We Think Envista Holdings (NYSE:NVST) Can Stay On Top Of Its 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. As with many other companies Envista Holdings Corporation (NYSE:NVST) makes use of debt. But the more important question is: how much risk is that debt creating?

We check all companies for important risks. See what we found for Envista Holdings in our free report.

When Is Debt Dangerous?

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Envista Holdings Carry?

You can click the graphic below for the historical numbers, but it shows that Envista Holdings had US$1.03b of debt in March 2025, down from US$1.51b, one year before. But on the other hand it also has US$1.08b in cash, leading to a US$44.3m net cash position.

How Healthy Is Envista Holdings' Balance Sheet?

According to the last reported balance sheet, Envista Holdings had liabilities of US$873.3m due within 12 months, and liabilities of US$1.56b due beyond 12 months. On the other hand, it had cash of US$1.08b and US$393.1m worth of receivables due within a year. So it has liabilities totalling US$959.9m more than its cash and near-term receivables, combined.

This deficit isn't so bad because Envista Holdings is worth US$3.00b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But we definitely want to keep our eyes open to indications that its debt is bringing too much risk. Despite its noteworthy liabilities, Envista Holdings boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Envista Holdings

Importantly, Envista Holdings's EBIT fell a jaw-dropping 51% in the last twelve months. If that earnings trend continues then paying off its debt will be about as easy as herding cats on to a roller coaster. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if Envista Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. While Envista Holdings has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. During the last three years, Envista Holdings produced sturdy free cash flow equating to 77% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.

Summing Up

While Envista Holdings does have more liabilities than liquid assets, it also has net cash of US$44.3m. The cherry on top was that in converted 77% of that EBIT to free cash flow, bringing in US$268m. So we are not troubled with Envista Holdings's debt use. We'd be motivated to research the stock further if we found out that Envista Holdings insiders have bought shares recently. If you would too, then you're in luck, since today we're sharing our list of reported insider transactions for free.

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.