Delivra Health Brands (CVE:DHB) Has Debt But No Earnings; Should You Worry?

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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We can see that Delivra Health Brands Inc. (CVE:DHB) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Delivra Health Brands's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Delivra Health Brands had CA$2.11m of debt, an increase on CA$2.03m, over one year. However, it does have CA$3.30m in cash offsetting this, leading to net cash of CA$1.19m.

How Strong Is Delivra Health Brands' Balance Sheet?

We can see from the most recent balance sheet that Delivra Health Brands had liabilities of CA$3.56m falling due within a year, and liabilities of CA$1.81m due beyond that. On the other hand, it had cash of CA$3.30m and CA$3.34m worth of receivables due within a year. So it can boast CA$1.28m more liquid assets than total liabilities.

This short term liquidity is a sign that Delivra Health Brands could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Delivra Health Brands boasts net cash, so it's fair to say it does not have a heavy debt load! There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Delivra Health Brands can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for Delivra Health Brands

In the last year Delivra Health Brands wasn't profitable at an EBIT level, but managed to grow its revenue by 8.0%, to CA$13m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Delivra Health Brands?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Delivra Health Brands had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of CA$754k and booked a CA$1.2m accounting loss. But the saving grace is the CA$1.19m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For instance, we've identified 3 warning signs for Delivra Health Brands (1 doesn't sit too well with us) you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.