Woodfield will continue to manufacture 11 Pernix products at the facility as part of a “long-term” agreement, which also manufactures additional products for other companies on a contract basis, Pernix spokesman Terry Novak told us, noting that: “Following this sale we will no longer be in the CMO business.”
He added that the sale is partly due to cost savings, which comes as financial issues plague the company as it lost $5.6m in the fourth quarter of 2013. But the sale also will help the company “to focus on sales and marketing as our core competency. The majority of employees are expected to stay with the new owner. The facility is 25,000 square feet of manufacturing and packaging, and another 35,000 [square feet] of warehouse space.”
Pernix markets a portfolio of branded products, including Cedax, an antibiotic for middle ear infections and a number of treatments for cough and cold conditions, as well as a non-narcotic product for the treatment of insomnia, and a treatment for major depressive disorder.
Woodfield will acquire the entire Pernix manufacturing operation, including all of the equipment at the facility, and will assume the mortgage associated with the facility. Pernix expects to receive approximately $1.2m in net proceeds at closing and realize approximately $5.0 million in annualized cost savings from the divesture. Pernix anticipates a closing of April 15, 2014, pending standard closing conditions and deliveries.
Commenting on the sale, Doug Drysdale, President and CEO of Pernix said, “The sale of [the site], along with the previously-announced closure of our distribution centers in Madison, MS and Magnolia, TX continues our efforts to reduce and simplify our operating costs. The transaction will be a significant contributor to profitability in 2014. We sincerely appreciate the contributions the PML team has made as part of the Pernix family and we look forward to working together with Woodfield to effect a smooth transition.”
The announcement also comes two months after Drysdale was named CEO, as part of an attempt to turn the company around, according to media reports.
Adam Runsdorf, President of Woodfield, added, “We are pleased to participate in this transaction with Pernix and look forward to expanding the current platform of operations which will be dedicated to the service of existing and future customers requiring outsourced contract manufacturing.”