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 28^th 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.

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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 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**

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.

Note: September 30, 2022, includes the Balance Sheet of Alchemee (acquired February 28, 2022).

Note: September 30, 2022, includes the Balance Sheet of Alchemee (acquired February 28, 2022).

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