Is Akoya Biosciences (NASDAQ:AKYA) Weighed On By Its Debt Load?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' 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 can see that Akoya Biosciences, Inc. (NASDAQ:AKYA) does use debt in its business. But the real question is whether this debt is making the company risky.

Why Does Debt Bring Risk?

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. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, 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. When we think about a company's use of debt, we first look at cash and debt together.

See our latest analysis for Akoya Biosciences

How Much Debt Does Akoya Biosciences Carry?

You can click the graphic below for the historical numbers, but it shows that as of September 2023 Akoya Biosciences had US$63.8m of debt, an increase on US$52.7m, over one year. However, it does have US$78.6m in cash offsetting this, leading to net cash of US$14.8m.

How Healthy Is Akoya Biosciences' Balance Sheet?

We can see from the most recent balance sheet that Akoya Biosciences had liabilities of US$35.5m falling due within a year, and liabilities of US$79.7m due beyond that. Offsetting this, it had US$78.6m in cash and US$16.1m in receivables that were due within 12 months. So it has liabilities totalling US$20.6m more than its cash and near-term receivables, combined.

Given Akoya Biosciences has a market capitalization of US$266.0m, it's hard to believe these liabilities pose much threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. While it does have liabilities worth noting, Akoya Biosciences 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 it is future earnings, more than anything, that will determine Akoya Biosciences's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

In the last year Akoya Biosciences wasn't profitable at an EBIT level, but managed to grow its revenue by 31%, to US$91m. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is Akoya Biosciences?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And the fact is that over the last twelve months Akoya Biosciences lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$59m of cash and made a loss of US$71m. However, it has net cash of US$14.8m, so it has a bit of time before it will need more capital. With very solid revenue growth in the last year, Akoya Biosciences may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 3 warning signs for Akoya Biosciences that you should be aware of before investing here.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.