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Is Regeneron Pharmaceuticals Inc’s (NASDAQ:REGN) Balance Sheet Strong Enough To Weather A Storm?

Bryan Cramer

There are a number of reasons that attract investors towards large-cap companies such as Regeneron Pharmaceuticals Inc (NASDAQ:REGN), with a market cap of US$32.52B. Market participants who are conscious of risk tend to search for large firms, attracted by the prospect of varied revenue sources and strong returns on capital. However, the health of the financials determines whether the company continues to succeed. Let’s take a look at Regeneron Pharmaceuticals’s leverage and assess its financial strength to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Note that this information is centred entirely on financial health and is a high-level overview, so I encourage you to look further into REGN here. See our latest analysis for Regeneron Pharmaceuticals

Does REGN produce enough cash relative to debt?

REGN has built up its total debt levels in the last twelve months, from US$481.13M to US$703.45M , which is mainly comprised of near term debt. With this growth in debt, the current cash and short-term investment levels stands at US$1.41B , ready to deploy into the business. On top of this, REGN has produced cash from operations of US$1.31B in the last twelve months, resulting in an operating cash to total debt ratio of 185.81%, meaning that REGN’s operating cash is sufficient to cover its debt. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In REGN’s case, it is able to generate 1.86x cash from its debt capital.

Can REGN meet its short-term obligations with the cash in hand?

With current liabilities at US$1.14B, the company has been able to meet these obligations given the level of current assets of US$4.34B, with a current ratio of 3.82x. However, a ratio greater than 3x may be considered as too high, as REGN could be holding too much capital in a low-return investment environment.

NasdaqGS:REGN Historical Debt May 22nd 18

Is REGN’s debt level acceptable?

REGN’s level of debt is appropriate relative to its total equity, at 10.73%. This range is considered safe as REGN is not taking on too much debt obligation, which can be restrictive and risky for equity-holders. We can check to see whether REGN is able to meet its debt obligations by looking at the net interest coverage ratio. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For REGN, the ratio of 92.13x suggests that interest is comfortably covered. Large-cap investments like REGN are often believed to be a safe investment due to their ability to pump out ample earnings multiple times its interest payments.

Next Steps:

REGN’s high cash coverage and low debt levels indicate its ability to utilise its borrowings efficiently in order to generate ample cash flow. Furthermore, the company exhibits an ability to meet its near-term obligations, which isn’t a big surprise for a large-cap. This is only a rough assessment of financial health, and I’m sure REGN has company-specific issues impacting its capital structure decisions. You should continue to research Regeneron Pharmaceuticals to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for REGN’s future growth? Take a look at our free research report of analyst consensus for REGN’s outlook.
  2. Valuation: What is REGN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether REGN is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.