Pernix Therapeutics Reports Second Quarter 2012 Financial Results

Pernix Therapeutics Holdings, Inc. (“Pernix” or the “Company”) (NYSE MKT: PTX), a specialty pharmaceutical company, today announced financial results for the quarter and six months ended June 30, 2012.

Financial Results

For the second quarter of 2012, net revenues were $10.5 million, compared to $12.0 million for the second quarter of 2011. The decrease in net revenues, as expected, was due primarily to the weak cough and cold season. The decrease was partially offset by sales from the initial trade launch of Omeclamox-Pak®. Sales of generic products represented 37% of the consolidated net product sales revenue of Pernix for the second quarter of 2012. The performance of Macoven was primarily due to several products launched subsequent to June 30, 2011.

The net loss for the second quarter of 2012 was approximately $0.9 million, or $0.03 per basic and diluted share, compared to net income of $1.5 million, or $0.07 per basic and diluted share, for the second quarter of 2011.

Cooper Collins, President and Chief Executive Officer of Pernix, said, “During the past few months, we completed several important initiatives that are expected to position the Company for future success. These initiatives include the launch of Omeclamox-Pak® by our new Gastroenterology sales force, the acquisition of Great Southern Laboratories, a private pharmaceutical contract manufacturing company, and the renegotiation of our co-promotion and supply agreements with ParaPRO for Natroba. With our strengthened financial position, we continue to move forward with our horizontal integration strategy across branded, generic and OTC products.”

Earnings before interest, taxes, depreciation and amortization (EBITDA, a non-GAAP measure) was a loss of $0.7 million for the second quarter of 2012, compared to EBITDA of $3.0 million for the second quarter of 2011. See the table at the end of this press release for a reconciliation of net income to EBITDA.

Selling, general and administrative (SG&A) expenses in the second quarter of 2012 increased by approximately 59% to $7.6 million, compared to $4.8 million for the second quarter of 2011. The increase was primarily due to hiring and training of the Company’s new gastroenterology sales force, pre-launch expenses associated with Omeclamox-Pak® and an increase in stock compensation expense.

Depreciation and amortization expense was $0.8 million for the second quarter of 2012, compared to $0.6 million for the second quarter of 2011. The Company recognized an income tax benefit of $0.5 million for the second quarter of 2012, compared to income tax expense of $0.9 million in the second quarter of 2011.

For the six months ended June 30, 2012, net revenues increased by approximately 13% to $25.0 million, compared to $22.1 million for the prior year period. The increase in net revenues was due primarily to a higher volume of sales of CEDAX, certain generic products and the launch of Omeclamox-Pak®.

Net income for the six months ended June 30, 2012 was approximately $0.3 million, or $0.01 per basic and diluted share, compared to approximately $2.5 million, or $0.11 per basic and diluted share, for the prior year period.

EBITDA was $2.0 million for the six months ended June 30, 2012, compared to EBITDA of $5.2 million for the prior year period. See the table at the end of this press release for a reconciliation of net income to EBITDA.

SG&A expenses in the six months ended June 30, 2012 increased by approximately 44% to $14.5 million, compared to $10.0 million for the prior year period. As previously stated, the increase was primarily due to hiring and training of the Company’s new gastroenterology sales force, pre-launch expenses associated with Omeclamox-Pak® and an increase in stock compensation expense.

Depreciation and amortization expense was $1.4 million for the six months ended June 30, 2012, compared to $1.1 million for the prior year period. The Company recognized an income tax expense of $0.2 million for the six months ended June 30, 2012, compared to $1.6 million in the prior year period.

Business Update

Launch of Omeclamox-Pak®

In July 2012, Pernix launched Omeclamox-Pak® by its newly-established gastroenterology sales force. Omeclamox-Pak® is a triple combination medication taken orally to treat Helicobacter pylori (H. pylori) infection and eradicate duodenal ulcer disease in adults.

Omeclamox-Pak® is a ten-day therapy of omeprazole delayed-release capsules, clarithromycin tablets, and amoxicillin capsules for the treatment of Helicobacter pylori (H. pylori) infection and duodenal ulcer disease (active or one-year history), and to eradicate H. pylori in adult patients. The product is co-packaged in twice-daily patient compliance packs and was approved by the U.S. Food and Drug Administration (FDA) in 2011.

Restructuring of Co-Promotion and Supply Agreements with ParaPRO LLC for Natroba™

In July 2012, the Company and ParaPRO replaced their then-existing co-promotion and supply agreements relating to Natroba™ with a new agreement to restructure the terms for marketing and distributing Natroba. Under the terms of the new agreement, the Company will no longer have the minimum inventory purchase commitments related to the marketing and promotion of Natroba that were required under the previous agreements. If the Company fails to meet certain future prescription volumes, the Company or ParaPRO would have the option to either modify or terminate the new agreement. The Company and ParaPRO will continue to work together to co-promote and market Natroba.

Acquisition of Great Southern Laboratories

In July 2012, the Company completed its acquisition of the business assets of Great Southern Laboratories (“GSL”), a pharmaceutical contract manufacturing company located in Houston, Texas. The Company anticipates closing on the related real estate in August 2012. Upon the final closing, the Company will have paid an aggregate of $4.9 million, and will have assumed certain liabilities, for substantially all of GSL’s assets including the land and buildings in which GSL operates. GSL has an established pharmaceutical manufacturing facility with an existing base of customers in the pharmaceutical industry, which is expected to provide the Company with additional revenue and potential cost savings. The Company acquired the GSL assets through a wholly-owned subsidiary, Pernix Manufacturing, LLC, and intends to continue to operate the business under the name Great Southern Laboratories.

Financial Position

As of June 30, 2012, the Company had $50.5 million of cash and cash equivalents.

During the second quarter of 2012, Pernix completed an At-the-Market (ATM) equity offering sales program. As of June 30, 2012, Pernix sold 2,966,739 shares of common stock under the ATM agreement for total net proceeds of approximately $23.8 million. No further sales of common stock will be made under the ATM program.

Guidance

The Company expects net revenues, inclusive of manufacturing revenues, for the full year 2012 to increase by approximately 20% as compared to the full year 2011. In the second half of 2012, the Company expects to record higher net revenues in the fourth quarter than the third quarter, and third quarter net revenues are expected to be similar to the first quarter of 2012. The Company estimates that its total operating expenses will increase by a range of $9 to $12 million for the full year 2012 as compared to 2011.

Conference Call Information

Management will host a conference call today at 9:00 a.m. EST to discuss its financial results for the second quarter and six months ended June 30, 2012. The conference call will feature remarks from Cooper Collins, President and Chief Executive Officer, and David Becker, Chief Financial Officer. To participate in the live conference call, please dial (877) 874-1565 (U.S.) or (719) 325-4751 (International), and provide passcode 4635735. A live webcast of the call will also be available on the investor relations section of the Company’s website, www.pernixtx.com. Please allow extra time prior to the webcast to register and download and install any necessary audio software.

A replay of the call will be available through August 21, 2012. To access the replay, please dial (888) 203-1112 (U.S.) or (719) 457-0820 (International), and provide passcode 4635735. An online archive of the webcast will be available on the Company's website for 30 days following the call.

About Pernix Therapeutics Holdings, Inc.

Pernix Therapeutics is a specialty pharmaceutical company primarily focused on the sales, marketing, and development of branded, generic and OTC pharmaceutical products. The Company manages a port-folio of branded and generic products. The Company’s branded products for the pediatrics market include CEDAX®, an antibiotic for middle ear infections, NATROBA™, a topical treatment for head lice marketed under an exclusive co-promotion agreement with ParaPRO, LLC, a family of prescription treatments for cough and cold (BROVEX®, ALDEX® and PEDIATEX®). The Company’s branded products for gastroenterology include OMECLAMOX-PAK®, a 10-day treatment for H. pylori infection and duodenal ulcer disease, and REZYST™, a probiotic blend to promote dietary management. The Company promotes its branded pediatric and gastroenterology products through its sales force. Pernix markets its generic products through its wholly-owned subsidiary, Macoven Pharmaceuticals. A product candidate utilizing cough-related intellectual property is in development for the U.S. OTC market. Founded in 1996, the Company is based in The Woodlands, TX.

Additional information about Pernix is available on the Company’s website located at www.pernixtx.com.

Non-GAAP Financial Measures

Pernix is disclosing non-GAAP financial measures in this press release. Primarily due to acquisitions, Pernix 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 U.S. generally accepted accounting principles (GAAP). In addition to disclosing its financial results determined in accordance with GAAP, Pernix is disclosing non-GAAP results that exclude items such as amortization expense and certain other expense and revenue items in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. Whenever Pernix uses a non-GAAP measure, it will provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures set forth herein 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.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions are forward-looking statements. Because these statements reflect the Company’s current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption "Risk Factors" in our Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein, could affect the Company’s future financial results and could cause actual results to differ materially from those expressed in forward-looking statements contained in the Company’s Annual Report on Form 10-K. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. The Company assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
 

PERNIX THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
         
 

 June 30,

2012
 

 December 31, 2011
 

(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 50,508,794 $ 34,551,180
Accounts receivable, net 15,624,764 20,601,360
Inventory, net 6,668,359 6,261,162
Prepaid expenses and other current assets 2,129,524 2,144,203
Prepaid taxes 837,464

Deferred income tax assets   4,676,000     4,552,000  
Total current assets 80,444,905 68,109,905
Property and equipment, net 1,101,861 911,948
Other assets:
Investments 5,157,894 4,451,831
Intangible assets, net 21,278,864 8,876,504
Other long-term assets   193,783     213,783  
Total assets $ 108,177,307   $ 82,563,971  
 
LIABILITIES
Current liabilities:
Accounts payable $ 3,721,836 $ 2,987,913
Accrued personnel expense 1,410,701 2,044,121
Accrued allowances 16,402,741 17,006,409
Income taxes payable 585,931
Other accrued expenses 1,711,435 1,565,918
Contracts payable 3,230,000 1,290,000
Line of Credit       6,000,000  
Total current liabilities 26,476,713 31,480,292
Long-term liabilities
Contracts payable 600,000
Deferred income taxes   4,454,000     860,000  
Total liabilities   30,930,713     32,940,292  
Commitments and contingencies
STOCKHOLDERS' EQUITY

Common stock, $.01 par value, 90,000,000 shares authorized,

31,140,973 and 27,820,004 issued, 29,068,163 and 25,749,137

outstanding at June 30, 2012 and December 31, 2011,

respectively
290,682 257,491

Treasury stock, at cost (2,072,810 and 2,070,867 shares held at

June 30, 2012 and December 31, 2011, respectively)
(3,772,410 ) (3,751,890 )
Additional paid-in capital 56,057,605 30,185,292
Retained earnings 22,102,849 21,843,418
Accumulated other comprehensive income   2,567,868     1,089,368  
Total stockholders' equity   77,246,594     49,623,679  
Total liabilities and stockholders' equity $ 108,177,307   $ 82,563,971  
 
 

PERNIX THERAPEUTICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
             

(Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
  2012     2011     2012     2011  
Net revenues $ 10,499,334 $ 12,044,772 $ 24,981,359 $ 22,139,748
Costs and expenses:
Cost of product sales 3,411,117 3,428,888 8,101,700

5,384,928
Selling, general & administrative expenses 7,636,227 4,793,462 14,465,296 10,013,204
Research and development expense 108,717 464,506 178,723 570,664
Loss from the operations of the joint venture with SEEK 261,251 240,195 591,251
Royalties expense, net 83,412 344,812
Depreciation and amortization expense   796,535     594,014     1,434,607     1,087,299  
 
Total costs and expenses   11,952,596     9,625,533     24,420,521    

17,992,158
 
 

Income (loss) from operations
  (1,453,262 )   2,419,239     560,838    

4,147,590
 
 
Other income (expense):
Interest expense, net (27,470 ) (62,487 ) (67,407 ) (92,664 )
 

Income (loss) before income taxes
(1,480,732 ) 2,356,752 493,431 4,054,296
Income tax provision   (549,000 )   855,000     234,000     1,578,000  
 

Net income (loss)
$ (931,732 ) $ 1,501,752   $ 259,431   $ 2,476,926  
 
Unrealized gain on securities, net of income tax 455,000 1,478,500
 

Comprehensive Income (loss)
$ (476,732 ) $ 1,501,752   $ 1,737,931   $ 2,476,926  
 

Net income (loss) per share, basic
$ (0.03 ) $ 0.07   $ 0.01   $ 0.11  

Net income (loss) per share, diluted
$ (0.03 ) $ 0.07   $ 0.01   $ 0.11  
 
Weighted-average common shares, basic   28,291,237     22,698,593     27,106,188     22,675,621  
Weighted-average common shares, diluted   28,291,237     23,043,014     27,713,021     23,015,064  
 
 

Supplemental Financial Information

The following table presents a reconciliation of Pernix’s net income to EBITDA. The Company defines EBITDA as net income plus interest, income tax expense, depreciation and amortization and presents these measures to assist investors in evaluating Pernix’s operating performance and comparing the Company’s results with those of other companies. EBITDA should not be considered in isolation from or as a substitute for net income.
 
 
PERNIX THERAPEUTICS HOLDINGS, INC. EBITDA Reconciliation Table(Unaudited)
             
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
GAAP Net Income (loss) $ (931,732) $ 1,501,752 $ 259,431 $ 2,476,926
Plus:
Income tax expense (benefit) (549,000) 855,000 234,000 1,578,000
Depreciation and amortization 796,535 594,014 1,434,607 1,087,299
Interest expense, net   27,470   62,487   67,407   92,664
EBITDA (loss) $ (656,727) $ 3,013,253 $ 1,995,445 $ 5,234,889

Copyright Business Wire 2010

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