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Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full-Year Ended December 31, 2020

RANCHO CUCAMONGA, Calif., March 15, 2021 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full-year ended December 31, 2020.

Fourth Quarter Highlights

  • Net revenues of $95.9 million for the fourth quarter
  • GAAP net loss of $6.3 million, or $0.13 per share, for the fourth quarter
  • Adjusted non-GAAP net income of $8.0 million, or $0.16 per share, for the fourth quarter

Full-Year Highlights

  • Net revenues of $349.8 million for the fiscal year
  • GAAP net income of $1.4 million, or $0.03 per share, for the fiscal year
  • Adjusted non-GAAP net income of $31.6 million, or $0.64 per share, for the fiscal year

Dr. Jack Zhang, Amphastar’s President and Chief Executive Officer, commented: “Glucagon’s approval, along with the substantial growth in Primatene Mist® and epinephrine multi-dose vials sales helped drive top line growth in 2020 for Amphastar. We remain optimistic that these trends will continue into 2021 and look forward to our pipeline’s continued development. On February 11, 2021, the FDA recognized the Company’s glucagon product as a ‘significant first generic drug approval’ for 2020, emphasizing the ‘real impact on American patients’ of such a product.”  

              
  Three Months Ended  Year Ended  
  December 31,  December 31,  
  2020  2019  2020 2019 
            
  (in thousands, except per share data) 
Net revenues    $95,921     $83,383     $349,846    $322,357 
GAAP net (loss) income attributable to Amphastar $(6,273) $(1,026) $1,403 $48,939 
Adjusted non-GAAP net income attributable to Amphastar* $7,994  $3,639  $31,616 $17,810 
GAAP diluted EPS attributable to Amphastar stockholders $(0.13) $(0.02) $0.03 $0.98 
Adjusted non-GAAP diluted EPS attributable to Amphastar stockholders* $0.16  $0.07  $0.64 $0.36 



 * Adjusted non-GAAP net income attributable to Amphastar and Adjusted non-GAAP diluted EPS attributable to Amphastar stockholders 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 
  2020 2019 Dollars    % 
          
  (in thousands)   
Net revenues:                        
Enoxaparin $17,648 $8,800 $8,848  101 %
Primatene Mist®  13,392  9,002  4,390  49 %
Lidocaine  12,191  12,282  (91) (1)%
Phytonadione  10,458  12,309  (1,851) (15)%
Epinephrine  7,482  4,311  3,171  74 %
Naloxone  7,079  8,951  (1,872) (21)%
Other finished pharmaceutical products  19,550  22,342  (2,792) (12)%
Total finished pharmaceutical products net revenues $87,800 $77,997 $9,803  13 %
API  8,121  5,386  2,735  51 %
Total net revenues $95,921 $83,383 $12,538  15 %

Changes in net revenues were primarily driven by:

  • Primatene Mist® increased volumes resulting from:
    • Continued success of our nationwide television, radio, and digital marketing campaign
    • An increase in our distribution channels, including a growth in online sales through Amazon and Kroger, the largest grocery store chain in the United States
  • Enoxaparin increased due to higher unit volumes as a result of a competitor leaving the market
  • Epinephrine sales increased due to the launch of our approved epinephrine injection multi-dose vials during the second quarter of 2020
  • Naloxone sales decreased due to lower average selling price because of increased competition
  • Other finished pharmaceutical product sales decreased due to lower demand, largely due to competitors returning to their normal distribution levels

             
  Three Months Ended       
  December 31,  Change 
  2020  2019  Dollars    % 
            
  (in thousands)   
Net revenues $95,921  $83,383  $12,538 15%
Cost of revenues  59,089   50,002   9,087 18%
Gross profit $36,832  $33,381  $3,451 10%
as % of net revenues  38%  40%      

Offsetting factors primarily drove changes in cost of revenues and the resulting gross margin:

  • Increased sales of high margin products such as Primatene Mist® and epinephrine injection multi-dose vials
  • Increased sales of low margin enoxaparin
  • A $1.3 million amendment fee from MannKind in the fourth quarter of 2019, which increased gross margins in 2019 as a percentage of revenue
             
  Three Months Ended       
  December 31,  Change 
  2020 2019 Dollars    % 
          
  (in thousands)   
Selling, distribution, and marketing $3,787 $3,476 $311  9 %
General and administrative  12,033  10,505  1,528  15 %
Research and development  18,133  19,644  (1,511) (8)%
  • Selling, distribution, and marketing expenses increased due to the cost of our ongoing national television, radio, and digital marketing campaign for Primatene Mist®
  • General and administrative expenses increased primarily due to increased legal expenses, including a reserve taken for the preliminary settlement of certain employment litigation
  • Research and development expenses decreased due to lower clinical trial expenses
             
  Three Months Ended       
  December 31,  Change 
  2020  2019 Dollars    % 
           
  (in thousands)   
Non-operating (expense) income, net $(9,621) $1,430 $(11,051) NM 
  • In December 2020, we recorded $12.8 million of expense relating to the litigation with Aventis, which was partially offset by foreign currency gains.

Year-End Results

             
  Year Ended December 31,  Change 
  2020 2019 Dollars    % 
          
  (in thousands)   
Net revenues:                        
Primatene Mist® $51,725 $18,065 $33,660  186 %
Enoxaparin  48,681  42,695  5,986  14 %
Phytonadione  42,646  45,786  (3,140) (7)%
Lidocaine  41,113  46,013  (4,900) (11)%
Naloxone  33,416  34,761  (1,345) (4)%
Epinephrine  23,799  13,885  9,914  71 %
Other finished pharmaceutical products  89,988  100,795  (10,807) (11)%
Total finished pharmaceutical products net revenues $331,368 $302,000 $29,368  10 %
API  18,478  20,357  (1,879) (9)%
Total net revenues $349,846 $322,357 $27,489  9 %

Changes in net revenues were primarily driven by:

  • Primatene Mist® increased volumes resulting from:
    • Continued success of our nationwide television, radio, and digital marketing campaign
    • Expansion of our distribution channels, including Kroger, the largest grocery store chain in the United States, starting in the third quarter of 2020 and online sales through Amazon
  • Enoxaparin increased primarily due to higher unit volumes as a result of a competitor leaving the market
  • Epinephrine increased volumes due to the launch of our epinephrine injection multi-dose vials during the second quarter of 2020
  • Decreased naloxone sales due to lower average selling price because of increased competition
  • Other finished pharmaceutical product sales decreased due to:
    • Lower demand for certain products which are frequently used in elective procedures, including lidocaine products and Cortrosyn® as a result of a nationwide decline in these procedures in response to the COVID-19 pandemic.
    • Decrease in calcium chloride, dextrose, and atropine, as a competitor who experienced shortages in 2019 returned to the market in 2020
             
  Year Ended December 31,  Change 
  2020  2019  Dollars    % 
            
  (in thousands)   
Net revenues $349,846  $322,357  $27,489 9%
Cost of revenues  206,506   190,434   16,072 8%
Gross profit $143,340  $131,923  $11,417 9%
as % of net revenues  41%  41%      

Offsetting factors impacting gross margin:

  • Increased sales of high margin products such as Primatene Mist® and epinephrine injection multi-dose vials
  • Increased sales of low margin enoxaparin
  • A $2.8 million amendment fee from MannKind in 2019, which increased gross margin as a percentage of revenue
             
  Year Ended December 31,  Change 
  2020 2019 Dollars    % 
          
  (in thousands)   
Selling, distribution, and marketing $14,780 $12,830 $1,950  15 %
General and administrative  50,377  50,279  98  0 %
Research and development  67,229  68,853  (1,624) (2)%
  • Selling, distribution, and marketing expenses increased due to the cost of our ongoing national television, radio, and digital marketing campaign for Primatene Mist® which began in July 2019
  • General and administrative expenses increased primarily due to the separation agreement entered into with a former executive, in which we incurred an expense of $4.9 million relating to cash compensation and share-based compensation expense, which was partially offset by a decrease in legal expenses
  • Research and development expenses decreased due to a decrease in clinical trial expenses as a result of delays caused by the COVID-19 pandemic and the completion of one of our external studies in 2020
             
  Year Ended December 31,  Change 
  2020  2019 Dollars    % 
           
  (in thousands)   
Non-operating (expense) income, net $(6,317) $60,267 $(66,584) 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.
  • In December 2020, we recorded $12.8 million of expense relating to the litigation with Aventis, which was partially offset by foreign currency gains

Cash flow provided by operating activities for the year ended December 31, 2020, was $57.3 million.

Impact of COVID-19

As a result of the COVID-19 pandemic, sales of Primatene Mist® and certain hospital products increased, while sales of certain products frequently used in elective produces, such as Cortrosyn® and lidocaine products, decreased. The Company has not experienced any significant negative impacts on its cash flows or operations as a result of the COVID-19 pandemic. All of the Company’s production facilities continued to operate during the quarter as they had prior to the COVID-19 pandemic with very little change, other than for enhanced safety measures intended to prevent the spread of the virus. It is not possible at this time to estimate the complete impact that the COVID-19 pandemic could have on our business, including our customers and suppliers, as the impact will depend on future developments of the pandemic, which are highly uncertain and cannot be predicted.

Pipeline Information

The Company currently has five ANDAs on file with the FDA targeting products with a market size of approximately $2.3 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and seven generic products in development targeting products with a market size of approximately $10.5 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2020. The Company is currently developing multiple proprietary products with 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 several additional DMFs.

Company Information

Amphastar is a bio-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 Amphastar®, Primatene Mist®, 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 stockholders, which exclude amortization expense, share-based compensation, impairment charges, executive severance expense, 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 15, 2021, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 407-0989 or (201) 389-0921 for international callers, five minutes before the conference.

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, product development, 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, such as the impact of the COVID-19 pandemic and related responses of business and governments to the pandemic on our operations and personnel, and on commercial activity and demand across our business operations and results of operations. 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, including in the Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020. In particular, the extent of COVID-19’s impact on our business will depend on several factors, including the severity, duration and extent of the pandemic, as well as actions taken by governments, businesses, and consumers in response to the pandemic, all of which continue to evolve and remain uncertain at this time. 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. The forward-looking statements in this release speak only as of the date of the release. Amphastar undertakes no obligation to revise or update information or any forward-looking statements 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,  
     2020     2019     2020     2019  
              
Net revenues    $95,921     $83,383     $349,846     $322,357  
Cost of revenues  59,089   50,002   206,506   190,434  
Gross profit  36,832   33,381   143,340   131,923  
              
Operating expenses:             
Selling, distribution, and marketing  3,787   3,476   14,780   12,830  
General and administrative  12,033   10,505   50,377   50,279  
Research and development  18,133   19,644   67,229   68,853  
Total operating expenses  33,953   33,625   132,386   131,962  
              
Income (loss) from operations  2,879   (244)  10,954   (39) 
              
Non-operating (expense) income, net  (9,621)  1,430   (6,317)  60,267  
              
(Loss) income before income taxes  (6,742)  1,186   4,637   60,228  
Income tax (benefit) provision  (950)  431   3,540   13,723  
              
Net (loss) income $(5,792) $755  $1,097  $46,505  
              
Net income (loss) attributable to non-controlling interests $481  $1,781  $(306) $(2,434) 
              
Net (loss) income attributable to Amphastar $(6,273) $(1,026) $1,403  $48,939  
              
Net (loss) income per share attributable to Amphastar stockholders:             
Basic $(0.13) $(0.02) $0.03  $1.04  
Diluted $(0.13) $(0.02) $0.03  $0.98  
              
Weighted-average shares used to compute net (loss) income per share attributable to Amphastar stockholders:             
Basic  47,496   46,840   47,038   46,982  
Diluted  47,496   46,840   49,124   49,907  

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

       
     December 31,     December 31, 
  2020
 2019
ASSETS      
Current assets:      
Cash and cash equivalents $92,642  $73,685 
Restricted cash  1,865   1,865 
Short-term investments  12,977   11,675 
Restricted short-term investments  2,200   2,290 
Accounts receivable, net  66,005   45,376 
Inventories  96,831   110,501 
Income tax refunds and deposits  385   311 
Prepaid expenses and other assets  6,777   9,538 
Total current assets  279,682   255,241 
       
Property, plant, and equipment, net  260,055   233,856 
Finance lease right-of-use assets  612   887 
Operating lease right-of-use assets  20,042   18,805 
Goodwill and intangible assets, net  40,615   41,153 
Other assets  5,250   11,156 
Deferred tax assets  24,980   25,873 
Total assets $631,236  $586,971 
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities $95,504  $77,051 
Income taxes payable  1,077   2,042 
Current portion of long-term debt  12,263   7,741 
Current portion of operating lease liabilities  3,357   3,175 
Total current liabilities  112,201   90,009 
       
Long-term reserve for income tax liabilities  4,709   3,425 
Long-term debt, net of current portion  34,186   39,394 
Long-term operating lease liabilities, net of current portion  17,464   16,315 
Deferred tax liabilities  741   867 
Other long-term liabilities  13,212   9,433 
Total liabilities  182,513   159,443 
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; 54,760,922 and 47,495,439 shares issued and outstanding as of December 31, 2020 and 52,495,483 and 46,576,968 shares issued and outstanding as of December 31, 2019, respectively  5   5 
Additional paid-in capital  410,061   367,305 
Retained earnings  117,773   116,370 
Accumulated other comprehensive loss  (3,721)  (4,687)
Treasury stock  (121,812)  (97,627)
Total Amphastar Pharmaceuticals, Inc. stockholders’ equity  402,306   381,366 
Non-controlling interests  46,417   46,162 
Total equity  448,723   427,528 
Total liabilities and stockholders’ equity $631,236  $586,971 

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, 
     2020     2019    2020     2019 
             
GAAP net (loss) income    $(5,792)    $755    $1,097     $46,505 
Adjusted for:            
Intangible amortization  265   260  1,036   1,037 
Share-based compensation  4,334   4,296  18,180   17,296 
Impairment of long-lived assets  81   171  241   365 
Expense related to executive separation agreement       4,869    
Gain (loss) on litigation settlement  13,780     13,780   (59,900)
Income tax (benefit) provision on pre-tax adjustments  (4,090)  72  (7,482)  10,494 
Non-GAAP net income $8,578  $5,554 $31,721  $15,797 
             
Non-GAAP net income (loss) attributable to non-controlling interests $584  $1,915 $105  $(2,013)
             
Non-GAAP net income attributable to Amphastar $7,994  $3,639 $31,616  $17,810 
             
Non-GAAP net income per share attributable to Amphastar stockholders:            
Basic $0.17  $0.08 $0.67  $0.38 
Diluted $0.16  $0.07 $0.64  $0.36 
             
Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar stockholders:            
Basic  47,496   46,840  47,038   46,982 
Diluted  49,730   49,242  49,124   49,907 


                      
  Three Months Ended December 31, 2020
                 
    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 $59,089  $3,787  $12,033  $18,133  $(9,621) $(950) $481 
Intangible amortization  (232)     (33)           11 
Share-based compensation  (972)  (106)  (2,920)  (336)        114 
Impairment of long-lived assets  (40)     (12)  (29)        5 
Loss on litigation settlement        (975)     (12,805)      
Income tax provision (benefit) on pre-tax adjustments                 4,090   (27)
Non-GAAP $57,845  $3,681  $8,093  $17,768  $3,184  $3,140  $584 

Reconciliation of Non-GAAP Measures (continued)

                      
  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 


                      
  Year Ended December 31, 2020
                 
    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 $206,506  $14,780  $50,377  $67,229  $(6,317) $3,540 $(306)
Intangible amortization  (902)     (134)          45 
Share-based compensation  (4,248)  (456)  (11,771)  (1,705)       444 
Impairment of long-lived assets  (72)     (140)  (29)       20 
Expense related to executive separation agreement        (4,869)           
Loss on litigation settlement        (975)     (12,805)     
Income tax provision (benefit) on pre-tax adjustments                 7,482  (98)
Non-GAAP $201,284  $14,324  $32,488  $65,495  $6,488  $11,022 $105 


                      
  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)


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