ZCMD — financial distress indicators
Financial-health summary
ZCMD's reported numbers place it in the 'Weak' financial-health band (distress score 50/100). The main indicators are market-implied default probability >20%, share price down >80% from 52-week high and steep revenue decline. Independently, the Ohlson accounting model puts its 1-year failure probability at 11% and the market-implied (Merton) default probability is 79.5%. In its favour: cash on hand covers all debt (net-cash balance sheet).
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 -0.82 σ → PD 79%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Price is -100% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Revenue changed -28% year over year.
Falling sales reduce cash available for debt service.
Net income negative in 3 of 3 fiscal years. Partly offset by positive operating cash flow and net cash.
Persistent losses erode equity and the capacity to absorb shocks.
Share count up +22% in a year.
Large issuance usually funds operating losses rather than growth.
Operating margin fell from -28% to -54% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (11.11).
📰 Recent news scan
- Zhongchao Inc. Announces 1-for-2 Share ConsolidationYahoo Finance · 2026-09-30
- Zhongchao Inc. Announces $5.0 Million Registered Direct OfferingYahoo Finance · 2026-07-23
- Zhongchao Inc. Announces 1-for-3 Share ConsolidationYahoo Finance · 2026-06-25
- Zhongchao Inc. Announces 1-for-31 Share ConsolidationYahoo Finance · 2026-06-04
- Zhongchao Inc. Announces Pricing of $5 Million Best Efforts Public OfferingYahoo Finance · 2026-05-29
⚖️ 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 ZCMD's financial-health indicators show?
As of 2026-10-08, ZCMD's public financial data places it in the 'Weak' band with a distress score of 50/100, driven by market-implied default probability >20%, share price down >80% from 52-week high and steep revenue decline. 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 ZCMD's financial distress score?
50/100 ('Weak'). Ohlson O-score -2.08 (model 1-year failure probability 11%). Merton distance-to-default -0.82 σ (model default probability 79.5%).
What works in ZCMD's favour?
Cash on hand covers all debt (net-cash balance sheet). Operating cash flow is positive over the latest 12 months. Strong current ratio (11.11).
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.