Star Equity Holdings, Inc. — financial distress indicators
Financial-health summary
Star Equity Holdings, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 42/100). The main indicators are operations consume cash, ohlson o-score signals likely failure and cash runway under 24 months. Independently, the Ohlson accounting model puts its 1-year failure probability at 63% and the market-implied (Merton) default probability is 0.3%. In its favour: strong current ratio (2.09).
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.
O-score 0.55 → model probability 63%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Cash covers ~12 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Share count up +33% in a year.
Large issuance usually funds operating losses rather than growth.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Strong current ratio (2.09).
- Revenue still growing (+23% YoY).
- High insider/promoter ownership (39%) aligns management with survival.
📰 Recent news scan
- Star Equity CEO Jeffrey Eberwein sells $27,540 in preferred stock By Investing.com - Investing.com CanadaGoogle News · 2026-10-08
- Star Navigation Systems Group Ltd. (SNA.CN) Stock Price, News, Quote & History - Yahoo! Finance CanadaGoogle News · 2026-10-07
- Northern Star Resources Limited (NESRF) Stock Price, News, Quote & History - Yahoo! Finance CanadaGoogle News · 2026-10-07
- Balyasny promotes star stock picker to co-lead equities - HedgeweekGoogle News · 2026-10-06
- Balyasny Elevates Star Stock Picker Weiss to Co-Lead Equities - Bloomberg.comGoogle News · 2026-10-05
- A recruitment provider rose from No. 5 to No. 3 in global client ratings. Hudson has made the list 18 years running. - Stock TitanGoogle News · 2026-09-24
⚖️ 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 Star Equity Holdings, Inc.'s financial-health indicators show?
As of 2026-10-08, Star Equity Holdings, Inc.'s public financial data places it in the 'Watch' band with a distress score of 42/100, driven by operations consume cash, ohlson o-score signals likely failure and cash runway under 24 months. 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 Star Equity Holdings, Inc.'s financial distress score?
42/100 ('Watch'). Ohlson O-score 0.55 (model 1-year failure probability 63%). Merton distance-to-default 2.72 σ (model default probability 0.3%).
What works in Star Equity Holdings, Inc.'s favour?
Strong current ratio (2.09). Revenue still growing (+23% YoY). High insider/promoter ownership (39%) 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.
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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.