Rapid7, Inc. — financial distress indicators
Financial-health summary
Rapid7, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 43/100). The main indicators are market-implied default probability >20%, thin interest coverage and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 87% and the market-implied (Merton) default probability is 31.9%. 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.
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.
Interest coverage is only 1.08× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
Total debt is 11.7× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Current ratio is 0.78.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
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
- Rapid7, Inc. (RPD) Stock Forecasts - Yahoo FinanceGoogle News · 2026-10-09
- (RPD) Optimized Trading Opportunities (RPD:CA) - Stock Traders DailyGoogle News · 2026-10-08
- 3 Unpopular Stocks with Questionable Fundamentals - StockStoryGoogle News · 2026-10-07
- Linux malware is targeting telecom devices. Researchers found it blending in through email systems. - Stock TitanGoogle News · 2026-10-02
- Rapid7 (NasdaqGM:RPD) Stock Forecast & Analyst Predictions - Simply Wall StreetGoogle News · 2026-09-26
- $RPD stock is up 13% today. Here's what we see in our data. - Quiver QuantitativeGoogle News · 2026-09-14
⚖️ 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 Rapid7, Inc.'s financial-health indicators show?
As of 2026-10-08, Rapid7, Inc.'s public financial data places it in the 'Watch' band with a distress score of 43/100, driven by market-implied default probability >20%, 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 Rapid7, Inc.'s financial distress score?
43/100 ('Watch'). Ohlson O-score 1.91 (model 1-year failure probability 87%). Merton distance-to-default 0.47 σ (model default probability 31.9%).
What works in Rapid7, Inc.'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 IT & Software companies with distress indicators
- Cyabra, Inc. (CYAB)Very weak 100/100
- Exyn Technologies, Inc. (EXYN)Very weak 100/100
- The OLB Group, Inc. (OLB)Very weak 100/100
- Roadzen, Inc. (RDZN)Very weak 100/100
- Rekor Systems, Inc. (REKR)Very weak 100/100
- Veea Inc. (VEEA)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.