SHMD — financial distress indicators
Financial-health summary
SHMD's reported numbers place it in the 'Very weak' financial-health band (distress score 80/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and ohlson o-score signals likely failure. Independently, the Ohlson accounting model puts its 1-year failure probability at 99% and the market-implied (Merton) default probability is 5.6%. 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.
Total liabilities are 1.24× 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).
Interest coverage (EBIT / interest) is -2.92×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
O-score 5.00 → model probability 99%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.86.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Merton distance-to-default 1.59 σ → PD 5.6%.
Investment-grade issuers typically have 1-year PD well below 1%.
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 -4% to -15% in two years.
Sharp margin compression signals loss of pricing power or cost control.
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
- Operating cash flow is positive over the latest 12 months.
- Revenue still growing (+10% YoY).
- High insider/promoter ownership (61%) aligns management with survival.
📰 Recent news scan
- restructurSCHMID Group Q2 Earnings Call HighlightsYahoo Finance · 2026-08-25
- SCHMID (SHMD) Nearly Tripled Revenue but Cut its Adjusted EBITDA Margin Outlook. Is China Growth Too Low-Margin?Yahoo Finance · 2026-08-27
- SCHMID Group N.V. Class A Ordinary Shares Q2 2026 Earnings Call SummaryYahoo Finance · 2026-08-26
- SCHMID Group Maintains €100M-Plus Revenue Target but Cuts 2026 Margin OutlookYahoo Finance · 2026-08-25
- SCHMID Group N.V. reports H1 2026 Financial Results and Updates Full-Year 2026 GuidanceYahoo Finance · 2026-08-25
- SCHMID Announces Investor Conference Call and WebcastYahoo Finance · 2026-08-14
⚖️ 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 SHMD's financial-health indicators show?
As of 2026-10-08, SHMD's public financial data places it in the 'Very weak' band with a distress score of 80/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and ohlson o-score signals likely failure. 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 SHMD's financial distress score?
80/100 ('Very weak'). Ohlson O-score 5.0 (model 1-year failure probability 99%). Merton distance-to-default 1.59 σ (model default probability 5.6%).
What works in SHMD's favour?
Operating cash flow is positive over the latest 12 months. Revenue still growing (+10% YoY). High insider/promoter ownership (61%) aligns management with survival.
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 Unclassified companies with distress indicators
- CNEY (CNEY)Very weak 100/100
- EPOW (EPOW)Very weak 100/100
- GIBO (GIBO)Very weak 100/100
- GNS (GNS)Very weak 100/100
- HKPD (HKPD)Very weak 100/100
- HUBC (HUBC)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.