Is AnaptysBio (NASDAQ:ANAB) Using Debt Sensibly?

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.' 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 AnaptysBio, Inc. (NASDAQ:ANAB) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

Our free stock report includes 3 warning signs investors should be aware of before investing in AnaptysBio. Read for free now.

When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free 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 common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is AnaptysBio's Net Debt?

The image below, which you can click on for greater detail, shows that at March 2025 AnaptysBio had debt of US$330.4m, up from US$310.2m in one year. However, its balance sheet shows it holds US$339.9m in cash, so it actually has US$9.55m net cash.

How Healthy Is AnaptysBio's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that AnaptysBio had liabilities of US$44.0m due within 12 months and liabilities of US$344.0m due beyond that. Offsetting this, it had US$339.9m in cash and US$17.9m in receivables that were due within 12 months. So its liabilities total US$30.2m more than the combination of its cash and short-term receivables.

Since publicly traded AnaptysBio shares are worth a total of US$609.1m, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. Despite its noteworthy liabilities, AnaptysBio boasts net cash, so it's fair to say it does not have a heavy debt load! 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 AnaptysBio'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.

Check out our latest analysis for AnaptysBio

Over 12 months, AnaptysBio reported revenue of US$112m, which is a gain of 387%, although it did not report any earnings before interest and tax. When it comes to revenue growth, that's like nailing the game winning 3-pointer!

So How Risky Is AnaptysBio?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that AnaptysBio 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$109m and booked a US$141m accounting loss. While this does make the company a bit risky, it's important to remember it has net cash of US$9.55m. That kitty means the company can keep spending for growth for at least two years, at current rates. The good news for shareholders is that AnaptysBio has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. To that end, you should learn about the 3 warning signs we've spotted with AnaptysBio (including 1 which is significant) .

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.