Is PROCEPT BioRobotics (NASDAQ:PRCT) A Risky Investment?

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.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that PROCEPT BioRobotics Corporation (NASDAQ:PRCT) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

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. If things get really bad, the lenders can take control of the business. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is PROCEPT BioRobotics's Net Debt?

The chart below, which you can click on for greater detail, shows that PROCEPT BioRobotics had US$51.5m in debt in June 2025; about the same as the year before. But on the other hand it also has US$302.7m in cash, leading to a US$251.2m net cash position.

How Healthy Is PROCEPT BioRobotics' Balance Sheet?

The latest balance sheet data shows that PROCEPT BioRobotics had liabilities of US$49.7m due within a year, and liabilities of US$77.5m falling due after that. Offsetting these obligations, it had cash of US$302.7m as well as receivables valued at US$80.8m due within 12 months. So it can boast US$256.3m more liquid assets than total liabilities.

This surplus suggests that PROCEPT BioRobotics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that PROCEPT BioRobotics 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 PROCEPT BioRobotics 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.

View our latest analysis for PROCEPT BioRobotics

In the last year PROCEPT BioRobotics wasn't profitable at an EBIT level, but managed to grow its revenue by 56%, to US$275m. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is PROCEPT BioRobotics?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that PROCEPT BioRobotics had an earnings before interest and tax (EBIT) loss, over the last year. And over the same period it saw negative free cash outflow of US$89m and booked a US$84m accounting loss. But the saving grace is the US$251.2m on the balance sheet. That means it could keep spending at its current rate for more than two years. PROCEPT BioRobotics's revenue growth shone bright over the last year, so it may well be in a position to turn a profit in due course. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. 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. Case in point: We've spotted 1 warning sign for PROCEPT BioRobotics you should be aware of.

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.