GlobeNewswire Inc | Nov 6, 2020 06:50AM EST

November 06, 2020

RANCHO CUCAMONGA, Calif., Nov. 06, 2020 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (Amphastar or the Company) today reported results for the three months ended September 30, 2020.

Third Quarter Highlights

-- Net revenues of $83.4 million for the third quarter -- GAAP net income of $3.9 million, or $0.08 per share, for the third quarter -- Adjusted non-GAAP net income of $7.6 million, or $0.15 per share, for the third quarter

Dr. Jack Zhang, Amphastars President and Chief Executive Officer, commented: We once again demonstrated growth due to the continued strength of Primatene Mist and the re-launch of our epinephrine vial product. Additionally, we are very excited about the significant progress on our intranasal epinephrine product as this product once again illustrates our scientific and technical strengths.

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019 (inthousands,exceptpersharedata) Net revenues $ 83,431 $ 80,137 $ 253,925 $ 238,974 GAAP net incomeattributable to $ 3,919 $ 1,310 $ 7,676 $ 49,965 AmphastarAdjusted non-GAAP netincome attributable to $ 7,629 $ 5,169 $ 23,622 $ 14,171 Amphastar*GAAP diluted EPSattributable to $ 0.08 $ 0.03 $ 0.16 $ 1.00 Amphastar stockholdersAdjusted non-GAAPdiluted EPSattributable to $ 0.15 $ 0.10 $ 0.48 $ 0.28 Amphastarstockholders*

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* 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.

Third Quarter Results

Three Months Ended September30, Change 2020 2019 Dollars % (in thousands) Net revenues: Primatene Mist^ $ 12,988 $ 3,654 $ 9,334 255%

Enoxaparin 11,647 9,573 2,074 22% Lidocaine 10,657 11,670 (1,013 ) (9)% Phytonadione 10,470 10,916 (446 ) (4)% Naloxone 8,739 10,613 (1,874 ) (18)% Epinephrine 5,370 3,756 1,614 43% Other finishedpharmaceutical 21,464 25,547 (4,083 ) (16)% productsTotal finishedpharmaceutical $ 81,335 $ 75,729 $ 5,606 7% products netrevenuesAPI 2,096 4,408 (2,312 ) (52)% Total net $ 83,431 $ 80,137 $ 3,294 4% revenues

Changes in net revenues were primarily driven by:

-- Increased sales of Primatene Mist primarily resulting from The continued success of our nationwide television, radio, and digital marketing campaign Growth in online sales through Amazon Launching Primatene Mist at Kroger, the largest grocery store chain in the United States -- Increased sales of enoxaparin primarily due to higher unit volumes -- Increased epinephrine sales due to the launch of our recently approved epinephrine injection, USP 30mg/30mL multi-dose vial product during the second quarter of 2020 -- Decreased naloxone sales due to lower average selling price because of increased competition -- Decreased lidocaine and other finished pharmaceutical product sales due to lower demand, largely due to competitors returning to their normal distribution levels

Three Months Ended September30, Change 2020 2019 Dollars % (in thousands) Net revenues $ 83,431 $ 80,137 $ 3,294 4% Cost of revenues 46,923 44,885 2,038 5% Gross profit $ 36,508 $ 35,252 $ 1,256 4% as % of net revenues 44% 44%

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

-- Increased sales of Primatene Mist and the launch of epinephrine injection multi-dose vial, both of which have higher margins -- Decreased sales of naloxone and other finished pharmaceutical products with higher margins

Three Months Ended September30, Change 2020 2019 Dollars % (in thousands) Selling,distribution, and $ 3,673 $ 3,221 $ 452 14% marketingGeneral and 11,674 11,021 653 6% administrativeResearch and 17,644 18,606 (962 ) (5)% development

-- Marketing and distribution expenses increased primarily related to Primatene Mist, including the cost of a national television, radio and digital marketing campaign, which began in July 2019 -- General and administrative expenses increased primarily due to increased legal expenses -- Research and development expenses decreased due to lower expenses in China, partially offset by increased domestic expenses related to our generic inhalation product pipeline, our insulin biosimilar programs and our intranasal epinephrine program

Cash flow provided by operating activities for the nine months ended September 30, 2020, was $40.4 million.

Impact of COVID-19

As a result of the COVID-19 pandemic, during the first quarter and second quarter, sales of Primatene Mist and certain hospital products increased, while sales of certain products frequently used in elective produces, such as Cortrosyn and lidocaine jelly, decreased. During the third quarter of 2020, sales of these products returned to levels closer to those experienced prior to the COVID-19 pandemic. 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 Companys 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 thatthe COVID-19pandemic 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 $1.5 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and nine 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 September 30, 2020. The Company is currently developing multiple proprietary products for injectable and intranasal dosage forms.

Amphastars 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 specialty 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 Companys 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.

Amphastars 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 Amphastars 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 Companys financial performance because the Companys 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 6, 2020, at 9:00 a.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 7086853.

The call can also be accessed on the Investors page on the Companys 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 Companys 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 Amphastars historical performance and its current expectations, estimates, and projections regarding Amphastars 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 Amphastars 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 Amphastars 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-19s 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 Companys website at http://ir.amphastar.com and on the SECs 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 Amphastars expectations to change.

Contact Information:

Amphastar Pharmaceuticals, Inc.Bill PetersChief Financial Officer(909) 980-9484

Table IAmphastar Pharmaceuticals, Inc.Condensed Consolidated Statement of Operations(Unaudited; in thousands, except per share data)

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019 Net revenues $ 83,431 $ 80,137 $ 253,925 $ 238,974 Cost of revenues 46,923 44,885 147,417 140,432 Gross profit 36,508 35,252 106,508 98,542 Operating expenses:Selling,distribution, 3,673 3,221 10,993 9,354 and marketingGeneral and 11,674 11,021 38,344 39,774 administrativeResearch and 17,644 18,606 49,096 49,209 developmentTotal operating 32,991 32,848 98,433 98,337 expenses Income from 3,517 2,404 8,075 205 operations Non-operatingincome 3,561 (822 ) 3,304 58,837 (expenses), net Income before 7,078 1,582 11,379 59,042 income taxesIncome tax 2,285 598 4,490 13,292 provision Net income $ 4,793 $ 984 $ 6,889 $ 45,750 Net income(loss)attributable to $ 874 $ (326 ) $ (787 ) $ (4,215 ) non-controllinginterests Net incomeattributable to $ 3,919 $ 1,310 $ 7,676 $ 49,965 Amphastar Net income pershareattributable to Amphastarstockholders:Basic $ 0.08 $ 0.03 $ 0.16 $ 1.06 Diluted $ 0.08 $ 0.03 $ 0.16 $ 1.00 Weighted-averageshares used tocompute netincome per share attributable toAmphastarstockholders:Basic 47,496 47,239 46,886 47,030 Diluted 49,848 50,075 48,922 50,128

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

September30, December31, 2020 2019 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 87,910 $ 73,685 Restricted cash 1,865 1,865 Short-term investments 10,873 11,675 Restricted short-term investments 2,200 2,290 Accounts receivable, net 52,382 45,376 Inventories 108,870 110,501 Income tax refunds and deposits 1,455 311 Prepaid expenses and other assets 10,986 9,538 Total current assets 276,541 255,241 Property, plant, and equipment, net 245,881 233,856 Finance lease right-of-use assets 693 887 Operating lease right-of-use assets 20,256 18,805 Goodwill and intangible assets, net 40,377 41,153 Other assets 7,735 11,156 Deferred tax assets 22,235 25,873 Total assets $ 613,718 $ 586,971 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 79,292 $ 77,051 Income taxes payable 1,619 2,042 Current portion of long-term debt 12,167 7,741 Current portion of operating lease 3,639 3,175 liabilitiesTotal current liabilities 96,717 90,009 Long-term reserve for income tax 3,425 3,425 liabilitiesLong-term debt, net of current portion 32,903 39,394 Long-term operating lease liabilities, 17,534 16,315 net of current portionDeferred tax liabilities 823 867 Other long-term liabilities 11,354 9,433 Total liabilities 162,756 159,443 Commitments and contingencies Stockholders? equity: Preferred stock: par value $0.0001;20,000,000 shares authorized; no shares ? ? issued and outstandingCommon stock: par value $0.0001;300,000,000 shares authorized;54,623,837 and 47,534,215 shares issuedand outstanding as of September 30, 2020 5 5 and 52,495,483 and 46,576,968 sharesissued and outstanding as of December31, 2019, respectivelyAdditional paid-in capital 404,084 367,305 Retained earnings 124,046 116,370 Accumulated other comprehensive loss (4,478 ) (4,687 )Treasury stock (118,425 ) (97,627 )Total Amphastar Pharmaceuticals, Inc. 405,232 381,366 stockholders? equityNon-controlling interests 45,730 46,162 Total equity 450,962 427,528 Total liabilities and stockholders? $ 613,718 $ 586,971 equity

Table IIIAmphastar Pharmaceuticals, Inc.Reconciliation of Non-GAAP Measures(Unaudited; in thousands, except per share data)

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019 GAAP net income $ 4,793 $ 984 $ 6,889 $ 45,750 Adjusted for: Intangible amortization 262 251 771 777 Share-based compensation 4,370 4,294 13,846 13,000 Impairment of long-lived 130 11 160 194 assetsExpense related toexecutive separation ? ? 4,869 ? agreementGain on litigation ? ? ? (59,900 )settlementIncome tax (benefit)provision on pre-tax (943 ) (598 ) (3,392 ) 10,422 adjustmentsNon-GAAP net income $ 8,612 $ 4,942 $ 23,143 $ 10,243 Non-GAAP net income (loss)attributable to $ 983 $ (227 ) $ (479 ) $ (3,928 )non-controlling interests Non-GAAP net income $ 7,629 $ 5,169 $ 23,622 $ 14,171 attributable to Amphastar Non-GAAP net income pershare attributable to Amphastar stockholders:Basic $ 0.16 $ 0.11 $ 0.50 $ 0.30 Diluted $ 0.15 $ 0.10 $ 0.48 $ 0.28 Weighted-average sharesused to compute non-GAAPnet income per share attributable to Amphastarstockholders:Basic 47,496 47,239 46,886 47,030 Diluted 49,848 50,075 48,922 50,128

Three Months Ended September30,2020 Selling, General Research Non-operating Income Non-controlling Cost of distribution and and income tax interest provision revenue and administrative development (expense), (benefit) adjustment marketing netGAAP $ 46,923 $ 3,673 $ 11,674 $ 17,644 $ 3,561 $ 2,285 $ 874 Intangible (229 ) ? (33 ) ? ? ? 12 amortizationShare-based (947 ) (120 ) (2,899 ) (404 ) ? ? 117 compensationImpairment oflong-lived (19 ) ? (111 ) ? ? ? 8 assetsIncome taxprovision(benefit) on ? ? ? ? ? 943 (28 )pre-taxadjustmentsNon-GAAP $ 45,728 $ 3,553 $ 8,631 $ 17,240 $ 3,561 $ 3,228 $ 983

Reconciliation of Non-GAAP Measures (continued)

Three Months Ended September30,2019 Selling, General Research Non-operating Income Non-controlling Cost of distribution and and income tax interest provision revenue and administrative development (expense), (benefit) adjustment marketing netGAAP $ 44,885 $ 3,221 $ 11,021 $ 18,606 $ (822 ) $ 598 $ (326 )Intangible (216 ) ? (35 ) ? ? ? 12 amortizationShare-based (701 ) (96 ) (3,138 ) (359 ) ? ? 107 compensationImpairment oflong-lived (4 ) ? (11 ) 4 ? ? 6 assetsIncome taxprovision(benefit) on ? ? ? ? ? 598 (26 )pre-taxadjustmentsNon-GAAP $ 43,964 $ 3,125 $ 7,837 $ 18,251 $ (822 ) $ 1,196 $ (227 )

Nine Months Ended September30,2020 Selling, General Research Non-operating Income Non-controlling Cost of distribution and and income tax interest provision revenue and administrative development (expense), (benefit) adjustment marketing netGAAP $ 147,417 $ 10,993 $ 38,344 $ 49,096 $ 3,304 $ 4,490 $ (787 )Intangible (670 ) ? (101 ) ? ? ? 34 amortizationShare-based (3,276 ) (350 ) (8,851 ) (1,369 ) ? ? 330 compensationImpairment oflong-lived (32 ) ? (128 ) ? ? ? 15 assetsExpenserelated toexecutive ? ? (4,869 ) ? ? ? ? separationagreementIncome taxprovision(benefit) on ? ? ? ? ? 3,392 (71 )pre-taxadjustmentsNon-GAAP $ 143,439 $ 10,643 $ 24,395 $ 47,727 $ 3,304 $ 7,882 $ (479 )

Nine Months Ended September30,2019 Selling, General Research Non-operating Income Non-controlling Cost of distribution and and income tax interest provision revenue and marketing administrative development (expense), (benefit) adjustment netGAAP $ 140,432 $ 9,354 $ 39,774 $ 49,209 $ 58,837 $ 13,292 $ (4,215 )Intangible (669 ) ? (108 ) ? ? ? 34 amortizationShare-based (2,939 ) (285 ) (8,577 ) (1,199 ) ? ? 257 compensationImpairmentof (69 ) ? (23 ) (102 ) ? ? 55 long-livedassetsGain onlitigation ? ? ? ? (59,900 ) ? ? settlementIncome taxbenefit on ? ? ? ? ? (10,422 ) (59 )pre-taxadjustmentsNon-GAAP $ 136,755 $ 9,069 $ 31,066 $ 47,908 $ (1,063 ) $ 2,870 $ (3,928 )