Pernix Therapeutics Holdings Inc (NASDAQ:PTX): Our Take On The Latest Release

Pernix Therapeutics Holdings Inc (NASDAQ:PTX) took a hit last week when the company announced its first quarter 2017 financials. During a subsequent conference call, however, management was able to ease sentiment a little, and Pernix will kick off this week at a close to 10% premium to its post-earnings lows.The first quarter of the year is generally the weakest in the pharmaceutical space from a revenue perspective. Seasonal trends dictated primarily by activity in the insurance industry weigh heavily on topline figures, and this inevitably translates to a weakening in sentiment when the numbers hit press. It can sometimes be an opportunity to pick up an exposure to a company at a discount ahead of a rebalancing as sentiment lifts. The way to ascertain whether any top line decline is purely seasonal, or is representative of something more serious, is to consider comparable quarter figures as opposed to consecutive quarter figures. And in this instance, such a comparison yields a pretty decent underlying operational advance.And in this instance, such a comparison yields a pretty decent underlying operational advance.Specifically, for two of the company's three lead portfolio assets, we saw year-over-year increases in prescription volume. Management reported growth of 2% and 3% in prescription volumes for Silenor and Zohydro ER with BeadTek, respectively. Not massive growth, but growth nonetheless. Prescriptions for Treximet, the third lead asset, dipped by around 1% year over year. As management noted on the conference call, however, the dip came against a backdrop of industry weakness, and the drug actually outperformed the majority of its competitors, gaining 10% on its market share metric.Numbers aside, the big discussion surrounding this company right now is whether it is in line for a near-term buyout. We have highlighted this potential on a number of occasions over the last 12 months, and steps taken by the company of late seem to indicate that it is dressing itself up for acquisition. Yet again, with the latest release, we got another hint that this suggestion is a valid one. In his closing remarks on the conference call, Pernix's CFO, Graham G. Miao, noted:

"…we continue to analyze various alternatives in order to proactively address our liquidity and the capital structure in a constructive manner, including strategic and the refinancing alternatives, asset sales and the mergers and the acquisitions."

This has become pretty standard rhetoric for executive communication over the last few months and seems to us to be an effort by management to reveal to shareholders that a buyout could well be on the cards without actually saying it in so many words. That's speculative, of course, but it's not unreasonably so.There is a financing outcome set to hit press on or before July, with the company shifting from its legacy Wells Fargo setup to an as-yet-undisclosed fresh framework. There is around $300 million debt on the books as things stand, and when considered against the backdrop of the finance source shift, this again could be construed as a tidying up of the balance sheet in an attempt to reduce or minimize the risk that the company is asking a potential buyer to take on as part of any acquisition.Again, speculative, but not unreasonably so.Putting speculation aside, however, and looking at this one from a long-term growth perspective, things remain relatively positive. The prescription side of the company is expanding into its respective constituent markets on aggregate and, whatever happens with the financing arrangement, it's almost certain to make the company more attractive from a capital structure point of view.Cash on hand at the end of March came in at $23 million, which isn't great, and the potential for dilution on the back of any attempts to boost this cash balance remains the primary risk with this stock right now. With this said, the refinancing should serve to mitigate this dilution potential a little bit, and of course, if the company is bought out, the potential dissipates.We will be updating our subscribers as soon as we know more. For the latest updates on PTX, sign up below!Disclosure: We have no position in PTX and have not been compensated for this article.