Is Arcutis Biotherapeutics (NASDAQ:ARQT) Weighed On By Its Debt Load?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the 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. Importantly, Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) does carry debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. 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, 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.

How Much Debt Does Arcutis Biotherapeutics Carry?

As you can see below, Arcutis Biotherapeutics had US$107.6m of debt at March 2025, down from US$202.8m a year prior. However, it does have US$198.1m in cash offsetting this, leading to net cash of US$90.5m.

A Look At Arcutis Biotherapeutics' Liabilities

Zooming in on the latest balance sheet data, we can see that Arcutis Biotherapeutics had liabilities of US$91.1m due within 12 months and liabilities of US$110.3m due beyond that. Offsetting this, it had US$198.1m in cash and US$85.4m in receivables that were due within 12 months. So it actually has US$82.1m more liquid assets than total liabilities.

This surplus suggests that Arcutis Biotherapeutics has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Simply put, the fact that Arcutis Biotherapeutics has more cash than debt is arguably a good indication that it can manage its debt safely. 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 Arcutis Biotherapeutics 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.

See our latest analysis for Arcutis Biotherapeutics

In the last year Arcutis Biotherapeutics wasn't profitable at an EBIT level, but managed to grow its revenue by 100%, to US$213m. So there's no doubt that shareholders are cheering for growth

So How Risky Is Arcutis Biotherapeutics?

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 Arcutis Biotherapeutics 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$117m and booked a US$130m accounting loss. But at least it has US$90.5m on the balance sheet to spend on growth, near-term. The good news for shareholders is that Arcutis Biotherapeutics has dazzling revenue growth, so there's a very good chance it can boost its free cash flow in the years to come. High growth pre-profit companies may well be risky, but they can also offer great 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. To that end, you should be aware of the 1 warning sign we've spotted with Arcutis Biotherapeutics .

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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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.