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Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended June 30, 2019

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Reports Net Revenues of $79.0 Million for the Three Months Ended June 30, 2019

RANCHO CUCAMONGA, Calif., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended June 30, 2019.

Second Quarter Highlights

  • Net revenues of $79.0 million for the second quarter

  • GAAP net income of $47.8 million, or $0.96 per share, for the second quarter

  • Adjusted non-GAAP net income of $4.1 million, or $0.08 per share, for the second quarter

Dr. Jack Zhang, Amphastar’s Chief Executive Officer, commented: “We are pleased that we have settled our long-running patent dispute with Momenta and Sandoz, and have received $59.9 million from them. Putting this case behind us will allow us to focus on research and development of our pipeline, which will be the primary use of the money that we received. We will also use some of the funds to increase our capacity for sterile injectable and inhalation products to meet the needs of production capacity when more of our pipeline products are approved. We will have the additional benefit of lower legal expenses going forward.”

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

(in thousands, except per share data)

Net revenues

$

79,047

$

71,040

$

158,837

$

129,433

GAAP net income (loss) attributable to Amphastar

$

47,787

$

(2,853

)

$

48,655

$

(9,994

)

Adjusted non-GAAP net income (loss) attributable to Amphastar*

$

4,117

$

1,157

$

9,002

$

(1,356

)

GAAP diluted EPS attributable to Amphastar shareholders

$

0.96

$

(0.06

)

$

0.97

$

(0.21

)

Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders*

$

0.08

$

0.02

$

0.18

$

(0.03

)

____________________________
* Adjusted non-GAAP net income attributable to Amphastar and Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders are non-GAAP financial measures. Please see the discussion in the section entitled “Non-GAAP Financial Measures” and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release.

Second Quarter Results

Three Months Ended

June 30,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues:

Phytonadione

$

12,441

$

10,806

$

1,635

15

%

Lidocaine

10,082

10,010

72

1

%

Enoxaparin

9,838

8,715

1,123

13

%

Naloxone

7,833

11,133

(3,300

)

(30

)%

Medroxyprogesterone

6,696

6,365

331

5

%

Epinephrine

3,139

3,687

(548

)

(15

)%

Primatene® Mist

2,512

2,512

N/A

Other finished pharmaceutical products

21,194

12,525

8,669

69

%

Total finished pharmaceutical products net revenues

$

73,735

$

63,241

$

10,494

17

%

API

5,312

7,799

(2,487

)

(32

)%

Total net revenues

$

79,047

$

71,040

$

8,007

11

%

Changes in net revenues were primarily driven by:

  • Enoxaparin increases due to higher average selling prices

  • Phytonadione increases due to a higher average selling price

  • Sales of Primatene® Mist, launched in December 2018

  • Increase in sales of other finished pharmaceutical products, such as Cortrosyn®, atropine, sodium bicarbonate, and dextrose which were in high demand due to market shortages, as well as sales of Isoproterenol which we launched in the third quarter of 2018

Three Months Ended

June 30,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues

$

79,047

$

71,040

$

8,007

11

%

Cost of revenues

46,660

44,976

1,684

4

%

Gross profit

$

32,387

$

26,064

$

6,323

24

%

as % of net revenues

41

%

37

%

Changes in cost of revenues and the resulting increase to gross margin were primarily driven by:

  • Sales of Primatene® Mist, which has higher margins

  • Higher average selling prices for enoxaparin

  • Increased sales of Cortrosyn® and medroxyprogesterone, which have high margins

Three Months Ended

June 30,

Change

2019

2018

Dollars

%

(in thousands)

Selling, distribution and marketing

$

2,992

$

1,876

$

1,116

59

%

General and administrative

12,426

11,669

757

6

%

Research and development

15,996

15,460

536

3

%

  • Selling, distribution and marketing expenses increased primarily due to increased marketing expenses related to Primatene® Mist

  • General and administrative expenses increased primarily due to higher legal fees

  • Research and development expenses increased primarily due to personnel-related expenses, as well as depreciation expense at Amphastar Nanjing Pharmaceuticals, or ANP, due to the expansion of the research and development efforts at that facility, and increased clinical trial expenses for our generic product pipeline

Three Months Ended

June 30,

Change

2019

2018

Dollars

%

(in thousands)

Non-operating income (expense), net

$

60,120

$

(1,259

)

$

61,379

NM

  • In June 2019, we recognized a gain of $59.9 million relating to the settlement of our enoxaparin litigation with Momenta Pharmaceuticals, Inc. and Sandoz Inc.

Cash flow provided by operating activities for the six months ended June 30, 2019, was $48.1 million.

Certain GAAP and non-GAAP measures for comparative periods in 2018 were revised for immaterial errors identified in a previous quarter.

Pipeline Information

The Company currently has four abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of approximately $800 million, three biosimilar products in development targeting products with a market size of approximately $14 billion, and 11 generic products in development targeting products with a market size of approximately $14 billion. This market information is based on IQVIA data for the 12 months ended June 30, 2019. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing three other proprietary products, which include injectable and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has 12 Drug Master Files, or DMFs, on file with the FDA and is developing six additional DMFs.

Company Information

Amphastar is a specialty pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company’s finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information and resources are available at www.amphastar.com.

Amphastar’s logo and other trademarks or service marks of Amphastar, including, but not limited to Primatene®, Amphadase® and Cortrosyn®, are the property of Amphastar.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) attributed to Amphastar and (ii) Adjusted non-GAAP diluted EPS attributed to Amphastar’s shareholders, which exclude amortization expense, share-based compensation, impairment charges, and legal settlements, in order to supplement investors’ and other readers’ understanding and assessment of the Company’s financial performance because the Company’s management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Conference Call Information

The Company will hold a conference call to discuss its financial results today, August 7, 2019, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 881-2595 or (315) 625-3083 for international callers, five minutes before the conference. The passcode for the conference call is 7375585.

The call can also be accessed on the Investors page on the Company’s website at www.amphastar.com.

Forward Looking Statements

All statements in this press release and in the conference call referenced above that are not historical are forward-looking statements, including, among other things, statements relating to the Company’s expectations regarding future financial performance, backlog, sales and marketing of its products, market size and growth, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to its pipeline of product candidates, its share buyback program and other future events. These statements are not historical facts but rather are based on Amphastar’s historical performance and its current expectations, estimates, and projections regarding Amphastar’s business, operations and other similar or related factors. Words such as “may,” “might,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amphastar’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar’s filings with the Securities and Exchange Commission. You can locate these reports through the Company’s website at http://ir.amphastar.com and on the SEC’s website at www.sec.gov. Amphastar undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar’s expectations to change.

Contact Information:

Amphastar Pharmaceuticals, Inc.
Bill Peters
Chief Financial Officer
(909) 980-9484

Table I
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Statement of Operations
(Unaudited; in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Net revenues

$

79,047

$

71,040

$

158,837

$

129,433

Cost of revenues

46,660

44,976

95,547

86,397

Gross profit

32,387

26,064

63,290

43,036

Operating expenses:

Selling, distribution, and marketing

2,992

1,876

6,133

3,597

General and administrative

12,426

11,669

28,753

22,667

Research and development

15,996

15,460

30,603

29,490

Total operating expenses

31,414

29,005

65,489

55,754

Income (loss) from operations

973

(2,941

)

(2,199

)

(12,718

)

Non-operating income (expense), net

60,120

(1,259

)

59,659

(371

)

Income (loss) before income taxes

61,093

(4,200

)

57,460

(13,089

)

Income tax provision (benefit)

14,173

(1,347

)

12,694

(3,095

)

Net income (loss)

$

46,920

$

(2,853

)

$

44,766

$

(9,994

)

Net loss attributable to non-controlling interests

$

(867

)

$

$

(3,889

)

$

Net income (loss) attributable to Amphastar

$

47,787

$

(2,853

)

$

48,655

$

(9,994

)

Net income (loss) per share attributable to Amphastar shareholders:

Basic

$

1.01

$

(0.06

)

$

1.04

$

(0.21

)

Diluted

$

0.96

$

(0.06

)

$

0.97

$

(0.21

)

Weighted-average shares used to compute net income (loss) per share attributable to Amphastar shareholders:

Basic

47,107

46,557

46,925

46,535

Diluted

49,894

46,557

50,155

46,535

The comparative period in 2018 was revised for immaterial errors.

Table II
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheet
(Unaudited; in thousands, except share data)

June 30,

December 31,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

120,373

$

86,337

Restricted cash

1,865

1,865

Short-term investments

2,836

2,831

Restricted short-term investments

2,290

2,290

Accounts receivable, net

48,823

52,163

Inventories

99,232

69,322

Income tax refunds and deposits

226

49

Prepaid expenses and other assets

8,489

5,485

Total current assets

284,134

220,342

Property, plant, and equipment, net

220,060

210,418

Finance lease right-of-use assets

985

Operating lease right-of-use assets

20,143

Goodwill and intangible assets, net

41,718

42,267

Other assets

13,515

9,918

Deferred tax assets

20,746

30,618

Total assets

$

601,301

$

513,563

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

88,171

$

87,418

Income taxes payable

3,150

1,187

Current portion of long-term debt

6,941

18,229

Current portion of operating lease liabilities

2,737

Total current liabilities

100,999

106,834

Long-term reserve for income tax liabilities

415

415

Long-term debt, net of current portion

39,793

31,984

Long-term operating lease liabilities, net of current portion

17,754

Deferred tax liabilities

1,025

1,031

Other long-term liabilities

9,027

8,940

Total liabilities

169,013

149,204

Commitments and contingencies:

Stockholders’ equity:

Preferred stock: par value $0.0001; 20,000,000 shares authorized; no shares issued and outstanding

Common stock: par value $0.0001; 300,000,000 shares authorized; 52,212,760 and 47,217,675 shares issued and outstanding as of June 30, 2019 and 51,438,675 and 46,631,118 shares issued and outstanding as of December 31, 2018, respectively

5

5

Additional paid-in capital

355,436

344,434

Retained earnings

116,086

67,485

Accumulated other comprehensive loss

(4,223

)

(4,013

)

Treasury stock

(79,459

)

(75,476

)

Total Amphastar Pharmaceuticals, Inc. stockholders’ equity

387,845

332,435

Non-controlling interests

44,443

31,924

Total equity

432,288

364,359

Total liabilities and stockholders’ equity

$

601,301

$

513,563

Table III
Amphastar Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures
(Unaudited; in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

GAAP net income (loss)

$

46,920

$

(2,853

)

$

44,766

$

(9,994

)

Adjusted for:

Intangible amortization

256

722

526

1,451

Share-based compensation

4,032

4,196

8,706

8,862

Impairment of long-lived assets

46

145

183

521

Gain on litigation settlement

(59,900

)

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

11,955

(1,053

)

11,020

(2,196

)

Non-GAAP net income (loss)

$

3,309

$

1,157

$

5,301

$

(1,356

)

Non-GAAP net loss attributable to non-controlling interests

$

(808

)

$

$

(3,701

)

$

Non-GAAP net income (loss) attributable to Amphastar

$

4,117

$

1,157

$

9,002

$

(1,356

)

Non-GAAP net income (loss) per share attributable to Amphastar shareholders:

Basic

$

0.09

$

0.02

$

0.19

$

(0.03

)

Diluted

$

0.08

$

0.02

$

0.18

$

(0.03

)

Weighted-average shares used to compute non-GAAP net income (loss) per share attributable to Amphastar shareholders:

Basic

47,107

46,557

46,925

46,535

Diluted

49,894

48,495

50,155

46,535


Three Months Ended June 30, 2019

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Non-operating
income (expense), net

Income
tax provision
(benefit)

Non-controlling interest adjustment

Cost of revenue

GAAP

$

46,660

$

2,992

$

12,426

$

15,996

$

60,120

$

14,173

$

(867

)

Intangible amortization

(223

)

(33

)

11

Share-based compensation

(959

)

(95

)

(2,648

)

(330

)

56

Impairment of long-lived assets

(43

)

(3

)

1

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

(11,955

)

(9

)

Non-GAAP

$

45,435

$

2,897

$

9,742

$

15,666

$

220

$

2,218

$

(808

)

Reconciliation of Non-GAAP Measures (continued)

Three Months Ended June 30, 2018

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Non-operating
income (expense), net

Income
tax provision
(benefit)

Non-controlling interest adjustment

Cost of revenue

GAAP

$

44,976

$

1,876

$

11,669

$

15,460

$

(1,259

)

$

(1,347

)

$

Intangible amortization

(683

)

(39

)

Share-based compensation

(981

)

(104

)

(2,743

)

(368

)

Impairment of long-lived assets

(3

)

(1

)

(141

)

Income tax provision (benefit) on pre-tax adjustments

1,053

Non-GAAP

$

43,309

$

1,772

$

8,886

$

14,951

$

(1,259

)

$

(294

)

$

The comparative period in 2018 was revised for immaterial errors.

Six Months Ended June 30, 2019

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Non-operating
income (expense), net

Income
tax provision
(benefit)

Non-controlling interest adjustment

Cost of revenue

GAAP

$

95,547

$

6,133

$

28,753

$

30,603

$

59,659

$

12,694

$

(3,889

)

Intangible amortization

(453

)

(73

)

22

Share-based compensation

(2,238

)

(189

)

(5,439

)

(840

)

150

Impairment of long-lived assets

(65

)

(12

)

(106

)

49

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

(11,020

)

(33

)

Non-GAAP

$

92,791

$

5,944

$

23,229

$

29,657

$

(241

)

$

1,674

$

(3,701

)


Six Months Ended June 30, 2018

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Non-operating
income (expense), net

Income
tax provision
(benefit)

Non-controlling interest adjustment

Cost of revenue

GAAP

$

86,397

$

3,597

$

22,667

$

29,490

$

(371

)

$

(3,095

)

$

Intangible amortization

(1,372

)

(79

)

Share-based compensation

(2,141

)

(211

)

(5,636

)

(874

)

Impairment of long-lived assets

(77

)

(4

)

(440

)

Income tax provision (benefit) on pre-tax adjustments

2,196

Non-GAAP

$

82,807

$

3,386

$

16,948

$

28,176

$

(371

)

$

(899

)

$

The comparative period in 2018 was revised for immaterial errors.