Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full-Year Ended December 31, 2022

February 28, 2023 |

19 min read

Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full-year ended December 31, 2022.

Reports Net Revenues of $135.0 Million for the Three Months Ended December 31, 2022

RANCHO CUCAMONGA, CA / ACCESSWIRE / February 28, 2023 / Amphastar Pharmaceuticals, Inc., (NASDAQ:AMPH) ("Amphastar" or the "Company") today reported results for the three months and full-year ended December 31, 2022.

Fourth Quarter Highlights

Net revenues of $135.0 million for the fourth quarter
GAAP net income of $33.9 million, or $0.66 per share, for the fourth quarter
Adjusted non-GAAP net income of $37.6 million, or $0.73 per share, for the fourth quarter

Full-Year Highlights

Net revenues of $499.0 million for the fiscal year
GAAP net income of $91.4 million, or $1.74 per share, for the fiscal year
Adjusted non-GAAP net income of $103.2 million, or $1.97 per share, for the fiscal year

Dr. Jack Zhang, Amphastar's President and Chief Executive Officer, commented: "We are pleased to report our strongest quarter yet, driven by sales of epinephrine, Primatene MIST^®, glucagon, and other finished pharmaceutical products. Looking ahead to 2023, we anticipate launching multiple new products to continue driving our growth."

	Three Months Ended				Year Ended
	December 31,				December 31,
	2022		2021		2022		2021
	(in thousands, except per share data)
Net revenues	$	135,023	$	120,887	$	498,987	$	437,768
GAAP net income attributable to Amphastar	$	33,913	$	19,760	$	91,386	$	62,116
Adjusted non-GAAP net income attributable to Amphastar*	$	37,638	$	20,833	$	103,186	$	67,999
GAAP diluted EPS attributable to Amphastar stockholders	$	0.66	$	0.39	$	1.74	$	1.25
Adjusted non-GAAP diluted EPS attributable to Amphastar stockholders*	$	0.73	$	0.42	$	1.97	$	1.37

* 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
	2022		2021		Dollars			%
	(in thousands)
Net revenues:
Primatene MIST^®	$	22,279	$	21,489	$	790			4	%
Epinephrine		21,427		18,868		2,559			14	%
Glucagon		18,319		15,335		2,984			19	%
Lidocaine		13,286		12,099		1,187			10	%
Phytonadione		11,666		13,921		(2,255	)		(16	)%
Enoxaparin		7,812		7,942		(130	)		(2	)%
Naloxone		4,845		6,546		(1,701	)		(26	)%
Other finished pharmaceutical products		33,082		21,776		11,306			52	%
Total finished pharmaceutical products net revenues	$	132,716	$	117,976	$	14,740			12	%
API		2,307		2,911		(604	)		(21	)%
Total net revenues	$	135,023	$	120,887	$	14,136			12	%

Changes in net revenues as compared to fourth quarter in prior year were primarily driven by:

Primatene MIST^® sales increased primarily due to an increase in unit volumes
Epinephrine sales increased by $1.8 million due to an increase in average selling price, with the remainder of the increase due to increased unit volumes as a result of competitor shortages
Glucagon sales increased primarily due to an increase in unit volumes
Phytonadione sales decreased due to decreased unit volumes
Naloxone sales decreased primarily due to a lower average selling price
Other finished pharmaceutical product sales changes were primarily due to:
- An increase in unit volumes for dextrose and sodium bicarbonate, which were in high demand due to competitor shortages
- Higher unit volumes of isoproterenol
- Launches of ganirelix and vasopressin, in June 2022 and August 2022, respectively
Active Pharmaceutical ingredient ("API") sales decreased primarily due to the timing of customer purchases

	Three Months Ended
	December 31,				Change
	2022		2021		Dollars			%
	(in thousands)
Net revenues	$	135,023	$	120,887	$	14,136			12	%
Cost of revenues		63,855		64,653		(798	)		(1	)%
Gross profit	$	71,168	$	56,234	$	14,934			27	%
as % of net revenues		53%		47%

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

Increased sales of higher-margin products such as Primatene MIST^®, epinephrine, and glucagon, as well as the launches of ganirelix and vasopressin in 2022
These factors were partially offset by overall increases in labor and input costs

	Three Months Ended
	December 31,				Change
	2022		2021		Dollars			%
	(in thousands)
Selling, distribution, and marketing	$	5,472	$	4,075	$	1,397			34	%
General and administrative		10,628		10,621		7			0	%
Research and development		17,236		17,286		(50	)		0	%
Non-operating income (expense), net		3,428		2,910		518			18	%

Selling, distribution, and marketing expenses increased primarily due to increased advertising and freight expenses
Research and development expenses remained flat during the quarter as a result of a decrease in expenditure for materials and components, which was partially offset by an increase in clinical trial expense for our insulin and inhalation product pipeline
The change in non-operating income, net is primarily a result of foreign currency gains

Year-End Results

	Year Ended December 31,				Change
	2022		2021		Dollars			%
	(in thousands)
Net revenues:
Primatene MIST^®	$	84,309	$	73,113	$	11,196			15	%
Epinephrine		74,204		57,530		16,674			29	%
Glucagon		55,322		47,639		7,683			16	%
Lidocaine		52,539		44,413		8,126			18	%
Phytonadione		49,500		45,498		4,002			9	%
Enoxaparin		34,950		35,962		(1,012	)		(3	)%
Naloxone		26,269		27,540		(1,271	)		(5	)%
Other finished pharmaceutical products		109,412		87,875		21,537			25	%
Total finished pharmaceutical products net revenues	$	486,505	$	419,570	$	66,935			16	%
API		12,482		18,198		(5,716	)		(31	)%
Total net revenues	$	498,987	$	437,768	$	61,219			14	%

Changes in net revenues were primarily driven by:

Primatene MIST^® sales increased primarily due to increased unit volumes, which was primarily a result of the continued success of our advertising campaign throughout the year
Epinephrine sales increased primarily due to an increase in unit volumes, arising from high demand due to competitor shortages, contributing $9.0 million in sales, as well as a higher average selling price, which contributed $7.7 million to the increase in sales
Glucagon sales increased due to an increase in unit volumes as the prior year period did not include a full year of sales due to glucagon's launch in the first quarter of 2021
Lidocaine sales increased due to an increase in unit volumes, which contributed $4.4 million, as well as a higher average selling price, which contributed $3.8 million to the increase in sales
Phytonadione sales increased due to a higher average selling price
Other finished pharmaceutical product sales changes were primarily due to:
- Higher unit volumes of calcium chloride, dextrose, and sodium bicarbonate, which were in high demand due to competitor shortages
- Launches of ganirelix and vasopressin in June 2022 and August 2022, respectively
API sales decreased primarily due to the timing of customer purchases

	Year Ended December 31,				Change
	2022		2021		Dollars		%
	(in thousands)
Net revenues	$	498,987	$	437,768	$	61,219		14	%
Cost of revenues		250,127		238,029		12,098		5	%
Gross profit	$	248,860	$	199,739	$	49,121		25	%
as % of net revenues		50%		46%

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

Increased sales of higher-margin products such as Primatene MIST^®, epinephrine, and glucagon, as well as the launches of ganirelix and vasopressin in 2022
These factors were partially offset by overall increases in labor and input costs

	Year Ended December 31,				Change
	2022		2021		Dollars			%
	(in thousands)
Selling, distribution, and marketing	$	21,531	$	17,486	$	4,045			23	%
General and administrative		45,061		51,434		(6,373	)		(12	)%
Research and development		74,771		60,932		13,839			23	%
Non-operating income (expense), net		8,543		14,252		(5,709	)		(40	)%

Selling, distribution, and marketing expenses increased due to increased freight expense and advertising expense for Primatene MIST^®
General and administrative expenses decreased primarily due to a decrease in legal expenses and a decrease in expenses in China due to the restructuring of Amphastar's Chinese subsidiary, Amphastar Nanjing Pharmaceutical, Co., Ltd. ("ANP"), in 2021
Research and development expenses increased due to:
- Increases in expenditures for materials and components, primarily for our AMP-018 and insulin products candidates
- An increase in clinical trial expense primarily due to external studies related to our insulin and inhalation product pipeline
- This was partially offset by a decrease in expenses in China due to the completion of the restructuring of ANP in 2021
The change in non-operating income, net is primarily due to:
- $5.4 million litigation settlement received in January 2022 in connection with the Regadenoson patent litigation
- $13.6 million gain on the deconsolidation of Hanxin Pharmaceutical Technology Co., Ltd related to the ANP restructuring in 2021

Cash flow provided by operating activities for the year ended December 31, 2022 was $89.2 million.

Pipeline Information

The Company currently has three ANDAs on file with the FDA targeting products with a market size of over $3 billion, three biosimilar products in development targeting products with a market size of over $11 billion, and six generic products in development targeting products with a market size of over $9 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2022. The Company is developing multiple proprietary products with injectable and intranasal dosage forms.

Amphastar's Chinese subsidiary, ANP, currently has 17 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, legal settlements, and other one-time events 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, February 28, 2023, 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 our expectations regarding future financial performance and business trends, our future growth, backlog, sales and marketing of our products, market size and expansion, 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 our pipeline of product candidates, the timing and results of clinical trials, our share buyback program, and other future events, such as the impact of the COVID-19 pandemic including its variants, the Russia-Ukraine conflict and resulting macroeconomic conditions, such as inflation and rising interest rates, and related responses of business and governments to the pandemic and international conflict on our operations and personnel, and on commercial activity and demand across our business operations and results of operations. These statements are not facts but rather are based on Amphastar's historical performance and our current expectations, estimates, and projections regarding our 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 our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 10, 2022, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 9, 2022, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the SEC on November 7, 2022. In particular, the extent of COVID-19 including its variants, the Russia-Ukraine conflict and resulting macroeconomic conditions, such as inflation and rising interest rates, impacts on our business will depend on several factors, including the actions taken by governments, businesses, and consumers in response, which continues to evolve and remain uncertain at this time. You can locate these reports through our 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 our 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,
	2022			2021			2022			2021

Net revenues	$	135,023		$	120,887		$	498,987		$	437,768
Cost of revenues		63,855			64,653			250,127			238,029
Gross profit		71,168			56,234			248,860			199,739

Operating expenses:
Selling, distribution, and marketing		5,472			4,075			21,531			17,486
General and administrative		10,628			10,621			45,061			51,434
Research and development		17,236			17,286			74,771			60,932
Total operating expenses		33,336			31,982			141,363			129,852

Income from operations		37,832			24,252			107,497			69,887

Non-operating income (expense), net		3,428			2,910			8,543			14,252

Income before income taxes		41,260			27,162			116,040			84,139
Income tax provision		7,290			7,194			23,477			20,630
Net income before equity in losses of unconsolidated affiliate		33,970			19,968			92,563			63,509

Equity in losses of unconsolidated affiliate		(57	)		(208	)		(1,177	)		(208	)

Net income	$	33,913		$	19,760		$	91,386		$	63,301

Net income attributable to non-controlling interests	$	-		$	-		$	-		$	1,185

Net income attributable to Amphastar	$	33,913		$	19,760		$	91,386		$	62,116

Net income per share attributable to Amphastar stockholders:
Basic	$	0.70		$	0.41		$	1.88		$	1.30
Diluted	$	0.66		$	0.39		$	1.74		$	1.25

Weighted-average shares used to compute net income per share attributable to Amphastar stockholders:
Basic		48,298			47,836			48,551			47,777
Diluted		51,716			50,057			52,427			49,784

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

	December 31,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	156,098		$	126,353
Restricted cash		235			235
Short-term investments		19,664			10,320
Restricted short-term investments		2,200			2,200
Accounts receivable, net		88,804			78,804
Inventories		103,584			92,807
Income tax refunds and deposits		171			126
Prepaid expenses and other assets		7,563			7,274
Total current assets		378,319			318,119

Property, plant, and equipment, net		238,266			244,244
Finance lease right-of-use assets		753			353
Operating lease right-of-use assets		25,554			26,894
Investment in unconsolidated affiliate		2,414			3,985
Goodwill and intangible assets, net		37,298			38,870
Other assets		20,856			16,665
Deferred tax assets		38,527			22,399
Total assets	$	741,987		$	671,529

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	84,242		$	89,545
Income taxes payable		4,571			9,081
Current portion of long-term debt		3,046			2,202
Current portion of operating lease liabilities		3,003			2,982
Total current liabilities		94,862			103,810

Long-term reserve for income tax liabilities		7,225			6,531
Long-term debt, net of current portion and unamortized debt issuance costs		72,839			74,776
Long-term operating lease liabilities, net of current portion		23,694			24,703
Deferred tax liabilities		144			534
Other long-term liabilities		14,565			15,653
Total liabilities		213,329			226,007
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; 58,110,231 and 48,112,069 shares issued and outstanding as of December 31, 2022 and 56,440,202 and 47,714,912 shares issued and outstanding as of December 31, 2021, respectively		6			6
Additional paid-in capital		455,077			422,423
Retained earnings		271,723			180,337
Accumulated other comprehensive loss		(8,624	)		(6,765	)
Treasury stock		(189,524	)		(150,479	)
Total equity		528,658			445,522
Total liabilities and stockholders' equity	$	741,987		$	671,529

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,
	2022			2021			2022			2021

GAAP net income	$	33,913		$	19,760		$	91,386		$	63,301
Adjusted for:
Intangible amortization		331			360			1,419			1,290
Share-based compensation		4,304			3,850			17,860			18,687
Impairment of long-lived assets		-			9			-			348
Gain on ANP Restructuring		-			-			-			(13,587	)
Reserves for litigation and settlements		-			(2,717	)		(4,929	)		274
Income tax provision on pre-tax adjustments		(910	)		(429	)		(2,550	)		(2,043	)
Non-GAAP net income	$	37,638		$	20,833		$	103,186		$	68,270

Non-GAAP net income attributable to non-controlling interests	$	-		$	-		$	-		$	271

Non-GAAP net income attributable to Amphastar	$	37,638		$	20,833		$	103,186		$	67,999

Non-GAAP net income per share attributable to Amphastar stockholders:
Basic	$	0.78		$	0.44		$	2.13		$	1.42
Diluted	$	0.73		$	0.42		$	1.97		$	1.37

Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar stockholders:
Basic		48,298			47,836			48,551			47,777
Diluted		51,716			50,057			52,427			49,784

	Three Months Ended December 31, 2022

				Selling,			General			Research			Non-operating				Non-controlling
	Cost of			distribution			and			and			income		Income		interest
	revenue			and marketing			administrative			development			(expense), net		tax provision		adjustment
GAAP	$	63,855		$	5,472		$	10,628		$	17,236		$	3,428	$	7,290	$	-
Intangible amortization		(205	)		-			(126	)		-			-		-		-
Share-based compensation		(941	)		(186	)		(2,791	)		(386	)		-		-		-
Income tax provision on pre-tax adjustments		-			-			-			-			-		910		-
Non-GAAP	$	62,709		$	5,286		$	7,711		$	16,850		$	3,428	$	8,200	$	-

	Three Months Ended December 31, 2021

				Selling,			General			Research			Non-operating					Non-controlling
	Cost of			distribution			and			and			income			Income		interest
	revenue			and marketing			administrative			development			(expense), net			tax provision		adjustment
GAAP	$	64,653		$	4,075		$	10,621		$	17,286		$	2,910		$	7,194	$	-
Intangible amortization		(235	)		-			(125	)		-			-			-		-
Share-based compensation		(811	)		(158	)		(2,553	)		(328	)		-			-		-
Impairment of long-lived assets		(9	)		-			-			-			-			-		-
Reserves for litigation and settlements		-			-			-			-			(2,717	)		-		-
Income tax provision on pre-tax adjustments		-			-			-			-			-			429		-
Non-GAAP	$	63,598		$	3,917		$	7,943		$	16,958		$	193		$	7,623	$	-

	Year Ended December 31, 2022

				Selling,			General			Research			Non-operating					Non-controlling
	Cost of			distribution			and			and			income			Income		interest
	revenue			and marketing			administrative			development			(expense), net			tax provision		adjustment
GAAP	$	250,127		$	21,531		$	45,061		$	74,771		$	8,543		$	23,477	$	-
Intangible amortization		(865	)		-			(554	)		-			-			-		-
Share-based compensation		(4,179	)		(726	)		(11,180	)		(1,775	)		-			-		-
Reserves for litigation and settlements		-			-			(800	)		-			(5,729	)		-		-
Income tax provision on pre-tax adjustments		-			-			-			-			-			2,550		-
Non-GAAP	$	245,083		$	20,805		$	32,527		$	72,996		$	2,814		$	26,027	$	-

	Year Ended December 31, 2021

				Selling,			General			Research			Non-operating					Non-controlling
	Cost of			distribution			and			and			income			Income		interest
	revenue			and marketing			administrative			development			(expense), net			tax provision		adjustment
GAAP	$	238,029		$	17,486		$	51,434		$	60,932		$	14,252		$	20,630	$	1,185
Intangible amortization		(963	)		-			(327	)		-			-			-		26
Share-based compensation		(3,778	)		(596	)		(12,622	)		(1,691	)		-			-		870
Impairment of long-lived assets		(93	)		-			(33	)		(222	)		-			-		7
Gain on ANP Restructuring		-			-			-			-			(13,587	)		-		(2,062	)
Reserves for litigation and settlements		-			-			(1,295	)		-			(1,021	)		-		-
Income tax provision on pre-tax adjustments		-			-			-			-			-			2,043		245
Non-GAAP	$	233,195		$	16,890		$	37,157		$	59,019		$	(356	)	$	22,673	$	271

SOURCE: Amphastar Pharmaceuticals, Inc.

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