Is Apyx Medical (NASDAQ:APYX) A Risky Investment?

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. As with many other companies Apyx Medical Corporation (NASDAQ:APYX) makes use of debt. But is this debt a concern to shareholders?

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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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. 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 examine debt levels, we first consider both cash and debt levels, together.

What Is Apyx Medical's Debt?

As you can see below, Apyx Medical had US$34.4m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, it also had US$29.3m in cash, and so its net debt is US$5.06m.

How Healthy Is Apyx Medical's Balance Sheet?

We can see from the most recent balance sheet that Apyx Medical had liabilities of US$10.6m falling due within a year, and liabilities of US$40.2m due beyond that. On the other hand, it had cash of US$29.3m and US$11.2m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$10.2m.

Of course, Apyx Medical has a market capitalization of US$83.2m, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Apyx Medical 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.

See our latest analysis for Apyx Medical

In the last year Apyx Medical had a loss before interest and tax, and actually shrunk its revenue by 5.1%, to US$47m. We would much prefer see growth.

Caveat Emptor

Importantly, Apyx Medical had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping US$12m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled US$10m in negative free cash flow over the last twelve months. So in short it's a really risky stock. 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 example - Apyx Medical has 3 warning signs we think you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.