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Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended March 31, 2019

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Reports Net Revenues of $79.8 Million for the Three Months Ended March 31, 2019

RANCHO CUCAMONGA, Calif., May 09, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended March 31, 2019.

First Quarter Highlights

  • Net revenues of $79.8 million for the first quarter

  • GAAP net income of $0.9 million, or $0.02 per share, for the first quarter

  • Adjusted non-GAAP net income of $4.9 million, or $0.10 per share, for the first quarter

Dr. Jack Zhang, Amphastar’s Chief Executive Officer, commented: “We are very pleased with the strong sales growth in the quarter and believe that increased promotion of Primatene® Mist and potential additional generic approvals this year will help us achieve strong sales growth for 2019.”

Three Months Ended

March 31,

2019

2018

(in thousands, except per share data)

Net revenues

$

79,790

$

58,393

GAAP net income (loss) attributable to Amphastar

$

868

$

(7,141

)

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

$

4,885

$

(2,513

)

GAAP diluted EPS attributable to Amphastar shareholders

$

0.02

$

(0.15

)

Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders*

$

0.10

$

(0.05

)

____________
* Adjusted non-GAAP net income (loss) and Adjusted non-GAAP diluted EPS 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.

First Quarter Results

Three Months Ended

March 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues:

Enoxaparin

$

14,484

$

7,007

$

7,477

107

%

Lidocaine

11,979

9,782

2,197

22

%

Phytonadione

10,120

9,181

939

10

%

Naloxone

7,364

8,927

(1,563

)

(18

)

%

Medroxyprogesterone

7,213

2,706

4,507

167

%

Primatene® Mist

2,897

2,897

N/A

Epinephrine

2,679

3,223

(544

)

(17

)

%

Other finished pharmaceutical products

17,803

12,291

5,512

45

%

Total finished pharmaceutical products net revenues

$

74,539

$

53,117

$

21,422

40

%

API

5,251

5,276

(25

)

(0

)

%

Total net revenues

$

79,790

$

58,393

$

21,397

37

%

Changes in net revenues were primarily driven by:

  • Enoxaparin increases due to higher average selling prices, as well as increased unit volumes

  • A full quarter of sales of medroxyprogesterone and Primatene® Mist

  • Lidocaine increases due to increased unit volumes and a higher average selling price

Three Months Ended

March 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues

$

79,790

$

58,393

$

21,397

37

%

Cost of revenues

48,887

41,421

7,466

18

%

Gross profit

$

30,903

$

16,972

$

13,931

82

%

as % of net revenues

39

%

29

%

Changes in cost of revenues and the resulting gross margin were primarily due to:

  • A full quarter of sales of medroxyprogesterone and Primatene® Mist, which have higher margins

  • A higher average selling price of enoxaparin

  • Increased sales of Cortrosyn®, which has high margins

Three Months Ended

March 31,

Change

2019

2018

Dollars

%

(in thousands)

Selling, distribution and marketing

$

3,141

$

1,721

$

1,420

83

%

General and administrative

16,327

10,998

5,329

48

%

Research and development

14,607

14,030

577

4

%

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

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

  • Research and development expenses increased primarily due to salaries and personnel-related expenses at Amphastar Nanjing Pharmaceuticals, or ANP, due to the expansion of the facility, and increased clinical trial expenses for both ANDA and NDA pipeline products

Cash flow used in operating activities for the three months ended March 31, 2019, was $3.6 million.

Share Buyback Program

On May 6, 2019, the Company’s Board of Directors authorized an increase of $20 million to the Company’s share buyback program, which is expected to continue for an indefinite period of time. The primary goal of the program is to offset dilution created by the Company’s equity compensation programs.

Purchases may be made through the open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated transactions, or other means, as determined by the Company’s management and in accordance with the requirements of the Securities and Exchange Commission and applicable laws.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, and other conditions.

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 March 31, 2019. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing four other proprietary products, which include injectable, inhalation and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has nine Drug Master Files, or DMFs, on file with the FDA and is developing nine 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, and impairment charges 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, May 9, 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 8047099.

The call can also be accessed on the Investors page on the Company’s website 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

March 31,

2019

2018

Net revenues

$

79,790

$

58,393

Cost of revenues

48,887

41,421

Gross profit

30,903

16,972

Operating expenses:

Selling, distribution, and marketing

3,141

1,721

General and administrative

16,327

10,998

Research and development

14,607

14,030

Total operating expenses

34,075

26,749

Loss from operations

(3,172

)

(9,777

)

Non-operating income (expense), net

(461

)

888

Loss before income taxes

(3,633

)

(8,889

)

Income tax benefit

(1,479

)

(1,748

)

Net loss

$

(2,154

)

$

(7,141

)

Net loss attributable to non-controlling interests

$

(3,022

)

$

Net income (loss) attributable to Amphastar

$

868

$

(7,141

)

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

Basic

$

0.02

$

(0.15

)

Diluted

$

0.02

$

(0.15

)

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

Basic

46,744

46,514

Diluted

50,416

46,514

The comparative period in 2018 was revised for immaterial errors.


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

March 31,

December 31,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

79,096

$

86,337

Restricted cash

1,865

1,865

Short-term investments

2,834

2,831

Restricted short-term investments

2,290

2,290

Accounts receivable, net

54,930

52,163

Inventories

78,580

69,322

Income tax refunds and deposits

1,592

49

Prepaid expenses and other assets

8,956

5,485

Total current assets

230,143

220,342

Property, plant, and equipment, net

214,836

210,418

Finance lease right-of-use assets

1,094

Operating lease right-of-use assets

13,480

Goodwill and intangible assets, net

42,255

42,267

Other assets

12,292

9,918

Deferred tax assets

30,618

30,618

Total assets

$

544,718

$

513,563

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

90,795

$

87,418

Income taxes payable

1,017

1,187

Current portion of long-term debt

17,587

18,229

Current portion of lease liabilities

2,560

Total current liabilities

111,959

106,834

Long-term reserve for income tax liabilities

415

415

Long-term debt, net of current portion

30,973

31,984

Long-term lease liabilities, net of current portion

11,174

Deferred tax liabilities

1,067

1,031

Other long-term liabilities

8,864

8,940

Total liabilities

164,452

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; 52,043,326 and 47,098,624 shares issued and outstanding as of March 31, 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

349,201

344,434

Retained earnings

68,299

67,485

Accumulated other comprehensive loss

(4,126

)

(4,013

)

Treasury stock

(78,393

)

(75,476

)

Total Amphastar stockholders’ equity

334,986

332,435

Non-controlling interests

45,280

31,924

Total equity

380,266

364,359

Total liabilities and stockholders’ equity

$

544,718

$

513,563


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

Three Months Ended

March 31,

2019

2018

GAAP net loss

$

(2,154

)

$

(7,141

)

Adjusted for:

Intangible amortization

270

729

Share-based compensation

4,674

4,666

Impairment of long-lived assets

137

376

Income tax expense on pre-tax adjustments

(935

)

(1,143

)

Non-GAAP net income (loss)

$

1,992

$

(2,513

)

Non-GAAP net loss attributable to non-controlling interests

$

(2,893

)

$

Non-GAAP net income (loss) attributable to Amphastar

$

4,885

$

(2,513

)

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

Basic

$

0.10

$

(0.05

)

Diluted

$

0.10

$

(0.05

)

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

Basic

46,744

46,514

Diluted

50,416

46,514


Three Months Ended March 31, 2019

Cost of
revenue

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Income
tax expense
(benefit)

Non-controlling
interest
adjustment

GAAP

$

48,887

$

3,141

$

16,327

$

14,607

$

(1,479

)

$

(3,022

)

Intangible amortization

(230

)

(40

)

11

Share-based compensation

(1,279

)

(94

)

(2,791

)

(510

)

94

Impairment of long-lived assets

(22

)

(9

)

(106

)

48

Income tax expense on pre-tax adjustments

935

(24

)

Non-GAAP

$

47,356

$

3,047

$

13,487

$

13,991

$

(544

)

$

(2,893

)


Three Months Ended March 31, 2018

Cost of
revenue

Selling,
distribution
and marketing

General
and
administrative

Research
and
development

Income
tax expense
(benefit)

Non-controlling
interest
adjustment

GAAP

$

41,421

$

1,721

$

10,998

$

14,030

$

(1,748

)

$

Intangible amortization

(689

)

(40

)

Share-based compensation

(1,160

)

(107

)

(2,893

)

(506

)

Impairment of long-lived assets

(74

)

(3

)

(299

)

Income tax expense on pre-tax adjustments

1,143

Non-GAAP

$

39,498

$

1,614

$

8,062

$

13,225

$

(605

)

$

The comparative period in 2018 was revised for immaterial errors.