Pernix Therapeutics Holdings, Inc’s (PTX) 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 wider loss.
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 recent acquisitions.
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 portfolio.
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 products.
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 arrangements.
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 guidance range.
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 such as Walgreens (WAG) and CVS Caremark Corp. (CVS) 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 now, Actavis, Inc. (ACT) looks attractive with a Zacks Rank #2 (Buy).
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