Is Ionis Pharmaceuticals (NASDAQ:IONS) Using Too Much 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 seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) does use debt in its business. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

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 usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. 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 Ionis Pharmaceuticals's Net Debt?

As you can see below, Ionis Pharmaceuticals had US$1.81b of debt, at March 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has US$2.15b in cash to offset that, meaning it has US$339.1m net cash.

How Strong Is Ionis Pharmaceuticals' Balance Sheet?

We can see from the most recent balance sheet that Ionis Pharmaceuticals had liabilities of US$250.3m falling due within a year, and liabilities of US$2.09b due beyond that. Offsetting this, it had US$2.15b in cash and US$39.7m in receivables that were due within 12 months. So it has liabilities totalling US$149.3m more than its cash and near-term receivables, combined.

Given Ionis Pharmaceuticals has a market capitalization of US$6.55b, it's hard to believe these liabilities pose much threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Ionis Pharmaceuticals 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 Ionis Pharmaceuticals 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.

See our latest analysis for Ionis Pharmaceuticals

Over 12 months, Ionis Pharmaceuticals made a loss at the EBIT level, and saw its revenue drop to US$717m, which is a fall of 7.6%. We would much prefer see growth.

So How Risky Is Ionis Pharmaceuticals?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And we do note that Ionis Pharmaceuticals 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$560m and booked a US$458m accounting loss. But the saving grace is the US$339.1m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. 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. For example, we've discovered 1 warning sign for Ionis Pharmaceuticals 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.