Is LeMaitre Vascular (NASDAQ:LMAT) A Risky Investment?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 LeMaitre Vascular, Inc. (NASDAQ:LMAT) makes use of debt. But the real question is whether this debt is making the company risky.

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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. 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. 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 LeMaitre Vascular's Debt?

The image below, which you can click on for greater detail, shows that at March 2025 LeMaitre Vascular had debt of US$168.0m, up from none in one year. However, it does have US$302.5m in cash offsetting this, leading to net cash of US$134.6m.

A Look At LeMaitre Vascular's Liabilities

According to the last reported balance sheet, LeMaitre Vascular had liabilities of US$24.7m due within 12 months, and liabilities of US$183.7m due beyond 12 months. Offsetting these obligations, it had cash of US$302.5m as well as receivables valued at US$35.1m due within 12 months. So it can boast US$129.2m more liquid assets than total liabilities.

This short term liquidity is a sign that LeMaitre Vascular could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that LeMaitre Vascular has more cash than debt is arguably a good indication that it can manage its debt safely.

View our latest analysis for LeMaitre Vascular

Another good sign is that LeMaitre Vascular has been able to increase its EBIT by 30% in twelve months, making it easier to pay down debt. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine LeMaitre Vascular's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While LeMaitre Vascular has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last three years, LeMaitre Vascular produced sturdy free cash flow equating to 74% of its EBIT, about what we'd expect. This free cash flow puts the company in a good position to pay down debt, when appropriate.

Summing Up

While it is always sensible to investigate a company's debt, in this case LeMaitre Vascular has US$134.6m in net cash and a decent-looking balance sheet. And it impressed us with its EBIT growth of 30% over the last year. So is LeMaitre Vascular's debt a risk? It doesn't seem so to us. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Case in point: We've spotted 1 warning sign for LeMaitre Vascular you should be aware of.

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.

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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.