Tilray Brands, Inc. — financial distress indicators
Financial-health summary
Tilray Brands, Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 78/100). The main indicators are operating profit does not cover interest, market-implied default probability >20% and losses in each of the last 3 years. Independently, the Ohlson accounting model puts its 1-year failure probability at 12% and the market-implied (Merton) default probability is 47.0%. In its favour: strong current ratio (2.21).
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.
Interest coverage (EBIT / interest) is -1.85×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default 0.08 σ → PD 47%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Total debt is 42.1× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Price is -83% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Share count up +24% 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 (2.21).
- Revenue still growing (+11% YoY).
📰 Recent news scan
- Tilray Brands, Inc. (TLRY) Reports Q1 Loss, Misses Revenue Estimates - Yahoo FinanceGoogle News · 2026-10-08
- Following Tilray Earnings, Here's What Comes Next for TLRY Stock - Barchart.comGoogle News · 2026-10-08
- Tilray Brands Sinks 4% as Record Revenue Masks Shrinking Cannabis Sales; Canopy Growth and Aurora Cannabis Ease - 24/7 Wall St.Google News · 2026-10-08
- Earnings Scheduled For October 8, 2026 - BenzingaGoogle News · 2026-10-08
- Tilray stock slips after Q1 revenue miss (TLRY:NASDAQ) - Seeking AlphaGoogle News · 2026-10-08
- Tilray Brands: Is the Stock a Buy at Less Than $4? - Yahoo FinanceGoogle News · 2026-10-06
⚖️ 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 Tilray Brands, Inc.'s financial-health indicators show?
As of 2026-10-08, Tilray Brands, Inc.'s public financial data places it in the 'Very weak' band with a distress score of 78/100, driven by operating profit does not cover interest, market-implied default probability >20% and losses in each of the last 3 years. 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 Tilray Brands, Inc.'s financial distress score?
78/100 ('Very weak'). Ohlson O-score -1.96 (model 1-year failure probability 12%). Merton distance-to-default 0.08 σ (model default probability 47.0%).
What works in Tilray Brands, Inc.'s favour?
Strong current ratio (2.21). Revenue still growing (+11% YoY).
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 Pharma & Biotech companies with distress indicators
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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.