Is Arcturus Therapeutics Holdings (NASDAQ:ARCT) Weighed On By Its Debt Load?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' 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 Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) makes use of debt. But the real question is whether this debt is making the company risky.

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Why Does Debt Bring Risk?

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. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Arcturus Therapeutics Holdings's Net Debt?

You can click the graphic below for the historical numbers, but it shows that as of March 2025 Arcturus Therapeutics Holdings had US$15.0m of debt, an increase on none, over one year. However, it does have US$216.9m in cash offsetting this, leading to net cash of US$201.9m.

How Strong Is Arcturus Therapeutics Holdings' Balance Sheet?

We can see from the most recent balance sheet that Arcturus Therapeutics Holdings had liabilities of US$49.4m falling due within a year, and liabilities of US$48.6m due beyond that. Offsetting these obligations, it had cash of US$216.9m as well as receivables valued at US$14.6m due within 12 months. So it actually has US$133.5m more liquid assets than total liabilities.

This surplus liquidity suggests that Arcturus Therapeutics Holdings' balance sheet could take a hit just as well as Homer Simpson's head can take a punch. With this in mind one could posit that its balance sheet means the company is able to handle some adversity. Succinctly put, Arcturus Therapeutics Holdings 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 Arcturus Therapeutics Holdings'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.

See our latest analysis for Arcturus Therapeutics Holdings

In the last year Arcturus Therapeutics Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 15%, to US$144m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Arcturus Therapeutics Holdings?

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 Arcturus Therapeutics Holdings 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$90m and booked a US$68m accounting loss. However, it has net cash of US$201.9m, 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. For riskier companies like Arcturus Therapeutics Holdings I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

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.