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Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended September 30, 2018

Reports Net Revenues of $75.5 Million for the Three Months Ended September 30, 2018

RANCHO CUCAMONGA, Calif., Nov. 08, 2018 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2018.

Third Quarter Highlights

  • Net revenues of $75.5 million for the third quarter
  • GAAP net income attributable to Amphastar of $2.4 million, or $0.05 per diluted share, for the third quarter
  • Adjusted non-GAAP net income attributable to Amphastar of $5.7 million, or $0.12 per diluted share, for the third quarter

Dr. Jack Zhang, Amphastar’s CEO, commented: “This is a very exciting time for Amphastar with our recent approval of Primatene® Mist, our strong sales growth in the quarter and our return to profitability.”

              
  Three Months Ended  Nine Months Ended  
  September 30,  September 30,  
  2018 2017 2018  2017 
    
  (in thousands, except per share data) 
Net revenues $ 75,543 $ 57,916 $ 204,976  $ 179,773 
GAAP net income (loss) attributable to Amphastar $ 2,389 $ 99 $ (7,605) $ 2,860 
Adjusted non-GAAP net income attributable to Amphastar* $ 5,721 $ 3,419 $ 4,168  $ 13,219 
GAAP diluted EPS attributable to Amphastar shareholders $ 0.05 $ 0.00 $ (0.16) $ 0.06 
Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders* $ 0.12 $ 0.07 $ 0.09  $ 0.28 

____________________________
* 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 
  2018 2017 Dollars % 
      
  (in thousands)   
Net revenues:            
Enoxaparin $ 18,564 $ 6,549 $ 12,015   183 %
Lidocaine   9,875   9,596   279   3 %
Naloxone   9,432   12,709   (3,277)  (26)%
Phytonadione   8,968   9,352   (384)  (4)%
Medroxyprogesterone   7,552   —   7,552  N/A 
Epinephrine   1,881   2,027   (146)  (7)%
Other finished pharmaceutical products   15,495   14,222   1,273   9 %
Total finished pharmaceutical products net revenues $ 71,767 $ 54,455 $ 17,312   32 %
API   3,776   3,461   315   9 %
Total net revenues $ 75,543 $ 57,916 $ 17,627   30 %

Changes in net revenues were primarily driven by:

  • Increased sales of enoxaparin, primarily driven by higher average selling prices, as well as an increase in unit volumes
  • Sales of medroxyprogesterone acetate which launched in the first quarter of 2018 so was not included in third quarter of 2017 results
  • Decreased sales of naloxone primarily due to lower unit volumes
             
  Three Months Ended       
  September 30,  Change 
  2018  2017  Dollars % 
      
  (in thousands)   
             
Net Revenues $ 75,543  $ 57,916  $ 17,627  30%
Cost of Revenues   46,283    37,363    8,920  24%
Gross Profit $ 29,260  $ 20,553  $ 8,707  42%
as % of net revenues  39%  35%      

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

  • The launch of medroxyprogesterone acetate and isoproterenol hydrochloride, which both have higher margins
  • Higher average selling prices of enoxaparin
             
  Three Months Ended       
  September 30,  Change 
  2018 2017 Dollars % 
      
  (in thousands)   
Selling, distribution and marketing $ 1,963 $ 1,756 $ 207  12%
General and administrative   13,407   11,665   1,742  15%
Research and development   11,340   10,075   1,265  13%
  • Selling, distribution and marketing expenses increased primarily due to increased freight costs
  • General and administrative expenses increased primarily due to higher legal fees
  • Research and development expenses increased primarily due to expenditures related to the expansion of our ANP facility as well as an increase in FDA, or Food and Drug Administration filing fees

Cash flow provided by operating activities for the nine months ended September 30, 2018 was $28.7 million.

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

Pipeline Information

The Company currently has four abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of approximately $0.7 billion, 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 September 30, 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, Amphastar Nanjing Pharmaceuticals, 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 Pharmaceuticals, Inc., including, but not limited to Primatene®, Amphadase® and Cortrosyn®, are the property of Amphastar Pharmaceuticals, Inc.

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 Pharmaceuticals, Inc. and (ii) Adjusted non-GAAP diluted EPS attributed to Amphastar Pharmaceuticals, Inc. 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, November 8, 2018, 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 5587773.

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,  
  2018  2017  2018  2017  
              
Net revenues $ 75,543  $ 57,916  $ 204,976  $ 179,773  
Cost of revenues   46,283    37,363    132,680    109,754  
Gross profit   29,260    20,553    72,296    70,019  
              
Operating (income) expenses:             
Selling, distribution, and marketing   1,963    1,756    5,560    4,831  
General and administrative   13,407    11,665    36,074    35,237  
Research and development   11,340    10,075    40,830    32,117  
Gain on sale of intangible assets   —    —    —    (2,643) 
Total operating expenses   26,710    23,496    82,464    69,542  
              
Income (loss) from operations   2,550    (2,943)   (10,168)   477  
              
Non-operating income (expense), net   24    829    (347)   1,917  
              
Income (loss) before income taxes   2,574    (2,114)   (10,515)   2,394  
Income tax expense (benefit)   958    (2,213)   (2,137)   (466) 
              
Net income (loss) $ 1,616  $ 99  $ (8,378) $ 2,860  
              
Net loss attributable to non-controlling interests $ (773) $ —  $ (773) $ —  
              
Net income (loss) attributable to Amphastar $ 2,389  $ 99  $ (7,605) $ 2,860  
              
Net income (loss) per share attributable to Amphastar shareholders:             
Basic $ 0.05  $ 0.00  $ (0.16) $ 0.06  
Diluted $ 0.05  $ 0.00  $ (0.16) $ 0.06  
              
Weighted-average shares used to compute net income (loss) per share attributable to Amphastar shareholders:             
Basic   46,241    46,101    46,437    46,065  
Diluted   48,281    48,215    46,437    48,046  

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)

       
  September 30, December 31,
  2018  2017 
ASSETS      
Current assets:      
Cash and cash equivalents $ 68,734  $ 65,594 
Short-term investments   2,829    2,635 
Restricted cash and short-term investments   4,155    4,155 
Accounts receivable, net   43,816    35,996 
Inventories   65,414    63,609 
Income tax refunds and deposits   3,186    6,036 
Prepaid expenses and other assets   6,670    9,753 
Total current assets   194,804    187,778 
       
Property, plant, and equipment, net   202,526    180,545 
Goodwill and intangible assets, net   42,727    45,140 
Other assets   11,127    8,663 
Deferred tax assets   29,458    28,946 
       
Total assets $ 480,642  $ 451,072 
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities $ 76,362  $ 57,555 
Income taxes payable   1,667    3,325 
Current portion of long-term debt and capital leases   18,592    6,312 
Total current liabilities   96,621    67,192 
       
Long-term reserve for income tax liabilities   879    879 
Long-term debt and capital leases, net of current portion   32,606    40,844 
Deferred tax liabilities   1,303    1,361 
Other long-term liabilities   7,963    7,060 
Total liabilities   139,372    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; 50,883,467 and 46,159,652 shares issued and outstanding as of September 30, 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   330,265    313,891 
Retained earnings   65,618    72,642 
Accumulated other comprehensive loss   (3,576)   (2,100)
Treasury stock   (72,896)   (50,702)
Total Amphastar stockholders’ equity   319,416    333,736 
Non-controlling interests   21,854    — 
Total equity   341,270    333,736 
       
Total liabilities and stockholders’ equity $ 480,642  $ 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  Nine Months Ended
  September 30,  September 30, 
  2018  2017  2018  2017 
             
GAAP net income (loss) $ 1,616  $ 99  $ (8,378) $ 2,860 
Adjusted for:            
Intangible amortization   271    713    1,722    2,139 
Share-based compensation   3,908    4,157    12,770    12,905 
Impairment of long-lived assets   10    —    390    — 
Income tax expense on pre-tax adjustments   (788)   (1,550)   (3,040)   (4,685)
Non-GAAP net income $ 5,017  $ 3,419  $ 3,464  $ 13,219 
             
Non-GAAP net loss attributable to non-controlling interests $ (704) $ —  $ (704) $ — 
             
Non-GAAP net income attributable to Amphastar $ 5,721  $ 3,419  $ 4,168  $ 13,219 
             
Non-GAAP net income per share attributable to Amphastar shareholders:            
Basic $ 0.12  $ 0.07  $ 0.09  $ 0.29 
Diluted $ 0.12  $ 0.07  $ 0.09  $ 0.28 
             
Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar shareholders:            
Basic   46,241    46,101    46,437    46,065 
Diluted   48,281    48,215    48,713    48,046 


                
  Three Months Ended September 30, 2018
  Cost of 
revenue
 Selling,
distribution
and marketing
 General
and
administrative
 Research
and
development
 Income
tax expense 
(benefit)
GAAP $ 46,283  $ 1,963  $ 13,407  $ 11,340  $ 958
Intangible amortization   (230)   —    (41)   —    —
Share-based compensation   (884)   (86)   (2,615)   (323)   —
Impairment of long-lived assets   —    —    —    (10)   —
Income tax expense on pre-tax adjustments   —    —    —    —    788
Non-GAAP $ 45,169  $ 1,877  $ 10,751  $ 11,007  $ 1,746


                
  Three Months Ended September 30, 2017
  Cost of 
revenue
 Selling,
distribution
and marketing
 General
and
administrative
 Research
and
development
 Income
tax expense 
(benefit)
 
GAAP $ 37,363  $ 1,756  $ 11,665  $ 10,075  $ (2,213)
Intangible amortization   (677)   —    (36)   —    — 
Share-based compensation   (815)   (88)   (2,948)   (306)   — 
Income tax expense on pre-tax adjustments   —    —    —    —    1,550 
Non-GAAP $ 35,871  $ 1,668  $ 8,681  $ 9,769  $ (663)

The comparative periods in 2017 were revised for immaterial errors.

Reconciliation of Non-GAAP Measures (continued)

                
  Nine Months Ended September 30, 2018
  Cost of 
revenue
 Selling,
distribution
and marketing
 General
and
administrative
 Research
and
development
 Income
tax expense 
(benefit)
GAAP $ 132,680  $ 5,560  $ 36,074  $ 40,830  $ (2,137)
Intangible amortization   (1,602)   —    (120)   —    — 
Share-based compensation   (3,025)   (297)   (8,251)   (1,197)   — 
Impairment of long-lived assets   (77)   —    (4)   (309)   — 
Income tax expense on pre-tax adjustments   —    —    —    —    3,040 
Non-GAAP $ 127,976  $ 5,263  $ 27,699  $ 39,324  $ 903 


                
  Nine Months Ended September 30, 2017
  Cost of 
revenue
 Selling,
distribution
and marketing
 General
and
administrative
 Research
and
development
 Income
tax expense 
(benefit)
 
GAAP $ 109,754  $ 4,831  $ 35,237  $ 32,117  $ (466)
Intangible amortization   (2,031)   —    (108)   —    — 
Share-based compensation   (2,843)   (237)   (8,715)   (1,110)   — 
Income tax expense on pre-tax adjustments   —    —    —    —    4,685 
Non-GAAP $ 104,880  $ 4,594  $ 26,414  $ 31,007  $ 4,219 

The comparative periods in 2017 were revised for immaterial errors.

Thursday, November 8, 2018 - 16:10