Is Cytosorbents (NASDAQ:CTSO) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We note that Cytosorbents Corporation (NASDAQ:CTSO) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Cytosorbents's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 Cytosorbents had debt of US$14.4m, up from US$13.7m in one year. On the flip side, it has US$10.2m in cash leading to net debt of about US$4.17m.

A Look At Cytosorbents' Liabilities

Zooming in on the latest balance sheet data, we can see that Cytosorbents had liabilities of US$9.84m due within 12 months and liabilities of US$26.6m due beyond that. On the other hand, it had cash of US$10.2m and US$7.74m worth of receivables due within a year. So it has liabilities totalling US$18.5m more than its cash and near-term receivables, combined.

While this might seem like a lot, it is not so bad since Cytosorbents has a market capitalization of US$44.6m, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Cytosorbents's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Cytosorbents

In the last year Cytosorbents wasn't profitable at an EBIT level, but managed to grow its revenue by 20%, to US$36m. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Despite the top line growth, Cytosorbents still had an earnings before interest and tax (EBIT) loss over the last year. Its EBIT loss was a whopping US$16m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$10m of cash over the last year. So suffice it to say we consider the stock very risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should learn about the 2 warning signs we've spotted with Cytosorbents (including 1 which makes us a bit uncomfortable) .

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.