Discontinued Operations

Dermavant Transaction

On October 28, 2024, the Company completed the sale of its entire equity interest in its majority-owned subsidiary, Dermavant, to Organon.

Pursuant to the Merger Agreement, Organon agreed to acquire Dermavant for aggregate cash consideration comprising (i) a payment of $175.0 million payable at the closing of the Dermavant Transaction, subject to certain adjustments, (ii) a $75.0 million milestone payment payable upon FDA approval of VTAMA (the “Product”) for the treatment of atopic dermatitis (the “AD Approval Milestone”) and (iii) up to $950.0 million in additional milestone payments payable upon achievement of certain tiered net sales amounts (each less than or equal to $1.0 billion) with respect to the Product. Additionally, Organon agreed to make tiered royalty payments of (x) low-to-mid single digit percentages with respect to annual net sales of the Product up to $1.0 billion and (y) 30% with respect to annual net sales of the Product above $1.0 billion. Such consideration and royalty payments are subject to certain post-closing adjustments and are payable to all of Dermavant’s equity holders, including holders of Dermavant RSUs, options and warrants, on a pro rata basis relative to their ownership of Dermavant prior to the closing of the Dermavant Transaction (in each case, after giving effect to the liquidation preference of Dermavant’s preference shares, all of which are held by the Company, and otherwise in accordance with the applicable terms of such securities). Under the liquidation preference of Dermavant’s preference shares, the Company is entitled to receive 100% of the first $270.0 million of consideration paid pursuant to the Merger Agreement. The Company received $183.6 million in cash in October 2024 upon the closing of the Dermavant Transaction, subject to certain post-closing adjustments that are not expected to be significant. The AD Approval Milestone was achieved in December 2024, and the Company received payment of the $75.0 million AD Approval Milestone in January 2025, pursuant to the terms of the Merger Agreement.

As contemplated by the Merger Agreement, in connection with the closing of the Dermavant Transaction, Dermavant repaid all amounts outstanding or otherwise payable (including accrued interest and all premiums and exit fees) pursuant to a senior secured credit facility (the “Credit Facility”), dated as of May 14, 2021 and amended as of May 24, 2024, by and among Dermavant, certain subsidiaries of Dermavant, XYQ Luxco S.A.R.L. and U.S. Bank Trust Company, National Association, and terminated the Credit Facility in accordance with its terms.

Following the closing of the Dermavant Transaction, all rights and obligations under each of (A) the Revenue Interest Purchase and Sale Agreement, dated as of May 14, 2021 and amended as of May 24, 2024, by and among Dermavant, Dermavant Sciences GmbH, XYQ Luxco S.A.R.L., NovaQuest Co-Investment Funds XVII, L.P., MAM Tapir Lender, LLC and U.S. Bank Trust Company, National Association and (B) the Funding Agreement, dated as of July 10, 2018 and amended as of May 24, 2024, by and among Dermavant, Dermavant Sciences GmbH and NovaQuest Co-Investment Fund VIII, L.P., were retained by Dermavant and its subsidiaries, which became indirect wholly owned subsidiaries of Organon.

Financial results of Dermavant through closing of the Dermavant Transaction are presented as “Income (loss) from discontinued operations, net of tax” in the accompanying consolidated statements of operations for the years ended March 31, 2025 and 2024. As a result of the Dermavant Transaction, the Company recognized a gain of $376.5 million for the year ended March 31, 2025, of which $301.5 million was recognized upon the deconsolidation of Dermavant and $75.0 million was subsequently recognized upon achievement of the first milestone.

The following table presents components of discontinued operations related to the Dermavant Transaction included in “Income (loss) from discontinued operations, net of tax” (in thousands):


	Years Ended March 31,
	2025		2024
Product revenue, net	$	41,599	$	75,057
License, milestone and other revenue	33,838		17,025
Revenue, net	75,437		92,082
Operating expenses:
Cost of revenues	12,116		13,961
Research and development	24,307		61,827
Selling, general and administrative	119,879		271,310
Total operating expenses	156,302		347,098
Loss from operations	(80,865)		(255,016)
Gain on sale of subsidiary interests(1)	(376,506)		—
Change in fair value of debt	(97,322)		32,105
Interest expense(2)	30,556		34,778
Other income, net	(11,257)		(7,473)
Income (loss) from discontinued operations before income taxes	373,664		(314,426)
Income tax expense	634		721
Income (loss) from discontinued operations, net of tax	$	373,030	$	(315,147)

Loss from discontinued operations before income taxes attributable to noncontrolling interests	$	(155)	$	(1,367)
Income (loss) from discontinued operations before income taxes attributable to Roivant Sciences Ltd.	373,819		(313,059)
Income (loss) from discontinued operations before income taxes	$	373,664	$	(314,426)

(1)Gain on sale of subsidiary interests includes the release of accumulated other comprehensive loss of $19.9 million, primarily associated with the realization of Dermavant’s cumulative translation adjustments.

(2)Interest expense consists of interest payments related to outstanding debt held by Dermavant as well as the associated non-cash amortization of debt discounts and issuance costs. Additionally, for the year ended March 31, 2025, interest expense includes an $8.8 million loss on extinguishment of the Credit Facility.

In the accompanying consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified. The following table summarizes significant non-cash operating and investing items from discontinued operations (in thousands):


	Years Ended March 31,
	2025		2024
Gain on sale of subsidiary interests	$	(376,506)	$	—
Share-based compensation	$	9,666	$	12,163
Change in fair value of debt	$	(97,322)	$	32,105
Loss on extinguishment of debt	$	8,848	$	—
Depreciation and amortization	$	6,739	$	11,457