Health Check: How Prudently Does GeneDx Holdings (NASDAQ:WGS) Use Debt?

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 can see that GeneDx Holdings Corp. (NASDAQ:WGS) does use debt in its business. But is this debt a concern to shareholders?

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.

When Is Debt A Problem?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is GeneDx Holdings's Debt?

The chart below, which you can click on for greater detail, shows that GeneDx Holdings had US$51.8m in debt in March 2025; about the same as the year before. However, it does have US$159.2m in cash offsetting this, leading to net cash of US$107.4m.

How Strong Is GeneDx Holdings' Balance Sheet?

According to the last reported balance sheet, GeneDx Holdings had liabilities of US$69.5m due within 12 months, and liabilities of US$119.5m due beyond 12 months. Offsetting these obligations, it had cash of US$159.2m as well as receivables valued at US$46.1m due within 12 months. So it can boast US$16.2m more liquid assets than total liabilities.

Having regard to GeneDx Holdings' size, it seems that its liquid assets are well balanced with its total liabilities. So while it's hard to imagine that the US$2.27b company is struggling for cash, we still think it's worth monitoring its balance sheet. Succinctly put, GeneDx Holdings boasts net cash, so it's fair to say it does not have a heavy debt load! 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 GeneDx Holdings'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.

Check out our latest analysis for GeneDx Holdings

Over 12 months, GeneDx Holdings reported revenue of US$330m, which is a gain of 49%, 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 GeneDx Holdings?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months GeneDx Holdings lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of US$13m and booked a US$39m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of US$107.4m. That kitty means the company can keep spending for growth for at least two years, at current rates. With very solid revenue growth in the last year, GeneDx Holdings may be on a path to profitability. Pre-profit companies are often risky, but they can also offer great rewards. 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. Case in point: We've spotted 1 warning sign for GeneDx Holdings 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.

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.