What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-25 · 765 added, 305 removed, 688 unchanged (61% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Lantheus Holdings, Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Asset Retirement Obligations - Refer to Notes 2 and 8 to the financial statements

Valuation of Certain Intangible Assets in the Progenics Pharmaceuticals, Inc.

Acquisition — Refer to Note 8 to the financial statements.

Critical Audit Matter Description

The Company records asset retirement obligations associated with relevant federal, state, local, and foreign environmental laws and regulations that may require the Company to remove or mitigate the effects of the disposal or release of chemical substances in jurisdictions where the Company does business or maintains properties.

The Company establishes accruals when those costs are legally obligated and can be reasonably estimated.

The asset retirement obligations are estimated, which may include the assistance of third-party environmental specialists, and are based on currently available information, regulatory requirements, remediation strategies, historical experience, the relative shares of the total remediation costs, a relevant discount rate, and the time periods of when estimated costs can be reasonably predicted.

The asset retirement obligations balance was $12.9 million as of December 31, 2019.

We identified asset retirement obligations related to the decommissioning of certain facilities as a critical audit matter because the expected costs involve significant estimation by management in order to comply with relevant regulatory requirements.

This required a high degree of auditor judgement and an increased extent of effort, including the need to involve environmental specialists.

The Company completed the acquisition of Progenics Pharmaceuticals, Inc.

(“Progenics”) common stock for a purchase price of $419.0 million on June 19, 2020 by means of an all-stock transaction.

Management accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition, including to the currently marketed product intangible asset (“currently marketed product”) and in-process research and development intangible assets (“IPR&D assets”).

Management estimated the fair value of the currently marketed product and IPR&D assets for the Progenics acquisition using the multi-period excess earnings method of the income approach.

The fair value determination of the currently marketed product and IPR&D assets required management to make significant estimates and assumptions related to forecasted future cash flows, and the selection of the discount rates.

We identified the valuation of the Company’s currently marketed product and IPR&D assets for the Progenics acquisition as a critical audit matter because of the significant estimates and assumptions used by management to determine the fair value of these assets.

This required a high degree of auditor judgment and an increased extent of effort, including the involvement of our valuation

specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasted future cash flows and the selection of the discount rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the asset retirement obligations included the following, among others:

We tested the effectiveness of controls related to the determination of asset retirement obligations, including management’s controls over the review of the expected decommissioning costs used in the determination of the asset retirement obligations.

We evaluated the methods and assumptions used by management to estimate the expected decommissioning costs used in the determination of the asset retirement obligations.

We made inquiries of management regarding the relevant regulatory requirements.

With the assistance of auditor specialists who have expertise in environmental matters and specialized skills and training, we:

Evaluated the relevant professional experience of management’s third-party environmental specialist.

Evaluated the completeness of the expected decommissioning costs by conducting a search of new or revised relevant regulatory requirements that would impact the Company’s cost estimate.

Evaluated the accuracy of management’s methods and assumptions to estimate the cost to remove, mitigate, or remediate the effects of the disposal or release of chemical substances through comparison of the expected decommissioning costs with the relevant regulatory requirements.

Our audit procedures related to the valuation of the currently marketed product and IPR&D assets for the Progenics acquisition, including forecasted future cash flows and the selection of the discount rates included the following, among others:

• We tested the effectiveness of controls over the valuation of the currently marketed product and IPR&D assets, including management’s controls over forecasted future cash flows, and the selection of discount rates.

• We evaluated the appropriateness and consistency of the methods and assumptions used by management to forecast future cash flows and select the discount rates.

• We assessed the reasonableness of management’s forecasted future cash flows by comparing the projections to historical results, and comparing the projections to certain peer companies, and internal and external market data and studies.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rates by:

◦ Testing the source information underlying determination of the discount rates and testing the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the discount rates selected by management.

• We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.

/s/ Deloitte & Touche LLP

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Accounts receivable, net 54,002 43,529

Inventory 35,744 29,180

Other current assets 9,625 7,283

Assets held for sale 5,242 —

Total current assets 184,225 172,911

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Intangibles, net 376,012 7,336

Goodwill 58,632 15,714

Deferred tax assets, net 70,147 71,834

Other long-term assets 60,634 21,627

Total assets $ 869,821 $ 405,919

Liabilities and stockholders’ equity

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Accrued expenses and other liabilities 41,726 37,360

Liabilities held for sale 1,793 —

Total current liabilities 80,504 66,111

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(in thousands, except per share data)

2020 2019 2018

Revenues $ 339,410 $ 347,337 $ 343,374

Cost of goods sold 200,649 172,526 168,489

Gross profit 138,761 174,811 174,885

Operating expenses

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Total operating expenses 142,959 123,150 110,397

Operating income

Operating (loss) income ( 4,198 ) 51,661 64,488

Interest expense 9,479 13,617 17,405

Loss on extinguishment of debt — 3,196 —

Other expense (income)

Income before income taxes

Income tax (benefit) expense

Net income per common share:

Other (income) loss ( 2,198 ) 6,221 ( 2,465 )

(Loss) income before income taxes ( 11,479 ) 28,627 49,548

Income tax expense (benefit) 1,994 ( 3,040 ) 9,030

Net (loss) income $ ( 13,473 ) $ 31,667 $ 40,518

Net (loss) income per common share:

Basic $ ( 0.25 ) $ 0.81 $ 1.06

Diluted $ ( 0.25 ) $ 0.79 $ 1.03

Weighted-average common shares outstanding:

Basic 54,134 38,988 38,233

Diluted 54,134 40,113 39,501

The accompanying notes are an integral part of these consolidated financial statements.

Lantheus Holdings, Inc.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

Other comprehensive income (loss):

2020 2019 2018

Net (loss) income $ ( 13,473 ) $ 31,667 $ 40,518

Other comprehensive (loss) income:

Foreign currency translation 330 148 ( 74 )

Total other comprehensive income (loss)

Comprehensive income

Unrealized loss on cash flow hedges, net of tax ( 1,418 ) — —

Total other comprehensive (loss) income ( 1,088 ) 148 ( 74 )

Comprehensive (loss) income $ ( 14,561 ) $ 31,815 $ 40,444

The accompanying notes are an integral part of these consolidated financial statements.

Lantheus Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands)

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders’

Shares Amount

Balance, January 1, 2018 37,765 $ 378 $ 232,960 $ ( 209,013 ) $ ( 1,034 ) $ 23,291

Net income — — — 40,518 — 40,518

Forfeiture of dividend equivalent right — — — 355 — 355

Other comprehensive loss — — — — ( 74 ) ( 74 )

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Balance, December 31, 2018 38,466 385 239,865 ( 168,140 ) ( 1,108 ) 71,002

Forfeiture of dividend equivalent right

Other comprehensive loss

Net income — — — 31,667 — 31,667

Other comprehensive income — — — — 148 148

Stock option exercises and employee stock plan purchases 95 1 1,745 — — 1,746

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Balance, December 31, 2019 39,251 393 251,641 ( 136,473 ) ( 960 ) 114,601

Other comprehensive income

Net loss — — — ( 13,473 ) — ( 13,473 )

Other comprehensive loss — — — — ( 1,088 ) ( 1,088 )

Stock option exercises and employee stock plan purchases 73 1 759 — — 760

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Shares withheld to cover taxes ( 141 ) ( 2 ) ( 2,127 ) — — ( 2,129 )

Issuance of common stock, net of $ 3,776 issuance costs

26,845 269 394,065 — — 394,334

Fair value of replacement stock options related to precombination services — — 7,125 — — 7,125

Stock-based compensation — — 14,075 — — 14,075

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Year Ended December 31,

2020 2019 2018

Operating activities

Adjustments to reconcile net income to net cash flows from operating activities:

Net (loss) income $ ( 13,473 ) $ 31,667 $ 40,518

Adjustments to reconcile net (loss) income to net cash flows from operating activities:

Depreciation, amortization and accretion 24,689 13,379 13,929

Impairment of long-lived assets 9,935 — —

Amortization of debt related costs 119 978 1,279

Provision for bad debt

Changes in fair value of contingent assets and liabilities ( 2,000 ) — —

Loss on extinguishment of debt — 3,196 —

Provision for excess and obsolete inventory 2,365 1,851 2,875

Stock-based compensation 14,075 12,492 8,718

Loss on impairment of land

Loss on extinguishment of debt

Loss on disposal of assets 2,250 286 842

Deferred taxes ( 1,334 ) 9,725 5,762

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Long-term income tax payable and other long-term liabilities 2,828 ( 13,156 ) 3,219

Other 1,525 282 878

Increases (decreases) in cash from operating assets and liabilities:

Accounts receivable ( 7,462 ) 156 ( 3,985 )

Inventory ( 8,459 ) 1,994 ( 8,690 )

Other current assets 1,941 ( 2,411 ) ( 661 )

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Proceeds from sale of assets — — 1,000

Lending on bridge loan ( 10,000 ) — —

Cash acquired in acquisition of business 17,562 — —

Net cash used in investing activities ( 4,912 ) ( 22,061 ) ( 19,132 )

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Proceeds from issuance of common stock 683 573 428

Payments for public offering costs

Equity issuance costs ( 3,777 ) — —

Proceeds from issuance of long-term debt — 199,461 —

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Effect of foreign exchange rates on cash and cash equivalents 152 76 ( 282 )

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Net (decrease) increase in cash and cash equivalents and restricted cash ( 10,225 ) ( 20,482 ) 37,111

Cash and cash equivalents and restricted cash, beginning of year 92,919 113,401 76,290

Cash and cash equivalents and restricted cash, end of year $ 82,694 $ 92,919 $ 113,401

Lantheus Holdings, Inc.

Consolidated Statements of Cash Flows (Continued)

(in thousands)

Year Ended December 31,

2020 2019 2018

Reconciliation to amounts within the consolidated balance sheets

Cash and cash equivalents $ 79,612 $ 92,919 $ 113,401

Cash and cash equivalents included in assets held for sale 941 — —

Restricted cash included in other long-term assets 2,141 — —

Cash, cash equivalents and restricted cash at end of period $ 82,694 $ 92,919 $ 113,401

Year Ended December 31,

2020 2019 2018

Supplemental disclosure of cash flow information

Cash paid during the period for:

Interest $ 9,368 $ 12,253 $ 15,869

Income taxes, net of refunds of $ 331 , $ 2 and $ 35 , respectively

$ 340 $ 274 $ 90

Schedule of non-cash investing and financing activities

Additions of property, plant and equipment included in liabilities $ 2,227 $ 4,175 $ 7,395

Consideration transferred in acquisition $ 419,009 $ — $ —

The accompanying notes are an integral part of these consolidated financial statements.

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Lantheus Holdings, Inc., a Delaware corporation, is the parent company of Lantheus Medical Imaging, Inc.

(“LMI”), also a Delaware corporation.

The Company develops, manufactures and commercializes innovative diagnostic medical imaging agents and other products that assist clinicians in the diagnosis and treatment of cardiovascular and other diseases.

(“LMI”) and for the period from June 19 through December 31, 2020, Progenics Pharmaceuticals, Inc., a Delaware corporation (“Progenics”).

See “Progenics Acquisition”.

The Company develops, manufactures and commercializes innovative diagnostic and therapeutic agents and products that assist clinicians in the diagnosis and treatment of heart disease, cancer and other diseases.

For the Company’s diagnostic agents, they believe that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system.

The Company’s commercial products are used by cardiologists, nuclear physicians, radiologists, internal medicine physicians, technologists and sonographers working in a variety of clinical settings.

The Company sells its products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.

The Company sells its products globally and has operations in the U.S., Puerto Rico and Canada and third-party distribution relationships in Europe, Canada, Australia, Asia-Pacific and Latin America.

The Company’s product portfolio includes an ultrasound contrast agent, nuclear imaging products and a radiotherapeutic product.

The Company’s principal products include the following:

DEFINITY is a microbubble contrast agent used in ultrasound exams of the heart, also known as echocardiography exams.

DEFINITY contains perflutren-containing lipid microspheres and is indicated in the U.S.

for use in patients with suboptimal echocardiograms to assist in imaging the left ventricular chamber and left endocardial border of the heart in ultrasound procedures.

TechneLite is a Tc-99m generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neurolite and other Tc-99m-based radiopharmaceuticals used in nuclear medicine procedures.

TechneLite uses Mo-99 as its active ingredient.

Sales of the Company’s microbubble contrast agent, DEFINITY, are made in the U.S.

The Company sells its products to radiopharmacies, PMFs, integrated delivery networks, hospitals, clinics and group practices.

The Company sells its products globally and has operations in the U.S.

and Canada and third-party distribution relationships in Europe, Canada, Australia, Asia-Pacific and Latin America.

Sales of the Company’s microbubble ultrasound enhancing agent, DEFINITY, are made in the U.S.

and Canada through a DEFINITY direct sales team.

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are made through the Company’s direct sales force to hospitals and clinics that maintain their own in-house radiopharmaceutical preparation capabilities.

The Company owns one radiopharmacy in Puerto Rico where they sell their own products as well as products of third parties to end-users.

AZEDRA is also sold in the U.S.

through an AZEDRA direct sales team.

RELISTOR was licensed to Bausch, and the Company collects quarterly royalties based on those sales.

The Company also maintains its own direct sales force in Canada for certain of its products.

In Europe, Australia, Asia-Pacific and Latin America, the Company generally relies on third-party distributors to market, sell and distribute its nuclear imaging and contrast agent products, either on a country-by-country basis or on a multi-country regional basis.

Progenics Transaction

On October 1, 2019, the Company entered into an Agreement and Plan of Merger (the “Initial Merger Agreement”) to acquire Progenics Pharmaceuticals, Inc.

PGNX) (“Progenics”) in an all-stock transaction.

Progenics is an oncology company developing innovative medicines and artificial intelligence to find, fight and follow cancer.

Under the terms of the Initial Merger Agreement, the Company agreed to acquire all of the issued and outstanding shares of Progenics common stock at a fixed exchange ratio.

Progenics stockholders would have received 0.2502 shares of the Company’s common stock for each share of Progenics common stock, representing an approximately 35% aggregate ownership stake in the combined company.

The transaction contemplated by the Initial Merger Agreement was unanimously approved by the Boards of Directors of both companies and was subject to the terms and conditions set forth in the Initial Merger Agreement, including, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company.

The Initial Merger Agreement further provides that in the event of a termination of the Initial Merger Agreement under certain circumstances, one party may be required to pay the other party a termination fee equal to $18.3 million .

In the event of a termination of the Merger Agreement as a result of Progenics stockholders failing to adopt the Initial Merger Agreement, Progenics may be required to reimburse reasonable and documented out-of-pocket expenses incurred by the Company in connection with the Merger Agreement not to exceed $5.3 million .

On February 20, 2020, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “Amended Merger Agreement”) with Progenics that, among other things, increases the exchange ratio and provides for the issuance of CVRs in connection with the transaction.

See Note 20, “Subsequent Events” for further details on the Amended Merger Agreement.

In Europe, Australia, Asia-Pacific and Latin America, the Company generally relies on third-party distributors to market, sell and distribute its nuclear imaging and ultrasound enhancing agent products, either on a country-by-country basis or on a multi-country regional basis.

The Company’s headquarters are located in North Billerica, MA with offices in New York, NY, Somerset, NJ, Montreal, Canada and Lund, Sweden.

Progenics Acquisition

On June 19, 2020 (the “Closing Date”), pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2020 (the “Merger Agreement”), by and among Holdings, Plato Merger Sub, Inc., a wholly-owned subsidiary of Holdings (“Merger Sub”), and Progenics, Holdings completed the previously announced acquisition of Progenics, by means of a merger of Merger Sub with and into Progenics, with Progenics surviving such merger as a wholly-owned subsidiary of Holdings (the “Progenics Acquisition”).

In accordance with the Merger Agreement, at the effective time of the Progenics Acquisition (the “Effective Time”), each share of Progenics common stock, par value $ 0.0013 per share, issued and outstanding immediately prior to the Effective Time (other than shares of Progenics common stock owned by Holdings, Progenics or any of their wholly-owned subsidiaries) was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $ 0.01 per share, and (ii) one contingent value right (a “CVR”) tied to the financial performance of PyL (18F-DCFPyL), Progenics’ prostate-specific membrane antigen (“PSMA”) targeted imaging agent designed to visualize prostate cancer, currently a late stage clinical candidate (“PyL”).

Each CVR will entitle its holder to receive a pro rata share of aggregate cash payments equal to 40 % of U.S.

net sales generated by PyL in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 million, respectively.

In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9 % (which the Company estimates could be approximately $ 100.0 million) of the total consideration the Company pays in the Progenics Acquisition.

No fractional shares of Holdings common stock were issued in the Progenics Acquisition, and Progenics’ former stockholders have received cash in lieu of any fractional shares of Holdings common stock.

In addition, in accordance with the Merger Agreement, at the Effective Time, each Progenics stock option with a per share exercise price less than or equal to $ 4.42 (an “in-the-money Progenics stock option”) received in exchange for each such in-the money Progenics stock option:

(i) an option to purchase Holdings common stock (each, a “Replacement Stock Option”) converted based on the Exchange Ratio, and (ii) a vested or unvested CVR depending on whether the underlying in-the-money Progenics stock option was vested at the Effective Time.

Each Progenics stock option with a per share exercise price greater than $ 4.42 (an “out-of-the-money

Progenics stock option”) received in exchange for such out-of-the-money Progenics stock options a Replacement Stock Option converted at an exchange ratio determined based on the average of the volume weighted average price per share of common stock of Progenics and Lantheus Holdings prior to the Effective Time, which exchange ratio was 0.31 , the same as the Exchange Ratio.

As a result of the acquisition, Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders.

Holdings also assumed 34,000 in-the-money Progenics stock options and 6,507,342 out-of-the-money Progenics stock options, each converted into Replacement Stock Options as noted above.

In addition, Lantheus assumed Progenics equity plans, which, on an as-converted basis, increased the number of Lantheus shares available for issuance by an aggregate of 4,211,290 shares prior to converting the stock options noted above, subject to certain limitations as to eligibility for issuance.

Please refer to Note 8, “Business Combinations”, for further details on the acquisition.

The Company experienced operational and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020 and through the date of this filing, including the impact of stay-at-home mandates and advisories, and a decline in the volume of procedures and treatments using the Company’s products.

As a result of the COVID-19 pandemic, the Company undertook a thorough analysis of all of its discretionary expenses.

In the first quarter of 2020, the Company implemented certain cost reduction initiatives.

For most of the second quarter, the Company reduced the Company’s work week from five days to four days and reduced the pay for employees by varying amounts depending on level of seniority.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives and paused new enrollment in the Phase 2 trial of 1095 in metastatic castrate-resistant prostate cancer (“mCRPC”) patients to minimize the risk to subjects and healthcare providers during the pandemic.

New enrollment in that study restarted in October 2020.

GE Healthcare Limited (“GE Healthcare”), the Company’s development and commercialization partner for flurpiridaz F 18, also delayed enrollment in the second Phase 3 clinical trial of flurpiridaz F 18 because of the pandemic and resumed enrollment in the third quarter of 2020.

The severity of the on-going impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, and the extent and severity of the impact on the Company's customers and suppliers, all of which are uncertain and cannot be predicted.

While the impact of COVID-19 on the Company’s results of operations and cash flows has been, and is expected to continue to be, material, given the continually evolving nature of the pandemic, the Company is currently unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows for the foreseeable future and whether the impact of COVID-19 could lead to potential future impairments.

Summary of Significant Accounting Policies

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All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain immaterial reclassifications in the prior period consolidated statement of cash flows have been reclassified to conform to the current year period financial statement presentation.

Reclassifications include $ 0.1 million and $ 0.3 million from provision for bad debt to other at December 31, 2019 and 2018, respectively, as well as $ 0.3 million and $ 0.8 million from other to loss on disposal of assets at December 31, 2019 and 2018, respectively.

Use of Estimates

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GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

The more significant estimates reflected in the Company’s consolidated financial statements include, but are not limited to, certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirement obligations, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities and accrued expenses.

The more significant estimates reflected in the Company’s consolidated financial statements include, but are not limited to, certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirement obligations, contingent assets and liabilities, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities and accrued expenses.

Actual results could materially differ from those estimates or assumptions.

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The Company accounts for income taxes using an asset and liability approach.

Income tax (benefit) expense represents income taxes paid or payable for the current year plus the change in deferred taxes during the year.

Income tax expense (benefit) represents income taxes paid or payable for the current year plus the change in deferred taxes during the year.

Deferred taxes result from differences between the financial and tax bases of the Company’s assets and liabilities.

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The Company records the related interest and penalties to income tax (benefit) expense.

Net Income per Common Share

Net Income (Loss) per Common Share

Basic earnings per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period.

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Cash and cash equivalents include savings deposits, certificates of deposit and money market funds that have original maturities of three months or less when purchased.

Restricted Cash

Restricted cash at December 31, 2020, represents primarily collateral for a letter of credit securing a lease obligation and a security deposit.

The Company believes the carrying value of this asset approximates fair value.

Concentration of Risks and Limited Suppliers

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The Company sells primarily to large national distributors, which in turn, resell the Company’s products.

As of December 31, 2019, no customer accounted for greater than 10% of accounts receivable, net.

One customer accounted for approximately 11% of accounts receivable, net for the year ended December 31, 2018.

No customer accounted for greater than 10% of revenues for the years ended December 31, 2019 and December 31, 2018.

Three customers accounted for approximately 12% , 10% and 10% of revenues for the year ended December 31, 2017.

As of December 31, 2020 and 2019, no customer accounted for greater than 10% of accounts receivable, net.

No customer accounted for greater than 10% of revenues for the years ended December 31, 2020, 2019 and 2018.

The Company relies on certain materials used in its development and manufacturing processes, some of which are procured from only one or a few sources.

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The following table sets forth revenues for each of the Company’s products representing 10% or more of revenues:

2020 2019 2018

DEFINITY 62.8 % 62.6 % 53.3 %

TechneLite 25.4 % 24.9 % 28.8 %

Inventory includes material, direct labor and related manufacturing overhead and is stated at the lower of cost and net realizable value on a first-in, first-out basis.

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The estimated useful lives of the major classes of depreciable assets are as follows:

Range of Estimated Useful Lives

10 - 50 years

Land improvements

15 - 40 years

Machinery and equipment

Furniture and fixtures

Leasehold improvements

Lesser of lease term or 15 years

Computer software

Class Range of Estimated Useful Lives

Buildings 10 - 50 years

Land improvements 15 - 40 years

Machinery and equipment 3 - 15 years

Furniture and fixtures 15 years

Leasehold improvements Lesser of lease term or 15 years

Computer software 3 - 5 years

Upon retirement or other disposal of property, plant & equipment, the cost and related amount of accumulated depreciation are removed from the asset and accumulated depreciation accounts, respectively.

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Spare parts include replacement parts relating to plant & equipment and are either recognized as an expense when consumed or reclassified and capitalized as part of the related asset and depreciated over the remaining useful life of the related asset.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting.

The Company recognizes the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition.

The Company assesses the fair value of assets acquired, including intangible assets, and liabilities assumed using a variety of methods.

Each asset acquired and liability assumed is measured at fair value from the perspective of a market participant.

The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates.

Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.

Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.

Transaction costs and restructuring costs associated with a business combination are expensed as incurred.

During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill.

After the measurement period, all adjustments are recorded in the consolidated statements of operations as operating expenses or income.

Goodwill is not amortized but is instead tested for impairment at least annually and whenever events or circumstances indicate that it is more likely-than-not that they may be impaired.

The Company has elected to perform the annual test for goodwill impairment as of October 31 of each year.

All goodwill has been allocated to the U.S.

reporting unit.

In performing the Company’s annual assessment, the Company is permitted to first perform a qualitative test and if necessary, perform a quantitative test.

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If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value.

The Company estimates the fair value of its reporting unit using discounted cash flow or other valuation models, such as comparative transactions and market multiples.

The Company did not recognize any goodwill impairment charges during the years ended December 31, 2019, 2018 or 2017.

The Company estimates the fair value of its reporting units using discounted cash flow or other valuation models, such as comparative transactions and market multiples.

The Company did no t recognize any goodwill impairment charges during the years ended December 31, 2020, 2019 or 2018.

Intangible and Long-Lived Assets

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Any impairments are recorded as permanent reductions in the carrying amount of the assets.

See Note 7, “Property, Plant and Equipment, Net” for further details on impairment.

Long-lived assets, other than goodwill and other intangible assets that are held for sale are recorded at the lower of the carrying value or the fair market value less the estimated cost to sell.

Intangible assets, consisting of patents, trademarks and customer relationships related to the Company’s products are amortized in a method equivalent to the estimated utilization of the economic benefit of the asset.

Intangible assets, consisting of patents, trademarks, customer relationships, a currently marketed product, licenses and developed technology related to the Company’s products are amortized in a method equivalent to the estimated utilization of the economic benefit of the asset.

The Company’s in-process research and development (“IPR&D”) represents intangible assets acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use.

The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region.

Because obtaining regulatory approval can include significant risks and uncertainties, the eventual realized value of the acquired IPR&D projects may vary from their fair value at the date of acquisition.

The Company classifies IPR&D acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts.

Upon completion of the associated research and development efforts, the Company will determine the useful life and begin amortizing the assets to reflect their use over their remaining lives.

Upon permanent abandonment, the Company writes-off the remaining carrying amount of the associated IPR&D intangible asset.

IPR&D assets are tested at least annually as of October 31 or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in the Company’s consolidated statements of operations.

See Note 11, “Intangibles, net and Goodwill” for further details on impairment.

Contingencies

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The estimated fair value of the Company’s long term debt approximates its carrying values as the applicable interest rates are subject to change with market interest rates.

The estimated fair value of the Company’s royalty-backed long-term debt approximates its carrying value as the interest rate is in line with the market interest rates for this type of debt with the respective underlining collateral value.

See note 4, “Fair Value of Financial Instruments”.

Contingent Consideration Liabilities

The estimated fair value of contingent consideration liabilities, initially measured and recorded on the acquisition date, are considered to be a Level 3 instrument and are reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value.

The contingent consideration liabilities are recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in general and administrative expenses in the consolidated statements of operations.

The estimated fair value is determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that include significant estimates and assumptions pertaining to commercialization events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement.

Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement.

Derivative Instruments

The Company uses interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt.

To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged.

Further, the Company must formally document the hedging relationship at inception and, on at least a quarterly basis, continually reevaluate the relationship to ensure it remains highly effective throughout the life of the hedge.

The Company does not enter into derivative financial instruments for speculative or trading purposes.

Advertising and Promotion Costs

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Remeasurement of the Company’s foreign currency denominated transactions are included in net income.

Transaction gains and losses are reported as a component of o ther expense (income) in the consolidated statements of operations.

Transaction gains and losses are reported as a component of other (income) loss in the consolidated statements of operations.

Stock-Based Compensation

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The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions such as stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield.

Expense for performance restricted stock awards is recognized based upon the fair value of the awards on the date of grant and the number of shares expected to vest based on the terms of the u nderlying award agreement and the requisite service period(s).

Other Expense (Income)

Other expense (income) consisted of the following:

Expected volatility is based on the historical volatility of the Company’s stock price.

The risk-free interest rates are based on quoted U.S.

Treasury rates for securities with maturities approximating the awards’ expected lives.

Expected lives are principally based on the Company’s historical exercise experience with previously issued awards.

The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying any in the foreseeable future.

Expense for performance restricted stock awards is recognized based upon the fair value of the awards on the date of grant and the number of shares expected to vest based on the terms of the underlying award agreement and the requisite service period(s).

Other (Income) Loss

Other (income) loss consisted of the following:

(in thousands) 2020 2019 2018

Foreign currency (gains) losses

Tax indemnification expense (income), net

Foreign currency losses (gains) $ 260 $ ( 33 ) $ 557

Tax indemnification (income) expense, net ( 2,218 ) 10,635 ( 2,855 )

Interest income ( 238 ) ( 686 ) ( 167 )

Arbitration award — ( 3,453 ) —

Total other expense (income)

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other gains and losses affecting stockholders’ equity that, under U.S.

Other ( 2 ) ( 242 ) —

Total other (income) loss $ ( 2,198 ) $ 6,221 $ ( 2,465 )

Comprehensive (Loss) Income

Comprehensive (loss) income consists of net (loss) income and other gains and losses affecting stockholders’ equity that, under U.S.

GAAP, are excluded from net income.

For the Company, other comprehensive income (loss) consists of foreign currency translation gains and losses.

The accumulated other comprehensive loss balance consists entirely of foreign currency translation gains and losses.

For the Company, other comprehensive (loss) income consists of foreign currency translation gains and losses as well as unrealized gains and losses on cash flow hedges related to the Company’s interest rate swaps.

The accumulated other comprehensive loss balance consists entirely of foreign currency translation gains and losses and unrealized gains and losses on cash flow hedges related to the Company’s interest rate swaps.

Asset Retirement Obligations

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Changes in these assumptions could impact the Company’s future reported results.

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and San Juan, Puerto Rico sites.

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts site.

The Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an asset retirement obligation.

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Self-Insurance Reserves

The Company’s consolidated balance sheets at both December 31, 2019 and 2018 include $0.6 million of accrued liabilities associated with employee medical costs that are retained by the Company.

The Company’s consolidated balance sheets at December 31, 2020 and 2019 include $ 0.6 million of accrued liabilities associated with employee medical costs that are retained by the Company, respectively.

The Company estimates the required liability of those claims on an undiscounted basis based upon various assumptions which include, but are not limited to, the Company’s historical loss experience and projected loss development factors.

The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents (frequency) and change in the ultimate cost per incident (severity).

The Company also maintains a separate cash account to fund these medical claims and must maintain a minimum balance as determined by the plan administrator.

The balance of this restricted cash account was approximately $0.2 million and $0.1 million at December 31, 2019 and 2018, respectively, and is included in other current assets.

Recent Accounting Pronouncements

Effective Date

Effect on the

Consolidated Financial

Recently Issued Accounting Standards Not Yet Adopted

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326)”

This ASU will require financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected.

The new model requires an entity to estimate credit losses based on historical information, current information and reasonable and supportable forecasts that affect the collectability of the reported amount.

ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019.

January 1, 2020

The Company has completed its assessment on the impact of the standard and concluded that upon adoption of this

standard there will not be a material

impact to its consolidated financial statements.

Effective Date

Effect on the

Standard Description Effective Date

for Company Effect on the

Consolidated Financial

Accounting Standards Adopted During the Year Ended December 31, 2020

ASU 2016-02, “Leases (Topic 842)”

This ASU supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized on the balance sheet.

In July 2018, an amendment was made that allows companies the option of using the effective date of the new standard as the initial application date (at the beginning of the period in which it is adopted, rather than at the beginning of the earliest comparative period).

January 1, 2019

See Note 13, "Leases" for the required disclosures related to the impact of adopting this standard.

The adoption of this standard resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019.

ASU 2020-04 and 2021-01, “Reference Rate Reform (Topic 848)” ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

ASU 2021-01 amends the previous standard to clarify certain expedient options are applicable to derivative instruments that use an interest rate for margining, discounting, or contract price alignment.

January 1, 2020 The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326)” This ASU requires financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected.

January 1, 2020 The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Revenue from Contracts with Customers

Adoption of ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”)

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption.

The reported results for 2019 and 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605.

The adoption of ASC 606 did not have a material impact on the Company’s consolidated balance sheet, results of operations, equity or cash flows as of the adoption date or for the periods presented.

Revenue Recognition

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Product revenue, net (1)

$ 284,885 $ 303,989 $ 288,580

License and royalty revenues 9,911 — —

revenues 294,796 303,989 288,580

International

Product revenue, net (1)

42,810 41,287 52,556

License and royalty revenues 1,804 2,061 2,238

Total International revenues

44,614 43,348 54,794

Total revenues $ 339,410 $ 347,337 $ 343,374

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Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the

terms of the contract.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract.

The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

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Milestone Payments:

At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

At the inception of each arrangement that includes development or sales milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

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The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.

At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and royalty revenues and earnings in the period of adjustment.

At December 31, 2019, the Company is constraining variable consideration related to milestone payments requiring regulatory approvals.

At December 31, 2020, the Company is constraining variable consideration related to development milestone payments requiring regulatory approvals and sales milestone payments related to achievement of certain sales targets.

Royalty Revenues:

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Amounts included in the contract liability at the beginning of the period $ 33 $ 33

Performance obligations satisfied (or partially satisfied) in previous periods

The Company did not record any revenue related to performance obligations satisfied (or partially satisfied) in previous periods during the years ended December 31, 2020 and 2019.

The Company’s performance obligations are typically part of contracts that have an original expected duration of one year or less.

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The Company develops these inputs based on the best information available, including its own data.

The Company’s financial assets measured at fair value on a recurring basis consist of money market funds.

The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of money market funds, interest rate swaps, a contingent receivable and contingent consideration liabilities.

The Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the consolidated balance sheets at fair value using quoted prices in active markets for identical assets.

The fair value of the interest rate swaps are determined based on observable market-based inputs, including interest rate curves and reflects the contractual terms of these instruments, including the period to maturity.

Please refer to Note 14, “Derivative Instruments”, for further details on the interest rate swaps.

The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the Progenics Acquisition at fair value based on inputs that are not observable in the market.

Please refer to Note 8, “Business Combinations”, for further details on the acquisition.

The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis:

December 31, 2020

(in thousands)

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

Money market $ 35,457 $ 35,457 $ — $ —

Contingent receivable 11,300 — — 11,300

Total assets $ 46,757 $ 35,457 $ — $ 11,300

Interest rate swaps $ 1,908 $ — $ 1,908 $ —

Contingent consideration liabilities 15,800 — — 15,800

Total liabilities $ 17,708 $ — $ 1,908 $ 15,800

December 31, 2019

(in thousands)

(in thousands) Total Fair

Value Level 1 Level 2 Level 3

Money market $ 39,530 $ 39,530 $ — $ —

Total assets $ 39,530 $ 39,530 $ — $ —

During the years ended December 31, 2020 and 2019, there were no transfers into or out of Level 3.

As part of the Progenics Acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc., related to a prior sale of certain intellectual property.

The Company has the right to receive $ 5.0 million upon regulatory approval and a 5 % royalty on net sales of approved products.

The Company considers the contingent receivable a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value was determined based on probability adjusted discounted cash flows that included significant estimates and assumptions pertaining to

regulatory events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

As part of the Progenics Acquisition, the Company issued CVRs and recorded the fair value as part of consideration transferred.

Refer to Note 1, “Description of Business” for further details on the CVRs.

Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”).

These contingent consideration liabilities include potential payments of up to $ 70.0 million if the Company attains certain net sales targets primarily for AZEDRA and 1095 and a $ 5.0 million 1095 commercialization milestone.

Additionally, there is a potential payment of up to $ 10.0 million related to a 1404 commercialization milestone.

The Company’s total potential payments related to the 2013 Acquisition are approximately $ 85.0 million.

The Company considers the contingent consideration liabilities a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value was determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets.

The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

Significant changes in any of the probabilities of success or the probabilities as to the periods in which milestones will be achieved would result in a significantly higher or lower fair value measurement.

The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the consolidated statements of operations.

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at June 19, 2020.

(in thousands) Fair Value at June 19, 2020 Valuation Technique Unobservable Input Assumption

Contingent receivable:

Regulatory milestone $ 3,100 Probability adjusted discounted cash flow model Period of expected milestone achievement 2021

Probability of success 90 %

Discount rate 23 %

Royalties 7,000 Probability adjusted discounted cash flow model

Probability of success 13 % - 77 %

Discount rate 23 %

Total $ 10,100

(in thousands) Fair Value at June 19, 2020 Valuation Technique Unobservable Input Assumption

Contingent consideration liability:

Net sales targets - PyL (CVRs) $ 3,700 Monte-Carlo simulation Period of expected milestone achievement 2022 - 2023

Discount rate 23 %

1095 commercialization milestone 2,200 Probability adjusted discounted cash flow model Period of expected milestone achievement 2026

Probability of success 45 %

Discount rate 0.48 %

Net sales targets - AZEDRA and 1095 10,700 Monte-Carlo simulation Probability of success 40 % - 100 %

Discount rate 22 % - 23 %

Total $ 16,600

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at December 31, 2020.

(in thousands) Fair Value at December 31, 2020 Valuation Technique Unobservable Input Assumption

Contingent receivable:

Regulatory milestone $ 3,200 Probability adjusted discounted cash flow model Period of expected milestone achievement 2021

Probability of success 90 %

Discount rate 24 %

Royalties 8,100 Probability adjusted discounted cash flow model

Probability of success 13 % - 77 %

Discount rate 24 %

Total $ 11,300

(in thousands) Fair Value at December 31, 2020 Valuation Technique Unobservable Input Assumption

Contingent consideration liability:

Net sales targets - PyL (CVRs) $ 4,200 Monte-Carlo simulation Period of expected milestone achievement 2022 - 2023

Discount rate 24 %

1095 commercialization milestone 2,200 Probability adjusted discounted cash flow model Period of expected milestone achievement 2026

Probability of success 45 %

Discount rate 0.51 %

Net sales targets - AZEDRA and 1095 9,400 Monte-Carlo simulation Probability of success 40 % - 100 %

Discount rate 23 % - 24 %

Total $ 15,800

For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated:

Financial Assets Financial Liabilities

(in thousands) Year Ended

December 31, 2020 Year Ended

December 31, 2020

Fair value, beginning of period $ — $ —

Progenics acquisition 10,100 16,600

Changes in fair value included in net loss 1,200 ( 800 )

Fair value, end of period $ 11,300 $ 15,800

The change in fair value of the contingent financial asset and contingent financial liabilities resulted in a gain of $ 2.0 million for the year ended December 31, 2020 was primarily due to a change in the forecast for AZEDRA, changes in market conditions and the passage of time.

The components of income before income taxes is summarized as follows:

(in thousands) 2020 2019 2018

$ ( 5,495 ) $ 25,432 46,945

International ( 5,984 ) 3,195 2,603

Income before income taxes

The income tax (benefit) expense is summarized as follows:

(Loss) income before income taxes $ ( 11,479 ) $ 28,627 $ 49,548

The income tax expense (benefit) is summarized as follows:

(in thousands) 2020 2019 2018

Federal $ — $ 287 $ ( 21 )

State 3,158 ( 13,166 ) 3,424

International 170 114 ( 135 )

3,328 ( 12,765 ) 3,268

Federal ( 1,506 ) 8,712 7,821

State ( 178 ) 790 1,411

International 350 223 ( 3,470 )

Income tax (benefit) expense

( 1,334 ) 9,725 5,762

Income tax expense (benefit) $ 1,994 $ ( 3,040 ) $ 9,030

The reconciliation of income taxes at the U.S.

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Permanent items 1,406 3,210 152

Acquisition costs - Progenics 2,723 — —

Recognition of deferred tax asset - assets held for sale ( 3,000 ) — —

Section 162(m) 717 527 353

Uncertain tax positions 2,818 ( 13,156 ) 3,227

1 unchanged sentence

State and local taxes 1,457 1,914 2,125

Impact of rate change on deferred taxes

True-up of prior year tax

Foreign tax rate differential ( 254 ) ( 238 ) 30

1 unchanged sentence

Benefit of windfall related to stock compensation ( 128 ) ( 2,768 ) ( 1,760 )

Increase in indemnification deferred tax asset

Income tax (benefit) expense

Change in indemnification deferred tax asset ( 590 ) 2,531 ( 731 )

Other 639 635 44

Income tax expense (benefit) $ 1,994 $ ( 3,040 ) $ 9,030

The components of deferred income tax assets (liabilities) are as follows:

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Net operating loss carryforwards 127,369 47,095

Depreciation 1,014 56

Deferred tax assets 170,562 74,660

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Reserves, accruals and other ( 5,676 ) ( 881 )

Customer relationships

Intangible assets ( 91,283 ) ( 707 )

Deferred tax liability ( 96,959 ) ( 1,588 )

valuation allowance ( 3,456 ) ( 1,238 )

$ 70,147 $ 71,834

Recorded in the accompanying consolidated balance sheets as:

Noncurrent deferred tax assets, net $ 70,147 $ 71,834

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act of 2017 (the “Act”).

The Act is significant and has wide-ranging effects.

The Company has completed its study of the ramifications of the Act, and has confirmed the primary material impact of the Act to be the remeasurement of the Company’s deferred tax assets, which was recorded in fiscal 2017 as a result of the reduction in U.S.

corporate tax rates from 35% to 21%.

As of December 31, 2017, the Company determined it had no accumulated unrepatriated foreign earnings, and therefore recorded no liability for the repatriation transition tax.

The Company has also completed its evaluation of and accounting for all other relevant changes resulting from the Act, and has determined that through December 31, 2018, these changes do not materially impact the Company's effective tax rate.

On June 19, 2020, the Company completed the Progenics Acquisition in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code.

The transaction resulted in an ownership change of Progenics under Section 382 of the Internal Revenue Code, and a limitation on the utilization of Progenics’ precombination tax attributes.

All of Progenics’ precombination research credits and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation.

Deferred tax liabilities of $ 92.3 million on acquired identified intangibles were recorded at acquisition resulting in a small net overall deferred tax liability for Progenics after the application of acquisition accounting.

The Company also acquired estimated utilizable U.S.

federal loss carryforwards of $ 338.7 million, tax-effected state loss carryforwards of $ 12.5 million and state tax credits of $ 2.5 million as a result of the Progenics acquisition.

The utilization of these losses and credits is subject to annual limitations based on Sections 382 and 383 of the Internal Revenue Code.

The Company regularly assesses its ability to realize its deferred tax assets.

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During the fourth quarter of fiscal year 2018, the Company's Canada subsidiary entered an accumulated three year period of profitability, removing a strong item of negative evidence previously supporting the recording of a full valuation allowance.

Management has determined that the weight of the relevant positive evidence outweigh the negative evidence, and released the valuation allowance against its Canada subsidiary's net deferred tax assets, resulting in an income tax benefit of $4.0 million in fiscal 2018.

The Company continues to record a valuation allowance of $1.2 million against the net deferred tax assets of its U.K.

During the fourth quarter of 2017, the Company determined based on its consideration of the weight of positive and negative evidence that there was sufficient positive evidence that its U.S.

federal and state deferred tax assets were more-likely-than-not realizable.

The Company’s conclusion was primarily driven by the achievement of a sustained level of U.S.

profitability, the expectation of sustained future profitability, and mitigating factors related to external supplier and customer risk sufficient to outweigh the available negative evidence.

Accordingly, the Company released the valuation allowance previously recorded against its U.S.

net deferred tax assets, resulting in a fiscal 2017 income tax benefit of $141.1 million .

Management determined that the weight of the relevant positive evidence outweigh the negative evidence, and released the valuation allowance against its Canada subsidiary's net deferred tax assets, resulting in an income tax benefit of $ 4.0 million in fiscal 2018.

The Company continues to record valuation allowances of $ 1.2 million against the net deferred tax assets of its U.K.

subsidiary, $ 2.1 million against the net deferred tax assets of its Sweden subsidiary, and $ 0.1 million against certain domestic state tax credits and state loss carryforwards.

The Company will continue to assess the level of the valuation allowance required.

1 unchanged sentence

A summary of the changes in the Company’s valuation allowance is summarized below:

(in thousands)

(in thousands) Amount

Balance, January 1, 2019 $ 1,240

5 unchanged sentences

Foreign currency 31

Increase due to Progenics acquisition 2,479

Release valuation allowance ( 603 )

1 unchanged sentence

The Company’s U.S.

federal income tax returns are subject to examination for three years.

The state and foreign income tax returns are subject to examination for periods varying from three to four years depending on the specific jurisdictions’ statutes of limitation.

federal income tax returns are subject to examination for three years after the filing date of the return.

The state and foreign income tax returns are subject to examination for periods varying from three to four years after filing, depending on the specific jurisdictions’ statutes of limitation, and in the case of Sweden, up to six years after the end of the financial year.

At December 31, 2020, the Company has U.S.

federal net operating loss carryovers of approximately $174.0 million , which will expire between 2032 and 2037 , and U.S.

federal research credits of $1.4 million which will begin to expire in 2037.

federal net operating loss carryovers of approximately $ 492.5 million,$ 354.5 million of which will expire between 2021 and 2037, and $ 138.0 million of which can be carried forward indefinitely.

The Company’s state net operating losses are $ 18.0 million on a tax-effected basis, which will expire between 2021 and 2040.

The Company also has U.S.

federal research credits carryforwards of $ 2.4 million which will begin to expire in 2037.

The Company has state research credit carryforwards of $ 4.2 million, which will expire between 2021 and 2035.

The Company has state investment tax credit carryforwards of $2.1 million , of which $0.7 million have no expiration date, and the remainder of which will begin to expire in 2020 and fully expire in 2022.

The Company has state investment tax credit carryforwards of $ 2.6 million net of federal impact, $ 0.7 million of which have no expiration date, $ 1.8 million of which will expire between 2021 and 2023, and the remainder of which will fully expire by 2034.

A reconciliation of the Company’s changes in uncertain tax positions for 2020 and 2019 is as follows:

(in thousands)

(in thousands) Amount

Balance of uncertain tax positions as of January 1, 2019 $ 9,788

1 unchanged sentence

Reductions related to prior year tax positions ( 4,496 )

Settlements —

Lapse of statute of limitations —

2 unchanged sentences

Reductions related to prior year tax positions —

Settlements —

Lapse of statute of limitations —

3 unchanged sentences

The tax indemnification receivable is recorded within other long-term assets.

In accordance with the Company’s accounting policy, the change in the tax liability, penalties and interest associated with these uncertain tax positions (net of any offsetting federal or state benefit) is recognized within income tax (benefit) expense.

Contemporaneously, changes in the tax indemnification receivable are recognized within other expense (income) in the consolidated statement of operations.

Accordingly, as these reserves change, adjustments are included in income tax (benefit) expense with an offsetting adjustment included in other expense (income).

In accordance with the Company’s accounting policy, the change in the tax liability, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense.

As these reserves change, adjustments are included in income tax expense while the offsetting adjustment is included in other income.

Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities.

For the year ended December 31, 2019, the Company released $17.1 million of liabilities for uncertain tax positions, including interest and penalties of $12.7 million .

This included a release of a liability of $1.9 million , including interest and penalties of $1.4 million , arising from a settlement during the year.

The remaining release of $15.2 million of liability was due to a change in estimate with respect to the Company’s indemnified uncertain tax positions.

In late 2019 the Company reassessed its indemnified uncertain tax positions and obtained, with the assistance of third-party tax experts, additional technical insights with respect to the indemnified uncertain tax positions.

On the basis of the new information obtained, the Company changed its estimate with respect to certain of its indemnified uncertain tax positions and consequently released $15.2 million of related reserves.

The combined release of $17.1 million was recorded to income tax (benefit) expense and offset by a reduction in deferred tax assets of $3.3 million and a $13.8 million reduction of the indemnification receivable recorded to other expense (income).

The amount due from BMS as of December 31, 2019, was also increased by $3.2 million , due to the accrual of interest on the liability with respect to the remaining uncertain tax positions.

Similarly, the amount due from BMS increased by $3.3 million in 2018, due to the accrual of interest on the existing liability for uncertain tax positions.

In 2017, the amount due from BMS increased by $8.4 million , primarily due to the decrease in U.S.

corporate tax rates effective January 1, 2018.

As noted above, there is no effect on net income or net cash flows in any period due to the indemnification agreement in place.

As of December 31, 2019 and 2018, total liabilities for uncertain tax positions including interest and penalties were $27.0 million and $40.2 million , respectively, consisting of uncertain tax positions of $5.3 million and $9.8 million , interest accruals of $20.7 million and $28.2 million , and penalty accruals of $1.0 million and $2.2 million , respectively.

As of December 31, 2019 and 2018, all of these liabilities were included in other long-term liabilities.

Included in the 2019, 2018 and 2017 tax provisions are a benefit of $13.2 million and expense of $3.2 million and $3.1 million , respectively, relating to accrual of interest, net of benefits for reversals of uncertain tax positions, recognized upon settlements, effective settlements or lapses of relevant statutes of limitation.

As of December 31, 2020 and 2019, total liabilities for uncertain tax positions including interest and penalties were $ 29.9 million and $ 27.0 million, respectively, consisting of uncertain tax positions of $ 5.3 million, interest accruals of $ 23.5 million and $ 20.7 million, respectively, and penalty accruals of $ 1.0 million.

As of December 31, 2020 and 2019, these liabilities were included in other long-term liabilities.

Included in the 2020, 2019 and 2018 tax provisions are an expense of $ 2.8 million, a benefit of $ 13.2 million and an expense of $ 3.2 million, respectively, relating to accrual of interest, net of benefits for reversals of uncertain tax positions recognized upon settlements, effective settlements, or lapses of relevant statutes of limitation.

The total long-term asset related to the indemnification was $ 20.8 million and $ 18.9 million at December 31, 2020 and 2019, respectively.

Included in other expense (income) for the years ended December 31, 2019, 2018 and 2017, is tax indemnification expense (income), net of $10.6 million , $(2.9) million and $(8.4) million , respectively.

For the year ended December 31, 2017, $6.5 million of the tax indemnification income is related to the impact of the U.S.

federal tax rate reduction, and the remainder arises from increases in the indemnified liabilities.

Included in other (income) loss for the years ended December 31, 2020, 2019 and 2018, is tax indemnification expense (income), net of $( 2.2 ) million, $ 10.6 million and $( 2.9 ) million, respectively.

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was passed by the Congress and signed into law on March 27, 2020.

The Company has reviewed the relevant measures of the Act.

No material impacts of the Cares Act have been identified nor are any anticipated.

On December 27, 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was signed into law, modifying certain aspects of the CARES Act.

This Act contains numerous provisions some of which may be beneficial to the Company.

The Company is analyzing those impacts but has not yet concluded its analysis.

Inventory consisted of the following:

7 unchanged sentences

(in thousands) 2020 2019

Land $ 13,450 $ 13,450

Buildings 70,381 75,654

Machinery, equipment and fixtures 77,854 87,763

1 unchanged sentence

Construction in progress 11,254 10,546

196,583 208,152

accumulated depreciation and amortization ( 76,412 ) ( 91,655 )

1 unchanged sentence

Depreciation and amortization expense related to property, plant & equipment, net, was $ 12.5 million, $ 10.3 million and $ 10.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable.

During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of COVID-19 related to certain other nuclear legacy manufacturing assets in the U.S.

segment, the Company determined certain impairment triggers had occurred.

Accordingly, the Company performed an undiscounted cash flow analysis as of March 31, 2020.

Based on the undiscounted cash flow analysis, the Company determined that the manufacturing assets had net carrying values that exceeded their estimated undiscounted future cash flows.

The Company then estimated the fair values of the asset group based on their discounted cash flows.

The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $ 7.3 million for the year ended December 31, 2020 in cost of goods sold in the consolidated statement of operations.

In connection with a contract termination in the fourth quarter of 2020, the Company transferred ownership of certain manufacturing assets and recorded a non-cash loss on disposal of assets of $ 1.8 million as well as paid $ 0.5 million, all of which is recorded in cost of goods sold in the consolidated statement of operations.

Business Combinations

On June 19, 2020, the Company completed the Progenics Acquisition.

Progenics is an oncology company developing innovative medicines and artificial intelligence to Find, Fight and Follow cancer.

The acquisition combines the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and R&D pipeline of Progenics.

Progenics brings several commercial products and a pipeline of product candidates that will further diversify the Company’s commercial and clinical development portfolios.

Under the terms of the Merger Agreement, the Company acquired all of the issued and outstanding shares of Progenics common stock for a purchase price of $ 419.0 million by means of an all-stock transaction, which includes Replacement Stock Options for precombination services as well as CVRs.

The CVRs were accounted for as contingent consideration, the fair value of which was determined using a Monte-Carlo simulation.

Additionally, the fair value of Replacement Stock Options related to precombination services was recorded as a component of consideration transferred.

Finally, as a result of the acquisition, Lantheus effectively settled an existing bridge loan with Progenics at the recorded amount (principal and accrued interest) of $ 10.1 million, representing the effective settlement of a preexisting relationship.

This effective settlement of the bridge loan was treated as a component of consideration transferred.

The Company determined that the bridge loan was at market terms and no gain or loss was recorded upon settlement.

The acquisition date fair value of the consideration transferred in the acquisition consisted of the following:

(in thousands)

Issuance of common stock $ 398,110

Fair value of replacement stock options 7,125

Fair value of bridge loan settled at close 10,074

Fair value of contingent considerations (CVRs) 3,700

Total consideration transferred $ 419,009

The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date.

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

As of December 31, 2020, the Company finalized all measurement period adjustments related to the Progenics acquisition other than tax related balances.

The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of the acquisition date, as well as measurement period adjustments made to the amounts initially recorded in June 2020.

The measurement period adjustments primarily resulted from finalizing the fair values of certain intangible assets and liabilities and other changes to certain tangible assets and liability accounts.

The related impact to net loss that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the consolidated financial statements.

(in thousands) Amounts Recognized as of Acquisition Date

(as previously reported) Measurement Period Adjustments Amounts Recognized as of Acquisition Date (as adjusted)

Cash and cash equivalents $ 15,421 $ — $ 15,421

Accounts receivable 5,787 — 5,787

Inventory 915 160 1,075

Other current assets 3,250 434 3,684

Property, plant and equipment 14,972 — 14,972

Identifiable intangible assets (weighted-average useful life):

Currently marketed product ( 15 years)

142,100 800 142,900

Licenses ( 11.5 years)

87,500 ( 1,700 ) 85,800

Developed technology ( 9 years)

3,000 ( 600 ) 2,400

IPR&D 150,900 200 151,100

Other long-term assets 37,631 — 37,631

Accounts payable ( 1,616 ) — ( 1,616 )

Accrued expenses and other liabilities ( 8,207 ) ( 80 ) ( 8,287 )

Other long-term liabilities ( 30,778 ) ( 380 ) ( 31,158 )

Long-term debt and other borrowings ( 40,200 ) — ( 40,200 )

Deferred tax liabilities ( 3,717 ) 299 ( 3,418 )

Goodwill 42,051 867 42,918

Total consideration transferred $ 419,009 $ — $ 419,009

Intangible assets acquired consist of currently marketed products, licenses, developed technology and IPR&D.

The fair value of the acquired intangible assets was determined based on estimated future revenues, royalty rates and discount rates, among other variables and estimates.

The acquired intangible assets subject to amortization were assigned useful lives based on the expected use of the assets and the regulatory and economic environment within which they are being used and are being amortized on a straight-line basis over the respective estimated useful lives.

The estimated fair values of the IPR&D assets were determined based on the present values of the expected cash flows to be generated by the respective underlying assets.

The Company used a discount rate of 23.0 % and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions.

As part of the acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics, related to a prior sale of certain intellectual property.

The estimated fair value of the acquired contingent receivable of $ 10.1 million was determined by applying a probability adjusted discounted cash flow model based on estimated future expected payments and recorded in other long-term assets.

The goodwill recognized is attributable to future technologies that are not separately identifiable that could potentially add to the currently developed and pipeline products and Progenics’ assembled workforce.

Future technologies did not meet the criteria for recognition separately from goodwill because they are part of the future development and growth of the business.

Goodwill of $ 42.9 million recognized in connection with the acquisition is not deductible for tax purposes and has been assigned to a reporting unit within the U.S.

reportable segment.

The Company recognized $ 11.9 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the year ended December 31, 2020, respectively.

These costs are recorded in general and administrative expenses in the consolidated statements of operations.

Progenics Pro Forma Financial Information

Progenics has been included in the Company’s consolidated financial statements since the acquisition date.

Progenics contributed revenues of $ 12.4 million, as well as a net loss of $ 27.1 million to the Company’s consolidated statement of operations for the year ended December 31, 2020.

The following unaudited pro forma financial information presents the Company’s results as if the Progenics acquisition had occurred on January 1, 2019:

December 31, 2020 Year Ended

December 31, 2019

(in thousands) Amount Amount

Pro forma revenue $ 350,315 $ 382,323

Pro forma net loss $ 29,190 $ 42,032

The unaudited pro forma financial information for all periods presented adjusts for the effects of material business combination items, including amortization of acquired intangible assets, transaction-related costs, adjustments to interest expense related to the assumption of long-term debt, retention and severance bonuses and the corresponding income tax effects of each.

These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the acquisition actually taken place on January 1, 2019.

In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the acquisition, including, but not limited to, revenue enhancements, cost savings or operating synergies that the combined company may achieve as a result of the acquisition.

Assets Held for Sale

During the fourth quarter of 2020, the Company entered into a stock purchase agreement (“SPA”) with one of its existing radiopharmacy customers to sell all of the stock of its Puerto Rican radiopharmacy servicing subsidiary.

This event qualified for held for sale accounting and the Company determined that the fair value of the net assets being sold significantly exceeded the carrying value as of December 31, 2020.

The transaction was finalized on January 29, 2021.

The purchase price for the stock sale was $ 18.0 million in cash and will also include a working capital adjustment once settled.

The SPA contains customary representations, warranties and covenants by each of the parties.

Subject to certain limitations, the buyer will be indemnified for damages resulting from breaches or inaccuracies of the Company’s representations, warranties and covenants in the SPA.

As part of the transaction, the Company and the buyer also entered into a customary transition services agreement and a long-term supply contract under which the Company will supply the buyer with certain of the Company’s products on commercial terms and under which the buyer has agreed to certain product minimum purchase commitments.

The Company does not believe this sale of certain net assets in the international segment constituted a strategic shift that would have a major effect on its operations or financial results.

As a result, this transaction is not classified as discontinued operations in the Company’s accompanying consolidated financial statements.

The following table summarizes the major classes of assets and liabilities held for sale as of December 31, 2020:

(in thousands) Amount

Current Assets:

Cash and cash equivalents $ 941

Accounts receivable, net 2,191

Inventory 420

Other current assets 43

Total current assets 3,595

Non-Current Assets:

Property, plant & equipment, net 761

Intangibles, net 96

Other long-term assets 790

Total assets held for sale $ 5,242

Current Liabilities:

Accounts payable $ 224

Accrued expense and other liabilities 661

Total current liabilities 885

Non-Current Liabilities:

Asset retirement obligations 302

Other long-term liabilities 606

Total liabilities held for sale $ 1,793

Asset Retirement Obligations

The Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an asset retirement obligation.

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and San Juan, Puerto Rico sites.

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts, and prior to its subsequent sale as discussed in Note 23, “Subsequent Events”, San Juan, Puerto Rico sites.

As of December 31, 2020, the liability for the San Juan, Puerto Rico site is recorded in liabilities held for sale.

As of December 31, 2020, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.9 million.

The following table provides a summary of the changes in the Company’s asset retirement obligations:

(in thousands)

(in thousands) Amount

Balance, January 1, 2020 $ 12,883

Revisions in estimated cash flows

Transfer to liabilities held for sale ( 302 )

Accretion expense 1,439

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The Company has provided this financial assurance in the form of a $ 28.2 million surety bond.

Intangibles, Net

Intangibles, Net and Goodwill

Intangibles, net, consisted of the following:

December 31, 2020

(in thousands)

Accumulated Amortization

Straight-Line

Customer relationships

(in thousands) Amortization

Method Cost Accumulated Amortization Net

Trademarks Straight-Line $ 13,540 $ ( 10,958 ) $ 2,582

Customer relationships Accelerated 96,865 ( 93,770 ) 3,095

Currently marketed product Straight-Line 142,900 ( 5,053 ) 137,847

Licenses Straight-Line 85,800 ( 4,008 ) 81,792

Developed technology Straight-Line 2,400 ( 144 ) 2,256

IPR&D N/A 148,440 — 148,440

Total $ 489,945 $ ( 113,933 ) $ 376,012

December 31, 2019

(in thousands)

Accumulated Amortization

Straight-Line

Customer relationships

Straight-Line

(in thousands) Amortization

Method Cost Accumulated Amortization Net

Trademarks Straight-Line $ 13,540 $ ( 10,407 ) $ 3,133

Customer relationships Accelerated 99,019 ( 94,816 ) 4,203

Total $ 112,559 $ ( 105,223 ) $ 7,336

The Company recorded amortization expense for its intangible assets of $ 10.8 million, $ 1.8 million and $ 2.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company performed its annual impairment test of its IPR&D assets as of October 31, 2020.

As a result of a timing delay in the development of an AZEDRA IPR&D asset due to the impact of COVID-19, the Company determined that the carrying value of $ 18.3 million exceeded the fair value of the asset.

Accordingly, the Company recorded a non-cash impairment charge of $ 2.7 million for the year ended December 31, 2020 in research and development expenses in the consolidated statements of operations.

The estimated fair value of the AZEDRA IPR&D asset was determined based on the present values of the expected cash flows.

The below table summarizes the estimated aggregate amortization expense expected to be recognized on the above intangible assets:

(in thousands)

(in thousands) Amount

2021 $ 18,628

2026 and thereafter 136,952

Total $ 227,572

Goodwill by reportable segment consisted of the following:

(in thousands) U.S.

Balance, January 1, 2020 $ 15,714 $ 15,714

Acquisition (1)

42,918 42,918

Balance, December 31, 2020 $ 58,632 $ 58,632

(1) Refer to Note 8, “Business Combinations” for additional details related to the Progenics acquisition

Accrued Expenses and Other Liabilities

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Accrued professional fees 2,925 6,917

Other 6,129 2,098

Total accrued expenses and other liabilities $ 41,726 $ 37,360

Long-Term Debt, Net, and Other Borrowings

As of December 31, 2020, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

2021 $ 20,452

Total principal outstanding 217,553

Unamortized debt premium, net 954

Unamortized debt issuance costs ( 602 )

Finance lease liabilities 495

Total 218,400

current portion ( 20,701 )

Total long-term debt, net, and other borrowings $ 197,699

In June 2019, the Company refinanced its previous $ 275.0 million five-year term loan agreement (the “2017 Term Facility”) with a new five-year $ 200.0 million term loan facility (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”).

In addition, the Company replaced its previous $ 75.0 million five-year revolving credit facility (the “2017 Revolving Facility”) with a new $ 200.0 million five-year revolving credit facility (the “2019 Revolving Facility” and, together with the 2019 Term Facility, the “2019 Facility”).

The terms of the 2019 Facility are set forth in the Credit Agreement, dated as of June 27, 2019 (the “2019 Credit Agreement”), by and among Holdings, the Company, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as

administrative agent and collateral agent.

The Company has the right to request an increase to the 2019 Term Facility or request the establishment of one or more new incremental term loan facilities, in an aggregate principal amount of up to $ 100.0 million, plus additional amounts, in certain circumstances.

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The 2019 Credit Agreement allows for a replacement interest rate in the event the LIBOR is phased out.

At December 31, 2019, the Company’s interest rate under the 2019 Term Facility was 3.55% .

The Company is permitted to voluntarily prepay the 2019 Term Loans, in whole or in part, without premium or penalty.

1 unchanged sentence

The 2019 Term Loans mature in June 2024.

As of December 31, 2019, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands)

Total principal outstanding

Unamortized debt discount

Unamortized debt issuance costs

Finance lease liabilities

current portion

Total long-term debt

At December 31, 2020, the Company’s interest rate under the 2019 Term Facility was 3.4 %.

2019 Revolving Facility

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The Company is permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in each case, without premium or penalty.

On any business day on which the total amount of outstanding Revolving

Loans and Letters of Credit exceeds the total Revolving Commitment, the Company must prepay the Revolving Loans in an amount equal to such excess.

On any business day on which the total amount of outstanding Revolving Loans and Letters of Credit exceeds the total Revolving Commitment, the Company must prepay the Revolving Loans in an amount equal to such excess.

As of December 31, 2020, there were no outstanding borrowings under the 2019 Revolving Facility.

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The minimum interest coverage ratio, commencing with the fiscal quarter ending September 30, 2019, must be at least 3.00 to 1.00.

The maximum total net leverage ratio permitted by the financial covenant is displayed in the table below:

2019 Facility Financial Covenant

Leverage Ratio

Q1 2020 to Q2 2020

Q3 2020 to Q2 2021

The Company may elect to increase the maximum total net leverage ratio by 0.50 to 1.00 (subject to a maximum of 4.25 to 1.00) up to two separate times during the term of the 2019 Facility in connection with any Material Acquisition (as defined in the Credit Agreement).

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The 2019 Facility is guaranteed by Holdings and Lantheus MI Real Estate, LLC, and obligations under the 2019 Facility are generally secured by first priority liens over substantially all of the assets of each of LMI, Holdings and Lantheus MI Real Estate, LLC (subject to customary exclusions set forth in the transaction documents) owned as of June 27, 2019 or thereafter acquired.

2020 Amendment

On June 19, 2020, the Company amended its 2019 Credit Agreement (“the Amendment”) as a result of the impact of the COVID-19 pandemic on the business and operations of the Company and the near-term higher level of indebtedness resulting from the Company’s decision not to immediately repay the Progenics debt secured by the RELISTOR royalties following the Progenics Acquisition.

The Company accounted for the Amendment as a debt modification and capitalized $ 1.2 million of associated costs.

The Amendment provides for, among other things, modifications to LMI’s financial maintenance covenants.

The covenant related to Total Net Leverage Ratio (as defined in the Amended Credit Agreement) has been waived from the date of the Amendment through December 31, 2020.

The maximum total net leverage ratio and interest coverage ratio permitted by the financial covenant is displayed in the table below:

2020 Amended Credit Agreement

Period Total Net Leverage Ratio

Q1 2021 5.50 to 1.00

Q2 2021 3.75 to 1.00

Thereafter 3.50 to 1.00

Period Interest Coverage Ratio

Q4 2020 to Q1 2021 2.00 to 1.00

Thereafter 3.00 to 1.00

The Amendment also introduces a new financial covenant requiring Consolidated Liquidity (as defined in the Amended Credit Agreement) to be no less than $ 150.0 million.

The Consolidated Liquidity covenant is tested on a continuing basis beginning on the date of the Amendment and ending on the date on which LMI delivers a compliance certificate for the fiscal quarter ending March 31, 2021.

For the period beginning on the date of the Amendment and ending on the Adjustment Date (as defined in the Amended Credit Agreement) for the fiscal quarter ending March 31, 2021, loans under the Amended Credit Agreement bear interest at LIBOR plus 3.25 % or the Base Rate plus 2.25 %.

On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, loans bear interest at LIBOR plus a spread that ranges from 1.50 % to 3.00 % or the Base Rate plus a spread that ranges from 0.50 % to 2.00 %, in each case based on LMI’s Total Net Leverage Ratio.

The commitment fee applicable to the Revolving Facility is 0.50 % until the Adjustment Date for the fiscal quarter ending March 31, 2021.

On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, the commitment fee ranges from 0.15 % to 0.40 % based on LMI’s Total Net Leverage Ratio.

Royalty-Backed Loan

On June 19, 2020, as a result of the acquisition, the Company assumed Progenics outstanding debt as of such date in the amount of $ 40.2 million.

Progenics, through a wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), entered into a $ 50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P.

(“HCRP”) on November 4, 2016.

Under the terms of the Royalty-Backed Loan, the lenders have no recourse to Progenics or any of its assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under Progenics’ license agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch Health Companies Inc.

The RELISTOR royalty payments will be used to repay the principal and interest on the loan.

The Royalty-Backed Loan bears interest at a per annum rate of 9.5 % and matures on June 30, 2025.

On June 22, 2020, HCRP waived the automatic acceleration of the Royalty-Backed Loan that otherwise would have been triggered by the consummation of the Progenics Acquisition and MNTX Royalties agreed not to prepay the loan until after December 31, 2020.

Under the terms of the loan agreement, payments of interest and principal, if any, are made on the last day of each calendar quarter out of RELISTOR royalty payments received since the immediately-preceding payment date.

On each payment date, 50 % of RELISTOR royalty payments received since the immediately-preceding payment date in excess of accrued interest on the loan are used to repay the principal of the loan, with the balance retained by the Company.

Starting on September 30, 2021, all of the RELISTOR royalties received since the immediately-preceding payment date will be used to repay the interest and outstanding principal balance until the balance is fully repaid.

Derivative Instruments

The Company uses interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt.

In March 2020, the Company entered into interest rate swap contracts to fix the LIBOR rate on a notional amount of $ 100.0 million through May 31, 2024.

The average fixed LIBOR rate on the interest rate swaps is approximately 0.82 %.

This agreement involves the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount.

The interest rate swaps were designated as cash flow hedges.

In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s consolidated balance sheets at fair value, and changes in the fair value of the swap agreements are recorded to other comprehensive loss and reclassified to interest expense in the period during which the hedged transaction affected earnings or it will become probable that the forecasted transaction would not occur.

At December 31, 2020, accumulated other comprehensive loss included $ 0.7 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.

The following table presents the location and fair value amounts of derivative instruments reported in the consolidated balance sheet:

(in thousands) December 31, 2020 December 31, 2019

Derivatives type Classification

Interest rate swap Accrued expenses and other liabilities $ 1,908 $ —

Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss, net of tax of $ 0.5 million and $ 0.0 million for the year ended December 31, 2020 and 2019, respectively, consisted of the following:

(in thousands) Foreign currency translation Unrealized loss on cash flow hedges Accumulated other comprehensive loss

Balance at January 1, 2020 $ ( 960 ) $ — $ ( 960 )

Other comprehensive income (loss) before reclassifications 330 ( 1,833 ) ( 1,503 )

Amounts reclassified to earnings — 415 415

Balance at December 31, 2020 $ ( 630 ) $ ( 1,418 ) $ ( 2,048 )

Balance at January 1, 2019 $ ( 1,108 ) $ — $ ( 1,108 )

Other comprehensive income before reclassifications 148 — 148

Amounts reclassified to earnings — — —

Balance at December 31, 2019 $ ( 960 ) $ — $ ( 960 )

Stock-Based Compensation

4 unchanged sentences

The Company adopted its 2015 Plan in June 2015 and subsequently amended the plan in April 2016, 2017 and 2019 which increased the common stock reserved for issuance under the plan to an aggregate 6,580,277 shares.

The Company assumed Progenics equity plans due to the acquisition as discussed in Note 1, “Description of Business”.

Stock-based compensation expense recognized in the consolidated statements of operations is summarized below:

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A summary of option activity for 2020 is presented below:

Options Weighted-

Price Weighted-

(Years) Aggregate

Balance at January 1, 2020 272,224 $ 17.44

1 unchanged sentence

Options exercised ( 8,868 ) $ 8.72

Options cancelled and expired

Options cancelled and forfeited ( 715,881 ) $ 19.47

Outstanding at December 31, 2020 1,575,219 $ 19.03 4.8 229,390

Exercisable at December 31, 2020 1,271,041 $ 19.72 3.8 228,958

The table below summarizes the key weighted-average assumptions used in valuing stock options granted:

Year Ended December 31, 2020

Expected volatility 71.1 %

Risk-free interest rate 0.3 %

Expected life (in years) 3.5

Expected dividend yield —

All options granted during the year ended December 31, 2020 represent Replacement Stock Options issued in connection with the Progenics Acquisition, of which $ 7.1 million related to precombination services for awards that had vested prior to the acquisition and was recorded as a component of consideration transferred in the Progenics Acquisition.

The unvested Replacement Stock Options have remaining vesting terms ranging from 0.1 years to 3.7 years and will be recognized as expense over the requisite service period.

There were no options granted during the years ended December 31, 2019 and 2018.

The weighted average grant-date fair value for stock option awards granted during the fiscal year ended December 31, 2020 was $ 5.67 per option.

During the years ended December 31, 2020, 2019 and 2018, 8,868 , 67,558 and 192,550 options were exercised having aggregate intrinsic values of $ 0.1 million, $ 0.6 million and $ 2.4 million, respectively.

As of December 31, 2020, there was $ 1.9 million of unrecognized compensation expense related to outstanding stock options, which is expected to be recognized over a weighted-average period of 2.3 years.

Restricted Stock

A summary of restricted stock awards and restricted stock units activity for 2020 is presented below:

Shares Weighted-

Average Grant

1 unchanged sentence

Nonvested balance at January 1, 2020 1,031,772 $ 15.20

Granted 786,006 $ 15.00

Vested ( 610,804 ) $ 12.45

Forfeited ( 99,108 ) $ 15.53

Nonvested balance at December 31, 2020 1,107,866 $ 16.58

Restricted stock generally vest over 3 years.

As of December 31, 2020, there was $ 11.8 million of unrecognized compensation expense related to outstanding restricted stock, which is expected to be recognized over a weighted-average period of 1.9 years.

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A summary of performance restricted stock award activity for 2020 is presented below:

Shares Weighted-

Average Grant

1 unchanged sentence

Nonvested balance at January 1, 2020 226,010 $ 16.62

Granted 9,767 $ 16.40

Vested ( 235,777 ) $ 16.40

Forfeited — $ —

Nonvested balance at December 31, 2020 — $ —

As of December 31, 2019 , there was $0.4 million of unrecognized compensation expense related to outstanding performance restricted stock which is expected to be recognized over a weighted-average period of 0.2 years.

The weighted average grant-date fair value for performance restricted stock granted during the fiscal year ended December 31, 2017 was $16.69 per share.

The total fair value of the performance restricted stock vested in fiscal year 2020 was $ 3.9 million.

Performance restricted stock awards granted in 2020 relate to the Company’s overachievement of performance targets.

There were no performance restricted stock awards granted during the years ended December 31, 2019 and 2018.

Total Stockholder Return Restricted Stock Awards (“TSR Awards”)

4 unchanged sentences

Year Ended December 31,

2020 2019 2018

Expected volatility 53.3 % 71.7 % 84.3 %

3 unchanged sentences

A summary of TSR Award activity for 2020 is presented below:

Shares Weighted-

Average Grant

1 unchanged sentence

Nonvested balance at January 1, 2020 306,230 $ 30.56

Granted 220,971 $ 23.43

Forfeited ( 35,430 ) $ 27.47

Nonvested balance at December 31, 2020 491,771 $ 27.58

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The weighted average grant-date fair value for TSR Awards granted during the fiscal years ended December 31, 2020, 2019 and 2018 was $ 23.43 , $ 39.92 and $ 22.76 per share, respectively.

Employee Stock Purchase Plan

In April 2017, the Company’s stockholders approved the 2017 Employee Stock Purchase Plan (“2017 ESPP”), which authorized the issuance of up to 250,000 shares of common stock thereunder.

Under the terms of the 2017 ESPP, eligible U.S.

employees can elect to acquire shares of the Company’s common stock through periodic payroll deductions during a series of six month offering periods, which will generally begin in March and September of each year.

Purchases under the 2017 ESPP are effected on the last business day of each offering period at a 15% discount to the closing price on that day.

The 2017 ESPP was implemented, subject to stockholder approval, on March 10, 2017, and the first purchases thereunder were made on September 13, 2017.

Adoption of ASC Topic 842, “Leases”

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In addition, the Company elected the relief package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company not to reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for any existing leases.

The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the guidance of ASC 840, Leases.

The reported results for 2020 and 2019 reflect the application of ASC 842 guidance.

The adoption of ASC 842 resulted in the recording of an additional lease asset and lease liability of approximately $ 1.1 million as of January 1, 2019.

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Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company assumed two operating leases as a result of the Progenics acquisition related to office space at the World Trade Center in New York City, pursuant to a lease agreement expiring in September 2030 and a radiopharmaceutical manufacturing facility in Somerset, New Jersey under a sublease agreement expiring in November 2028, which were recorded as of June 19, 2020, for $ 18.6 million and $ 0.6 million, respectively.

The Company excluded the Puerto Rico operating lease amounts classified as held for sale as of December 31, 2020.

Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to apply the short-term lease exemption.

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Operating and finance lease assets and liabilities are as follows:

(in thousands)

Classification

December 31, 2019

Other long-term assets

Property, plant and equipment, net

(in thousands) Classification December 31, 2020 December 31, 2019

Operating Other long-term assets $ 18,441 $ 935

Finance Property, plant and equipment, net 525 348

Total leased assets $ 18,966 $ 1,283

Accrued expenses and other liabilities

Current portion of long-term debt and other borrowings

Other long-term liabilities

Long-term debt, net and other borrowings

Operating Accrued expenses and other liabilities $ 1,164 $ 193

Finance Current portion of long-term debt and other borrowings 249 143

Operating Other long-term liabilities 17,501 812

Finance Long-term debt, net and other borrowings 246 186

Total leased liabilities $ 19,160 $ 1,334

The components of lease expense were as follows:

(in thousands)

(in thousands) Year Ended

December 31, 2020 Year Ended

December 31, 2019

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Other information related to leases were as follows:

December 31, 2019

December 31, 2020 December 31, 2019

Weighted-average remaining lease term (Years):

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Finance leases 5.3 % 5.4 %

(in thousands)

(in thousands) Year Ended

December 31, 2020 Year Ended

December 31, 2019

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Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows:

(in thousands)

Operating Leases

(in thousands) Operating Leases (1)

Finance Leases

2021 $ 1,964 $ 231

2022 2,213 216

2023 2,255 78

Thereafter 12,170 —

Total future minimum lease payments 23,239 525

Net Income Per Common Share

A summary of net income per common share is presented below:

interest 4,574 30

Total $ 18,665 $ 495

(1) Amounts exclude lease payments of $ 0.9 million associated with its Puerto Rico subsidiary that is classified as held for sale

Net (Loss) Income Per Common Share

A summary of net (loss) income per common share is presented below:

(in thousands, except per share amounts) 2020 2019 2018

Net (loss) income $ ( 13,473 ) $ 31,667 $ 40,518

Basic weighted-average common shares outstanding 54,134 38,988 38,233

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Diluted weighted-average common shares outstanding 54,134 40,113 39,501

Basic income per common share

Diluted income per common share

Antidilutive securities excluded from diluted net income per common share

Basic (loss) income per common share $ ( 0.25 ) $ 0.81 $ 1.06

Diluted (loss) income per common share $ ( 0.25 ) $ 0.79 $ 1.03

Antidilutive securities excluded from diluted net (loss) income per common share 3,175 50 424

Commitments and Contingencies

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As of December 31, 2020, future payments required under purchase commitments are as follows:

(in thousands)

(in thousands) Amount

Total $ 6,198

The Company has entered into agreements which contain certain percentage volume purchase requirements.

The Company has excluded these future purchase commitments from the table above since there are no minimum purchase commitments or payments under these agreements.

License Agreements

The Company has entered into license agreements in which fixed payments have been committed to be paid on an annual basis.

As of December 31, 2020, future fixed payments required under license agreements are $ 0.7 million.

The Company may be required to pay additional amounts up to approximately $ 90.6 million in contingent payments under the Company’s license agreements.

These contingent payments include potential milestone or contractual payment obligations contingent upon the achievement or occurrence of future milestones or events and the amounts and timing of such potential obligations are unknown or uncertain.

Legal Proceedings

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In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, could materially and adversely affect its financial condition or results of operations.

In October 2019, the Company was awarded a total of approximately $3.5 million , consisting of damages, pre-judgment interest, and certain arbitration fees, compensation and expenses in its arbitration with Pharmalucence in connection with a Manufacturing and Supply Agreement dated November 12, 2013, under which Pharmalucence agreed to manufacture and supply DEFINITY for the Company.

The commercial arrangement contemplated by that agreement was repeatedly delayed and ultimately never successfully realized.

After extended settlement discussions between Sun Pharma, the ultimate parent of Pharmalucence, and the Company, which did not lead to a mutually acceptable outcome, on November 10, 2017, the Company filed an arbitration demand (and later an amended arbitration demand) with the American Arbitration Association against Pharmalucence, alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious misrepresentation and violation of the Massachusetts Consumer Protection Law,

also known as Chapter 93A.

In November 2019, the Company received proceeds of $3.5 million , which is recorded in other expense (income) in the consolidated statement of operations.

As of December 31, 2019 , except as disclosed above the Company had no material ongoing litigation in which the Company was a party.

In addition, the Company had no material ongoing regulatory or other proceedings and no knowledge of any investigations by government or regulatory authorities in which the Company is a target, in either case that the Company believes could have a material and adverse effect on its current business.

If a matter is both probable to result in material liability and the amount of loss can be reasonably estimated, the Company estimates and discloses the possible material loss or range of loss.

If such loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements.

As of December 31, 2020, the Company had the following material ongoing litigation in which the Company was a party:

RELISTOR Subcutaneous Injection

Between November 19, 2015 and September 18, 2017, Progenics, Salix, Valeant (now Bausch) and Wyeth filed multiple lawsuits against Mylan Pharmaceuticals and certain of its affiliates (collectively, “Mylan”) in the United States District Court for the District of New Jersey (the “NJ Court”) for infringement of certain U.S.

patents based upon Mylan’s filing of multiple ANDAs seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of those patents expire.

These actions were later consolidated into two separate actions in the District of New Jersey.

On May 1, 2018, in the lead action, the NJ Court granted Plaintiffs’ motion for partial summary judgment as to the validity of a particular claim that Mylan had admitted it infringed.

On May 23, 2018, the NJ Court entered an order for final judgment in favor of Plaintiffs and against Mylan on that particular claim.

As a result, trial on the merits in the lead action was adjourned, allowing trial, if necessary, to be consolidated with the lagging, second action.

On August 20, 2020, the parties agreed to dismiss all claims, affirmative defenses, and counterclaims in the lagging action and proceed to a full trial on the merits for the patents asserted in the lead action.

On May 25, 2018, Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”).

On April 8, 2020, the CAFC issued its decision reversing the NJ Court’s grant of summary judgment and remanding for further proceedings.

On June 22, 2020, Plaintiffs filed a petition for rehearing/rehearing en banc, and on July 24, 2020, that petition was denied.

On December 23, 2020, Plaintiffs and Mylan entered into a Settlement and License Agreement (the “Mylan Settlement Agreement”) relating to the actions in the NJ Court.

The Mylan Settlement Agreement provides for a full settlement and release by both Plaintiffs and Mylan for all claims that were or could have been asserted in the district court cases and all resulting damages or other remedies.

Plaintiffs and Mylan filed a Stipulated Order of Dismissal after the execution of the Mylan Settlement Agreement, and the matter has been dismissed.

RELISTOR Tablets - Actavis

Between December 6, 2016 and December 8, 2017, Progenics, Salix, Bausch, and Wyeth filed suit against Actavis, Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd.

(collectively, “Actavis”) in the NJ Court for infringement of certain U.S.

patents based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of those patents expire.

The actions were later consolidated into a single action in the NJ Court.

On May 6-9, 2019, a bench trial was held, and on July 17, 2019, the NJ Court issued an Order finding the asserted claims of a certain U.S.

patent valid and infringed.

The NJ Court additionally ordered that the effective date of any approval of Actavis’s ANDA may not be earlier than the expiration date of that patent.

Actavis filed an appeal of the NJ Court’s decision with the CAFC on August 13, 2019.

The matter is currently pending on appeal at the CAFC and merits briefing has concluded.

Actavis’s opening brief was filed February 6, 2020.

The Plaintiffs filed their responsive brief on September 15, 2020.

Actavis’s reply brief was filed on December 7, 2020.

On June 13, 2019, Progenics, Salix, Bausch, and Wyeth filed another suit against Actavis in the NJ Court for infringement of a separate, and at that time, recently granted U.S.

patent based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before this patent expires.

On February 12, 2021, Plaintiffs and Actavis entered into a Settlement and License Agreement (the “Actavis Settlement Agreement”) relating to the actions in the NJ Court and the related Federal Circuit appeal.

The Actavis Settlement Agreement provides for a full settlement and release by both Plaintiffs and Actavis of all claims that were or could have been asserted in the NJ Court cases and all resulting damages or other remedies.

Plaintiffs and Actavis have further agreed to file a Stipulation and Order to dismiss the pending district court action and a Motion for Voluntary Dismissal of the appeal.

RELISTOR European Opposition Proceedings

In addition to the above described ANDA notifications, in October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone.

Notices of opposition were filed separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH.

Between May 11, 2017 and July 4, 2017, the opposition division provided notice that the three European patents would be revoked.

Each of these matters were appealed to the European Patent Office.

Oral proceedings for EP1615646 were held on September 22, 2020.

The decision under appeal was set aside and the case was remitted to the opposition division for further prosecution.

The deadline for written submissions prior to an oral hearing is July 27, 2021.

The oral hearing is set for September 27, 2021.

On November 13, 2020, Progenics withdrew the appeal for EP2368553 and EP2368554.

termination of the proceedings with revocation of the patent were issued on November 23, 2020 for EP2368553 and EP2368554.

Because the outcome of litigation is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.

German PSMA-617 Litigation

On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court in Mannheim, Germany (the “German District Court”).

In this Complaint, MIP claimed that the discovery and development of PSMA-617 was related to work performed under a research collaboration sponsored by MIP.

MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University.

On February 27, 2019, Endocyte, Inc., a wholly owned subsidiary of Novartis AG, filed a motion to intervene in the German litigation.

Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.

On November 27, 2018, MIP requested that the European Patent Office (“EPO”) stay the examination of a certain European Patent (EP) and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint.

On December 10, 2018, the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective November 27, 2018.

MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in corresponding U.S.

patent applications (U.S.

16/038,729, 16/114,988, 16/510,495, 16/551,198).

MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S.

patent applications (U.S.

16/510,495, 16/551,198).

On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending U.S.

patent applications was signed by less than all applicants or owners of the applications.

On February 27, 2019, the German District Court set € 0.4 million as the amount MIP must deposit with the German District Court as security in the event of an unfavorable final decision on the merits of the dispute.

The German District Court held the first oral hearing in the case on August 6, 2019.

The German District Court considered procedural matters and granted the parties the right to make further submissions.

A further oral hearing occurred July 23, 2020, during which the German District Court heard live testimony from several witnesses, testifying on behalf of the defendants.

On August 24, 2020, the German District Court issued its decision dismissing MIP’s claims, stating that MIP failed to discharge its burden of proof in the matter.

MIP filed a Notice of Appeal of the German District Court’s decision on September 24, 2020 and filed its appeal brief on November 26, 2020.

Responsive briefs are due on March 12, 2021.

MIP is also considering its legal and procedural alternatives against the defendants in other jurisdictions and proceedings.

If MIP is not successful in its appeal, it will be responsible for the German court fees and fees and disbursements of defendant’s and intervenor’s counsel, both at first instance and on appeal.

Most of such fees and disbursements at first instance are covered by the aforementioned cash security deposited with the German District Court.

Because the outcome of litigation is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.

Whistleblower Complaint

In July 2019, Progenics received notification of a complaint submitted by Dr.

Syed Mahmood, the former Vice President of Medical Affairs for Progenics, to the Occupational Safety and Health Administration of the United States Department of Labor (“DOL”), alleging that the termination of his employment by Progenics was in violation of Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”).

Mahmood sought reinstatement to his former position of Vice President of Medical Affairs, back pay, front pay in lieu of reinstatement, interest, attorneys’ fees and costs incurred, and special damages.

In March 2020, Dr.

Mahmood filed a complaint in the U.S.

District Court for the Southern District of New York (as permitted by SOX because the DOL had not issued a decision within 180 days).

Mahmood’s federal complaint asserted claims of violation of Section 806 of SOX.

The DOL action has been dismissed.

Progenics filed an answer to Dr.

Mahmood’s complaint on August 26, 2020 and the initial pre-trial conference was held on September 16, 2020.

The parties entered into mediation in connection with Dr.

Mahmood’s complaint on December 8, 2020, and the matter was settled pursuant to a Confidential Negotiated Settlement Agreement dated December 30, 2020.

A Stipulation of Dismissal with Prejudice was then filed with the court, and the matter was dismissed with prejudice.

The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S.

4 unchanged sentences

Expense recognized by the Company for matching contributions made to the 401(k) Plan was $ 0.8 million, $ 2.1 million and $ 1.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Segment Informatio n

Segment Information

The Company reports two operating segments, U.S.

2 unchanged sentences

The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascular diagnostic imaging.

All goodwill has been allocated to the U.S.

operating segment.

The Company does not identify or allocate assets to its segments.

The Company does not identify or allocate assets to its segments other than goodwill.

Management is in the process of evaluating the Company’s operating and reporting structure.

The Company anticipates this evaluation, which it expects to complete during 2021, may result in a change to the Company’s existing operating segment reporting structure.

Selected information regarding the Company’s segments are provided as follows:

(in thousands) 2020 2019 2018

Revenue by product from external customers

Revenue by product and geography from external customers

DEFINITY $ 207,270 $ 211,777 $ 178,440

TechneLite 69,729 72,534 74,042

Other nuclear 36,864 36,231 48,935

Rebates and allowances ( 19,067 ) ( 16,553 ) ( 12,837 )

Revenues 294,796 303,989 288,580

International

DEFINITY 6,046 5,731 4,633

TechneLite 16,512 14,058 24,816

Other nuclear 22,060 23,574 25,349

1 unchanged sentence

Total International Revenues 44,614 43,348 54,794

DEFINITY 213,316 217,508 183,073

TechneLite 86,241 86,592 98,858

Other nuclear 58,924 59,805 74,284

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(in thousands) 2020 2019 2018

Geographical revenues

International

Total revenues

Operating income

$ ( 10,363 ) $ 44,275 $ 56,327

International 6,165 7,386 8,161

Operating income

Total operating (loss) income ( 4,198 ) 51,661 64,488

Interest expense 9,479 13,617 17,405

Loss on extinguishment of debt — 3,196 —

Other expense (income)

Income before income taxes

Other (income) loss ( 2,198 ) 6,221 ( 2,465 )

(Loss) income before income taxes $ ( 11,479 ) $ 28,627 $ 49,548

Depreciation and amortization

$ 23,007 $ 11,673 $ 12,278

International 244 414 491

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Long-lived assets

$ 120,147 $ 115,560

International (1)

Total long-lived assets $ 120,171 $ 116,497

________________________________

(1) 2020 Amount excludes Puerto Rico as the Company has identified its Puerto Rico entity as held for sale.

Valuation and Qualifying Accounts

(in thousands)

Balance at Beginning of Year

Charged to Income

Deductions from Reserves (1)

Other Adjustments

Balance at End of Year

(in thousands) Balance at Beginning of Year Charged to Income Deductions from Reserves (1)

Other Adjustments Balance at End of Year

Allowance for doubtful accounts

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(1) Amounts charged to deductions from allowance for doubtful accounts represent the write-off of uncollectible balances and represent payments for rebates and allowances.

Quarterly Consolidated Financial Data (Unaudited)

Summarized quarterly consolidated financial data is presented below:

Quarterly Periods During the Year Ended

December 31, 2019

(in thousands, except per share data)

Basic income per weighted-average share (a)

Diluted income per weighted-average share (a)

Quarterly Periods During the Year Ended

December 31, 2018

(in thousands, except per share data)

Basic income per weighted-average share (a)

Diluted income per weighted-average share (a)

________________________________

Quarterly and annual computations are prepared independently.

Accordingly, the sum of each quarter may not necessarily total the fiscal year period amounts noted elsewhere within this Annual Report on Form 10-K.

Subsequent Events

On February 20, 2020, the Company entered into the Amended Merger Agreement with Progenics, which amends and restates the Initial Merger Agreement.

Under the terms of the Amended Merger Agreement, the Company will acquire all of the issued and outstanding shares of Progenics common stock at a fixed exchange ratio whereby Progenics stockholders will receive, for each share of Progenics stock held at the time of the closing of the merger, 0.31 of a share of the Company’s common stock, increased from 0.2502 under the Initial Merger Agreement, together with a non-tradeable contingent value right (a “CVR”) tied to the financial performance of PyL TM ( 18 F-DCFPyL), Progenics’ prostate-specific membrane antigen targeted imaging agent designed to visualize prostate cancer currently in late stage clinical development (“PyL”).

Each CVR will entitle its holder to receive a pro rata share of aggregate cash payments equal to 40% of U.S.

net sales generated by PyL in 2022 and 2023 in excess of $100 million and $150 million , respectively.

In no event will the Company’s aggregate payments under the CVRs exceed 19.9% of the total consideration the Company pays in the transaction.

As a result of the increase in the exchange ratio, following the completion of the merger, former Progenics stockholders’ aggregate ownership stake will increase to approximately 40% of the combined company from approximately 35% under the Initial Merger Agreement.

Progenics’ stockholders will also now be entitled to appraisal rights as provided under Delaware law.

The transaction contemplated by the Amended Merger Agreement was unanimously approved by the Boards of Directors of both companies and requires, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company.

In addition, pursuant to the Amended Merger Agreement, the holder of each in-the-money option to purchase shares of Progenics common stock under any equity based compensation plan of Progenics (“Progenics Stock Option”) will be entitled to receive in exchange for each such in-the-money option (i) an option to purchase Lantheus Common Stock (each, a “Lantheus Stock Option”) converted based on the 0.31 exchange ratio and (ii) a vested or unvested CVR depending on whether the underlying option is vested.

Holders of out-of-the-money Progenics Stock Options will receive Lantheus Stock Options converted on an exchange ratio adjusted based on actual trading prices of common stock of Progenics and Lantheus Holdings prior to the effective time of the merger.

The Amended Merger Agreement also provides that on closing the Company’s board of directors will appoint Dr.

Gerard Ber and Mr.

Heinz Mausli, who are currently members of the board of directors of Progenics, to serve on the Company’s board of directors.

In addition, the Company’s board of directors, subject to complying with applicable fiduciary duties, will use commercially reasonable efforts to cause Dr.

Mausli to be nominated for reelection following the closing through 2023.

The Company’s board of directors will be reduced in size from ten to nine members at the Company’s annual meeting of stockholders on April 23, 2020 (or sooner if the transaction closes before then) and will be further reduced in size from nine to eight members prior to the date of the Company’s 2021 annual meeting of stockholders.

Except as described above, the material terms of the Amended Merger Agreement are substantially the same as the terms of the Initial Merger Agreement.

The transaction is currently expected to close in the second quarter of 2020.

Upon completion of the acquisition, which the parties intend to report as tax-deferred to Progenics’ stockholders with respect to the stock component of the merger consideration for U.S.

federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH.

On January 29, 2021, the Company sold all of the stock of its Puerto Rican radiopharmacy servicing subsidiary to PharmaLogic Holdings Corp.

(“PharmaLogic”) pursuant to its previously announced Securities Purchase Agreement.

The Company and PharmaLogic also entered into a long-term supply agreement under which the Company will continue to supply the Puerto Rico operations with certain products to meet a percentage of PharmaLogics’ commercial requirements.

As previously disclosed, the purchase price paid for the transaction is $ 18.0 million in cash, subject to working capital and other customary adjustments.

The Company expects to record a gain on the sale.

Proceeds from this transaction will be used in the Company’s core businesses and product pipeline.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data