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Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full Year Ended December 31, 2019

Reports Net Revenues of $83.4 Million for the Three Months Ended December 31, 2019

RANCHO CUCAMONGA, Calif., March 12, 2020 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full year ended December 31, 2019.

Fourth Quarter Highlights

  • Net revenues of $83.4 million for the fourth quarter

  • GAAP net loss of $1.0 million, or $(0.02) per share, for the fourth quarter

  • Adjusted non-GAAP net income of $3.6 million, or $0.07 per share, for the fourth quarter

Full Year Highlights

  • Net revenues of $322.4 million for the fiscal year

  • GAAP net income of $48.9 million, or $0.98 per share, for the fiscal year

  • Adjusted non-GAAP net income of $17.8 million, or $0.36 per share, for the fiscal year

Dr. Jack Zhang, Amphastar’s Chief Executive Officer, commented: “We finished 2019 with very strong sales of Primatene® Mist, with fourth quarter sales essentially equaling sales in the previous three quarters combined. Additionally, we have made great progress with our pipeline of product candidates, as we continue to move forward with clinical trials for both our insulin and inhalation products. In addition, the FDA accepted two more of our ANDAs.”

Three Months Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

(in thousands, except per share data)

Net revenues

$

83,383

$

89,690

$

322,357

$

294,666

GAAP net income (loss) attributable to Amphastar

$

(1,026

)

$

1,867

$

48,939

$

(5,738

)

Adjusted non-GAAP net income attributable to Amphastar*

$

3,639

$

6,231

$

17,810

$

10,399

GAAP diluted EPS attributable to Amphastar shareholders

$

(0.02

)

$

0.04

$

0.98

$

(0.12

)

Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders*

$

0.07

$

0.13

$

0.36

$

0.21

_________________________________

* 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.

Fourth Quarter Results

Three Months Ended

December 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues:

Lidocaine

$

12,282

$

13,661

$

(1,379

)

(10

)%

Phytonadione

12,309

12,942

(633

)

(5

)%

Primatene® Mist

9,002

3,574

5,428

152

%

Naloxone

8,951

7,703

1,248

16

%

Enoxaparin

8,800

19,085

(10,285

)

(54

)%

Medroxyprogesterone

6,062

7,448

(1,386

)

(19

)%

Epinephrine

4,311

1,264

3,047

241

%

Other finished pharmaceutical products

16,280

17,257

(977

)

(6

)%

Total finished pharmaceutical products net revenues

$

77,997

$

82,934

$

(4,937

)

(6

)%

API

5,386

6,756

(1,370

)

(20

)%

Total net revenues

$

83,383

$

89,690

$

(6,307

)

(7

)%

Changes in net revenues were primarily driven by:

  • Increased sale of Primatene® Mist, which launched in December 2018

  • Epinephrine and naloxone sales increased due to higher unit volumes

  • Enoxaparin sales decreased due to lower unit volumes

  • Medroxyprogesterone sales decreased due to lower unit volumes, which was partially offset by a higher average selling price

  • Lidocaine sales decreased due to lower unit volumes

Three Months Ended

December 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues

$

83,383

$

89,690

$

(6,307

)

(7

)%

Cost of revenues

50,002

55,001

(4,999

)

(9

)%

Gross profit

$

33,381

$

34,689

$

(1,308

)

(4

)%

as % of net revenues

40

%

39

%

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

  • Increased sales of Primatene® Mist, which has higher margins and were magnified by the use of API and components which were expensed to pre-launch inventory in prior years

Three Months Ended

December 31,

Change

2019

2018

Dollars

%

(in thousands)

Selling, distribution and marketing

$

3,476

$

2,596

$

880

34

%

General and administrative

10,505

13,814

(3,309

)

(24

)%

Research and development

19,644

16,734

2,910

17

%

  • Marketing expenses related to Primatene® Mist increased due to the cost of a national television and radio marketing campaign, which began in July 2019

  • General and administrative expenses decreased primarily due to lower legal expenses

  • Research and development expenses increased primarily due the increased clinical trial expenses for our generic product pipeline, largely for our inhalation abbreviated new drug applications, or ANDAs, as well as an increase in expenses at our Amphastar Nanjing Pharmaceuticals, or ANP, subsidiary.

Year-End Results

Year Ended
December 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues:

Lidocaine

$

46,013

$

43,328

$

2,685

6

%

Phytonadione

45,786

41,897

3,889

9

%

Enoxaparin

42,695

53,371

(10,676

)

(20

)%

Naloxone

34,761

37,195

(2,434

)

(7

)%

Medroxyprogesterone

27,850

24,071

3,779

16

%

Primatene® Mist

18,065

3,574

14,491

405

%

Epinephrine

13,885

10,055

3,830

38

%

Other finished pharmaceutical products

72,945

57,568

15,377

27

%

Total finished pharmaceutical products net revenues

$

302,000

$

271,059

$

30,941

11

%

API

20,357

23,607

(3,250

)

(14

)%

Total net revenues

$

322,357

$

294,666

$

27,691

9

%

Changes in net revenues were primarily driven by:

  • A full year of Primatene® Mist sales, which launched in December 2018

  • Lidocaine sales increased due to a higher average selling price, as well as higher unit volumes

  • Phytonadione sales increased primarily due to a higher average selling price

  • Epinephrine sales increased due to higher unit volumes

  • A full year of Medroxyprogesterone sales, which launched in 2018

  • Other finished pharmaceutical products sales increased, including atropine, calcium chloride, and dextrose, which were in high demand due to market shortages

  • Enoxaparin sales decreased due to lower unit volumes, partially offset by an increase in average selling price due to a change in customer mix

  • Naloxone sales decreased due to a lower average selling price

Year Ended December 31,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues

$

322,357

$

294,666

$

27,691

9

%

Cost of revenues

190,434

187,681

2,753

1

%

Gross profit

$

131,923

$

106,985

$

24,938

23

%

as % of net revenues

41

%

36

%

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

  • Increased sales of Primatene® Mist and phytonadione, which have higher margins than many of our other products

  • Gross margins for Primatene® Mist were magnified by the use of API and components which were expensed to pre-launch inventory in prior years

Year Ended December 31,

Change

2019

2018

Dollars

%

(in thousands)

Selling, distribution and marketing

$

12,830

$

8,156

$

4,674

57

%

General and administrative

50,279

49,888

391

1

%

Research and development

68,853

57,564

11,289

20

%

  • Marketing expenses related to Primatene® Mist increased due to the cost of a national television and radio marketing campaign, which began in July 2019

  • General and administrative expenses increased primarily due to personnel costs and consulting and accounting audit fees, partially offset by lower legal expenses

  • Research and development expenses increased primarily due to personnel-related expenses and depreciation due to API and key component development at ANP

  • Clinical trial expense increased due to external studies related to our generic product pipeline, primarily for our inhalation ANDAs and our insulin biosimilar programs

Year Ended December 31,

Change

2019

2018

Dollars

%

(in thousands)

Non-operating income (expense), net

$

60,267

$

(1,303

)

$

61,570

NM

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

Cash flow provided by operating activities for the year ended December 31, 2019, was $41.8 million.

Pipeline Information

The Company currently has seven ANDAs filed with the FDA targeting products with a market size of approximately $1.9 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and nine generic products in development targeting products with a market size of approximately $12 billion. This market information is based on IQVIA data for the 12 months ended December 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 and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has 14 Drug Master Files, or DMFs, on file with the FDA and is developing four 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, March 12, 2020, 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 4863509.

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

Year Ended

December 31,

December 31,

2019

2018

2019

2018

Net revenues

$

83,383

$

89,690

$

322,357

$

294,666

Cost of revenues

50,002

55,001

190,434

187,681

Gross profit

33,381

34,689

131,923

106,985

Operating expenses:

Selling, distribution, and marketing

3,476

2,596

12,830

8,156

General and administrative

10,505

13,814

50,279

49,888

Research and development

19,644

16,734

68,853

57,564

Total operating expenses

33,625

33,144

131,962

115,608

Income (loss) from operations

(244

)

1,545

(39

)

(8,623

)

Non-operating income (expenses), net

1,430

(956

)

60,267

(1,303

)

Income (loss) before income taxes

1,186

589

60,228

(9,926

)

Income tax provision (benefit)

431

(1,129

)

13,723

(3,266

)

Net income (loss)

$

755

$

1,718

$

46,505

$

(6,660

)

Net income (loss) attributable to non-controlling interests

$

1,781

$

(149

)

$

(2,434

)

$

(922

)

Net income (loss) attributable to Amphastar

$

(1,026

)

$

1,867

$

48,939

$

(5,738

)

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

Basic

$

(0.02

)

$

0.04

$

1.04

$

(0.12

)

Diluted

$

(0.02

)

$

0.04

$

0.98

$

(0.12

)

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

Basic

46,840

46,268

46,982

46,395

Diluted

46,840

49,181

49,907

46,395


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

December 31,

December 31,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

73,685

$

86,337

Restricted cash

1,865

1,865

Short-term investments

11,675

2,831

Restricted short-term investments

2,290

2,290

Accounts receivable, net

45,376

52,163

Inventories

110,501

69,322

Income tax refunds and deposits

311

49

Prepaid expenses and other assets

9,538

5,485

Total current assets

255,241

220,342

Property, plant, and equipment, net

233,856

210,418

Finance lease right-of-use assets

887

Operating lease right-of-use assets

18,805

Goodwill and intangible assets, net

41,153

42,267

Other assets

11,156

9,918

Deferred tax assets

25,873

30,618

Total assets

$

586,971

$

513,563

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

77,051

$

87,418

Income taxes payable

2,042

1,187

Current portion of long-term debt

7,741

18,229

Current portion of operating lease liabilities

3,175

Total current liabilities

90,009

106,834

Long-term reserve for income tax liabilities

3,425

415

Long-term debt, net of current portion

39,394

31,984

Long-term operating lease liabilities, net of current portion

16,315

Deferred tax liabilities

867

1,031

Other long-term liabilities

9,433

8,940

Total liabilities

159,443

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; 52,495,483 and 46,576,968 shares issued and outstanding as of December 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

367,305

344,434

Retained earnings

116,370

67,485

Accumulated other comprehensive loss

(4,687

)

(4,013

)

Treasury stock

(97,627

)

(75,476

)

Total Amphastar Pharmaceuticals, Inc. stockholders’ equity

381,366

332,435

Non-controlling interests

46,162

31,924

Total equity

427,528

364,359

Total liabilities and stockholders’ equity

$

586,971

$

513,563

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

Three Months Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

GAAP net income (loss)

$

755

$

1,718

$

46,505

$

(6,660

)

Adjusted for:

Intangible amortization

260

265

1,037

1,987

Share-based compensation

4,296

3,910

17,296

16,680

Impairment of long-lived assets

171

1,257

365

1,647

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

72

(1,004

)

10,494

(4,044

)

Non-GAAP net income

$

5,554

$

6,146

$

15,797

$

9,610

Non-GAAP net income (loss) attributable to non-controlling interests

$

1,915

$

(85

)

$

(2,013

)

$

(789

)

Non-GAAP net income attributable to Amphastar

$

3,639

$

6,231

$

17,810

$

10,399

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

Basic

$

0.08

$

0.13

$

0.38

$

0.22

Diluted

$

0.07

$

0.13

$

0.36

$

0.21

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

Basic

46,840

46,268

46,982

46,395

Diluted

49,242

49,181

49,907

48,830


Three Months Ended December 31, 2019

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

50,002

$

3,476

$

10,505

$

19,644

$

1,430

$

431

$

1,781

Intangible amortization

(226

)

(34

)

11

Share-based compensation

(880

)

(103

)

(2,961

)

(352

)

98

Impairment of long-lived assets

(30

)

(141

)

58

Income tax provision (benefit) on pre-tax adjustments

(72

)

(33

)

Non-GAAP

$

48,866

$

3,373

$

7,369

$

19,292

$

1,430

$

359

$

1,915

Reconciliation of Non-GAAP Measures (continued)

Three Months Ended December 31, 2018

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

55,001

$

2,596

$

13,814

$

16,734

$

(956

)

$

(1,129

)

$

(149

)

Intangible amortization

(224

)

(41

)

11

Share-based compensation

(898

)

(86

)

(2,602

)

(324

)

62

Impairment of long-lived assets

(1,010

)

(5

)

(242

)

1

Income tax provision (benefit) on pre-tax adjustments

1,004

(10

)

Non-GAAP

$

52,869

$

2,510

$

11,166

$

16,168

$

(956

)

$

(125

)

$

(85

)


Year Ended December 31, 2019

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

190,434

$

12,830

$

50,279

$

68,853

$

60,267

$

13,723

$

(2,434

)

Intangible amortization

(895

)

(142

)

45

Share-based compensation

(3,819

)

(388

)

(11,538

)

(1,551

)

355

Impairment of long-lived assets

(99

)

(164

)

(102

)

113

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

(10,494

)

(92

)

Non-GAAP

$

185,621

$

12,442

$

38,435

$

67,200

$

367

$

3,229

$

(2,013

)


Year Ended December 31, 2018

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

187,681

$

8,156

$

49,888

$

57,564

$

(1,303

)

$

(3,266

)

$

(922

)

Intangible amortization

(1,826

)

(161

)

22

Share-based compensation

(3,923

)

(383

)

(10,853

)

(1,521

)

130

Impairment of long-lived assets

(1,087

)

(9

)

(551

)

2

Income tax provision (benefit) on pre-tax adjustments

4,044

(21

)

Non-GAAP

$

180,845

$

7,773

$

38,865

$

55,492

$

(1,303

)

$

778

$

(789

)