Health Check: How Prudently Does Fulgent Genetics (NASDAQ:FLGT) Use Debt?

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.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Fulgent Genetics, Inc. (NASDAQ:FLGT) makes use of debt. But the more important question is: how much risk is that debt creating?

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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. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. 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 Fulgent Genetics's Net Debt?

As you can see below, Fulgent Genetics had US$2.43m of debt at September 2025, down from US$2.91m a year prior. But it also has US$375.8m in cash to offset that, meaning it has US$373.4m net cash.

How Healthy Is Fulgent Genetics' Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Fulgent Genetics had liabilities of US$72.4m due within 12 months and liabilities of US$21.4m due beyond that. Offsetting these obligations, it had cash of US$375.8m as well as receivables valued at US$78.7m due within 12 months. So it actually has US$360.7m more liquid assets than total liabilities.

This luscious liquidity implies that Fulgent Genetics' balance sheet is sturdy like a giant sequoia tree. Having regard to this fact, we think its balance sheet is as strong as an ox. Succinctly put, Fulgent Genetics 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 it is future earnings, more than anything, that will determine Fulgent Genetics's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for Fulgent Genetics

Over 12 months, Fulgent Genetics reported revenue of US$316m, which is a gain of 14%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

So How Risky Is Fulgent Genetics?

We have no doubt that loss making companies are, in general, riskier than profitable ones. And in the last year Fulgent Genetics had an earnings before interest and tax (EBIT) loss, truth be told. Indeed, in that time it burnt through US$20m of cash and made a loss of US$43m. But the saving grace is the US$373.4m on the balance sheet. That kitty means the company can keep spending for growth for at least two years, at current rates. 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. Case in point: We've spotted 2 warning signs for Fulgent Genetics you should be aware of, and 1 of them is a bit concerning.

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.