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Pernix Therapeutics Reports Third Quarter 2012 Financial Results

  Pernix Therapeutics Reports Third Quarter 2012 Financial Results

   Third Quarter of 2012 Net Revenues Increased Approximately 6.3% to $18.1
           Million From $17.1 Million in the Third Quarter of 2011

     Announced Agreement to Acquire Cypress Pharmaceuticals and Hawthorn
                               Pharmaceuticals

       Macoven Launched Generic Spinosad for the Treatment of Head Lice

             Completed Acquisition of Great Southern Laboratories

Business Wire

THE WOODLANDS, Texas -- November 14, 2012

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

Financial Results

For the third quarter of 2012, net revenues increased 6.3% to $18.1 million,
compared to $17.1 million for the third quarter of 2011. Total net revenues
consisted of 56% branded products, 32% generic products, and 12% manufacturing
revenues in the third quarter of 2012.

The net loss for the third quarter of 2012 was approximately $(0.3) million,
or $(0.01) per basic and diluted share, compared to net income of $2.0
million, or $0.08 per basic and diluted share, for the third quarter of 2011.

Cooper Collins, President and Chief Executive Officer of Pernix, said, “During
the third quarter, we launched Omeclamox-Pak®, which is steadily making
progress. Macoven introduced generic Spinosad for the treatment of head lice,
which is already gaining traction in just two months after the launch, and we
have made efficiency and quality improvements at Great Southern Labs. Today,
we announced that we entered into an agreement to acquire Cypress
Pharmaceuticals and Hawthorn Pharmaceuticals, which are an excellent
combination with Pernix and are expected to provide strong growth for the
Company in the future.”

Earnings before interest, taxes, depreciation and amortization (EBITDA, a
non-GAAP measure) was $0.2 million for the third quarter of 2012, compared to
EBITDA of $3.5 million for the third quarter of 2011. See the table at the end
of this press release for a reconciliation of net income to EBITDA and
adjusted EBITDA. The third quarter 2012, as compared to the third quarter
2011, was impacted by certain operating activities initiated in recent months
including (i) an operating loss of approximately $513,000 from Great Southern
Laboratories of which the majority was incurred in the acquisition month of
July 2012, (ii) an operating loss on the Omeclamox-Pak product of
approximately $400,000, (iii) the expenses incurred in the development of the
Company’s OTC cough products utilizing the recently licensed cough
intellectual property of approximately $107,000, and (iv) the expenses
incurred pursuant to the Company’s previously announced pediatric prescription
development program of approximately $105,000, along with an increase in stock
compensation expense primarily related to a restricted stock issuance in March
2012 of approximately $321,000. In total, these investments in new products,
acquisitions, development and personnel impacted EBITDA by approximately $1.5
million for the quarter.

Selling, general and administrative (SG&A) expenses in the third quarter of
2012 increased by approximately $4.3 to $9.8 million, compared to $5.5 million
for the third quarter of 2011. The increase was primarily due to hiring and
training of the Company’s new gastroenterology sales force, expenses
associated with the launch of Omeclamox-Pak®, an increase in stock
compensation expense, and acquisition and operating expenses related to Great
Southern Laboratories.

Depreciation and amortization expense was $ 0.9 million for the third quarter
of 2012, compared to $0.6 million for the third quarter of 2011. The Company
recognized an income tax benefit of $0.4 million for the third quarter of
2012, compared to income tax expense of $0.9 million in the third quarter of
2011.

For the nine months ended September 30, 2012, net revenues increased 10% to
$43.1 million, compared to $39.2 million for the prior year period. Total net
revenues consisted of 60% branded products, 35% generic products, and 5%
manufacturing revenues for the first nine months of 2012.

The net loss for the nine months ended September 30, 2012 was approximately
$(10,911), or $0.00 per basic and diluted share, compared to net income of
approximately $4.5 million, or $0.19 per basic and diluted share, for the
prior year period.

EBITDA was $2.2 million for the nine months ended September 30, 2012, compared
to EBITDA of $8.8 million for the prior year period. See the table at the end
of this press release for a reconciliation of net income to EBITDA and
adjusted EBITDA. The nine months ended September 30, 2012, as compared to the
same period in 2011, was impacted by certain operating activities initiated in
recent months including (i) an operating loss of approximately $513,000 from
Great Southern Laboratories (ii) an operating loss on the Omeclamox-Pak
product of approximately $1,450,000, (iii) the expenses incurred in the
development of the Company’s OTC cough products utilizing the recently
licensed cough intellectual property of approximately $337,000, and (iv) the
expenses incurred pursuant to the Company’s previously announced pediatric
prescription development program of approximately $137,000, along with an
increase in stock compensation expense primarily related to a restricted stock
issuance in March 2012 and stock option issuances after September 30, 2011 of
approximately $1,029,000. In total, these investments in new products, product
development, acquisitions and personnel impacted EBITDA by approximately $3.5
million.

SG&A expenses in the nine months ended September 30, 2012 increased by
approximately $8.7 million to $24.3 million, compared to $15.6 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®, an increase in stock
compensation expense and acquisition and operating expenses related to Great
Southern Laboratories.

Depreciation and amortization expense was $2.3 million for the nine months
ended September 30, 2012, compared to $1.7 million for the prior year period.
The Company recognized an income tax benefit of $0.2 million for the nine
months ended September 30, 2012, compared to an income tax expense of $2.5
million in the prior year period.

Completed the Acquisition of Great Southern Laboratories

On July 2, 2012, Pernix completed its acquisition of the business assets of
Great Southern Laboratories (“GSL”), a pharmaceutical contract manufacturing
company located in Houston, Texas. The Company closed on the related real
estate on August 30, 2012. Upon the final closing, the Company paid an
aggregate of approximately $4.9 million, and assumed certain liabilities for
substantially all of GSL’s assets including the land and buildings in which
GSL operates. GSL has an established manufacturing facility with an existing
base of customers in the pharmaceutical industry, which is expected to provide
the Company with additional income and potential cost savings. The Company
acquired the GSL assets through a wholly-owned subsidiary, Pernix
Manufacturing, LLC, and continues to operate the business under the name Great
Southern Laboratories.

Financial Position and Guidance

As of September 30, 2012, the Company had $37.0 million of cash and cash
equivalents.

The Company expects the combined revenues of Pernix, with the addition of
Cypress and Hawthorn to be in the range of $135-$145 million for the full year
2013. The Company is not issuing guidance for the full year 2012.

Conference Call Information

Management will host a conference call today at 9:00 a.m. EST to discuss its
financial results for the third quarter and nine months ended September 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 (888) 364-3109 (U.S.) or
(719) 325-2432 (International), and provide passcode 9218466. 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 November 21, 2012. To access
the replay, please dial (888) 203-1112 (U.S.) or (719) 457-0820
(International), and provide passcode 9218466. 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, manufacturing and development of branded, generic and
OTC pharmaceutical products. The Company manages a portfolio 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, and a family of 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. The Company’s
wholly-owned subsidiary, Pernix Manufacturing, LLC, doing business as Great
Southern Laboratories, manufactures and packages products for the
pharmaceutical industry in a wide range of dosage-forms. 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
                                                                             
                                              September 30,     December 31,
                                              2012              2011
                                              (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                     $ 37,037,057      $ 34,551,180
Accounts receivable, net                        20,786,923        20,601,360
Inventory, net                                  6,981,146         6,261,162
Prepaid expenses and other current assets       2,319,860         2,144,203
Prepaid taxes                                   1,713,675         ─
Deferred income tax assets                     5,168,000       4,552,000  
Total current assets                            74,006,661        68,109,905
Property and equipment, net                     6,961,435         911,948
Other assets:
Investments                                     6,355,262         4,451,831
Intangible assets, net                          24,062,367        8,876,504
Other long-term assets                         193,783         213,783    
Total assets                                  $ 112,119,508    $ 82,563,971 
                                                                             
LIABILITIES
Current liabilities:
Accounts payable                              $ 5,915,601       $ 2,987,913
Accrued personnel expense                       1,691,677         2,044,121
Accrued allowances                              14,887,900        17,006,409
Income taxes payable                            ─                 585,931
Other accrued expenses                          3,107,302         1,565,918
Contracts payable                               1,750,000         1,290,000
Debt – short term                               248,946           ─
Line of Credit                                 ─               6,000,000  
Total current liabilities                       27,601,426        31,480,292
Long-term liabilities
Contracts payable                               ─                 600,000
Debt – long term                                1,439,845         ─
Deferred income taxes                          4,465,000       860,000    
Total liabilities                              33,506,271      32,940,292 
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 90,000,000
shares authorized, 31,143,639 and
27,820,004 issued, 29,070,829 and               290,708           257,491
25,749,137 outstanding at September 30,
2012 and December 31, 2011, respectively
Treasury stock, at cost (2,072,810 and
2,070,867 shares held at September 30, 2012     (3,772,410  )     (3,751,890 )
and December 31, 2011, respectively)
Additional paid-in capital                      56,886,190        30,185,292
Retained earnings                               21,832,507        21,843,418
Accumulated other comprehensive income         3,376,242       1,089,368  
Total stockholders' equity                     78,613,237      49,623,679 
Total liabilities and stockholders' equity    $ 112,119,508    $ 82,563,971 
                                                                             

                                                  
PERNIX THERAPEUTICS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                                                   
                   Three Months Ended September      Nine Months Ended September 30,
                   30,
                   2012            2011             2012            2011
Net sales          $ 18,134,158     $ 17,064,196     $ 43,115,517     $ 39,203,944
Costs and
expenses:
Cost of product      7,759,761        7,684,233        15,861,461       13,069,161
sales
Selling, general
and                  9,837,217        5,542,274        24,302,513       15,555,478
administrative
expenses
Research and
development          332,971          147,138          511,694          717,802
expense
Loss from the
operations of
the joint            ─                100,614          240,195          691,865
venture with
SEEK
Royalties            ─                32,461           ─                377,273
expense, net
Depreciation and
amortization        885,982        603,528        2,320,589      1,690,827  
expense
                                                                                   
Total costs and     18,815,931     14,110,248     43,236,452     32,102,406 
expenses
                                                                                   
Income from         (681,773   )    2,953,948      (120,935   )    7,101,538  
operations
                                                                                   
Other income
(expense):
Interest            7,431          (37,300    )    (59,976    )    (129,964   )
expense, net
Total other         7,431          (37,300    )    (59,976    )    (129,964   )
income, net
                                                                                   
Income (loss)
before income        (674,342   )     2,916,648        (180,911   )     6,971,574
taxes
Income tax
provision           (404,000   )    922,000        (170,000   )    2,500,000  
(benefit)
                                                                                   
Net income         $ (270,342   )   $ 1,994,648      $ (10,911    )   $ 4,471,574
(loss)
Unrealized gain
on securities,       808,374          ─                2,286,874        ─
net of income
tax
Comprehensive      $ 538,032          1,994,648        2,275,963        4,471,574
income
                                                                                   
Net income
(loss) per         $ (0.01      )   $ 0.08          $ 0.00          $ 0.19       
share, basic
Net income
(loss) per         $ (0.01      )   $ 0.08          $ 0.00          $ 0.19       
share, diluted
                                                                                   
Weighted-average
common shares,      29,069,119     24,841,554     27,765,275     23,401,910 
basic
                                                                                   
Weighted-average
common shares,      29,069,119     25,147,191     27,765,275     23,737,231 
diluted
                                                                                   

Supplemental Financial Information

The following table presents a reconciliation of Pernix’s net income to EBITDA
and adjusted 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. Adjusted EBITDA further
eliminates the effect of stock-based compensation. EBITDA and adjusted 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 Sept. 30,  Nine Months Ended Sept. 30,
                    2012            2011          2012           2011
GAAP Net Income     $  (270,342  )   $ 1,994,648   $ (10,911   )   $ 4,471,574
(loss)
Plus:
Income tax          $  (404,000  )     922,000       (170,000  )     2,500,000
expense (benefit)
Depreciation and       885,982         603,528       2,320,589       1,690,827
amortization
Interest expense,     (7,431    )    37,300       59,976        129,964
net
EBITDA              $  204,209      $ 3,557,476   $ 2,199,654    $ 8,792,365
                                                                     
Adjustments to
EBITDA:
Stock-based           678,149       357,372      1,901,568     872,269
compensation
Adjusted EBITDA     $  882,358      $ 3,914,848   $ 4,101,222    $ 9,664,634


Contact:

Pernix Therapeutics Holdings, Inc.
Joseph T. Schepers,800-793-2145 ext. 3002
Director, Investor Relations
jschepers@pernixtx.com
 
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