Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended September 30, 2023

November 8, 2023 |

16 min read

Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2023.

Reports Net Revenues of $180.6 Million for the Three Months Ended September 30, 2023

RANCHO CUCAMONGA, CA / ACCESSWIRE / November 8, 2023 / Amphastar Pharmaceuticals, Inc., (NASDAQ:AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2023.

Third Quarter Highlights

Net revenues of $180.6 million for the third quarter
GAAP net income of $49.2 million, or $0.91 per share, for the third quarter
Adjusted non-GAAP net income of $61.9 million, or $1.15 per share, for the third quarter

Dr. Jack Zhang, Amphastar’s President and Chief Executive Officer, commented: “We are pleased to announce strong results driven by the success of our diabetes portfolio, particularly following the strategic acquisition of BAQSIMI^® and the continued strength of our generic glucagon product. As we move forward, we anticipate that our strong pipeline will continue to drive growth in the future.”

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(in thousands, except per share data)
Net revenues	$	180,556	$	120,129	$	466,290	$	363,964
GAAP net income	$	49,222	$	15,874	$	101,378	$	57,473
Adjusted non-GAAP net income*	$	61,898	$	20,232	$	128,823	$	65,548
GAAP diluted EPS	$	0.91	$	0.30	$	1.91	$	1.09
Adjusted non-GAAP diluted EPS*	$	1.15	$	0.38	$	2.43	$	1.24

______________________________

* Adjusted non-GAAP net income 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.

Third Quarter Results

	Three Months Ended
	September 30,				Change
	2023		2022		Dollars			%
	(in thousands)
Product revenues:
Glucagon	$	29,514	$	14,224	$	15,290			107	%
Primatene MIST^®		24,834		18,359		6,475			35	%
Epinephrine		20,199		19,502		697			4	%
Lidocaine		15,522		12,621		2,901			23	%
Enoxaparin		7,702		7,983		(281	)		(4	)%
Phytonadione		7,449		13,978		(6,529	)		(47	)%
Naloxone		4,715		6,818		(2,103	)		(31	)%
Other finished pharmaceutical products		37,730		23,635		14,095			60	%
Total finished pharmaceutical products net revenues	$	147,665	$	117,120	$	30,545			26	%
API		4,190		3,009		1,181			39	%
Other revenues		28,701		-		28,701			N/A
Total product revenues, net	$	180,556	$	120,129	$	60,427			50	%

Changes in product revenues as compared to the third quarter of the prior year were primarily driven by:

Glucagon sales increased primarily due to an increase in unit volumes, as a result of two suppliers discontinuing their glucagon injection products at the end of 2022
Primatene MIST^® sales increased due to an increase in unit volumes
Lidocaine sales increased primarily due to an increase in unit volumes, as a result of supplier shortages
Phytonadione sales decreased due to lower unit volumes, as a result of increased competition
Sales of naloxone decreased due to lower unit volumes, as a result of increased competition
Other finished pharmaceutical product sales increased primarily due to:
- Higher unit volumes of dextrose, atropine, calcium chloride, and sodium bicarbonate, due to increased demand caused by supplier shortages during the quarter
- A full quarter of sales for vasopressin, which was launched in August 2022
- Launch of regadenoson in April 2023
Active Pharmaceutical ingredient (“API”) sales increased primarily due to the timing of customer purchases

Other revenues are comprised of net revenues from the sales of BAQSIMI^® of $28.7 million during the three months ended September 30, 2023, which was recognized on a net basis similar to a royalty and based on Eli Lilly & Company’s (“Lilly”) reported BAQSIMI^® net sales of $48.7 million. Currently, BAQSIMI^® is being sold by Lilly on our behalf under the Transition Services Agreement (“TSA”) with Lilly, whereby Lilly would provide certain services to support the transition of the BAQSIMI^® operations to us. Once Amphastar takes over the distribution of BAQSIMI^®, Amphastar will recognize the entire revenue amount. This revenue recognition change is expected to be phased in by country during 2024.

	Three Months Ended
	September 30,				Change
	2023		2022		Dollars		%
	(in thousands)
Net revenues	$	180,556	$	120,129	$	60,427		50%
Cost of revenues		72,153		61,619		10,534		17%
Gross profit	$	108,403	$	58,510	$	49,893		85%
as % of net revenues		60%		49%

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

Increased sales of higher-margin products such as glucagon and Primatene MIST^®, the sales of ganirelix and vasopressin that were launched in 2022, as well as the sales of regadenoson, which we launched in April 2023
As a result of the TSA, the revenue relating to BAQSIMI^® is recognized on a net basis within net revenues.

	Three Months Ended
	September 30,						Change
	2023			2022			Dollars			%
	(in thousands)
Selling, distribution, and marketing	$	6,407		$	4,785		$	1,623			34	%
General and administrative		12,654			11,984			670			6%	%
Research and development		16,664			18,514			(1,850	)		(10)	%
Non-operating income (expense), net		(9,041	)		(632	)		(8,409	)	NM

Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales force related to BAQSIMI^®, as well as an increase in advertising spending for Primatene MIST^®
General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI^®, which was partially offset by a decrease in legal fees
Research and development expenses decreased due to:
- Decrease in clinical trials expense
- Decreases in materials and supply expense, as a result of a ramp-up of expenses in 2022 for AMP-018 and our insulin pipeline products
- This decrease was partially offset by an increase in salary and personnel-related expenses
The change in non-operating expenses, net is primarily a result of:
- Foreign currency fluctuations
- Costs incurred in connection with the syndicated credit agreement we entered into with Wells Fargo Bank, as syndication agent, to finance the acquisition of BAQSIMI^®
- Mark-to-market adjustments relating to our interest rate swap contracts

Cash flow provided by operating activities for the nine months ended September 30, 2023 was $159.6 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 $10 billion, and six generic products in development targeting products with a market size of over $8 billion. This market information is based on IQVIA data for the 12 months ended September 30, 2023. 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^®, BAQSIMI^®, Primatene MIST^®, REXTOVY^®, 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) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI^®, debt issuance costs, 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, November 8, 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, ten 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, sales and marketing of our products, market size and expansion, product portfolio, 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, the prospective benefits of the acquisition of BAQSIMI^®, and other future events, including potential contingent consideration amounts and terms related to the acquisition of BAQSIMI^®, the anticipated benefits of BAQSIMI^® to our product portfolio, Amphastar’s commitment to strategically maximizing the commercial potential of BAQSIMI^®, and other future events. 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, 2022, filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 9, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023. In particular, there can be no guarantee that the acquisition of BAQSIMI^® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI^® into our product portfolio to differ from Amphastar’s expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI^® on its financial results or financial guidance. 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) 476-3416

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,
	2023		2022		2023		2022

Net revenues:
Product revenues, net	$	151,855	$	120,129	$	437,589	$	363,964
Other revenues		28,701		-		28,701		-
Net revenues		180,556		120,129		466,290		363,964

Cost of revenues		72,153		61,619		211,309		186,272
Gross profit		108,403		58,510		254,981		177,692

Operating expenses:
Selling, distribution, and marketing		6,407		4,784		20,234		16,059
General and administrative		12,654		11,984		38,418		34,433
Research and development		16,664		18,514		53,322		57,535
Total operating expenses		35,725		35,282		111,974		108,027

Income from operations		72,678		23,228		143,007		69,665

Non-operating income (expenses), net		(9,041)		(632)		(12,993)		5,115

Income before income taxes		63,637		22,596		130,014		74,780
Income tax provision		14,025		6,559		27,160		16,187
Net income before equity in losses of unconsolidated affiliate		49,612		16,037		102,854		58,593

Equity in losses of unconsolidated affiliate		(390)		(163)		(1,476)		(1,120)

Net income	$	49,222	$	15,874	$	101,378	$	57,473

Net income per share:
Basic	$	1.01	$	0.32	$	2.10	$	1.18
Diluted	$	0.91	$	0.30	$	1.91	$	1.09

Weighted-average shares used to compute net income per share:
Basic		48,701		48,904		48,368		48,635
Diluted		53,921		52,788		52,997		52,665

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

	September 30,		December 31,
	2023		2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	266,778	$	156,098
Restricted cash		4,259		235
Short-term investments		33,098		19,664
Restricted short-term investments		2,200		2,200
Accounts receivable, net		118,990		88,804
Inventories		109,978		103,584
Income tax refunds and deposits		1,506		171
Prepaid expenses and other assets		6,196		7,563
Total current assets		543,005		378,319

Property, plant, and equipment, net		280,836		238,266
Finance lease right-of-use assets		610		753
Operating lease right-of-use assets		32,666		25,554
Investment in unconsolidated affiliate		1,026		2,414
Goodwill and intangible assets, net		619,351		37,298
Long-term investments		972		-
Other assets		25,299		20,856
Deferred tax assets		40,868		38,527
Total assets	$	1,544,633	$	741,987

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	222,719	$	84,242
Income taxes payable		31,092		4,571
Current portion of long-term debt		433		3,046
Current portion of operating lease liabilities		3,719		3,003
Total current liabilities		257,963		94,862

Long-term reserve for income tax liabilities		7,225		7,225
Long-term debt, net of current portion and unamortized debt issuance costs		638,206		72,839
Long-term operating lease liabilities, net of current portion		30,199		23,694
Deferred tax liabilities		201		144
Other long-term liabilities		15,699		14,565
Total liabilities		949,493		213,329
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; 59,220,178 and 47,898,466 shares issued and outstanding as of September 30, 2023 and 58,110,231 and 48,112,069 shares issued and outstanding as of December 31, 2022, respectively		6		6
Additional paid-in capital		477,880		455,077
Retained earnings		373,102		271,723
Accumulated other comprehensive loss		(8,411)		(8,624)
Treasury stock		(247,437)		(189,524)
Total equity		595,140		528,658
Total liabilities and stockholders’ equity	$	1,544,633	$	741,987

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,
	2023		2022		2023		2022

GAAP net income	$	49,222	$	15,874	$	101,378	$	57,473
Adjusted for:
Intangible amortization		6,168		392		6,651		1,088
Share-based compensation		4,644		4,299		15,620		13,556
Impairment of long-lived assets		474		-		3,174		-
Expenses related to BAQSIMI^?? acquisition		2,182		-		3,682		-
Debt issuance costs		3,019		-		6,043		-
Litigation settlements		-		800		-		(4,929)
Income tax provision on pre-tax adjustments		(3,811)		(1,133)		(7,725)		(1,640)
Non-GAAP net income	$	61,898	$	20,232	$	128,823	$	65,548

Non-GAAP net income per share:
Basic	$	1.27	$	0.41	$	2.66	$	1.35
Diluted	$	1.15	$	0.38	$	2.43	$	1.24

Weighted-average shares used to compute non-GAAP net income per share:
Basic		48,701		48,904		48,368		48,635
Diluted		53,921		52,788		52,997		52,665

	Three Months Ended September 30, 2023
	Cost of revenue		Selling, distribution and marketing		General and administrative		Research and development		Non-operating income (expense), net		Income tax provision
GAAP	$	72,153	$	6,407	$	12,654	$	16,664	$	(9,041)	$	14,025
Intangible amortization		(6,149)		-		34		(53)		-		-
Share-based compensation		(1,004)		(213)		(2,975)		(452)		-		-
Impairment of long-lived assets		(470)		-		(4)		-		-		-
Expenses related to BAQSIMI^® acquisition		-		-		(357)		-		1,825		-
Debt issuance costs		-		-		-		-		3,019		-
Income tax provision on pre-tax adjustments		-		-		-		-		-		3,811
Non-GAAP	$	64,530	$	6,194	$	9,352	$	16,159	$	(4,197)	$	17,836
	Three Months Ended September 30, 2022
	Cost of revenue		Selling, distribution and marketing		General and administrative		Research and development		Non-operating income (expense), net		Income tax provision


GAAP	$	61,619	$	4,784	$	11,984	$	18,514	$	(632)	$	6,559
Intangible amortization		(206)		-		(186)		-		-		-
Share-based compensation		(915)		(178)		(2,810)		(396)		-		-
Litigation settlements		-		-		(800)		-		-		-
Income tax provision on pre-tax adjustments		-		-		-		-		-		1,133
Non-GAAP	$	60,498	$	4,606	$	8,188	$	18,118	$	(632)	$	7,692
	Nine Months Ended September 30, 2023
	Cost of revenue		Selling, distribution and marketing		General and administrative		Research and development		Non-operating income (expense), net		Income tax provision


GAAP	$	211,309	$	20,234	$	38,418	$	53,322	$	(12,993)	$	27,160
Intangible amortization		(6,582)		-		(16)		(53)		-		-
Share-based compensation		(3,868)		(649)		(9,323)		(1,780)		-		-
Impairment of long-lived assets		(3,170)		-		(4)		-		-		-
Expenses related to BAQSIMI^® acquisition		-		-		(1,857)		-		1,825		-
Debt issuance costs		-		-		-		-		6,043		-
Income tax provision on pre-tax adjustments		-		-		-		-		-		7,725
Non-GAAP	$	197,689	$	19,585	$	27,218	$	51,489	$	(5,125)	$	34,885
	Nine Months Ended September 30, 2022
	Cost of revenue		Selling, distribution and marketing		General and administrative		Research and development		Non-operating income (expense), net		Income tax provision


GAAP	$	186,272	$	16,059	$	34,433	$	57,535	$	5,115	$	16,187
Intangible amortization		(660)		-		(428)		-		-		-
Share-based compensation		(3,238)		(540)		(8,389)		(1,389)		-		-
Litigation settlements		-		-		(800)		-		(5,729)		-
Income tax provision on pre-tax adjustments		-		-		-		-		-		1,640
Non-GAAP	$	182,374	$	15,519	$	24,816	$	56,146	$	(614)	$	17,827

SOURCE: Amphastar Pharmaceuticals, Inc.

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