Taro Provides Results for September 30, 2022

Taro Provides Results for September 30, 2022




Taro Provides Results for September 30, 2022

HAWTHORNE, N.Y.–(BUSINESS WIRE)–Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and six months ended September 30, 2022.

Quarter ended September 30, 2022* Highlights ─ compared to September 30, 2021

  • Net sales of $130.5 million decreased, principally due to the continued price decline particularly in the U.S. generic business, as well as a one-time gross-to-net (“GTN”) adjustment.
  • Gross profit of $47.0 million (36.0% of net sales) compared to $62.0 million (47.0% of net sales).
  • Research and development (R&D) expenses of $11.5 million decreased slightly.
  • Selling, marketing, general and administrative expenses (SG&A) of $42.3 million increased $18.6 million.
  • Operating loss of $(6.8) million compared to operating income of $24.4 million. The current year quarter operating loss is primarily attributable to the aforementioned price erosion and GTN adjustment, as well as the on-going impact associated with the integration of our recent acquisition.
  • Interest and other financial income of $4.3 million increased $1.9 million.
  • Tax benefit of $2.1 million compared to tax expense of $6.1 million in the prior year quarter.
  • Net loss attributable to Taro was $(2.8) million compared to net income of $23.3 million, resulting in (loss) per share of $(0.07) compared to earnings per share of $0.62. Excluding the impact from the settlement and loss contingencies charges in the prior year quarter, net income was $24.7 million, resulting in earnings per share of $0.66.

Six Months ended September 30, 2022* Highlights ─ compared to September 30, 2021

  • Net sales of $287.2 million increased $8.1 million.
  • Gross profit of $128.6 million (44.8% of net sales compared to 50.1%) decreased $11.2 million.
  • R&D expenses of $23.0 million decreased $2.4 million.
  • SG&A of $98.4 million increased $50.7 million.
  • Operating income of $7.2 million compared to $5.2 million, Excluding the impact from the settlement and loss contingencies charges in the prior year, operating income was $66.6 million. The current year operating income primarily reflects the six-month impact of the factors mentioned above.
  • Interest and other financial income of $6.2 million increased from $5.4 million.
  • Net income attributable to Taro was $11.3 million compared to $4.6 million, resulting in earnings per share of $0.30 compared to earnings per share of $0.12. Excluding the impact from the settlement and loss contingencies charges in the prior year, net income was $66.0 million, resulting in diluted earnings per share of $1.75.

Cash Flow and Balance Sheet Highlights

  • Cash flow used in operations for the six months ended September 30, 2022 was $37.7 million compared to $8.0 million for the six months ended September 30, 2021. Excluding the impact from the settlement and loss contingencies charges in both periods, cash flow provided by operations was $30.0 million compared to $94.9 million for the six months ended September 30, 2021.
  • As of September 30, 2022, cash and cash equivalents, short-term bank deposits and marketable securities (both short- and long-term) decreased $58.9 million to $1.2 billion from March 31, 2022; principally the result of a $67.6 million settlement payment to the Direct Purchaser Plaintiff (“DPP”) class in the In re: Generic Pharmaceuticals Pricing Antitrust Litigation, MDL No. 2724.

* The September 30, 2022 results include six months’ results from the February 28th acquisition of Alchemee.

FDA Approvals and Filings

The Company currently has a total of nineteen ANDAs awaiting FDA approval, including three tentative approvals.

The Company cautions that the foregoing 2022 financial information (including Alchemee) is unaudited and is subject to change.

************************

About Taro

Taro Pharmaceutical Industries Ltd. is a multinational, science-based pharmaceutical company dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products. For further information on Taro Pharmaceutical Industries Ltd., please visit the Company’s website at www.taro.com.

SAFE HARBOR STATEMENT

The unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments necessary to present fairly the financial condition and results of operations of the Company. The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 20-F, as filed with the SEC.

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements that do not describe historical facts or that refer or relate to events or circumstances the Company “estimates,” “believes,” or “expects” to happen or similar language, and statements with respect to the Company’s financial performance, availability of financial information, and estimates of financial results and information for fiscal year 2023. Although the Company believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurances that its expectations will be attained. Factors that could cause actual results to differ include general domestic and international economic conditions, industry and market conditions, changes in the Company’s financial position, litigation brought by any party in any court in Israel, the United States, or any country in which Taro operates, regulatory and legislative actions in the countries in which Taro operates, and other risks detailed from time to time in the Company’s SEC reports, including its Annual Reports on Form 20-F. Forward-looking statements are applicable only as of the date on which they are made. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.

**Financial Tables Follow**

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. dollars in thousands, except share data)
   
  Quarter Ended Six Months Ended
  September 30, September 30,
 

 

2022

 

2021

 

 

2022

 

2021

 

Sales, net  

$

130,498

 

$

131,986

 

$

287,163

 

$

279,099

 

Cost of sales  

 

83,536

 

 

69,941

 

 

158,595

 

 

139,356

 

Gross profit  

 

46,962

 

 

62,045

 

 

128,568

 

 

139,743

 

   
Operating Expenses:  
Research and development  

 

11,522

 

 

12,495

 

 

23,030

 

 

25,448

 

Selling, marketing, general and administrative  

 

42,255

 

 

23,684

 

 

98,377

 

 

47,660

 

Settlements and loss contingencies  

 

 

 

1,420

 

 

 

 

61,420

 

Operating (loss) income *  

 

(6,815

)

 

24,446

 

 

7,161

 

 

5,215

 

   
Financial (income) expense, net:  
Interest and other financial income  

 

(4,296

)

 

(2,371

)

 

(6,222

)

 

(5,413

)

Foreign exchange (income) expense  

 

2,788

 

 

(264

)

 

3,082

 

 

11

 

Other gain, net  

 

395

 

 

2,340

 

 

839

 

 

2,724

 

Income (loss) before income taxes  

 

(4,913

)

 

29,421

 

 

11,140

 

 

13,341

 

Tax (benefit) expense  

 

(2,100

)

 

6,104

 

 

(126

)

 

8,792

 

Net (loss) income attributable to Taro *  

$

(2,813

)

$

23,317

 

$

11,266

 

$

4,549

 

   
Net (loss) income per ordinary share attributable to Taro:  
Basic and Diluted *  

$

(0.07

)

$

0.62

 

$

0.30

 

$

0.12

 

   
Weighted-average number of shares used to compute net (loss) income per share:  
Basic and Diluted  

 

37,584,891

 

 

37,600,580

 

 

37,584,891

 

 

37,696,975

 

   
May not foot due to rounding.  

Note: Quarter and six months ended September 30, 2022 includes results from Alchemee (acquired February 28, 2022).

* Excluding the settlement and loss contingencies charges of $1.4 million for the quarter ended September 30, 2021, Operating income was $25.9 million, Net income attributable to Taro was $24.7 million, and basic and diluted earnings per share was $0.66.

Excluding the settlement and loss contingencies charges of $61.4 million for the six months ended September 30, 2021, Operating income was $66.6 million, Net income attributable to Taro was $66.0 million, and basic and diluted earnings per share was $1.75.

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
 

September 30,

March 31,

2022

2022

ASSETS (unaudited) (audited)
CURRENT ASSETS:
Cash and cash equivalents

$

175,191

$

251,134

Short-term bank deposits

 

95,630

 

47,586

Marketable securities

 

568,671

 

522,028

Accounts receivable and other:
Trade, net

 

248,495

 

246,972

Other receivables and prepaid expenses

 

53,097

 

59,727

Inventories

 

215,524

 

210,439

TOTAL CURRENT ASSETS

 

1,356,608

 

1,337,886

Marketable securities

 

357,586

 

435,189

Property, plant and equipment, net

 

191,489

 

199,692

Deferred income taxes

 

124,167

 

124,882

Goodwill

 

12,718

 

11,820

Other assets

 

64,711

 

66,893

TOTAL ASSETS

$

2,107,279

$

2,176,362

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables

$

61,356

$

68,232

Other current liabilities

 

313,495

 

363,886

TOTAL CURRENT LIABILITIES

 

374,851

 

432,118

Deferred taxes and other long-term liabilities

 

26,148

 

32,799

TOTAL LIABILITIES

 

400,999

 

464,917

 
Taro shareholders’ equity

 

1,706,280

 

1,711,445

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

2,107,279

$

2,176,362

 
 

Note: September 30, 2022, includes the Balance Sheet of Alchemee (acquired February 28, 2022).

 

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
 
Six Months Ended September 30,

 

2022

 

 

2021

 

(unaudited)

 (unaudited)

Cash flows from operating activities:
Net income (loss)

$

11,266

 

$

4,549

 

Adjustments required to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization

 

13,994

 

 

12,795

 

Realized loss on sale of long-lived assets

 

 

 

551

 

Change in derivative instruments, net

 

(24

)

 

(314

)

Effect of change in exchange rate on marketable securities and bank deposits

 

1,358

 

 

404

 

Deferred income taxes, net

 

2,245

 

 

16,927

 

Increase (decrease) in trade receivables, net

 

(2,071

)

 

16,868

 

Increase in inventories, net

 

(5,316

)

 

(2,636

)

Decrease (increase) in other receivables, income tax receivables, prepaid expenses and other

 

5,739

 

 

(2,472

)

Decrease in trade, income tax, accrued expenses and other payables

 

(71,798

)

 

(59,982

)

Expense from amortization of marketable securities bonds, net

 

6,940

 

 

5,287

 

Net cash used in operating activities

 

(37,667

)

 

(8,023

)

 
Cash flows from investing activities:
Purchase of plant, property & equipment, net

 

(3,443

)

 

(5,831

)

Investment in other intangible assets

 

(68

)

 

(107

)

Investment in short-term bank deposits, net

 

(48,044

)

 

(35,573

)

Proceeds from (investment in) marketable securities, net

 

15,516

 

 

(6,442

)

Net cash used in investing activities

 

(36,039

)

 

(47,953

)

 
Cash flows from financing activities:
Purchase of treasury stock

 

 

 

(24,934

)

Net cash used in financing activities

 

 

 

(24,934

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(2,237

)

 

(599

)

Decrease in cash and cash equivalents

 

(75,943

)

 

(81,509

)

Cash and cash equivalents at beginning of period

 

251,134

 

 

605,177

 

Cash and cash equivalents at end of period

$

175,191

 

$

523,668

 

 
Cash Paid during the year for:
Income taxes

$

3,091

 

$

4,532

 

Cash Received during the year for:
Income taxes

$

14,156

 

$

2,351

 

Non-cash investing transactions:
Purchase of property, plant and equipment included in accounts payable

$

3,206

 

$

702

 

Non-cash financing transactions:
Purchase of marketable securities, net

$

6,199

 

$

630

 

 

Note: September 30, 2022, includes the Balance Sheet of Alchemee (acquired February 28, 2022).

Contacts

William J. Coote
VP, CFO

(914) 345-9001

William.Coote@taro.com