Investment Thesis
TerrAscend demonstrates operational profitability with strong 52.3% gross margins and positive 16.1% operating income, but is severely unprofitable at the net level due to substantial debt burden and likely interest/financing charges. With 2.28x debt-to-equity leverage, declining revenue (-2.8% YoY), and tight 1.5x interest coverage, the company faces material financial stress that outweighs modest positive FCF generation.
Strengths
- Strong gross margin of 52.3% indicates efficient production operations
- Positive operating cash flow of 21.5M and free cash flow of 12.9M show underlying business generates cash
- Acceptable current ratio of 1.38x provides near-term liquidity buffer
Risks
- Deeply negative net income of -81.3M despite positive revenue signals unsustainable debt/financing burden
- High leverage with 2.28x debt-to-equity and 225.5M long-term debt creates refinancing and solvency risk
- Revenue declining 2.8% YoY combined with negative profitability indicates deteriorating business fundamentals
- Quick ratio of 0.95x and tight 1.5x interest coverage suggest limited financial flexibility
Key Metrics to Watch
- Net income trend and path to profitability
- Revenue growth stabilization or recovery
- Debt reduction progress and debt service coverage ratio
- Operating cash flow sustainability
Financial Metrics
Revenue
260.6M
Net Income
-81.3M
EPS (Diluted)
$-0.29
Free Cash Flow
12.9M
Total Assets
557.4M
Cash
37.4M
Profitability Ratios
Gross Margin
52.3%
Operating Margin
16.1%
Net Margin
-31.2%
ROE
-82.1%
ROA
-14.6%
FCF Margin
5.0%
Balance Sheet & Liquidity
Current Ratio
1.38x
Quick Ratio
0.95x
Debt/Equity
2.28x
Debt/Assets
82.2%
Interest Coverage
1.46x
Long-term Debt
225.5M
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: 2026-04-17T21:54:20.904965 |
Data as of: 2025-12-31 |
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