins because of the heavy R&D investment required to bring a drug to market. The entire Biotechnology industry is expected to grow revenue by 6.3% in 2025, but Cara Therapeutics, Inc. has not participated in that profit expansion.

What this estimate hides is that the company is in a survival-mode pivot, not a growth-mode phase, following the failure of its lead asset, TTI-101. The reverse merger in early 2025 provided a necessary liquidity injection of $23.9 million in net assets, bolstering cash to $36.4 million in Q3 2025, which is critical to fund operations until the next data readout. For a deeper look at the stakeholders betting on this pivot, you should check out Exploring Cara Therapeutics, Inc. (CARA) Investor Profile: Who's Buying and Why?

Your next step is clear: Monitor the cash runway and the R&D spend on TTI-109. If onboarding takes 14+ days, churn risk rises. Finance: track Q4 2025 cash burn against the $36.4 million cash balance and model the runway to the H1 2026 TTI-109 data readout.

Debt vs. Equity Structure

You're looking at Cara Therapeutics, Inc. (CARA)'s balance sheet, and the first thing to understand is that its financing story for 2025 is less about debt management and more about a strategic, existential pivot to equity. The company's recent reverse merger with Tvardi Therapeutics fundamentally reshaped its capital structure, essentially wiping the slate clean of significant debt to buy a new cash runway.

As of the fiscal quarter ending March 2025, Cara Therapeutics reported $0 in Debt, a figure that reflects a deliberate move away from debt financing. This shift was cemented by the reverse merger, which converted all outstanding Convertible Notes-a form of short-term liability-into equity, eliminating $35.9 million in debt from the balance sheet in the third quarter of 2025. That's a huge deleveraging event.

The company's Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of its shareholders' equity (total assets minus total liabilities), tells a different, more complex story. For a recent period around late 2024/early 2025, this ratio was reported as approximately -9.68. A negative D/E ratio is defintely not a sign of high debt; it's a clear indicator of a negative shareholder equity (an accumulated deficit), which is common for clinical-stage biotechnology firms that burn cash on research and development (R&D) without product revenue.

Here's the quick math: the company is currently financed almost entirely by equity-and cash from that equity-not debt. The industry average Debt-to-Equity ratio for Biotechnology is around 0.17, meaning most peers use about 17 cents of debt for every dollar of equity. Cara Therapeutics is far below that, but the underlying negative equity is the real risk factor. The company is using equity to fund its R&D, not debt.

This strategic move to prioritize equity financing over debt is a clear action to ensure survival and fund the TTI-109 program. The reverse merger, which closed in April 2025, acted as a significant equity issuance, providing a critical liquidity injection of $23.9 million in net assets. This cash, totaling $36.4 million in cash and short-term investments as of Q3 2025, is expected to fund operations into the first half of 2026. The company is simply too small and too early-stage to take on traditional, high-interest debt.

• Debt Elimination: Converted $35.9 million in notes to equity.
• Liquidity Boost: Received $23.9 million in net assets from the merger.
• Financing Focus: Primarily relies on equity funding to extend its cash runway.

For a deeper dive into who provided this crucial equity funding, you should check out Exploring Cara Therapeutics, Inc. (CARA) Investor Profile: Who's Buying and Why?

The current financial structure is a high-risk, high-reward bet on the pipeline, funded by shareholders. It's a clean balance sheet, but a very short runway.

Liquidity and Solvency

You need to know if Cara Therapeutics, Inc. (CARA) has the cash to cover its near-term bills, especially as a clinical-stage biotech company that completed a merger in 2025. The quick answer is yes, their liquidity position is defintely strong, but that strength is being rapidly consumed by their core operations.

The company's most recent liquidity ratios are exceptionally high, reflecting a substantial cushion of current assets (cash and equivalents) relative to current liabilities. As of the latest available data, the Current Ratio stands at a remarkable 11.03, and the Quick Ratio is nearly identical at 10.67. A ratio above 1.0 is generally good, so these figures suggest Cara Therapeutics, Inc. has over ten times the current assets needed to cover its short-term debts. This is a very strong liquidity profile.

Here's the quick math on their working capital: with total current assets of approximately $43.83 million, the company's working capital-the capital available for day-to-day operations-is roughly $39.86 million. This figure is driven by a large cash and short-term investments balance of $37.90 million. This strong working capital position is a necessary buffer for a company focused on drug development. For more on the strategic direction, you should check out the Mission Statement, Vision, & Core Values of Cara Therapeutics, Inc. (CARA).

The cash flow statement, however, tells a more nuanced story about the underlying business dynamics. While the balance sheet shows a cash hoard, the Statement of Cash Flows reveals the burn rate. For the last twelve months, Cara Therapeutics, Inc.'s operating cash flow was a significant outflow of -$60.92 million. This negative cash flow is typical for a biotech firm that is spending heavily on research and development (R&D) and clinical trials, but it highlights the critical need for continuous financing.

A breakdown of the recent cash flow trends shows exactly where the money is going and how it's being funded:

• Operating Cash Flow: A major outflow of -$60.92 million, indicating the cost of running the core business far exceeds revenue.
• Investing Cash Flow: A minimal outflow of -$1.05 million, primarily for capital expenditures. This is a small number, suggesting minimal investment in long-term assets.
• Financing Cash Flow: The primary source of recent capital has been through financing activities, most notably the merger with Tvardi Therapeutics, which closed in April 2025. This event was crucial for bolstering the company's cash and cash equivalents post-transaction.

The core liquidity strength of Cara Therapeutics, Inc. is its high cash balance, which is why the ratios look so good. But, the major liquidity concern is the substantial and persistent negative operating cash flow. The current cash balance is a finite resource, and without a clear path to positive operating cash flow, or further financing, the company will face a liquidity crunch down the road. The merger provided a capital injection, but the clock is still ticking on that -$60.92 million annual burn rate.

Here is a snapshot of the key liquidity metrics:

Valuation Analysis

You're looking at Cara Therapeutics, Inc. (CARA) and wondering if the market is missing something, or if the valuation is telling the real story. Honestly, for a clinical-stage biotech that recently completed a merger with Tvardi Therapeutics, Inc. and changed its ticker, traditional metrics are going to look messy, and they defintely are.

The core takeaway is this: Cara Therapeutics, Inc. is currently a bet on future clinical success, not present profitability. The valuation ratios are negative, which is typical for a company with negative earnings (losses) that is focused on drug development. This means the stock's price is driven by pipeline potential, not cash flow.

Is Cara Therapeutics, Inc. Overvalued or Undervalued?

The quick answer is that based on analyst consensus, Cara Therapeutics, Inc. is significantly undervalued relative to its price target, but its fundamentals scream high-risk speculation. The key valuation ratios for the 2025 fiscal year reflect a company operating at a loss, which is common in the biotechnology sector.

Here's the quick math on the key metrics (TTM, November 2025):

• Price-to-Earnings (P/E) Ratio: The ratio stands at approximately -0.41. Since earnings are negative, the P/E ratio is negative and effectively meaningless for a direct comparison to profitable companies.
• Price-to-Book (P/B) Ratio: This ratio is around -5.30. A negative P/B means the company has a negative book value (liabilities exceed assets), often due to accumulated losses, which is a significant red flag for financial health.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM figure is approximately -0.2x. This negative multiple confirms that Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is negative, again highlighting the company's operating losses.

What this estimate hides is the impact of the merger and the reverse stock split. The company executed a 1-for-3 reverse stock split in April 2025 in connection with the merger with Tvardi Therapeutics, Inc., which can temporarily distort price history and valuation metrics.

Stock Trend and Analyst Sentiment

The stock has been on a volatile ride. Over the last 12 months leading up to November 2025, the Cara Therapeutics, Inc. stock price has seen a decrease of roughly -41.98%. Despite this drop, the stock was trading around $5.32 in mid-November 2025.

Don't look for a dividend here; Cara Therapeutics, Inc. is a growth-focused entity, not an income play. It does not pay dividends, so the dividend yield and payout ratios are both 0%.

The analyst community is taking a cautious stance. The consensus rating from 3 analysts is a 'Hold.' However, the average 12-month price target is still set at $12.00. If you hold the stock at the current price of $5.32, that target implies a potential upside of over 125%. That's a huge gap, but remember, this target was last updated in mid-2024 and may not fully reflect all post-merger risks and opportunities.

For a deeper dive into who is making these big bets, you should read Exploring Cara Therapeutics, Inc. (CARA) Investor Profile: Who's Buying and Why?

To summarize the forward-looking view, here is the current analyst breakdown:

Next step: Finance needs to model the burn rate against the expected clinical trial milestones for the Tvardi Therapeutics, Inc. pipeline to validate the $12.00 price target by next Tuesday.

Risk Factors

You're looking for a clear-eyed view of Cara Therapeutics, Inc. (CARA), and the direct takeaway is this: the company is in a high-stakes transition. The primary risks are centered on a precarious cash runway, intense commercial competition for its key product, and the inherent execution risk of its recent strategic shift.

Financial and Operational Headwinds

The most immediate concern for Cara Therapeutics is its financial health and cash burn. For Q1 2025, the company reported a net loss of approximately $4.91 million, which, while an improvement over some prior periods, still highlights the need for external funding or a significant revenue boost. To be fair, this is a biotech reality, but the clock is ticking. The company's total TTM revenue as of November 2025 stood at only $7.13 million USD, a figure that is defintely not sustainable for its operating expenses. The company's cash, cash equivalents, and marketable securities were around $70 million as of March 31, 2024, which a 2023 financing deal was expected to stretch into 2025. This cash position is tight given the capital-intensive nature of clinical development.

Here's the quick math: a sustained quarterly loss near $4.91 million means every quarter eats into that $70 million cash reserve. The company's primary mitigation strategy has been a new operating plan focused on cost-containment and cash conservation. That's a good first step, but it doesn't solve the revenue problem.

Commercial and Competitive Pressures

On the market side, the commercial performance of KORSUVA (difelikefalin injection) for chronic kidney disease-associated pruritus (CKD-aP) has been underwhelming. It faces significant competition in the uremic pruritus treatment space. The challenge isn't just getting regulatory approval (which they have), but actually capturing market share against entrenched or more cost-effective therapies. The market has been slow to adopt KORSUVA, partly due to its high cost and modest efficacy compared to the competitive landscape. This is a classic biotech risk: a great drug doesn't always translate to great sales.

• Competition limits KORSUVA's revenue potential.
• High drug costs hinder broad market adoption.
• Future growth relies on successful clinical trials for new indications.

Strategic and Clinical Execution Risk

The most significant near-term risk stems from the company's pivot. In April 2025, Cara Therapeutics announced a proposed merger with Tvardi Therapeutics, accompanied by a 1-for-3 reverse stock split. This move fundamentally changes the company's focus from its difelikefalin programs to Tvardi's STAT3-targeting pipeline for fibrosis-driven diseases. This is a massive strategic shift, and it carries two major risks:

1. Integration Risk: Merging two biopharma companies is complex, introducing risks related to integrating different cultures, research teams, and operational structures.
2. Pipeline Risk: Investor value is now tied to the success of an entirely new, unproven clinical pipeline, shifting focus away from the oral difelikefalin trials that were once the key valuation driver.

The company is actively exploring a range of strategic alternatives to maximize shareholder value, engaging Piper Sandler & Co. to help navigate this process. What this estimate hides is the risk that this exploration may not result in a transaction with attractive terms, or any transaction at all. For a deeper dive into the numbers behind this situation, you should read Breaking Down Cara Therapeutics, Inc. (CARA) Financial Health: Key Insights for Investors.

Growth Opportunities

You need to understand that the future growth of Cara Therapeutics, Inc. (CARA) is entirely dependent on its recent reverse merger with Tvardi Therapeutics, Inc., which closed in April 2025. This isn't a simple product launch; it's a complete pivot to a new clinical-stage biopharma company, now operating as Tvardi Therapeutics, Inc. (TVRD) on the Nasdaq. The old business model is gone.

The core growth driver is the new pipeline, specifically the development of novel, oral, small molecule therapies targeting Signal Transducer and Activator of Transcription 3 (STAT3). STAT3 is a key protein involved in many fibrosis-driven diseases, and Tvardi Therapeutics aims to be a first-mover in this oral therapy space. That's the whole ballgame now.

For the 2025 fiscal year, the financial picture reflects this transition. Analyst estimates for the legacy Cara Therapeutics business projected revenue of just $3.67 million and a loss per share (EPS) of approximately -$0.79. But honestly, those numbers are a footnote. The real financial health metric is the cash runway. The combined company, following a concurrent $28 million private financing, is expected to have enough cash to fund operations into the second half of 2026. That gives them a solid 18-month window to hit their critical milestones.

The immediate growth opportunity lies in the clinical trial readouts. Tvardi Therapeutics anticipates reporting topline data in the second half of 2025 from two Phase 2 clinical programs using its lead STAT3 inhibitor, TTI-101. The most important is the program in idiopathic pulmonary fibrosis (IPF), a serious, chronic lung disease. A positive readout here would be a massive catalyst, validating the new company's entire strategy and providing the first real evidence of future revenue potential. Plus, they are also advancing TTI-101 in hepatocellular carcinoma (HCC), with data expected in the first half of 2026.

The competitive advantage for the newly formed Tvardi Therapeutics is its focus on developing an oral, small molecule therapy to inhibit STAT3. While STAT3 is a known target, an effective, orally available drug that can treat multiple fibrosis-driven diseases would be a significant differentiator in the biopharma landscape. This approach offers a potential advantage in patient convenience and broader market expansion compared to injectable or more complex therapies. If you want to dive deeper into the financial mechanics of this transformation, you can read more at Breaking Down Cara Therapeutics, Inc. (CARA) Financial Health: Key Insights for Investors.

What this estimate hides, defintely, is the binary risk of clinical-stage biotech: if the TTI-101 data is negative in the second half of 2025, the stock and the cash runway will be under immediate and severe pressure. Your action now is simple: track the Phase 2 readout date for TTI-101 in IPF.