Madrigal Pharmaceuticals, Inc. (MDGL) Cash Flow Statement

The quarterly OCF/NI ratio has oscillated between negative and above 2.0 across the ten-quarter window, which makes the single-quarter relationship between profit and cash hard to rely on. The 2026Q3 ratio of 2.17 appears driven largely by a $26.4M working capital inflow rather than sustained earnings power, suggesting investors should separate the timing effect from underlying conversion. Until several consecutive quarters show OCF tracking net income more consistently, the earnings quality warrants further investigation.

Free cash flow has been negative in most quarters of the period, and the sole strong positive reading coincides with a large working capital inflow, which may not repeat. Capital expenditure remains minimal at roughly 1% of revenue, so the FCF swings are driven by operating and working capital dynamics rather than investment spending. The data suggests the company has not yet demonstrated a self-sustaining cash generation pattern.

The magnitude of working capital movements relative to reported net income indicates that receivables, inventory, or payables timing is the primary driver of quarterly cash results. Large inflows followed by large outflows suggest the cash profile may reflect collection timing rather than durable operating improvement. Investors should monitor whether these swings normalize as the commercial base matures.

Summing operating cash flow across the window shows persistent cash consumption, which contrasts with the narrowing operating losses described in the income statement. Stock-based compensation appears to be a meaningful component of the gap between reported economics and cash generation, and it may warrant scrutiny when assessing true cash burn. The divergence suggests reported profitability should be viewed cautiously until cash generation catches up.