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	)