Pharmaceutical company Amphastar Pharmaceuticals (NASDAQAMPH) missed Wall Street’s revenue expectations in Q1 CY2026, with sales flat year on year at $171.2 million. Its non-GAAP profit of $0.42 per share was 40.5% below analysts’ consensus estimates.

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Company Overview

Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ: AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Amphastar Pharmaceuticals’s 14.4% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Amphastar Pharmaceuticals’s recent performance shows its demand has slowed as its annualized revenue growth of 3% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Amphastar Pharmaceuticals’s $171.2 million of revenue was flat year on year, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.3% over the next 12 months, similar to its two-year rate. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Adjusted Operating Margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

Amphastar Pharmaceuticals has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 30%.

Analyzing the trend in its profitability, Amphastar Pharmaceuticals’s adjusted operating margin rose by 3.6 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming into its more recent performance, however, we can see the company’s margin has decreased by 11.7 percentage points on a two-year basis. If Amphastar Pharmaceuticals wants to pass our bar, it must prove it can expand its profitability consistently.

This quarter, Amphastar Pharmaceuticals generated an adjusted operating margin profit margin of 13.4%, down 17.1 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Amphastar Pharmaceuticals’s EPS grew at 31.7% compounded annual growth rate over the last five years, higher than its 14.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Amphastar Pharmaceuticals’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Amphastar Pharmaceuticals’s adjusted operating margin declined this quarter but expanded by 3.6 percentage points over the last five years. Its share count also shrank by 6.2%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q1, Amphastar Pharmaceuticals reported adjusted EPS of $0.42, down from $0.74 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Amphastar Pharmaceuticals’s Q1 Results

We struggled to find many positives in these results. Its EPS missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 8.3% to $22.04 immediately following the results.

Amphastar Pharmaceuticals’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).