Pernix Therapeutics Reports Second Quarter 2012 Financial Results
Pernix Therapeutics Holdings, Inc.Joseph T. Schepers, 800-793-2145 ext. 3002Director, Investor Relations
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.
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.
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.
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.
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.
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.
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.
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, . 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.
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 .
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.
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.