Is OptimizeRx (NASDAQ:OPRX) Using Too Much Debt?

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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We can see that OptimizeRx Corporation (NASDAQ:OPRX) does use debt in its business. 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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest 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 OptimizeRx's Debt?

The image below, which you can click on for greater detail, shows that OptimizeRx had debt of US$28.4m at the end of June 2025, a reduction from US$35.6m over a year. However, it also had US$16.6m in cash, and so its net debt is US$11.8m.

How Healthy Is OptimizeRx's Balance Sheet?

According to the last reported balance sheet, OptimizeRx had liabilities of US$21.1m due within 12 months, and liabilities of US$28.9m due beyond 12 months. Offsetting these obligations, it had cash of US$16.6m as well as receivables valued at US$34.2m due within 12 months. So its total liabilities are just about perfectly matched by its shorter-term, liquid assets.

Having regard to OptimizeRx's size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the US$348.1m company is struggling for cash, we still think it's worth monitoring its balance sheet.

View our latest analysis for OptimizeRx

We measure a company's debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.

Given net debt is only 1.5 times EBITDA, it is initially surprising to see that OptimizeRx's EBIT has low interest coverage of 0.65 times. So one way or the other, it's clear the debt levels are not trivial. Notably, OptimizeRx made a loss at the EBIT level, last year, but improved that to positive EBIT of US$3.6m in the last twelve months. 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 OptimizeRx'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.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So it is important to check how much of its earnings before interest and tax (EBIT) converts to actual free cash flow. Happily for any shareholders, OptimizeRx actually produced more free cash flow than EBIT over the last year. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Our View

OptimizeRx's conversion of EBIT to free cash flow suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14's goalkeeper. But the stark truth is that we are concerned by its interest cover. It's also worth noting that OptimizeRx is in the Healthcare Services industry, which is often considered to be quite defensive. Taking all this data into account, it seems to us that OptimizeRx takes a pretty sensible approach to debt. That means they are taking on a bit more risk, in the hope of boosting shareholder returns. 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. For instance, we've identified 2 warning signs for OptimizeRx that you should be aware of.

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.