Taro Provides Results for the Year Ended March 31, 2021

Rhea-AI Summary

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) reported unaudited financial results for the quarter and year ended March 31, 2021. Net sales decreased to $148.3 million for the quarter and $549.0 million for the year, down by $26.6 million and $95.8 million, respectively. Gross profit for the quarter was $76.9 million (51.9% of net sales) compared to 58.5% the previous year. The company faced substantial settlements and loss contingencies totaling $558.9 million. Taro recorded a net loss of $(386.7) million for the year, leading to a diluted loss per share of $(10.12). Despite challenges, Taro announced new FDA approvals and launched a skincare brand, Bee Rx™.

Positive

• Received three FDA approvals for ANDAs in the quarter and a total of eight for the year.
• Maintained a healthy cash and cash equivalents balance of $1.58 billion.

Negative

• Net sales decreased by $95.8 million year-over-year.
• Reported a net loss of $(386.7) million compared to net income of $244.2 million in the prior year.
• Settlements and loss contingencies totaled $558.9 million, significantly impacting financial results.

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and year ended March 31, 2021.

Quarter ended March 31, 2021 Highlights ─ compared to March 31, 2020

• Net sales of $148.3 million decreased $26.6 million. The prior year quarter was higher than normal partly due to stocking up by customers as the outbreak of COVID-19 was beginning.
• Gross profit of $76.9 million (51.9% of net sales compared to 58.5%) decreased $25.3 million.
• Research and development (R&D) expenses of $16.6 million marginally increased.
• Selling, marketing, general and administrative expenses (SG&A) of $22.2 million decreased $6.9 million.
• Settlements and loss contingencies of $80.0 million reflect an additional legal contingency provision related to ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.
• Operating (loss) of $(41.9) million compared to operating income of $57.2 million. Excluding the settlement and loss contingencies charges, operating income was $38.1 million, a decrease of $19.1 million, and as a percentage of net sales was 25.7% compared to 32.7%.
• Interest and other financial income of $3.2 million decreased $3.4 million, reflecting the continuing low global interest rate environment.
• Foreign Exchange (FX) income of $0.8 million compared to $3.7 million ─ an unfavorable impact of $2.8 million.
• Tax (benefit) of $(8.9) million compared to tax expense of $13.9 million. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate was 18.5% compared to 20.4%.
• Net (loss) attributable to Taro was $(29.8) million compared to net income of $54.2 million, resulting in diluted (loss) per share of $(0.78) compared to diluted earnings per share of $1.42. Excluding the impact from the settlement and loss contingencies charges, net income was $31.0 million, resulting in diluted earnings per share of $0.81.

Year ended March 31, 2021 Highlights ─ compared to March 31, 2020

• Net sales of $549.0 million decreased $95.8 million.
• Gross profit of $296.7 million (54.0% of net sales compared to 62.0%) decreased $103.1 million.
• R&D expenses of $60.2 million remained in line with the prior year.
• SG&A of $91.4 million decreased $2.1 million.
• Settlements and loss contingencies of $558.9 million reflect the one-time settlement charge 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 a $140.0 million provision related to ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.
• Operating (loss) of $(413.8) million compared to operating income of $246.5 million. Excluding the settlement and loss contingencies charges, operating income was $145.1 million, a decrease of $101.4 million, and as a percentage of net sales was 26.4% compared to 38.2%.
• Interest and other financial income decreased $13.5 million to $20.2 million.
• FX expense of $0.4 million compared to FX income of $14.8 million ─ an unfavorable impact of $15.2 million.
• Tax expense of $9.7 million decreased $43.8 million from $53.5 million in the prior year. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate was 15.7% compared to 17.9%.
• Net (loss) attributable to Taro was $(386.7) million compared to net income of $244.2 million, resulting in diluted (loss) per share of $(10.12) compared to diluted earnings per share of $6.35. Excluding the impact from the settlement and loss contingencies charges, net income was $141.4 million, resulting in diluted earnings per share of $3.70.

Cash Flow and Balance Sheet Highlights

• Cash flow provided by operations for the year ended March 31, 2021, was $45.8 million. Excluding the impact from the settlement and loss contingencies charges, cash flow provided by operations was $130.3 million compared to $271.6 million for the year ended March 31, 2020.
• As of March 31, 2021, cash and cash equivalents and marketable securities (both short and long-term) increased $12.5 million to $1.58 billion from March 31, 2020. Cash and cash equivalents reflects the impact from a $102.8 million payment under the DOJ settlement agreement and share repurchases of $24.2 million.

Mr. Uday Baldota, Taro’s CEO, stated, “While we are encouraged by the sequential quarter-over-quarter revenue growth and the general trend of revenue this year, we continue to be negatively impacted by the COVID-19 pandemic and the effects it is having on the overall marketplace. Despite the difficult operating environment, we continue to maintain our leading market share, with 70% of our products ranking in the top two in the U.S. generic market. We continue to concentrate on creating shareholder value by continuing our R&D investment, maintaining a healthy pipeline, a robust, consistent flow of ANDA submissions and approvals from the FDA, and timely and successful launches of our products.”

FDA Approvals and Filings

The Company recently received three approvals from the U.S. Food and Drug Administration (“FDA”) for an Abbreviated New Drug Applications (“ANDAs”); Imiquimod Cream USP, 3.75%, Clobetasol Propionate Shampoo, 0.05% and Tavaborole Topical Solution, 5%. In total, the Company reported eight FDA approvals in the year. The Company currently has a total of twenty ANDAs awaiting FDA approval, including five tentative approvals.

Share Repurchase Program - Returning Capital to Shareholders

On November 4, 2019, the Company announced that its Board of Directors approved a share repurchase of ordinary shares up to $300 million. The repurchase authorization enables the Company to purchase its ordinary shares from time to time through open market purchases (including 10b5-1 trading plans), privately negotiated transactions, tender offer or other means, in accordance with applicable securities laws and other regulations. No time period has been set for the repurchase program, and any such program may be suspended or discontinued at any time.

During the quarter, the Company repurchased 278,705 shares at an average price of $75.98. In total, through March 31, 2021, the Company has repurchased 332,033 shares at an average price of $75.23.

Taro Announces the Launch of New Skincare Brand, Bee Rx™

On May 1, 2021, Taro Pharmaceuticals U.S.A., Inc. launched its newest brand in a growing family: Bee Rx™, a new kind of wellness. Bee Rx™ products are manufactured in New Zealand, using a clinically proven, unique combination of medical grade kanuka honey and bee venom. Bee Rx™ launch product line includes anti-aging serums, lip plumpers, and acne blemish repair.

The Company cautions that the foregoing 2021 financial information 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 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.

**Financial Tables Follow**

 

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share data)
		Quarter Ended								Year Ended
		March 31,								March 31,
		2021				2020				2021				2020
		(unaudited)				(unaudited)				(unaudited)				(audited)
Sales, net		$	148,348			$	174,940			$	548,970			$	644,769
Cost of sales			71,414				72,668				252,314				245,044
Gross profit			76,934				102,272				296,656				399,725
Operating Expenses:
Research and development			16,587				15,799				60,152				59,777
Selling, marketing, general and administrative			22,234				29,111				91,355				93,413
Settlements and loss contingencies			80,000				150				558,924				—
Operating (loss) income			(41,887	)			57,212				(413,775	)			246,535
Financial (income) expense, net:
Interest and other financial income			(3,185	)			(6,633	)			(20,174	)			(33,645	)
Foreign exchange (income) expense			(842	)			(3,690	)			365				(14,837	)
Other gain, net			100				808				2,892				3,018
(Loss) income before income taxes			(37,760	)			68,343				(391,073	)			298,035
Tax (benefit) expense			(8,878	)			13,920				9,667				53,485
Net (loss) income			(28,882	)			54,423				(400,740	)			244,550
Net income (loss) attributable to non-controlling interest			904				225				(14,087	)			309
Net (loss) income attributable to Taro		$	(29,786	)		$	54,198			$	(386,653	)		$	244,241
Net (loss) income per ordinary share attributable to Taro:
Basic and Diluted		$	(0.78	)		$	1.42			$	(10.12	)		$	6.35
Weighted-average number of shares used to compute net income per share:
Basic and Diluted			38,065,388				38,258,337				38,209,726				38,460,056
May not foot due to rounding.

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
		March 31,				March 31,
		2021				2020
ASSETS		(unaudited)				(audited)
CURRENT ASSETS:
Cash and cash equivalents		$	605,177			$	513,354
Marketable securities			418,480				595,383
Accounts receivable and other:
Trade, net			213,539				235,221
Other receivables and prepaid expenses			53,347				35,567
Inventories			180,292				153,073
TOTAL CURRENT ASSETS			1,470,835				1,532,598
Marketable securities			557,209				459,639
Property, plant and equipment, net			205,508				209,961
Deferred income taxes			142,007				106,693
Other assets			31,314				32,361
TOTAL ASSETS		$	2,406,873			$	2,341,252
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	61,166			$	28,858
Other current liabilities			615,135				193,873
TOTAL CURRENT LIABILITIES			676,301				222,731
Deferred taxes and other long-term liabilities			35,115				8,762
TOTAL LIABILITIES			711,416				231,493
Taro shareholders' equity			1,703,649				2,103,864
Non-controlling interest			(8,192	)			5,895
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,406,873			$	2,341,252

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
		Year Ended March 31,
		2021				2020
		(unaudited)				(audited)
Cash flows from operating activities:
Net (loss) income		$	(400,740	)		$	244,550
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			23,680				21,383
Realized loss on sale of long-lived assets			92				28
Change in derivative instruments, net			(236	)			(2,649	)
Effect of change in exchange rate on marketable securities and bank deposits			(4,588	)			(11,600	)
Deferred income taxes, net			(38,413	)			7,584
Decrease in trade receivables, net			21,683				2,724
Increase in inventories, net			(27,219	)			(4,994	)
(Increase) decrease in other receivables, income tax receivables, prepaid expenses and other			(16,325	)			12,137
Increase in trade, income tax, accrued expenses and other payables			482,520				782
Loss from marketable securities, net			5,316				1,660
Net cash provided by operating activities			45,770				271,605
Cash flows from investing activities:
Purchase of plant, property & equipment, net			(16,983	)			(26,610	)
Investment in other intangible assets			(161	)			(1,783	)
Proceeds from (investment in) marketable securities, net			84,885				(269,769	)
Net cash provided by (used in) investing activities			67,741				(298,162	)
Cash flows from financing activities:
Purchase of treasury stock			(24,196	)			(26,984	)
Net cash used in financing activities			(24,196	)			(26,984	)
Effect of exchange rate changes on cash and cash equivalents			2,508				(556	)
Increase (decrease) in cash and cash equivalents			91,823				(54,097	)
Cash and cash equivalents at beginning of period			513,354				567,451
Cash and cash equivalents at end of period		$	605,177			$	513,354
Cash Paid during the year for:
Income taxes		$	29,377			$	54,536
Cash Received during the year for:
Income taxes		$	4,093			$	24,331
Non-cash investing transactions:
Purchase of property, plant and equipment included in accounts payable		$	2,997			$	1,477
Non-cash financing transactions:
Purchase of intangible assets		$	15			$	—
Purchase of treasury stock		$	782			$	—
Purchase of marketable securities		$	9,417			$	9,159

 

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FAQ

What are the key financial results for Taro Pharmaceuticals for the quarter ended March 31, 2021?

For the quarter, Taro reported net sales of $148.3 million, a decrease of $26.6 million year-over-year, with a gross profit of $76.9 million (51.9% of net sales).

What was Taro's net income for the year ended March 31, 2021?

Taro recorded a net loss of $(386.7) million for the year ended March 31, 2021, compared to a net income of $244.2 million the previous year.

How did Taro Pharmaceuticals perform in terms of FDA approvals?

Taro received three FDA approvals for ANDAs during the quarter and a total of eight approvals for the entire year.

What new product did Taro Pharmaceuticals launch in May 2021?

Taro launched Bee Rx™, a new skincare brand that includes products made with medical grade kanuka honey and bee venom.

What impact did legal settlements have on Taro's financial results?

Taro faced settlements and loss contingencies of $558.9 million, which significantly affected its operating results.