Amphastar: Earnings Miss, Margins Drop

Amphastar Pharmaceuticals (NASDAQ:AMPH), a company involved in the development and commercialization of generic and proprietary pharmaceutical products, announced its financial results for the fourth quarter of 2024 on Feb. 27, 2025. The results revealed a slight miss in both earnings and revenue compared to analyst expectations. The company's adjusted earnings per share (EPS) came in at $0.92, underperforming the $0.94 anticipated by analysts, while total revenue reached $186.52 million, falling just short of the projected $188 million. Despite these misses, the company experienced some growth in revenue and earnings compared to the same quarter last year. However, a decline in gross profit margin and increased competition in some product lines tempered overall optimism.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Business Focus

Amphastar Pharmaceuticals, headquartered in California, specializes in developing technically complex generic and proprietary drugs, focusing on high-barrier products with fewer competitors and better margins. The company's endeavors target injectable and inhalation markets which present significant growth potential. It leverages advanced research and manufacturing capabilities to maintain strong market positioning. One key focus is expanding its pipeline, which includes more than 20 high-barrier product candidates across different stages of development. Additionally, strategic acquisitions, such as BAQSIMI, play a critical role in Amphastar's growth strategy, enhancing its portfolio and expanding international reach.

The company's recent focus on high-margin, complex drug formulations is strategic. This focus reduces vulnerability to competition and is supported by an active pipeline and ongoing research and development. By maintaining technological and vertical integration, Amphastar reduces production times, increases control over costs, and maintains quality standards across its product lines.

Quarter Overview: Financial and Product Highlights

During the quarter, several noticeable trends emerged. Revenue increased 4.7% compared to Q4 2023, reaching $186.5 million, despite missing analyst projections. Adjusted EPS grew to $0.92, a 4.5% rise over the previous year. However, gross profit margin declined significantly, dropping to 46.5% from 54% a year ago, attributed to higher labor and component costs.

Primatene MIST® excelled, with sales surging 18% to surpass $100 million annually. Yet, other segments faced challenges; Epinephrine sales fell by 24% due to heightened competition, and Enoxaparin revenues dropped 39% amid market shifts. The recent acquisition of BAQSIMI posted $41.8 million in revenue, but supply disruptions impacted European sales by $2 million to $3 million, although integration and transition from Eli Lilly progressed.

Strategic cost management was evident in the reduction of research and development expenses and marketing initiatives, such as expanding BAQSIMI's market presence, bolstered future outlook. Marketing expenses increased to support sales force expansion. Net income slightly increased to $47.2 million, showing a 0.8% uptick from last year.

As the quarter wrapped, Amphastar grappled with the impact of competition and cost increases but noted advancements in its strategy.

Future Outlook and Strategy

Looking forward, Amphastar's management remains focused on fostering growth through its high-barrier product strategy, anticipating robust performance from its pipeline while eyeing worldwide expansion for BAQSIMI.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 870% — a market-crushing outperformance compared to 170% for the S&P 500.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

Learn more »

*Stock Advisor returns as of February 24, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Amphastar Pharmaceuticals. The Motley Fool has a disclosure policy.