LightPath Technologies (NASDAQ:LPTH) Has Debt But No Earnings; Should You Worry?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that LightPath Technologies, Inc. (NASDAQ:LPTH) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does LightPath Technologies Carry?

The image below, which you can click on for greater detail, shows that at September 2025 LightPath Technologies had debt of US$5.01m, up from US$3.25m in one year. However, its balance sheet shows it holds US$11.5m in cash, so it actually has US$6.50m net cash.

A Look At LightPath Technologies' Liabilities

We can see from the most recent balance sheet that LightPath Technologies had liabilities of US$17.8m falling due within a year, and liabilities of US$13.8m due beyond that. Offsetting these obligations, it had cash of US$11.5m as well as receivables valued at US$9.59m due within 12 months. So its liabilities total US$10.5m more than the combination of its cash and short-term receivables.

Of course, LightPath Technologies has a market capitalization of US$304.4m, so these liabilities are probably manageable. 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, LightPath Technologies 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 ultimately the future profitability of the business will decide if LightPath Technologies can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for LightPath Technologies

Over 12 months, LightPath Technologies reported revenue of US$44m, which is a gain of 37%, 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 LightPath Technologies?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months LightPath Technologies lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$9.0m of cash and made a loss of US$16m. However, it has net cash of US$6.50m, so it has a bit of time before it will need more capital. LightPath Technologies's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. 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. We've identified 3 warning signs with LightPath Technologies (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.