Health Check: How Prudently Does Centessa Pharmaceuticals (NASDAQ:CNTA) Use Debt?

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.' 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. As with many other companies Centessa Pharmaceuticals plc (NASDAQ:CNTA) makes use of debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. 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. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together.

What Is Centessa Pharmaceuticals's Net Debt?

The image below, which you can click on for greater detail, shows that at June 2025 Centessa Pharmaceuticals had debt of US$109.5m, up from US$76.5m in one year. However, it does have US$250.7m in cash offsetting this, leading to net cash of US$141.2m.

How Healthy Is Centessa Pharmaceuticals' Balance Sheet?

According to the last reported balance sheet, Centessa Pharmaceuticals had liabilities of US$29.7m due within 12 months, and liabilities of US$117.5m due beyond 12 months. On the other hand, it had cash of US$250.7m and US$44.1m worth of receivables due within a year. So it can boast US$147.6m more liquid assets than total liabilities.

This surplus suggests that Centessa Pharmaceuticals has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Succinctly put, Centessa Pharmaceuticals boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Centessa Pharmaceuticals can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for Centessa Pharmaceuticals

In the last year Centessa Pharmaceuticals wasn't profitable at an EBIT level, but managed to grow its revenue by 119%, to US$15m. So its pretty obvious shareholders are hoping for more growth!

So How Risky Is Centessa Pharmaceuticals?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And in the last year Centessa Pharmaceuticals had an earnings before interest and tax (EBIT) loss, truth be told. And over the same period it saw negative free cash outflow of US$144m and booked a US$230m accounting loss. But at least it has US$141.2m on the balance sheet to spend on growth, near-term. Importantly, Centessa Pharmaceuticals's revenue growth is hot to trot. High growth pre-profit companies may well be risky, but they can also offer great rewards. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 1 warning sign for Centessa Pharmaceuticals that you should be aware of.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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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.