Regis Corporation — financial distress indicators
Financial-health summary
Regis Corporation's reported numbers place it in the 'Weak' financial-health band (distress score 51/100). The main indicators are severe working-capital shortfall, thin interest coverage and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 59% and the market-implied (Merton) default probability is 10.2%. In its favour: operating cash flow is positive over the latest 12 months.
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.
Current ratio is 0.59 (current assets cover 59% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Interest coverage is only 1.19× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
Total debt is 9.7× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Merton distance-to-default 1.27 σ → PD 10.2%.
Investment-grade issuers typically have 1-year PD well below 1%.
Short-term debt is 7.7× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Operating cash flow negative in 2 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
📰 Recent news scan
- Regis (RGS) Reports $24.4M of Operating Income as Franchise Revenue Falls 12%. Can Company-Owned Salons Offset a Shrinking Franchise Base?Yahoo Finance · 2026-09-09
- Regis (RGS) Q4 2026 Earnings Call TranscriptYahoo Finance · 2026-09-02
- Regis Q4 Earnings Call HighlightsYahoo Finance · 2026-09-01
- Is It Too Late To Consider Buying Regis Corporation (NASDAQ:RGS)?Yahoo Finance · 2026-05-27
- Regis Stock Gains Post Q3 Earnings Despite Revenue DeclineYahoo Finance · 2026-05-18
- Regis (RGS) Q3 2026 Earnings Call TranscriptYahoo Finance · 2026-05-13
⚖️ 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 Regis Corporation's financial-health indicators show?
As of 2026-10-08, Regis Corporation's public financial data places it in the 'Weak' band with a distress score of 51/100, driven by severe working-capital shortfall, thin interest coverage and very high leverage. 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 Regis Corporation's financial distress score?
51/100 ('Weak'). Ohlson O-score 0.35 (model 1-year failure probability 59%). Merton distance-to-default 1.27 σ (model default probability 10.2%).
What works in Regis Corporation's favour?
Operating cash flow is positive over the latest 12 months.
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 Consumer Discretionary companies with distress indicators
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- Polestar Automotive Holding UK PLC (PSNYW)Very weak 100/100
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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.