Is Rockwell Medical (NASDAQ:RMTI) A Risky Investment?
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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. Importantly, Rockwell Medical, Inc. (NASDAQ:RMTI) does carry debt. But should shareholders be worried about its use of debt?
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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.
How Much Debt Does Rockwell Medical Carry?
The chart below, which you can click on for greater detail, shows that Rockwell Medical had US$9.20m in debt in September 2025; about the same as the year before. But it also has US$23.7m in cash to offset that, meaning it has US$14.5m net cash.
A Look At Rockwell Medical's Liabilities
Zooming in on the latest balance sheet data, we can see that Rockwell Medical had liabilities of US$9.58m due within 12 months and liabilities of US$10.9m due beyond that. Offsetting these obligations, it had cash of US$23.7m as well as receivables valued at US$8.33m due within 12 months. So it actually has US$11.6m more liquid assets than total liabilities.
This surplus strongly suggests that Rockwell Medical has a rock-solid balance sheet (and the debt is of no concern whatsoever). On this view, lenders should feel as safe as the beloved of a black-belt karate master. Simply put, the fact that Rockwell Medical has more cash than debt is arguably a good indication that it can manage its debt safely. 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 Rockwell Medical 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 Rockwell Medical
Over 12 months, Rockwell Medical made a loss at the EBIT level, and saw its revenue drop to US$76m, which is a fall of 24%. That makes us nervous, to say the least.
So How Risky Is Rockwell Medical?
Statistically speaking companies that lose money are riskier than those that make money. And in the last year Rockwell Medical had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$2.9m of cash and made a loss of US$5.9m. But the saving grace is the US$14.5m on the balance sheet. That means it could keep spending at its current rate for more than two years. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. 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. These risks can be hard to spot. Every company has them, and we've spotted 3 warning signs for Rockwell Medical you should know about.
If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.
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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.