Is Lucid Diagnostics (NASDAQ:LUCD) Using Too Much Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 Lucid Diagnostics Inc. (NASDAQ:LUCD) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Lucid Diagnostics's Net Debt?

The image below, which you can click on for greater detail, shows that at September 2025 Lucid Diagnostics had debt of US$22.3m, up from US$10.2m in one year. But it also has US$48.4m in cash to offset that, meaning it has US$26.1m net cash.

How Strong Is Lucid Diagnostics' Balance Sheet?

We can see from the most recent balance sheet that Lucid Diagnostics had liabilities of US$26.2m falling due within a year, and liabilities of US$1.16m due beyond that. On the other hand, it had cash of US$48.4m and US$550.0k worth of receivables due within a year. So it actually has US$21.6m more liquid assets than total liabilities.

This surplus suggests that Lucid Diagnostics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Lucid Diagnostics has more cash than debt is arguably a good indication that it can manage its debt safely. 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 Lucid Diagnostics'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.

Check out our latest analysis for Lucid Diagnostics

In the last year Lucid Diagnostics wasn't profitable at an EBIT level, but managed to grow its revenue by 5.0%, to US$4.4m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Lucid Diagnostics?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Lucid Diagnostics lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of US$44m and booked a US$66m accounting loss. But at least it has US$26.1m on the balance sheet to spend on growth, near-term. 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 example Lucid Diagnostics has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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.