OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS

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 07/19/2024

Weekly Sector Credit

  • This week’s Credit Sector Tracker profiles the 55 companies in the Biotech/Pharma sector.
  • Ostensibly, these companies have adequate liquidity, with a 1.42x median current ratio. The free cash flow adjusted ratio, however, tells a different story. The median value of .18x says that a majority of the sector does not have sufficient funding to cover its short-term liabilities for the year and will require additional financing. The top 25% are fully funded.
  • The median total liabilities/ market cap of .25x tells us that the market is quite comfortable with the asset value coverage of the sector’s liabilities.
  • Cash flow is another story. All quartiles of funds from operation/total liabilities are negative. This is not unexpected in a sector where many of the companies are pre-revenue and funding large discovery programs and clinical trials.
  • Companies in the sector tend to be relatively small, with median market caps of $16M. Small size tends to limit the amount of ancillary assets that can be sold to maintain liquidity in a pinch.
  • The credit profile of the sector suggests we should see a brisk amount of consolidation occurring.

Week ended 07/19/2024

Weekly Sector Credit

  • This week’s Credit Sector Tracker profiles the 55 companies in the Biotech/Pharma sector.
  • Ostensibly, these companies have adequate liquidity, with a 1.42x median current ratio. The free cash flow adjusted ratio, however, tells a different story. The median value of .18x says that a majority of the sector does not have sufficient funding to cover its short-term liabilities for the year and will require additional financing. The top 25% are fully funded.
  • The median total liabilities/ market cap of .25x tells us that the market is quite comfortable with the asset value coverage of the sector’s liabilities.
  • Cash flow is another story. All quartiles of funds from operation/total liabilities are negative. This is not unexpected in a sector where many of the companies are pre-revenue and funding large discovery programs and clinical trials.
  • Companies in the sector tend to be relatively small, with median market caps of $16M. Small size tends to limit the amount of ancillary assets that can be sold to maintain liquidity in a pinch.
  • The credit profile of the sector suggests we should see a brisk amount of consolidation occurring.

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