Ainos (NASDAQ:AIMD) Has Debt But No Earnings; Should You Worry?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 note that Ainos, Inc. (NASDAQ:AIMD) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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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 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 examine debt levels, we first consider both cash and debt levels, together.

What Is Ainos's Debt?

As you can see below, Ainos had US$11.0m of debt at September 2025, down from US$12.3m a year prior. However, because it has a cash reserve of US$1.13m, its net debt is less, at about US$9.87m.

How Strong Is Ainos' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Ainos had liabilities of US$581.4k due within 12 months and liabilities of US$12.1m due beyond that. On the other hand, it had cash of US$1.13m and US$62.0 worth of receivables due within a year. So it has liabilities totalling US$11.5m more than its cash and near-term receivables, combined.

When you consider that this deficiency exceeds the company's US$10.4m market capitalization, you might well be inclined to review the balance sheet intently. In the scenario where the company had to clean up its balance sheet quickly, it seems likely shareholders would suffer extensive dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But it is Ainos's earnings that will influence how the balance sheet holds up in the future. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

See our latest analysis for Ainos

Given it has no significant operating revenue at the moment, shareholders will be hoping Ainos can make progress and gain better traction for the business, before it runs low on cash.

Caveat Emptor

Over the last twelve months Ainos produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable US$14m at the EBIT level. When we look at that alongside the significant liabilities, we're not particularly confident about the company. It would need to improve its operations quickly for us to be interested in it. Not least because it had negative free cash flow of US$4.7m over the last twelve months. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Ainos has 6 warning signs (and 4 which are significant) we think you should know about.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.