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Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full-Year Ended December 31, 2021

Thursday, March 10, 2022 4:05 PM
Amphastar Pharmaceuticals, Inc.
https://www.amphastar.com/
Topic:
Earnings

Reports Net Revenues of $120.9 Million for the Three Months Ended December 31, 2021

RANCHO CUCAMONGA, CA / ACCESSWIRE / March 10, 2022 / Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) ("Amphastar" or the "Company") today reported results for the three months and full-year ended December 31, 2021.

Fourth Quarter Highlights

  • Net revenues of $120.9 million for the fourth quarter
  • GAAP net income of $19.8 million, or $0.39 per share, for the fourth quarter
  • Adjusted non-GAAP net income of $20.8 million, or $0.42 per share, for the fourth quarter

Full-Year Highlights

  • Net revenues of $437.8 million for the fiscal year
  • GAAP net income of $62.1 million, or $1.25 per share, for the fiscal year
  • Adjusted non-GAAP net income of $68.0 million, or $1.37 per share, for the fiscal year

Dr. Jack Zhang, Amphastar's President and Chief Executive Officer commented: "Last year was a turning point for Amphastar - with financial strength driven by the continued growth of our higher-margin products. We expect a number of pipeline milestones to be reached in 2022 as we continue to execute the Company's strategy."

Three Months Ended Year Ended
December 31, December 31,
2021 2020 2021 2020

(in thousands, except per share data)
Net revenues
$120,887 $95,921 $437,768 $349,846
GAAP net income (loss) attributable to Amphastar
$19,760 $(6,273) $62,116 $1,403
Adjusted non-GAAP net income attributable to Amphastar*
$20,833 $7,994 $67,999 $31,616
GAAP diluted EPS attributable to Amphastar stockholders
$0.39 $(0.13) $1.25 $0.03
Adjusted non-GAAP diluted EPS attributable to Amphastar stockholders*
$0.42 $0.16 $1.37 $0.64

* 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

2021 2020 Dollars %
(in thousands)
Net revenues:
Primatene Mist®
$21,489 $13,392 $8,097 60%
Epinephrine
18,868 7,482 11,386 152%
Glucagon
15,335 - 15,335 N/A
Phytonadione
13,921 10,458 3,463 33%
Lidocaine
12,099 12,191 (92) (1)%
Enoxaparin
7,942 17,648 (9,706) (55)%
Naloxone
6,546 7,079 (533) (8)%
Other finished pharmaceutical products
21,776 19,550 2,226 11%
Total finished pharmaceutical products net revenues
$117,976 $87,800 $30,176 34%
API
2,911 8,121 (5,210) (64)%
Total net revenues
$120,887 $95,921 $24,966 26%

Changes in net revenues were primarily driven by:

  • Primatene Mist® increased volumes resulting due to the continued success of our advertising campaign
  • Epinephrine sales increased due to our launch of the multi-dose vial in 2020 and higher demand for the pre-filled syringe as a result of competitor shortages
  • Glucagon for injection emergency kit, which was launched in the first quarter of 2021
  • Phytonadione sales increased due to an increase in unit volumes and higher average selling price
  • Enoxaparin sales decreased due to lower unit volumes and lower average selling price as competitors re-entered the market in 2021
  • Other finished pharmaceutical product sales increased due to higher demand, largely due to competitors' shortages
  • API decrease due to timing of orders from MannKind and other customers
Three Months Ended

December 31, Change
2021 2020 Dollars %
(in thousands)
Net revenues
$120,887 $95,921 $24,966 26%
Cost of revenues
64,653 59,089 5,564 9%
Gross profit
$56,234 $36,832 $19,402 53%
as % of net revenues
47% 38%

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

  • Increased sales of higher-margin products such as Primatene Mist®, epinephrine injection multi-dose vials, and glucagon
  • Partially offset by increased cost for heparin, the starting material for enoxaparin, and lower pricing for enoxaparin
Three Months Ended
December 31, Change

2021 2020 Dollars %
(in thousands)
Selling, distribution, and marketing $
4,075
$
3,787
$
288
8%
General and administrative
10,621 12,033 (1,412) (12)%
Research and development
17,286 18,133 (847) (5)%
Non-operating income, net
2,910 (9,621) 12,531 (130)%
  • Selling, distribution, and marketing expenses increased primarily due to the ongoing marketing and distribution expenses for Primatene Mist®
  • General and administrative expenses decreased primarily due to a decrease in legal expenses, as we settled several lawsuits
  • Research and development expenses decreased due to a decrease in expenses in China resulting from the restructuring of our Chinese subsidiary, Amphastar Nanjing Pharmaceuticals (ANP), and the deconsolidation of Hanxin and its subsidiaries
  • Non-operating income, net, increased as a result of:
    • A $2.7 million gain related to a settlement of a legal dispute, net of contingent legal fees
    • A $12.8 million expense in the fourth quarter of 2020 relating to litigation with Aventis

Year-End Results

Year Ended December 31, Change
2021 2020 Dollars %
(in thousands)
Net revenues:
Primatene Mist®
$73,113 $51,725 $21,388 41%
Epinephrine
57,530 23,799 33,731 142%
Glucagon
47,639 - 47,639 N/A
Phytonadione
45,498 42,646 2,852 7%
Lidocaine
44,413 41,113 3,300 8%
Enoxaparin
35,962 48,681 (12,719) (26)%
Naloxone
27,540 33,416 (5,876) (18)%
Other finished pharmaceutical products
87,875 89,988 (2,113) (2)%
Total finished pharmaceutical products net revenues
$419,570 $331,368 $88,202 27%
API
18,198 18,478 (280) (2)%
Total net revenues
$437,768 $349,846 $87,922 25%

Changes in net revenues were primarily driven by:

  • Primatene Mist® increased volumes resulting from the continued success of our advertising campaign
  • Glucagon for injection emergency kit, which was launched in the first quarter of 2021
  • Epinephrine and lidocaine sales increased due to our launch of the epinephrine multi-dose vials in 2020 and higher demand for the pre-filled syringe as a result of competitor shortages
  • Phytonadione sales increased due to higher average selling price
  • Enoxaparin and naloxone sales decreased due to lower unit volumes and lower average selling prices as competitors entered the market in 2021
  • Other finished pharmaceutical product sales decreased due to lower unit volumes as a result of competitors returning to their normal distribution levels during the year
Year Ended December 31, Change
2021 2020 Dollars %
(in thousands)
Net revenues
$437,768 $349,846 $87,922 25%
Cost of revenues
238,029 206,506 31,523 15%
Gross profit
$199,739 $143,340 $56,399 39%
as % of net revenues
46% 41%

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

  • Increased sales of higher-margin products such as Primatene Mist®, epinephrine injection multi-dose vials, and glucagon
  • Partially offset by increased cost for heparin, the starting material for enoxaparin, and lower pricing for enoxaparin
Year Ended December 31, Change
2021 2020 Dollars %
(in thousands)
Selling, distribution, and marketing
$17,486 $14,780 $2,706 18%
General and administrative
51,434 50,377 1,057 2%
Research and development
60,932 67,229 (6,297) (9)%
Non-operating (expense) income, net
$14,252 $(6,317) $20,569 NM
  • Selling, distribution, and marketing expenses increased primarily due to the ongoing marketing and distribution expenses for Primatene Mist®, including the cost of developing a new commercial for television
  • General and administrative expenses increased primarily due to an increase in legal expenses, which was partially offset by a decrease in cash compensation and share-based compensation expense relating to the separation agreement that we entered into with a former executive during the second quarter of 2020
  • Research and development expenses decreased due to:
    • A decrease in clinical trial expense as a result of delays in beginning certain clinical trials due to changes in COVID-19 protocols
    • A decrease in expenses in China due to the restructuring of ANP and the deconsolidation of Hanxin and its subsidiaries
  • Non-operating income, net, increased as a result of:
    • A $13.6 million gain on the deconsolidation of Hanxin relating to the ANP restructuring
    • A $2.7 million gain related to a settlement of a legal dispute, net of contingent legal fees
    • A $12.8 million expense in the fourth quarter of 2020 relating to the litigation with Aventis

Cash flow provided by operating activities for the year ended December 31, 2021 was $98.0 million.

Pipeline Information

The Company currently has five ANDAs on file with the FDA targeting products with a market size of approximately $4 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and eight generic products in development targeting products with a market size of approximately $12 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2021. 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, executive severance expense, 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, March 10, 2022, 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, backlog, sales and marketing of our 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 our pipeline of product candidates, the timing and results of clinical trials, our share buyback program, the impact of the restructuring of ANP, and other future events, such as the impact of the COVID-19 pandemic including its variants 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 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, 2020, filed with the SEC on March 15, 2021, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on November 9, 2021. 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 including its variants, 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 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,
2021 2020 2021 2020
Net revenues
$120,887 $95,921 $437,768 $349,846
Cost of revenues
64,653 59,089 238,029 206,506
Gross profit
56,234 36,832 199,739 143,340
Operating expenses:
Selling, distribution, and marketing
4,075 3,787 17,486 14,780
General and administrative
10,621 12,033 51,434 50,377
Research and development
17,286 18,133 60,932 67,229
Total operating expenses
31,982 33,953 129,852 132,386
Income from operations
24,252 2,879 69,887 10,954
Non-operating income (expenses), net
2,910 (9,621) 14,252 (6,317)
Income (loss) before income taxes
27,162 (6,742) 84,139 4,637
Income tax provision (benefit)
7,194 (950) 20,630 3,540
Net income before equity in losses of unconsolidated affiliate
19,968 (5,792) 63,509 1,097
Equity in losses of unconsolidated affiliate
(208) - (208) -
Net income (loss)
$19,760 $(5,792) $63,301 $1,097
Net income (loss) attributable to non-controlling interests
$- $481 $1,185 $(306)
Net income (loss) attributable to Amphastar
$19,760 $(6,273) $62,116 $1,403
Net income (loss) per share attributable to Amphastar stockholders:
Basic
$0.41 $(0.13) $1.30 $0.03
Diluted
$0.39 $(0.13) $1.25 $0.03
Weighted-average shares used to compute net income (loss) per share attributable to Amphastar stockholders:
Basic
47,836 47,496 47,777 47,038
Diluted
50,057 47,496 49,784 49,124

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

December 31, December 31,
2021 2020
ASSETS
Current assets:
Cash and cash equivalents
$126,353 $92,642
Restricted cash
235 1,865
Short-term investments
10,320 12,977
Restricted short-term investments
2,200 2,200
Accounts receivable, net
78,804 66,005
Inventories
92,807 96,831
Income tax refunds and deposits
126 385
Prepaid expenses and other assets
7,274 6,777
Total current assets
318,119 279,682
Property, plant, and equipment, net
244,244 260,055
Finance lease right-of-use assets
353 612
Operating lease right-of-use assets
26,894 20,042
Equity method investment
3,985 -
Goodwill and intangible assets, net
38,870 40,615
Other assets
16,665 5,250
Deferred tax assets
22,399 24,980
Total assets
$671,529 $631,236
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$89,545 $95,504
Income taxes payable
9,081 1,077
Current portion of long-term debt
2,202 12,263
Current portion of operating lease liabilities
2,982 3,357
Total current liabilities
103,810 112,201
Long-term reserve for income tax liabilities
6,531 4,709
Long-term debt, net of current portion and unamortized debt issuance costs
74,776 34,186
Long-term operating lease liabilities, net of current portion
24,703 17,464
Deferred tax liabilities
534 741
Other long-term liabilities
15,653 13,212
Total liabilities
226,007 182,513
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; 56,440,202 and 47,714,912 shares issued and outstanding as of December 31, 2021 and 54,760,922 and 47,495,439 shares issued and outstanding as of December 31, 2020, respectively
6 5
Additional paid-in capital
422,423 410,061
Retained earnings
180,337 117,773
Accumulated other comprehensive loss
(6,765) (3,721)
Treasury stock
(150,479) (121,812)
Total Amphastar Pharmaceuticals, Inc. stockholders' equity
445,522 402,306
Non-controlling interests
- 46,417
Total equity
445,522 448,723
Total liabilities and stockholders' equity
$671,529 $631,236

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,
2021 2020 2021 2020
GAAP net income (loss)
$19,760 $(5,792) $63,301 $1,097
Adjusted for:
Intangible amortization
360 265 1,290 1,036
Share-based compensation
3,850 4,334 18,687 18,180
Impairment of long-lived assets
9 81 348 241
Gain on ANP Restructuring
- - (13,587) -
Expense related to executive separation agreement
- - - 4,869
Reserves for litigation and settlements
(2,717) 13,780 274 13,780
Income tax benefit on pre-tax adjustments
(429) (4,090) (2,043) (7,482)
Non-GAAP net income
$20,833 $8,578 $68,270 $31,721
Non-GAAP net income attributable to non-controlling interests
$- $584 $271 $105
Non-GAAP net income attributable to Amphastar
$20,833 $7,994 $67,999 $31,616
Non-GAAP net income per share attributable to Amphastar stockholders:
Basic
$0.44 $0.17 $1.42 $0.67
Diluted
$0.42 $0.16 $1.37 $0.64
Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar stockholders:
Basic
47,836 47,496 47,777 47,038
Diluted
50,057 49,730 49,784 49,124
Three Months Ended December 31, 2021
Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating income (expense), net Income tax provision (benefit) Non-controlling interest 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 (benefit) on pre-tax adjustments
- - - - - 429 -
Non-GAAP
$63,598 $3,917 $7,943 $16,958 $193 $7,623 $-

Three Months Ended December 31, 2020

Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating income (expense), net Income tax provision (benefit) Non-controlling interest 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 $3,182 $3,140 $584
Year Ended December 31, 2021
Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating income (expense), net Income tax provision (benefit) Non-controlling interest 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 (benefit) on pre-tax adjustments
- - - - - 2,043 245
Non-GAAP
$233,195 $16,890 $37,157 $59,019 $(356) $22,673 $271
Year Ended December 31, 2020
Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating income (expense), net Income tax provision (benefit) Non-controlling interest 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

SOURCE: Amphastar Pharmaceuticals, Inc.

Topic:
Earnings
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