U.S. Markets close in 2 hrs 28 mins

Is Cryoport, Inc.'s (NASDAQ:CYRX) Balance Sheet A Threat To Its Future?

Simply Wall St

Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!

Cryoport, Inc. (NASDAQ:CYRX) is a small-cap stock with a market capitalization of US$408m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Since CYRX is loss-making right now, it’s vital to understand the current state of its operations and pathway to profitability. The following basic checks can help you get a picture of the company's balance sheet strength. Nevertheless, these checks don't give you a full picture, so I recommend you dig deeper yourself into CYRX here.

CYRX’s Debt (And Cash Flows)

Over the past year, CYRX has borrowed debt capital of around US$15m including long-term debt. With this increase in debt, the current cash and short-term investment levels stands at US$47m , ready to be used for running the business. Its negative operating cash flow means calculating cash-to-debt wouldn't be useful. For this article’s sake, I won’t be looking at this today, but you can take a look at some of CYRX’s operating efficiency ratios such as ROA here.

Can CYRX meet its short-term obligations with the cash in hand?

Looking at CYRX’s US$3.1m in current liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 16.91x. The current ratio is the number you get when you divide current assets by current liabilities. Having said that, many consider a ratio above 3x to be high.

NasdaqCM:CYRX Historical Debt, April 9th 2019

Does CYRX face the risk of succumbing to its debt-load?

With debt at 38% of equity, CYRX may be thought of as appropriately levered. This range is considered safe as CYRX is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. CYRX's risk around capital structure is low, and the company has the headroom and ability to raise debt should it need to in the future.

Next Steps:

CYRX’s debt level is appropriate for a company its size, and it is also able to generate sufficient cash flow coverage, meaning it has been able to put its debt in good use. In addition to this, the company exhibits an ability to meet its near term obligations should an adverse event occur. Keep in mind I haven't considered other factors such as how CYRX has been performing in the past. You should continue to research Cryoport to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CYRX’s future growth? Take a look at our free research report of analyst consensus for CYRX’s outlook.
  2. Valuation: What is CYRX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CYRX is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.