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. As with many other companies Replimune Group, Inc. (NASDAQ:REPL) makes use of debt. But should shareholders be worried about its use of debt?

Why Does Debt Bring Risk?

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. If things get really bad, the lenders can take control of the business. 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. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Replimune Group's Net Debt?

As you can see below, Replimune Group had US$47.6m of debt, at December 2025, which is about the same as the year before. You can click the chart for greater detail. But it also has US$269.1m in cash to offset that, meaning it has US$221.5m net cash.

How Healthy Is Replimune Group's Balance Sheet?

We can see from the most recent balance sheet that Replimune Group had liabilities of US$50.1m falling due within a year, and liabilities of US$73.0m due beyond that. Offsetting these obligations, it had cash of US$269.1m as well as receivables valued at US$2.96m due within 12 months. So it actually has US$149.0m more liquid assets than total liabilities.

This surplus suggests that Replimune Group is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Succinctly put, Replimune Group boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Replimune Group 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.

Since Replimune Group doesn't have significant operating revenue, shareholders may be hoping it comes up with a great new product, before it runs out of money.

So How Risky Is Replimune Group?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And we do note that Replimune Group had an earnings before interest and tax (EBIT) loss, over the last year. Indeed, in that time it burnt through US$283m of cash and made a loss of US$315m. With only US$221.5m on the balance sheet, it would appear that its going to need to raise capital again soon. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. 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. We've identified 4 warning signs with Replimune Group (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

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.