TransMedics Group Inc (TMDX)
Interest coverage
| 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 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 31,455 | -803 | -14,217 | -28,727 | -38,109 | -15,318 | -24,157 | -31,437 | -35,986 | -42,167 | -42,290 | -39,428 | -33,996 | -26,881 | -24,874 | -26,384 | -29,182 | -31,814 | -31,658 | -29,603 |
| Interest expense (ttm) | US$ in thousands | 28,885 | 14,416 | 13,298 | 10,791 | 8,193 | 5,390 | 3,857 | 3,726 | 3,697 | 3,889 | 3,882 | 3,874 | 3,867 | 3,859 | 3,895 | 3,985 | 4,077 | 4,190 | 4,302 | 4,353 |
| Interest coverage | 1.09 | -0.06 | -1.07 | -2.66 | -4.65 | -2.84 | -6.26 | -8.44 | -9.73 | -10.84 | -10.89 | -10.18 | -8.79 | -6.97 | -6.39 | -6.62 | -7.16 | -7.59 | -7.36 | -6.80 |
September 30, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $31,455K ÷ $28,885K
= 1.09
Interest coverage ratio calculates a company's ability to meet its interest obligations on outstanding debt. It is computed by dividing earnings before interest and taxes (EBIT) by the total interest expense. A higher ratio indicates a stronger ability to cover interest expenses.
Analyzing the interest coverage ratio of TransMedics Group Inc over the past years reveals a concerning trend. The company's interest coverage ratio has been consistently below 1, indicating that its EBIT is insufficient to cover its interest expenses. This raises red flags about the company's financial health and ability to service its debt obligations.
The negative interest coverage ratios in recent quarters, such as -0.06, -1.07, and -2.66, highlight a critical situation where the company's earnings are not enough to cover its interest payments. This puts TransMedics at a higher risk of default and may indicate financial distress.
Furthermore, the declining trend in interest coverage over successive periods, with ratios deteriorating from -4.65 to -10.89, suggests a worsening financial condition. The company's inability to generate enough earnings to cover interest costs poses a significant threat to its long-term sustainability and may impact its creditworthiness in the eyes of lenders and investors.
In conclusion, based on the historical interest coverage ratios, it is evident that TransMedics Group Inc faces challenges in meeting its interest obligations from its operating earnings. Investors and creditors should closely monitor the company's financial performance and debt management strategies to assess the potential risks associated with its financial leverage.
Peer comparison
Sep 30, 2024