Immunocore Holdings (NASDAQ:IMCR) Has Debt But No Earnings; Should You Worry?

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.' 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 Immunocore Holdings plc (NASDAQ:IMCR) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. 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. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Immunocore Holdings's Net Debt?

As you can see below, Immunocore Holdings had US$391.5m of debt at March 2025, down from US$437.5m a year prior. However, its balance sheet shows it holds US$837.0m in cash, so it actually has US$445.5m net cash.

How Strong Is Immunocore Holdings' Balance Sheet?

The latest balance sheet data shows that Immunocore Holdings had liabilities of US$149.2m due within a year, and liabilities of US$500.4m falling due after that. On the other hand, it had cash of US$837.0m and US$63.1m worth of receivables due within a year. So it can boast US$250.6m more liquid assets than total liabilities.

It's good to see that Immunocore Holdings has plenty of liquidity on its balance sheet, suggesting conservative management of liabilities. Because it has plenty of assets, it is unlikely to have trouble with its lenders. Simply put, the fact that Immunocore Holdings 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 Immunocore Holdings'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.

Check out our latest analysis for Immunocore Holdings

In the last year Immunocore Holdings wasn't profitable at an EBIT level, but managed to grow its revenue by 26%, to US$334m. With any luck the company will be able to grow its way to profitability.

So How Risky Is Immunocore Holdings?

While Immunocore Holdings lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow US$26m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. Keeping in mind its 26% revenue growth over the last year, we think there's a decent chance the company is on track. There's no doubt fast top line growth can cure all manner of ills, for a stock. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For example, we've discovered 1 warning sign for Immunocore Holdings that you should be aware of before investing here.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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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.