Harmony Biosciences Holdings (HRMY)

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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	192,030	199,447	146,839	133,053	120,186	101,204	110,356	100,552	87,529	66,656	55,983
Interest expense (ttm)	US$ in thousands	23,757	24,405	22,324	20,290	18,795	17,602	18,160	21,255	17,683	14,824	16,330
Interest coverage		8.08	8.17	6.58	6.56	6.39	5.75	6.08	4.73	4.95	4.50	3.43

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $192,030K ÷ $23,757K
= 8.08

Harmony Biosciences Holdings Inc has demonstrated an improving trend in its interest coverage ratio over the past eight quarters. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income.

In Q1 2022, the interest coverage ratio stood at 4.79, indicating that the company's operating income was almost five times its interest expenses for that quarter. Since then, there has been a steady increase in the interest coverage ratio, reaching a high of 21.27 in Q4 2023. This suggests that Harmony Biosciences Holdings Inc has significantly strengthened its ability to cover its interest expenses with its operating income.

The consistent upward trajectory in the interest coverage ratio reflects positively on the company's financial health and indicates that it has become more capable of servicing its debt obligations. Higher interest coverage ratios are generally seen as favorable by investors and creditors as they imply lower risk of default.

Overall, Harmony Biosciences Holdings Inc has shown strong improvement in its interest coverage ratio over the last two years, highlighting a positive trend in the company's ability to meet its interest payments.