Is Volitionrx (USA Stocks:VNRX) outlook still optimistic based on the current debt level?

A picture is worth a thousand words, and in the case of Volitionrx, the numbers tell a story of promise mixed with hurdles. Despite recent optimistic news and some positive developments in research and development, the company's financials reveal ongoing struggles. With a net income from continuing operations of -27.3 million dollars and operating cash flows also in the red at -25.9 million dollars, Volitionrx faces significant challenges ahead. Leverage levels and liabilities remain a concern, especially with total current liabilities at 7.8 million dollars and short-term debt of 1.1 million dollars, which could amplify risks if the company's growth trajectory stalls. While the stock trades at a modest market value of around 0.77 dollars, the path to profitability remains uncertain, making it a speculative play for investors willing to accept the inherent volatility. Volitionrx is set to release its earnings tomorrow. Currently, its total assets have remained relatively steady over the past year. However, total current liabilities are expected to increase to around $8.2 million in 2025, even as cash reserves are projected to grow to approximately $16.6 million. While many investors are eyeing the healthcare equipment and supplies sector, Volitionrx stands out as a distinctive option. Its focus on innovative diagnostic tests offers a different angle within the healthcare space, making it worth watching as the company progresses.
Published over two weeks ago
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Reviewed by Gabriel Shpitalnik

Volitionrx has liabilities totaling $5.82 million and a debt-to-equity ratio of 1.57, which sits around the industry average. Our analysis aims to add context to the current expert consensus on the company. Using our advanced, multi-layered algorithm, we evaluate Volitionrx’s growth prospects by considering both technical signals and fundamental data. This approach helps us craft a tailored recommendation that reflects the company's financial position and market potential, providing a clearer picture for investors looking to make informed decisions.

Important Points

Despite some positive cash flow of **$20.7M** and manageable long-term debt of **$4M**, Volitionrx's stock at a typical price of **$0.77** faces headwinds with a negative EPS estimate of **-0.165** for this year, making leveraged positions risky given the company's ongoing losses and liabilities totaling **$27.7M**. Considering the current low price and modest trading volume of **86.1K**, traders should be cautious about using leverage, as the stock's volatility and negative momentum suggest potential for sharp declines despite recent news.
Volitionrx financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Volitionrx, including all of Volitionrx's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Volitionrx assets, the company is considered highly leveraged. Understanding the composition and structure of overall Volitionrx debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Watch out for price decline

Please consider monitoring Volitionrx on a daily basis if you are holding a position in it. Volitionrx is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Volitionrx stock to be traded above the $1 level to remain listed. If Volitionrx stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

Understanding Volitionrx Total Debt

Volitionrx liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Volitionrx has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Volitionrx balance sheet include debt obligations and money owed to different Volitionrx vendors, workers, and loan providers. Below is the chart of Volitionrx main long-term debt accounts currently reported on its balance sheet.
You can use Volitionrx financial leverage analysis tool to get a better grip on understanding its financial position

How important is Volitionrx's Liquidity

Volitionrx financial leverage refers to using borrowed capital as a funding source to finance Volitionrx ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Volitionrx financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Volitionrx's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Volitionrx's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Volitionrx's total debt and its cash.

A Deeper Perspective

This firm reported the previous year's revenue of 1.23 M. Net Loss for the year was (27.26 M) with profit before overhead, payroll, taxes, and interest of 1.31 M.

Asset Breakdown

3.9 M
Non Current Assets Total
3.9 M
Total Current Assets
Other Current Assets
Total Assets10.74 Million
Total Current Assets3.85 Million
Non Current Assets Total3.91 Million
Non Currrent Assets Other(0.94)
Other Current Assets559,404
Intangible Assets484,209
Net Tangible Assets(3.54 Million)
Other Assets0.8
A penny saved is a penny earned, but for Volitionrx (VNRX), the challenge lies in turning its assets into sustainable profits.
Despite a solid cash flow of 3.3 million dollars at the end of the period, the company faces significant hurdles with an operating income of -27 million dollars and a high probability of bankruptcy at 95.94%. Leverage remains modest, with a debt-to-equity ratio of just 1.57%, yet the stock's beta of 1.06 indicates it moves slightly more than the market, adding to its risk profile. With total assets of 9.4 million dollars and ongoing research expenses of 14.4 million dollars, the company’s financials suggest it’s still in a growth phase, but leverage and cash flow challenges could weigh heavily on future performance..

Some Volitionrx technical indicators suggest turnaround

Recent technical analysis indicates that Volitionrx has experienced a sharp decline of over 47.78%, reflecting notable recent volatility. Despite this, some indicators suggest the possibility of a turnaround, hinting that the stock may be stabilizing after a tough period. While the steep drop warrants caution, these signs could point to a shift in momentum worth monitoring for potential signs of recovery. Volitionrx tends to be quite volatile over short time frames and could be classified as a penny stock. While it might offer trading opportunities, many penny stocks are highly speculative and prone to artificial price spikes driven by hype or rumors. Investors should thoroughly understand both the potential upside and the risks involved.
Be wary of promotional tactics, sudden news, or unverified claims, and always review the backgrounds of company executives before investing. Timing is key, but remember that most artificially inflated stocks tend to revert quickly, emphasizing the importance of solid fundamentals for sustainable growth.Investing in Volitionrx presents a mixed picture. While the overall analyst consensus leans toward a strong buy, the current valuation and earnings estimates suggest caution. The stock's estimated value of around 0.77 compared to a potential upside of nearly 8 times indicates significant volatility and uncertainty. With earnings expected to remain negative through next year, the risk remains elevated, and the downside could be substantial if expectations aren’t met. For those considering a position, it’s essential to weigh the potential for growth against the inherent risks, especially given the modest valuation and the speculative nature of the current outlook..

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Volitionrx. Please refer to our Terms of Use for any information regarding our disclosure principles.

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