Arrowhead Pharmaceuticals Inc (ARWR)

Interest coverage

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-276,516	-184,165	-163,499	-138,499	-147,865	-172,278	-155,435	-115,257	-187,855	-149,037	-134,273	-118,351	-112,359	-93,158	-33,401	1,141	45,392	61,191	40,384	5,868
Interest expense (ttm)	US$ in thousands	20,844	18,326	13,064	7,906	2,849	0	6,120	7,400	8,924	11,093	9,195,473	11,528,843	11,529,724	13,707,425	11,474,695	10,880,005	10,879,486	9,790,726	3,881,476	2,455,218
Interest coverage		-13.27	-10.05	-12.52	-17.52	-51.90	—	-25.40	-15.58	-21.05	-13.44	-0.01	-0.01	-0.01	-0.01	-0.00	0.00	0.00	0.01	0.01	0.00

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-276,516K ÷ $20,844K
= -13.27

Based on the data provided for Arrowhead Pharmaceuticals Inc., the interest coverage ratio has shown significant fluctuations over the recent quarters. In Q1 2024, the interest coverage ratio is -55.19, indicating that the company's operating income is insufficient to cover its interest expenses. This likely suggests financial distress and raises concerns about the company's ability to meet its interest obligations from its earnings.

Furthermore, in Q4 2023, the interest coverage ratio deteriorated further to -67.72, indicating a worsening financial position compared to the previous quarter. The negative values for both Q1 2024 and Q4 2023 suggest that Arrowhead Pharmaceuticals Inc. is not generating enough operating income to cover its interest expenses, posing a risk of default on its debt obligations.

In Q3 2023, the interest coverage ratio reported a drastic decline to -2,694.06, a staggering figure that raises serious red flags about the company's financial health. While no data is available for the remaining quarters of 2023 and the quarters of 2022, the negative trend observed in the available data suggests a concerning pattern of declining interest coverage for Arrowhead Pharmaceuticals Inc.

Overall, based on the data provided, Arrowhead Pharmaceuticals Inc. has been facing severe challenges in meeting its interest payments with its operating income, indicating a high level of financial risk and potential liquidity issues. It is crucial for the company to address this significant deterioration in its interest coverage ratio to ensure its financial stability and avoid potential financial distress.