Arrowhead Pharmaceuticals Inc (ARWR)

Pretax margin

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Earnings before tax but after interest (EBT)	US$ in thousands	-202,491	-172,278	-140,846	-84,551	68,149
Revenue	US$ in thousands	222,409	243,231	138,287	87,992	168,796
Pretax margin		-91.04%	-70.83%	-101.85%	-96.09%	40.37%

September 30, 2023 calculation

Pretax margin = EBT ÷ Revenue
= $-202,491K ÷ $222,409K
= -91.04%

The pretax margin is a key financial ratio that indicates a company's efficiency in generating profits before accounting for taxes. A higher pretax margin reflects better cost control and higher profitability. Conversely, a negative pretax margin indicates that the company is operating at a loss before considering taxes.

From the data provided, it is evident that Arrowhead Pharmaceuticals Inc. has experienced significant fluctuations in its pretax margin over the past five years. In 2019, the company achieved a healthy pretax margin of 40.37%, signifying strong profitability. However, this performance sharply reversed in 2020 and 2021, with the pretax margin plunging into negative territory, indicating substantial losses incurred before taxes.

The deepening loss was further reflected in 2022 and 2023, with the pretax margin deteriorating to -71.01% and -85.78%, respectively. These negative pretax margins indicate a consistent pattern of decreasing profitability and increasing losses.

It is crucial for Arrowhead Pharmaceuticals Inc. to address the factors contributing to its deteriorating pretax margin, such as increasing costs, declining revenues, or inefficiencies in its operations. Additionally, the company should focus on implementing strategic initiatives to improve profitability and reverse the negative trend in its pretax margin.

In summary, the consistent negative pretax margins exhibited by Arrowhead Pharmaceuticals Inc. indicate financial challenges that need to be promptly addressed to ensure the company's long-term sustainability and profitability.