Pharma stock under pressure: Taro Pharmaceutical Industries Ltd. (NYSE: TARO)

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Taro Pharmaceutical Industries Ltd. (NYSE: TARO) stock fell over 3.80% on 4th Feb, 2020 (As of 10:34 am GMT-5; Source: Google finance) after the company in the third quarter of FY 19 has reported fall in the net sales to $147.7 million from $28.7 million, mainly due to competition. The company’s Net income attributable to Taro had decreased to $67.7 million compared to $93.5 million, a $25.8 million decrease, as the decrease in operating income and FX income was partially offset by the decrease in tax expense, which had resulted in diluted earnings per share of $1.76 compared to $2.40.  The company has reported the gross profit of $94.1 million (63.7% of net sales compared to 66.6%), which reflects the decrease of $23.4 million. the company’s research and development (R&D) expenses of $15.0 million had remained constant. the company’s Selling, marketing, general and administrative expenses (SG&A) were of $20.9 million, which reflects the decrease of $3 million. the company’s operating income were of $58.2 million (39.4% of net sales compared to 44.8%), which reflects the decrease of $20.7 million. The company’s interest and other financial income were of $8.5 million, had increased slightly. Further, the company’s Foreign Exchange (FX) income decreased $27.4 million to $3.3 million mainly due to the commencement of hedging accounting in accordance with ASU No. 2017-12 and the change in the Canadian subsidiary’s functional currency to U.S. dollar.

At the end of December 31, 2019, the company had increased cash and cash equivalents and marketable securities (both short and long-term) by $176.8 million to $1.5 billion from March 31, 2019. Cash and cash equivalents shows the impact from the $26.8 million Tender Offer paid in December 2019. The company has generated Cash flow provided by operations for the nine months ended December 31, 2019, of $222 million compared to $265.1 million for the nine months ended December 31, 2018.

Meanwhile, the Company has recently received an approval from the U.S. Food and Drug Administration (“FDA”) for one Abbreviated New Drug Application (“ANDA”), Azithromycin for Oral Suspension USP, 200 mg per 5mL. The Company currently has a total of twenty-three ANDAs awaiting FDA approval, that also includes seven tentative approvals. On the other hand, on December 19, 2019, the company had announced the final results of its modified “Dutch auction” tender offer whereby the Company accepted for payment 280,719 ordinary shares including all “odd lots” properly tendered, at the final purchase price of $91.00 per share, for an total purchase price of approximately $25.5 million (excluding fees and expenses relating to the tender offer)

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