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.' 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. Importantly, agilon health, inc. (NYSE:AGL) does carry debt. But should shareholders be worried about its use of debt?

What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. 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. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is agilon health's Debt?

As you can see below, agilon health had US$34.9m of debt at March 2025, down from US$37.3m a year prior. But it also has US$367.1m in cash to offset that, meaning it has US$332.2m net cash.

A Look At agilon health's Liabilities

The latest balance sheet data shows that agilon health had liabilities of US$1.37b due within a year, and liabilities of US$57.9m falling due after that. Offsetting this, it had US$367.1m in cash and US$1.26b in receivables that were due within 12 months. So it can boast US$189.9m more liquid assets than total liabilities.

This surplus suggests that agilon health is using debt in a way that is appears to be both safe and conservative. Due to its strong net asset position, it is not likely to face issues with its lenders. Succinctly put, agilon health boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine agilon health'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.

In the last year agilon health wasn't profitable at an EBIT level, but managed to grow its revenue by 23%, to US$6.0b. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is agilon health?

Statistically speaking companies that lose money are riskier than those that make money. And we do note that agilon health had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through US$80m of cash and made a loss of US$255m. While this does make the company a bit risky, it's important to remember it has net cash of US$332.2m. That means it could keep spending at its current rate for more than two years. With very solid revenue growth in the last year, agilon health may be on a path to profitability. By investing before those profits, shareholders take on more risk in the hope of bigger rewards. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. Be aware that agilon health is showing 2 warning signs in our investment analysis , 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.

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.