Amphastar Pharmaceuticals(US:AMPH)2025-08-07 20:43Part I. FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements for June 30, 2025, present the company's financial position, performance, and cash flows Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.615 billion, driven by cash and inventories, while total equity reached $757.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $580,830 | $534,071 | | Cash and cash equivalents | $187,689 | $151,609 | | Inventories, net | $191,731 | $153,741 | | Total Assets | $1,615,333 | $1,577,470 | | Total Current Liabilities | $176,407 | $173,759 | | Long-term debt, net | $607,727 | $601,630 | | Total Liabilities | $857,851 | $845,172 | | Total Stockholders' Equity | $757,482 | $732,298 | Condensed Consolidated Statements of Operations Net revenues for Q2 2025 decreased to $174.4 million, with net income of $31.0 million, reflecting a year-over-year decline Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $174,414 | $182,394 | $344,942 | $354,230 | | Gross profit | $86,490 | $95,166 | $171,741 | $185,266 | | Income from operations | $42,184 | $55,217 | $79,477 | $103,227 | | Net income | $31,030 | $37,949 | $56,315 | $81,126 | | Diluted EPS | $0.64 | $0.73 | $1.15 | $1.54 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operations decreased to $70.7 million, primarily due to increased inventories Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $70,669 | $124,400 | | Net cash provided by (used in) investing activities | $9,856 | $(54,666) | | Net cash used in financing activities | $(44,705) | $(24,295) | | Net increase in cash | $36,080 | $45,323 | Notes to Condensed Consolidated Financial Statements The notes provide detailed information on accounting policies, revenue recognition, segment reporting, and debt - The company operates as a single reportable segment: pharmaceutical products68 Net Revenues by Key Product (in thousands) | Product | YTD 2025 | YTD 2024 | Change % | | :--- | :--- | :--- | :--- | | BAQSIMI® | $85,042 | $44,697 | +90.3% | | Primatene MIST® | $51,931 | $47,022 | +10.4% | | Glucagon | $41,445 | $55,908 | -25.9% | | Epinephrine | $34,767 | $54,051 | -35.7% | | Lidocaine | $28,643 | $25,573 | +12.0% | - Three major customers, McKesson, Cencora, and Cardinal Health, accounted for 29%, 27%, and 15% of total accounts receivable, respectively, as of June 30, 202571 - The company has $345 million in 2.0% Convertible Senior Notes due 2029 and a $250 million term loan due 20288990 - During the six months ended June 30, 2025, the company repurchased 1,935,696 shares of its common stock for a total of $50.0 million under its share buyback program112 Management's Discussion and Analysis (MD&A) Management discusses the 4% decrease in Q2 2025 net revenues, driven by lower legacy product sales despite BAQSIMI® growth, impacting gross margin Results of Operations Net product revenues for Q2 2025 decreased by 3%, as BAQSIMI® growth was offset by declines in legacy products, leading to a gross margin decline to 50% Q2 2025 vs Q2 2024 Product Revenue Changes (in thousands) | Product | Q2 2025 Revenue | Q2 2024 Revenue | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | BAQSIMI® | $46,687 | $30,854 | $15,833 | 51% | | Epinephrine | $16,180 | $27,941 | $(11,761) | (42)% | | Glucagon | $20,602 | $27,373 | $(6,771) | (25)% | - The increase in BAQSIMI® sales was driven by growth in unit volumes as the company assumed full global distribution responsibilities at the beginning of 2025159 - The decrease in epinephrine and glucagon sales was attributed to increased competition and, for glucagon, a market shift towards ready-to-use products like BAQSIMI®159 - R&D expenses increased by 14% in Q2 2025 to $20.1 million, primarily due to higher material and supply expenses for inhalation pipeline products and increased depreciation167169 Liquidity and Capital Resources The company had $187.7 million in cash and $404.4 million in working capital as of June 30, 2025, with operating cash flow decreasing to $70.7 million - Working capital increased by $44.1 million to $404.4 million at June 30, 2025, from $360.3 million at December 31, 2024194 - Net cash provided by operating activities decreased to $70.7 million for the first half of 2025 from $124.4 million in 2024, largely due to an increase in inventories as the company took over the BAQSIMI® supply chain196197 - Net cash used in financing activities was $44.7 million, primarily driven by $50.2 million in treasury stock purchases203 Quantitative and Qualitative Disclosure about Market Risk The company is exposed to market risks including investment, interest rate, and foreign currency exchange risks, with no material changes from its 2024 10-K - The company identifies its primary market risks as changes in the value of its investments, interest rate fluctuations, and foreign currency exchange rate changes212 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report213 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls214 Part II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, including two employment litigations in California, and intends to vigorously defend itself - The company is facing two employment litigations from former employees with individual and class action claims for alleged violations of the California Labor Code144145 - The company has recorded an estimated liability of $11.0 million for a property and casualty claim, which is fully covered by its insurance policies146 Risk Factors The company highlights several key risks, including manufacturing disruptions, trade tariffs, cybersecurity threats, and executive stock pledges - A significant portion of manufacturing takes place in China, exposing the company to risks from political unrest, tariffs, health epidemics, and changes in trade laws which could adversely affect business218219 - The company faces risks from enhanced trade tariffs and restrictions, with significant uncertainty about the future trade relationship between the United States and China222 - The company and its third-party providers have experienced and may continue to experience cyber-attacks, including past security breaches at its Chinese subsidiary and illegal obtaining of employee personal information227 - Executives Jack Y. Zhang and Mary Z. Luo have pledged a total of 3,601,156 shares of common stock as collateral for loans, where a forced sale could cause the stock price to decline235236 Issuer Purchases of Equity Securities During Q2 2025, the company repurchased 1,541,860 shares at an average price of $25.30, with an additional $50.0 million authorized for buybacks Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 554,282 | $25.24 | | May 2025 | 528,481 | $24.58 | | June 2025 | 459,097 | $26.12 | - On August 5, 2025, the Board of Directors authorized a $50.0 million increase to the share buyback program, which does not have an expiration date242 Other Information No officers or directors adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter - No officers or directors adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading plan during the second quarter of 2025245 Exhibits This section lists exhibits filed with the Form 10-Q, including amendments to bylaws, manufacturing agreements, and CEO/CFO certifications