Pernix Therapeutics Reports Second Quarter 2013 Financial Results

  Pernix Therapeutics Reports Second Quarter 2013 Financial Results

 Pernix Enters into Agreement to Sell Certain Generic Assets to Breckenridge
                               for $30 Million

   Revenues Increased 96% to $20.6 Million Compared to $10.5 Million in the
                           Second Quarter of 2012.

       Reaffirms Full Year 2013 Revenue Guidance of $90 - $100 Million

Business Wire

THE WOODLANDS, Texas -- August 9, 2013

Pernix Therapeutics Holdings, Inc. (“Pernix” or the “Company”) (NASDAQ MKT:
PTX), a specialty pharmaceutical company, today announced financial results
for the quarter and year-to-date period ended June 30, 2012.

The Company also announced today that it has entered into an agreement to sell
certain generic assets owned by its subsidiary, Cypress Pharmaceuticals, to
Breckenridge Pharmaceutical, Inc. for $30 million. Under the terms of the
agreement, Breckenridge will pay Pernix $20 million in an upfront payment and
$10 million which is to be paid in two equal installments over the next two
years. The assets include 7 previously marketed Abbreviated New Drug
Applications (ANDAs), 11 ANDAs filed at the FDA, and certain other ANDAs in
various stages of development. The agreement contains customary
representations, warranties, covenants and indemnities by the parties, and the
closing of the transactions contemplated by the agreement is subject to the
satisfaction of certain customary conditions described therein. This
transaction is expected to close no later than mid-September 2013.

Michael Pearce, Chairman, President and CEO, said, “We are executing on
critical deliverables. By continuing to integrate and consolidate our recent
acquisitions of Cypress Hawthorn and Somaxon, reducing costs, improving sales
force productivity, and selling certain non-core assets, the Company has
regained financial footing and is repositioned for growth.”

Financial Results

For the second quarter 2013, net sales increased by approximately 96% to $20.6
million, compared to $10.5 million for the same period in the prior year. The
growth in net revenues was due primarily to sales of branded and generic
products acquired from Cypress Hawthorn and Silenor products acquired in the
merger with Somaxon. Pernix closed on its acquisition of Cypress Hawthorn on
December 31, 2012 and on its merger with Somaxon on March 6, 2013. Total net
product revenues for the second quarter of 2013 consisted of 53% from generic
product sales and 47% from brand product sales.

The net loss for the second quarter of 2013 was approximately $5.9 million, or
$0.16 per basic and diluted share, compared to net loss of $0.9 million, or
$0.03 per basic and diluted share, for the second quarter of 2012.

Earnings before interest, taxes, depreciation and amortization (EBITDA, a
non-GAAP measure) was a loss of $3.8 million for the second quarter of 2013,
compared to EBITDA of $0.7 million for the second quarter of 2012. 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
2013 were approximately $13.1 million, compared to $7.6 million for the second
quarter of 2012. $2.6 million of the increase relates to an increase in
overall compensation expense that was primarily attributable to the addition
of Cypress employees, effective Janaury 1, 2013, the addition of Pernix
Manufacting employees in July 2012, partially offset by a decrease in bonus
and incentive compensation. This remaining increase was primarily due to the
incremental increase of the SG&A expenses from the acquisitions of Cypress,
Somaxon and Pernix Manufacturing. In addition, we incurred approximately $0.1
million in transaction expenses in connection with the acquisitions of Cypress
Hawthorn and Somaxon and realized an increase of approximately $0.7 million in
legal fees related to certain litigation that has now been settled.

Depreciation and amortization expense was $2.6 million for the second quarter
of 2013, compared to $0.8 million for the second quarter of 2012. The Company
recognized an income tax benefit of $2.1 million for the second quarter of
2013, compared to income tax expense of $0.5 million in the second quarter of
2012.

For the six months ended June 30, 2013, net revenues increased by
approximately 71% to $42.7 million, compared to $25.0 million for the prior
year period. The increase in net revenues was due primarily to a higher volume
of sales from Cypress and Hawthorn.

The net loss for the six months ended June 30, 2013 was approximately $14.0
million, or $0.39 per basic and diluted share, compared to net income of
approximately $0.3 million, or $0.01 per basic and diluted share, for the
prior year period.

EBITDA was $11.9 million for the six months ended June 30, 2013, compared to
EBITDA of $2.0 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, 2013 were approximately $27.2
million, compared to $14.4 million for the prior year period. As previously
stated, the increase was primarily due to the SG&A expenses of Cypress
Hawthorn and Pernix Manufacturing, including the addition of these employees
and their related overhead. In addition, we incurred approximately $0.5
million in transaction expenses in connection with the acquisitions of Cypress
Hawthorn and Somaxon and realized an increase of approximately $1.8 million in
legal fees from product related litigation. The Company incurred expenses
related to advancing the in-process research and development projects acquired
in the acquisition of Cypress Hawthorn.

Depreciation and amortization expense was $4.8 million for the six months
ended June 30, 2013, compared to $1.4 million for the prior year period. The
Company recognized an income tax benefit of $5.4 million for the six months
ended June 30, 2013, compared to an income tax provision of approximately $0.2
million in the prior year period.

Financial Position and Guidance

As of June 30, 2013, the Company had $9.0 million of cash and cash
equivalents. The Company reaffirms its previously announced net revenue
guidance for the full year 2013 to be in the range of $90 to $100 million. In
the second half of 2013, the Company expects to record higher net revenues in
the fourth quarter than the third quarter.

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, 2013.
The conference call will feature remarks from Michael Pearce, President,
Chairman and Chief Executive Officer, and Tracy Clifford, VP of Finance and
Accounting. To participate in the live conference call, please dial (877)
312-8783 (domestic) or (408) 940-3874 (international), and provide passcode
18730492. 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 16, 2013. To access the
replay, please dial (855) 859-2056 (domestic) and (404) 537-3406
(international), and provide passcode 18730492. An online archive of the
webcast will be available on the Company's website for 30 days following the
call.

VelocityHealth Securities. acted as a financial advisory to Pernix on the sale
of certain Cypress assets to Breckenridge.

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 ZUTRIPRO® for the treatment of cough and cold. 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. Founded in
1996, the Company is based in The Woodlands, TX.

Additional information about Pernix is available on the Company’s website
located atwww.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,          December 31,
                                             2013              2012
                                             (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                    $ 9,048,119       $ 23,022,821
Accounts receivable, net                       26,689,761        36,647,087
Inventory, net                                 18,968,319        22,014,405
Prepaid expenses and other current assets      4,655,948         3,888,117
Prepaid income taxes                           5,506,105       2,024,411
Deferred income taxes                         6,942,000        8,118,500
Total current assets                           71,810,252        95,715,341
Property and equipment, net                    7,200,041         6,946,944
Other assets:
Investments                                    ─                 5,710,526
Goodwill                                       52,645,405        37,160,911
Intangible assets, net                         102,414,440       104,054,431
Assets held for sale                           29,000,000        ─
Other long-term assets                        1,384,055        1,858,534
Total assets                                 $ 264,454,193     $ 251,446,687
LIABILITIES
Current liabilities:
Accounts payable                             $ 12,643,133      $ 5,045,488
Accrued personnel expenses                     2,595,489         2,881,967
Accrued allowances                             31,423,549        30,054,551
Other accrued expenses                         5,117,497         5,548,084
Other liabilities                              15,180,329        8,130,664
Debt                                         18,471,787         2,286,513
Total current liabilities                     85,431,784       53,947,267
Long-term liabilities
Other liabilities                            7,808,640           7,765,511
Debt                                           6,414,307         41,349,563
Deferred income taxes                         43,844,000       35,535,500
Total liabilities                             143,498,731      138,597,841
                                                                             
Commitments and contingencies (Note 16)
                                                                             
Temporary Equity
Common stock subject to repurchase
(3,773,079 and 4,427,084 shares as of June     29,241,362        34,309,901
30, 2013 and December 31, 2012,
respectively)
                                                                             
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, 90,000,000
shares authorized, 39,240,781 and
34,994,828 issued and 37,195,090 and           333,478           296,033
33,301,818 outstanding at June 30, 2013
and December 31, 2012, respectively)
Treasury stock, at cost (2,119,891 and
2,072,810 shares held at June 30, 2013 and     (3,980,629  )     (3,772,410  )
December 31, 2012, respectively)
Additional paid-in capital                     88,943,737        58,606,942
Retained earnings                              6,417,514         20,433,262
Accumulated other comprehensive income        ─                2,975,118
Total equity                                   91,714,100        78,538,945
                                                              
Total liabilities and stockholders’ equity   $ 264,454,193     $ 251,446,687
                                                                             

                                                  
PERNIX THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
                                                                                    
                   Three Months Ended                Six Months Ended
                   June 30,                          June 30,
                   2013            2012             2013             2012
Net revenues       $ 20,573,401     $ 10,499,334     $ 42,651,274      $ 24,981,359
Costs and
operating
expenses:
Cost of product      11,162,350       3,411,117        24,239,797        8,101,700
sales
Selling, general
and                  13,141,447       7,636,227        27,220,635        14,465,296
administrative
expenses
Research and
development          1,792,184        108,717          2,999,300         178,723
expense
Loss from the
operations of
the joint          ─                  ─                ─                 240,195
venture with
SEEK
Depreciation and
amortization         2,631,992        796,535          4,794,700         1,434,607
expense
Loss on sale of     4,880           ─               4,880            ─
assets
Total costs and
operating           28,732,853      11,952,596      59,259,312       24,420,521
expenses
                                                                                    
Income (loss)        (8,159,452 )     (1,453,262 )     (16,608,038 )     560,838
from operations
                                                                                    
Other income
(expense):
Change in fair
value of put         (1,830,062 )     ─                (3,970,789  )     ─
right
Change in fair
value of             ─                ─                283,000           ─
contingent
consideration
Interest             (1,632,569 )     (27,470    )     (2,709,184  )     (67,407    )
expense, net
Gain on sale of     3,605,263       ─               3,605,263        ─
investment
Total other
(loss) income,      142,632         (27,470    )    (2,791,710  )    (67,407    )
net
                                                                                    
Income (loss)
before income        (8,016,820 )     (1,480,732 )     (19,399,748 )     493,431
taxes
                                                                                    
Income tax
(benefit)           (2,121,000 )    (549,000   )    (5,384,000  )    234,000
provision
                                                                                    
Net income         $ (5,895,820 )   $ (931,732   )   $ (14,015,748 )   $ 259,431
(loss)
                                                                                    
Reclassification
adjustment for
net realized
gain included in    (1,526,473 )   455,000           (2,975,118  )   1,478,500
net income
(loss), net of
income tax
                                                                                    
Comprehensive      $ (7,422,293 )   $ (476,732   )   $ (16,990,866 )   $ 1,737,931
income (loss)
                                                                                    
Net income
(loss) per         $ (0.16      )   $ (0.03      )   $ (.39        )   $ 0.01
share, basic
Net income
(loss) per         $ (0.16      )   $ (0.03      )   $ (.39        )   $ 0.01
share, diluted
Weighted-average
common shares,      37,114,717      28,291,237      35,738,469       27,106,188
basic
Weighted-average
common shares,      37,114,717      28,291,237      35,738,469       27,713,021
diluted
                                                                                    

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
                                               
                  Three Months Ended June 30,  Six Months Ended June 30,
                    2013           2012          2013            2012
Net (loss) income $ (5,895,820)   $ (931,732)     $ (14,015,748)   $ 259,431
Amortization &      2,631,992       796,535         4,794,700        1,434,607
depreciation
Net interest        1,632,569       27,470          2,709,184        67,407
Taxes               (2,121,000)     (549,000)       (5,384,000)      234,000
EBITDA            $ (3,752,259)   $ (656,727)     $ (11,895,864)   $ 1,995,445
                                                                     
Deal expenses       116,672         37,629          527,340          37,629
Stock               479,271         727,224         1,024,835        1,223,441
compensation
Stock
compensation –      148,212         188,367         294,796          376,732
ParaPRO
Increase in basis
of acquired         895,440         ─               4,710,700        ─
inventory
included in COGS
Increase in value   1,830,062       ─               3,970,789
of put right
Change in fair
value of            ─               ─               (283,000)        ─
contingent
consideration
Gain on sale of     (3,605,263)                    (3,605,263)      
investment
Adjusted EBITDA   $ (3,887,865)   $ 296,494       $ (5,255,667)    $ 3,633,247

Contact:

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