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Form 6-K TARO PHARMACEUTICAL INDU For: Oct 27

November 9, 2022 5:07 PM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2022

Commission File Number 001-35463

 

 

Taro Pharmaceutical Industries Ltd.

(Translation of registrant’s name into English)

 

 

14 Hakitor Street, Haifa Bay 2624761, Israel

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


TARO PROVIDES RESULTS FOR SEPTEMBER 30, 2022

Hawthorne, NY, October 27, 2022 - 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
September 30,
    Six Months Ended
September 30,
 
     2022 (1)     2021     2022 (1)     2021  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

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,
2022
     March 31,
2022
 
     (unaudited)      (audited)  

ASSETS

     

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  

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 losss 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).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 27, 2022

 

TARO PHARMACEUTICAL INDUSTRIES LTD.
By:   /s/ Uday Baldota
  Name: Uday Baldota
  Title: Chief Executive Officer and Director


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