Is Pulmonx (NASDAQ:LUNG) Using Debt In A Risky Way?

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 Pulmonx Corporation (NASDAQ:LUNG) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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 frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Pulmonx's Net Debt?

The chart below, which you can click on for greater detail, shows that Pulmonx had US$37.1m in debt in June 2025; about the same as the year before. However, its balance sheet shows it holds US$84.2m in cash, so it actually has US$47.1m net cash.

How Healthy Is Pulmonx's Balance Sheet?

The latest balance sheet data shows that Pulmonx had liabilities of US$22.4m due within a year, and liabilities of US$55.7m falling due after that. On the other hand, it had cash of US$84.2m and US$16.4m worth of receivables due within a year. So it can boast US$22.5m more liquid assets than total liabilities.

This excess liquidity is a great indication that Pulmonx's balance sheet is almost as strong as Fort Knox. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Succinctly put, Pulmonx boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Pulmonx'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.

See our latest analysis for Pulmonx

Over 12 months, Pulmonx reported revenue of US$91m, which is a gain of 18%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is Pulmonx?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Pulmonx lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$32m of cash and made a loss of US$57m. While this does make the company a bit risky, it's important to remember it has net cash of US$47.1m. 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. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Pulmonx you should know about.

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.