Is Ultragenyx Pharmaceutical (NASDAQ:RARE) Using Too Much Debt?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' 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 can see that Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) does use debt in its business. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. 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 Ultragenyx Pharmaceutical's Net Debt?

You can click the graphic below for the historical numbers, but it shows that Ultragenyx Pharmaceutical had US$846.6m of debt in June 2025, down from US$889.1m, one year before. However, it does have US$487.6m in cash offsetting this, leading to net debt of about US$359.0m.

A Look At Ultragenyx Pharmaceutical's Liabilities

We can see from the most recent balance sheet that Ultragenyx Pharmaceutical had liabilities of US$293.2m falling due within a year, and liabilities of US$854.7m due beyond that. Offsetting this, it had US$487.6m in cash and US$127.4m in receivables that were due within 12 months. So its liabilities total US$533.0m more than the combination of its cash and short-term receivables.

Given Ultragenyx Pharmaceutical has a market capitalization of US$3.23b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Ultragenyx Pharmaceutical 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.

View our latest analysis for Ultragenyx Pharmaceutical

In the last year Ultragenyx Pharmaceutical wasn't profitable at an EBIT level, but managed to grow its revenue by 27%, to US$610m. With any luck the company will be able to grow its way to profitability.

Caveat Emptor

Even though Ultragenyx Pharmaceutical managed to grow its top line quite deftly, the cold hard truth is that it is losing money on the EBIT line. Its EBIT loss was a whopping US$505m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. However, it doesn't help that it burned through US$442m of cash over the last year. So suffice it to say we consider the stock very risky. 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. Case in point: We've spotted 1 warning sign for Ultragenyx Pharmaceutical 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.