Does Harvard Bioscience (NASDAQ:HBIO) Have A Healthy Balance Sheet?

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.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. We note that Harvard Bioscience, Inc. (NASDAQ:HBIO) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Harvard Bioscience Carry?

As you can see below, Harvard Bioscience had US$36.0m of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. However, because it has a cash reserve of US$5.55m, its net debt is less, at about US$30.4m.

A Look At Harvard Bioscience's Liabilities

The latest balance sheet data shows that Harvard Bioscience had liabilities of US$55.6m due within a year, and liabilities of US$9.36m falling due after that. Offsetting this, it had US$5.55m in cash and US$13.5m in receivables that were due within 12 months. So its liabilities total US$45.9m more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the US$19.9m company, like a colossus towering over mere mortals. So we definitely think shareholders need to watch this one closely. After all, Harvard Bioscience would likely require a major re-capitalisation if it had to pay its creditors today. 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 Harvard Bioscience 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.

Check out our latest analysis for Harvard Bioscience

Over 12 months, Harvard Bioscience made a loss at the EBIT level, and saw its revenue drop to US$91m, which is a fall of 14%. That's not what we would hope to see.

Caveat Emptor

While Harvard Bioscience's falling revenue is about as heartwarming as a wet blanket, arguably its earnings before interest and tax (EBIT) loss is even less appealing. Its EBIT loss was a whopping US$4.1m. Considering that alongside the liabilities mentioned above make us nervous about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it had negative free cash flow of US$203k over the last twelve months. So suffice it to say we consider the stock to be risky. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. For example Harvard Bioscience has 3 warning signs (and 1 which is concerning) we think you should know about.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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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.