Reports Net Revenues of $89.7 Million for the Three Months Ended December 31, 2018

RANCHO CUCAMONGA, Calif., March 12, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full year ended December 31, 2018.

Fourth Quarter Highlights

• Net revenues of $89.7 million for the fourth quarter, up 48% from the quarter ended December 31, 2017
• GAAP net income attributable to Amphastar of $1.9 million, or $0.04 per diluted share, for the fourth quarter
• Adjusted non-GAAP net income attributable to Amphastar of $6.2 million, or $0.13 per diluted share, for the fourth quarter

Full Year Highlights

• Net revenues of $294.7 million for the fiscal year, up 23% from the previous year
• GAAP net loss attributable to Amphastar of $5.7 million, or $(0.12) per diluted share, for the fiscal year
• Adjusted non-GAAP net income attributable to Amphastar of $10.4 million, or $0.21 per diluted share, for the fiscal year

Dr. Jack Zhang, Amphastar’s CEO, commented: “The fourth quarter ended a great year for our Company. During the quarter we received approval for Primatene® Mist, which followed multiple ANDA approvals and launches throughout the year. Sales grew 48% in the quarter with Primatene® Mist’s launch, and capped off sales growth of 23% for the year.”

		Three Months Ended						Year Ended
		December 31,						December 31,
		2018			2017			2018				2017
		(in thousands, except per share data)
Net revenues		$	89,690		$	60,402		$	294,666			$	240,175
GAAP net income (loss) attributable to Amphastar		$	1,867		$	787		$	(5,738	)		$	3,647
Adjusted non-GAAP net income attributable to Amphastar*		$	6,231		$	4,115		$	10,399			$	17,334
GAAP diluted EPS attributable to Amphastar shareholders		$	0.04		$	0.02		$	(0.12	)		$	0.08
Adjusted non-GAAP diluted EPS attributable to Amphastarshareholders*		$	0.13		$	0.08		$	0.21			$	0.36

___________________________________ * Adjusted non-GAAP net income attributable to Amphastar and Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders 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
		2018			2017			Dollars				%
		(in thousands)
Net revenues:
Enoxaparin		$	19,085		$	11,347		$	7,738			68	%
Lidocaine			13,661			10,384			3,277			32	%
Phytonadione			12,942			10,703			2,239			21	%
Naloxone			7,703			8,434			(731	)		(9	)%
Medroxyprogesterone			7,448			—			7,448			N/A
Epinephrine			1,264			3,665			(2,401	)		(66	)%
Primatene® Mist			3,574			—			3,574			N/A
Other finished pharmaceutical products			17,257			11,452			5,805			51	%
Total finished pharmaceutical products net revenues		$	82,934		$	55,985		$	26,949			48	%
API			6,756			4,417			2,339			53	%
Total net revenues		$	89,690		$	60,402		$	29,288			48	%

Changes in net revenues were primarily driven by:

• Enoxaparin increases due to higher average selling prices, as well as increased unit volumes
• Medroxyprogesterone, which was launched in the first quarter of 2018
• Primatene® Mist, which was launched in the fourth quarter of 2018
• Epinephrine declines due to lower unit volumes

		Three Months Ended
		December 31,								Change
		2018				2017				Dollars			%
		(in thousands)
Net revenues		$	89,690			$	60,402			$	29,288		48	%
Cost of revenues			55,001				39,912				15,089		38	%
Gross profit		$	34,689			$	20,490			$	14,199		69	%
as % of net revenues			39	%			34	%

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

• The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins
• Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin

		Three Months Ended
		December 31,						Change
		2018			2017			Dollars			%
		(in thousands)
Selling, distribution and marketing		$	2,596		$	1,629		$	967		59	%
General and administrative			13,814			9,221			4,593		50	%
Research and development			16,734			11,386			5,348		47	%

• Selling, distribution and marketing expenses increased due to higher freight costs and marketing expenses related to the launch of Primatene® Mist
• General and administrative expenses increased primarily due to higher legal fees and expenses at the Company’s subsidiary Amphastar Nanjing Pharmaceuticals, or ANP
• Research and development expenses increased primarily due to material expenditures at ANP for pipeline product candidates, increased clinical trial expenses, and Food and Drug Administration, or FDA, filing fees

Year-End Results

		Year Ended December 31,						Change
		2018			2017			Dollars				%
		(in thousands)
Net revenues:
Enoxaparin		$	53,371		$	36,593		$	16,778			46	%
Lidocaine			43,328			37,602			5,726			15	%
Phytonadione			41,897			37,946			3,951			10	%
Naloxone			37,195			42,342			(5,147	)		(12	)%
Medroxyprogesterone			24,071			—			24,071			N/A
Epinephrine			10,055			25,914			(15,859	)		(61	)%
Primatene® Mist			3,574			—			3,574			N/A
Other finished pharmaceutical products			57,568			49,742			7,826			16	%
Total finished pharmaceutical products net revenues		$	271,059		$	230,139		$	40,920			18	%
API			23,607			10,036			13,571			135	%
Total net revenues		$	294,666		$	240,175		$	54,491			23	%

Changes in net revenues were primarily driven by:

• Enoxaparin increases due to higher average selling prices, as well as increased unit volumes
• Medroxyprogesterone, which was launched in the first quarter of 2018
• Primatene® Mist, which was launched in the fourth quarter of 2018
• Lidocaine increases primarily due to increased unit volumes
• Epinephrine declines due to the discontinuation of the unapproved vial product in 2017
• Naloxone declines due to lower unit volumes

		Year Ended December 31,								Change
		2018				2017				Dollars			%
		(in thousands)
Net revenues		$	294,666			$	240,175			$	54,491		23	%
Cost of revenues			187,681				149,666				38,015		25	%
Gross profit		$	106,985			$	90,509			$	16,476		18	%
as % of net revenues			36	%			38	%

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

• The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins
• Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin

		Year Ended December 31,							Change
		2018			2017				Dollars			%
		(in thousands)
Selling, distribution and marketing		$	8,156		$	6,460			$	1,696		26	%
General and administrative			49,888			44,458				5,430		12	%
Research and development			57,564			43,503				14,061		32	%
Gain on sale of intangible assets			—			(2,643	)			2,643		(100	)%

• Selling, distribution and marketing expenses increased primarily due to increased freight costs and marketing expenses related to the launch of Primatene® Mist
• General and administrative expenses increased primarily due to higher legal fees and expenses at ANP
• Research and development expenses increased primarily due to expenditures related to the expansion of our ANP facility, as well as an increase in FDA filing fees and an increase in clinical trial expenses

Cash flow provided by operating activities for the year ended December 31, 2018 was $38.2 million.

Certain GAAP and non-GAAP measures for comparative periods in 2017 were revised for immaterial errors.

Pipeline Information

The Company currently has five abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of over $750 million, three biosimilar products in development targeting products with a market size of over $14 billion, and 11 generic products in development targeting products with a market size of over $12 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2018. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing four other proprietary products, which include injectable, inhalation and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has nine Drug Master Files, or DMFs, on file with the FDA and is developing nine 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 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, including, but not limited to Primatene®, 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, 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) attributed to Amphastar and (ii) Adjusted non-GAAP diluted EPS attributed to Amphastar’s shareholders, which 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, March 12, 2019, 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 4878419.

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, 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. 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.

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								Year Ended
		December 31,								December 31,
		2018				2017				2018				2017
Net revenues		$	89,690			$	60,402			$	294,666			$	240,175
Cost of revenues			55,001				39,912				187,681				149,666
Gross profit			34,689				20,490				106,985				90,509
Operating (income) expenses:
Selling, distribution, and marketing			2,596				1,629				8,156				6,460
General and administrative			13,814				9,221				49,888				44,458
Research and development			16,734				11,386				57,564				43,503
Gain on sale of intangible assets			—				—				—				(2,643	)
Total operating expenses			33,144				22,236				115,608				91,778
Income (loss) from operations			1,545				(1,746	)			(8,623	)			(1,269	)
Non-operating income (expense), net			(956	)			601				(1,303	)			2,518
Income (loss) before income taxes			589				(1,145	)			(9,926	)			1,249
Income tax expense (benefit)			(1,129	)			(1,932	)			(3,266	)			(2,398	)
Net income (loss)		$	1,718			$	787			$	(6,660	)		$	3,647
Net loss attributable to non-controlling interests		$	(149	)		$	—			$	(922	)		$	—
Net income (loss) attributable to Amphastar		$	1,867			$	787			$	(5,738	)		$	3,647
Net income (loss) per share attributable to Amphastar shareholders:
Basic		$	0.04			$	0.02			$	(0.12	)		$	0.08
Diluted		$	0.04			$	0.02			$	(0.12	)		$	0.08
Weighted-average shares used to compute net income (loss) pershare attributable to Amphastar shareholders:
Basic			46,268				46,233				46,395				46,107
Diluted			49,181				49,330				46,395				48,367

The comparative periods in 2017 were revised for immaterial errors.

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

		December 31,				December 31,
		2018				2017
ASSETS
Current assets:
Cash and cash equivalents		$	86,337			$	65,594
Short-term investments			2,831				2,635
Restricted cash and short-term investments			4,155				4,155
Accounts receivable, net			52,163				35,996
Inventories			69,322				63,609
Income tax refunds and deposits			49				6,036
Prepaid expenses and other assets			5,485				9,753
Total current assets			220,342				187,778
Property, plant, and equipment, net			210,418				180,545
Goodwill and intangible assets, net			42,267				45,140
Other assets			9,918				8,663
Deferred tax assets			30,618				28,946
Total assets		$	513,563			$	451,072
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	87,418			$	57,555
Income taxes payable			1,187				3,325
Current portion of long-term debt and capital leases			18,229				6,312
Total current liabilities			106,834				67,192
Long-term reserve for income tax liabilities			415				879
Long-term debt and capital leases, net of current portion			31,984				40,844
Deferred tax liabilities			1,031				1,361
Other long-term liabilities			8,940				7,060
Total liabilities			149,204				117,336
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; 51,438,675 and 46,631,118 shares issued and outstanding as of December 31, 2018 and 50,039,212 and 46,623,581 shares issued and outstanding as of December 31, 2017, respectively			5				5
Additional paid-in capital			344,434				313,891
Retained earnings			67,485				72,642
Accumulated other comprehensive loss			(4,013	)			(2,100	)
Treasury stock			(75,476	)			(50,702	)
Total Amphastar stockholders’ equity			332,435				333,736
Non-controlling interests			31,924				—
Total equity			364,359				333,736
Total liabilities and stockholders’ equity		$	513,563			$	451,072

The December 31, 2017, figures were revised for immaterial errors.

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

		Three Months Ended								Year Ended
		December 31,								December 31,
		2018				2017				2018				2017
GAAP net income (loss)		$	1,718			$	787			$	(6,660	)		$	3,647
Adjusted for:
Intangible amortization			265				717				1,987				2,856
Share-based compensation			3,910				4,182				16,680				17,087
Impairment of long-lived assets			1,257				—				1,647				—
Income tax expense on pre-tax adjustments			(1,004	)			(1,571	)			(4,044	)			(6,256	)
Non-GAAP net income		$	6,146			$	4,115			$	9,610			$	17,334
Non-GAAP net loss attributable to non-controlling interests		$	(85	)		$	—			$	(789	)		$	—
Non-GAAP net income attributable to Amphastar		$	6,231			$	4,115			$	10,399			$	17,334
Non-GAAP net income per share attributable to Amphastar shareholders:
Basic		$	0.13			$	0.09			$	0.22			$	0.38
Diluted		$	0.13			$	0.08			$	0.21			$	0.36
Weighted-average shares used to compute non-GAAP net incomeper share attributable to Amphastar shareholders:
Basic			46,268				46,233				46,395				46,107
Diluted			49,181				49,330				48,830				48,367

		Three Months Ended December 31, 2018
						Selling,				General				Research				Income				Non-controlling
		Cost of				distribution				and				and				tax expense				interest
		revenue				and marketing				administrative				development				(benefit)				adjustment
GAAP		$	55,001			$	2,596			$	13,814			$	16,734			$	(1,129	)		$	(149	)
Intangible amortization			(224	)			—				(41	)			—				—				11
Share-based compensation			(898	)			(86	)			(2,602	)			(324	)			—				62
Impairment of long-lived assets			(1,010	)			—				(5	)			(242	)			—				1
Income tax expense on pre-taxadjustments			—				—				—				—				1,004				(10	)
Non-GAAP		$	52,869			$	2,510			$	11,166			$	16,168			$	(125	)		$	(85	)

		Three Months Ended December 31, 2017
						Selling,				General				Research				Income				Non-controlling
		Cost of				distribution				and				and				tax expense				interest
		revenue				and marketing				administrative				development				(benefit)				adjustment
GAAP		$	39,912			$	1,629			$	9,221			$	11,386			$	(1,932	)		$	—
Intangible amortization			(675	)			—				(42	)			—				—				—
Share-based compensation			(913	)			(65	)			(2,928	)			(276	)			—				—
Income tax expense on pre-taxadjustments			—				—				—				—				1,571				—
Non-GAAP		$	38,324			$	1,564			$	6,251			$	11,110			$	(361	)		$	—

The comparative periods in 2017 were revised for immaterial errors.Reconciliation of Non-GAAP Measures (continued)

		Year Ended December 31, 2018
						Selling,				General				Research				Income				Non-controlling
		Cost of				distribution				and				and				tax expense				interest
		revenue				and marketing				administrative				development				(benefit)				adjustment
GAAP		$	187,681			$	8,156			$	49,888			$	57,564			$	(3,266	)		$	(922	)
Intangible amortization			(1,826	)			—				(161	)			—				—				22
Share-based compensation			(3,923	)			(383	)			(10,853	)			(1,521	)			—				130
Impairment of long-lived assets			(1,087	)			—				(9	)			(551	)			—				2
Income tax expense on pre-taxadjustments			—				—				—				—				4,044				(21	)
Non-GAAP		$	180,845			$	7,773			$	38,865			$	55,492			$	778			$	(789	)

		Year Ended December 31, 2017
						Selling,				General				Research				Income				Non-controlling
		Cost of				distribution				and				and				tax expense				interest
		revenue				and marketing				administrative				development				(benefit)				adjustment
GAAP		$	149,666			$	6,460			$	44,458			$	43,503			$	(2,398	)		$	—
Intangible amortization			(2,706	)			—				(150	)			—				—				—
Share-based compensation			(3,756	)			(302	)			(11,643	)			(1,386	)			—				—
Income tax expense on pre-taxadjustments			—				—				—				—				6,256				—
Non-GAAP		$	143,204			$	6,158			$	32,665			$	42,117			$	3,858			$	—

The comparative periods in 2017 were revised for immaterial errors.

Source: Amphastar Pharmaceuticals, Inc.

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