Investment Thesis
Hydrofarm is insolvent with negative equity of -$63.3M and liabilities exceeding assets by $63.3M. The company is burning cash at -$14.1M annually from operations while posting massive losses (-$289.8M net income) and faces a liquidity crisis with a current ratio of 0.37x, unable to meet short-term obligations. Revenue has collapsed 29.4% YoY while the company carries $111.9M in debt against only $6.3M in cash.
Strengths
- Maintains positive gross margin of 11.3% despite operational distress
- Retains $6.3M in cash for immediate liquidity needs
- Still generating $134.3M in annual revenue base for potential restructuring
Risks
- Negative stockholders' equity of -$63.3M indicates balance sheet insolvency
- Current ratio of 0.37x and quick ratio of 0.13x show inability to meet short-term obligations
- Operating cash flow of -$14.1M and free cash flow of -$15.1M indicate unsustainable cash burn
- Operating margin of -206.3% and net margin of -215.9% demonstrate severe operational distress
- Debt service burden of $111.9M in long-term debt with inadequate cash reserves creates critical refinancing risk
- Revenue decline of 29.4% YoY shows deteriorating business fundamentals
- Zero insider Form 4 activity in 90 days may indicate lack of management confidence
Key Metrics to Watch
- Quarterly cash burn rate and path to cash flow breakeven
- Debt covenant compliance status and refinancing deadlines
- Revenue stabilization and gross margin sustainability
- Working capital trends and liquidity runway in months
Financial Metrics
Revenue
134.3M
Net Income
-289.8M
EPS (Diluted)
$-62.35
Free Cash Flow
-15.1M
Total Assets
123.8M
Cash
6.3M
Profitability Ratios
Gross Margin
11.3%
Operating Margin
-206.3%
Net Margin
-215.9%
ROE
N/A
ROA
-234.1%
FCF Margin
-11.2%
Balance Sheet & Liquidity
Current Ratio
0.37x
Quick Ratio
0.13x
Debt/Equity
N/A
Debt/Assets
151.1%
Interest Coverage
-70.44x
Long-term Debt
111.9M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-11T12:30:21.363820 |
Data as of: 2025-12-31 |
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