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Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended September 30, 2019

19:00 EST 6 Nov 2019 | Globe Newswire

Reports Net Revenues of $80.1 Million for the Three Months Ended September 30, 2019

RANCHO CUCAMONGA, Calif., Nov. 07, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2019.

Third Quarter Highlights

  • Net revenues of $80.1 million for the third quarter
  • GAAP net income of $1.3 million, or $0.03 per share, for the third quarter
  • Adjusted non-GAAP net income of $5.2 million, or $0.10 per share, for the third quarter

Dr. Jack Zhang, Amphastar’s Chief Executive Officer, commented: “A significant accomplishment in the third quarter was the successful ramp up of our marketing efforts for Primatene® Mist. We are pleased to announce we started shipping Primatene® Mist to Walmart in October. Meanwhile, our pipeline of both generic and proprietary candidates continues to move ahead. Additionally, we recently had another complex ANDA accepted for filing.”

             
  Three Months Ended  Nine Months Ended
  September 30,  September 30, 
  2019 2018 2019 2018 
          
  (in thousands, except per share data)
Net revenues $ 80,137 $ 75,543 $ 238,974 $ 204,976 
GAAP net income (loss) attributable to Amphastar $ 1,310 $ 2,389 $ 49,965 $ (7,605)
Adjusted non-GAAP net income attributable to Amphastar* $ 5,169 $ 5,721 $ 14,171 $ 4,168 
GAAP diluted EPS attributable to Amphastar shareholders $ 0.03 $ 0.05 $ 1.00 $ (0.16)
Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders* $ 0.10 $ 0.12 $ 0.28 $ 0.09 

_____________________________
* 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.

Third Quarter Results

             
  Three Months Ended       
  September 30,  Change 
          
  2019 2018 Dollars % 
          
  (in thousands)   
Net revenues:            
Lidocaine $ 11,670 $ 9,875 $ 1,795   18 %
Phytonadione   10,916   8,968   1,948   22 %
Naloxone   10,613   9,432   1,181   13 %
Enoxaparin   9,573   18,564   (8,991)  (48)%
Medroxyprogesterone   7,879   7,552   327   4 %
Epinephrine   3,756   1,881   1,875   100 %
Primatene® Mist   3,654   —   3,654  N/A 
Other finished pharmaceutical products   17,668   15,495   2,173   14 %
Total finished pharmaceutical products net revenues $ 75,729 $ 71,767 $ 3,962   6 %
API   4,408   3,776   632   17 %
Total net revenues $ 80,137 $ 75,543 $ 4,594   6 %

Changes in net revenues were primarily driven by:

  • Lidocaine sales increases due to a higher average selling price, as well as higher unit volumes
  • Phytonadione sales increases due to a higher average selling price
  • Epinephrine and naloxone sales increases due to higher unit volumes
  • Sales of Primatene® Mist, which launched in December 2018
  • Increases in sales of other finished pharmaceutical products, including atropine, calcium chloride, and dextrose, which were in high demand due to market shortages
             
  Three Months Ended       
  September 30,  Change 
  2019  2018  Dollars % 
            
  (in thousands)   
Net revenues $ 80,137  $ 75,543  $ 4,594   6 %
Cost of revenues   44,885    46,283    (1,398)  (3)%
Gross profit $ 35,252  $ 29,260  $ 5,992   20 %
as % of net revenues  44%  39%      

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

  • Sales of Primatene® Mist, which has higher margins
  • Increased sales of phytonadione, which has higher margins
             
  Three Months Ended       
  September 30,  Change 
  2019 2018 Dollars % 
          
  (in thousands)   
Selling, distribution and marketing $ 3,221 $ 1,963 $ 1,258   64 %
General and administrative   11,021   13,407   (2,386)  (18)%
Research and development   18,606   11,340   7,266   64 %
  • Selling, distribution and marketing expenses increased primarily due to increased marketing expenses related to Primatene® Mist, including the cost of a 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 to the development of active pharmaceutical ingredients and key components, and increased clinical trial expenses for our generic product pipeline, primarily for our inhalation abbreviated new drug applications, or ANDAs

Cash flow provided by operating activities for the nine months ended September 30, 2019, was $36.1 million.

Share Buyback Program

On November 4, 2019, the Company’s Board of Directors authorized an increase of $20 million to the Company’s share buyback program, which is expected to continue for an indefinite period of time. The primary goal of the program is to offset dilution created by the Company’s equity compensation programs.

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

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

Pipeline Information

The Company currently has five ANDAs, filed with the FDA targeting products with a market size of approximately $1.1 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and 11 generic products in development targeting products with a market size of approximately $13 billion. This market information is based on IQVIA data for the 12 months ended September 30, 2019. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing three 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, November 7, 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 8097493.

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  Nine Months Ended
  September 30,  September 30, 
  2019
 2018
 2019
 2018
             
Net revenues $ 80,137  $ 75,543  $ 238,974  $ 204,976 
Cost of revenues   44,885    46,283    140,432    132,680 
Gross profit   35,252    29,260    98,542    72,296 
             
Operating expenses:            
Selling, distribution, and marketing   3,221    1,963    9,354    5,560 
General and administrative   11,021    13,407    39,774    36,074 
Research and development   18,606    11,340    49,209    40,830 
Total operating expenses   32,848    26,710    98,337    82,464 
             
Income (loss) from operations   2,404    2,550    205    (10,168)
             
Non-operating (expense) income, net   (822)   24    58,837    (347)
             
Income (loss) before income taxes   1,582    2,574    59,042    (10,515)
Income tax provision (benefit)   598    958    13,292    (2,137)
             
Net income (loss) $ 984  $ 1,616  $ 45,750  $ (8,378)
             
Net loss attributable to non-controlling interests $ (326) $ (773) $ (4,215) $ (773)
             
Net income (loss) attributable to Amphastar $ 1,310  $ 2,389  $ 49,965  $ (7,605)
             
Net income (loss) per share attributable to Amphastar shareholders:            
Basic $ 0.03  $ 0.05  $ 1.06  $ (0.16)
Diluted $ 0.03  $ 0.05  $ 1.00  $ (0.16)
             
Weighted-average shares used to compute net income (loss) per share attributable to Amphastar shareholders:            
Basic   47,239    46,241    47,030    46,437 
Diluted   50,075    48,281    50,128    46,437 


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

       
  September 30,  December 31, 
  2019
 2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 85,611  $ 86,337 
Restricted cash   1,865    1,865 
Short-term investments   12,666    2,831 
Restricted short-term investments   2,290    2,290 
Accounts receivable, net   45,255    52,163 
Inventories   109,854    69,322 
Income tax refunds and deposits   890    49 
Prepaid expenses and other assets   10,472    5,485 
Total current assets   268,903    220,342 
       
Property, plant, and equipment, net   222,158    210,418 
Finance lease right-of-use assets   896    — 
Operating lease right-of-use assets   19,463    — 
Goodwill and intangible assets, net   41,139    42,267 
Other assets   12,331    9,918 
Deferred tax assets   20,746    30,618 
Total assets $ 585,636  $ 513,563 
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities $ 75,137  $ 87,418 
Income taxes payable   1,400    1,187 
Current portion of long-term debt   6,969    18,229 
Current portion of operating lease liabilities   3,090    — 
Total current liabilities   86,596    106,834 
       
Long-term reserve for income tax liabilities   415    415 
Long-term debt, net of current portion   38,079    31,984 
Long-term operating lease liabilities, net of current portion   16,940    — 
Deferred tax liabilities   976    1,031 
Other long-term liabilities   8,977    8,940 
Total liabilities   151,983    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; 52,399,044 and 47,199,907 shares issued and outstanding as of September 30, 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   361,705    344,434 
Retained earnings   117,396    67,485 
Accumulated other comprehensive loss   (5,848)   (4,013)
Treasury stock   (83,853)   (75,476)
Total Amphastar Pharmaceuticals, Inc. stockholders’ equity   389,405    332,435 
Non-controlling interests   44,248    31,924 
Total equity   433,653    364,359 
Total liabilities and stockholders’ equity $ 585,636  $ 513,563 


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

             
  Three Months Ended  Nine Months Ended
  September 30,  September 30, 
  2019
 2018
 2019
 2018
             
GAAP net income (loss) $ 984  $ 1,616  $ 45,750  $ (8,378)
Adjusted for:            
Intangible amortization   251    271    777    1,722 
Share-based compensation   4,294    3,908    13,000    12,770 
Impairment of long-lived assets   11    10    194    390 
Gain on litigation settlement   —    —    (59,900)   — 
Income tax provision (benefit) on pre-tax adjustments   (598)   (788)   10,422    (3,040)
Non-GAAP net income (loss) $ 4,942  $ 5,017  $ 10,243  $ 3,464 
             
Non-GAAP net loss attributable to non-controlling interests $ (227) $ (704) $ (3,928) $ (704)
             
Non-GAAP net income attributable to Amphastar $ 5,169  $ 5,721  $ 14,171  $ 4,168 
             
Non-GAAP net income per share attributable to Amphastar shareholders:            
Basic $ 0.11  $ 0.12  $ 0.30  $ 0.09 
Diluted $ 0.10  $ 0.12  $ 0.28  $ 0.09 
             
Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar shareholders:            
Basic   47,239    46,241    47,030    46,437 
Diluted   50,075    48,281    50,128    48,713 


                      
  Three Months Ended September 30, 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 $ 44,885  $ 3,221  $ 11,021  $ 18,606  $ (822) $ 598 $ (326)
Intangible amortization   (216)   —    (35)   —    —    —   12 
Share-based compensation   (701)   (96)   (3,138)   (359)   —    —   107 
Impairment of long-lived assets   (4)   —    (11)   4    —    —   6 
Gain on litigation settlement   —    —    —    —    —    —   — 
Income tax provision (benefit) on pre-tax adjustments   —    —    —    —    —    598   (26)
Non-GAAP $ 43,964  $ 3,125  $ 7,837  $ 18,251  $ (822) $ 1,196 $ (227)


Reconciliation of Non-GAAP Measures (continued)

                      
  Three Months Ended September 30, 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 $ 46,283  $ 1,963  $ 13,407  $ 11,340  $ 24 $ 958 $ (773)
Intangible amortization   (230)   —    (41)   —    —   —   11 
Share-based compensation   (884)   (86)   (2,615)   (323)   —   —   68 
Impairment of long-lived assets   —    —    —    (10)   —   —   1 
Income tax provision (benefit) on pre-tax adjustments   —    —    —    —    —   788   (11)
Non-GAAP $ 45,169  $ 1,877  $ 10,751  $ 11,007  $ 24 $ 1,746 $ (704)


                      
  Nine Months Ended September 30, 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 $ 140,432  $ 9,354  $ 39,774  $ 49,209  $ 58,837  $ 13,292  $ (4,215)
Intangible amortization   (669)   —    (108)   —    —    —    34 
Share-based compensation   (2,939)   (285)   (8,577)   (1,199)   —    —    257 
Impairment of long-lived assets   (69)   —    (23)   (102)   —    —    55 
Gain on litigation settlement   —    —    —    —    (59,900)   —    — 
Income tax provision (benefit) on pre-tax adjustments   —    —    —    —    —    (10,422)   (59)
Non-GAAP $ 136,755  $ 9,069  $ 31,066  $ 47,908  $ (1,063) $ 2,870  $ (3,928)


                      
  Nine Months Ended September 30, 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 $ 132,680  $ 5,560  $ 36,074  $ 40,830  $ (347) $ (2,137) $ (773)
Intangible amortization   (1,602)   —    (120)   —    —    —    11 
Share-based compensation   (3,025)   (297)   (8,251)   (1,197)   —    —    68 
Impairment of long-lived assets   (77)   —    (4)   (309)   —    —    1 
Income tax provision (benefit) on pre-tax adjustments   —    —    —    —    —    3,040    (11)
Non-GAAP $ 127,976  $ 5,263  $ 27,699  $ 39,324  $ (347) $ 903  $ (704)

 

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