Waldencast plc — financial distress indicators
Financial-health summary
Waldencast plc's reported numbers place it in the 'Very weak' financial-health band (distress score 80/100). 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 53% and the market-implied (Merton) default probability is 40.6%. In its favour: strong current ratio (1.70).
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 -2.59×.
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 0.24 σ → PD 41%.
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.
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.
O-score 0.12 → model probability 53%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Cash covers ~22 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Last price $0.95.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Price is -69% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Strong current ratio (1.70).
- High insider/promoter ownership (51%) aligns management with survival.
📰 Recent news scan
- Waldencast (OTCPK:WALD.F) - Stock Analysis - Simply Wall StreetGoogle News · 2026-10-06
- Waldencast (OTCPK:WALD.F) Stock Price - Simply Wall StreetGoogle News · 2026-10-06
- A beauty company sold Obagi Medical in a deal valued at up to $460 million. Milk Makeup is now its sole focus. - Stock TitanGoogle News · 2026-09-28
- Waldencast PLC (NASDAQ:WALD) Shares Shorted: Short Interest Up 374.1% in September - MarketBeatGoogle News · 2026-09-25
- $WALD stock is down 18% today. Here's what we see in our data. - Quiver QuantitativeGoogle News · 2026-09-14
- Waldencast Stock Steadies As SEC Closes Probe On Obagi Accounting - Timothy SykesGoogle News · 2026-04-29
⚖️ 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 Waldencast plc's financial-health indicators show?
As of 2026-10-08, Waldencast plc's public financial data places it in the 'Very weak' band with a distress score of 80/100, 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 Waldencast plc's financial distress score?
80/100 ('Very weak'). Ohlson O-score 0.12 (model 1-year failure probability 53%). Merton distance-to-default 0.24 σ (model default probability 40.6%).
What works in Waldencast plc's favour?
Strong current ratio (1.70). High insider/promoter ownership (51%) 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 Consumer Staples companies with distress indicators
- AMASS Brands, Inc. (AMSS)Very weak 100/100
- Borealis Foods Inc. (BRLS)Very weak 100/100
- Reed's, Inc. (REED)Very weak 100/100
- Sadot Group Inc. (SDOT)Very weak 100/100
- Rocky Mountain Chocolate Factory, Inc. (RMCF)Very weak 97/100
- Sow Good Inc. (SOWG)Very weak 97/100
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.