Investment Thesis
Ironwood Pharmaceuticals exhibits strong profitability margins (68% operating margin) but faces severe structural challenges including negative stockholders' equity of -$217.1M, declining revenue (-15.7% YoY), and critically weak cash generation ($5.1M FCF vs. $40.8M net income indicates poor earnings quality). The $199.5M debt burden on a negative equity base creates solvency risk despite adequate short-term liquidity.
Strengths
- Exceptional operating margins of 68.1% and net margins of 38.3%
- Strong interest coverage ratio of 10.0x indicating debt servicing capability
- Adequate liquidity with current ratio of 1.41x and $220.5M cash position
Risks
- Negative stockholders' equity of -$217.1M indicates balance sheet insolvency with liabilities exceeding assets
- Revenue declining 15.7% YoY with flat net income shows no growth and deteriorating fundamentals
- Severe cash flow weakness: $40.8M net income but only $5.1M operating cash flow suggests poor earnings quality and potential accounting adjustments
Key Metrics to Watch
- Operating cash flow trend and reconciliation to net income quality
- Revenue trajectory and pipeline sustainability
- Stockholders' equity trend and path to positive equity
Financial Metrics
Revenue
106.5M
Net Income
40.8M
EPS (Diluted)
$0.24
Free Cash Flow
5.1M
Total Assets
434.6M
Cash
220.5M
Profitability Ratios
Gross Margin
N/A
Operating Margin
68.1%
Net Margin
38.3%
ROE
N/A
ROA
9.4%
FCF Margin
4.8%
Balance Sheet & Liquidity
Current Ratio
1.41x
Quick Ratio
1.40x
Debt/Equity
N/A
Debt/Assets
0.0%
Interest Coverage
10.04x
Long-term Debt
199.5M
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: 2026-05-08T10:46:42.471500 |
Data as of: 2026-03-31 |
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