Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended March 31, 2018

Reports Net Revenues of $58.4 Million for the Three Months Ended March 31, 2018

RANCHO CUCAMONGA, Calif., May 09, 2018 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended March 31, 2018.

First Quarter Highlights

  • Net revenues of $58.4 million for the first quarter
  • GAAP net loss of $7.2 million, or $0.16 per share, for the first quarter
  • Adjusted non-GAAP net loss of $2.5 million, or $0.05 per share, for the first quarter

Dr. Jack Zhang, Amphastar’s CEO, commented:  “We are pleased to announce that we have resubmitted our NDA for Primatene® Mist after receiving good results from our recent human factors study. While we don’t have a PDUFA date yet, we plan to begin producing inventory in preparation for a launch.”

       
  Three Months Ended
  March 31, 
  2018  2017
  (in thousands, except per share data)
Net revenues $ 58,393  $ 56,670
GAAP net income (loss) $ (7,246) $ 893
Adjusted non-GAAP net income (loss)* $ (2,452) $ 4,475
GAAP diluted EPS $ (0.16) $ 0.02
Adjusted non-GAAP diluted EPS* $ (0.05) $ 0.09
___________________________       
* Adjusted non-GAAP net income (loss) and Adjusted non-GAAP diluted EPS 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.
        

First Quarter Results

            
  Three Months Ended      
  March 31,  Change
  2018 2017 Dollars %
  (in thousands)     
Net revenues:           
Lidocaine $ 9,782 $ 8,289 $ 1,493   18
Phytonadione   9,181   7,886   1,295   16
Naloxone   8,927   10,939   (2,012)  (18)%
Enoxaparin   7,007   10,410   (3,403)  (33)%
Epinephrine   3,223   9,574   (6,351)  (66)%
Medroxyprogesterone   2,706   —   2,706  N/A
Other finished pharmaceutical products   12,291   8,836   3,455   39
Total finished pharmaceutical products net revenues $ 53,117 $ 55,934 $ (2,817)  (5)%
API   5,276   736   4,540   617
Total net revenues $ 58,393 $ 56,670 $ 1,723   3
              

Changes in net revenues were primarily driven by:

  • Launch of medroxyprogesterone acetate in a vial form in January 2018 and a pre-filled syringe form in February 2018
  • Discontinuation of epinephrine injection vial product in the second quarter of 2017
  • Decline of enoxaparin sales due to lower unit sales at lower net average selling prices
  • Increase in sales of insulin active pharmaceutical ingredient, or API, products due to the timing of customer purchases
            
  Three Months Ended      
  March 31,  Change
  2018  2017  Dollars % 
  (in thousands)      
Cost of Revenues $ 41,332  $ 33,842  $ 7,490  22%
% of net revenues  71%  60%      
               

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

  • Increased labor costs due to implementing new quality standards and increased hourly rates
  • Lower productivity at the Company’s U.S. facilities as the Company is in the process of increasing production of newly launched products
  • Increased inventory write-down, partially due to increased cost of heparin
  • Discontinuation of epinephrine injection vial product in the second quarter of 2017
  • Launch of medroxyprogesterone acetate, which partially offset the changes noted above
            
  Three Months Ended      
  March 31,  Change
  2018 2017 Dollars %
  (in thousands)     
Selling, distribution and marketing $ 1,721 $ 1,479  $ 242   16
General and administrative   10,998   11,338    (340)  (3)%
Research and development   14,260   11,250    3,010   27
Gain on sale of intangible assets   —   (2,643)   2,643   (100)%
               
  • Selling, distribution and marketing expenses increased primarily due to increased expenses at the Company’s Amphastar Nanjing Pharmaceuticals subsidiary as well as increased freight costs
  • General and administrative expenses decreased primarily due to lower legal fees
  • Research and development expenses increased primarily due to an NDA filing fee for a product that the Company currently markets under the grandfather exception as well as increased expenditures on materials for the Company’s pipeline products

Cash flow provided by operating activities for the three months ended March 31, 2018, was $8.4 million.

Share buyback program

On May 7, 2018, the Company’s Board of Directors authorized an increase of $20.0 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.

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 three abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of over $0.5 billion, three biosimilar products in development targeting products with a market size of over $15.0 billion, and 12 generic products in development targeting products with a market size of over $12.0 billion. This market information is based on IQVIA data for the 12 months ended March 31, 2018. The Company’s proprietary pipeline includes NDAs for Primatene® Mist and intranasal naloxone. The Company is currently developing four other proprietary products, which include injectable, inhalation and intranasal dosage forms.

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) and (ii) Adjusted non-GAAP diluted EPS, that 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, May 9, 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 5298899.

The call can also be accessed on the Investors page on the Company’s website 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, 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
  March 31, 
  2018  2017 
       
Net revenues $ 58,393  $ 56,670 
Cost of revenues   41,332    33,842 
Gross profit   17,061    22,828 
       
Operating (income) expenses:      
Selling, distribution, and marketing   1,721    1,479 
General and administrative   10,998    11,338 
Research and development   14,260    11,250 
Gain on sale of intangible assets   —    (2,643)
Total operating expenses   26,979    21,424 
       
Income (loss) from operations   (9,918)   1,404 
       
Non-operating income (expense), net   888    100 
       
Income (loss) before income taxes   (9,030)   1,504 
Income tax expense (benefit)   (1,784)   611 
       
Net income (loss) $ (7,246) $ 893 
       
Net income (loss) per share:      
Basic $ (0.16) $ 0.02 
Diluted $ (0.16) $ 0.02 
       
Weighted-average shares used to compute net income (loss) per share:      
Basic   46,514    46,069 
Diluted   46,514    48,057 
         


       
Table II
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheet
(Unaudited; in thousands, except per share data)
       
  March 31,  December 31, 
  2018
 2017
ASSETS      
Current assets:      
Cash and cash equivalents $ 54,547  $ 65,594 
Short-term investments   2,826    2,635 
Restricted cash and short-term investments   4,155    4,155 
Accounts receivable, net   31,883    35,996 
Inventories   62,780    63,609 
Income tax refunds and deposits   12,194    6,036 
Prepaid expenses and other assets   5,661    9,753 
Total current assets   174,046    187,778 
Property, plant, and equipment, net   191,915    185,339 
Goodwill and intangible assets, net   44,850    45,140 
Other assets   10,714    8,663 
Deferred tax assets   28,257    27,745 
       
Total assets $ 449,782  $ 454,665 
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities $ 58,498  $ 57,555 
Income taxes payable   7,983    3,325 
Current portion of long-term debt and capital leases   6,061    6,312 
Total current liabilities   72,542    67,192 
       
Long-term reserve for income tax liabilities   879    879 
Long-term debt and capital leases, net of current portion   39,706    40,844 
Deferred tax liabilities   1,425    1,361 
Other long-term liabilities   8,126    7,060 
Total liabilities   122,678    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; 50,471,687 and 46,656,793 shares issued and outstanding as of March 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   316,665    313,891 
 Retained earnings   69,570    76,235 
 Accumulated other comprehensive loss   (910)   (2,100)
 Treasury stock   (58,226)   (50,702)
Total stockholders’ equity   327,104    337,329 
       
Total liabilities and stockholders’ equity $ 449,782  $ 454,665 
         


       
Table III
Amphastar Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures
(Unaudited; in thousands, except per share data)
       
  Three Months Ended
  March 31, 
  2018  2017 
       
GAAP net income (loss) $ (7,246) $ 893 
Adjusted for:      
Intangible amortization   729    721 
Share-based compensation   4,666    4,451 
Impairment of long-lived assets   598    — 
Income tax expense on pre-tax adjustments   (1,199)   (1,590)
Non-GAAP net income (loss) $ (2,452) $ 4,475 
       
Non-GAAP net income (loss) per share:      
Basic $ (0.05) $ 0.10 
Diluted $ (0.05) $ 0.09 
       
Weighted-average shares used to compute non-GAAP net income (loss) per share:      
Basic   46,514    46,069 
Diluted   46,514    48,057 
         


                
  Three Months Ended March 31, 2018
           
    Selling, General  Research Income
  Cost of  distribution and and tax expense
  revenue and marketing administrative development (benefit)
GAAP $ 41,332  $ 1,721  $ 10,998  $ 14,260  $ (1,784)
Intangible amortization   (689)   —    (40)   —    — 
Share-based compensation   (1,160)   (107)   (2,893)   (506)   — 
Impairment of long-lived assets   (74)   —    (3)   (521)   — 
Income tax expense on pre-tax adjustments   —    —    —    —    1,199 
Non-GAAP $ 39,409  $ 1,614  $ 8,062  $ 13,233  $ (585)
                     


                
  Three Months Ended March 31, 2017
           
    Selling, General  Research Income
  Cost of  distribution and and tax expense
  revenue and marketing administrative development (benefit)
GAAP $ 33,842  $ 1,479  $ 11,338  $ 11,250  $ 611
Intangible amortization   (685)   —    (36)   —    —
Share-based compensation   (1,131)   (84)   (2,783)   (453)   —
Income tax expense on pre-tax adjustments   —    —    —    —    1,590
Non-GAAP $ 32,026  $ 1,395  $ 8,519  $ 10,797  $ 2,201
                    

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