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Mar 12,2019
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Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full Year Ended December 31, 2018

Reports Net Revenues of $89.7 Million for the Three Months Ended December 31, 2018

RANCHO CUCAMONGA, Calif., March 12, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full year ended December 31, 2018.

Fourth Quarter Highlights

  • Net revenues of $89.7 million for the fourth quarter, up 48% from the quarter ended December 31, 2017
  • GAAP net income attributable to Amphastar of $1.9 million, or $0.04 per diluted share, for the fourth quarter
  • Adjusted non-GAAP net income attributable to Amphastar of $6.2 million, or $0.13 per diluted share, for the fourth quarter

Full Year Highlights

  • Net revenues of $294.7 million for the fiscal year, up 23% from the previous year
  • GAAP net loss attributable to Amphastar of $5.7 million, or $(0.12) per diluted share, for the fiscal year
  • Adjusted non-GAAP net income attributable to Amphastar of $10.4 million, or $0.21 per diluted share, for the fiscal year

Dr. Jack Zhang, Amphastar’s CEO, commented: “The fourth quarter ended a great year for our Company. During the quarter we received approval for Primatene® Mist, which followed multiple ANDA approvals and launches throughout the year. Sales grew 48% in the quarter with Primatene® Mist’s launch, and capped off sales growth of 23% for the year.”

                           
    Three Months Ended   Year Ended  
    December 31,   December 31,  
    2018   2017   2018   2017  
                   
    (in thousands, except per share data)  
Net revenues   $  89,690   $  60,402   $  294,666     $  240,175  
GAAP net income (loss) attributable to Amphastar   $  1,867   $  787   $  (5,738 )   $  3,647  
Adjusted non-GAAP net income attributable to Amphastar*   $  6,231   $  4,115   $  10,399     $  17,334  
GAAP diluted EPS attributable to Amphastar shareholders   $  0.04   $  0.02   $  (0.12 )   $  0.08  
Adjusted non-GAAP diluted EPS attributable to Amphastar
shareholders*		   $  0.13   $  0.08   $  0.21     $  0.36  

___________________________________ 
* 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  
    2018   2017   Dollars   %  
                   
    (in thousands)      
Net revenues:                        
Enoxaparin   $  19,085   $  11,347   $  7,738      68  %
Lidocaine      13,661      10,384      3,277      32  %
Phytonadione      12,942      10,703      2,239      21  %
Naloxone      7,703      8,434      (731 )    (9 )%
Medroxyprogesterone      7,448      —      7,448     N/A  
Epinephrine      1,264      3,665      (2,401 )    (66 )%
Primatene® Mist      3,574      —      3,574     N/A  
Other finished pharmaceutical products      17,257      11,452      5,805      51  %
Total finished pharmaceutical products net revenues   $  82,934   $  55,985   $  26,949      48  %
API      6,756      4,417      2,339      53  %
Total net revenues   $  89,690   $  60,402   $  29,288      48  %

Changes in net revenues were primarily driven by:

  • Enoxaparin increases due to higher average selling prices, as well as increased unit volumes
  • Medroxyprogesterone, which was launched in the first quarter of 2018
  • Primatene® Mist, which was launched in the fourth quarter of 2018
  • Epinephrine declines due to lower unit volumes
                         
    Three Months Ended            
    December 31,   Change  
    2018     2017     Dollars   %  
                       
    (in thousands)      
Net revenues   $  89,690     $  60,402     $  29,288    48  %
Cost of revenues      55,001        39,912        15,089    38  %
Gross profit   $  34,689     $  20,490     $  14,199    69  %
as % of net revenues     39 %     34 %            

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

  • The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins
  • Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin
                         
    Three Months Ended            
    December 31,   Change  
    2018   2017   Dollars   %  
                   
    (in thousands)      
Selling, distribution and marketing   $  2,596   $  1,629   $  967    59  %
General and administrative      13,814      9,221      4,593    50  %
Research and development      16,734      11,386      5,348    47  %
  • Selling, distribution and marketing expenses increased due to higher freight costs and marketing expenses related to the launch of Primatene® Mist
  • General and administrative expenses increased primarily due to higher legal fees and expenses at the Company’s subsidiary Amphastar Nanjing Pharmaceuticals, or ANP
  • Research and development expenses increased primarily due to material expenditures at ANP for pipeline product candidates, increased clinical trial expenses, and Food and Drug Administration, or FDA, filing fees

Year-End Results

                         
    Year Ended December 31,    Change  
    2018   2017   Dollars   %  
                   
    (in thousands)      
Net revenues:                        
Enoxaparin   $  53,371   $  36,593   $  16,778      46  %
Lidocaine      43,328      37,602      5,726      15  %
Phytonadione      41,897      37,946      3,951      10  %
Naloxone      37,195      42,342      (5,147 )    (12 )%
Medroxyprogesterone      24,071      —      24,071     N/A  
Epinephrine      10,055      25,914      (15,859 )    (61 )%
Primatene® Mist      3,574      —      3,574     N/A  
Other finished pharmaceutical products      57,568      49,742      7,826      16  %
Total finished pharmaceutical products net revenues   $  271,059   $  230,139   $  40,920      18  %
API      23,607      10,036      13,571      135  %
Total net revenues   $  294,666   $  240,175   $  54,491      23  %

Changes in net revenues were primarily driven by:

  • Enoxaparin increases due to higher average selling prices, as well as increased unit volumes
  • Medroxyprogesterone, which was launched in the first quarter of 2018
  • Primatene® Mist, which was launched in the fourth quarter of 2018
  • Lidocaine increases primarily due to increased unit volumes
  • Epinephrine declines due to the discontinuation of the unapproved vial product in 2017
  • Naloxone declines due to lower unit volumes
                         
    Year Ended December 31,    Change  
    2018     2017     Dollars   %  
    (in thousands)
            
Net revenues   $  294,666     $  240,175     $  54,491    23  %
Cost of revenues      187,681        149,666        38,015    25  %
Gross profit   $  106,985     $  90,509     $  16,476    18  %
as % of net revenues     36 %     38 %            

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

  • The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins
  • Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin
                         
    Year Ended December 31,    Change  
    2018   2017     Dollars   %  
                     
    (in thousands)      
Selling, distribution and marketing   $  8,156   $  6,460     $  1,696    26  %
General and administrative      49,888      44,458        5,430    12  %
Research and development      57,564      43,503        14,061    32  %
Gain on sale of intangible assets      —      (2,643 )      2,643    (100 )%
  • Selling, distribution and marketing expenses increased primarily due to increased freight costs and marketing expenses related to the launch of Primatene® Mist
  • General and administrative expenses increased primarily due to higher legal fees and expenses at ANP
  • Research and development expenses increased primarily due to expenditures related to the expansion of our ANP facility, as well as an increase in FDA filing fees and an increase in clinical trial expenses

Cash flow provided by operating activities for the year ended December 31, 2018 was $38.2 million.

Certain GAAP and non-GAAP measures for comparative periods in 2017 were revised for immaterial errors.

Pipeline Information

The Company currently has five abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of over $750 million, three biosimilar products in development targeting products with a market size of over $14 billion, and 11 generic products in development targeting products with a market size of over $12 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2018. 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 is available at the Company’s website 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, or 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, March 12, 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 4878419.

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,   
    2018     2017     2018     2017    
                           
Net revenues   $  89,690     $  60,402     $  294,666     $  240,175    
Cost of revenues      55,001        39,912        187,681        149,666    
Gross profit      34,689        20,490        106,985        90,509    
                           
Operating (income) expenses:                          
Selling, distribution, and marketing      2,596        1,629        8,156        6,460    
General and administrative      13,814        9,221        49,888        44,458    
Research and development      16,734        11,386        57,564        43,503    
Gain on sale of intangible assets      —        —        —        (2,643 )  
Total operating expenses      33,144        22,236        115,608        91,778    
                           
Income (loss) from operations      1,545        (1,746 )      (8,623 )      (1,269 )  
                           
Non-operating income (expense), net      (956 )      601        (1,303 )      2,518    
                           
Income (loss) before income taxes      589        (1,145 )      (9,926 )      1,249    
Income tax expense (benefit)      (1,129 )      (1,932 )      (3,266 )      (2,398 )  
                           
Net income (loss)   $  1,718     $  787     $  (6,660 )   $  3,647    
                           
Net loss attributable to non-controlling interests   $  (149 )   $  —     $  (922 )   $  —    
                           
Net income (loss) attributable to Amphastar   $  1,867     $  787     $  (5,738 )   $  3,647    
                           
Net income (loss) per share attributable to Amphastar shareholders:                          
Basic   $  0.04     $  0.02     $  (0.12 )   $  0.08    
Diluted   $  0.04     $  0.02     $  (0.12 )   $  0.08    
                           
Weighted-average shares used to compute net income (loss) per
share attributable to Amphastar shareholders:		                          
Basic      46,268        46,233        46,395        46,107    
Diluted      49,181        49,330        46,395        48,367    

The comparative periods in 2017 were revised for immaterial errors.


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

             
    December 31,    December 31, 
    2018   2017
ASSETS            
Current assets:            
Cash and cash equivalents   $ 86,337     $ 65,594  
Short-term investments     2,831       2,635  
Restricted cash and short-term investments     4,155       4,155  
Accounts receivable, net     52,163       35,996  
Inventories     69,322       63,609  
Income tax refunds and deposits     49       6,036  
Prepaid expenses and other assets     5,485       9,753  
Total current assets     220,342       187,778  
             
Property, plant, and equipment, net     210,418       180,545  
Goodwill and intangible assets, net     42,267       45,140  
Other assets     9,918       8,663  
Deferred tax assets     30,618       28,946  
             
Total assets   $ 513,563     $ 451,072  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
Accounts payable and accrued liabilities   $ 87,418     $ 57,555  
Income taxes payable     1,187       3,325  
Current portion of long-term debt and capital leases     18,229       6,312  
Total current liabilities     106,834       67,192  
             
Long-term reserve for income tax liabilities     415       879  
Long-term debt and capital leases, net of current portion     31,984       40,844  
Deferred tax liabilities     1,031       1,361  
Other long-term liabilities     8,940       7,060  
Total liabilities     149,204       117,336  
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; 51,438,675 and 46,631,118 shares issued and outstanding as of December 31, 2018 and 50,039,212 and 46,623,581 shares issued and outstanding as of December 31, 2017, respectively     5       5  
Additional paid-in capital     344,434       313,891  
Retained earnings     67,485       72,642  
Accumulated other comprehensive loss     (4,013 )     (2,100 )
Treasury stock     (75,476 )     (50,702 )
Total Amphastar stockholders’ equity     332,435       333,736  
Non-controlling interests     31,924       —  
Total equity     364,359       333,736  
             
Total liabilities and stockholders’ equity   $ 513,563     $ 451,072  

The December 31, 2017, figures were revised for immaterial errors.


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, 
    2018     2017     2018     2017  
                         
GAAP net income (loss)   $  1,718     $  787     $  (6,660 )   $  3,647  
Adjusted for:                        
Intangible amortization      265        717        1,987        2,856  
Share-based compensation      3,910        4,182        16,680        17,087  
Impairment of long-lived assets      1,257        —        1,647        —  
Income tax expense on pre-tax adjustments      (1,004 )      (1,571 )      (4,044 )      (6,256 )
Non-GAAP net income   $  6,146     $  4,115     $  9,610     $  17,334  
                         
Non-GAAP net loss attributable to non-controlling interests   $  (85 )   $  —     $  (789 )   $  —  
                         
Non-GAAP net income attributable to Amphastar   $  6,231     $  4,115     $  10,399     $  17,334  
                         
Non-GAAP net income per share attributable to Amphastar shareholders:                        
Basic   $  0.13     $  0.09     $  0.22     $  0.38  
Diluted   $  0.13     $  0.08     $  0.21     $  0.36  
                         
Weighted-average shares used to compute non-GAAP net income
per share attributable to Amphastar shareholders:		                        
Basic      46,268        46,233        46,395        46,107  
Diluted      49,181        49,330        48,830        48,367  


                                     
    Three Months Ended December 31, 2018
                           
        Selling,   General   Research   Income   Non-controlling
    Cost of   distribution   and   and   tax expense   interest
    revenue   and marketing   administrative   development   (benefit)   adjustment
GAAP   $  55,001     $  2,596     $  13,814     $  16,734     $  (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 expense on pre-tax
adjustments		      —        —        —        —        1,004        (10 )
Non-GAAP   $  52,869     $  2,510     $  11,166     $  16,168     $  (125 )   $  (85 )


                                     
    Three Months Ended December 31, 2017
                           
        Selling,   General   Research   Income   Non-controlling
    Cost of   distribution   and   and   tax expense   interest
    revenue   and marketing   administrative   development   (benefit)   adjustment
GAAP   $  39,912     $  1,629     $  9,221     $  11,386     $  (1,932 )   $  —
Intangible amortization      (675 )      —        (42 )      —        —        —
Share-based compensation      (913 )      (65 )      (2,928 )      (276 )      —        —
Income tax expense on pre-tax
adjustments		      —        —        —        —        1,571        —
Non-GAAP   $  38,324     $  1,564     $  6,251     $  11,110     $  (361 )   $  —

The comparative periods in 2017 were revised for immaterial errors.

Reconciliation of Non-GAAP Measures (continued)

                                     
    Year Ended December 31, 2018
                           
        Selling,   General   Research   Income   Non-controlling
    Cost of   distribution   and   and   tax expense   interest
    revenue   and marketing   administrative   development   (benefit)   adjustment
GAAP   $  187,681     $  8,156     $  49,888     $  57,564     $  (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 expense on pre-tax
adjustments		      —        —        —        —        4,044        (21 )
Non-GAAP   $  180,845     $  7,773     $  38,865     $  55,492     $  778     $  (789 )


                                     
    Year Ended December 31, 2017
                           
        Selling,   General   Research   Income   Non-controlling
    Cost of   distribution   and   and   tax expense   interest
    revenue   and marketing   administrative   development   (benefit)   adjustment
GAAP   $  149,666     $  6,460     $  44,458     $  43,503     $  (2,398 )   $  —
Intangible amortization      (2,706 )      —        (150 )      —        —        —
Share-based compensation      (3,756 )      (302 )      (11,643 )      (1,386 )      —        —
Income tax expense on pre-tax
adjustments		      —        —        —        —        6,256        —
Non-GAAP   $  143,204     $  6,158     $  32,665     $  42,117     $  3,858     $  —

The comparative periods in 2017 were revised for immaterial errors.

Source: Amphastar Pharmaceuticals, Inc.

 

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