Pernix Therapeutics 10-Q 15 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 04, 2017
Document Information [Line Items]
Entity Registrant Name	PERNIX THERAPEUTICS HOLDINGS, INC.
Entity Central Index Key	1,024,126
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,015,641
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 22,737	$ 36,375
Accounts receivable, net	31,000	50,729
Inventory, net	7,444	7,775
Prepaid expenses and other current assets	15,069	12,617
Income tax receivable	680	1,414
Total current assets	76,930	108,910
Property and equipment, net	1,013	1,103
Goodwill	30,600	30,600
Intangible assets, net	151,086	169,571
Other	235	257
Total assets	259,864	310,441
Current liabilities:
Accounts payable and accrued expenses	20,391	21,343
Accrued allowances	55,810	60,961
Interest payable	6,329	10,897
Treximet Secured Notes - current	0	11,103
Other liabilities - current	4,912	5,224
Total current liabilities	87,442	109,528
Convertible notes - long-term	105,217	104,071
Derivative liability	584	230
Contingent consideration	2,749	2,403
Treximet Secured Notes - long-term	172,677	172,250
Credit facilities - long-term	14,000	14,000
Arbitration award	17,410	17,522
Other liabilities - long-term	2,559	4,500
Total liabilities	402,638	424,504
Commitments and contingencies (notes 1, 3, 6, 7, 10 and 11)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding	0	0
Common stock, $.01 par value, 140,000,000 shares authorized, 10,015,641 shares issued and outstanding at March 31, 2017 and December 31, 2016	100	100
Additional paid-in capital	245,054	244,309
Accumulated other comprehensive loss	(73)	(79)
Accumulated deficit	(387,855)	(358,393)
Total stockholders' equity	(142,774)	(114,063)
Total liabilities and stockholders' equity	$ 259,864	$ 310,441

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Stockholders Equity
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value	$ 0.01	$ 0.01
Common stock shares authorized	140,000,000	140,000,000
Common stock shares issued	10,015,641	10,015,641
Common stock shares outstanding	10,015,641	10,015,641

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net revenues	$ 29,742	$ 32,469
Costs and operating expenses:
Cost of product sales	10,040	11,238
Selling, general and administrative expense	20,275	25,950
Research and development expense	528	928
Depreciation and amortization expense	18,547	23,664
Change in fair value of contingent consideration	346	(5,502)
Restructuring costs	100	0
Total costs and operating expenses	49,836	56,278
Loss from operations	(20,094)	(23,809)
Other income (expense):
Interest expense	(8,959)	(9,024)
Change in fair value of derivative liability	(354)	6,794
Foreign currency transaction gain	0	138
Total other expense, net	(9,313)	(2,092)
Loss before income tax expense	(29,407)	(25,901)
Income tax expense	55	35
Net loss	(29,462)	(25,936)
Other comprehensive loss:
Unrealized gain during period, net of tax of $0 and $0, respectively	6	0
Comprehensive loss	$ (29,456)	$ (25,936)
Net Loss per share, basic	$ (2.94)	$ (4.24)
Net Loss per share, diluted	$ (2.94)	$ (4.24)
Weighted-average common shares, basic	10,016	6,112
Weighted-average common shares, diluted	10,016	6,112

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows used in operating activities:
Net loss	$ (29,462)	$ (25,936)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	91	114
Amortization of intangibles	18,485	23,550
Amortization of deferred financing costs	620	605
Accretion expense	1,348	871
Deferred income tax benefit	0	(137)
Stock compensation expense	745	1,469
Fair market value change in derivative liability	354	(6,794)
Fair market value change in contingent consideration	346	(5,502)
(Increase) decrease in operating assets:
Accounts receivable	19,729	9,453
Income tax receivable	734	(121)
Inventory	331	(1,792)
Prepaid expenses and other assets	(720)	1,186
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	(1,764)	7,453
Accrued allowances	(5,151)	(195)
Interest payable	(4,568)	(5,177)
Other liabilities	(1,918)	(2,366)
Net cash used in operating activities	(800)	(3,319)
Cash flows from investing activities:
Purchase of software and equipment	(3)	(227)
Net cash used in investing activities	(3)	(227)
Cash flows from financing activities:
Payments on Treximet Secured Notes	(12,812)	(14,908)
Net payments on credit facilities	0	(1,000)
Payments on mortgages and capital leases	(23)	(16)
Shares withheld for the payment of taxes	0	(19)
Net cash used in financing activities	(12,835)	(15,943)
Net decrease in cash and cash equivalents	(13,638)	(19,489)
Cash and cash equivalents, beginning of period	36,375	56,135
Cash and cash equivalents, end of period	$ 22,737	$ 36,646

1. Company Overview

1. Company Overview	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
1. Company Overview	Note 1. Company Overview Pernix Therapeutics Holdings, Inc. and subsidiaries (collectively, Pernix, the Company, we, our and us) is a specialty pharmaceutical company focused on the acquisition, development and commercialization of prescription drugs, primarily for the United States (U.S.) market. The Company targets underserved therapeutic areas, such as the central nervous system (CNS) and Pain, including neurology, psychiatry as well as Pain specialties, and has an interest in expanding into additional specialty segments. The Company promotes its branded products to physicians through its Pernix sales force, and markets its generic portfolio through its wholly owned subsidiaries, Macoven Pharmaceuticals, LLC (Macoven) and Cypress Pharmaceuticals, Inc. (Cypress). The Company's branded products include Treximet®, a medication indicated for the acute treatment of migraine attacks with and without aura, Silenor®, a non-controlled substance and approved medication for the treatment of insomnia characterized by difficulty with sleep maintenance and Zohydro ER® with BeadTek, an extended-release opioid agonist indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with generally accepted accounting principles in the United States (GAAP) and under the rules and regulations of the United States Securities and Exchange Commission (SEC) for interim reporting. In management's opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by GAAP has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2017. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended December 31, 2016, included in Pernix's 2016 Annual Report on Form 10-K filed with the SEC. The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to reporting of the assets and liabilities and the disclosure of contingent assets and liabilities to prepare these unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period in conformity with GAAP. Significant estimates of the Company include: revenue recognition, sales allowances such as returns on product sales, government program rebates, customer coupon redemptions, wholesaler/pharmacy discounts, product service fees, rebates and chargebacks, sales commissions, amortization, stock-based compensation, the determination of fair values of assets and liabilities in connection with business combinations, and deferred income taxes. Actual results could differ from these estimates. Subsequent Events The Company has evaluated all events and transactions since March 31, 2017 and did not have any recognized subsequent events but had the following non-recognized subsequent event: On April 18, 2017, the Company and certain of its subsidiaries (together with the Company, the Borrowers) entered into Amendment No. 1 to the Credit Agreement (the Amendment) with Wells Fargo, National Association, as Administrative Agent (Wells Fargo) and the lenders party thereto. The Amendment amends the Credit Agreement, effective August 21, 2015, between the Borrowers, Wells Fargo and the lenders party thereto (the Credit Agreement). Pursuant to the Amendment, the Base Rate Margin (as defined in the Credit Agreement) was increased from 1.00% to 3.00% and the LIBOR Rate Margin (as defined in the Credit Agreement) was increased from 2.00% to 4.00%, in each case effective as of the date of the Amendment. The Company has previously disclosed that it was reviewing its strategic alternatives, including the potential sale of all or a portion of the Company. Consistent with this prior disclosure, the Borrowers have agreed to market their businesses and assets for sale. Further, as the Company intends to transition to another financing source on or before July 31, 2017, it has also agreed that a failure to repay all borrowings under the Credit Agreement on or before July 31, 2017 would constitute an event of default under the Credit Agreement. Furthermore, the Amendment reduced the lenders' commitment to $14,200,000, the amount outstanding under the facility on the date of the Amendment (inclusive of a portion of the fee described below), and eliminated the ability to request letters of credit thereunder. The Amendment also amended certain of the covenants with which the Borrowers must comply under the Credit Agreement. The Amendment replaced the financial covenant in the Credit Agreement with (i) the requirement to maintain a cash balance of at least $8,000,000, tested weekly, and (ii) the requirement that the Borrowing Base (as defined in the Credit Agreement) less the principal amount of all loans outstanding, be greater than $15,000,000 from and after the date that is 30 days after the effective date of the Amendment. The Amendment also provides Wells Fargo, as administrative agent, with certain additional information rights and appraisal rights. In addition, Wells Fargo agreed to not impose certain reserves upon the Borrowing Base in connection with the previously disclosed arbitral award made to GlaxoSmithKline LLC and certain of its affiliates and subsidiaries (collectively, GSK). The Borrowers paid to Wells Fargo a fee of $140,000 in connection with the execution of the Amendment and in certain circumstances will pay an additional fee of $140,000. Going Concern Pursuant to the Amendment, the Company agreed that a failure to repay all borrowings under the Credit Agreement on or before July 31, 2017 would constitute an event of default under the Credit Agreement with Wells Fargo. Therefore, the Company's ability to continue operations after July 31, 2017 will depend on its ability to transition to another financing source on or before July 31, 2017, as to which no assurances can be given. Based upon the foregoing, there is substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that any financing by the Company to transition to an alternative financing source can be realized by the Company, or if realized, what the terms of any such financing may be, or that any amount that the Company is able to raise will be adequate. The Company continues to analyze various alternatives, including strategic and refinancing alternatives, asset sales and mergers and acquisitions. The Company's future success depends on its ability to refinance the Wells Fargo Credit Agreement, raise capital and/or implement the various strategic alternatives discussed above. The Company cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to it or, if available, will be on terms acceptable to the Company. If the Company issues additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of its common stock, and the Company's current shareholders may experience dilution. If the Company is unable to obtain funds when needed or on acceptable terms, the Company may be required to curtail its current development programs, cut operating costs, forego future development and other opportunities and may need to seek bankruptcy protection. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Pernix's wholly-owned subsidiaries Pernix Therapeutics, LLC, Macoven, Cypress, Cypress' subsidiary, Hawthorn Pharmaceuticals, Inc., Pernix Ireland Limited and Pernix Ireland Pain Limited. Transactions between and among the Company and its consolidated subsidiaries are eliminated. Fair Value of Financial Instruments A financial instrument is defined as cash equivalent, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from another party. The Company's financial instruments consist primarily of cash equivalents, notes receivable, and a credit facility. The carrying values of these assets and liabilities approximate their fair value due to their short-term nature. Significant Customers The Company's customers consist of drug wholesalers, retail drug stores, mass merchandisers and grocery store pharmacies in the United States. The Company primarily sells its products directly to large national drug wholesalers, which in turn resell the products to smaller or regional wholesalers, retail pharmacies, chain drug stores, and other third parties. The following tables list the Company's customers that individually comprised greater than 10% of total gross product sales for the three months ended March 31, 2017 and 2016, or 10% of total accounts receivable as of March 31, 2017 and December 31, 2016. Gross Product Sales: Three Months Ended March 31, 2017 2016 McKesson Corporation 34% 36% AmerisourceBergen Drug Corporation 28% 33% Cardinal Health, Inc. 28% 25% Total 90% 94% Accounts Receivable, net: March 31, December 31, 2017 2016 McKesson Corporation 37% 36% Cardinal Health, Inc. 28% 28% AmerisourceBergen Drug Corporation 27% 28% Total 92% 92%

2. Earnings per Share

2. Earnings per Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
2. Earnings per Share	Note 2. Earnings per Share Basic net income (loss) per common share is the amount of net income (loss) for the period divided by the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average shares that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares. The following table sets forth the computation of basic and diluted net loss per share (in thousands except per share data): Three Months Ended March 31, 2017 2016 Numerator: Net loss $ (29,462) $ (25,936) Denominator: Weighted-average common shares, basic 10,016 6,112 Dilutive effect of stock options - - Weighted-average common shares, diluted 10,016 6,112 Net loss per share, basic and diluted $ (2.94) $ (4.24) The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted income (loss) per share because to do so would have been anti-dilutive for the periods presented (in thousands): Three Months Ended March 31, 2017 2016 4.25% Convertible Notes 1,133 1,133 Stock options and restricted stock 854 804 Warrants 33 47 Total potential dilutive effect 2,020 1,984

3. Fair Value Measurement

3. Fair Value Measurement	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
3. Fair Value Measurement	Note 3. Fair Value Measurement The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows: Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3- Inputs are unobservable and reflect the Company's assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. Summary of Assets Recorded at Fair Value The Company's cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. These investments are initially valued at the transaction price and subsequently valued utilizing third-party pricing providers or other market observable data. Data used in the analysis include reportable trades, broker/dealer quotes, bids and offers, benchmark yields and credit spreads. The Company validates the prices provided by its third-party pricing providers by reviewing their pricing methods, analyzing pricing inputs and confirming that the securities have traded in normally functioning markets. The Company did not adjust or override any fair value measurements provided by its pricing providers as of March 31, 2017 or December 31, 2016. The Company had no financial assets that are required to be measured at fair value as of March 31, 2017 and December 31, 2016. As of March 31, 2017 and December 31, 2016, the Company did not have any investments in Level 2 or Level 3 securities. There were no transfers of assets or liabilities between Level 1 and Level 2 during the three months ended March 31, 2017 and 2016. The carrying amounts reflected in the unaudited condensed consolidated balance sheets for certain short-term financial instruments including accounts receivable, accounts payable, accrued expenses, and other liabilities approximate fair value due to their short-term nature. Summary of Liabilities Recorded at Carrying Value and Fair Value The 4.25% Convertible Notes and the Treximet Secured Notes (each, as defined below) are recorded at carrying value. The derivative liability and contingent consideration are recorded at fair value. Within the hierarchy of fair value measurements, the derivative liability and contingent consideration are Level 3 fair values. The fair and carrying value of our debt instruments are detailed as follows (in thousands): As of March 31, 2017 As of December 31, 2016 Fair Carrying Fair Carrying Value Value Value Value 4.25% Convertible Notes $ 35,555 $ 105,217 $ 32,595 $ 104,071 Derivative liability 584 584 230 230 Contingent consideration 2,749 2,749 2,403 2,403 Treximet Secured Notes 137,492 172,677 147,551 183,353 Total $ 176,380 $ 281,227 $ 182,779 $ 290,057 Convertible Notes The fair values of the 4.25% Convertible Notes were estimated using the (i) terms of the 4.25% Convertible Notes; (ii) rights, preferences, privileges, and restrictions of the underlying security; (iii) time until any restriction(s) are released; (iv) fundamental financial and other characteristics of the Company; (v) trading characteristics of the underlying security (exchange, volume, price, and volatility); (vi) valuation of derivative liability; and (vii) precedent sale transactions. Derivative Liability The fair value of the derivative liability was determined using a "with and without" scenario. Under this methodology, valuations are performed on the 4.25% Convertible Notes inclusive of all terms as well as for a convertible note that has identical terms and features but excluding the conversion option. The difference between the two valuations is equal to the fair value of the conversion option. Significant increases or decreases in these inputs would result in a significant change in the fair value of the derivative liability. Contingent Consideration The fair value of contingent consideration is based on two components - a regulatory milestone and commercial milestone. For the regulatory milestone, the expected regulatory earn out payment was discounted taking into account (a) the Company's cost of debt, (b) the expected timing of the payment and (c) subordinate nature of the earn out obligation. The fair value of the commercial milestone was determined using a Monte Carlo simulation. This simulation assumed a risk-neutral framework, whereby future net revenue was simulated over the earn out period using the Geometric Brownian Motion. For each simulation path, the earn out payments were calculated based on the achievement of the revenue milestone and then were discounted to the valuation date. Significant increases or decreases in these unobservable inputs and/or the probability of achievement of these milestones would result in a significant change in the fair value of the contingent consideration. Treximet Secured Notes The fair value of the Company's Treximet Secured Notes was estimated using a discounted cash flow model. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the periods (in thousands). As of and for the As of and for the Three months Ended Year Ended March 31, 2017 December 31, 2016 Derivative liability: Balance at beginning of year $ 230 $ 9,165 Initial measurement of derivative liability - - Remeasurement adjustments - loss (gains) included in earnings 354 (8,935) Ending balance $ 584 $ 230 Contingent consideration: Balance at beginning of year $ 2,403 $ 14,055 Initial measurement of contingent consideration - - Remeasurement adjustments - loss (gains) included in earnings 346 (11,652) Ending balance $ 2,749 $ 2,403

4. Inventory

4. Inventory	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
4. Inventory	Note 4. Inventory Inventories are stated at the lower of cost or market. Inventories consist of the following (in thousands): March 31, December 31, 2017 2016 Raw materials $ 1,975 $ 2,365 Work-in-process - - Finished goods 6,735 7,393 Inventory, gross 8,710 9,758 Reserve for obsolescence (1,266) (1,983) Inventory, net $ 7,444 $ 7,775

5. Goodwill and Intangible Asse

5. Goodwill and Intangible Assets	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
5. Intangible Assets and Goodwill	Note 5. Goodwill and Intangible Assets Goodwill consists of the following (in thousands): Amount Balance at December 31, 2015 $ 54,865 Measurement period adjustments - Zohydro ER (499) Goodwill impairment (23,766) Balance at December 31, 2016 30,600 Measurement period adjustments - Balance at March 31, 2017 $ 30,600 Intangible assets consist of the following (dollars in thousands): As of March 31, 2017 Weighted Gross Carrying Accumulated Net Carrying Average Life Amount Impairment Amortization Amount Unamortized intangible assets: In-process research and development Indefinite $ 11,000 $ - $ - $ 11,000 Total unamortized intangible assets 11,000 - - 11,000 Amortized intangible assets: Product licenses 8.4 years 2,846 - (1,324) 1,522 Supplier contracts 5.0 years 583 - (107) 476 Acquired developed technologies 7.7 years 357,892 - (219,804) 138,088 Total amortized intangible assets 361,321 - (221,235) 140,086 Total intangible assets $ 372,321 $ - $ (221,235) $ 151,086 As of December 31, 2016 Weighted Gross Carrying Accumulated Net Carrying Average Life Amount Impairment Amortization Amount Unamortized intangible assets: In-process research and development Indefinite $ 26,500 $ (15,500) $ - $ 11,000 Total unamortized intangible assets 26,500 (15,500) - 11,000 Amortized intangible assets: Brand 0.0 years 3,887 (891) (2,996) - Product licenses 8.4 years 2,846 - (1,232) 1,614 Supplier contracts 5.0 years 583 - (78) 505 Acquired developed technologies 7.7 years 379,737 (15,052) (208,233) 156,452 Total amortized intangible assets 387,053 (15,943) (212,539) 158,571 Total intangible assets $ 413,553 $ (31,443) $ (212,539) $ 169,571 As of March 31, 2017, the weighted average remaining life for our definite-lived intangible assets in total was approximately 8.8 years. In process research and development (IPR&D) will be amortized on a straight-line basis over its useful life once the receipt of regulatory approval is obtained. During 2016, the Company determined that the carrying value of certain of its intangible assets was not recoverable based upon the existence of one or more of the indicators of impairment. The Company measured these impairments based on a probability weighted projected discounted cash flow method using a discount rate determined to be commensurate with the risk inherent in the Company's current business model and therefore, recorded impairment charges of approximately $15.5 million against IPR&D, $891,000 against brands, and $15.1 million against acquired developed technologies. Estimated amortization expense related to intangible assets with definite lives for each of the five succeeding years and thereafter is as follows (in thousands): Amount 2017 (April - December) $ 54,455 2018 13,961 2019 5,507 2020 5,420 2021 5,325 Thereafter 55,418 Total $ 140,086 Amortization expense was $18.5 million and $23.6 million for the three months ended March 31, 2017 and 2016, respectively, of which, $29,000 and $0 is included in cost of product sales in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016, respectively.

6. Accrued Allowances

6. Accrued Allowances	3 Months Ended
	Mar. 31, 2017
Accrued Liabilities [Abstract]
6. Accrued Allowances	Note 6. Accrued Allowances Accrued allowances consist of the following (in thousands): March 31, December 31, 2017 2016 Accrued returns allowance $ 19,022 $ 18,314 Accrued price adjustments 30,137 35,234 Accrued government program rebates 6,651 7,413 Total $ 55,810 $ 60,961

7. Debt

7. Debt	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
7. Debt	Note 7. Debt Debt, net of discounts and deferred financing costs, consists of the following (in thousands): March 31, December 31, 2017 2016 Wells Fargo Credit Facility $ 14,000 $ 14,000 4.25% Convertible Notes 105,217 104,071 Treximet Secured Notes 172,677 183,353 Total outstanding debt 291,894 301,424 Less current portion - 11,103 Long-term debt outstanding $ 291,894 $ 290,321 Credit Facilities : Wells Fargo On August 21, 2015, the Company entered into the Credit Agreement with Wells Fargo, as Administrative Agent and the lenders party thereto for a $50.0 million, three-year senior secured revolving credit facility (the Wells Fargo Credit Facility), which may be increased by an additional $20.0 million in the lenders' discretion. The Company's obligations under the Wells Fargo Credit Facility are secured by, among other things, the Company's and certain subsidiaries' inventory and accounts receivable, and are guaranteed by certain of the Company's subsidiaries. As of March 31, 2017 and December 31, 2016, $14.0 million was outstanding under the Wells Fargo Credit Facility and classified as Credit facilities - long-term on the unaudited condensed consolidated balance sheets. The Wells Fargo Credit Facility contains representations and warranties, affirmative, restrictive and financial covenants, and events of default (applicable to the Company and certain of its subsidiaries) which are customary for credit facilities of this type. The effective interest rate was 3.62% at March 31, 2017. On February 8, 2017, the Company agreed to provide Wells Fargo 30 days' prior notice of any request for a borrowing under this facility until April 8, 2017. On April 18, 2017, the Borrowers entered into the Amendment with Wells Fargo and the lenders party thereto. The Amendment amends the Credit Agreement governing the Wells Fargo Credit Facility. Pursuant to the Amendment, the Base Rate Margin (as defined in the Credit Agreement) was increased from 1.00% to 3.00% and the LIBOR Rate Margin (as defined in the Credit Agreement) was increased from 2.00% to 4.00%, in each case effective as of the date of the Amendment. The Company has previously disclosed that it was reviewing its strategic alternatives, including the potential sale of all or a portion of the Company. Consistent with this prior disclosure, the Borrowers have agreed to market their businesses and assets for sale. Further, as the Company intends to transition to another financing source on or before July 31, 2017, it has also agreed that a failure to repay all borrowings under the Credit Agreement on or before July 31, 2017 would constitute an event of default under the Credit Agreement. Furthermore, the Amendment reduced the lenders' commitment to $14,200,000, the amount outstanding under the facility on the date of the Amendment (inclusive of a portion of the fee described below), and eliminated the ability to request letters of credit thereunder. The Amendment also amended certain of the covenants with which the Borrowers must comply under the Credit Agreement. The Amendment replaced the financial covenant in the Credit Agreement with (i) the requirement to maintain a cash balance of at least $8,000,000, tested weekly, and (ii) the requirement that the Borrowing Base (as defined in the Credit Agreement), less the principal amount of all loans outstanding, be greater than $15,000,000 from and after the date that is 30 days after the effective date of the Amendment. The Amendment also provides Wells Fargo, as Administrative Agent, with certain additional information rights and appraisal rights. In addition, Wells Fargo agreed to not impose certain reserves upon the Borrowing Base in connection with the previously disclosed arbitral award made to GSK. The Borrowers paid to Wells Fargo a fee of $140,000 in connection with the execution of the Amendment and in certain circumstances will pay an additional fee of $140,000. Interest expense related to the Wells Fargo Credit Facility was $105,000 and $39,000, for the three months ending March 31, 2017 and 2016, respectively. Accrued interest on the Wells Fargo Credit Facility was approximately $38,000 and $37,000 as of March 31, 2017 and December 31, 2016, respectively. The Company recorded debt issuance costs of $270,000, which are being amortized using the effective interest method. As of March 31, 2017, $90,000 and $38,000 are recorded on the unaudited condensed consolidated balance sheet in Prepaid expenses and other current assets and Other assets, respectively. As of December 31, 2016, $90,000 and $60,000 are recorded on the consolidated balance sheet in Prepaid expenses and other current assets and Other assets, respectively. Due to the Amendment discussed above, the Company will accelerate the amortization of the remaining $128,000 in debt issuance costs in the quarter ended June 30, 2017. Convertible Notes: 4.25% Convertible Notes On April 22, 2015, the Company issued $130.0 million aggregate principal amount 4.25% Convertible Senior Notes (the 4.25% Convertible Notes). The 4.25% Convertible Notes mature on April 1, 2021, unless earlier converted, redeemed or repurchased. The Company received net proceeds from the sale of the 4.25% Convertible Notes of $125.0 million, after deducting placement agent fees and commissions and offering expenses payable by the Company. Interest on the 4.25% Convertible Notes is payable on April 1 and October 1 of each year, beginning October 1, 2015. The discounted note balance of $108.4 million and $107.4 million is recorded as long-term debt on the unaudited condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016, respectively. The 4.25% Convertible Notes are governed by the terms of an indenture (the Indenture), between the Company and Wilmington Trust, National Association (the Trustee), each of which were entered into on April 22, 2015. The Company may not redeem the 4.25% Convertible Notes prior to April 6, 2019. However, the holders may convert their 4.25% Convertible Notes at any time prior to the close of business on the business day immediately preceding January 1, 2021 only under certain circumstances. Upon conversion, the Company will deliver a number of shares of the Company's common stock equal to the conversion rate in effect on the conversion date. Effective upon the Reverse Stock Split, the conversion rate decreased from 87.2030 shares of the Company's common stock for each $1,000 principal amount of the 4.25% Convertible Notes to 8.7237 shares of the Company's common stock for each $1,000 principal amount of the 4.25% Convertible Notes, which represents a conversion price of approximately $114.63 per share. Following certain corporate transactions that can occur on or prior to the stated maturity date, the Company will increase the conversion rate for a holder that elects to convert its 4.25% Convertible Notes in connection with such a corporate transaction. In addition to the holder option to convert, the 4.25% Convertible Notes may be redeemed upon the occurrence of certain events. The Company incurred debt issuance costs of approximately $5.0 million, which have been deferred and which are being amortized over a six-year period, unless earlier converted, in which case the unamortized costs would be recorded in additional paid-in capital. The effective interest rate on the 4.25% Convertible Notes, including debt issuance costs and bifurcated conversion option derivative (discussed below), is 9.7%. The Company is required to separate the conversion option in the 4.25% Convertible Notes under Accounting Standards Codification (ASC) 815, Derivatives and Hedging Debt with Conversion and Other Options In addition to the bifurcated conversion feature, there are two other features that require bifurcation but contain de minimis value. Although the probability was considered remote, at the time of the transaction, that (1) additional interest would be incurred for failure to file financial statements timely or (2) the 4.25% Convertible Notes would be redeemed by the Company following the failure of the Zohydro ER acquisition (see Note 12, Business Combinations Interest expense was $2.3 million for each of the three months ended March 31, 2017 and 2016 related to the 4.25% Convertible Notes. Change in fair value of derivative liability was an expense of $354,000 and income of $6.8 million for the three months ended March 31, 2017 and 2016, respectively. Accrued interest on the 4.25% Convertible Notes was approximately $2.8 million and $1.4 million as of March 31, 2017 and December 31, 2016, respectively. The Company recorded debt issuance costs of $5.0 million, which are being amortized using the effective interest method. As of March 31, 2017, $722,000 and $3.1 million are recorded on the unaudited condensed consolidated balance sheet in Prepaid expenses and other current assets and Convertible Notes - long-term, respectively. As of December 31, 2016, $705,000 and $3.3 million are recorded on the consolidated balance sheet in Prepaid expenses and other current assets and Convertible Notes - long-term, respectively. As of March 31, 2017 and December 31, 2016, the Company had outstanding borrowings of $130.0 million related to the 4.25% Convertible Notes, respectively. Secured Notes: Treximet Note Offering On August 19, 2014, the Company issued $220.0 million aggregate principal amount of its 12% Senior Secured Notes due 2020 (the Treximet Secured Notes) pursuant to an Indenture (the "August 2014 Indenture") dated as of August 19, 2014 among the Company, certain of its subsidiaries (the "Guarantors") and U.S. Bank National Association (the August 2014 Trustee), as trustee and collateral agent. The Treximet Secured Notes mature on August 1, 2020 and bear interest at a rate of 12% per annum, payable in arrears on February 1 and August 1 of each year (each, a Payment Date), beginning on February 1, 2015. On each Payment Date, commencing August 1, 2015, the Company began paying installments of principal of the Treximet Secured Notes in an amount equal to 50% of net sales of Treximet for the two consecutive fiscal quarters immediately preceding such Payment Date (less the amount of interest paid on the Treximet Secured Notes on such Payment Date). At each month-end beginning with January 2015, the net sales of Treximet will be calculated, the monthly interest accrual amount will then be deducted from the net sales and this resulting amount will be recorded as the current portion of the Treximet Secured Notes. If the Treximet net sales less the interest due at each month-end of each six-month period does not result in any excess over the interest due, no principal payment must be paid at that time. The remaining balance outstanding on the Treximet Secured Notes will be due on the maturity date, which is August 1, 2020. As of March 31, 2017 and December 31, 2016, the Company classified $0 and $12.8 million, respectively, of the Treximet Secured Notes as a current liability and $176.8 million as a non-current liability. The Treximet Secured Notes are unconditionally guaranteed, jointly and severally, by the Guarantors. The Treximet Secured Notes and the guarantees of the Guarantors are secured by a continuing first-priority security interest in substantially all of the assets of the Company and the Guarantors related to Treximet other than inventory and certain inventory related assets, including accounts arising from the sale of the inventory. The Company may redeem the Treximet Secured Notes at its option, in whole at any time or in part from time to time, on any business day, on not less than 30 days nor more than 60 days prior notice provided to each holder's registered address. If such redemption was prior to August 1, 2015, the redemption price would have been equal to the greater of (i) the principal amount of the Treximet Secured Notes being redeemed and (ii) the present value, discounted at the applicable treasury rate of the principal amount of the Treximet Secured Notes being redeemed plus 1.00%, of such principal payment amounts and interest at the rate per annum shown above on the outstanding principal balance of the Treximet Secured Notes being redeemed assuming the principal balances were amortized at the times and in the assumed amounts set forth on Schedule A to the August 2014 Indenture. If such redemption occurred on or after August 1, 2015 and prior to August 1, 2016, the redemption price would have been equal to 106% of the outstanding principal amount of Treximet Secured Notes being redeemed plus accrued and unpaid interest thereon, or occurs (i) on or after August 1, 2016 and prior to August 1, 2017, the redemption price will equal 103% of the outstanding principal amount of the Treximet Secured Notes being redeemed plus accrued and unpaid interest thereon and (ii) on or after August 1, 2017, the redemption price will equal 100% of the outstanding principal amount of the Treximet Secured Notes being redeemed plus accrued and unpaid interest thereon. The August 2014 Indenture contains covenants that limit the ability of the Company and the Guarantors to, among other things: incur certain additional indebtedness; pay dividends on, redeem or repurchase stock or make other distributions in respect of its capital stock; repurchase, prepay or redeem certain indebtedness; make certain investments; create restrictions on the ability of the Guarantors to pay dividends to the Company or make other intercompany transfers; create liens; transfer or sell assets; consolidate, merge or sell or otherwise dispose of all or substantially all of its assets and enter into certain transactions with affiliates. Upon the occurrence of certain events constituting a change of control, the Company is required to make an offer to repurchase all of the Treximet Secured Notes (unless otherwise redeemed) at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any to the repurchase date. The August 2014 Indenture provides that an Event of Default (as defined in the August 2014 Indenture) will occur if, among other things, (a) the Company defaults in any payment of interest on any note when due and payable, and such default continues for a period of 30 days; (b) the Company defaults in the payment of principal of or premium, if any, on any note when due and payable on the maturity date, upon declaration of acceleration or otherwise, or to pay the change of control repurchase price, when due and payable, and such default continues for a period of five days; (c) failure to make a repurchase offer in the event of a change in control when required under the August 2014 Indenture, which continues for three business days; (d) the Company or any Guarantor fails to comply with certain covenants after receiving written notice from the August 2014 Trustee or the holders of more than 25% of the principal amount of the outstanding Treximet Secured Notes; (e) the Company or any Guarantor defaults with respect to other indebtedness for borrowed money in excess of $8.0 million and such default is not cured within 30 days after written notice from the August 2014 Trustee or the holders of more than 25% of the principal amount of the outstanding Treximet Secured Notes; (f) the Company or any Guarantor has rendered against it a final judgment for the payment of $8.0 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) under certain circumstances; (g) certain bankruptcy, insolvency, liquidation, reorganization or similar events occur with respect to the Company or any Guarantor; (h) a guarantee of the Treximet Secured Notes (with certain exceptions) is held to be unenforceable or invalid in a judicial proceeding or ceases to be in full force and effect or a Guarantor disaffirms its obligations under its guarantee of the Treximet Secured Notes; and (i) certain changes in control of a Guarantor. Interest expense related to the Treximet Secured Notes was $5.4 million and $6.0 million for the three months ending March 31, 2017 and 2016, respectively. Accrued interest on the Treximet Secured Notes was approximately $3.5 million and $9.5 million as of March 31, 2017 and December 31, 2016, respectively. The Company recorded debt issuance costs of $7.8 million, which are being amortized using the effective interest method. As of March 31, 2017, $1.3 million and $3.1 million are recorded on the unaudited condensed consolidated balance sheet in Prepaid expenses and other current assets and Treximet Secured Notes - long-term, respectively. As of December 31, 2016, $1.3 million and $3.4 million are recorded on the consolidated balance sheet in Treximet Secured Notes - current and Treximet Secured Notes - long-term, respectively. On April 13, 2015, the Company furnished to the holders of the Treximet Secured Notes a Consent Solicitation Statement (the Consent Solicitation). The Consent Solicitation sought the consent of the holders of a majority of the principal amount of the Treximet Secured Notes to amend the August 2014 Indenture, that governs the Treximet Secured Notes to allow the Company to, among other things, incur up to $42.2 million of additional debt (the Indenture Amendments) in exchange for a consent fee in cash equal to 1% of the principal amount of consenting Treximet Secured Notes (the Consent Fees). Through April 28, 2015, the Company received consent to the Indenture Amendments from holders representing approximately 98% of the principal amount of the Notes, and subsequently paid the holders approximately $2.2 million during the year ended December 31, 2015. The cost of inducement of $403,000 and $974,000 is recorded in other current assets and Treximet Secured Notes - long term on the consolidated balance sheet at March 31, 2017, respectively and $403,000 and $1.1 million is recorded in Treximet Secured Notes - current and Treximet Secured Notes - long term on the consolidated balance sheet at December 31, 2016, respectively and are being amortized using the straight-line method, which approximates the effective interest method. The following table represents the future maturity schedule of the outstanding debt and line of credit at March 31, 2017 (in thousands): Amount 2017 $ - 2018 14,000 * 2019 - 2020 176,769 2021 130,000 Thereafter - Total maturities 320,769 Less: Note discount (21,647) Deferred financing costs (7,228) Total outstanding debt $ 291,894 * As noted in Note 1. Company Overview

8. Stockholders' Equity

8. Stockholders' Equity	3 Months Ended
	Mar. 31, 2017
Stockholders Equity
8. Stockholders' Equity	Note 8. Stockholders' Equity Reverse Stock Split On October 13, 2016, the Company effectuated a reverse stock split of its outstanding shares of common stock at a ratio of 1 to 10 (the Reverse Stock Split). Upon the effectiveness of the Reverse Stock Split, which occurred on October 13, 2016, the Company's issued and outstanding shares of common stock was decreased from 94,961,549 to 9,499,812 shares, all with a par value of $0.01. Accordingly, all share and per share information has been restated in the Report to retroactively show the effect of the Reverse Stock Split. Warrants As of March 31, 2017, the Company has approximately 32,992 outstanding common stock warrants in connection with the acquisition of Somaxon Pharmaceuticals (Somaxon) in March 2013. Stock Option Plans In June 2015, the Company's shareholders approved the 2015 Omnibus Incentive Plan (the 2015 Plan). The maximum number of shares that can be offered under this plan is 700,000. Incentives may be granted under the 2015 Plan to eligible participants in the form of (a) incentive stock options, (b) non-qualified stock options, (c) restricted shares, (d) restricted stock units, (e) share appreciation rights and (f) other share-based awards. Incentive grants under the 2015 Plan generally vest based on four years of continuous service and have 10-year contractual terms. Stock-Based Compensation Stock-based compensation expense is recognized, net of an estimated forfeiture rate, on a straight-line basis over the requisite service period, which is the vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of its stock options. The determination of the fair value of share-based payment awards on the date of grant using an option pricing model is affected by the Company's stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the term of the awards, actual employee exercise behaviors, risk-free interest rate and expected dividends. The weighted average fair value of stock options granted during the periods and the assumptions used to estimate those values using the Black-Scholes option pricing mode were as follows: Three Months Ended March 31, 2017 2016 Weighted average expected stock price volatility 85.0% 71.0% Estimated dividend yield - - Risk-free interest rate 2.1% 1.4% Expected life of option (in years) 6.2 6.2 Weighted average grant date fair value per option $ 1.86 $ 13.70 The expected stock price volatility for the stock options is based on historical volatility of the Company's stock. The Company has not paid and does not anticipate paying cash dividends; therefore, the expected dividend rate is assumed to be 0%. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption. The expected life of the stock options granted was estimated based on the historical exercise patterns over the option lives. The Company measures the grant date fair value of restricted stock units using the Company's closing common stock price on the trading date immediately preceding the grant date. Stock-based compensation expense was $745,000 and $1.5 million for the three months ended March 31, 2017 and 2016, respectively. Stock-based compensation expense for the periods presented is included within the selling, general and administrative expense in the unaudited condensed consolidated statements of operations. Stock Options As of March 31, 2017, approximately 673,000 options are outstanding that have been issued to employees and directors under the Company's Golf Trust of America, Inc. 2007 Stock Option Plan, the Amended and Restated Pernix Therapeutics Holdings, Inc. 2009 Stock Incentive Plan and the 2015 Plan. As of March 31, 2017, there was approximately $5.2 million of total unrecognized compensation cost related to non-vested stock options issued to employees and directors of the Company, which is expected to be recognized ratably over a weighted-average period of 2.20 years. During the year ended December 31, 2015, the Company's Board of Directors awarded a total of 48,500 options (Performance Options) to certain of the Company's former executive officers. Due to the corporate restructuring that was announced in July 2016 and the associated departures of Company's former executive officers, all outstanding Performance Options have been canceled and none of these Performance Options have vested. The Company utilized a Monte Carlo simulation to determine the grant date fair value of the Performance Options. Compensation expense is recognized over the performance period of each tranche in accordance with ASC 718, Compensation - Stock Compensation The following table shows the option activity, described above, during the three months ended March 31, 2017 (share and intrinsic values in thousands): Weighted Average Average Remaining Aggregate Exercise Contractual Life Intrinsic Shares Price (years) Value Options Outstanding at December 31, 2016 650 $ 25.85 Granted 29 2.54 Exercised - - $ - Cancelled (6) 47.03 Expired - - Options outstanding at March 31, 2017 673 $ 24.63 8.9 $ 186 Options vested and expected to vest as of March 31, 2017 518 $ 29.24 8.7 $ 114 Options vested and exercisable as of March 31, 2017 118 $ 58.50 7.4 $ - The total intrinsic value of options exercised during the three months ended March 31, 2017 and 2016 was $0. Options issued subsequent to January 2014 have a graded vesting schedule over either three or four years. The Company's stock option grants expire ten years from the date of grant. Restricted Stock The following table shows the Company's non-vested restricted stock activity during the three months ended March 31, 2017 (share and intrinsic values in thousands): Weighted Average Aggregate Grant Date Fair Intrinsic Shares Value Value Non-vested restricted stock outstanding at December 31, 2016 197 $ 3.36 Granted 5 2.19 Vested - - $ - Forfeited - - Non-vested restricted stock outstanding at March 31, 2017 202 $ 3.33 As of March 31, 2017, there was $331,000 of total unrecognized compensation cost related to non-vested restricted stock issued to employees and directors of the Company.

9. Income Taxes

9. Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
9. Income Taxes	Note 9. Income Taxes The Company reported an income tax expense of $55,000 and $35,000 for the three months ended March 31, 2017 and 2016, respectively. The Company's effective tax rate was 0.2% for the three months ended March 31, 2017, compared to an estimated annual effective rate of 0.1% for the three months ended March 31, 2016. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. All deferred tax assets were subject to a full valuation allowance as of December 31, 2016. The Company evaluates the realizability of its U.S. net deferred tax assets based on all available evidence, both positive and negative, on a quarterly basis. The realization of net deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. The Company weighed both positive and negative evidence and determined that due to recent losses there is a continued need for a full valuation allowance against all of the Company's deferred tax assets as of March 31, 2017 and December 31, 2016. Our gross deferred tax assets are comprised primarily of U.S. Federal net operating losses and accruals. A substantial portion of the deferred tax liability at March 31, 2017 relates to the difference between the financial statement and tax basis of the intangibles acquired in the Cypress acquisition. The deferred tax liability related to these Cypress intangibles is reduced on an annual basis by the financial statement amortization of such intangibles. The Company files income tax returns with both federal and state-level taxing authorities in the U.S., and with the taxing authorities of various foreign jurisdictions. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. As of March 31, 2017, the Company's 2014 Federal tax return is under examination by the Internal Revenue Service (the IRS). Other years subject to potential examination by the IRS include 2012, 2013 and 2015.

10. Commitments and Contingenci

10. Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
10. Commitments and Contingencies	Note 10. Commitments and Contingencies Legal Proceedings GlaxoSmithKline (GSK) Arbitration The Company was involved in an arbitration proceeding with GSK. GSK claimed that the Company owed GSK damages relating to an alleged breach by the Company of a covenant contained in the Asset Purchase and Sale Agreement (APSA), dated as of May 13, 2014 by and among GSK and the Company pertaining to a pre-existing customer agreement. The Company asserted counterclaims and defenses under the APSA and also asserted claims against GSK related to breaches of a supply agreement between the parties. The Company and GSK entered into an interim settlement agreement (the Interim Settlement Agreement) under which the Company agreed to make payments to GSK and escrow additional funds. Additionally, the parties agreed to submit the matter to binding arbitration. On January 31, 2017, the arbitration tribunal issued opinions in favor of GSK, awarding it damages and fees in the amount of approximately $35 million, plus interest (estimated to be approximately $2 to $5 million). The tribunal also denied the Company's claim that GSK breached its obligations under the supply agreement. The Company has already paid to GSK an aggregate of $16.5 million, including $6.2 million from the escrow account, which will offset the total award. After discussions with GSK, an agreement was reached on March 17, 2017, to amend the Interim Settlement Agreement with GSK whereby the Company agreed to establish a payment schedule for satisfaction of the current balance of the award. Pursuant to the amendment, the Company agreed that the outstanding balance as of the date of the amendment was approximately $21.5 million to GSK and the Company agreed to make quarterly installments in amounts totaling $1.0 million in 2017, $3.5 million in 2018 and approximately $17.0 million in 2019. The Company recorded the fair value of this settlement in the amount of approximately $18.5 million in its financial statements at December 31, 2016 and recorded $15.3 million as a reduction to net revenues, $1.0 million to selling, general and administrative expense and $2.2 million to interest expense in the year ended December 31, 2016. As of March 31, 2017, the net present value of remaining payment obligations owed under this settlement agreement was $18.7 million. The current portion is recorded in other liabilities - current and the non-current portion was recorded in arbitration award on the Company's unaudited condensed consolidated balance sheet as of March 31, 2017. Recro Gainesville LLC v. Actavis Laboratories FL, Inc., District of Delaware Case Nos. 14-1118, 15-413, and 15-1196; Recro Gainesville LLC v. Alvogen Malta Operations Ltd., District of Delaware Case No. 14-1364 Recro is the owner of U.S. Patent Nos. 6,228,398 (the '398 Patent) and 6,902,742 (the '742 Patent), both of which expire on November 1, 2019, and U.S. Patent No. 9,132,096 (the '096 Patent), which expires on September 12, 2034. All three patents (collectively, the Orange Book Patents) are listed in the United States Food and Drug Administration's (FDA) Orange Book: Approved Drug Product with Therapeutic Equivalence Evaluations (Orange Book) as covering Zohydro ER. Actavis plc (Actavis) and Alvogen Pine Brook, Inc. (Alvogen) each filed abbreviated new drug applications (ANDAs) with the FDA seeking approval of proposed generic versions of Zohydro ER in 10, 15, 20, 30, 40, and 50 mg dosage strengths. Those ANDAs and amendments thereto contained certifications asserting that the Orange Book Patents are invalid and not infringed. Pursuant to the Hatch-Waxman Act, Recro brought suit against Actavis on September 3, 2014 and May 21, 2015 for declaratory judgment of infringement of the '398 and '742 Patents, and on December 23, 2015 for declaratory judgment of infringement of the '096 Patent. In response, Actavis filed counterclaims seeking declaratory judgments of noninfringement and invalidity of all three Orange Book Patents. Pursuant to the Hatch-Waxman Act, Recro brought suit against Alvogen on November 3, 2014 for declaratory judgment of infringement of the '398 and '742 Patents. In response, Alvogen filed counterclaims seeking declaratory judgments of noninfringement and invalidity of those two patents. On September 13, 2016, Recro and Actavis jointly filed a stipulation of dismissal of all claims and counterclaims relating to the '398 Patent, and that stipulation was entered by the Court on September 14, 2016. On September 29, 2016, Recro and Alvogen jointly filed a stipulation of dismissal of all claims and counterclaims then-pending, and that stipulation was entered by the Court on March 31, 2016, ending the case between Recro and Alvogen. Recro and Actavis participated in a bench trial in the United States District Court for the District of Delaware regarding the '742 and '096 Patents, which was completed on October 7, 2016. During the trial, Actavis declined to pursue its invalidity counterclaims as to both the '742 and '096 Patents. The parties' post-trial submissions regarding the remaining issues of infringement were filed on November 7, 2016. On February 23, 2017, the Company received a favorable opinion for this litigation and the United States District Court for the District of Delaware concluded that Actavis' proposed generic version of Zohydro ER infringes U.S. Patent Nos. 9,132,096 and 6,902,742. The Judge has entered an order enjoining Actavis from engaging in the commercial manufacture, use, offer to sell, or sale in the United States, or importation into the United States of Actavis' ANDA product prior to expiration of the two patents. On March 17, 2017 Actavis filed a notice of appeal. The Company remains confident in Recro's legal position with respect to this matter. Pernix Ireland Pain, Ltd. and Pernix Therapeutics, LLC v. Actavis Laboratories FL, Inc., Pernix Ireland Pain, Ltd. and Pernix Therapeutics, LLC v. Alvogen Malta Operations, Ltd., Pernix Ireland Pain, Ltd. is the owner of U.S. Patent No. 9,265,760 (the '760 Patent), which was issued on February 23, 2016, U.S. Patent No. 9,326,982 (the '982 Patent), which was issued on May 3, 2016, U.S. Patent No. 9,333,201 (the '201 Patent), which was issued on May 10, 2016, and U.S. Patent No. 9,339,499 (the '499 Patent), which issued on May 17, 2016 (collectively, the "Pernix Zohydro ER Patents"). The Pernix Zohydro ER Patents are listed in the Orange Book as covering Zohydro ER. Pernix Therapeutics, LLC (Pernix LLC) is the exclusive licensee of the Pernix Zohydro ER Patents and is the sole distributor of Zohydro ER in the United States. As discussed above, Actavis and Alvogen (together, the Defendants) each filed ANDAs with the FDA seeking approval of proposed generic versions of Zohydro ER in 10, 15, 20, 30, 40, and 50 mg dosage strengths, and litigation regarding those ANDAs is ongoing in the District of Delaware in Recro Gainesville LLC v. Actavis Laboratories FL, Inc., Recro Gainesville LLC v. Alvogen Malta Operations Ltd., Medicine to Go Pharmacies, Inc. v. Macoven Pharmaceuticals, LLC and Pernix Therapeutics Holdings, Inc., District Court of New Jersey Case No. 3:16-cv-07717 On October 23, 2016, Medicine to Go Pharmacies, Inc. (the Macoven Plaintiff) filed an action against Macoven, Pernix and unidentified individuals seeking redress for the sending of unlawful advertisements to facsimile machines in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227. On December 2, 2016, the Company filed its answers in defense of the allegations. The fax campaign that is the subject of this litigation was administered by a third party that is not presently a defendant in this litigation. The Company may not be able to secure indemnification from this third party for costs that it might incur relative to this matter and insurance defense and indemnity does not appear available to the Company. While certain cases of this nature have historically resolved for non-material amounts, it is difficult for the Company to quantify its potential liability, if any, at this time. Based upon known facts, the Company intends to vigorously defend itself in this litigation. Other Commitments and Contingencies In July 2012 and January 2013, Somaxon settled two patent litigation claims with parties seeking to market generic equivalents of Silenor. As of March 31, 2017, remaining payment obligations of the Company owed under these settlement agreements are $750,000. The balance is payable in equal annual installments of $250,000 through 2019. The current portion is recorded in other liabilities - current and the non-current portion is recorded in other liabilities - long-term on the Company's unaudited condensed consolidated balance sheets as of March 31, 2017. During the first quarter of 2014, the Company settled all claims arising from certain actions by Cypress under the Texas Medicaid Fraud Prevention Act prior to its acquisition by the Company. As part of the settlement, the Company agreed to pay $12.0 million, payable in annual amounts of $2.0 million until the settlement is paid in full. As of March 31, 2017, the net present value of remaining payment obligations owed under this settlement agreement is $3.6 million. The current portion is recorded in other liabilities - current and the non-current portion is recorded in other liabilities - long-term on the Company's unaudited condensed consolidated balance sheet as of March 31, 2017. In connection with the acquisition of Treximet, the Company is responsible for the payment of royalties to Pozen of 18% of Treximet net sales with quarterly minimum royalty amounts of $4.0 million for the calendar quarters commencing on January 1, 2015 and ending on March 31, 2018.

11. Restructuring

11. Restructuring	3 Months Ended
	Mar. 31, 2017
Restructuring and Related Activities [Abstract]
11. Restructuring	Note 11. Restructuring On July 7, 2016, the Company announced a restructuring of its sales force and operations (2016 Restructuring Costs). The reorganization plan included (1) a reduction of 54 sales positions, primarily from the Company's Neurology sales team; (2) prioritization and reorganization of sales territories to reduce the inefficient time that sales representatives spent driving long distances between customers; (3) improvement of the Company's compensation plan to incentivize the field sales staff to increase the frequency of calls on the focused targets; and (4) consolidation of the Neurology and Pain sales forces under one sales management structure to eliminate redundancies. In addition, as part of this initiative, the Company reduced its administrative staff by 6 employees. The Company incurred $100,000 during the three months ended March 31, 2017 in contract termination costs associated with the 2016 restructuring. To date the Company has incurred $2.4 million in 2016 Restructuring Costs; $1.4 million related to employee termination benefits and $1.0 million related to contract termination costs. Associated contract termination cost payments are expected to be paid by December 31, 2017. On March 16, 2015, the Company instituted an initiative to restructure operations and shut down its Charleston, South Carolina site (2015 Restructuring Costs). This step was done to consolidate operations within the Company's headquarters located in Morristown, New Jersey. The Company incurred $0 during the three months ended March 31, 2017 and 2016, related to the restructuring. Associated severance payments were paid by May 31, 2016. A summary of accrued restructuring costs, included as a component of accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets, is as follows (in thousands): December 31, March 31, 2016 Charges Cash Non-cash 2017 2016 restructuring costs $ 618 $ 100 $ (128) $ - $ 590 (Contract termination costs) December 31, 2015 Charges Cash Non-cash December 31, 2016 2015 restructuring costs $ 104 $ - $ (104) $ - $ - (Employee termination benefits)

12. Business Combinations

12. Business Combinations	3 Months Ended
	Mar. 31, 2017
Business Combinations [Abstract]
12. Business Combinations	Note 12. Business Combinations Consideration paid by the Company for each business it purchased is allocated to the assets and liabilities acquired based upon their estimated fair values as of the date of each acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed is recorded as goodwill. Zohydro ER Acquisition On April 24, 2015, Pernix completed the acquisition of the pharmaceutical product line, Zohydro ER, including an abuse-deterrent pipeline and all related intellectual property, a favorable supplier contract and an associated liability payable, and a specified quantity of inventory associated therewith, from Zogenix, Inc. (Zogenix). There were no other tangible or intangible assets acquired and liabilities assumed related to the Zohydro ER product line from Zogenix. The total purchase price consisted of an upfront cash payment of $80.0 million including a deposit of $10.0 million in an escrow fund, stock consideration of $11.9 million issued in common stock of Pernix, $927,000 for a specified quantity of inventory, and regulatory and commercial milestones of up to $283.5 million including a $12.5 million milestone payment upon approval of a ZX007 abuse-deterrent extended-release hydrocodone tablet and up to $271.0 million in potential sales milestones if the Zohydro ER product line achieves certain agreed-upon net sales targets. The Zohydro ER product line acquisition was accounted for as a business combination in accordance with ASC 805 Business Combinations Business Combinations (Topic 805)

13. Supplemental Cash Flow Info

13. Supplemental Cash Flow Information	3 Months Ended
	Mar. 31, 2017
Supplemental Cash Flow Elements [Abstract]
13. Supplemental Cash Flow Information	Note 13. Supplemental Cash Flow Information Supplemental cash flow information is as follows (in thousands): Three Months Ended March 31, 2017 2016 Supplemental disclosures of Cash Flow Information: Cash (received) paid for income taxes, net $ (679) $ 157 Cash paid for interest 11,481 12,600

14. Recent Accounting Pronounce

14. Recent Accounting Pronouncements	3 Months Ended
	Mar. 31, 2017
Accounting Changes and Error Corrections [Abstract]
14. Recent Accounting Pronouncements	Note 14. Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (the FASB) issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) In January 2017, the FASB issued ASU 2017-01, Business Combination (Topic 805) For transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance For transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company is currently assessing the potential impact of adopting ASU 2017-01 on its financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02 Leases The leasing standard will be effective for calendar year-end public companies beginning after December 15, 2018. Public companies will be required to adopt the new leasing standard for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption will be permitted for all companies and organizations upon issuance of the standard. For calendar year-end public companies, this means an adoption date of January 1, 2019 and retrospective application to previously issued annual and interim financial statements for 2018 and 2017. The Company is currently in the process of evaluating the impact that this new leasing ASU will have on its financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In July 2015, the FASB issued, ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue Recognition There were no other recent accounting pronouncements that have not yet been adopted by the Company that are expected to have a material impact on the Company's consolidated financial statements.

1. Company Overview (Policies)

1. Company Overview (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Interim Financial Statements	The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with generally accepted accounting principles in the United States (GAAP) and under the rules and regulations of the United States Securities and Exchange Commission (SEC) for interim reporting. In management's opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by GAAP has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2017. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended December 31, 2016, included in Pernix's 2016 Annual Report on Form 10-K filed with the SEC.
Management's Estimates and Assumptions	The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to reporting of the assets and liabilities and the disclosure of contingent assets and liabilities to prepare these unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period in conformity with GAAP. Significant estimates of the Company include: revenue recognition, sales allowances such as returns on product sales, government program rebates, customer coupon redemptions, wholesaler/pharmacy discounts, product service fees, rebates and chargebacks, sales commissions, amortization, stock-based compensation, the determination of fair values of assets and liabilities in connection with business combinations, and deferred income taxes. Actual results could differ from these estimates. Going Concern Pursuant to the Amendment, the Company agreed that a failure to repay all borrowings under the Credit Agreement on or before July 31, 2017 would constitute an event of default under the Credit Agreement with Wells Fargo. Therefore, the Company's ability to continue operations after July 31, 2017 will depend on its ability to transition to another financing source on or before July 31, 2017, as to which no assurances can be given. Based upon the foregoing, there is substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that any financing by the Company to transition to an alternative financing source can be realized by the Company, or if realized, what the terms of any such financing may be, or that any amount that the Company is able to raise will be adequate. The Company continues to analyze various alternatives, including strategic and refinancing alternatives, asset sales and mergers and acquisitions. The Company's future success depends on its ability to refinance the Wells Fargo Credit Agreement, raise capital and/or implement the various strategic alternatives discussed above. The Company cannot be certain that these initiatives or raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to it or, if available, will be on terms acceptable to the Company. If the Company issues additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of its common stock, and the Company's current shareholders may experience dilution. If the Company is unable to obtain funds when needed or on acceptable terms, the Company may be required to curtail its current development programs, cut operating costs, forego future development and other opportunities and may need to seek bankruptcy protection.
Subsequent Events	The Company has evaluated all events and transactions since March 31, 2017 and did not have any recognized subsequent events but had the following non-recognized subsequent event: On April 18, 2017, the Company and certain of its subsidiaries (together with the Company, the Borrowers) entered into Amendment No. 1 to the Credit Agreement (the Amendment) with Wells Fargo, National Association, as Administrative Agent (Wells Fargo) and the lenders party thereto. The Amendment amends the Credit Agreement, effective August 21, 2015, between the Borrowers, Wells Fargo and the lenders party thereto (the Credit Agreement). Pursuant to the Amendment, the Base Rate Margin (as defined in the Credit Agreement) was increased from 1.00% to 3.00% and the LIBOR Rate Margin (as defined in the Credit Agreement) was increased from 2.00% to 4.00%, in each case effective as of the date of the Amendment. The Company has previously disclosed that it was reviewing its strategic alternatives, including the potential sale of all or a portion of the Company. Consistent with this prior disclosure, the Borrowers have agreed to market their businesses and assets for sale. Further, as the Company intends to transition to another financing source on or before July 31, 2017, it has also agreed that a failure to repay all borrowings under the Credit Agreement on or before July 31, 2017 would constitute an event of default under the Credit Agreement. Furthermore, the Amendment reduced the lenders' commitment to $14,200,000, the amount outstanding under the facility on the date of the Amendment (inclusive of a portion of the fee described below), and eliminated the ability to request letters of credit thereunder. The Amendment also amended certain of the covenants with which the Borrowers must comply under the Credit Agreement. The Amendment replaced the financial covenant in the Credit Agreement with (i) the requirement to maintain a cash balance of at least $8,000,000, tested weekly, and (ii) the requirement that the Borrowing Base (as defined in the Credit Agreement) less the principal amount of all loans outstanding, be greater than $15,000,000 from and after the date that is 30 days after the effective date of the Amendment. The Amendment also provides Wells Fargo, as administrative agent, with certain additional information rights and appraisal rights. In addition, Wells Fargo agreed to not impose certain reserves upon the Borrowing Base in connection with the previously disclosed arbitral award made to GlaxoSmithKline LLC and certain of its affiliates and subsidiaries (collectively, GSK). The Borrowers paid to Wells Fargo a fee of $140,000 in connection with the execution of the Amendment and in certain circumstances will pay an additional fee of $140,000.
Business Acquisitions	Consideration paid by the Company for each business it purchased is allocated to the assets and liabilities acquired based upon their estimated fair values as of the date of each acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed is recorded as goodwill.
Principles of Consolidation	The unaudited condensed consolidated financial statements include the accounts of Pernix's wholly-owned subsidiaries Pernix Therapeutics, LLC, Macoven, Cypress, Cypress' subsidiary, Hawthorn Pharmaceuticals, Inc., Pernix Ireland Limited and Pernix Ireland Pain Limited. Transactions between and among the Company and its consolidated subsidiaries are eliminated.
Fair Value of Financial Instruments	A financial instrument is defined as cash equivalent, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from another party. The Company's financial instruments consist primarily of cash equivalents, notes receivable, and a credit facility. The carrying values of these assets and liabilities approximate their fair value due to their short-term nature.
Significant Customers	The Company's customers consist of drug wholesalers, retail drug stores, mass merchandisers and grocery store pharmacies in the United States. The Company primarily sells its products directly to large national drug wholesalers, which in turn resell the products to smaller or regional wholesalers, retail pharmacies, chain drug stores, and other third parties.
Earnings per Share	Basic net income (loss) per common share is the amount of net income (loss) for the period divided by the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average shares that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

1. Company Overview (Tables)

1. Company Overview (Tables)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Significant Customers	The following tables list the Company's customers that individually comprised greater than 10% of total gross product sales for the three months ended March 31, 2017 and 2016, or 10% of total accounts receivable as of March 31, 2017 and December 31, 2016. Gross Product Sales: Three Months Ended March 31, 2017 2016 McKesson Corporation 34% 36% AmerisourceBergen Drug Corporation 28% 33% Cardinal Health, Inc. 28% 25% Total 90% 94% Accounts Receivable, net: March 31, December 31, 2017 2016 McKesson Corporation 37% 36% Cardinal Health, Inc. 28% 28% AmerisourceBergen Drug Corporation 27% 28% Total 92% 92%

2. Earnings per Share (Tables)

2. Earnings per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Earnings per Share	The following table sets forth the computation of basic and diluted net loss per share (in thousands except per share data): Three Months Ended March 31, 2017 2016 Numerator: Net loss $ (29,462) $ (25,936) Denominator: Weighted-average common shares, basic 10,016 6,112 Dilutive effect of stock options - - Weighted-average common shares, diluted 10,016 6,112 Net loss per share, basic and diluted $ (2.94) $ (4.24)
Antidilutive securitites	The following table sets forth the potential common shares that could potentially dilute basic income per share in the future that were not included in the computation of diluted income (loss) per share because to do so would have been anti-dilutive for the periods presented (in thousands): Three Months Ended March 31, 2017 2016 4.25% Convertible Notes 1,133 1,133 Stock options and restricted stock 854 804 Warrants 33 47 Total potential dilutive effect 2,020 1,984

3. Fair Value Measurement (Tabl

3. Fair Value Measurement (Tables)	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring and nonrecurring basis	The fair and carrying value of our debt instruments are detailed as follows (in thousands): As of March 31, 2017 As of December 31, 2016 Fair Carrying Fair Carrying Value Value Value Value 4.25% Convertible Notes $ 35,555 $ 105,217 $ 32,595 $ 104,071 Derivative liability 584 584 230 230 Contingent consideration 2,749 2,749 2,403 2,403 Treximet Secured Notes 137,492 172,677 147,551 183,353 Total $ 176,380 $ 281,227 $ 182,779 $ 290,057
Fair Value Measurements Using Significant Unobservable Input (Tables)	For the Company's assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein, and gains or losses recognized during the periods (in thousands). As of and for the As of and for the Three months Ended Year Ended March 31, 2017 December 31, 2016 Derivative liability: Balance at beginning of year $ 230 $ 9,165 Initial measurement of derivative liability - - Remeasurement adjustments - loss (gains) included in earnings 354 (8,935) Ending balance $ 584 $ 230 Contingent consideration: Balance at beginning of year $ 2,403 $ 14,055 Initial measurement of contingent consideration - - Remeasurement adjustments - loss (gains) included in earnings 346 (11,652) Ending balance $ 2,749 $ 2,403

4. Inventory (Tables)

4. Inventory (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventories are stated at the lower of cost or market. Inventories consist of the following (in thousands): March 31, December 31, 2017 2016 Raw materials $ 1,975 $ 2,365 Work-in-process - - Finished goods 6,735 7,393 Inventory, gross 8,710 9,758 Reserve for obsolescence (1,266) (1,983) Inventory, net $ 7,444 $ 7,775

5. Goodwill and Intangible As25

5. Goodwill and Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Changes in the carrying amount of goodwill	Goodwill consists of the following (in thousands): Amount Balance at December 31, 2015 $ 54,865 Measurement period adjustments - Zohydro ER (499) Goodwill impairment (23,766) Balance at December 31, 2016 30,600 Measurement period adjustments - Balance at March 31, 2017 $ 30,600
Intangible assets	Intangible assets consist of the following (dollars in thousands): As of March 31, 2017 Weighted Gross Carrying Accumulated Net Carrying Average Life Amount Impairment Amortization Amount Unamortized intangible assets: In-process research and development Indefinite $ 11,000 $ - $ - $ 11,000 Total unamortized intangible assets 11,000 - - 11,000 Amortized intangible assets: Product licenses 8.4 years 2,846 - (1,324) 1,522 Supplier contracts 5.0 years 583 - (107) 476 Acquired developed technologies 7.7 years 357,892 - (219,804) 138,088 Total amortized intangible assets 361,321 - (221,235) 140,086 Total intangible assets $ 372,321 $ - $ (221,235) $ 151,086 As of December 31, 2016 Weighted Gross Carrying Accumulated Net Carrying Average Life Amount Impairment Amortization Amount Unamortized intangible assets: In-process research and development Indefinite $ 26,500 $ (15,500) $ - $ 11,000 Total unamortized intangible assets 26,500 (15,500) - 11,000 Amortized intangible assets: Brand 0.0 years 3,887 (891) (2,996) - Product licenses 8.4 years 2,846 - (1,232) 1,614 Supplier contracts 5.0 years 583 - (78) 505 Acquired developed technologies 7.7 years 379,737 (15,052) (208,233) 156,452 Total amortized intangible assets 387,053 (15,943) (212,539) 158,571 Total intangible assets $ 413,553 $ (31,443) $ (212,539) $ 169,571
Intangible Assets Estimated Amortization Expenses	Estimated amortization expense related to intangible assets with definite lives for each of the five succeeding years and thereafter is as follows (in thousands): Amount 2017 (April - December) $ 54,455 2018 13,961 2019 5,507 2020 5,420 2021 5,325 Thereafter 55,418 Total $ 140,086

6. Accrued Allowances (Tables)

6. Accrued Allowances (Tables)	3 Months Ended
	Mar. 31, 2017
Accrued Liabilities [Abstract]
Accrued allowances	Accrued allowances consist of the following (in thousands): March 31, December 31, 2017 2016 Accrued returns allowance $ 19,022 $ 18,314 Accrued price adjustments 30,137 35,234 Accrued government program rebates 6,651 7,413 Total $ 55,810 $ 60,961

7. Debt (Tables)

7. Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Debt consists	Debt, net of discounts and deferred financing costs, consists of the following (in thousands): March 31, December 31, 2017 2016 Wells Fargo Credit Facility $ 14,000 $ 14,000 4.25% Convertible Notes 105,217 104,071 Treximet Secured Notes 172,677 183,353 Total outstanding debt 291,894 301,424 Less current portion - 11,103 Long-term debt outstanding $ 291,894 $ 290,321
Future maturity schedule of the outstanding debt and line of credit	The following table represents the future maturity schedule of the outstanding debt and line of credit at March 31, 2017 (in thousands): Amount 2017 $ - 2018 14,000 * 2019 - 2020 176,769 2021 130,000 Thereafter - Total maturities 320,769 Less: Note discount (21,647) Deferred financing costs (7,228) Total outstanding debt $ 291,894 * As noted in Note 1. Company Overview

8. Stockholders_ Equity (Tables

8. Stockholders’ Equity (Tables)	3 Months Ended
	Mar. 31, 2017
Stockholders Equity Tables
Stock option assumptions	The weighted average fair value of stock options granted during the periods and the assumptions used to estimate those values using the Black-Scholes option pricing mode were as follows: Three Months Ended March 31, 2017 2016 Weighted average expected stock price volatility 85.0% 71.0% Estimated dividend yield - - Risk-free interest rate 2.1% 1.4% Expected life of option (in years) 6.2 6.2 Weighted average grant date fair value per option $ 1.86 $ 13.70
Stock option activity	The following table shows the option activity, described above, during the three months ended March 31, 2017 (share and intrinsic values in thousands): Weighted Average Average Remaining Aggregate Exercise Contractual Life Intrinsic Shares Price (years) Value Options Outstanding at December 31, 2016 650 $ 25.85 Granted 29 2.54 Exercised - - $ - Cancelled (6) 47.03 Expired - - Options outstanding at March 31, 2017 673 $ 24.63 8.9 $ 186 Options vested and expected to vest as of March 31, 2017 518 $ 29.24 8.7 $ 114 Options vested and exercisable as of March 31, 2017 118 $ 58.50 7.4 $ -
Restricted stock activity	The following table shows the Company's non-vested restricted stock activity during the three months ended March 31, 2017 (share and intrinsic values in thousands): Weighted Average Aggregate Grant Date Fair Intrinsic Shares Value Value Non-vested restricted stock outstanding at December 31, 2016 197 $ 3.36 Granted 5 2.19 Vested - - $ - Forfeited - - Non-vested restricted stock outstanding at March 31, 2017 202 $ 3.33

11. Restructuring (Tables)

11. Restructuring (Tables)	3 Months Ended
	Mar. 31, 2017
Restructuring and Related Activities [Abstract]
Accrued restructuring costs	A summary of accrued restructuring costs, included as a component of accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets, is as follows (in thousands): December 31, March 31, 2016 Charges Cash Non-cash 2017 2016 restructuring costs $ 618 $ 100 $ (128) $ - $ 590 (Contract termination costs) December 31, 2015 Charges Cash Non-cash December 31, 2016 2015 restructuring costs $ 104 $ - $ (104) $ - $ - (Employee termination benefits)

13. Schedule of Cash Flow, Supp

13. Schedule of Cash Flow, Supplemental Disclosures (Tables)	3 Months Ended
	Mar. 31, 2017
Schedule Of Cash Flow Supplemental Disclosures Tables
Schedule of cash flow, supplemental disclosures	Supplemental cash flow information is as follows (in thousands): Three Months Ended March 31, 2017 2016 Supplemental disclosures of Cash Flow Information: Cash (received) paid for income taxes, net $ (679) $ 157 Cash paid for interest 11,481 12,600

1. Company Overview (Details)

1. Company Overview (Details)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Company's customers that individually comprised greater than 10% of total gross product sales
Percentage of gross product sales	90.00%	94.00%
McKesson Corporation
Company's customers that individually comprised greater than 10% of total gross product sales
Percentage of gross product sales	34.00%	36.00%
Amerisource Bergen Drug Corporation
Company's customers that individually comprised greater than 10% of total gross product sales
Percentage of gross product sales	28.00%	33.00%
Cardinal Health Inc
Company's customers that individually comprised greater than 10% of total gross product sales
Percentage of gross product sales	28.00%	25.00%

1. Company Overview (Details 1)

1. Company Overview (Details 1)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accounts Receivable
McKesson Corporation	37.00%	36.00%
Cardinal Health, Inc.	28.00%	28.00%
AmerisourceBergen Drug Corporation	27.00%	28.00%
Total	92.00%	92.00%

2. Earnings per Share (Details)

2. Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net loss	$ (29,462)	$ (25,936)
Denominator:
Weighted-average common shares, basic	10,016	6,112
Dilutive effect of stock options	0	0
Weighted-average common shares, diluted	10,016	6,112
Net loss per share, basic and diluted	$ (2.94)	$ (4.24)

2. Earnings Per Share Potential

2. Earnings Per Share Potentially Diluted Shares Excluded (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Anti-dilutive shares	2,020	1,984
4.25% Convertible Notes
Anti-dilutive shares	1,133	1,133
Stock Options and Restricted Stock
Anti-dilutive shares	854	804
Warrants
Anti-dilutive shares	33	47

3. Fair Value Measurement (Debt

3. Fair Value Measurement (Debt Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt instruments, fair value	$ 176,380	$ 182,779
Debt instruments, carrying value	281,227	290,057
4.25% Convertible Notes
Debt instruments, fair value	35,555	32,595
Debt instruments, carrying value	105,217	104,071
Derivative Liability
Debt instruments, fair value	584	230
Debt instruments, carrying value	584	230
Contingent Consideration
Debt instruments, fair value	2,749	2,403
Debt instruments, carrying value	2,749	2,403
Treximet Secured Notes
Debt instruments, fair value	137,492	147,551
Debt instruments, carrying value	$ 172,677	$ 183,353

3. Fair Value Measurements Usin

3. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Derivative Liability
Beginning balance	$ 230	$ 9,165
Initial measurement of derivative liability or contingent consideration	0	0
Remeasurement adjustments - gains included in earnings	354	(8,935)
Ending balance	584	230
Contingent Consideration
Beginning balance	2,403	14,055
Initial measurement of derivative liability or contingent consideration	0	0
Remeasurement adjustments - gains included in earnings	346	(11,652)
Ending balance	$ 2,749	$ 2,403

4. Inventory (Details)

4. Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 1,975	$ 2,365
Work-in-process	0	0
Finished goods	6,735	7,393
Inventory gross	8,710	9,758
Reserve for obsolescence	(1,266)	(1,983)
Inventory, net	$ 7,444	$ 7,775

5. Goodwill and Intangible As38

5. Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill And Intangible Assets - Goodwill Details
Goodwill	$ 30,600	$ 30,600	$ 54,865
Measurement period adjustments	$ 0	(499)
Goodwill impairment		$ (23,766)

5. Goodwill and Intangible As39

5. Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill	$ 30,600	$ 30,600	$ 54,865
Measurement period adjustments	$ 0	$ (499)

5. Goodwill and Intangible As40

5. Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Intangible assets consist of the following
Gross Carrying Amount	$ 372,321	$ 413,553
Impairment	0	(31,443)
Accumulated Amortization	(221,235)	(212,539)
Net Carrying Amount	151,086	169,571
In Process Research And Development Member
Intangible assets consist of the following
Gross Carrying Amount	11,000	26,500
Impairment	0	(15,500)
Accumulated Amortization	0	0
Net Carrying Amount	11,000	11,000
Total Indefinite Lived
Intangible assets consist of the following
Gross Carrying Amount	11,000	26,500
Impairment	0	(15,500)
Accumulated Amortization	0	0
Net Carrying Amount	$ 11,000	$ 11,000
Product Licenses Member
Intangible assets consist of the following
Weighted Average Life	8 years 144 days	8 years 144 days
Gross Carrying Amount	$ 2,846	$ 2,846
Impairment	0	0
Accumulated Amortization	(1,324)	(1,232)
Net Carrying Amount	$ 1,522	$ 1,614
Noncompete And Supplier Contracts Member
Intangible assets consist of the following
Weighted Average Life	5 years	5 years
Gross Carrying Amount	$ 583	$ 583
Impairment	0	0
Accumulated Amortization	(107)	(78)
Net Carrying Amount	$ 476	$ 505
Acquired Developed Technology Member
Intangible assets consist of the following
Weighted Average Life	7 years 252 days	7 years 252 days
Gross Carrying Amount	$ 357,892	$ 379,737
Impairment	0	(15,052)
Accumulated Amortization	(219,804)	(208,233)
Net Carrying Amount	138,088	156,452
Total Definite Lived
Intangible assets consist of the following
Gross Carrying Amount	361,321	387,053
Impairment	0	(15,943)
Accumulated Amortization	(221,235)	(212,539)
Net Carrying Amount	$ 140,086	$ 158,571
Brand Member
Intangible assets consist of the following
Weighted Average Life		0 years
Gross Carrying Amount		$ 3,887
Impairment		(891)
Accumulated Amortization		(2,996)
Net Carrying Amount		$ 0

5. Goodwill and Intangible As41

5. Goodwill and Intangible Assets (Details 2) $ in Thousands	Mar. 31, 2017USD ($)
Estimated amortization expense related to intangible assets
2017 (April – December)	$ 54,455
2,018	13,961
2,019	5,507
2,020	5,420
2,021	5,325
Thereafter	55,418
Total	$ 140,086

5. Goodwill and Intangible As42

5. Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 18,500	$ 23,600

6. Accrued Allowances (Details)

6. Accrued Allowances (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accrued allowances consist of the following
Accrued returns allowance	$ 19,022	$ 18,314
Accrued price adjustments	30,137	35,234
Accrued government program rebates	6,651	7,413
Total	$ 55,810	$ 60,961

7. Debt (Details)

7. Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Total debt	$ 291,894	$ 301,424
Debt - current	0	11,103
Debt - long term	291,894	290,321
Wells Fargo Credit Facility
Total debt	14,000	14,000
4.25% Convertible Notes
Total debt	105,217	104,071
Treximet Secured Notes
Total debt	$ 172,677	$ 183,353

7. Debt (Details 1)

7. Debt (Details 1) $ in Thousands	Mar. 31, 2017USD ($)
Debt And Lines Of Credit Details 1
2,017	$ 0
2,018	14,000	[1]
2,019	0
2,020	176,769
2,021	130,000
Thereafter	0
Total maturities	320,769
Less: note discount	(21,647)
Less: deferred financing costs	(7,228)
Total outstanding debt	$ 291,894
[1]	As noted in Note 1. Company Overview, subsequent to the balance sheet date, the Credit Agreement was amended and is currently due July 31, 2017. The amount included in the table above represents the contractual maturity of the agreement in place as of the balance sheet date.

8. Stockholders_ Equity (Detail

8. Stockholders’ Equity (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted average of the assumptions used to value stock options on the date of grant
Weighted average expected stock price volatility	85.00%	71.00%
Estimated dividend yield	0.00%	0.00%
Risk-free interest rate	2.10%	1.40%
Expected life of option (in years)	6 years 72 days	6 years 72 days
Weighted average grant date fair value per option	$ 1.86	$ 13.7

8. Stockholders_ Equity (Deta47

8. Stockholders’ Equity (Details 1) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Option Shares
Outstanding at December 31, 2016 | shares	650
Granted | shares	29
Exercised | shares	0
Cancelled | shares	(6)
Expired | shares	0
Outstanding at March 31, 2017 | shares	673
Options vested and expected to vest, as of March 31, 2017 | shares	518
Options vested and exercisable, as of March 31, 2017 | shares	118
Option Average Exercise Price
Outstanding at December 31, 2016 | $ / shares	$ 25.85
Granted | $ / shares	2.54
Exercised | $ / shares	0
Cancelled | $ / shares	47.03
Expired | $ / shares	0
Outstanding at March 31, 2017 | $ / shares	24.63
Options vested and expected to vest, as of March 31, 2017 | $ / shares	29.24
Options vested and exercisable, as of March 31, 2016 | $ / shares	$ 58.50
Option Weighted Average Remaining Contractual Life Years
Options outstanding at March 31, 2017	8 years 324 days
Options vested and expected to vest, as of March 31, 2017	8 years 252 days
Options vested and exercisable, as of March 31, 2017	7 years 144 days
Option Aggregate Intrinsic Value
Exercised | $	$ 0
Options outstanding at March 31, 2017 | $	186
Options vested and expected to vest as of March 31, 2017 | $	114
Options vested and exercisable as of March 31, 2017 | $	$ 0

8. Stockholders_ Equity (Deta48

8. Stockholders’ Equity (Details 2) - Restricted shares $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Non-vested restricted stock outstanding at December 31, 2016 | shares	197
Granted | shares	5
Vested | shares	0
Forfeited | shares	0
Non-vested restricted stock outstanding at March 31, 2017 | shares	202
Weighted Average Grant Date Fair Value | $ / shares	$ 3.36
Granted | $ / shares	2.19
Vested | $ / shares	0
Forfeited | $ / shares	0
Weighted Average Grant Date Fair Value | $ / shares	$ 3.33
Unrecognized compensation cost related to non-vested retricted stock | $	$ 331

10. Commitments and Contingen49

10. Commitments and Contingencies (Details Narrative) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Minimum quarterly royalty payments	$ 4,000
Texas Medicaid Fraud Prevention Act
Settlement description	During the first quarter of 2014, the Company settled all claims arising from certain actions by Cypress under the Texas Medicaid Fraud Prevention Act prior to its acquisition by the Company. As part of the settlement, the Company agreed to pay $12.0 million, payable in annual amounts of $2.0 million until the settlement is paid in full. As of March 31, 2017, the net present value of remaining payment obligations owed under this settlement agreement is $3.6 million. The current portion is recorded in other liabilities - current and the non-current portion is recorded in other liabilities - long-term on the Company's unaudited condensed consolidated balance sheet as of March 31, 2017.
Somaxon [Member]
Settlement description	In July 2012 and January 2013, Somaxon settled two patent litigation claims with parties seeking to market generic equivalents of Silenor. As of March 31, 2017, remaining payment obligations of the Company owed under these settlement agreements are $750,000. The balance is payable in equal annual installments of $250,000 through 2019. The current portion is recorded in other liabilities - current and the non-current portion is recorded in other liabilities - long-term on the Company's unaudited condensed consolidated balance sheets as of March 31, 2017.

11. Restructuring Complete (Det

11. Restructuring Complete (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Restructuring charges	$ 100	$ 0
Contract termination
Accrued restructuring costs	590		$ 618
Restructuring charges	100
Restructuring cash	(128)
Restructuring noncash	$ 0
Employee termination
Accrued restructuring costs			0	$ 104
Restructuring charges			0
Restructuring cash			(104)
Restructuring noncash			$ 0

12. Business Combinations (Narr

12. Business Combinations (Narrative) (Details) - Zohydro ER	3 Months Ended
	Mar. 31, 2017
Business Acquisition, Name of Acquired Entity	Zohydro ER
Business Combination, Assets and Liabilities, Description	Zohydro ER Acquisition On April 24, 2015, Pernix completed the acquisition of the pharmaceutical product line, Zohydro ER, including an abuse-deterrent pipeline and all related intellectual property, a favorable supplier contract and an associated liability payable, and a specified quantity of inventory associated therewith, from Zogenix, Inc. (Zogenix). There were no other tangible or intangible assets acquired and liabilities assumed related to the Zohydro ER product line from Zogenix. The total purchase price consisted of an upfront cash payment of $80.0 million including a deposit of $10.0 million in an escrow fund, stock consideration of $11.9 million issued in common stock of Pernix, $927,000 for a specified quantity of inventory, and regulatory and commercial milestones of up to $283.5 million including a $12.5 million milestone payment upon approval of a ZX007 abuse-deterrent extended-release hydrocodone tablet and up to $271.0 million in potential sales milestones if the Zohydro ER product line achieves certain agreed-upon net sales targets. The Zohydro ER product line acquisition was accounted for as a business combination in accordance with ASC 805 Business Combinations Business Combinations (Topic 805)

13. Supplemental Cash Flow In52

13. Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Supplemental disclosures of Cash Flow Information:
Cash (received) paid for income taxes, net	$ (679)	$ 157
Cash paid for interest	$ 11,481	$ 12,600