Pernix Therapeutics Holdings, Inc's
) second quarter 2013 loss of 18 cents per share was wider than
the Zacks Consensus Estimate of a loss of 14 cents and the
year-ago loss of 3 cents.
Despite an increase in revenues, higher expenses led to the
Revenues in the second quarter of 2013 came in at $20.6
million, up 96.0% from the year-ago quarter and just above the
Zacks Consensus Estimate of $20 million.
Quarter In Detail
The year-over-year growth in revenues was primarily due to
We note that Pernix has completed the acquisitions of Cypress
Pharmaceuticals (a privately-owned generic pharmaceutical
company) and Hawthorn Pharmaceuticals (a privately-owned branded
pharmaceutical company) at the end of Dec 2012.
In early Mar 2013, Pernix completed the acquisition of Somaxon
Pharmaceuticals, thereby adding insomnia drug Silenor to its
However, the increase in revenues due to recent acquisitions
was partially offset by a decrease in the sales of legacy
products. This, in turn, was attributed to the discontinuation of
the sale of certain generic products as a result of related
litigation settlement terms along with the recall of certain
Gross margin declined to 50.3% in the reported quarter from
67.5% in the year-ago quarter. Gross margin was negatively
impacted by the sale of products subject to revenue-sharing
Selling, general and administrative (SG&A) expenses in the
second quarter of 2013 increased 72.1% from the year-ago quarter
to $13.1 million.
2013 Outlook Reiterated
Pernix reiterated its guidance for 2013. Pernix projects
revenues between $90 million and $100 million in 2013. The
projected revenue range includes contribution from the Cypress,
Hawthorn, and Somaxon acquisitions. The Zacks Consensus Estimate
of $91 million for 2013 is towards the lower end of the company's
Revenues in the fourth quarter are expected to be higher than
the third quarter due to seasonality.
In a strategic move, Pernix decided not to launch Dr. Cocoa,
an OTC chocolate flavored cough and cold offering, on its own in
retail channels due to lack of resources. The company is looking
to partner the product. We note that the distribution of
Dr. Cocoa was previously approved by major retail pharmacy chains
CVS Caremark Corp.
) among others.
Pernix is on track to start patient dosing in its pediatric
upper respiratory study in the third quarter of 2013 and is also
working on the Silenor OTC switch.
Concurrent with the earnings release, Pernix announced 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. Pernix expects to pay off
its long-term debt from the proceeds generated from the sale of
non-core assets and other initiatives.
Pernix currently carries a Zacks Rank #5 (Strong Sell). Right
) looks attractive with a Zacks Rank #2 (Buy).
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