ADC Therapeutics SA — financial distress indicators
Financial-health summary
ADC Therapeutics SA's reported numbers place it in the 'Very weak' financial-health band (distress score 77/100). The main indicators are liabilities exceed assets (negative equity), market-implied default probability >20% and losses in each of the last 3 years. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 31.9%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.74× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
Merton distance-to-default 0.47 σ → PD 32%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 6.71 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Price is -67% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Share count up +26% in a year.
Large issuance usually funds operating losses rather than growth.
0 severe and 1 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Strong current ratio (4.09).
- Revenue still growing (+15% YoY).
📰 Recent news scan
- restructurADC Therapeutics Announces Comprehensive Strategic Financial Restructuring Marking Key Capital Structure ImprovementsYahoo Finance · 2026-10-08
- ADC Therapeutics to Participate in the 2026 Cantor Global Healthcare ConferenceYahoo Finance · 2026-09-03
- ADC Therapeutics (ADCT) Q2 2026 Earnings Call TranscriptYahoo Finance · 2026-08-20
- ADC Therapeutics (ADCT) Stock Fair Value Falls After LOTIS 5 Reshapes Zynlonta OutlookYahoo Finance · 2026-08-16
- ADC Therapeutics SA (ADCT) (Q2 2026) Earnings Call Highlights: Navigating Regulatory Hurdles ...Yahoo Finance · 2026-08-13
- ADC Therapeutics Q2 Earnings Call HighlightsYahoo Finance · 2026-08-13
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do ADC Therapeutics SA's financial-health indicators show?
As of 2026-10-08, ADC Therapeutics SA's public financial data places it in the 'Very weak' band with a distress score of 77/100, driven by liabilities exceed assets (negative equity), market-implied default probability >20% and losses in each of the last 3 years. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is ADC Therapeutics SA's financial distress score?
77/100 ('Very weak'). Ohlson O-score 6.71 (model 1-year failure probability 100%). Merton distance-to-default 0.47 σ (model default probability 31.9%).
What works in ADC Therapeutics SA's favour?
Cash on hand covers all debt (net-cash balance sheet). Strong current ratio (4.09). Revenue still growing (+15% YoY).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Pharma & Biotech companies with distress indicators
- ABVC BioPharma, Inc. (ABVC)Very weak 100/100
- AKAN (AKAN)Very weak 100/100
- Endovia Health Sciences, Inc. (EDVA)Very weak 100/100
- Elicio Therapeutics, Inc. (ELTX)Very weak 100/100
- IM Cannabis Corp. (IMCC)Very weak 100/100
- NeuroSense Therapeutics Ltd. (NRSN)Very weak 100/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.