Is Healios K.K (TSE:4593) Weighed On By Its Debt Load?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Healios K.K. (TSE:4593) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Healios K.K's Debt?

The image below, which you can click on for greater detail, shows that Healios K.K had debt of JP¥2.05b at the end of June 2025, a reduction from JP¥6.04b over a year. But it also has JP¥6.25b in cash to offset that, meaning it has JP¥4.20b net cash.

How Strong Is Healios K.K's Balance Sheet?

According to the last reported balance sheet, Healios K.K had liabilities of JP¥6.45b due within 12 months, and liabilities of JP¥9.12b due beyond 12 months. Offsetting these obligations, it had cash of JP¥6.25b as well as receivables valued at JP¥130.0m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by JP¥9.19b.

Since publicly traded Healios K.K shares are worth a total of JP¥54.0b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, Healios K.K also has more cash than debt, so we're pretty confident 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 Healios K.K 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.

Check out our latest analysis for Healios K.K

Over 12 months, Healios K.K made a loss at the EBIT level, and saw its revenue drop to JP¥112m, which is a fall of 79%. That makes us nervous, to say the least.

So How Risky Is Healios K.K?

Statistically speaking companies that lose money are riskier than those that make money. And the fact is that over the last twelve months Healios K.K lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of JP¥2.3b and booked a JP¥6.0b accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of JP¥4.20b. That means it could keep spending at its current rate for more than two years. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see 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. Be aware that Healios K.K is showing 4 warning signs in our investment analysis , and 2 of those are concerning...

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.