Tandem Diabetes Care (NASDAQ:TNDM) Has Debt But No Earnings; Should You Worry?

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.' 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 Tandem Diabetes Care, Inc. (NASDAQ:TNDM) makes use of debt. But should shareholders be worried about its use of debt?

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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. 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, 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Tandem Diabetes Care's Net Debt?

The chart below, which you can click on for greater detail, shows that Tandem Diabetes Care had US$354.3m in debt in March 2025; about the same as the year before. However, its balance sheet shows it holds US$368.6m in cash, so it actually has US$14.3m net cash.

A Look At Tandem Diabetes Care's Liabilities

Zooming in on the latest balance sheet data, we can see that Tandem Diabetes Care had liabilities of US$288.2m due within 12 months and liabilities of US$478.7m due beyond that. On the other hand, it had cash of US$368.6m and US$126.6m worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$271.7m.

This deficit isn't so bad because Tandem Diabetes Care is worth US$1.34b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. However, it is still worthwhile taking a close look at its ability to pay off debt. While it does have liabilities worth noting, Tandem Diabetes Care also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Tandem Diabetes Care'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 Tandem Diabetes Care

Over 12 months, Tandem Diabetes Care reported revenue of US$983m, which is a gain of 28%, although it did not report any earnings before interest and tax. With any luck the company will be able to grow its way to profitability.

So How Risky Is Tandem Diabetes Care?

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 Tandem Diabetes Care lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of US$3.8m and booked a US$184m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of US$14.3m. That means it could keep spending at its current rate for more than two years. With very solid revenue growth in the last year, Tandem Diabetes Care may be on a path to profitability. Pre-profit companies are often risky, but they can also offer great rewards. For riskier companies like Tandem Diabetes Care I always like to keep an eye on whether insiders are buying or selling. So click here if you want to find out for yourself.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.