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 firstname.lastname@example.org
Pernix Therapeutics Reports Third Quarter 2012 Financial Results
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