Pernix Therapeutics Reports Fourth Quarter and Full Year 2012 Financial Results

  Pernix Therapeutics Reports Fourth Quarter and Full Year 2012 Financial
  Results

Completed Acquisition of Cypress Pharmaceuticals and Hawthorn Pharmaceuticals

      Completed the Acquisition of Somaxon Pharmaceuticals in March 2013

 Announced Plans to Launch Dr. Cocoa, an OTC Chocolate Flavored Cough & Cold
                                 Product Line

Business Wire

THE WOODLANDS, Texas -- March 18, 2013

Pernix Therapeutics Holdings, Inc. (“Pernix” or the “Company”) (NASDAQ: PTX),
a specialty pharmaceutical company, today announced financial results for the
fourth quarter and year ended December 31, 2012.

Financial Results

For the fourth quarter of 2012, net revenues were $18.2 million, compared to
$21.4 million for the fourth quarter of 2011. Total net product revenues
consisted of 53% revenue contribution from branded products and 47% revenue
contribution from generic products in the fourth quarter of 2012.

The net loss for the fourth quarter of 2012 was approximately $(1.4) million,
or $(0.05) per basic and diluted share, compared to net income of $3.9
million, or $0.15 per basic and diluted share, for the fourth quarter of 2011.

“This past year was a time for investing and building in Pernix’s continued
success,” said Cooper Collins, President and Chief Executive Officer of
Pernix. “Looking forward in 2013, we are focused on several key objectives
that are expected to drive the Company’s future growth, which include the
following: integrating Cypress and Hawthorn, re-launching Silenor by our
newly-combined Pernix and Hawthorn sales forces, initiating our Phase III
clinical trials for our pediatric product, launching Dr. Cocoa, an OTC
chocolate flavored cough and cold product for the 2013-2014 cough and cold
season, beginning the development of Silenor as an OTC product, and working
toward the IND filings of two products in Hawthorn’s pipeline. We are also
capitalizing on the synergies of our acquisitions, and improving efficiencies
across all of our operations.”

Adjusted Earnings before interest, taxes, depreciation and amortization
(adjusted EBITDA, a non-GAAP measure) was approximately $1.0 million for the
fourth quarter of 2012, compared to adjusted EBITDA of $7.6 million for the
fourth quarter of 2011. Adjusted EBITDA further eliminates the impact of
non-cash stock-based compensation expense and expenses associated with the
acquisitions of Cypress Pharmaceuticals, Hawthorn Pharmaceuticals and Somaxon
Pharmaceuticals. See the table at the end of this press release for a
reconciliation of net income to EBITDA and adjusted EBITDA. For the fourth
quarter of 2012, acquisition-related expenses were $0.8 million. Stock
compensation expense increased to $0.9 million in the fourth quarter of 2012
as compared to $0.6 million in the prior year quarter primarily related to a
restricted stock issuance in March 2012. In total, these investments impacted
adjusted EBITDA by approximately $1.7 million for the quarter.

Selling, general and administrative (SG&A) expenses in the fourth quarter of
2012 increased by approximately $4.2 to $11.1 million, compared to $6.9
million for the fourth quarter of 2011. The increase was primarily due to the
hiring of the Company’s new gastroenterology sales force, and expenses related
to the development of the Company’s OTC cough and cold product candidate,
operating expenses related to Pernix Manufacturing, an increase in stock
compensation expense, expenses associated with the acquisitions of Cypress
Pharmaceuticals, Hawthorn Pharmaceuticals, and Somaxon Pharmaceuticals as well
as an increase in corporate infrastructure costs to support the Company’s
growth objectives.

Depreciation and amortization expense was $ 0.9 million for the fourth quarter
of 2012, compared to $0.6 million for the fourth quarter of 2011. The Company
recognized an income tax benefit of $204,000 for the fourth quarter of 2012,
compared to income tax expense of $2.1 million in the fourth quarter of 2011.

For the year ended December 31, 2012, net revenues increased 1% to $61.3
million, compared to $60.6 million for the prior year period. Total net
product revenues consisted of 55% branded products and 36% generic products
for the full year.

The net loss for the year ended December 31, 2012 was approximately $(1.4)
million, or $(0.05) per basic and diluted share, compared to net income of
approximately $8.3 million, or $0.35 per basic and $0.34 per diluted share,
for the prior year period.

Adjusted EBITDA was $5.9 million for the year ended December 31, 2012,
compared to adjusted EBITDA of $17.4 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. For the full year 2012, acquisition-related
expenses were $1.0 million. Stock compensation expense increased to $3.3
million in 2012 as compared to $1.6 million in 2011 primarily related to a
restricted stock issuance in March and December 2012. In total, these
investments impacted adjusted EBITDA by approximately $4.3 million for the
quarter.

SG&A expenses in the year ended December 31, 2012 increased by approximately
$12.9 million to $35.4 million, compared to $22.5 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, launch expenses
associated with Omeclamox-Pak®, development of the Company’s OTC cough and
cold product, an increase in stock compensation expense and operating expenses
related to Great Southern Laboratories, expenses associated with acquisitions
of Great Southern Laboratories, Cypress Pharmaceuticals, Hawthorn
Pharmaceuticals and Somaxon Pharmaceuticals as well as an increase in
corporate infrastructure costs to support the Company’s growth objectives.

Depreciation and amortization expense was $3.2 million for the year ended
December 31, 2012, compared to $2.3 million for the prior year period. The
Company recognized an income tax benefit of $0.4 million for the year ended
December 31, 2012, compared to an income tax expense of $4.6 million in the
prior year period.

Dr. Cocoa OTC Chocolate Flavored Cough and Cold Product Launch

The Company expects to launch Dr. Cocoa, an OTC chocolate flavored cough and
cold product, in time for the 2013-2014 cough and cold season. The Dr. Cocoa
product line includes daytime, nighttime, cough, cold and fever formulations.

Completed the Acquisition of Cypress Pharmaceuticals and Hawthorn
Pharmaceuticals

On December 28, 2012, Pernix completed its acquisition of Cypress
Pharmaceuticals, Inc. (“Cypress”), a privately-owned generic pharmaceutical
company, and Hawthorn Pharmaceutical, Inc. (“Hawthorn”), a privately-owned
branded pharmaceutical company. Under the terms of the definitive agreement
announced on November 14, 2012 and as amended on December 28, 2012, Pernix
will pay up to $102 million, including an up-front payment of $52.0 million in
cash and $34.3 million in equity (approximately 4,427,084 shares of the
Company’s common stock) at closing as well as up to $11 million payable in
December 2013 and an additional $5 million in a milestone payment. In
connection with the closing of the acquisition, the Company entered into a $42
million credit facility with Midcap Funding V, LLC and other lending parties.

New Product Approvals

On February 28, 2013, the Company announced that its subsidiary, Hawthorn
Pharmaceuticals, Inc., received U.S. Food and Drug Administration (FDA)
approval of a new drug application (NDA) for VITUZ® Oral Solution (hydrocodone
bitartrate and chlorpheniramine maleate). VITUZ is indicated for the relief of
cough and symptoms associated with upper respiratory allergies or a common
cold in adults 18 years of age and older. The product is expected to launch
prior to the fall of the current year.

On February 28, 2013, the Company announced that its subsidiary, Cypress
Pharmaceuticals, Inc., was granted final approval by the FDA for an
abbreviated new drug application (ANDA) for Mefenamic Acid Capsules USP, 250
mg. This product is the generic version of Ponstel Capsules, 250 mg, and is
indicated for relief of mild-to-moderate pain in patients 14 years of age and
older and the treatment of primary dysmenorrhea. The Company expects to launch
the product in the second quarter of 2013.

Completed Acquisition of Somaxon Pharmaceuticals

On March 6, 2013, Pernix completed its acquisition of Somaxon Pharmaceuticals,
Inc. (“Somaxon”) following the approval of the transaction by stockholders of
Somaxon at the special meeting held on March 6, 2013. Under the terms of the
transaction announced on December 11, 2012, Pernix acquired all of the common
stock of Somaxon in a stock-for-stock transaction with a total value equity
value of $25 million.

Somaxon stockholders received 3,665,689 shares of Pernix common stock. The
number of shares of Pernix common stock issued to the stockholders of Somaxon
was based on the volume-weighted average price of Pernix’s common stock over
the 30 day period ending on the day immediately prior to the closing on March
6, 2013. The volume-weighted average price was $6.82.

Financial Position and Guidance

As of December 31, 2012, the Company had $23.0 million of cash and cash
equivalents and working capital of $42.0 million. Pernix had $42 million
outstanding on its $42 million term loan facility as of December 31, 2012.

The Company expects net revenues of Pernix, with the addition of the Cypress,
Hawthorn and Somaxon acquisitions to be in the range of $125-$135 million for
the full year 2013.

Conference Call Information

The Company will host a conference call today at 9:00 a.m. EDT to discuss its
financial results for the fourth quarter and full year ended December 31,
2012. Cooper Collins, President and Chief Executive Officer will lead the
conference call. To participate in the live conference call, please dial (888)
510-1786 (U.S.) or (719) 785-1753 (International), and provide passcode
5442195. 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 March 25, 2013. To access the
replay, please dial (888) 203-1112 (U.S.) or (719) 457-0820 (International),
and provide passcode 5442195. 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
products, including the recently acquired Hawthorn Pharmaceuticals’ product
line. 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 (ZUTRIPRO®, 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 also markets the branded product, SILENOR®, for the treatment of
insomnia. The Company promotes its branded pediatric and gastroenterology
products through its sales force. Pernix markets its generic products through
its wholly-owned subsidiaries, Cypress Pharmaceutical and Macoven
Pharmaceuticals. The Company’s wholly-owned subsidiary, 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.
CONSOLIDATED BALANCE SHEETS
                                                             
                                              December 31,      December 31,
                                              2012              2011
ASSETS
Current assets:
Cash and cash equivalents                     $ 23,022,821      $ 34,551,180
Accounts receivable, net                        36,647,087        20,601,360
Inventory, net                                  22,014,405        6,261,162
Prepaid expenses and other current assets       3,888,117         2,144,203
Prepaid income taxes                            2,024,411         –
Deferred income tax assets - current           8,118,500       4,552,000  
Total current assets                            95,715,341        68,109,905
Property and equipment, net                     6,946,944         911,948
Other assets:
Investments                                     5,710,526         4,451,831
Goodwill                                        37,160,911        1,406,591
Intangible assets, net                          104,054,431       7,469,913
Other long-term assets                         1,858,534       213,783    
Total assets                                  $ 251,446,687    $ 82,563,971 
                                                                  
LIABILITIES
Current liabilities:
Accounts payable                              $ 5,045,488       $ 2,987,913
Accrued personnel expense                       2,881,967         2,044,121
Accrued allowances                              30,054,551        17,006,409
Income taxes payable                            –                 585,931
Other accrued expenses                          5,548,084         1,565,918
Contracts payable and other obligations         8,130,664         1,290,000
Debt, short term                                2,286,513         –
Line of Credit                                 –               6,000,000  
Total current liabilities                       53,947,267        31,480,292
Long-term liabilities
Contracts payable and other obligations         7,765,511         600,000
Debt - long term                                41,349,563        –
Deferred income taxes                          35,535,500      860,000    
Total liabilities                              138,597,841     32,940,292 
Commitments and contingencies
                                                                  
Temporary Equity
Common stock subject to repurchase              34,309,901        –
(4,427,084 shares)
                                                                  
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value, 10,000,000
shares authorized, no shares outstanding
Common stock, $.01 par value, 90,000,000
shares authorized, 35,723,161 and               296,033           257,491
27,820,004 issued, and 34,030,351 and
25,749,137 outstanding at December 31, 2012
and December 31, 2011, respectively
Treasury stock, at cost (2,072,810 and
2,070,867 shares held at December 31, 2012      (3,772,410  )     (3,751,890 )
and December 31, 2011, respectively)
Additional paid-in capital                      58,606,942        30,185,292
Retained earnings                               20,433,362        21,843,418
Other comprehensive income                     2,975,118       1,089,368  
Total stockholders' equity                     78,538,945      49,623,679 
Total liabilities and stockholders' equity    $ 251,446,687    $ 82,563,971 
                                                                             


PERNIX THERAPEUTICS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                  
                   Three Months Ended December 31,   Year Ended December 31,
                   2012            2011             2012            2011
Net sales          $ 18,197,042     $ 21,402,911     $ 61,312,559     $ 60,606,855
Costs and
expenses:
Cost of sales        7,515,434        7,474,799        23,376,895       20,921,233
Selling, general
and                  11,149,140       6,982,488        35,451,653       22,537,966
administrative
expenses
Research and
development          219,971          204,630          731,665          922,432
expense
                                                                                   
Loss from the
operations of        −                122,486          240,195          814,351
the joint
venture
Depreciation and
amortization        880,894        612,067        3,201,483      2,302,894  
expense
                                                                        
Total costs and     19,765,439     15,396,470     63,001,891     47,498,876 
expenses
                                                                        
Income (loss)       (1,568,397 )    6,006,441      (1,689,332 )    13,107,979 
from operations
                                                                        
Other income
(expense):
Interest             (34,847    )     (41,414    )     (94,823    )     (171,378   )
expense, net
                                                                        
Income (loss)
before income        (1,603,244 )     5,965,027        (1,784,155 )     12,936,601
taxes
Income tax
provision           (203,999   )    2,089,000      (373,999   )    4,589,000  
(benefit)
                                                                        
Net income         $ (1,399,245 )   $ 3,876,027      $ (1,410,156 )   $ 8,347,601
(loss)
                                                                        
Unrealized gain
on securities,       (401,124   )     1,089,368        1,885,750        1,089,368
net of income
tax
                                                                 
Comprehensive      $ (1,800,369 )    4,965,395      475,594        9,436,969  
income
                                                                        
Net income
(loss) per         $ (0.05      )   $ 0.15          $ (0.05      )   $ 0.35       
share, basic
Net income
(loss) per         $ (0.05      )   $ 0.15          $ (0.05      )   $ 0.34       
share, diluted
                                                                        
Weighted-average
common shares,      29,254,667     25,738,003     28,146,207     23,990,734 
basic
                                                                        
Weighted-average
common shares,      29,254,667     26,516,582     28,146,207     24,460,291 
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 certain non-recurring expenses and certain non-cash
expenses. 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

               Three Months Ended December     Year Ended December 31,
                31,
                2012              2011          2012            2011
GAAP Net        $  (1,399,245  )   $ 3,876,025   $ (1,410,156 )   $ 8,347,601
Income (loss)
Plus:
Income tax
expense         $  (203,999    )     2,089,000     (373,999   )     4,589,000
(benefit)
Depreciation
and                880,894           612,067       3,201,483        2,302,894
amortization
Interest          34,847          41,414       94,823         171,378
expense, net
EBITDA          $  (687,503    )   $ 6,618,506   $ 1,512,151     $ 15,410,873
                                                                    
Adjustments
to EBITDA:
Impairment         −                 380,000       −                380,000
Charge
Stock-based        897,461           586,495       3,339,300        1,595,830
compensation
Acquisition       776,816         −            1,000,947      −
expenses
Adjusted        $  986,774        $ 7,585,001   $ 5,852,398     $ 17,386,703
EBITDA

Contact:

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