Executive Summary

Q4 revenue was $83.4M, up sequentially from $80.1M in Q3 2019, with gross margin of 40% vs 44% in Q3; GAAP diluted EPS was $(0.02) and adjusted diluted EPS was $0.07, reflecting non-GAAP add-backs (share-based comp, amortization, impairments, tax effects) .
Primatene Mist sales accelerated to $9.0M in Q4 as Walmart launched in November and national broadcast TV ads began in January; weekly store sales increased by more than 140% vs early Q3, and management reiterated a $65M annual run-rate target by 2021 .
Mix shift toward higher-margin products (Primatene, phytonadione) lifted YoY gross margin to 40% from 39% despite sequential margin compression vs Q3; enoxaparin declined YoY on lower volumes after 2018 shortage normalization .
2020 setup: capacity expansion via sANDA approval for sodium bicarbonate at IMS (shortage products ~$20M annual opportunity), epinephrine vial ANDA GDUFA date in Q2, two complex injectable ANDAs with GDUFA dates in Q3/Q4, insulin clinical trials ongoing, and ANP third-party sales expected to more than double .
S&P Global consensus for Q4 2019 was unavailable at time of analysis due to API limits; estimate comparisons cannot be made at this time.

What Went Well and What Went Wrong

What Went Well

Primatene Mist momentum: “Weekly store sales… increased by more than 140% compared to the first week of the third quarter 2019” and management “maintain[s] our guidance… achieving an annual rate of revenue of $65 million by 2021” .
Higher-margin mix: YoY gross margin improved to 40% from 39%, driven by Primatene and phytonadione; Q4 gross profit was $33.4M .
Capacity and pipeline execution: FDA approved sANDA for sodium bicarbonate line at IMS; two additional ANDAs were accepted; insulin trials began; intranasal naloxone NDA steps progressing .

What Went Wrong

Enoxaparin normalization: Q4 enoxaparin revenue dropped to $8.8M from $19.1M YoY due to lower unit volumes vs the 2018 shortage-driven surge .
Sequential margin compression: Q4 gross margin was 40% vs 44% in Q3, reflecting product mix and stepped-up Primatene advertising (selling and marketing rose to $3.5M vs $2.6M YoY) .
GAAP loss: Q4 GAAP net loss of $(1.0)M or $(0.02) per share vs $0.04 in Q4 2018, before non-GAAP adjustments .

Financial Results

Sequential Trend (Q2 → Q3 → Q4 2019)

Metric	Q2 2019	Q3 2019	Q4 2019
Revenue ($USD Millions)	$79.047	$80.137	$83.383
GAAP Diluted EPS	$0.96	$0.03	$(0.02)
Adjusted Diluted EPS (non-GAAP)	$0.08	$0.10	$0.07
Gross Margin (%)	41%	44%	40%

YoY Comparison (Q4 2018 vs Q4 2019)

Metric	Q4 2018	Q4 2019
Revenue ($USD Millions)	$89.690	$83.383
GAAP Diluted EPS	$0.04	$(0.02)
Adjusted Diluted EPS (non-GAAP)	$0.13	$0.07
Gross Margin (%)	39%	40%

Product Revenue Breakdown (Q4 2019 vs Q4 2018)

Product	Q4 2018 ($USD Thousands)	Q4 2019 ($USD Thousands)	Change (%)
Lidocaine	$13,661	$12,282	(10%)
Phytonadione	$12,942	$12,309	(5%)
Primatene Mist	$3,574	$9,002	152%
Naloxone	$7,703	$8,951	16%
Enoxaparin	$19,085	$8,800	(54%)
Medroxyprogesterone	$7,448	$6,062	(19%)
Epinephrine	$1,264	$4,311	241%
Other Finished Products	$17,257	$16,280	(6%)
API	$6,756	$5,386	(20%)
Total Net Revenues	$89,690	$83,383	(7%)

KPIs

KPI	Q4 2019	FY 2019
Cash Flow from Operations	~$5.7M	$41.8M
Share Repurchases	$13.8M	>$22M
Primatene Weekly Store Sales Growth vs early Q3	>140%	N/A
Gross Margin (%)	40%	41%

Non-GAAP adjustments (Q4 2019): Share-based comp $4.296M, intangible amortization $0.260M, impairments $0.171M, tax effect $0.072M; reconciled non-GAAP net income attributable to Amphastar of $3.639M and $0.07 diluted EPS .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Primatene Mist Annual Run-Rate	By 2021	$65M (maintained)	$65M (maintained)	Maintained
Sodium Bicarbonate / Shortage Products Sales Opportunity	2020 run-rate	N/A	~$20M annually	New
ANP Third-Party Sales	FY 2020	$1.5M actual in 2019	“More than double” ($>3M)	Raised
Advertising (Primatene)	2020	N/A	Increase dollars; decline as % of Primatene sales	Strategy update
G&A as % of Sales	2020	N/A	Expected to decrease	Lower
R&D Spend	2020	N/A	Increase (dollars and % of sales)	Higher

No formal revenue/EPS/tax rate guidance provided in these materials.

Earnings Call Themes & Trends

Topic	Q2 2019 (Q-2)	Q3 2019 (Q-1)	Q4 2019 (Current)	Trend
Primatene Mist commercialization	Initial revenue $2.512M; TV/radio marketing underway	Walmart shipping started in Oct; revenue $3.654M; marketing ramp	Revenue $9.002M; network TV launched Jan; >140% weekly sales growth; $65M run-rate by 2021 reaffirmed	Accelerating
Gross Margin/Mix	41% margin; higher margins from Primatene, enoxaparin pricing	44% margin; Primatene/phytonadione mix	40% margin; YoY improvement via Primatene; sequential lower vs Q3	Strong YoY, softer QoQ
Supply chain/COVID-19	Built inventory; litigation settlement proceeds to invest in capacity	Not highlighted	99% China staff back; 2-year API inventory in CA; all US finished goods manufacturing; minimal COVID impact expected	Resilient
Regulatory/pipeline	sANDA plans; litigation settlement $59.9M	Another complex ANDA accepted; buyback increase	sANDA approval (sodium bicarbonate); epinephrine vial ANDA Q2 GDUFA; two complex injectables Q3/Q4; insulin trials started; naloxone NDA resubmission path	Advancing
Enoxaparin dynamics	Higher ASPs; revenues $9.838M	$9.573M; decline vs 2018 shortage spike	$8.800M; YoY down 54%	Normalizing lower
ANP/DMFs	ANP expanding R&D; 12 DMFs on file	14 DMFs on file	ANP sales expected to more than double; ongoing API/key component development	Growing

Management Commentary

“We finished 2019 with very strong sales of Primatene Mist, with fourth quarter sales essentially equaling sales in the previous three quarters combined.” — Dr. Jack Zhang, CEO .
“Weekly store sales… increased by more than 140% compared to the first week of the third quarter 2019… we maintain our guidance of Primatene Mist, achieving an annual rate of revenue of $65 million by 2021.” — Jason Shandell, President .
“We recently issued a press release announcing that the FDA approved our supplemental ANDA for sodium bicarbonate… greatly increases our manufacturing capacity at our IMS facility.” — Jason Shandell .
“General and administrative spending decreased 24%… primarily due to decreased legal expenses since we settled our lawsuit with Momenta and Sandoz in June of 2019.” — Bill Peters, CFO .
“We have at least two years inventory of starting material and API located in our California facilities… Amphastar manufactures all of our finished products in the United States.” — Jason Shandell .

Q&A Highlights

Primatene stocking/reorders: ~$2M of Walmart stocking in Q4; continued reorders trending well .
Epinephrine vial ANDA timeline and market: Minor CRL responded in one day; Q2 GDUFA date; expectation to be sole generic initially with reasonable share .
SG&A/ad spend cadence: Advertising dollars to rise for Primatene, but decline as % of Primatene sales (earnings leverage); G&A to decline as % of sales .
COVID-19 impact on Primatene demand: OTC access seen as an advantage during social distancing; observed demand increases, including reported local shortages; mild winter/allergy season also supportive .
Competitive inhalation (ProAir generic): Management does not view generic albuterol (incl. authorized generics) as materially impacting Primatene because OTC access differentiates; pursuing additional retail partners .

Estimates Context

S&P Global consensus estimates for Q4 2019 could not be retrieved due to API limits at time of analysis; therefore, beat/miss vs Street cannot be determined in this report. If access is restored, we will update comparisons to “Revenue Consensus Mean” and “Primary EPS Consensus Mean” and reassess estimate revisions trajectory.

Key Takeaways for Investors

Primatene Mist is the core growth driver; Q4 sales surged with broader retail and DTC push, and management remains confident in a $65M annual run-rate by 2021 — monitor retail expansion and advertising ROI .
Near-term revenue tailwinds from shortage products via IMS capacity expansion (sodium bicarbonate sANDA) with ~$20M annual opportunity; watch execution pace and product availability .
Pipeline is de-risking with multiple 2020 GDUFA dates (epinephrine vial Q2; complex injectables Q3/Q4) and ongoing insulin trials; regulatory milestones are potential trading catalysts .
Margin trajectory favorable YoY on mix but may fluctuate with advertising intensity; expect operating leverage as Primatene scales and ads decline as % of sales .
Enoxaparin normalization remains a headwind vs 2018; diversified portfolio and shortages in other critical care SKUs should offset .
Strong cash generation ($41.8M FY CFO) and buybacks ($22M in 2019) provide capital allocation flexibility; balance sheet supports continued R&D and capacity investments .
COVID-19 supply chain resilience (US manufacturing, 2-year API stockpiles) reduces operational risk; OTC positioning could benefit Primatene demand in the current environment .

Amphastar Pharmaceuticals, Inc. (AMPH)·Q4 2019 Earnings Summary