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

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

March 12, 2020

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. (NASDAQ: 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)

 

Source: Amphastar Pharmaceuticals, Inc.

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