Pernix Therapeutics Reports First Quarter 2012 Financial Results

First Quarter of 2012 Net Revenues Increased Approximately 43% to $14.5 Million from $10.1 Million in the First Quarter of 2011

Launch of Omeclamox-Pak® as a Branded Prescription Treatment for H. pylori Infection and Duodenal Ulcer Disease On Track for the Summer of 2012

Secures Exclusive Rights to the Cough-Related Intellectual Property from its Joint Venture with SEEK in the United States and Canada

THE WOODLANDS, Texas--(BUSINESS WIRE)--Pernix Therapeutics Holdings, Inc. (“Pernix” or the “Company”) (NYSE Amex: PTX), a specialty pharmaceutical company, today announced financial results for the quarter ended March 31, 2012.

Financial Results

For the first quarter of 2012, net revenues increased approximately by 43% to $14.5 million, compared to $10.1 million for the first quarter of 2011. The growth in net revenues was due primarily to a higher volume of sales of CEDAX, certain generic products and a decrease in Medicaid rebates.

Net income for the first quarter of 2012 was approximately $1.2 million, or $0.05 per basic and $0.04 per diluted share, compared to approximately $1.0 million, or $0.04 per basic and diluted share, for the first quarter of 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA, a non-GAAP measure) increased 19% to $2.7 million for the first quarter of 2012, compared to $2.2 million for the first quarter of 2011. See the table at the end of this press release for a reconciliation of EBITDA to net income.

Selling, general and administrative (“SG&A”) expenses in the first quarter of 2012 increased by approximately 31% to $6.8 million, compared to $5.2 million for the first quarter of 2011. The increase was primarily due to (i) growth in the corporate infrastructure to meet the Company’s business objectives, (ii) increased stock compensation expense, (iii) professional expenses associated with the Omeclamox-Pak license, the pediatric development program announced in February 2012, the ATM offering, and the acquisition of the IP Rights from the joint venture with SEEK, (iv) market research on the OTC opportunities related to the joint venture cough-related intellectual property and Omeclamox-Pak and (v) pre-launch expenses associated with Omeclamox-Pak. Depreciation and amortization expense was $0.6 million for the first quarter of 2012, compared to $0.5 million for the first quarter of 2011. The Company recognized an income tax expense of $0.8 million for the first quarter of 2012, compared to $0.7 million in the first quarter of 2011.

Cooper Collins, President and Chief Executive Officer of Pernix, said, “We are pleased to achieve strong growth in net revenues during the first quarter, despite a weak cough and cold season and we are looking forward to the anticipated launch of Omeclamox-Pak on track for this summer. With our strengthened financial position, we remain very active in evaluating business development opportunities, which we believe will drive the continued growth of the company.”

Mr. Collins continued, “Today, we are pleased to announce that we have obtained the rights to the cough-related intellectual property from the joint venture with SEEK in the United States and Canada, which is an important step in pursuing our horizontal integration strategy across our branded, generic and OTC products. We are enthusiastic about the potential opportunities to market a new OTC product line in 2013, and we plan to recruit additional OTC expertise to maximize the value of this asset. This agreement also provides us with the potential to benefit from royalties on product sales outside of the United States and Canada.”

Business Update

Launch of Omeclamox-Pak® in summer of 2012

Pernix remains on track to launch Omeclamox-Pak® in the summer of 2012 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 (20 mg), clarithromycin tablets (500 mg) and amoxicillin capsules (500 mg) for the treatment of Helicobacter pylori (H. pylori) infection and duodenal ulcer disease (active or one-year history) 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.

H. pylori are a bacterium acquired largely by people living in developing countries. Researchers suspect the bacteria are passed through contact with human saliva and waste, or contaminated food and water. If H. pylori is left untreated, it can damage the stomach and small intestine wall causing peptic ulcer disease, specifically duodenal ulcers. Symptoms of H. pylori-induced duodenal ulcers generally surface in adults and may include burning pain in the abdomen, nausea, vomiting, bloating and weight loss. According to the National Institutes of Health, approximately 20 percent of people under 40 years old and half of adults over 60 years of age are infected.

Acquisition of Exclusive Rights to the Cough-Related Intellectual Property from its Joint Venture with SEEK in the United States and Canada

Pernix announced today that the Company has acquired the exclusive rights from SEEK, its joint venture partner, to commercialize and market products utilizing the intellectual property (IP) in the areas of cough, cold, sinus and allergy in the United States and Canada. SEEK will retain exclusive rights to commercialize and develop the intellectual property outside the United States and Canada. Under the terms of the agreement, Pernix paid SEEK $5 million in connection with the termination of its joint venture with SEEK, and will pay royalties to SEEK on sales of products utilizing the joint venture IP in the United States and Canada. Pernix will also receive royalties from SEEK product sales outside of the United States and Canada.

Generic Products Continue to Contribute to Revenue Growth

Pernix markets generic products through its wholly-owned subsidiary, Macoven Pharmaceuticals. Sales of generic products represented 39% of the consolidated net product sales revenue of Pernix for the first quarter of 2012. The performance of Macoven was primarily due to several products launched during the second half of 2011.

Significantly Strengthened Financial Position

In April 2012, Pernix completed an At-the-Market (ATM) equity offering sales program through Cantor Fitzgerald & Co. On April 26, 2012, Pernix sold approximately 2.7 million shares of common stock under the ATM agreement for total net proceeds of approximately $21.3 million. The Company had previously sold 269,500 shares of common stock under its ATM program for total net proceeds of approximately $2.5 million. No further sales of common stock will be made under the ATM program. As of May 11, 2012, including the net proceeds from the ATM offering and a $5 million payment to SEEK, the Company had approximately $57.8 million of cash and cash equivalents.

Guidance

The Company expects net revenues for the full year 2012 to increase by approximately 20% as compared to the full year 2011 and approximately two-thirds of its net revenues are expected in the second half of 2012, which includes the launch of Omeclamox- Pak. Following the termination of the joint venture with SEEK, the Company will no longer participate in the funding of development outside of the US and Canada. As a result, the Company now estimates that its total operating expenses will increase by a range of $10 to $13 million for the full year 2012 as compared to 2011.

Conference Call Information

Management will host a conference call today at 9:00 am EST to discuss its financial results for the first quarter 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 [phone] (U.S.) or [phone] (International), and provide passcode 1478041. 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 May 22, 2012. To access the replay, please dial [phone] (U.S.) or [phone] (International), and provide passcode 1478041. 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 Holdings, Inc. is a specialty pharmaceutical company primarily focused on the sales, marketing, 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, a family of prescription treatments for cough and cold (BROVEX®, ALDEX® and PEDIATEX®) and REZYST IM™, a probiotic blend to promote dietary management. The Company promotes its branded pediatric 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 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

The Company wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. No assurances can be given regarding the future performance of the Company. The Company wishes to advise readers that factors could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically declines any obligation, to update any forward-looking statements to reflect events or circumstances occurring after the date such statements are made.

PERNIX THERAPEUTICS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
		March 31, 2012			December 31, 2011
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	39,201,515		$	34,551,180
Accounts receivable, net		16,401,767			20,601,360
Inventory, net		5,040,631			6,261,162
Prepaid expenses and other current assets		1,672,289			2,144,203
Prepaid taxes		807,174
Deferred income tax assets		4,057,000			4,552,000
Total current assets		67,180,376			68,109,905
Property and equipment, net		1,057,105			911,948
Other assets:
Investments		5,869,320			4,451,831
Intangible assets, net		12,664,454			8,876,504
Other long-term assets		213,783			213,783
Total assets	$	86,985,038		$	82,563,971
LIABILITIES
Current liabilities:
Accounts payable	$	2,249,872		$	2,987,913
Accrued personnel expense		1,371,517			2,044,121
Accrued allowances		14,905,179			17,006,409
Income taxes payable		—			585,931
Other accrued expenses		2,024,198			1,565,918
Contracts payable		3,415,725			1,290,000
Line of Credit		6,000,000			6,000,000
Total current liabilities		29,966,491			31,480,292
Long-term liabilities
Contracts payable		300,000			600,000
Deferred income taxes		1,425,000			860,000
Total liabilities		31,691,491			32,940,292
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 90,000,000 shares authorized, 28,423,482 and 27,820,004 issued, 26,350,672 and 25,749,137 outstanding at March 31, 2012 and December 31, 2011, respectively		263,507			257,491
Treasury stock, at cost (2,072,810 and 2,070,867 shares held at March 31, 2012 and December 31, 2011, respectively)		(3,772,410	)		(3,751,890	)
Additional paid-in capital		33,655,001			30,185,294
Retained earnings		23,034,581			21,843,416
Other comprehensive income		2,112,868			1,089,368
Total stockholders' equity		55,293,547			49,623,679
Total liabilities and stockholders' equity	$	86,985,038		$	82,563,971

PERNIX THERAPEUTICS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31,
	2012			2011
Net revenues	$	14,482,025		$	10,094,975
Costs and expenses:
Cost of product sales		4,690,583			1,956,040
Selling, general and administrative expenses		6,824,262			5,219,740
Research and development expense		70,006			106,158
Loss from operations of the joint venture with SEEK		240,195			330,000
Royalties expense, net		—			261,400
Depreciation and amortization expense		638,072			493,285
Total costs and expenses		12,463,118			8,366,623
Income from operations		2,018,907			1,728,352
Other income (expense):
Other expense		(4,807	)		—
Interest expense, net		(39,937	)		(30,177	)
Total other income (expense), net		(44,744	)		(30,177	)
Income before income taxes		1,974,163			1,698,175
Income tax provision		783,000			723,000
Net income	$	1,191,163		$	975,175
Unrealized gain on securities, net of income tax of approximately $634,000		1,023,500			—
Comprehensive income	$	2,214,663		$	975,175
Net income per share, basic	$	0.05		$	0.04
Net income per share, diluted	$	0.04		$	0.04
Weighted-average common shares, basic		25,921,139			22,652,394
Weighted-average common shares, diluted		26,473,364			23,141,524

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 (Unaudited)
	Three Months Ended March 31,
	2012		2011
GAAP Net Income	$	1,191,163	$	975,175
Plus:
Income tax expense		783,000		723,000
Depreciation and amortization		638,072		493,285
Interest expense, net		39,937		30,177
EBITDA	$	2,652,172	$	2,221,637