Phytonadione

Reports Net Revenues of $171.8 Million for the Three Months Ended March 31, 2024 RANCHO CUCAMONGA, CA / ACCESSWIRE / May 8, 2024 / Amphastar Pharmaceuticals, Inc., (NASDAQ:AMPH) ("Amphastar" or the "Company") today reported results for the three months ended March 31, 2024. First Quarter Highlights Net revenues of $171.8 million for the first quarter GAAP net income of $43.2 million, or $0.81 per share, for the first quarter Adjusted non-GAAP net income of $55.3 million, or $1.04 per share, for the first quarter Dr. Jack Zhang, Amphastar's President and Chief Executive Officer, commented: "Amphastar's strong first quarter results were led by BAQSIMI ® revenue growth of 22% over what Eli Lilly & Company ("Lilly") reported for the first quarter of 2023. This significant increase demonstrates a strong transition and the potential for continued growth of BAQSIMI ® ." Three Months Ended March 31, 2024 2023 (in thousands, except per share data) Net revenues $ 171,836 $ 140,022 GAAP net income $ 43,177 $ 26,032 Adjusted non-GAAP net income* $ 55,296 $ 32,143 GAAP diluted EPS $ 0.81 $ 0.50 Adjusted non-GAAP diluted EPS* $ 1.04 $ 0.62 ____________________________________ * 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 III of this press release. First Quarter Results Three Months Ended March 31, Change 2024 2023 Dollars % (in thousands) Product revenues: Glucagon $ 28,535 $ 25,696 $ 2,839 11 % Epinephrine 26,110 20,091 6,019 30 % Primatene MIST ® 24,166 23,483 683 3 % BAQSIMI ® 13,843 - 13,843 N/A Lidocaine 12,773 13,646 (873 ) (6 )% Phytonadione 9,973 7,713 2,260 29 % Enoxaparin 7,096 9,867 (2,771 ) (28 )% Naloxone 4,287 4,957 (670 ) (14 )% Other finished pharmaceutical products 29,154 30,557 (1,403 ) (5 )% Total finished pharmaceutical products net revenues $ 155,937 $ 136,010 $ 19,927 15 % API 1,692 4,012 (2,320 ) (58 )% Other revenues 14,207 - 14,207 N/A Total net revenues $ 171,836 $ 140,022 $ 31,814 23 % Changes in net revenues as compared to the first quarter of the prior year were primarily driven by: BAQSIMI ® sales consisting of $13.8 million in sales made by the Company directly to its customers which are recorded as part of Product Revenues, net, and $24.6 million in sales made by Lilly on behalf of the Company under the Transition Services Agreement ("TSA"), which resulted in a net payment to the Company of $14.2 million after deducting cost of sales and other expenses and was recorded in Other Revenues Glucagon sales increased due to a growth in unit volumes, impacting sales by $1.8 million as well as a higher average selling price, impacting sales by $1.1 million as we launched glucagon in Canada Epinephrine and Phytonadione sales increased primarily due to an increase in unit volumes, as a result of other supplier shortages Primatene MIST ® sales increased primarily due to an increase in unit volumes and a higher average selling price Lidocaine sales decreased primarily due to a decrease in unit volumes, as a result of other suppliers returning to their historical distribution levels Enoxaparin and Naloxone sales decreased primarily due to a decrease in unit volumes Other finished pharmaceutical product sales changes were primarily due to: Lower unit volumes of MPA, as our Active Pharmaceutical Ingredient ("API") supplier discontinued making the active ingredient This decrease was partially offset by higher unit volumes of dextrose and sodium bicarbonate caused by other supplier shortages during the quarter Launch of regadenoson in April 2023 API sales decreased primarily due to the timing of customer purchases Three Months Ended March 31, Change 2024 2023 Dollars % (in thousands) Net revenues $ 171,836 $ 140,022 $ 31,814 $ 23 Cost of revenues 81,736 66,182 15,554 24 % Gross profit $ 90,100 $ 73,840 $ 16,260 $ 22 % as % of net revenues 52.4 % 52.7 % Changes in the cost of revenues and the resulting gross margins were primarily driven by: Increase in depreciation and amortization expense related to the acquired BAQSIMI ® assets Increases in labor costs and certain component costs Charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value These factors were partially offset by increased sales of higher-margin products: BAQSIMI ® which was acquired in June 2023 Glucagon, Primatene MIST ® , and epinephrine Regadenoson launched in April 2023 Three Months Ended March 31, Change 2024 2023 Dollars % (in thousands) Selling, distribution, and marketing $ 9,371 $ 7,109 $ 2,262 32 % General and administrative 15,676 13,483 2,193 16 % Research and development 17,043 19,815 (2,772 ) (14) % Non-operating (expenses) income, net (134 ) 136 (270 ) NM Selling, distribution, and marketing expenses increased primarily due to the expansion of our sales and marketing efforts related to BAQSIMI ® General and administrative expenses increased primarily due to an increase in expenses related to BAQSIMI ® Research and development expenses decreased due to the timing of clinical trial expenses, as well as a decrease in materials and supply expenses, primarily related to our insulin and inhalation pipeline products, as a result of a ramp-up in 2023 Cash flow provided by operating activities for the three months ended March 31, 2024, was $55.3 million. Pipeline Information The Company currently has four abbreviated new drug applications ("ANDAs") on the U.S. Food and Drug Administration (the "FDA") targeting products with a market size of over $3 billion, three biosimilar products in development targeting products with a market size of over $7 billion, and four generic products in development targeting products with a market size of over $3 billion. This market information is based on IQVIA data for the 12 months ended March 31, 2024. The Company is developing multiple proprietary products with injectable and intranasal dosage forms. Amphastar's Chinese subsidiary, Amphastar Nanjing Pharmaceuticals, Co., Ltd. ("ANP"), currently has multiple Drug Master Files ("DMFs"), on 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 . Amphastar's logo and other trademarks or service marks of Amphastar, including, but not limited to Amphastar ® , BAQSIMI ® , Primatene MIST ® , REXTOVY TM , 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) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI ® , certain debt issuance costs, 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, May 8, 2024, 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, ten minutes before the conference. The call can also be accessed on the Investors page on the Company's website 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 and business trends, our future growth, sales and marketing of our products, market size and expansion, product portfolio, 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, the prospective benefits of the acquisition of BAQSIMI ® , including its potential for continued revenue growth, the success of our integration of BAQSIMI ® , and other future events. 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, 2023, filed with the SEC on February 29, 2024. In particular, there can be no guarantee that the acquisition of BAQSIMI ® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI ® into our product portfolio to differ from Amphastar's expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI ® on its financial results or financial guidance. You can locate these reports through our website at and on the SEC's website at 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) 476-3416 Table I Amphastar Pharmaceuticals, Inc. Condensed Consolidated Statement of Operations (Unaudited; in thousands, except per share data) Three Months Ended March 31, 2024 2023 Net revenues: Product revenues, net $ 157,629 $ 140,022 Other revenues 14,207 - Total net revenues 171,836 140,022 Cost of revenues 81,736 66,182 Gross profit 90,100 73,840 Operating expenses: Selling, distribution, and marketing 9,371 7,109 General and administrative 15,676 13,483 Research and development 17,043 19,815 Total operating expenses 42,090 40,407 Income from operations 48,010 33,433 Non-operating (expenses) income, net (134 ) 136 Income before income taxes 47,876 33,569 Income tax provision 4,126 6,752 Net income before equity in losses of unconsolidated affiliate 43,750 26,817 Equity in losses of unconsolidated affiliate (573 ) (785 ) Net income $ 43,177 $ 26,032 Net income per share: Basic $ 0.90 $ 0.54 Diluted $ 0.81 $ 0.50 Weighted-average shares used to compute net income per share: Basic 48,212 48,000 Diluted 53,013 51,970 Table II Amphastar Pharmaceuticals, Inc. Condensed Consolidated Balance Sheet (Unaudited; in thousands, except per share data) March 31, December 31, 2024 2023 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 201,148 $ 144,296 Restricted cash 235 235 Short-term investments 88,407 112,510 Restricted short-term investments 2,200 2,200 Accounts receivable, net 138,114 114,943 Inventories 115,494 105,833 Income tax refunds and deposits 784 526 Prepaid expenses and other assets 8,696 9,057 Total current assets 555,078 489,600 Property, plant, and equipment, net 288,523 282,746 Finance lease right-of-use assets 516 564 Operating lease right-of-use assets 31,352 32,333 Investment in unconsolidated affiliate - 527 Goodwill and intangible assets, net 607,064 613,295 Long-term investments 15,163 14,685 Other assets 23,369 25,910 Deferred tax assets 53,252 53,252 Total assets $ 1,574,317 $ 1,512,912 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 116,697 $ 93,366 Accrued payments for BAQSIMI ® 128,245 126,090 Income taxes payable 5,857 1,609 Current portion of long-term debt 428 436 Current portion of operating lease liabilities 3,942 3,906 Total current liabilities 255,169 225,407 Long-term reserve for income tax liabilities 6,066 6,066 Long-term debt, net of current portion and unamortized debt issuance costs 594,006 589,579 Long-term operating lease liabilities, net of current portion 28,739 29,721 Other long-term liabilities 17,981 22,718 Total liabilities 901,961 873,491 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; 60,160,459 and 48,841,343 shares issued and outstanding as of March 31, 2024 and 59,390,194 and 48,068,881 shares issued and outstanding as of December 31, 2023, respectively 6 6 Additional paid-in capital 476,072 486,056 Retained earnings 452,445 409,268 Accumulated other comprehensive loss (8,769 ) (8,478 ) Treasury stock (247,398 ) (247,431 ) Total equity 672,356 639,421 Total liabilities and stockholders' equity $ 1,574,317 $ 1,512,912 Table III Amphastar Pharmaceuticals, Inc. Reconciliation of Non-GAAP Measures (Unaudited; in thousands, except per share data) Three Months Ended March 31, 2024 2023 GAAP net income $ 43,177 $ 26,032 Adjusted for: Intangible asset amortization 6,167 241 Share-based compensation 7,360 6,111 Expenses related to BAQSIMI ® acquisition 1,826 1,217 Income tax provision on pre-tax adjustments (3,234 ) (1,458 ) Adjusted non-GAAP net income $ 55,296 $ 32,143 Adjusted non-GAAP net income per share: Basic $ 1.15 $ 0.67 Diluted $ 1.04 $ 0.62 Weighted-average shares used to compute adjusted non-GAAP net income per share: Basic 48,212 48,000 Diluted 53,013 51,970 Three Months Ended March 31, 2024 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 81,736 $ 9,371 $ 15,676 $ 17,043 $ (134 ) $ 4,126 Intangible asset amortization (6,147 ) - (3 ) (17 ) - - Share-based compensation (2,125 ) (260 ) (3,876 ) (1,099 ) - - Expenses related to BAQSIMI ® acquisition - - - - 1,826 - Income tax provision on pre-tax adjustments - - - - - 3,234 Non-GAAP $ 73,464 $ 9,111 $ 11,797 $ 15,927 $ 1,692 $ 7,360 Three Months Ended March 31, 2023 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 66,182 $ 7,109 $ 13,483 $ 19,815 $ 136 $ 6,752 Intangible asset amortization (211 ) - (30 ) - - - Share-based compensation (1,706 ) (209 ) (3,357 ) (839 ) - - Expenses related to BAQSIMI ® acquisition - - (1,217 ) - - - Income tax provision on pre-tax adjustments - - - - - 1,458 Non-GAAP $ 64,265 $ 6,900 $ 8,879 $ 18,976 $ 136 $ 8,210 SOURCE: Amphastar Pharmaceuticals, Inc. 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Reports Net Revenues of $178.1 Million for the Three Months Ended December 31, 2023 RANCHO CUCAMONGA, CA / ACCESSWIRE / February 28, 2024 / Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) ("Amphastar" or the "Company") today reported results for the three months and full-year ended December 31, 2023. Fourth Quarter Highlights Net revenues of $178.1 million for the fourth quarter GAAP net income of $36.2 million, or $0.68 per share, for the fourth quarter Adjusted non-GAAP net income of $46.9 million, or $0.88 per share, for the fourth quarter Full-Year Highlights Net revenues of $644.4 million for the fiscal year GAAP net income of $137.5 million, or $2.60 per share, for the fiscal year Adjusted non-GAAP net income of $175.7 million, or $3.32 per share, for the fiscal year Dr. Jack Zhang, Amphastar's President and Chief Executive Officer, commented: "We enter 2024 with strong momentum. 2023 was an important year for the Company driven by the strong performance of glucagon and Primatene MIST ® alongside the acquisition of BAQSIMI ® , which strengthened our diabetes portfolio. The recent submission of our first BLA for Insulin Aspart, known as AMP-004, underscores our continued pipeline development in diabetes management, and marks another milestone for Amphastar." Three Months Ended Year Ended December 31, December 31, 2023 2022 2023 2022 (in thousands, except per share data) Net revenues $ 178,105 $ 135,023 $ 644,395 $ 498,987 GAAP net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Adjusted non-GAAP net income* $ 46,875 $ 37,638 $ 175,699 $ 103,186 GAAP diluted EPS $ 0.68 $ 0.66 $ 2.60 $ 1.74 Adjusted non-GAAP diluted EPS* $ 0.88 $ 0.73 $ 3.32 $ 1.97 ____________________________________ * 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 III of this press release. Fourth Quarter Results Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Product revenues: Glucagon $ 31,198 $ 18,319 $ 12,879 70 % Epinephrine 24,646 21,427 3,219 15 % Primatene MIST® 24,484 22,279 2,205 10 % Lidocaine 14,988 13,286 1,702 13 % Phytonadione 11,922 11,666 256 2 % Enoxaparin 6,092 7,812 (1,720 ) (22 )% Naloxone 4,230 4,845 (615 ) (13 )% Other finished pharmaceutical products 35,015 33,082 1,933 6 % Total finished pharmaceutical products net revenues $ 152,575 $ 132,716 $ 19,859 15 % API 3,074 2,307 767 33 % Other revenues 22,456 - 22,456 N/A Total product revenues, net $ 178,105 $ 135,023 $ 43,082 32 % Changes in product revenues as compared to the fourth quarter of the prior year were primarily driven by: Glucagon sales increased primarily due to an increase in unit volumes, as a result of two competitors discontinuing their glucagon injection products at the end of 2022 Epinephrine sales increased primarily due to an increase in unit volumes, as a result of supplier shortages Lidocaine sales increased primarily due to higher unit volumes as supply chain issues eased allowing us to fulfill backorders Primatene MIST® sales increased $1.3 million due to an increase in unit volumes, with the remainder of the increase due to an increase in average selling price Enoxaparin and naloxone sales decreased primarily due to a decrease in unit volumes Other finished pharmaceutical product sales increased primarily due to: Higher unit volumes of atropine, calcium chloride, and sodium bicarbonate, due to increased demand caused by supplier shortages during the fourth quarter Launch of regadenoson in April 2023 Active Pharmaceutical Ingredient ("API") sales increased primarily due to the timing of customer purchases Other revenues are comprised of net revenues from the sales of BAQSIMI® of $22.5 million during the three months ended December 31, 2023, which was recognized on a net basis similar to a royalty arrangement and based on Eli Lilly & Company's ("Lilly") reported BAQSIMI® net sales of $37.6 million. Currently, BAQSIMI® is being sold by Lilly on our behalf under the Transition Services Agreement ("TSA") with Lilly, whereby Lilly provides certain services to support the transition of the BAQSIMI® operations to us. Once Amphastar takes over the distribution of BAQSIMI®, Amphastar will recognize the entire revenue amount. This revenue recognition change is expected to be phased in by country during 2024. Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Net revenues $ 178,105 $ 135,023 $ 43,082 32 % Cost of revenues 81,965 63,855 18,110 28 % Gross profit $ 96,140 $ 71,168 $ 24,972 35 % as % of net revenues 54 % 53 % Changes in the cost of revenues and gross margin were primarily driven by: Increased sales of higher-margin products such as glucagon and Primatene MIST®, as well as the sales of regadenoson, which we launched in April 2023. As a result of the TSA, the revenue relating to BAQSIMI® is recognized on a net basis within net revenues. These factors were partially offset by charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023. Three Months Ended December 31, Change 2023 2022 Dollars % (in thousands) Selling, distribution, and marketing $ 8,619 $ 5,472 $ 3,147 58 % General and administrative 13,122 10,628 2,494 23 % Research and development 20,419 17,236 3,183 18 % Non-operating (expenses) income, net (12,635 ) 3,428 (16,063 ) NM Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI®. General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI®, which was partially offset by a decrease in legal fees. Research and development expenses increased due to an increase in materials and supply expenses, primarily related to our inhalation pipeline products. The change in non-operating (expenses) income, net is primarily a result of: Interest expense in the fourth quarter of 2023, which was primarily related to our Wells Fargo Bank syndicated loan, as well as our convertible debt Foreign currency fluctuations Mark-to-market adjustments relating to our interest rate swap contracts. Year-End Results Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Product revenues: Glucagon $ 113,684 $ 55,322 $ 58,362 105 % Primatene MIST® 89,321 84,309 5,012 6 % Epinephrine 81,650 74,204 7,446 10 % Lidocaine 58,162 52,539 5,623 11 % Phytonadione 44,939 49,500 (4,561 ) (9 )% Enoxaparin 31,533 34,950 (3,417 ) (10 )% Naloxone 19,004 26,269 (7,265 ) (28 )% Other finished pharmaceutical products 140,823 109,412 31,411 29 % Total finished pharmaceutical products net revenues $ 579,116 $ 486,505 $ 92,611 19 % API 14,122 12,482 1,640 13 % Other revenues 51,157 - 51,157 N/A Total product revenues, net $ 644,395 $ 498,987 $ 145,408 29 % Changes in product revenues were primarily driven by: Glucagon sales increased primarily due to an increase in unit volumes as a result of two competitors discontinuing their glucagon injection products at the end of 2022 Primatene MIST® sales increased due to an increase in the average selling price Epinephrine and lidocaine sales increased primarily due to an increase in unit volumes as a result of supplier shortages Phytonadione sales decreased due to lower unit volumes as a result of increased competition Enoxaparin sales decreased primarily due to a decrease in unit volumes Sales of naloxone decreased due to lower unit volumes, reducing sales by $4.6 million, as well as a lower average selling price, reducing sales by $2.7 million as a result of increased competition Other finished pharmaceutical product sales increased primarily due to: Higher unit volumes of dextrose, atropine, calcium chloride, and sodium bicarbonate due to increased demand caused by supplier shortages during the year A full year of sales for ganirelix and vasopressin, which was launched in June 2022 and August 2022, respectively Launch of regadenoson in April 2023 API sales increased primarily due to the timing of customer purchases Other revenues are comprised of net revenues from the sales of BAQSIMI® of $51.2 million during the year ended December 31, 2023, which was recognized on a net basis similar to a royalty and based on Lilly's reported BAQSIMI® net sales of $86.3 million. Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Net revenues $ 644,395 $ 498,987 $ 145,408 29 % Cost of revenues 293,274 250,127 43,147 17 % Gross profit $ 351,121 $ 248,860 $ 102,261 41 % as % of net revenues 54 % 50 % Changes in the cost of revenues and gross margin were primarily driven by: Increased sales of higher-margin products such as glucagon and Primatene MIST®, the sales of ganirelix and vasopressin that were launched in 2022, as well as the sales of regadenoson, which we launched in April 2023 As a result of the TSA, the revenue relating to BAQSIMI® is recognized on a net basis within net revenues. These factors were partially offset by an impairment charge of $2.7 million related to the impairment of the IMS (UK) international product rights, as well as charges included in cost of revenues to adjust our inventory and related purchase commitments to their net realizable value, which includes a $3.6 million inventory reserve as a result of amending the Supply Agreement with MannKind Corporation in December 2023 Year Ended December 31, Change 2023 2022 Dollars % (in thousands) Selling, distribution, and marketing $ 28,853 $ 21,531 $ 7,322 34 % General and administrative 51,540 45,061 6,479 14 % Research and development 73,741 74,771 (1,030 ) (1 )% Non-operating (expenses) income, net (25,628 ) 8,543 (34,171 ) NM Selling, distribution, and marketing expenses increased primarily due to expenses related to the expansion of our sales and marketing efforts related to BAQSIMI®, as well as an increase in advertising spending for Primatene MIST® General and administrative expenses increased primarily due to an increase in salary and personnel-related expenses, as well as costs related to the acquisition of BAQSIMI®, which was partially offset by a decrease in legal fees Research and development expenses decreased due to: Decreases in materials and supply expenses as a result of a ramp-up of expenses in 2022 for AMP-018 and our insulin pipeline products This decrease was partially offset by an increase in salary and personnel-related expenses The change in non-operating (expenses) income, net is primarily a result of: Foreign currency fluctuations Costs incurred in connection with the syndicated credit agreement we entered into with Wells Fargo Bank, as syndication agent, to finance the acquisition of BAQSIMI® Mark-to-market adjustments relating to our interest rate swap contracts Cash flow provided by operating activities for the year ended December 31, 2023 was $183.5 million. Pipeline Information The Company currently has four abbreviated new drug applications ("ANDAs") and one biosimilar insulin candidate on the U.S. Food and Drug Administration (the "FDA") targeting products with a market size of over $3 billion and $4 billion, respectively, three biosimilar products in development targeting products with a market size of over $10 billion, and six generic products in development targeting products with a market size of over $8 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2023. The Company is developing multiple proprietary products with injectable and intranasal dosage forms. Amphastar's Chinese subsidiary, Amphastar Nanjing Pharmaceuticals, Co., Ltd. ("ANP"), currently has multiple Drug Master Files ("DMFs"), on 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 . Amphastar's logo and other trademarks or service marks of Amphastar, including, but not limited to Amphastar®, BAQSIMI®, Primatene MIST®, REXTOVYTM, 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) and (ii) Adjusted non-GAAP diluted EPS, which exclude amortization expense, share-based compensation, impairment charges, expenses related to our acquisition of BAQSIMI®, debt issuance costs, 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, February 28, 2024, 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, ten minutes before the conference. The call can also be accessed on the Investors page on the Company's website at . 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 and business trends, our future growth, sales and marketing of our products, market size and expansion, product portfolio, 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, the prospective benefits of the acquisition of BAQSIMI®, and other future events. 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, 2022, filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 9, 2023, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 8, 2023. In particular, there can be no guarantee that the acquisition of BAQSIMI® will be beneficial to our business, that any event, change or other circumstance could cause the results of the acquisition and integration of BAQSIMI® into our product portfolio to differ from Amphastar's expectation, that all or any of the contingent consideration will be payable on the terms described herein or at all, or that Amphastar can reliably predict the impact of BAQSIMI® on its financial results or financial guidance. You can locate these reports through our website at and on the SEC's website at . 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) 476-3416 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, 2023 2022 2023 2022 Net revenues: Product revenues, net $ 155,649 $ 135,023 $ 593,238 $ 498,987 Other revenues 22,456 - 51,157 - Total net revenues 178,105 135,023 644,395 498,987 Cost of revenues 81,965 63,855 293,274 250,127 Gross profit 96,140 71,168 351,121 248,860 Operating expenses: Selling, distribution, and marketing 8,619 5,472 28,853 21,531 General and administrative 13,122 10,628 51,540 45,061 Research and development 20,419 17,236 73,741 74,771 Total operating expenses 42,160 33,336 154,134 141,363 Income from operations 53,980 37,832 196,987 107,497 Non-operating (expenses) income, net (12,635 ) 3,428 (25,628 ) 8,543 Income before income taxes 41,345 41,260 171,359 116,040 Income tax provision 4,673 7,290 31,833 23,477 Net income before equity in losses of unconsolidated affiliate 36,672 33,970 139,526 92,563 Equity in losses of unconsolidated affiliate (505 ) (57 ) (1,981 ) (1,177 ) Net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Net income per share: Basic $ 0.75 $ 0.70 $ 2.85 $ 1.88 Diluted $ 0.68 $ 0.66 $ 2.60 $ 1.74 Weighted-average shares used to compute net income per share: Basic 47,957 48,298 48,265 48,551 Diluted 53,014 51,716 53,001 52,427 Table II Amphastar Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets (Unaudited; in thousands, except share data) December 31, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 144,296 $ 156,098 Restricted cash 235 235 Short-term investments 112,510 19,664 Restricted short-term investments 2,200 2,200 Accounts receivable, net 114,943 88,804 Inventories 105,833 103,584 Income tax refunds and deposits 526 171 Prepaid expenses and other assets 9,057 7,563 Total current assets 489,600 378,319 Property, plant, and equipment, net 282,746 238,266 Finance lease right-of-use assets 564 753 Operating lease right-of-use assets 32,333 25,554 Investment in unconsolidated affiliate 527 2,414 Goodwill and intangible assets, net 613,295 37,298 Long-term investments 14,685 - Other assets 25,910 20,856 Deferred tax assets 53,252 38,527 Total assets $ 1,512,912 $ 741,987 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 93,366 $ 84,242 Accrued payments for BAQSIMI® 126,090 - Income taxes payable 1,609 4,571 Current portion of long-term debt 436 3,046 Current portion of operating lease liabilities 3,906 3,003 Total current liabilities 225,407 94,862 Long-term reserve for income tax liabilities 6,066 7,225 Long-term debt, net of current portion and unamortized debt issuance costs 589,579 72,839 Long-term operating lease liabilities, net of current portion 29,721 23,694 Deferred tax liabilities - 144 Other long-term liabilities 22,718 14,565 Total liabilities 873,491 213,329 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; 59,390,194 and 48,068,881 shares issued and outstanding as of December 31, 2023 and 58,110,231 and 48,112,069 shares issued and outstanding as of December 31, 2022, respectively 6 6 Additional paid-in capital 486,056 455,077 Retained earnings 409,268 271,723 Accumulated other comprehensive loss (8,478 ) (8,624 ) Treasury stock (247,431 ) (189,524 ) Total equity 639,421 528,658 Total liabilities and stockholders' equity $ 1,512,912 $ 741,987 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, 2023 2022 2023 2022 GAAP net income $ 36,167 $ 33,913 $ 137,545 $ 91,386 Adjusted for: Intangible amortization 6,178 331 12,830 1,419 Share-based compensation 4,622 4,304 20,242 17,860 Impairment of long-lived assets 1 - 3,175 - Expenses related to BAQSIMI® acquisition 2,148 - 5,830 - Debt issuance costs 742 - 6,785 - Litigation settlements - - - (4,929 ) Income tax provision on pre-tax adjustments (2,983 ) (910 ) (10,708 ) (2,550 ) Non-GAAP net income $ 46,875 $ 37,638 $ 175,699 $ 103,186 Non-GAAP net income per share: Basic $ 0.98 $ 0.78 $ 3.64 $ 2.13 Diluted $ 0.88 $ 0.73 $ 3.32 $ 1.97 Weighted-average shares used to compute non-GAAP net income per share: Basic 47,957 48,298 48,265 48,551 Diluted 53,014 51,716 53,001 52,427 Three Months Ended December 31, 2023 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 81,965 $ 8,619 $ 13,122 $ 20,419 $ (12,635 ) $ 4,673 Intangible amortization (6,158 ) - (3 ) (17 ) - - Share-based compensation (1,023 ) (221 ) (2,946 ) (432 ) - - Impairment of long-lived assets - - (1 ) - - - Expenses related to BAQSIMI® acquisition - - (322 ) - 1,826 - Debt issuance costs - - - - 742 - Income tax provision on pre-tax adjustments - - - - - 2,983 Non-GAAP $ 74,784 $ 8,398 $ 9,850 $ 19,970 $ (10,067 ) $ 7,656 Three Months Ended December 31, 2022 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 63,855 $ 5,472 $ 10,628 $ 17,236 $ 3,428 $ 7,290 Intangible amortization (205 ) - (126 ) - - - Share-based compensation (941 ) (186 ) (2,791 ) (386 ) - - Income tax provision on pre-tax adjustments - - - - - 910 Non-GAAP $ 62,709 $ 5,286 $ 7,711 $ 16,850 $ 3,428 $ 8,200 Year Ended December 31, 2023 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 293,274 $ 28,853 $ 51,540 $ 73,741 $ (25,628 ) $ 31,833 Intangible amortization (12,741 ) - (19 ) (70 ) - - Share-based compensation (4,891 ) (870 ) (12,269 ) (2,212 ) - - Impairment of long-lived assets (3,170 ) - (5 ) - - - Expenses related to BAQSIMI® acquisition - - (2,179 ) - 3,651 - Debt issuance costs - - - - 6,785 - Income tax provision on pre-tax adjustments - - - - - 10,708 Non-GAAP $ 272,472 $ 27,983 $ 37,068 $ 71,459 $ (15,192 ) $ 42,541 Year Ended December 31, 2022 Cost of revenue Selling, distribution and marketing General and administrative Research and development Non-operating (expenses) income, net Income tax provision GAAP $ 250,127 $ 21,531 $ 45,061 $ 74,771 $ 8,543 $ 23,477 Intangible amortization (865 ) - (554 ) - - - Share-based compensation (4,179 ) (726 ) (11,180 ) (1,775 ) - - Litigation settlements - - (800 ) - (5,729 ) - Income tax provision on pre-tax adjustments - - - - - 2,550 Non-GAAP $ 245,083 $ 20,805 $ 32,527 $ 72,996 $ 2,814 $ 26,027 SOURCE: Amphastar Pharmaceuticals, Inc. 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