Aehr Test Systems, Inc. — financial distress indicators
Financial-health summary
Aehr Test Systems, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 37/100). The main indicators are operations consume cash, losses in 2 of the last 3 years and steep revenue decline. Independently, the Ohlson accounting model puts its 1-year failure probability at 8% and the market-implied (Merton) default probability is 0.0%. 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.
Operating cash flow negative in 2 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Revenue changed -15% year over year.
Falling sales reduce cash available for debt service.
Price is -62% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Operating margin fell from 15% to -28% in two years.
Sharp margin compression signals loss of pricing power or cost control.
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 (10.33).
📰 Recent news scan
- Is Aehr Test Systems (AEHR) Stock Too Expensive After Its AI Order?Yahoo Finance · 2026-10-19
- Implied Volatility Surging for Aehr Stock OptionsYahoo Finance · 2026-10-13
- Aehr Test Systems to Announce First Quarter Fiscal 2027 Financial Results on November 2, 2026Yahoo Finance · 2026-10-08
- Aehr Receives Follow-On Sonoma(TM) Production Orders for Lead Hyperscale Customer's Next-Generation AI ProcessorYahoo Finance · 2026-10-07
- AEHR vs. CAMT: Which Semiconductor Equipment Stock Is the Better Bet?Yahoo Finance · 2026-09-30
- Aehr Test Systems to Participate in 18th Annual CEO Investor Summit 2026 in San FranciscoYahoo Finance · 2026-09-28
⚖️ 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 Aehr Test Systems, Inc.'s financial-health indicators show?
As of 2026-10-23, Aehr Test Systems, Inc.'s public financial data places it in the 'Watch' band with a distress score of 37/100, driven by operations consume cash, losses in 2 of the last 3 years and steep revenue decline. 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 Aehr Test Systems, Inc.'s financial distress score?
37/100 ('Watch'). Ohlson O-score -2.4 (model 1-year failure probability 8%). Merton distance-to-default 5.06 σ (model default probability 0.0%).
What works in Aehr Test Systems, Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet). Strong current ratio (10.33).
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 Semiconductor companies with distress indicators
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- GCT Semiconductor Holding, Inc. (GCTS)Very weak 78/100
- Fabric.AI, Inc. (FABC)Weak 65/100
- SmartKem, Inc. (SMTK)Weak 65/100
- Peraso Inc. (PRSO)Weak 63/100
- Mobix Labs, Inc. (MOBX)Weak 55/100
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.