Is Imricor Medical Systems (ASX:IMR) Using Debt In A Risky Way?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Imricor Medical Systems, Inc. (ASX:IMR) makes use of debt. But should shareholders be worried about its use of debt?

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

What Is Imricor Medical Systems's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Imricor Medical Systems had US$23.8m of debt, an increase on US$8.16m, over one year. But on the other hand it also has US$50.3m in cash, leading to a US$26.6m net cash position.

How Strong Is Imricor Medical Systems' Balance Sheet?

The latest balance sheet data shows that Imricor Medical Systems had liabilities of US$2.00m due within a year, and liabilities of US$30.5m falling due after that. Offsetting these obligations, it had cash of US$50.3m as well as receivables valued at US$254.7k due within 12 months. So it can boast US$18.1m more liquid assets than total liabilities.

This short term liquidity is a sign that Imricor Medical Systems could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Imricor Medical Systems boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Imricor Medical Systems can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Check out our latest analysis for Imricor Medical Systems

In the last year Imricor Medical Systems had a loss before interest and tax, and actually shrunk its revenue by 9.2%, to US$749k. We would much prefer see growth.

So How Risky Is Imricor Medical Systems?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year Imricor Medical Systems had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$17m of cash and made a loss of US$36m. But the saving grace is the US$26.6m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We've spotted 3 warning signs for Imricor Medical Systems you should be aware of, and 1 of them is potentially serious.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.