Taro Provides Results for December 31, 2023

Taro Pharmaceutical Industries Ltd. provided unaudited financial results for the quarter and nine months ended December 31, 2023.

HAWTHORNE, N.Y.--(BUSINESS WIRE)-- Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and nine months ended December 31, 2023.

Quarter ended December 31, 2023 Highlights ─ compared to December 31, 2022

  • Net sales of $157.1 million increased $17.9 million or 12.9% principally due to new launches and gross-to-net (“GTN”) adjustments. Excluding the impact of GTN adjustments, sales growth was high single digits.
  • Gross profit of $79.9 million (50.8% of net sales) compared to $64.0 million (46.0% of net sales).
  • Research and development (R&D) expenses of $13.6 million increased $0.7 million.
  • Selling, marketing, general and administrative expenses (SG&A) of $50.4 million included certain one-time charges of $0.9 million related to recruiting expenses for the relocation of our Alchemee operations from California to New York and legal costs related to the Special Committee that was established by the Board to consider the proposal submitted by Sun Pharmaceutical Industries Ltd. on May 26, 2023. Excluding these charges, SG&A declined marginally.
  • Operating income was $15.9 million; excluding the impact from the certain one-time charges, operating income was $16.8 million compared to operating income of $1.3 million in the previous year quarter.
  • Interest and other financial income of $15.5 million increased $8.9 million.
  • Tax expense of $13.1 million compared to a tax expense of $1.9 million in the prior year quarter.
  • Net income was $20.2 million compared to net income of $7.3 million in the previous quarter, resulting in earnings per share of $0.54 compared to earnings per share of $0.19.

Nine Months ended December 31, 2023 Highlights ─ compared to December 31, 2022

  • Net sales of $464.2 million increased $37.9 million or 8.9%, due to one-time GTN adjustments. Excluding, these adjustments, the sales growth was mid-single-digits.
  • Gross profit of $217.6 million (46.9% of net sales as compared to 45.2%) increased $25.0 million.
  • R&D expenses of $44.1 million increased $8.1 million, principally the result of increased clinical studies.
  • SG&A of $160.8 million included certain one-time charges of $13.2 million related to the aforementioned certain one-time charges. Excluding these charges, SG&A was $147.6 million, slightly below the prior year.
  • Operating income was $12.7 million; excluding the impact from the GTN adjustments and the certain one-time charges, operating income was slightly increased as compared to the prior year.
  • Interest and other financial income of $40.4 million increased $27.5 million from $12.8 million in the prior year.
  • Net income was $38.8 million compared to $18.5 million, resulting in earnings per share of $1.03 compared to earnings per share of $0.49.

Cash Flow and Balance Sheet Highlights

  • Net cash provided by operations for the nine months ended December 31, 2023 was $86.2 million compared to net cash used in operations of $24.9 million for the nine months ended December 31, 2022. Excluding the impact from settlement payments and settlement and loss contingencies charges impacting the prior year, cash flow provided by operations was $97.7 million compared to $50.4 million for the nine months ended December 31, 2022.
  • As of December 31, 2023, cash and cash equivalents, short-term bank deposits and marketable securities (both short- and long-term) increased $51.0 million to $1.306 billion from March 31, 2023.

Taro Announces Merger Agreement with Sun Pharma
On January 17, 2024, Taro and Sun Pharmaceutical Industries Limited (Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE: 524715) (together with its subsidiaries and/or associates referred as “Sun Pharma”) announced that they have entered into a definitive merger agreement in which Sun Pharma, Taro’s controlling shareholder, has agreed to acquire all of the outstanding ordinary shares of Taro (other than the shares already held by Sun Pharma or its affiliates) for $43.00 per share in cash without interest. The merger is subject to various closing conditions. These include, among other conditions, the approval of the merger by the affirmative vote of shareholders representing at least 75% of the voting power of the Company's shares present and voting in person or by proxy at a meeting of the Company’s shareholders, including at least a majority of the voting power of such shares held by holders other than Sun Pharma and its affiliates or any other holders having a personal interest (under the Israeli Companies Law) in the merger and voting thereon.

The $43.00 per share purchase price represents a 48% premium over the closing price of $28.97 per share on May 25, 2023, the last trading day before Sun Pharma first submitted its non-binding proposal to Taro, and a 58% premium to the volume-weighted average price of the shares during the 60 days prior to and including May 25, 2023.

The Company cautions that the foregoing 2023 financial information 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 2024. 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

 

Nine Months Ended

   

December 31,

 

December 31,

     

2023

     

2022

     

2023

     

2022

 
Sales, net  

$

157,145

   

$

139,202

   

$

464,241

   

$

426,365

 
Cost of sales    

77,241

     

75,155

     

246,651

     

233,750

 
Impairment    

23

     

     

23

     

 
Gross profit    

79,881

     

64,047

     

217,567

     

192,615

 
                 
Operating Expenses:                
Research and development    

13,588

     

12,907

     

44,058

     

35,937

 
Selling, marketing, general and administrative    

50,410

     

49,861

     

160,808

     

148,238

 
Operating income *    

15,883

     

1,279

     

12,701

     

8,440

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

(15,496

)

   

(6,592

)

   

(40,358

)

   

(12,814

)

Foreign exchange (income)/expense    

(138

)

   

(738

)

   

(597

)

   

2,344

 
Other gain, net    

1,827

     

563

     

2,783

     

1,403

 
Income before income taxes    

33,344

     

9,172

     

56,440

     

20,313

 
Tax expense    

13,136

     

1,907

     

17,651

     

1,781

 
Net income *  

$

20,208

   

$

7,265

   

$

38,789

   

$

18,532

 
                 
Net income/(loss) per ordinary share:                
Basic and Diluted *  

$

0.54

   

$

0.19

   

$

1.03

   

$

0.49

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

37,584,891

     

37,584,891

     

37,584,891

     

37,584,891

 

* For the quarter ended December 31, 2023, excluding the impact from the certain one-time charges of $0.9 million (see page one of release for a description), operating income was $16.8 million compared to operating income of $1.3 million. Excluding the impact of the certain one-time charges, net income was $21.0 million, resulting in earnings per share of $0.56.

* For the nine months ended December 31, 2023, excluding the impact from the certain one-time charges of $13.2 million (see page one of release for a description), operating income was $25.9 million compared to $8.4 million. Excluding the impact of the certain one-time charges, net income was $50.2 million, resulting in earnings per share of $1.34.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

         
   

December 31,

 

March 31,

   

2023

 

2023

ASSETS  

(unaudited)

 

(audited)

CURRENT ASSETS:        
Cash and cash equivalents  

$

382,409

 

$

154,495

Short-term bank deposits    

56,480

   

119,980

Marketable securities    

463,327

   

575,814

Accounts receivable and other:        
Trade, net    

191,232

   

202,260

Other receivables and prepaid expenses    

39,140

   

57,210

Inventories    

214,816

   

226,669

TOTAL CURRENT ASSETS    

1,347,404

   

1,336,428

Marketable securities    

403,544

   

404,896

Property, plant and equipment, net    

218,385

   

190,139

Deferred income taxes    

97,300

   

103,672

Goodwill    

17,231

   

17,231

Other assets    

79,315

   

83,147

TOTAL ASSETS  

$

2,163,179

 

$

2,135,513

         
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
Trade payables  

$

51,183

 

$

68,485

Other current liabilities    

322,876

   

317,064

TOTAL CURRENT LIABILITIES    

374,059

   

385,549

Deferred taxes and other long-term liabilities    

10,027

   

19,106

TOTAL LIABILITIES    

384,086

   

404,655

         
Taro shareholders' equity    

1,779,093

   

1,730,858

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  

$

2,163,179

 

$

2,135,513

         

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(U.S. dollars in thousands)

   

Nine Months Ended

December 31,

     

2023

     

2022

 
Cash flows from operating activities:        
Net income  

$

38,789

   

$

18,533

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

22,872

     

21,320

 
Impairment of long-lived assets    

23

     

 
Realized loss on sale of long-lived assets    

     

2

 
Change in derivative instruments, net    

     

(24

)

Decrease in goodwill and intangible assets    

242

     

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

(539

)

   

1,590

 
Deferred income taxes, net    

5,189

     

4,612

 
Decrease (increase) in trade receivables, net    

10,781

     

(5,168

)

Decrease (increase) in inventories, net    

11,769

     

(12,361

)

Decrease in other receivables, income tax receivables, prepaid expenses and other    

18,367

     

7,287

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

(14,972

)

   

(67,938

)

(Income)/expense from amortization of marketable securities bonds, net    

(6,303

)

   

7,247

 
Net cash provided by (used in) operating activities    

86,218

     

(24,900

)

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

(48,229

)

   

(11,186

)

Investment in other intangible assets    

(99

)

   

(122

)

Proceeds (Investment) in short-term bank deposits, net    

63,500

     

(121,982

)

Proceeds from marketable securities, net    

126,367

     

3,060

 
Investment in other investments    

     

(2,000

)

Net cash used in (provided by) investing activities    

141,539

     

(132,230

)

         
Cash flows from financing activities:        
Net cash used in financing activities    

     

 
         
Effect of exchange rate changes on cash and cash equivalents    

157

     

(2,031

)

Increase (decrease) in cash and cash equivalents    

227,914

     

(159,161

)

Cash and cash equivalents at beginning of period    

154,495

     

251,134

 
Cash and cash equivalents at end of period  

$

382,409

   

$

91,973

 
         
Cash Paid during the year for:        
Income taxes  

$

10,600

   

$

3,415

 
Cash Received during the year for:        
Income taxes  

$

12,931

   

$

14,156

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

$

1,360

   

$

1,260

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

$

1,305

   

$

2,710

 
Sale of marketable securities  

$

270

   

$

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240125784015/en/

Contacts

William J. Coote
VP, CFO
(914) 345-9001
William.Coote@taro.com

Source: Taro Pharmaceutical Industries Ltd.

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