IPA Interpharm Holdings, Inc.

Interpharm Holdings, Inc. (Amex: IPA), a manufacturer and distributor of generic pharmaceutical drugs, today announced its financial results for the three and nine month periods ended March 31, 2006. -0- *T Quarter Ended Nine-Months Ended ----------------------- ------------------------ March March 31, % 31, % ----------------- ----------------- In Thousands $ 2006 2005 Change 2006 2005 Change -------------- -------- ------------- -------- -------------- Revenue $ 16,110 $10,670 51% $ 46,869 $28,561 64% Gross Profit $ 3,999 $ 2,272 76% $ 13,161 $ 6,806 93% Gross Profit Percent 24.8% 21.3% 3.5%pts 28.1% 23.8% 4.3%pts R&D Expenses $ 2,975 $ 1,659 79% $ 7,006 $ 2,198 219% Net (Loss) Income ($1,499) ($634) 136% ($1,336)$ 405 (430)% *T As a result of two new products launched during the nine month period ended March 31, 2006, as well as new sales and marketing strategies, Interpharm's revenue continues to surpass prior year results. New, higher gross profit products added more than $3 million and $8.4 million of revenue, respectively, to the three and nine month periods ended March 31, 2006 when compared to the same periods in the prior year. Included in Interpharm's operating expenses for the three and nine month period ended March 31, 2006, were $0.59 million and $1.0 million respectively, for non-cash charges to record employee stock based compensation in accordance with FAS 123 (R) during the current fiscal year. Further it recorded approximately $0.5 million of one-time charges as a result of accounting for consideration to be paid to the estate of a deceased executive officer. During the three-month period ended March 31, 2006, Interpharm increased its spending on research and development by more than $1.3 million compared to the three month period ended March 31, 2005. Year to date, its spending on research and development increased more than $4.8 million, or three-fold, compared to the prior year. Cameron Reid, Chief Executive Officer of Interpharm Holdings, Inc stated: "The company is on schedule in implementing our business plan. Specifically, with respect to research and development, we have filed 10 ANDAs year to date. Further, we are now actively developing all six of our targeted product areas: female hormone products, scheduled narcotics, products requiring special release characteristics, liquids, softgel products and products coming off patent. We will continue to increase our investment in research and development and related infrastructure to enable us to file ANDAs at a rate which we anticipate will exceed our previous projection of 25 ANDAs during the period July 1, 2005 through June 30, 2007. I remain confident about our future." About Interpharm Holdings, Inc. Interpharm currently develops, manufactures and distributes generic prescription strength and over-the-counter drugs. Interpharm will continue to focus on growing organically through internal product development and leveraging its strength in efficient and cost effective manufacturing. In addition, Interpharm will also continue to seek consummation of mutually beneficial strategic alliances and collaborations. Headquartered on Long Island, New York, Interpharm presently employs nearly 500 people. FORWARD-LOOKING STATEMENTS Statements made in this news release, contain forward-looking statements concerning Interpharm's business and products involving risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, and additional competition from existing and new competitors, changes in technology, and various other factors beyond Interpharm's control. Other risks inherent in Interpharm's business are set forth in its filings with the SEC, including, but not limited to, its Form 10-K, filed on September 28, 2005 and Forms 10-Q filed on November 21, 2005 and February 14, 2006. All information in this release is as of May 15, 2006. Interpharm undertakes no duty to update any forward-looking statements to conform the release to actual results or changes in its circumstances or expectations after the date of this release. The financial information stated above and in the tables below has been abstracted from the Company's Form 10-Q for the fiscal quarter ended March 31, 2006, filed with the SEC on May 15, 2006, and should be read in conjunction with the information provided therein. Tables to Follow -0- *T CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (In thousands, except share data) Three Months Nine Months Ended Ended March 31, March 31, -------------------------------- 2006 2005 2006 2005 ------- ------- ------- ------- SALES, Net $16,110 $10,670 $46,869 $28,561 COST OF SALES ------------- (including related party rent expense of $102 and $306 for the three and nine months ended March 31, 2006 and 2005, respectively) 12,111 8,398 33,708 21,755 ------- ------- ------- ------- GROSS PROFIT 3,999 2,272 13,161 6,806 ------- ------- ------- ------- OPERATING EXPENSES ------------------ Selling, general and administrative 3,263 1,580 7,901 3,893 Related party rent 18 18 54 54 Research and development 2,975 1,659 7,006 2,198 ------- ------- ------- ------- TOTAL OPERATING EXPENSES 6,256 3,257 14,961 6,145 ------- ------- ------- ------- OPERATING (LOSS) INCOME (2,257) (985) (1,800) 661 ------- ------- ------- ------- OTHER (EXPENSE) INCOME ---------------------- Interest expense, net (170) (22) (359) (25) Gain (loss) on disposal of fixed assets 2 -- (5) -- Gain on sale of marketable securities -- -- -- 9 ------- ------- ------- ------- TOTAL OTHER EXPENSE (168) (22) (364) (16) ------- ------- ------- ------- (LOSS) INCOME BEFORE INCOME TAXES (2,425) (1,007) (2,164) 645 (BENEFIT FROM) PROVISION FOR INCOME TAXES (926) (373) (828) 240 ------- ------- ------- ------- NET (LOSS) INCOME (1,499) (634) (1,336) 405 INCOME ATTRIBUTABLE TO PREFERRED STOCKHOLDERS 98 41 181 143 ------- ------- ------- ------- NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $(1,597)$ (675)$(1,517)$ 262 ======= ======= ======= ======= EARNINGS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS -------------------------------------- Basic (loss) earnings per share $ (0.05)$ (0.03)$ (0.05)$ 0.01 ======= ======= ======= ======= Diluted (loss) earnings per share $ (0.05)$ (0.03)$ (0.05)$ 0.00 ======= ======= ======= ======= Basic weighted average shares outstanding 32,464 24,967 32,423 24,967 Diluted weighted average shares and equivalent shares Outstanding 32,464 24,967 32,423 67,702 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) ASSETS March 31, June 30, 2006 2005 ---------- ------- CURRENT ASSETS (Unaudited) -------------- Cash and cash equivalents $ 254 $ 537 Accounts receivable, net 9,910 7,664 Inventories 9,287 8,941 Prepaid expenses and other current assets 1,791 1,156 Deferred tax assets 87 87 ---------- ------- Total Current Assets 21,329 18,385 Land, building and equipment, net 28,289 21,872 Deferred tax assets 5,126 4,326 Investment in APR, LLC 1,022 1,022 Deposits 650 785 Deferred financing costs 274 -- ---------- ------- TOTAL ASSETS $ 56,690 $46,390 ========== ======= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES ------------------- Current maturities of long-term debt $ 4,826 $10,340 Accounts payable, accrued expenses and other liabilities 12,822 6,233 Deferred revenue 2,296 -- ------- ------- Total Current Liabilities 19,944 16,573 OTHER LIABILITIES ----------------- Long-term debt, less current maturities 13,883 6,691 Other liabilities 199 15 ------- ------- TOTAL LIABILITIES 34,026 23,279 ------- ------- COMMITMENTS AND CONTINGENCIES ----------------------------- STOCKHOLDERS' EQUITY -------------------- Preferred stock, 10,000,000 shares authorized; issued and outstanding - 6,607,561 and 6,608,233 at March 31, 2006 and June 30, 2005, respectively; aggregate liquidation preference of $4,365,591 and $4,366,263 at March 31, 2006 and June 30, 2005, respectively 343 343 Common stock, $0.01 par value, 70,000,000 shares authorized; shares issued - 32,463,607 at March 31, 2006 and 32,338,607 at June 30, 2005 325 324 Additional paid-in capital 22,500 19,104 Stock subscription receivable (112) -- Accumulated other comprehensive loss (12) -- Unearned stock based compensation (2,260) -- Retained earnings 1,880 3,340 ------- ------- TOTAL STOCKHOLDERS' EQUITY 22,664 23,111 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $56,690 $46,390 ======= ======= *T