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 28^th 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.

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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

[email protected]