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Amphastar Pharmaceuticals Reports Revenues of $49.0 Million for the Second Quarter Ended June 30, 2014

RANCHO CUCAMONGA, Calif., Aug. 12, 2014 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (Nasdaq:AMPH) ("Amphastar" or the "Company") today reported results for the second quarter ended June 30, 2014.

  • Net revenues of $49.0 million for the second quarter
  • GAAP net loss of $1.2 million or $0.03 per diluted share for the second quarter
  • Adjusted non-GAAP net income of $0.8 million or $0.02 per diluted share for the second quarter

Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
(in thousands, except per share data)
Net revenues $ 49,003 $ 62,524 $ 94,873 $ 115,487
GAAP net income (loss) $ (1,180) $ 7,810 $ (2,799) $ 10,192
Adjusted non-GAAP net income* $ 752 $ 8,920 $ 631 $ 12,884
GAAP diluted EPS $ (0.03) $ 0.20 $ (0.07) $ 0.26
Adjusted non-GAAP diluted EPS* $ 0.02 $ 0.23 $ 0.02 $ 0.33
(*see Table II for reconciliation to GAAP numbers)

Second Quarter Results

For the three months ended June 30, 2014, the Company reported net revenues of $49.0 million, a decrease of 22% from $62.5 million for the same prior year period.

During the quarter, net revenues of enoxaparin were $27.2 million, a decrease of 34% compared to $41.3 million for the same prior year period due to a decrease in the number of units sold and a decrease in the average selling price.

Other product revenues were $21.8 million for the quarter, an increase of 3% compared to $21.2 million for the same prior year period. This increase is due to increased unit sales of naloxone, which were partially offset by lower unit sales of other injectable products.

Cost of revenues were $34.0 million for the quarter, a decrease of 3% compared to $35.0 million for the same period in the prior year, due to a decrease in sales unit volume. Gross profit as a percentage of net revenues decreased to 31% for the quarter compared to 44% for the prior year period. The decrease is primarily related to a decrease in average net sales price of enoxaparin during 2014.

Selling, distribution and marketing expenses increased to $1.4 million from $1.2 million, compared to the same period in the prior year. General and administrative expenses increased to $8.6 million from $6.5 million, compared to the same period in the prior year, as a result of an increase in compensation expenses including an increase in stock-based compensation.

For the three months ended June 30, 2014, research and development expenses decreased by 23% to $6.0 million from $7.8 million, compared to the same period in the prior year, primarily related to a decrease in pre-launch inventory expense.

The Company reported adjusted non-GAAP quarterly net income of $0.8 million, or $0.02 per fully diluted share, for the three months ended June 30, 2014, compared to adjusted non-GAAP net income of $8.9 million, or $0.23 per fully diluted share, for the same period in the prior year.

Dr. Jack Zhang, CEO, commented: "We are very pleased to issue our first earnings report as a public company. The future for Amphastar is extremely exciting. Executing the supply agreement with MannKind last week represents another important step towards accomplishing our long-term goals."

Liquidity

Our cash and cash equivalents and short term investments at June 30, 2014 were $65.6 million.

Non-GAAP Financial Measures

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 accounting principles generally accepted in the U.S. or "GAAP". In addition to disclosing its financial results determined in accordance with GAAP, the Company is disclosing certain non-GAAP results that exclude amortization expense, share-based compensation and impairment charges in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance, because the Company's management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such a non-GAAP measure, it will provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP measure 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, August 12, 2014, at 2 p.m. Pacific Time.

To access the conference call, dial toll free 877-881-2595, or 315-625-3083 for international callers, five minutes before the conference. The passcode for the conference call is 80867405. The call can also be accessed on the Investors page on the Company's website www.amphastar.com.

Pipeline Information

The Company currently has 3 abbreviated new drug applications or ANDAs filed with the FDA targeting products with a market size of over $0.5 billion and another 10 ANDAs in development targeting products with a market size of over $14 billion. The proprietary pipeline includes a new drug application or NDA for Primatene® and an NDA supplement for Amphadase®. The Company is currently developing five other proprietary drugs including injectables, inhalation products, and other dosage forms. Market information is based on IMS data for the 12 months ended June 30, 2014.

Company Information

Amphastar is a specialty pharmaceutical company that primarily develops, manufactures, markets, and sells generic and proprietary injectable and inhalation products, including products with high technical barriers to market entry. Most of the Company's products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers.

Forward Looking Statements

This press release contains forward-looking statements, including statements relating to Amphastar. These statements are not historical facts but rather are based on Amphastar's current expectations, estimates, and projections regarding Amphastar's business, operations and other similar or related factors. Words such as "may," "will," "could," "would," "should," "anticipate," "predict," "potential," "continue," "expects," "intends," "plans," "projects," "believes," "estimates," and other similar or related expressions are used to identify these forward-looking statements. These statements are only predictions and as such are not guarantees of future performance, and they involve risks, uncertainties, and assumptions that are difficult or impossible to predict. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Amphastar's filings with the SEC.

Table I
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Statement of Operations
(Unaudited; in thousands, except per share data)
Three Months ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
Net revenues $ 49,003 $ 62,524 $ 94,873 $ 115,487
Cost of revenues 34,007 35,035 67,368 68,440
Gross profit 14,996 27,489 27,505 47,047
Operating expenses:
Selling, distribution, and marketing 1,352 1,203 2,612 2,597
General and administrative 8,638 6,513 15,484 13,420
Research and development 5,994 7,791 12,203 16,695
Impairment of long-lived assets 184 348
Total operating expenses 16,168 15,507 30,647 32,712
Income (loss) from operations (1,172) 11,982 (3,142) 14,335
Non-operating income (expense)
Interest income 32 47 60 96
Interest expense, net (476) (237) (655) (542)
Other income (expense), net (260) 127 (610) 222
Total other income (expense), net (704) (63) (1,205) (224)
Income (loss) before income taxes (1,876) 11,919 (4,347) 14,111
Income tax expense (benefit) (696) 4,109 (1,548) 3,919
Net income (loss) $ (1,180) $ 7,810 $ (2,799) $ 10,192
Net income (loss) per common share:
Basic $ (0.03) $ 0.20 $ (0.07) $ 0.26
Diluted $ (0.03) $ 0.20 $ (0.07) $ 0.26
Weighted-average shares used to compute net income (loss) per common share:
Basic 39,767 38,708 39,268 38,708
Diluted 39,767 38,847 39,268 38,846
Table II
Amphastar Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures
(Unaudited; in thousands, except per share data)
Three Months Ended June 30,
2014 2013
GAAP Non-GAAP
Adjustments
*
Non-GAAP
As Adjusted
GAAP Non-GAAP
Adjustments
*
Non-GAAP
As Adjusted
Net revenues $ 49,003 $ — $ 49,003 $ 62,524 $ — $ 62,524
Cost of revenues 34,007 (825) 33,182 35,035 (759) 34,276
Gross profit 14,996 825 15,821 27,489 759 28,248
Operating expenses:
Selling, distribution, and marketing 1,352 (29) 1,323 1,203 (24) 1,179
General and administrative 8,638 (1,890) 6,748 6,513 (752) 5,761
Research and development 5,994 (144) 5,850 7,791 (159) 7,632
Impairment of long-lived assets 184 (184)
Total operating expenses 16,168 (2,247) 13,921 15,507 (935) 14,572
Income (loss) from operations (1,172) 3,072 1,900 11,982 1,694 13,676
Non-operating income (expense)
Interest income 32 32 47 47
Interest expense, net (476) (476) (237) (237)
Other income (expense), net (260) (260) 127 127
Total other income (expense), net (704) (704) (63) (63)
Income (loss) before income taxes (1,876) 3,072 1,196 11,919 1,694 13,613
Income tax expense (benefit) (696) 1,140 444 4,109 584 4,693
Net income (loss) $ (1,180) $ 1,932 $ 752 $ 7,810 $ 1,110 $ 8,920
Net income (loss) per common share:
Basic $ (0.03) $ 0.02 $ 0.20 $ 0.23
Diluted $ (0.03) $ 0.02 $ 0.20 $ 0.23
Weighted-average shares used to compute net income (loss) per common share:
Basic 39,767 39,767 38,708 38,708
Diluted 39,767 40,817 38,847 38,847
* Non-GAAP adjustments include reversal of amortization expense and share-based compensation as follows, as well as the reversal of impairment of long-lived assets:
Three Months Ended June 30,
2014 2013
Amortization
Expense
Share-Based
Compensation
Expense
Total Non-
GAAP
Adjustment
Amortization
Expense
Share-Based
Compensation
Expense
Total Non-
GAAP
Adjustment
Cost of revenues (446) (379) (825) (446) (313) (759)
Selling, distribution, and marketing (29) (29) (24) (24)
General and administrative (36) (1,854) (1,890) (7) (745) (752)
Research and development (144) (144) (159) (159)
Reconciliation of Non-GAAP Measures (continued)
Six Months Ended June 30,
2014 2013
GAAP Non-GAAP
Adjustments
*
Non-GAAP
As Adjusted
GAAP Non-GAAP
Adjustments
*
Non-GAAP
As Adjusted
Net revenues $ 94,873 $ — $ 94,873 $ 115,487 $ — $ 115,487
Cost of revenues 67,368 (1,544) 65,824 68,440 (1,479) 66,961
Gross profit 27,505 1,544 29,049 47,047 1,479 48,526
Operating expenses:
Selling, distribution, and marketing 2,612 (50) 2,562 2,597 (47) 2,550
General and administrative 15,484 (3,114) 12,370 13,420 (1,924) 11,496
Research and development 12,203 (271) 11,932 16,695 (277) 16,418
Impairment of long-lived assets 348 (348)
Total operating expenses 30,647 (3,783) 26,864 32,712 (2,248) 30,464
Income (loss) from operations (3,142) 5,327 2,185 14,335 3,727 18,062
Non-operating income (expense)
Interest income 60 60 96 96
Interest expense, net (655) (655) (542) (542)
Other income (expense), net (610) (610) 222 222
Total other income (expense), net (1,205) (1,205) (224) (224)
Income (loss) before income taxes (4,347) 5,327 980 14,111 3,727 17,838
Income tax expense (benefit) (1,548) 1,897 349 3,919 1,035 4,954
Net income (loss) $ (2,799) $ 3,430 $ 631 $ 10,192 $ 2,692 $ 12,884
Net income (loss) per common share:
Basic $ (0.07) $ 0.02 $ 0.26 $ 0.33
Diluted $ (0.07) $ 0.02 $ 0.26 $ 0.33
Weighted-average shares used to compute net income (loss) per common share:
Basic 39,268 39,268 38,708 38,708
Diluted 39,268 40,186 38,846 38,846
* Non-GAAP adjustments include reversal of amortization expense and share-based compensation as follows, as well as the reversal of impairment of long-lived assets:
Six Months Ended June 30,
2014 2013
Amortization
Expense
Share-Based
Compensation
Expense
Total Non-
GAAP
Adjustment
Amortization
Expense
Share-Based
Compensation
Expense
Total Non-
GAAP
Adjustment
Cost of revenues (891) (653) (1,544) (891) (588) (1,479)
Selling, distribution, and marketing (50) (50) (47) (47)
General and administrative (67) (3,047) (3,114) (14) (1,910) (1,924)
Research and development (271) (271) (277) (277)

CONTACT: Amphastar Pharmaceuticals, Inc. William Peters Chief Financial Officer (909) 980-9484Source:Amphastar Pharmaceuticals, Inc.