Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) (“Amphastar” or the
“Company”) today reported results for the three months ended June
30, 2017.
Second Quarter Highlights
- Net revenues of $65.2 million for the second quarter
- GAAP net income of $2.0 million, or $0.04 per diluted share,
for the second quarter
- Adjusted non-GAAP net income of $5.4 million, or $0.11 per
diluted share, for the second quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
(in thousands, except per share data) |
|
Net revenues |
|
$ |
65,187 |
|
$ |
68,033 |
|
$ |
121,857 |
|
$ |
127,399 |
|
GAAP net income |
|
$ |
1,972 |
|
$ |
6,895 |
|
$ |
2,865 |
|
$ |
9,384 |
|
Adjusted non-GAAP net
income* |
|
$ |
5,430 |
|
$ |
10,347 |
|
$ |
9,905 |
|
$ |
15,906 |
|
GAAP diluted EPS |
|
$ |
0.04 |
|
$ |
0.15 |
|
$ |
0.06 |
|
$ |
0.21 |
|
Adjusted non-GAAP
diluted EPS* |
|
$ |
0.11 |
|
$ |
0.23 |
|
$ |
0.21 |
|
$ |
0.35 |
|
|
* 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 II of this press
release. |
Second Quarter Results
For the three months ended June 30, 2017, the
Company reported net revenues of $65.2 million, a decrease of 4%
compared to $68.0 million for the three months ended June 30,
2016.
For the three months ended June 30, 2017, net
revenues of enoxaparin were $8.3 million, representing a decrease
of 52% compared to $17.3 million for the three months ended June
30, 2016. Of the decrease, $7.1 million was due to lower unit
volumes, while the remainder was due to lower pricing.
Other finished pharmaceutical product revenues were
$55.5 million for the three months ended June 30, 2017,
representing an increase of 19% compared to $46.4 million for the
three months ended June 30, 2016. This was primarily due to an
increase in sales of epinephrine to $10.6 million from $5.2 million
resulting from increases in both average selling price and unit
volumes. The FDA requested that the Company discontinue the
manufacturing and distribution of its epinephrine injection, USP
vial product, which had been marketed under the “grandfather”
exception to the FDA’s “Prescription Drug Wrap-Up” program. The
Company discontinued selling this product in the second quarter of
2017. Net revenues from this product were $9.9 million for
the three months ended June 30, 2017.
For the three months ended June 30, 2017, sales of
lidocaine increased to $9.3 million from $8.2 million for the three
months ended June 30, 2016, and sales of phytonadione increased to
$10.0 million from $8.8 million for the three months ended June 30,
2016, both of which were primarily due to an increase in unit
volumes. These increases were partially offset by a decrease in
sales of naloxone to $10.3 million for the three months ended June
30, 2017 from $15.6 million for the three months ended June 30,
2016, primarily as a result of a decrease in unit volumes as well
as a lower average selling price.
Sales of the Company’s insulin active
pharmaceutical ingredient, or API, products were $1.4 million for
the three months ended June 30, 2017, compared to $4.3 million for
the three months ended June 30, 2016, as the Company did not ship
any API to MannKind in the second quarter of 2017.
Cost of revenues were $38.4 million, or 59% of
revenues, and $36.3 million, or 53% of revenues, for the three
months ended June 30, 2017 and 2016, respectively, representing an
increase of $2.1 million. Cost of revenues in the second
quarter of 2017 included a charge of $4.7 million to adjust certain
inventory items to their net realizable value, including $2.9
million for enoxaparin inventory.
Selling, distribution, and marketing expenses were
$1.6 million and $1.3 million for the three months ended June 30,
2017 and 2016, respectively. For the three months ended June 30,
2017, general and administrative expenses increased to $12.2
million from $9.5 million for the three months ended June 30, 2016,
primarily due to an increase in legal fees, in preparation for the
Company’s patent trial in July 2017.
For the three months ended June 30, 2017, research
and development expenses increased by 1% to $10.7 million from
$10.5 million for the three months ended June 30, 2016.
Expenditures on clinical trials and materials related to our
pipeline products increased, which were partially offset by a
decrease in FDA fees pertaining to the NDA filing of our intranasal
naloxone product candidate that was submitted in the second quarter
of 2016.
The Company recorded an income tax expense of $1.2
million for the three months ended June 30, 2017, compared to an
income tax expense of $2.9 million for the three months ended June
30, 2016.
The Company recognized net income of $2.0 million,
or $0.04 per fully diluted share, for the three months ended June
30, 2017, compared to a net income of $6.9 million, or $0.15 per
fully diluted share, for the three months ended June 30, 2016. The
Company’s adjusted non-GAAP quarterly net income was $5.4 million,
or $0.11 per fully diluted share, for the three months ended June
30, 2017, compared to an adjusted non-GAAP net income of $10.3
million, or $0.23 per fully diluted share, for the three months
ended June 30, 2016. Please see the discussion in the section
entitled “Non-GAAP Financial Measures” and the reconciliation of
GAAP to non-GAAP measures in Table II of this press release.
The Company’s cash and cash equivalents, short-term
investments, and unrestricted short-term investments were $87.4
million as of June 30, 2017. Cash flow provided by operating
activities for the six months ended June 30, 2017, was $27.0
million.
Share buyback program
On August 7, 2017, the Company’s Board of Directors
authorized an increase of $20.0 million to the Company’s share
buyback program, which is expected to continue for an indefinite
period of time. The primary goal of the program is to offset
dilution created by the Company’s equity compensation programs.
Purchases may be made through the open market and
private block transactions pursuant to Rule 10b5-1 plans, privately
negotiated transactions, or other means, as determined by the
Company’s management and in accordance with the requirements of
the Securities and Exchange Commission.
The timing and actual number of shares repurchased
will depend on a variety of factors including price, corporate and
regulatory requirements, and other conditions.
Pipeline Information
The Company currently has six abbreviated new drug
applications, or ANDAs, filed with the FDA targeting products with
a market size of over $1.1 billion, three biosimilar products in
development targeting products with a market size of $15.0 billion,
and 11 generic products in development targeting products with a
market size of over $12.0 billion. This market information is based
on IMS Health data for the 12 months ended June 30, 2017. The
Company’s proprietary pipeline includes NDAs for Primatene® Mist
and intranasal naloxone. The Company is currently developing four
other proprietary products, which include injectable, inhalation
and intranasal dosage forms.
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 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 is available at the Company’s website at
www.amphastar.com.
Amphastar’s logo and other trademarks or service
marks of Amphastar Pharmaceuticals, Inc., including, but not
limited to Primatene®, Amphadase® and Cortrosyn®, are the property
of Amphastar Pharmaceuticals, Inc.
Non-GAAP Financial Measures
To supplement its consolidated financial
statements, which are prepared and presented in accordance with
U.S. generally accepted accounting principles, or 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, 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
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, August 9, 2017, at 2:00 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
62348267.
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 the Company’s expectations regarding future
financial performance, backlog, sales and marketing of its
products, market size and growth, the timing of FDA filings or
approvals, acquisitions and other matters related to its pipeline
of product candidates, the timing for completion of construction at
the Company’s IMS facility, its share buyback program and other
future events. These statements are not historical facts but rather
are based on Amphastar’s historical performance and its current
expectations, estimates, and projections regarding Amphastar’s
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. You can locate these reports
through the Company’s website at http://ir.amphastar.com and on the
SEC’s website at www.sec.gov. Amphastar undertakes no
obligation to revise or update information 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 Amphastar’s expectations to
change.
Table I |
Amphastar Pharmaceuticals, Inc. |
Condensed Consolidated Statement of
Operations |
(Unaudited; in thousands, except per share
data) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
65,187 |
|
$ |
68,033 |
|
|
$ |
121,857 |
|
|
$ |
127,399 |
|
|
Cost of revenues |
|
|
38,440 |
|
|
36,319 |
|
|
|
72,282 |
|
|
|
70,783 |
|
|
Gross profit |
|
|
26,747 |
|
|
31,714 |
|
|
|
49,575 |
|
|
|
56,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (income)
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and marketing |
|
|
1,596 |
|
|
1,332 |
|
|
|
3,075 |
|
|
|
2,684 |
|
|
General
and administrative |
|
|
12,234 |
|
|
9,458 |
|
|
|
23,572 |
|
|
|
20,328 |
|
|
Research
and development |
|
|
10,732 |
|
|
10,594 |
|
|
|
21,982 |
|
|
|
19,199 |
|
|
Gain on
sale of intangible assets |
|
|
— |
|
|
— |
|
|
|
(2,643 |
) |
|
|
— |
|
|
Total operating
expenses |
|
|
24,562 |
|
|
21,384 |
|
|
|
45,986 |
|
|
|
42,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
2,185 |
|
|
10,330 |
|
|
|
3,589 |
|
|
|
14,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
(expense), net |
|
|
988 |
|
|
(578 |
) |
|
|
1,088 |
|
|
|
(837 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
3,173 |
|
|
9,752 |
|
|
|
4,677 |
|
|
|
13,568 |
|
|
Income tax expense |
|
|
1,201 |
|
|
2,857 |
|
|
|
1,812 |
|
|
|
4,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,972 |
|
$ |
6,895 |
|
|
$ |
2,865 |
|
|
$ |
9,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
$ |
0.15 |
|
|
$ |
0.06 |
|
|
$ |
0.21 |
|
|
Diluted |
|
$ |
0.04 |
|
$ |
0.15 |
|
|
$ |
0.06 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
46,025 |
|
|
44,957 |
|
|
|
46,047 |
|
|
|
44,999 |
|
|
Diluted |
|
|
47,866 |
|
|
45,968 |
|
|
|
47,962 |
|
|
|
45,712 |
|
|
Table II |
Amphastar Pharmaceuticals, Inc. |
Reconciliation of Non-GAAP
Measures |
(Unaudited; in thousands, except per share
data) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
|
$ |
1,972 |
|
|
$ |
6,895 |
|
|
$ |
2,865 |
|
|
$ |
9,384 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization |
|
|
705 |
|
|
|
570 |
|
|
|
1,426 |
|
|
|
1,050 |
|
Share-based compensation |
|
|
4,298 |
|
|
|
4,198 |
|
|
|
8,749 |
|
|
|
8,049 |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
114 |
|
|
|
— |
|
|
|
331 |
|
Income
tax expense on pre-tax adjustments |
|
|
(1,545 |
) |
|
|
(1,430 |
) |
|
|
(3,135 |
) |
|
|
(2,908 |
) |
Non-GAAP net
income |
|
$ |
5,430 |
|
|
$ |
10,347 |
|
|
$ |
9,905 |
|
|
$ |
15,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.12 |
|
|
$ |
0.23 |
|
|
$ |
0.22 |
|
|
$ |
0.35 |
|
Diluted |
|
$ |
0.11 |
|
|
$ |
0.23 |
|
|
$ |
0.21 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute non-GAAP net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
46,025 |
|
|
|
44,957 |
|
|
|
46,047 |
|
|
|
44,999 |
|
Diluted |
|
|
47,866 |
|
|
|
45,968 |
|
|
|
47,962 |
|
|
|
45,712 |
|
|
|
Three Months Ended
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, |
|
General |
|
Research |
|
Income |
|
|
Cost of |
|
distribution |
|
and |
|
and |
|
tax expense |
|
|
revenue |
|
and marketing |
|
administrative |
|
development |
|
(benefit) |
GAAP |
|
$ |
38,440 |
|
|
$ |
1,596 |
|
|
$ |
12,234 |
|
|
$ |
10,732 |
|
|
$ |
1,201 |
Intangible
amortization |
|
|
(669 |
) |
|
|
— |
|
|
|
(36 |
) |
|
|
— |
|
|
|
— |
Share-based
compensation |
|
|
(897 |
) |
|
|
(65 |
) |
|
|
(2,985 |
) |
|
|
(351 |
) |
|
|
— |
Income tax expense on
pre-tax adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,545 |
Non-GAAP |
|
$ |
36,874 |
|
|
$ |
1,531 |
|
|
$ |
9,213 |
|
|
$ |
10,381 |
|
|
$ |
2,746 |
|
|
Three Months Ended
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, |
|
General |
|
Research |
|
Income |
|
|
Cost of |
|
distribution |
|
and |
|
and |
|
tax expense |
|
|
revenue |
|
and marketing |
|
administrative |
|
development |
|
(benefit) |
GAAP |
|
$ |
36,319 |
|
|
$ |
1,332 |
|
|
$ |
9,458 |
|
|
$ |
10,594 |
|
|
$ |
2,857 |
Intangible
amortization |
|
|
(535 |
) |
|
|
— |
|
|
|
(35 |
) |
|
|
— |
|
|
|
— |
Share-based
compensation |
|
|
(771 |
) |
|
|
(65 |
) |
|
|
(3,100 |
) |
|
|
(262 |
) |
|
|
— |
Impairment of
long-lived assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(114 |
) |
|
|
— |
Income tax expense on
pre-tax adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,430 |
Non-GAAP |
|
$ |
35,013 |
|
|
$ |
1,267 |
|
|
$ |
6,323 |
|
|
$ |
10,218 |
|
|
$ |
4,287 |
Reconciliation of Non-GAAP Measures
(continued) |
|
|
|
Six Months Ended
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, |
|
General |
|
Research |
|
Income |
|
|
Cost of |
|
distribution |
|
and |
|
and |
|
tax expense |
|
|
revenue |
|
and marketing |
|
administrative |
|
development |
|
(benefit) |
GAAP |
|
$ |
72,282 |
|
|
$ |
3,075 |
|
|
$ |
23,572 |
|
|
$ |
21,982 |
|
|
$ |
1,812 |
Intangible
amortization |
|
|
(1,354 |
) |
|
|
— |
|
|
|
(72 |
) |
|
|
— |
|
|
|
— |
Share-based
compensation |
|
|
(2,028 |
) |
|
|
(149 |
) |
|
|
(5,768 |
) |
|
|
(804 |
) |
|
|
— |
Income tax expense on
pre-tax adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,135 |
Non-GAAP |
|
$ |
68,900 |
|
|
$ |
2,926 |
|
|
$ |
17,732 |
|
|
$ |
21,178 |
|
|
$ |
4,947 |
|
|
Six Months Ended
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, |
|
General |
|
Research |
|
Income |
|
|
Cost of |
|
distribution |
|
and |
|
and |
|
tax expense |
|
|
revenue |
|
and marketing |
|
administrative |
|
development |
|
(benefit) |
GAAP |
|
$ |
70,783 |
|
|
$ |
2,684 |
|
|
$ |
20,328 |
|
|
$ |
19,199 |
|
|
$ |
4,184 |
Intangible
amortization |
|
|
(981 |
) |
|
|
— |
|
|
|
(69 |
) |
|
|
— |
|
|
|
— |
Share-based
compensation |
|
|
(1,570 |
) |
|
|
(131 |
) |
|
|
(5,746 |
) |
|
|
(602 |
) |
|
|
— |
Impairment of
long-lived assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(331 |
) |
|
|
— |
Income tax expense on
pre-tax adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,908 |
Non-GAAP |
|
$ |
68,232 |
|
|
$ |
2,553 |
|
|
$ |
14,513 |
|
|
$ |
18,266 |
|
|
$ |
7,092 |
Contact Information:
Amphastar Pharmaceuticals, Inc.
Bill Peters
Chief Financial Officer
(909) 980-9484
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