Despite Lacking Profits Atai Life Sciences (NASDAQ:ATAI) Seems To Be On Top Of Its Debt

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.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Atai Life Sciences N.V. (NASDAQ:ATAI) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

We've discovered 5 warning signs about Atai Life Sciences. View them for free.

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. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Atai Life Sciences's Debt?

As you can see below, at the end of March 2025, Atai Life Sciences had US$23.8m of debt, up from US$22.0m a year ago. Click the image for more detail. But it also has US$98.2m in cash to offset that, meaning it has US$74.4m net cash.

A Look At Atai Life Sciences' Liabilities

Zooming in on the latest balance sheet data, we can see that Atai Life Sciences had liabilities of US$28.5m due within 12 months and liabilities of US$15.0m due beyond that. Offsetting this, it had US$98.2m in cash and US$1.35m in receivables that were due within 12 months. So it can boast US$56.0m more liquid assets than total liabilities.

This excess liquidity suggests that Atai Life Sciences is taking a careful approach to debt. Due to its strong net asset position, it is not likely to face issues with its lenders. Simply put, the fact that Atai Life Sciences has more cash than debt is arguably a good indication that it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Atai Life Sciences'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.

View our latest analysis for Atai Life Sciences

Over 12 months, Atai Life Sciences reported revenue of US$1.9m, which is a gain of 573%, 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 Atai Life Sciences?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that Atai Life Sciences 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$83m and booked a US$149m accounting loss. However, it has net cash of US$74.4m, so it has a bit of time before it will need more capital. Importantly, Atai Life Sciences's revenue growth is hot to trot. 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. These risks can be hard to spot. Every company has them, and we've spotted 5 warning signs for Atai Life Sciences you should know about.

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.