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 July, 2020

 

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): _____

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

FOR IMMEDIATE RELEASE

 

CONTACTS:

Daphne Huang

VP, CFO

(914) 345-9001

Daphne.Huang@taro.com

William J. Coote

AVP, Business Finance, Treasurer and Investor Relations

(914) 345-9001

William.Coote@taro.com

 

 

TARO PROVIDES RESULTS FOR QUARTER ENDED JUNE 30, 2020

Quarter reflects One-Time Charge for Global Resolution with DOJ

 

Hawthorne, NY, July 29, 2020 - Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro”) today provided unaudited financial results for the quarter ended June 30, 2020.

 

Quarter ended June 30, 2020 Highlights - compared to Quarter ended June 30, 2019

 

Net sales of $117.6 million, decreased $43.7 million.

 

Gross profit of $64.9 million decreased $36.8 million, and as a percentage of net sales was 55.2% compared to 63.1%.

 

Research and development expenses of $12.9 million decreased slightly from the prior year.

 

Selling, marketing, general and administrative expenses of $22.2 million, which includes the impact of COVID-19 related expenses and higher legal expenses, increased $2.5 million.

 

Settlements and loss contingencies of $478.9 million reflect the one-time settlement charge of $418.9 million related to the global resolution of the Department of Justice investigations into the U.S. generic pharmaceutical industry.  An additional provision of $60.0 million has been taken for the related ongoing multi-jurisdiction civil antitrust matters; however, there can be no assurance as to the ultimate outcome.

 

Operating (loss) income was $(449.2) million. Excluding the settlement and loss contingencies charges, operating income was $29.8 million, a decrease of $38.8 million, and as a percentage of net sales was 25.3% as compared to 42.5%.

 

Interest and other financial income decreased $2.3 million to $7.3 million, reflecting the lower global interest rate environment.

 

Foreign Exchange income of $0.2 million compared to $7.9 million in the comparable quarter ─ an unfavorable impact of $7.7 million.

 

Tax expense of $8.9 million compared to a tax expense of $20.4 million ─ a favorable impact of $11.5 million. Excluding the impact from the settlement and loss contingencies charges, the effective tax rate for the quarter was 23.4% as compared to 23.6%.

 

Net (loss) income attributable to Taro was $(434.9) million. Excluding the settlement and loss contingencies charges, net income was $29.0 million compared to $66.2 million. Diluted (loss) per share for the quarter was $(11.37).  Excluding the settlement and loss contingencies charges, diluted earnings per share was $0.76 compared to $1.72.

 

Cash Flow and Balance Sheet Highlights

 

Cash flow provided by operations was $64.1 million compared to $82.6 million for the three months ended June 30, 2019.

 

As of June 30, 2020, cash, including short-term and long-term marketable securities, increased $64.4 million to $1.63 billion from March 31, 2020.


Mr. Uday Baldota, Taro’s CEO stated, Regarding our results they reflect the challenging times that we are facing, not only due to the continuing uncertainty of the duration and impact of the COVID19 pandemic, but also in the overall U.S. generic industry which we believe will continue in the foreseeable future.  We are happy to have reached a resolution with the DOJ, so that we can move forward and sharpen our focus on growing our business.

 

FDA Approvals and Filings

 

Taro recently received approvals from the U.S. Food and Drug Administration (“FDA”) for three Abbreviated New Drug Applications (“ANDAs”): Betamethasone Dipropionate Spray, 0.05%, Doxepin Hydrochloride Capsules USP, and Butalbital, Acetaminophen and Caffeine Capsules USP.  Taro currently has a total of nineteen ANDAs awaiting FDA approval, including five tentative approvals.

 

Taro Achieves Global Resolution of DOJ Antitrust Investigations

 

On July 23, 2020, Taro Pharmaceuticals U.S.A., Inc. (“Company”), globally resolved all matters related to the Company in connection with the multi-year investigations by the Department of Justice, Antitrust Division and Civil Division (“DOJ”) into the U.S. generic pharmaceutical industry. Under a Deferred Prosecution Agreement reached with DOJ Antitrust, the DOJ will file an Information for conduct that took place between 2013 and 2015. If the Company adheres to the terms of the agreement, including the payment of $205.7 million, the DOJ will dismiss the Information at the end of a three-year period. The Company has also reached a framework understanding with DOJ Civil, subject to final agreement and agency authorization, in which the Company has agreed to pay $213.3 million to resolve all claims related to federal healthcare programs. Accordingly, a charge of $418.9 million is taken in the current quarter and shown as Settlements and loss contingencies.

 

Form 20-F Filings with the SEC

 

On June 19, 2020, Taro filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2020.

 

************************

 

Taro cautions that the foregoing financial information is presented on an unaudited basis 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 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

(Unaudited)

(U.S. dollars in thousands, except share data)

 

 

 

 

Quarter Ended June 30,

 

 

 

2020

 

 

2019

 

Sales, net

 

$

117,634

 

 

$

161,296

 

Cost of sales

 

 

52,688

 

 

 

59,572

 

Gross profit

 

 

64,946

 

 

 

101,724

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

   Research and development

 

 

12,932

 

 

 

13,443

 

   Selling, marketing, general and administrative

 

 

22,248

 

 

 

19,718

 

   Settlements and loss contingencies

 

 

478,924

 

 

 

 

Operating (loss) income *

 

 

(449,158

)

 

 

68,563

 

 

 

 

 

 

 

 

 

 

Financial income, net:

 

 

 

 

 

 

 

 

  Interest and other financial income

 

 

(7,310

)

 

 

(9,624

)

  Foreign exchange income

 

 

(197

)

 

 

(7,905

)

Other gain, net

 

 

549

 

 

 

594

 

(Loss) income before income taxes

 

 

(441,102

)

 

 

86,686

 

Tax expense

 

 

8,854

 

 

 

20,445

 

Net (loss)  income

 

 

(449,956

)

 

 

66,241

 

Net (loss) income attributable to non-controlling interest

 

 

(15,038

)

 

 

58

 

Net (loss) income attributable to Taro *

 

$

(434,918

)

 

$

66,183

 

 

 

 

 

 

 

 

 

 

Net (loss) income per ordinary share attributable to Taro:

 

 

 

 

 

 

 

 

Basic and Diluted *

 

$

(11.37

)

 

$

1.72

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

38,258,337

 

 

 

38,539,056

 

 

 

 

 

 

 

 

 

 

May not foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

* Excluding the settlement and loss contingencies charges of $478.9 million, for the quarter ended June 30, 2020, Operating income was $29.8 million, Net income attributable to Taro was $29.0 million, and Basic and diluted earnings per share was $0.76.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 

 

June 30,

 

 

March 31,

 

 

2020

 

 

2020

 

ASSETS

(unaudited)

 

 

(audited)

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

532,044

 

 

$

513,354

 

Marketable securities

 

590,286

 

 

 

595,383

 

Accounts receivable and other:

 

 

 

 

 

 

 

   Trade, net

 

189,301

 

 

 

235,221

 

   Other receivables and prepaid expenses

 

45,082

 

 

 

35,567

 

Inventories

 

166,223

 

 

 

153,073

 

TOTAL CURRENT ASSETS

 

1,522,936

 

 

 

1,532,598

 

Marketable securities

 

510,397

 

 

 

459,639

 

Property, plant and equipment, net

 

209,228

 

 

 

209,961

 

Deferred income taxes

 

105,389

 

 

 

106,693

 

Other assets

 

31,743

 

 

 

32,361

 

TOTAL ASSETS

$

2,379,693

 

 

$

2,341,252

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Trade payables

$

36,302

 

 

$

28,858

 

Other current liabilities

 

560,185

 

 

 

193,873

 

TOTAL CURRENT LIABILITIES

 

596,487

 

 

 

222,731

 

Deferred taxes and other long-term liabilities

 

109,068

 

 

 

8,762

 

TOTAL LIABILITIES

 

705,555

 

 

 

231,493

 

 

 

 

 

 

 

 

 

Taro shareholders' equity

 

1,683,279

 

 

 

2,103,864

 

Non-controlling interest

 

(9,141

)

 

 

5,895

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,379,693

 

 

$

2,341,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

 

 

Three Months Ended June 30,

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

$

(449,956

)

 

$

66,241

 

Adjustments required to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

     Depreciation and amortization

 

5,571

 

 

 

5,071

 

     Change in derivative instruments, net

 

(923

)

 

 

(2,421

)

     Effect of change in exchange rate on inter-company balances, marketable securities and bank deposits

 

(1,728

)

 

 

(5,624

)

     Deferred income taxes, net

 

(2,367

)

 

 

2,930

 

     Decrease in trade receivables, net

 

45,921

 

 

 

24,431

 

     Increase in inventories, net

 

(13,150

)

 

 

(205

)

     (Increase) decrease in other receivables, income tax receivable, prepaid expenses and other

 

(3,462

)

 

 

15,671

 

     Increase (decrease) in trade, income tax, accrued expenses, and other payables

 

483,957

 

 

 

(22,965

)

     Loss (income) from marketable securities, net

 

247

 

 

 

(525

)

Net cash provided by operating activities

 

64,110

 

 

 

82,604

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

     Purchase of plant, property & equipment, net

 

(5,133

)

 

 

(7,969

)

     Investment in other intangible assets

 

(63

)

 

 

(30

)

     Investment in marketable securities, net

 

(40,825

)

 

 

(9,070

)

Net cash used in investing activities

 

(46,021

)

 

 

(17,069

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

601

 

 

 

 

Increase in cash and cash equivalents

 

18,690

 

 

 

65,535

 

Cash and cash equivalents at beginning of period

 

513,354

 

 

 

567,451

 

Cash and cash equivalents at end of period

$

532,044

 

 

$

632,986

 

 

 

 

 

 

 

 

 

Cash Paid during the year for:

 

 

 

 

 

 

 

Income taxes

$

7,119

 

 

$

10,432

 

Cash Received during the year for:

 

 

 

 

 

 

 

Income taxes

$

 

 

$

7,128

 

Non-cash investing transactions:

 

 

 

 

 

 

 

Purchase of property, plant and equipment included in accounts payable

$

1,304

 

 

$

2,317

 

Non-cash financing transactions:

 

 

 

 

 

 

 

(Sale) purchase of marketable securities

$

(745

)

 

$

2,436

 

 

#####


 

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:  July 29, 2020

TARO PHARMACEUTICAL INDUSTRIES LTD.

By:  /s/ Uday Baldota

Name:Uday Baldota

Title:Chief Executive Officer and Director