Health Check: How Prudently Does Cryoport (NASDAQ:CYRX) Use Debt?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a 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 Cryoport, Inc. (NASDAQ:CYRX) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

What Risk Does Debt Bring?

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. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

Check out our latest analysis for Cryoport

What Is Cryoport's Debt?

The chart below, which you can click on for greater detail, shows that Cryoport had US$408.4m in debt in June 2023; about the same as the year before. However, it does have US$504.7m in cash offsetting this, leading to net cash of US$96.3m.

How Strong Is Cryoport's Balance Sheet?

According to the last reported balance sheet, Cryoport had liabilities of US$40.3m due within 12 months, and liabilities of US$446.1m due beyond 12 months. Offsetting this, it had US$504.7m in cash and US$43.1m in receivables that were due within 12 months. So it can boast US$61.4m more liquid assets than total liabilities.

This short term liquidity is a sign that Cryoport could probably pay off its debt with ease, as its balance sheet is far from stretched. Succinctly put, Cryoport 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 ultimately the future profitability of the business will decide if Cryoport 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.

In the last year Cryoport wasn't profitable at an EBIT level, but managed to grow its revenue by 4.8%, to US$241m. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Cryoport?

Statistically speaking companies that lose money are riskier than those that make money. And in the last year Cryoport had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$32m of cash and made a loss of US$47m. While this does make the company a bit risky, it's important to remember it has net cash of US$96.3m. That means it could keep spending at its current rate for more than two years. 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. 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 example - Cryoport has 2 warning signs we think you should be aware of.

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.