Health Check: How Prudently Does Soluna Holdings (NASDAQ:SLNH) 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.' 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. We can see that Soluna Holdings, Inc. (NASDAQ:SLNH) does use debt in its business. But should shareholders be worried about its use of debt?

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What Risk Does Debt Bring?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Soluna Holdings's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Soluna Holdings had US$23.3m of debt in September 2025, down from US$26.0m, one year before. However, it does have US$51.4m in cash offsetting this, leading to net cash of US$28.1m.

A Look At Soluna Holdings' Liabilities

Zooming in on the latest balance sheet data, we can see that Soluna Holdings had liabilities of US$56.2m due within 12 months and liabilities of US$22.4m due beyond that. Offsetting this, it had US$51.4m in cash and US$7.90m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$19.3m.

Since publicly traded Soluna Holdings shares are worth a total of US$130.7m, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. Despite its noteworthy liabilities, Soluna Holdings boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Soluna 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.

Check out our latest analysis for Soluna Holdings

In the last year Soluna Holdings had a loss before interest and tax, and actually shrunk its revenue by 28%, to US$29m. That makes us nervous, to say the least.

So How Risky Is Soluna Holdings?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Soluna Holdings had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of US$29m and booked a US$95m accounting loss. However, it has net cash of US$28.1m, so it has a bit of time before it will need more capital. Summing up, we're a little skeptical of this one, as it seems fairly risky in the absence of free cashflow. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. Be aware that Soluna Holdings is showing 3 warning signs in our investment analysis , you should know about...

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.