Does Absci (NASDAQ:ABSI) Have A Healthy Balance Sheet?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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. As with many other companies Absci Corporation (NASDAQ:ABSI) makes use of debt. But is this debt a concern to shareholders?

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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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Absci's Debt?

As you can see below, Absci had US$3.23m of debt at March 2025, down from US$7.05m a year prior. But on the other hand it also has US$134.0m in cash, leading to a US$130.8m net cash position.

How Healthy Is Absci's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Absci had liabilities of US$27.3m due within 12 months and liabilities of US$6.37m due beyond that. Offsetting this, it had US$134.0m in cash and US$1.38m in receivables that were due within 12 months. So it actually has US$101.7m more liquid assets than total liabilities.

This surplus suggests that Absci is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Succinctly put, Absci boasts net cash, 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 ultimately the future profitability of the business will decide if Absci 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.

Check out our latest analysis for Absci

In the last year Absci had a loss before interest and tax, and actually shrunk its revenue by 9.9%, to US$4.8m. That's not what we would hope to see.

So How Risky Is Absci?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Absci 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$77m and booked a US$107m accounting loss. However, it has net cash of US$130.8m, so it has a bit of time before it will need more capital. Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the 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. For instance, we've identified 2 warning signs for Absci that you should be aware of.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.