ADMA Biologics Inc (ADMA)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	139,332	115,242	84,289	44,615	21,632	1,340	-16,662	-25,364	-39,366	-46,498	-51,618	-58,024	-58,373	-62,402	-61,766	-63,309	-64,915	-55,522	-50,771	-44,986
Interest expense (ttm)	US$ in thousands	951	6,947	13,093	22,681	25,027	24,549	23,731	22,005	19,279	16,858	14,577	13,251	13,058	12,851	12,643	12,463	11,984	11,606	11,164	10,170
Interest coverage		146.51	16.59	6.44	1.97	0.86	0.05	-0.70	-1.15	-2.04	-2.76	-3.54	-4.38	-4.47	-4.86	-4.89	-5.08	-5.42	-4.78	-4.55	-4.42

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $139,332K ÷ $951K
= 146.51

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its operating income. A higher interest coverage ratio indicates that a company is more capable of covering its interest obligations.

In the case of ADMA Biologics Inc, the interest coverage ratio experienced a downward trend from March 2020 to September 2022, with the ratio consistently below 0, indicating that the company's operating income was insufficient to cover its interest expenses during this period. This situation suggests a higher financial risk for the company as it struggled to meet its interest obligations.

However, starting from March 2023, the interest coverage ratio began to improve and turned positive, indicating that ADMA Biologics Inc's operating income was finally able to cover its interest expenses. The significant improvement in the ratio from a negative to a very high positive value as of December 31, 2024, suggests a considerable enhancement in the company's financial health and debt-servicing capability.

It is important to note that a sudden and substantial increase in the interest coverage ratio, such as the sharp rise observed in the later periods, could indicate either a significant increase in operating income or a reduction in interest expenses. Further analysis of the company's financial statements and operational performance would be necessary to fully understand the reasons behind the significant improvement in ADMA Biologics Inc's interest coverage ratio.