What changed in this filing

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Item 1. Financial Statements

2021-05-04 compared with 2020-11-05 · 242 added, 363 removed, 409 unchanged (60% of the section changed)

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(in thousands, except par value)

September 30,

2021 December 31,

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Other current assets 10,145 9,625

Assets held for sale — 5,242

Total current assets 168,354 184,225

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Accrued expenses and other liabilities 35,240 41,726

Liabilities held for sale — 1,793

Total current liabilities 64,590 80,504

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Revenues $ 92,509 $ 90,704

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Total operating expenses 40,671 30,877

Operating (loss) income ( 5,250 ) 8,517 ( 3,670 ) 39,223

Gain on sale of assets 15,263 —

Operating income 15,622 7,125

Interest expense 2,718 1,946

Loss on extinguishment of debt — — — 3,196

Other (income) loss ( 596 ) 804 ( 1,702 ) ( 1,695 )

(Loss) income before income taxes ( 7,462 ) 5,357 ( 8,636 ) 26,231

Income tax (benefit) expense ( 1,076 ) 501 1,425 5,014

Net (loss) income $ ( 6,386 ) $ 4,856 $ ( 10,061 ) $ 21,217

Net (loss) income per common share:

Gain on extinguishment of debt ( 889 ) —

Other income ( 549 ) ( 350 )

Income before income taxes 14,342 5,529

Income tax expense 5,334 2,192

Net income $ 9,008 $ 3,337

Net income per common share:

Basic $ 0.13 $ 0.08

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Lantheus Holdings, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net (loss) income $ ( 6,386 ) $ 4,856 $ ( 10,061 ) $ 21,217

Net income $ 9,008 $ 3,337

Other comprehensive income (loss):

Foreign currency translation 102 ( 446 )

Unrealized loss on cash flow hedges, net of tax ( 89 ) — ( 1,541 ) —

Unrealized gain (loss) on cash flow hedges, net of tax 706 ( 988 )

Total other comprehensive income (loss) 808 ( 1,434 )

Comprehensive (loss) income $ ( 6,290 ) $ 4,823 $ ( 11,611 ) $ 21,328

Comprehensive income $ 9,816 $ 1,903

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

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(in thousands)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Common Stock Additional

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Net income — — — 9,008 — 9,008

Other comprehensive loss — — — — ( 1,434 ) ( 1,434 )

Other comprehensive income — — — — 808 808

Stock option exercises and employee stock plan purchases 155 1 2,379 — — 2,380

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Balance, March 31, 2021 67,434 $ 674 $ 669,623 $ ( 140,938 ) $ ( 1,240 ) $ 528,119

Net loss — — — ( 7,012 ) — ( 7,012 )

Other comprehensive loss — — — — ( 212 ) ( 212 )

Stock option exercises and employee stock plan purchases 7 — 50 — — 50

Vesting of restricted stock awards and units 242 2 ( 2 ) — — —

Shares withheld to cover taxes ( 36 ) ( 1 ) ( 484 ) — — ( 485 )

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

26,845 269 394,065 — — 394,334

Fair value of replacement options related to pre-acquisition services — — 7,125 — — 7,125

Stock-based compensation — — 3,385 — — 3,385

Balance, June 30, 2020 66,808 $ 668 $ 657,669 $ ( 140,148 ) $ ( 2,606 ) $ 515,583

Net loss — — — ( 6,386 ) — ( 6,386 )

Other comprehensive loss — — — — 96 96

Stock option exercises and employee stock plan purchases 32 — 344 — — 344

Vesting of restricted stock awards and units 13 1 ( 1 ) — — —

Shares withheld to cover taxes ( 3 ) ( 1 ) ( 49 ) — — ( 50 )

Stock-based compensation — — 3,992 — — 3,992

Balance, September 30, 2020 $ 66,850 $ 668 $ 661,955 $ ( 146,534 ) $ ( 2,510 ) $ 513,579

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

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(in thousands)

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Common Stock Additional

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Net income — — — 3,337 — 3,337

Other comprehensive income — — — — 56 56

Stock option exercises and employee stock plan purchases 37 — 606 — — 606

Vesting of restricted stock awards and units 365 4 ( 4 ) — — —

Shares withheld to cover taxes ( 50 ) ( 1 ) ( 1,119 ) — — ( 1,120 )

Stock-based compensation — — 2,720 — — 2,720

Balance, March 31, 2019 38,818 $ 388 $ 242,068 $ ( 158,191 ) $ ( 1,052 ) $ 83,213

Net income — — — 6,412 — 6,412

Other comprehensive income — — — — 88 88

Stock option exercises and employee stock plan purchases 9 — 120 — — 120

Vesting of restricted stock awards and units 253 3 ( 3 ) — — —

Shares withheld to cover taxes ( 37 ) ( 1 ) ( 943 ) — — ( 944 )

Stock-based compensation — — 3,358 — — 3,358

Balance, June 30, 2019 39,043 $ 390 $ 244,600 $ ( 151,779 ) $ ( 964 ) $ 92,247

Net income — — — 4,856 — 4,856

Other comprehensive loss — — — — ( 1,434 ) ( 1,434 )

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Stock-based compensation — — 3,075 — — 3,075

Balance, September 30, 2019 39,229 $ 392 $ 248,694 $ ( 146,923 ) $ ( 997 ) $ 101,166

Balance, March 31, 2020 39,750 $ 398 $ 253,530 $ ( 133,136 ) $ ( 2,394 ) $ 118,398

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

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(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

Net (loss) income $ ( 10,061 ) $ 21,217

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

Net income $ 9,008 $ 3,337

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

Depreciation, amortization and accretion 8,123 3,732

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Changes in fair value of contingent assets and liabilities 300 —

Loss on extinguishment of debt — 3,196

Provision for bad debt 215 107

Gain on extinguishment of debt ( 889 ) —

Provision for excess and obsolete inventory 1,395 449

Stock-based compensation 3,317 3,075

Gain on sale of assets ( 15,263 ) —

Deferred taxes 4,581 1,467

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Capital expenditures ( 2,520 ) ( 2,698 )

Lending on bridge loan ( 10,000 ) —

Cash acquired in acquisition of business 17,562 —

Net cash used in investing activities ( 1,127 ) ( 17,320 )

Proceeds from sale of assets, net 15,823 —

Net cash provided by provided by (used in) investing activities 13,303 ( 2,698 )

Financing activities

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

Payments on long-term debt and other borrowings ( 35,572 ) ( 2,551 )

Equity issuance costs ( 3,777 ) —

Deferred financing costs ( 1,223 ) ( 2,034 )

Proceeds from stock option exercises 2,043 —

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Effect of foreign exchange rates on cash, cash equivalents and restricted cash ( 21 ) ( 184 )

Net decrease in cash, cash equivalents and restricted cash ( 2,784 ) ( 35,339 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 11,691 ) 2,794

Cash, cash equivalents and restricted cash, beginning of period 82,694 92,919

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(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Reconciliation to amounts within the condensed consolidated balance sheets

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and its direct and indirect wholly-owned subsidiaries, references to “Holdings” refer to Lantheus Holdings, Inc.

and not to any of its subsidiaries, and references to “LMI” refer to Lantheus Medical Imaging, Inc., the direct subsidiary of Holdings.

and not to any of its subsidiaries, references to “LMI” refer to Lantheus Medical Imaging, Inc., the direct subsidiary of Holdings and references to “Progenics” refer to Progenics Pharmaceuticals, Inc., a wholly-owned subsidiary of LMI.

Solely for convenience, the Company refers to trademarks, service marks and trade names without the TM, SM and ® symbols.

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Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics Pharmaceuticals, Inc., a Delaware corporation (“Progenics”) for the period from June 19 through September 30, 2020 (see “Acquisition of Progenics” below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics (as of the closing date, June 19, 2020), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S.

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In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement have been included.

The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020 or any future period.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or any future period.

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, which resulted in a change in operating segments.

Please refer to Note 19, “Segment Information”, for further details.

The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S.

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These condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities Exchange Commission (“SEC”) on February 25, 2021.

Acquisition of Progenics

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 “Merger”).

In accordance with the Merger Agreement, at the effective time of the Merger (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”).

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 Transaction, exceed 19.9 % (which we estimate could be approximately $ 100 million) of the total consideration the Company pays in the Progenics Transaction.

No fractional shares of Holdings common stock were issued in the Merger, 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 Lantheus 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.

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.

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 Lantheus 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.

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 certain 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.

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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 2020 operations and financial results or cash flows for the foreseeable future and whether the impact of COVID-19 could lead to potential future impairments.

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 remain 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 remains unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows and whether the on-going impact of COVID-19 could lead to potential future impairments.

Summary of Significant Accounting Policies

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.

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 in-process research and development (“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 condensed consolidated statements of operations as operating expenses or income.

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

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 condensed 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.

Intangible and Long-Lived Assets

The Company’s 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 or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in the Company’s condensed consolidated statements of operations.

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 $ 0.2 million from provision for bad debt to other at March 31, 2020.

The Company had a reclassification in presentation related to rebates and allowances within product revenue.

Please refer to Note 3, “Revenue from Contracts with Customers” for further details.

Recent Accounting Pronouncements

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Effect on the Condensed Consolidated Financial Statements

Recently Issued Accounting Standards Not Yet Adopted

Accounting Standards Adopted During the Nine Months Ended September 30, 2020

ASU 2020-04, “Reference Rate Reform (Topic 848)” This ASU 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.

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

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.

Accounting Standards Adopted During the Three Months Ended March 31, 2021

ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)” This ASU provides guidance to simplify the complexity associated with accounting for convertible instruments and derivatives.

For convertible instruments, the number of major separation models required were reduced.

Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features.

This ASU further amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

The ASU simplifies the diluted net income per share calculation in certain areas as well.

January 1, 2021 The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

The following table summarizes revenue by revenue source and reportable segment as follows:

The following table summarizes revenue by revenue source as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

Major Products/Service Lines by Segment (in thousands) 2020 2019 2020 2019

Product revenue, net (1)

$ 73,080 $ 74,650 $ 208,482 $ 225,274

License and royalty revenues

4,395 — 5,137 —

revenues 77,475 74,650 213,619 225,274

International

Major Products/Service Lines (in thousands) 2021 2020

Product revenue, net (1)

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License and royalty revenues 5,190 491

Total International revenues

11,069 11,126 31,639 32,717

Total revenues $ 92,509 $ 90,704

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same revenue recognition policies and judgments for all of its principal products.

The Company classifies its revenues into three product categories:

precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other.

Precision diagnostics includes DEFINITY, TechneLite and other imaging diagnostic products.

Radiopharmaceutical oncology consists of AZEDRA and other oncologic therapeutics.

Strategic partnerships and other includes partnerships related to other products, such as RELISTOR, that improve patient outcomes and care.

Revenue by product category on a net basis is as follows:

Three Months Ended

(in thousands) 2021 2020 (1)

DEFINITY $ 55,971 $ 52,505

TechneLite 22,800 22,779

Other precision diagnostics 6,984 13,057

Total precision diagnostics 85,755 88,341

Radiopharmaceutical oncology 1,500 1,968

Strategic partnerships and other 5,254 395

Total revenues $ 92,509 $ 90,704

________________________________

(1) The Company reclassified rebates and allowances of $ 4.7 million for the three months ended March 31, 2020 within each product category, which included $ 4.3 million for DEFINITY, $ 0.3 million for TechneLite and $ 0.1 million for other precision diagnostics.

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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Please refer to Note 13, “Derivative Instruments”, for further details on the interest rate swaps.

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

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:

September 30, 2020

March 31, 2021

(in thousands) Total Fair

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

Contingent receivable 11,300 — — 11,300

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

During the three and nine months ended September 30, 2020, there were no transfers into or out of Level 3.

As part of the acquisition of Progenics, 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.

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

Contingent consideration liabilities 15,800 — — 15,800

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

During the three months ended March 31, 2021, 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.

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

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

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

Refer to Note 1, “Basis of Presentation” for further details on the CVRs.

Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013.

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

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.

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The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the condensed 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 September 30, 2020.

(in thousands) Fair Value at September 30, 2020 Valuation Technique Unobservable Input Assumption

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at March 31, 2021.

Fair Value at Assumptions

(in thousands) March 31, 2021 December 31, 2020 Valuation Technique Unobservable Input March 31, 2021 December 31, 2020

Contingent receivable:

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Total $ 12,200 $ 11,300

(in thousands) Fair Value at September 30, 2020 Valuation Technique Unobservable Input Assumption

Fair Value at Assumptions

(in thousands) March 31, 2021 December 31, 2020 Valuation Technique Unobservable Input March 31, 2021 December 31, 2020

Contingent consideration liability:

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Discount rate 23 % 24 %

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

1095 commercialization milestone 2,100 2,200 Probability adjusted discounted cash flow model

Period of expected milestone achievement 2026 2026

Probability of success 45 % 45 %

Discount rate 1.0 % 0.5 %

Net sales targets - AZEDRA and 1095 11,100 Monte-Carlo simulation Probability of success 40 % - 100 %

Net sales targets - AZEDRA and 1095 10,300 9,400 Monte-Carlo simulation

Probability of success 40 % - 100 %

Discount rate 22 % - 23 %

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Financial Assets Financial Liabilities

(in thousands) Nine Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

(in thousands) Three Months Ended

March 31, 2021 Three Months Ended

March 31, 2021

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

Progenics acquisition 10,100 16,300

Changes in fair value included in net loss 100 900

Changes in fair value included in net income 900 1,200

Fair value, end of period $ 12,200 $ 17,000

The change in fair value of the contingent financial asset and contingent financial liabilities of $ 0.8 million for the three and nine months ended September 30, 2020 were primarily due to the passage of time.

The change in fair value of the contingent financial asset and contingent financial liabilities resulted in a loss of $ 0.3 million for the three months ended March 31, 2021 and was primarily due to changes in market conditions and the passage of time.

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full year, adjusted for any discrete events which are recorded in the period they occur.

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

Income tax (benefit) expense $ ( 1,076 ) $ 501 $ 1,425 $ 5,014

Income tax expense $ 5,334 $ 2,192

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

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In determining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluated all available positive and negative evidence, and weighed the objective evidence and expected impact.

The Company has recorded valuation allowances of $ 3.2 million against the net deferred tax assets of certain foreign subsidiaries, as well as a valuation allowance of $ 0.7 million against net U.S.

deferred tax assets due to the potential expiration of certain tax losses and state tax credits prior to utilization.

The Company assessed the need for a valuation allowance against certain deferred state tax credits added through the Progenics Acquisition.

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

subsidiary, and $ 2.3 million against the net deferred tax assets of its Sweden subsidiary.

In connection with the Company’s acquisition of the medical imaging business from Bristol-Myers Squibb (“BMS”) in 2008, the Company recorded a liability for uncertain tax positions related to the acquired business and simultaneously entered into a tax indemnification agreement with BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the taxing authorities.

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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.

On June 19, 2020, the Company acquired the stock of Progenics Pharmaceuticals, Inc.

in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code of 1986, as amended.

The transaction resulted in an ownership change of Progenics under Section 382 and a limitation on the utilization of Progenics’ pre-transaction tax attributes.

All of Progenics’ pre-transaction 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 arising from the purchase accounting basis step-up in identified intangibles were also recorded as part of the purchase accounting, resulting in a small net overall deferred tax liability for Progenics after the application of purchase accounting.

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 arising from the purchase accounting basis step-up in identified intangibles were recorded at acquisition, resulting in a net overall deferred tax liability for Progenics after the application of acquisition accounting.

During the current period, the Company finalized the acquisition accounting for income taxes resulting in a reduction of deferred tax assets, primarily related to state research credits and an increase to goodwill of $ 2.6 million.

Inventory consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

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Property, plant and equipment, net, consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

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Total property, plant and equipment, net $ 118,381 $ 120,171

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.4 million and $ 2.5 million for the three months ended September 30, 2020 and 2019, respectively, and $ 9.1 million and $ 7.5 million for the nine months ended September 30, 2020 and 2019, respectively.

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.0 million for the three months ended March 31, 2021 and 2020.

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.

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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 nine months ended September 30, 2020 in cost of goods sold in the condensed consolidated statement of operations.

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

Business Combinations

On June 19, 2020, the Company completed the acquisition of Progenics, 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.

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 combined the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and research and development (“R&D”) pipeline of Progenics.

Progenics brings to the Company 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 options to purchase Holdings common stock (“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 options related to pre-acquisition services was recorded as a component of consideration transferred.

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.

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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.

The purchase price allocation is preliminary and is subject to change, including for the valuation and amortization of intangible assets, income taxes and related valuation allowances and certain assets and liabilities among other items.

The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

Any potential adjustments made could be material in relation to the preliminary values presented below.

The preliminary fair value of the assets acquired and liabilities assumed were as follows:

(in thousands) Amount

The Company recorded a measurement period adjustment of $ 2.6 million related to deferred taxes for the three months ended March 31, 2021, which finalized all measurement period adjustments related to the Progenics Acquisition.

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, deferred taxes and other changes to certain tangible assets and liability accounts.

Measurement period adjustments were recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date.

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

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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

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

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

Intangible assets acquired consist of currently marketed products, licenses, developed technology and in-process research and development (“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.

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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.

As part of the Progenics 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.

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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 $ 42.1 million recognized in connection with the acquisition is not deductible for tax purposes and has been assigned to the U.S.

operating segment.

The Company recognized $ 1.6 million and $ 10.5 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the three and nine months ended September 30, 2020, respectively.

These costs are recorded in general and administrative expenses in the condensed 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 $ 5.9 million and $ 6.9 million, as well as a net loss of $ 12.6 million and $ 15.8 million to the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2020, respectively.

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

Nine Months Ended

September 30, 2020 Nine Months Ended

September 30, 2019

(in thousands) Amount Amount

Pro forma revenue $ 256,163 $ 277,851

Pro forma net loss 27,143 47,032

The 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.

Goodwill of $ 45.5 million recognized in connection with the acquisition is not deductible for tax purposes .

Sale of Puerto Rico Subsidiary

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

The assets were classified as held for sale 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 consummated on January 29, 2021.

The purchase price for the stock sale was $ 18.0 million in cash, which includes a holdback amount of $ 1.8 million to be due to the Company in January 2022, 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, reported as held for sale in the international segment prior to the change in segments in Q1 2021, 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 sold as of January 29, 2021 (date of sale) and held for sale as of December 31, 2020:

(in thousands)

January 29, 2021 December 31, 2020

Current Assets:

Cash and cash equivalents

Accounts receivable, net

Other current assets

Total current assets

Non-Current Assets:

Property, plant & equipment, net

Intangibles, net

Other long-term assets

Total assets held for sale

$ 4,744 $ 5,242

Current Liabilities:

Accounts payable

Accrued expense and other liabilities

Total current liabilities

Non-Current Liabilities:

Asset retirement obligations

Other long-term liabilities

Total liabilities held for sale

$ 1,448 $ 1,793

The sale resulted in a pre-tax book gain of $ 15.3 million, which was recorded within operating income in the condensed consolidated statement of operations for the three months ended March 31, 2021.

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.

As of September 30, 2020, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.9 million.

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

As of March 31, 2021, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

The Company previously operated a production facility which manufactured and processed radioactive materials at its San Juan, Puerto Rico site.

As of December 31, 2020, the liability for the San Juan, Puerto Rico site was recorded in liabilities held for sale and the sale was consummated on January 29, 2021.

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

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Accretion expense 388

Balance at September 30, 2020 $ 13,962

Balance at March 31, 2021 $ 14,408

The Company is required to provide the U.S.

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Intangibles, net, consisted of the following:

September 30, 2020

March 31, 2021

(in thousands) Amortization Method Cost Accumulated Amortization Net

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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

The Company recorded amortization expense for its intangible assets of $ 4.8 million and $ 0.5 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6.1 million and $ 1.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company recorded amortization expense for its intangible assets of $ 4.7 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively.

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

(in thousands) Amount

Remainder of 2021 $ 14,051

2026 and thereafter 136,924

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Long-Term Debt, Net, and Other Borrowings

As of September 30, 2020, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

As of March 31, 2021, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

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Total principal outstanding 182,500

Unamortized debt premium 1,230

Unamortized debt discount ( 647 )

Unamortized debt issuance costs ( 559 )

3 unchanged sentences

Total long-term debt, net and other borrowings $ 171,474

At September 30, 2020, the Company’s interest rate under the 2019 Term Facility was 3.4 %.

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 Company’s acquisition of Progenics.

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

Q3 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.

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 Transaction 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.

At March 31, 2021, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility”) was 3.4 %.

On March 31, 2021, the Company voluntarily repaid in full the entire outstanding principal on the original $ 50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P.

in the amount of $ 30.9 million, which included a prepayment amount of $ 0.5 million, and terminated the agreement governing the Royalty-Backed Loan.

The Company recorded a gain on extinguishment of debt of $ 0.9 million related to the write-off of an unamortized debt premium offset by the prepayment amount.

Derivative Instruments

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In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s condensed 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 September 30, 2020, accumulated other comprehensive loss included $ 0.6 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.

At March 31, 2021, accumulated other comprehensive loss included $ 0.6 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 condensed consolidated balance sheet:

(in thousands) September 30, 2020 December 31, 2019

(in thousands) March 31, 2021 December 31, 2020

Derivatives type Classification

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Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss, net of tax of $ 0.5 million and $ 0.0 million for the nine months ended September 30, 2020 and 2019, respectively, consisted of the following:

The components of accumulated other comprehensive loss, net of tax of $ 0.2 million and $ 0.3 million for the three months ended March 31, 2021 and 2020, respectively, consisted of the following:

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

Balance at January 1, 2021 $ ( 630 ) $ ( 1,418 ) $ ( 2,048 )

Other comprehensive loss before reclassifications ( 9 ) ( 1,784 ) ( 1,793 )

Other comprehensive income before reclassifications 102 533 635

Amounts reclassified to earnings — 173 173

Balance at September 30, 2020 $ ( 969 ) $ ( 1,541 ) $ ( 2,510 )

Balance at March 31, 2021 $ ( 528 ) $ ( 712 ) $ ( 1,240 )

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

Other comprehensive income before reclassifications 111 — 111

Other comprehensive loss before reclassifications ( 446 ) ( 988 ) ( 1,434 )

Amounts reclassified to earnings — — —

Balance at September 30, 2019 $ ( 997 ) $ — $ ( 997 )

Balance at March 31, 2020 $ ( 1,406 ) $ ( 988 ) $ ( 2,394 )

Stock-Based Compensation

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

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Total stock-based compensation expense $ 3,317 $ 3,075

Net (Loss) Income Per Common Share

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

Net Income Per Common Share

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2021 2020

Net (loss) income $ ( 6,386 ) $ 4,856 $ ( 10,061 ) $ 21,217

Net income $ 9,008 $ 3,337

Basic weighted-average common shares outstanding 67,094 39,433

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Diluted weighted-average common shares outstanding 67,714 40,102

Basic (loss) income per common share $ ( 0.10 ) $ 0.12 $ ( 0.20 ) $ 0.55

Diluted (loss) income per common share $ ( 0.10 ) $ 0.12 $ ( 0.20 ) $ 0.53

Antidilutive securities excluded from diluted net (loss) income per common share 2,588 48 1,657 44

Other (Income) Loss

Other (income) loss consisted of the following:

Basic income per common share $ 0.13 $ 0.08

Diluted income per common share $ 0.13 $ 0.08

Antidilutive securities excluded from diluted net income per common share 1,349 604

Other income consisted of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2021 2020

Foreign currency (gains) losses $ ( 33 ) $ 96 $ 187 $ 7

Tax indemnification (income) expense, net ( 555 ) 762 ( 1,664 ) ( 842 )

Foreign currency losses $ 42 $ 314

Tax indemnification income, net ( 573 ) ( 555 )

Interest income ( 17 ) ( 109 )

Other ( 1 ) —

Total other (income) loss $ ( 596 ) $ 804 $ ( 1,702 ) $ ( 1,695 )

Total other income $ ( 549 ) $ ( 350 )

Commitments and Contingencies

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

As of September 30, 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 “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 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 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.

A date for trial has not yet been set.

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 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.

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 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 Court.

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

patent valid and infringed.

The 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 Court’s decision with the CAFC on August 13, 2019.

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

Actavis’s opening brief was filed

February 6, 2020.

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

Actavis’s reply brief is currently due on November 5, 2020.

On June 13, 2019, Progenics, Salix, Bausch, and Wyeth filed another suit against Actavis in the 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.

Litigation in this action is underway, and fact discovery has begun.

As of March 31, 2021, the Company had the following material ongoing litigation in which the Company was a party:

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.

In October 2015, Progenics received notices of opposition to three European patents relating to methylnaltrexone:

EP1615646, EP2368553 and EP2368554.

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 are on appeal with the European Patent Office.

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

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

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

Notices of termination of the proceedings with revocation of the patent were issued on November 23, 2020 for both patents.

Oral proceedings for the third patent, 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.

Oral proceedings are set to occur on November 17, 2020 and November 18, 2020 for EP2368553 and EP2368554, respectively.

For each of the above-described RELISTOR proceedings, Progenics and Bausch continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights.

Pursuant to the RELISTOR license agreement between Progenics and Bausch, Bausch has the first right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement.

Because the outcome of litigation is uncertain and in these RELISTOR proceedings the Company does not control the enforcement of the intellectual property rights at issue, no assurance can be given as to how or when any of these RELISTOR proceedings will ultimately be resolved.

The deadline for

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

The oral hearing is set for September 27, 2021.

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 of Mannheim in Germany (the “German District Court”).

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.

4 unchanged sentences

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 the corresponding US patent applications.

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, and 17/110,558).

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.

On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending US patent applications was signed by less than all applicants or owners of the applications.

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.

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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.

On September 24, 2020, MIP filed a Notice of Appeal of the German District Court’s decision.

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.

The University and Endocyte each filed oppositions to MIP’s Notice of Appeal 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 District Court fees and fees and disbursements of defendant’s and intervenor’s counsel, both at first instance and on appeal.

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, we 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 asserts claims of violation of Section 806 of SOX.

The DOL action has been dismissed and the matter will proceed in federal district court.

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 Company believes the claims in this matter are without merit, and the Company has meritorious defenses to the claims.

The Company intends to vigorously defend against the claims.

The Company is unable to estimate the potential liability with respect to the legal matters noted above.

There are numerous factors that make it difficult to estimate reasonably possible loss or range of loss at the various stages of the legal proceedings noted above, including the significant number of legal and factual issues still to be resolved in those various legal proceedings.

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

Petition for Post-Grant Review

On February 4, 2021, Advanced Accelerator Applications USA, Inc.

(“AAA”) filed a petition for post-grant review of U.S.

10,640,461 (the “’461 patent”) with the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office.

The ’461 patent is owned by MIP.

In the petition, AAA challenges the patentability of claims 1, 45, and 47 of the ’461 patent under 35 U.S.C.

§§ 112 and 102(a)(1).

On February 9, 2021, the PTAB mailed a Notice of Filing Date Accorded to Petition and Time for Filing Patent Owner Preliminary Response.

The PTAB set a three (3) month deadline for MIP to file a preliminary response.

The filing of a preliminary response to the petition is optional for the patent owner (MIP).

Should the PTAB decide to institute post-grant review, a schedule will be set and MIP will be afforded three months from the date of institution to formally respond to the petition.

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

Segment Information

The Company reports two operating segments, U.S.

and International, based on geographic customer base.

The results of these operating segments are regularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer.

The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of innovative diagnostic and therapeutic agents and products.

All goodwill has been allocated to the U.S.

operating segment.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 2020 2019

Revenue by product from external customers

DEFINITY $ 53,792 $ 50,917 $ 148,346 $ 154,099

TechneLite 17,652 18,281 52,599 55,204

Other nuclear 11,571 9,355 26,437 28,006

Rebates and allowances ( 5,540 ) ( 3,903 ) ( 13,763 ) ( 12,035 )

Revenues 77,475 74,650 213,619 225,274

International

DEFINITY 1,637 1,478 4,239 4,036

TechneLite 3,837 3,466 10,897 10,794

Other nuclear 5,596 6,186 16,507 17,901

Rebates and allowances ( 1 ) ( 4 ) ( 4 ) ( 14 )

Total International Revenues 11,069 11,126 31,639 32,717

DEFINITY 55,429 52,395 152,585 158,135

TechneLite 21,489 21,747 63,496 65,998

Other nuclear 17,167 15,541 42,944 45,907

Rebates and allowances ( 5,541 ) ( 3,907 ) ( 13,767 ) ( 12,049 )

Total Revenues $ 88,544 $ 85,776 $ 245,258 $ 257,991

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2020 2019 2020 2019

Operating (loss) income

$ ( 6,621 ) $ 6,389 $ ( 7,634 ) $ 33,662

International 1,371 2,128 3,964 5,561

Total operating (loss) income ( 5,250 ) 8,517 ( 3,670 ) 39,223

Interest expense 2,808 2,356 6,668 11,491

Loss on extinguishment of debt — — — 3,196

Other (income) loss ( 596 ) 804 ( 1,702 ) ( 1,695 )

(Loss) income before income taxes $ ( 7,462 ) $ 5,357 $ ( 8,636 ) $ 26,231

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, including the impact on the Company’s business of the acquisition of Progenics described in Note 8, and the sale of the Puerto Rico subsidiary in the current quarter, which resulted in a change in operating and reportable segments.

As of the first quarter of fiscal year 2021, the Company operates as one business segment:

the development, manufacture and sale of innovative diagnostic and therapeutic agents and products that assist clinicians in the diagnosis and treatment of heart disease, cancer and other diseases.

This conclusion reflects the Company’s focus on the performance of the business on a consolidated worldwide basis.

The results of this operating segment are regularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer.

The Company’s chief operating decision maker does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based on the Company’s consolidated operating results.

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-Q

Item 1. Financial Statements