Is Quantum BioPharma (CSE:QNTM) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' 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, Quantum BioPharma Ltd. (CSE:QNTM) does carry debt. But the real question is whether this debt is making the company risky.

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What Risk Does Debt Bring?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is Quantum BioPharma's Net Debt?

As you can see below, at the end of June 2025, Quantum BioPharma had US$2.11m of debt, up from US$615.6k a year ago. Click the image for more detail. However, it also had US$1.53m in cash, and so its net debt is US$580.2k.

A Look At Quantum BioPharma's Liabilities

Zooming in on the latest balance sheet data, we can see that Quantum BioPharma had liabilities of US$13.2m due within 12 months and no liabilities due beyond that. Offsetting these obligations, it had cash of US$1.53m as well as receivables valued at US$3.23m due within 12 months. So its liabilities total US$8.49m more than the combination of its cash and short-term receivables.

Of course, Quantum BioPharma has a market capitalization of US$87.8m, so these liabilities are probably manageable. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. But either way, Quantum BioPharma has virtually no net debt, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Quantum BioPharma will need earnings to service that debt. So when considering debt, it's definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Check out our latest analysis for Quantum BioPharma

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

Caveat Emptor

Over the last twelve months Quantum BioPharma produced an earnings before interest and tax (EBIT) loss. Indeed, it lost a very considerable US$19m at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. Another cause for caution is that is bled US$11m in negative free cash flow over the last twelve months. So suffice it to say we consider the stock very 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 Quantum BioPharma has 5 warning signs (and 4 which shouldn't be ignored) we think 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.