Capturing Default Through The FHR: Invitae

When companies teeter on the brink of collapse, it often seems sudden. But not for us. At RapidRatings, we equip our clients with powerful financial risk data, allowing them to proactively identify and mitigate looming financial threats.

Case in point – Invitae, a biotech and pharmaceutical company. While their recent bankruptcy may have appeared abrupt, we began monitoring their financial decline as early as 2015.

Leveraging our forward-looking FHR model, we first identified Invitae as high-risk in 2017 when its FHR dropped from a 41 (Medium Risk) to a 28 (High Risk), as measured on our 100-point scale.

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In the first quarter of 2023, Invitae’s FHR dropped to 17, entering the Very High Risk zone.  Over the last five years, 92% of companies that defaulted had an FHR below 40 at least a year ahead of the default event.

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A Predictable Outcome

For risk managers with a keen eye for hidden risk, Invitae's future was predictable.

By closely monitoring financial health signals on both public and private, our clients proactively identify brewing problems in their supply chains and proactively implement risk mitigation procedures to prevent costly disruptions to their operations.

In today's evolving risk landscape, bankruptcy stories like Invitae's serve as stark reminders: financial health is the ultimate indicator of distress. Companies that embrace sound risk management and use financial health as a key indicator will be stronger, better protected, and less likely to be caught off guard.

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