Taro Pharmaceutical Industries Ltd. (NYSE: TARO) ("Taro" or the "Company") today provided unaudited financial results for the quarter and six months ended September 30, 2020.
Quarter ended September 30, 2020 Highlights ─ compared to September 30, 2019
Net sales of $142.8 million decreased $18.0 million.
Gross profit of $81.6 million (57.1% of net sales compared to 63.2%) decreased $20.0 million.
Research and development ("R&D") expenses of $16.6 million increased $1.0 million.
Selling, marketing, general and administrative expenses ("SG&A") of $24.1 million increased slightly.
Operating income of $41.0 million (28.7% of net sales compared to 38.9%) decreased $21.6 million.
Interest and other financial income of $5.7 million decreased $3.2 million, reflecting the lower global interest rate environment.
Tax expense of $3.6 million decreased $12.7 million; with the effective tax rate of 7.4% compared to 22.4%.
Net income attributable to Taro was $45.1 million compared to $56.2 million, an $11.1 million decrease, resulting in diluted earnings per share of $1.18 compared to $1.46.
Six Months ended September 30, 2020 Highlights ─ compared to September 30, 2019
Net sales of $260.5 million compared to $322.1 million decreased $61.7 million.
Gross profit of $146.5 million (56.3% of net sales compared to 63.1%) decreased $56.8 million.
R&D expenses of $29.5 million increased slightly.
SG&A of $46.3 million increased $3.0 million.
Settlements and loss contingencies of $478.9 million reflect the one-time settlement charge (taken in the first quarter) which consists of $418.9 million related to the global resolution of the Department of Justice ("DOJ") investigations into the U.S. generic pharmaceutical industry and an additional provision of $60.0 million related to ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.
Operating (loss) of $(408.2) million compared to operating income of $131.1 million. Excluding the settlement and loss contingencies charges, operating income was $70.7 million, a decrease of $60.4 million, and as a percentage of net sales was 27.2% compared to 40.7%.
Interest and other financial income of $13.0 million decreased $5.5 million.
FX income of $0.8 million compared to $7.9 million in 2019 ─an unfavorable impact of $7.1 million.
Tax expense of $12.4 million decreased $24.2 million. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate was 14.4% compared to 23.1%.
Net (loss) attributable to Taro was $(389.8) million compared to net income of $122.4 million, resulting in diluted (loss) earnings per share of $(10.19) compared to $3.17. Excluding the impact from the settlement and loss contingencies charges, net income was $74.2 million; resulting in diluted earnings per share of $1.94.
Cash Flow and Balance Sheet Highlights
Cash flow (used in) operations for the six months ended September 30, 2020, was $(48.1) million. Excluding the impact from the settlement and loss contingencies charges, cash flow provided by operations was $54.7 million compared to $123.4 million for the six months ended September 30, 2019.
As of September 30, 2020, cash and cash equivalents and marketable securities (both short and long-term), decreased $49.6 million to $1.5 billion from March 31, 2020; due to a partial payment made as a result of the DOJ settlement announced in July.
Mr. Uday Baldota, Taro’s CEO stated, "Performance this quarter is a result of improving sales across all our business segments over first quarter, even while continuing to be negatively impacted by the pandemic. Our teams have worked tirelessly to serve our customers and patients through these tumultuous times as evidenced by regular product launches and steady market shares. With the recent surge in COVID-19 in our key geographies, and the resulting mitigation steps by respective authorities, we are cautious about the impact on our business for the rest of the year. However, our longer term commitment to enrich our product portfolio, organically or otherwise, stays as strong."
FDA Approvals and Filings
The Company recently received an approval from the U.S. Food and Drug Administration ("FDA") for the Abbreviated New Drug Application ("ANDA"): Calcipotriene and Betamethasone Dipropionate Topical Suspension, 0.005%/0.064%. The Company currently has a total of eighteen ANDAs awaiting FDA approval, including five tentative approvals.
Launch of Specialty Generic Deferiprone Tablets, 500mg in the U.S.
On September 28, 2020, Taro announced the launch of a new specialty generic, Deferiprone Tablets, the generic version of Ferriprox®. This drug product for orphan indication expands Taro’s capabilities to include specialty products.
Acquisition of Aquinox
On July 31, 2020, Taro Pharmaceuticals, Inc. completed the purchase of Aquinox Pharmaceuticals (Canada) Inc. ("Aquinox"), a wholly-owned subsidiary of Neoleukin Therapeutics, Inc., including intellectual property rights to various early stage molecules. Pursuant to the agreement, Taro acquired all issued and outstanding shares of Aquinox for $8.2 million.
Earnings Call (8:00 am EST, October 29, 2020)
As previously announced, the Company will host an earnings call at 8:00 am EST on Thursday, October 29, 2020, where senior management will discuss the Company’s performance and answer questions from participants. This call will be accessible through an audio dial-in and a web-cast. Audio conference participants can dial-in on the numbers below:
Participant Toll-Free Dial-In Number: +1 (844) 421-0601 ID: 3484939
Participant International Dial-In Number: +1 (716) 247-5800 ID: 3484939
Audio web-cast: Details are provided on our website, www.taro.com
To participate in the audio call, please dial the numbers provided above five to ten minutes ahead of the scheduled start time. The operator will provide instructions on asking questions before the call. The transcript of the event will be available on the Company’s website at www.taro.com.
The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change.
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 2021. 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.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
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TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
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TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six Months Ended September 30,
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VP, Chief Financial Officer
William J. Coote
AVP, Treasurer and Investor Relations