OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Credit Tracker By Industry Sector
Credit Tracker By Sector
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Week ended 08/02/2024
Weekly Sector Credit
- Q2 earnings season is roughly halfway through and many of the largest MSOs have already reported including Green Thumb (GTII: CSE), Trulieve (TRUL: CSE), Verano (VRNO: Cboe), Curaleaf (CURA: TSX), Ascend (AAWH: CSE), AYR (AYR.A: CSE), and Jushi (JUSHF: OTCPK). New financials obviously change credit metrics. Less obvious is the fact that the decline in stock prices over the last two weeks has impacted several of our key credit measures, including total liabilities to market cap and debt to market cap.
- Median cash flow-adjusted current ratios for the Cultivation and Retail sectors are slightly better, at .67x compared to .62x last week. Despite the slight improvement, the ratio still indicates that over one-half of the 93 companies will need to obtain additional financing to discharge their current liabilities over the current year.
- The group’s median total liabilities to market cap now stands at 2.31x, a deterioration from 2.01x last week. Decreased market valuations primarily caused this. The cannabis equity market is saying that there is a slightly less cushion between the market value of the group’s assets and its liabilities.
- Debt/ 2024 EBITDA, a more commonly used but less predictive measure of credit quality than the market-based measures, now has a median value of 2.6x, an improvement from 2.73x last week.
- We conclude that overall credit quality has improved over the last week. Several large refinancings have mitigated crises at maturity concerns which were a significant overhang on the sector.
Week ended 08/02/2024
Weekly Sector Credit
- Q2 earnings season is roughly halfway through and many of the largest MSOs have already reported including Green Thumb (GTII: CSE), Trulieve (TRUL: CSE), Verano (VRNO: Cboe), Curaleaf (CURA: TSX), Ascend (AAWH: CSE), AYR (AYR.A: CSE), and Jushi (JUSHF: OTCPK). New financials obviously change credit metrics. Less obvious is the fact that the decline in stock prices over the last two weeks has impacted several of our key credit measures, including total liabilities to market cap and debt to market cap.
- Median cash flow-adjusted current ratios for the Cultivation and Retail sectors are slightly better, at .67x compared to .62x last week. Despite the slight improvement, the ratio still indicates that over one-half of the 93 companies will need to obtain additional financing to discharge their current liabilities over the current year.
- The group’s median total liabilities to market cap now stands at 2.31x, a deterioration from 2.01x last week. Decreased market valuations primarily caused this. The cannabis equity market is saying that there is a slightly less cushion between the market value of the group’s assets and its liabilities.
- Debt/ 2024 EBITDA, a more commonly used but less predictive measure of credit quality than the market-based measures, now has a median value of 2.6x, an improvement from 2.73x last week.
- We conclude that overall credit quality has improved over the last week. Several large refinancings have mitigated crises at maturity concerns which were a significant overhang on the sector.
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