What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-02-25 · 360 added, 414 removed, 1039 unchanged (43% of the section changed)

2 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets

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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.

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

Acquisition — Refer to Note 8 to the financial statements.

Valuation of Contingent Value Rights— Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

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.

As part of the acquisition of Progenics Pharmaceuticals, Inc.

(“Progenics”) on June 19, 2020, the Company issued contingent value rights (“CVRs”) to certain stockholders of Progenics entitling them to future cash payments of 40% of U.S.

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

The estimated fair value of the CVRs was determined using a Monte-Carlo simulation model that included estimates and assumptions pertaining to (1) the period of expected milestone achievement and net sales targets and (2) discount rates.

The fair value determination of these CVRs therefore required management to make estimates and assumptions related the periods in which net sales targets will be achieved and the selection of the discount rates.

We identified the valuation of the contingent consideration liabilities related to the CVRs as a critical audit matter because of the estimates and assumptions used by management to determine the fair value of these CVRs.

Auditing the estimates and assumptions related to the valuation of the CVRs 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 estimates as to the period of expected milestone achievement and net sales targets and the selection of the discount rates.

How the Critical Audit Matter Was Addressed in the Audit

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.

Our audit procedures related to the valuation of the CVRs, including assessing the periods in which net sales targets will be achieved and the selection of discount rates included the following, among others:

• We agreed the calculation to determine the CVR amounts payable to the terms of the merger agreement.

• We tested the effectiveness of controls over the valuation of the CVRs, including management’s controls over the determination of amounts and timing of net sales targets, and the selection of discount rates.

• We evaluated the reasonableness of the periods of expected milestone achievement and net sales targets by comparing these assumptions to (1) internal communications to management and the Board of Directors, (2) information obtained from individuals outside of the finance department and (3) information included in the Company’s external communications.

• We evaluated management’s ability to accurately estimate the periods in which net sales targets will be achieved and the reasonableness of such estimates by comparing management’s historical net sales estimates to subsequent results of operations, and comparing the forecasts to internal and external data, while also taking into account any changes in market conditions.

• We evaluated whether the period of expected milestone achievement and net sales targets were consistent with evidence obtained in other areas of the audit.

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

◦ Evaluating the appropriateness of the valuation methodology and the calculation of the Monte-Carlo simulation model used by the Company.

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

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

/s/ Deloitte & Touche LLP

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Total operating expenses 263,783 142,959 123,150

Gain on sales of assets 15,263 — —

Operating (loss) income ( 60,825 ) ( 4,198 ) 51,661

Interest expense 7,752 9,479 13,617

Loss on extinguishment of debt — 3,196 —

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

(Gain) loss on extinguishment of debt ( 889 ) — 3,196

Other loss (income) 7,350 ( 2,198 ) 6,221

(Loss) income before income taxes ( 75,038 ) ( 11,479 ) 28,627

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

Income tax (benefit) expense ( 3,759 ) 1,994 ( 3,040 )

Net (loss) income $ ( 71,279 ) $ ( 13,473 ) $ 31,667

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Net (loss) income $ ( 71,279 ) $ ( 13,473 ) $ 31,667

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation ( 124 ) 330 148

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

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

Unrealized gain (loss) on cash flow hedges, net of tax 1,687 ( 1,418 ) —

Total other comprehensive income (loss) 1,563 ( 1,088 ) 148

Comprehensive (loss) income $ ( 69,716 ) $ ( 14,561 ) $ 31,815

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Net income — — — 31,667 — 31,667

Forfeiture of dividend equivalent right — — — 355 — 355

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

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

Net income — — — 31,667 — 31,667

Other comprehensive income — — — — 148 148

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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Net loss — — — ( 71,279 ) — ( 71,279 )

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

Other comprehensive income — — — — 1,563 1,563

Stock option exercises and employee stock plan purchases 360 3 6,059 — — 6,062

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Shares withheld to cover taxes ( 107 ) ( 1 ) ( 2,045 ) — — ( 2,046 )

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 — — 15,934 — — 15,934

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Impairment of long-lived assets 9,729 9,935 —

ARO acceleration 5,259 — —

Amortization of debt related costs 676 119 978

Changes in fair value of contingent assets and liabilities 72,400 ( 2,000 ) —

Loss on extinguishment of debt — 3,196 —

(Gain) loss on extinguishment of debt ( 889 ) — 3,196

Provision for excess and obsolete inventory 4,057 2,365 1,851

Stock-based compensation 15,934 14,075 12,492

Loss on disposal of assets 2,250 286 842

(Gain) loss on disposal of assets ( 15,263 ) 2,250 286

Deferred taxes 4,437 ( 1,334 ) 9,725

Long-term income tax receivable ( 2,218 ) 10,635 ( 2,855 )

Long-term indemnification receivable 7,121 ( 2,218 ) 10,635

Long-term income tax payable and other long-term liabilities ( 7,912 ) 2,828 ( 13,156 )

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Capital expenditures ( 12,140 ) ( 12,474 ) ( 22,061 )

Proceeds from sale of assets — — 1,000

Proceeds from sale of assets, net 15,823 — —

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 )

Net cash provided by (used in) investing activities 3,683 ( 4,912 ) ( 22,061 )

Financing activities

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Effect of foreign exchange rates on cash and cash equivalents ( 310 ) 152 76

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

Net increase (decrease) in cash and cash equivalents and restricted cash 17,957 ( 10,225 ) ( 20,482 )

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

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

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

(“LMI”) and 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, 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.

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

The Company believes its diagnostic products result in improved diagnostic information that 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 payors and throughout the healthcare system.

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

The Company produces and markets its products throughout the U.S., selling primarily to clinics, group practices, hospitals, integrated delivery networks and radiopharmacies.

The Company sells its products outside the U.S.

through a combination of direct distribution in Canada and third party distribution relationships in Europe, Canada, Australia, Asia-Pacific, Central America and South America.

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

and Canada through a DEFINITY direct sales team.

In the U.S., the Company’s nuclear imaging products, including TechneLite, Xenon, NEUROLITE and Cardiolite, are primarily distributed through commercial radiopharmacies, the majority of which are controlled by or associated with GE Healthcare, Cardinal, UPPI, Jubilant Radiopharma and PharmaLogic.

Sales of the Company’s prostate cancer diagnostic imaging agent, PYLARIFY (as defined below), are generated in the U.S.

through a PYLARIFY direct sales team and a sales team at some of our positron emission tomography (“PET”) manufacturing facilities (“PMF”) partners.

In the U.S., the Company’s other nuclear imaging products, including TechneLite, Xenon, NEUROLITE and Cardiolite, are primarily sold to commercial radiopharmacies, the majority of which are controlled by or associated with GE Healthcare, Cardinal, UPPI, Jubilant Radiopharma and PharmaLogic.

A small portion of the Company’s nuclear imaging product sales in the U.S.

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

AZEDRA is also sold in the U.S.

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

AZEDRA sales are generated 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.

We have licensed RELISTOR 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 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.

In Europe, Australia, Asia-Pacific, Central America and South 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 additional offices in 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”).

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 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”).

This agent was approved by the U.S.

Food and Drug Administration (“FDA”) on May 26, 2021 under the name PYLARIFY (piflufolastat F 18), and the commercial launch of this agent has begun.

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.

net sales generated by PYLARIFY 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 % of the total consideration the Company pays in the Progenics Acquisition (which the Company currently estimates could be approximately $ 100.0 million).

The Company will issue the aforementioned cash payments related to the CVRs during the first quarter of 2023 and the first quarter of 2024 respectively.

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.

(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.

PYLARIFY Approval and Commercial Launch

On May 27, 2021, the Company announced that the FDA had approved PYLARIFY, a fluorine-18- (“F 18”) labeled PET imaging agent targeting prostate-specific membrane antigen (“PSMA”).

PYLARIFY is a radioactive diagnostic agent indicated for PET imaging of PSMA-positive lesions in men with prostate cancer with suspected metastasis who are candidates for initial definitive therapy and with suspected recurrence based on elevated serum prostate-specific antigen (“PSA”) levels.

PYLARIFY is a product in the Company’s radiopharmaceutical oncology product category.

The Company commenced its commercial launch of PYLARIFY in the U.S.

in June 2021.

Upon commercial launch in June 2021, PYLARIFY was immediately available in select parts of the U.S.

Over the course of the remainder of 2021, PYLARIFY availability expanded into additional regions and is now broadly available nationwide.

The Company continues to expand its geographic coverage, customer contracting and market access coverage to serve its customers and the U.S.

prostate cancer community.

The commercial launch of PYLARIFY is complex and expensive.

During 2021, the Company hired additional employees to assist it with the commercialization of PYLARIFY, including in sales, marketing, reimbursement, quality and medical affairs.

To manufacture PYLARIFY, the Company assembled and qualified a nationwide network of PMFs with radioisotope-producing cyclotrons that make F 18, which has a 110-minute half-life, so PYLARIFY is manufactured and distributed rapidly to end-users.

After being made on a cyclotron at a PMF, the F 18 is then combined with certain chemical ingredients in specially designed chemistry synthesis boxes to manufacture PYLARIFY.

The finished PYLARIFY is then quality control tested and transferred to a radiopharmacist who prepares and dispenses patient-specific doses of the final product.

Because each of the PMFs manufacturing these products is deemed by the FDA to be a separate manufacturing site, each has to be approved by the FDA.

Although PYLARIFY is now broadly available nationwide, the Company can give no assurance that the FDA will continue to approve PMFs in accordance with the Company’s planned roll-out schedule.

If FDA approval of manufacturing sites is delayed or withdrawn, the Company’s future business, results of operations, financial condition and cash flows could be adversely affected.

The Company’s commercial launch also required the Company to obtain adequate coding and coverage for PYLARIFY, including not only coverage from Medicare, Medicaid and other government payors, as well as private payors, but also appropriate payment levels, which adequately cover our customers’ costs of using PYLARIFY in PET/CT imaging procedures.

We received notification that our HCPCS code, which enables streamlined billing, went into effect as of January 1, 2022.

In addition, effective January 1, 2022, CMS granted Transitional Pass-Through Payment Status in the hospital outpatient setting (“TPT Status”) for PYLARIFY, enabling traditional Medicare to provide an incremental payment for PET/CT scans performed with PYLARIFY in this setting.

TPT Status for PYLARIFY is expected to expire December 31, 2024.

After TPT Status expires, under current Medicare rules, PYLARIFY, similar to other diagnostic radiopharmaceuticals, would not be separately reimbursed in the hospital outpatient setting but rather would be included as part of the facility fee a hospital otherwise receives for a PET/CT imaging procedure, and the facility fee does not always cover the cost of a drug used in the procedure.

The Company can give no assurance that any CMS reimbursement in the hospital outpatient setting that follows the expiration of TPT Status will be adequate to cover the cost of PYLARIFY used in a PET/CT imaging procedure.

COVID-19 Pandemic

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 hospital staffing challenges, vaccination mandates, employee absences due to illness, and a decline in the volume of certain procedures and treatments using the Company’s products.

For example, we believe that during the fourth quarter of 2021 sales of DEFINITY were impacted by hospital nursing and sonographer shortages, and sales of AZEDRA were impacted by treatment capacity constraints in hospitals, treatment deferrals and cancellations by patients, and access restrictions by hospitals.

There has also been a substantial reduction in pulmonary ventilation studies in which the Company’s product, Xenon, is used.

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

For most of the second quarter of 2020, 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 ARROW Phase 2 study of 1095, a PSMA-targeted therapeutic, 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.

GE Healthcare Limited (“GE Healthcare”), the Company’s development and commercialization partner for flurpiridaz fluorine-18 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.

Although some of the restrictions, including stay-at-home mandates, imposed in response to the COVID-19 pandemic have been lifted in much of the United States (the “U.S.”), and there has been a rapid rollout and development of multiple vaccines and boosters, the resurgence of COVID-19 infections continued to impact certain aspects of the Company’s business during 2021 and the pandemic could still have a future negative impact on the Company's business, particularly if there are additional resurgences as a result of mutations or other variations to the virus that increase its communicability or its impact on certain populations, geographic regions and the healthcare system, including elective procedures and hospital access.

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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Certain accounts receivable may be fully reserved when the Company becomes aware of any specific collection issues.

The Company periodically reviews the aging of receivables, payment history and customer creditworthiness to determine if adjustments to the allowance for bad debt is necessary.

Allowance for bad debt has been immaterial for all years presented.

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

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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.

Diluted earnings per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, plus the potential dilutive effect of other securities if those securities were converted or exercised.

During periods in which the Company incurs net losses, both basic and diluted loss per common share is calculated by dividing the net loss by the weighted-average shares of common stock outstanding and potentially dilutive securities are excluded from the calculation because their effect would be antidilutive.

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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.

Restricted cash as of December 31, 2021 and 2020, represents primarily collateral for a letter of credit securing a lease obligation and a security deposit.

The Company believes the carrying value of these assets approximates fair value.

Concentration of Risks and Limited Suppliers

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The Company periodically reviews its accounts receivable for collectability and provides for an allowance for doubtful accounts to the extent that amounts are not expected to be collected.

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

The Company sells primarily to clinics, distributors, group practices, hospitals, integrated delivery networks and radiopharmacies.

As of December 31, 2021 and 2020, no customer accounted for greater than 10% of accounts receivable, net.

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In addition, a disruption in the commercial supply of, or a significant increase in the cost of one of the Company’s materials from these sources could have a material adverse effect on the Company’s business, financial position and results of operations.

The Company has Mo-99 supply agreements with IRE of Belgium, running through December 31, 2022, and renewable by the Company on a year-to-year basis thereafter, and with ANSTO and NTP, running through December 31, 2021.

The Company also has a Xenon supply agreement with IRE which runs through June 30, 2022, and which is subject to further extension.

The Company has Mo-99 supply agreements with IRE of Belgium, running through December 31, 2022, with auto-renewal provisions and terminable upon notice of non-renewal, and with NTP and its subcontractor ANSTO, running through March 31, 2022, and for which the Company is currently negotiating an extension.

The Company also has a Xenon supply agreement with IRE which runs through December 31, 2023, with auto-renewal provisions and terminable upon notice of non-renewal.

The Company currently relies on IRE as the sole supplier of bulk-unprocessed Xenon which the Company processes and finishes for its customers.

The Company currently relies on JHS as its sole source manufacturer of DEFINITY, NEUROLITE, Cardiolite and evacuation vials for TechneLite.

The Company currently relies on JHS as its significant manufacturer of DEFINITY and its sole source manufacturer of NEUROLITE, Cardiolite and evacuation vials for TechneLite.

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

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TechneLite 21.5 % 25.4 % 24.9 %

10.2 % — % — %

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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If future commercial use of the product is not probable, then inventory costs associated with such product are expensed as incurred.

As of December 31, 2020 and 2019, the Company had no capitalized inventories associated with product that did not have regulatory approval, respectively.

As of December 31, 2021 and 2020, the Company had $ 6.1 million and no capitalized inventories associated with product that did not have regulatory approval, respectively.

Property, Plant and Equipment, net

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Certain costs to obtain or develop computer software are capitalized and amortized over the estimated useful life of the software.

Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of the related assets.

Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of the related assets and recorded throughout costs of goods sold and operating expenses in the associated functional expense category which utilizes the associated asset.

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

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

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.

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.

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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.

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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:

Other Loss (Income)

Other loss (income) consisted of the following:

(in thousands) 2021 2020 2019

Foreign currency losses (gains) $ 274 $ 260 $ ( 33 )

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

Tax indemnification expense (income), net 7,121 ( 2,218 ) 10,635

Interest income ( 45 ) ( 238 ) ( 686 )

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Other — ( 2 ) ( 242 )

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

Total other loss (income) $ 7,350 $ ( 2,198 ) $ 6,221

Comprehensive (Loss) Income

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Self-Insurance Reserves

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’s consolidated balance sheets at December 31, 2021 and 2020 include $ 0.7 million and $ 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.

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Accounting Standards Adopted During the Year Ended December 31, 2021

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.

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 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 consolidated financial statements.

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Disaggregation of Revenue

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

The following table summarizes revenue by revenue source as follows:

Year Ended December 31,

Major Products/Service Lines by Segment (in thousands) 2020 2019 2018

Product revenue, net (1)

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

License and royalty revenues 9,911 — —

revenues 294,796 303,989 288,580

International

Major Products/Service Lines

(in thousands) 2021 2020 2019

Product revenue, net (1)

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License and royalty revenues 24,852 11,715 2,061

Total International revenues

44,614 43,348 54,794

Total revenues $ 425,208 $ 339,410 $ 347,337

______________________________

(1) The Company’s principal products include DEFINITY and TechneLite and are categorized within product revenue, net.

(1) The Company’s principal products include DEFINITY, TechneLite and PYLARIFY and are categorized within product revenue, net.

The Company applies the 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 revenue.

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

Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA.

Strategic partnerships and other revenue includes strategic partnerships and other arrangements related to other products of the Company, including RELISTOR.

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

Year Ended December 31,

(in thousands) 2021 2020 (1)

DEFINITY $ 232,759 $ 195,865 $ 202,398

TechneLite 91,293 84,945 85,465

Other precision diagnostics 26,973 36,824 49,243

Total precision diagnostics 351,025 317,634 337,106

PYLARIFY 43,414 — —

Other radiopharmaceutical oncology 5,473 10,022 8,655

Total radiopharmaceutical oncology 48,887 10,022 8,655

Strategic Partnerships and other revenue 25,296 11,754 1,576

Total revenues $ 425,208 $ 339,410 $ 347,337

________________________________

(1) The Company reclassified aggregate rebates and allowances of $ 19.1 million and $ 16.6 million for the years ended December 31, 2020 and 2019, respectively, which included $ 17.5 million and $ 15.1 million for DEFINITY, $ 1.3 million and $ 1.1 million for TechneLite and $ 0.3 million for other precision diagnostics.

Product Revenue, Net

The Company sells its products principally to hospitals and clinics, radiopharmacies and distributors.

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

The Company considers customer purchase orders, which in some cases are governed by master sales or group purchasing organization agreements, to be the contracts with a customer.

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Reserves for product returns are not significant to the Company due to the nature of its products including radiopharmaceutical products with limited half-lives.

An analysis of the amount of, and change in, reserves is summarized as follows:

(in thousands) Rebates and

Balance, January 1, 2020 $ 6,985

Provision related to current period revenues 19,675

Adjustments relating to prior period revenues ( 604 )

Payments or credits made during the period ( 16,706 )

Balance, December 31, 2020 9,350

Provision related to current period revenues 25,772

Adjustments relating to prior period revenues 14

Payments or credits made during the period ( 24,159 )

Balance, December 31, 2021 $ 10,977

License and Royalty Revenues

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

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

Milestone payments that are outside the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

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.

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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.

The fair value of the interest rate swaps is 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.

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Money market $ 40,140 $ 40,140 $ — $ —

Interest rate swaps 357 — 357 —

Contingent receivable 9,300 — — 9,300

Total assets $ 49,797 $ 40,140 $ 357 $ 9,300

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

Contingent consideration liabilities $ 86,200 $ — $ — $ 86,200

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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

During the years ended December 31, 2021 and 2020, 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.

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 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.

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 PYLARIFY in 2022 and 2023 in excess of $ 100.0 million and $ 150.0 million, respectively.

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

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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 Company considers the contingent consideration liabilities relating to the CVRs and the 2013 Acquisition, each a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy.

The estimated fair value of these 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.

Significant changes in any of the probabilities of success, the probabilities as to the periods in which sales targets and milestones will be achieved, discount rates or underlying revenue forecasts 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

The Company can give no assurance that the actual amounts paid, if any, in connection with the contingent consideration liabilities, including the CVRs, will be consistent with any recurring fair value estimate of such contingent consideration liabilities.

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

Fair Value as of Assumptions

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

Contingent receivable:

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Total $ 9,300 $ 11,300

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

Fair Value as of Assumptions

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

Contingent consideration liability:

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

Net sales targets - PYLARIFY (CVRs) $ 73,200 $ 4,200 Monte Carlo simulation Period of expected milestone achievement and sales targets 2022 - 2023 2022 - 2023

Discount rate 17 % 24 %

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

1095 commercialization milestone 1,900 2,200 Probability adjusted discounted cash flow model

Period of expected milestone achievement 2026 2026

Probability of success 40 % 45 %

Discount rate 1.3 % 0.5 %

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

Net sales targets - AZEDRA and 1095 11,100 9,400 Monte Carlo simulation

Probability of success and sales targets 40 % - 100 %

Discount rate 16 % - 17 %

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Financial Assets Financial Liabilities

(in thousands) Year Ended

December 31, 2020 Year Ended

December 31, 2020

(in thousands) Years Ended December 31, Years Ended December 31,

2021 2020 2021 2020

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

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Fair value, end of period $ 9,300 $ 11,300 $ 86,200 $ 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 change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 72.4 million for the year ended December 31, 2021 and was primarily due to changes in revenue forecasts, changes in market conditions, a decrease in discount rates and the passage of time.

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

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(Loss) income before income taxes $ ( 75,038 ) $ ( 11,479 ) $ 28,627

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

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

(in thousands) 2021 2020 2019

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4,437 ( 1,334 ) 9,725

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

Income tax (benefit) expense $ ( 3,759 ) $ 1,994 $ ( 3,040 )

The reconciliation of income taxes at the U.S.

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State and local taxes 656 1,457 1,914

Impact on deferred taxes of change in tax rate 3,049 — —

Non-deductible changes in fair value of contingent assets and liabilities 15,015 230 —

Foreign tax rate differential 23 ( 254 ) ( 238 )

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Other 184 639 635

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

Income tax (benefit) expense $ ( 3,759 ) $ 1,994 $ ( 3,040 )

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

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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.

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 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.

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Foreign currency 31

Increase due to Progenics acquisition 2,479

Release valuation allowance ( 603 )

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Charged to income tax (benefit) expense ( 189 )

Adjustment related to Progenics acquired deferred assets 867

Foreign currency ( 211 )

Increase due to Progenics acquisition 2,479

Release valuation allowance ( 603 )

Balance, December 31, 2021 $ 3,923

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The Company has state research credit carryforwards of $ 3.1 million, which will expire between 2024 and 2036.

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.

The Company has state investment tax credit carryforwards of $ 1.7 million net of federal impact, $ 0.7 million of which have no expiration date, and $ 1.0 million of which will expire between 2022 and 2024.

A reconciliation of the Company’s changes in uncertain tax positions for 2021 and 2020 is as follows:

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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.

Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments, net of actual tax benefits received, to be paid on behalf of the Company by BMS.

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

A long-term receivable is recorded within other long-term assets to account for the expected value to the Company of future indemnification payments, net of actual tax benefits received, to be paid on behalf of the Company by BMS.

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.

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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.

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, 2021 and 2020, total liabilities for uncertain tax positions including interest and penalties were $ 20.9 million and $ 29.9 million, respectively, consisting of uncertain tax positions of $ 3.7 million and $ 5.3 million, respectively, interest accruals of

$ 16.5 million and $ 23.5 million, respectively, and penalty accruals of $ 0.8 million and $ 1.0 million, respectively.

As of December 31, 2021 and 2020, 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.

Included in the 2021, 2020 and 2019 tax provisions are a benefit of $ 9.0 million, an expense of $ 2.8 million and a benefit of $ 13.2 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 $ 13.5 million and $ 20.8 million at December 31, 2021 and 2020, respectively.

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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.

The Company has analyzed the CARES Act and determined that the Act to date has had no material impact on the Company’s income taxes.

Inventory consisted of the following:

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Total inventory $ 35,129 $ 35,744

Inventory costs associated with products that have not yet received regulatory approval are capitalized if the Company believes there is probable future commercial use of the product and future economic benefit of the asset.

If future commercial use of the product is not probable, then inventory costs associated with such product are expensed during the period the costs are incurred.

As of December 31, 2021, the Company had $ 6.1 million of such product costs included in inventories related to DEFINITY that have been manufactured through the Company’s in-house manufacturing capabilities, which is awaiting regulatory approval.

Property, Plant and Equipment, Net

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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.

During the year ended December 31, 2021, the Company reviewed certain facts relating to an asset group that included the right-of-use (“ROU”) asset associated with the lease of office space in the World Trade Center (the “WTC lease”) in New York City and resulted in a change to the asset group due to the negotiation of a sublease.

Please refer to Note 17, “Leases” for further details.

During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of the COVID-19 pandemic related to certain other nuclear legacy manufacturing assets, 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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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 acquisition combined the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and research and development pipeline of Progenics.

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

Under the terms of the Merger Agreement, the Company acquired all 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 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.

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

Finally, as a result of the Progenics 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.

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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.

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 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.

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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 $ 42.9 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.

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

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.

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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.

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 Progenics 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 Progenics Acquisition, including, but not limited to, revenue enhancements, cost savings or operating synergies that the combined company may achieve as a result of the Progenics Acquisition.

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 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 included a holdback amount of $ 1.8 million that was remitted to the Company as of December 31, 2021, and paid in the first quarter of 2022;

the purchase price also included a working capital adjustment.

The SPA contained 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.

The Company does not believe this sale of certain net assets, reported as held for sale as of December 31, 2020, 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

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:

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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 (loss) income in the consolidated statements of operations for the year ended December 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 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.

The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and Somerset, New Jersey sites.

As of December 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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Balance, January 1, 2021 $ 14,020

Transfer to liabilities held for sale ( 302 )

Change in useful life estimate 5,259

Accretion expense 1,554

Balance, December 31, 2021 $ 20,833

The Company is required to provide the U.S.

Nuclear Regulatory Commission and Massachusetts Department of Public Health financial assurance demonstrating the Company’s ability to fund the decommissioning of its North Billerica, Massachusetts production facility upon closure, although the Company does not intend to close the facility.

In December 2021, the Company evaluated the accretion timeline of an asset group due to a revision in the planned period of use at the North Billerica site.

As a result of the accelerated timeline, the Company determined the asset group’s present value exceeded the current value recorded as of December 31, 2021.

Accordingly, the Company recorded a non-cash adjustment of $ 5.3 million to anticipate a revision in the end of useful life by the end of 2022.

The Company is required to provide the Massachusetts Department of Public Health and New Jersey Department of Environmental Protection financial assurance demonstrating the Company’s ability to fund the decommissioning of its North Billerica, Massachusetts and Somerset, New Jersey production facilities upon closure, although the Company has no current plans to close the facilities.

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

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December 31, 2021

(in thousands) Amortization

(in thousands) Useful Lives (in years) 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

Trademarks 15 - 25

Straight-Line $ 13,540 $ ( 11,510 ) $ 2,030

Customer relationships 15 - 25

Accelerated 96,880 ( 94,630 ) 2,250

Currently marketed product 9 - 15

Straight-Line 275,700 ( 23,345 ) 252,355

Licenses 11 - 16

Straight-Line 85,800 ( 11,555 ) 74,245

Developed technology 9 Straight-Line 2,400 ( 410 ) 1,990

IPR&D N/A 148,440 — 148,440

IPR&D N/A N/A 15,640 — 15,640

Total $ 489,960 $ ( 141,450 ) $ 348,510

December 31, 2020

(in thousands) Amortization

(in thousands) Useful Lives (in years) Amortization

Method Cost Accumulated Amortization Net

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

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

Trademarks 15 - 25

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

Customer relationships 15 - 25

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

Currently marketed product 15

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

Licenses 11 - 16

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

Developed technology 9 Straight-Line 2,400 ( 144 ) 2,256

IPR&D N/A N/A 148,440 — 148,440

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

The Company recorded amortization expense for its intangible assets of $ 27.5 million, $ 10.8 million and $ 1.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

In May 2021, PyL (18F-DCFPyL) was approved by the FDA under the name PYLARIFY.

Accordingly, the Company reclassified the associated asset of $ 132.8 million from IPR&D to currently marketed products and commenced amortization of the asset.

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

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Total $ 332,870

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

Accrued expenses are comprised of the following:

Changes in the carrying amounts of goodwill for the years ended December 31, 2021 and 2020, were as follows:

(in thousands) 2021 2020

Balance, Beginning of year $ 58,632 $ 15,714

Increase from acquisition 2,557 42,918

Balance, End of year $ 61,189 $ 58,632

Accrued Expenses and Other Liabilities and Other Long-Term Liabilities

Accrued expenses and other liabilities and other long-term liabilities are comprised of the following:

(in thousands) 2021 2020

Compensation and benefits $ 22,730 $ 17,669

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Total accrued expenses and other liabilities $ 58,068 $ 41,726

Operating lease liabilities (Note 17) $ 16,546 $ 17,501

Long-term contingent liability (Note 4) 86,200 15,800

Other long-term liabilities 22,148 30,092

Total other long-term liabilities $ 124,894 $ 63,393

Long-Term Debt, Net, and Other Borrowings

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Total principal outstanding 175,000

Unamortized debt premium, net 954

Unamortized debt discount ( 498 )

Unamortized debt issuance costs ( 430 )

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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 terms of the 2019 Facility are set forth in the Credit Agreement, dated as of June 27, 2019 (as amended, 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 Term Loans under the 2019 Term Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBOR plus a spread ranging from 1.25 % to 2.25 % as determined by the Company’s total net leverage ratio (as defined in the 2019 Credit Agreement) or (ii) the Base Rate (as defined in the 2019 Credit Agreement) plus a spread ranging from 0.25 % to 1.25 % as determined by the Company’s total net leverage ratio.

The use of the LIBOR is expected to be phased out by the end of 2021.

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

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

The use of LIBOR, as it relates to the Company’s 2019 Term Facility, is expected to be phased out by the end of June 2023.

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

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

The 2019 Term Facility requires the Company to make mandatory prepayments of the outstanding 2019 Term Loans in certain circumstances.

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Under the terms of the 2019 Revolving Facility, the lenders thereunder agreed to extend credit to the Company from time to time until June 27, 2024 consisting of revolving loans (the “Revolving Loans” and, together with the 2019 Term Loans, the “Loans”) in an aggregate principal amount not to exceed $ 200.0 million (the “Revolving Commitment”) at any time outstanding.

The 2019 Revolving Facility includes a $ 20.0 million sub-facility for the issuance of letters of credit (the “Letters of Credit”).

The 2019 Revolving Facility includes a $ 10.0 million sub-facility for swingline loans (the “Swingline Loans”).

The 2019 Revolving Facility includes a $ 20.0 million sub-facility for the issuance of Letters of Credit.

The 2019 Revolving Facility includes a $ 10.0 million sub-facility for Swingline Loans.

The Letters of Credit, Swingline Loans and the borrowings under the 2019 Revolving Facility are expected to be used for working capital and other general corporate purposes.

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The 2019 Facility requires the Company to be in quarterly compliance, measured on a trailing four quarter basis, with two financial covenants.

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

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

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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Upon an event of default, the administrative agent under the Credit Agreement will have the right to declare the Loans and other obligations outstanding immediately due and payable and all commitments immediately terminated or reduced.

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.

The 2019 Facility is guaranteed by Holdings, Progenics 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, Progenics 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

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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 covenant related to Total Net Leverage Ratio (as defined in the Amended Credit Agreement) was 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

2019 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

Q3 2021 and 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.

Q2 2021 and thereafter 3.00 to 1.00

Under the 2019 Credit Agreement, 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 %, and the commitment fee ranges from 0.15 % to 0.40 %, in each case based on LMI’s Total Net Leverage Ratio.

Royalty-Backed Loan

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(“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.

The Royalty-Backed Loan bore interest at a per annum rate of 9.5 % and was scheduled to mature 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.

On March 31, 2021, the Company voluntarily repaid in full the entire outstanding principal on the Royalty-Backed Loan 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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Derivatives type Classification

Interest rate swap Other long-term assets $ 357 $ —

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

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

Other comprehensive income before reclassifications 148 — 148

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

Amounts reclassified to earnings — 415 415

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As of December 31, 2021, the Company’s approved equity incentive plans included the 2015 Equity Incentive Plan (“2015 Plan”), the 2013 Equity Incentive Plan (“2013 Plan”), and the 2008 Equity Incentive Plan (“2008 Plan”).

These plans are administered by the Board of Directors and permit the granting of stock options, stock appreciation rights, restricted stock, restricted stock units and dividend equivalent rights (“DERs”) to employees, officers, directors and consultants of the Company.

These plans are administered by the Board of Directors and permit the granting of stock options, stock appreciation rights, restricted stock, restricted stock units and dividend equivalent rights to employees, officers, directors and consultants of the Company.

The Company has certain stock option and restricted stock awards outstanding under each of its equity incentive plans but, upon adoption of the 2015 Plan, no longer grants new equity awards under its 2008 and 2013 Plans.

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Exercisable at December 31, 2021 860,461 $ 19.12 4.3 8,672,206

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.

No stock options were granted during the fiscal year ended December 31, 2021.

During the years ended December 31, 2021, 2020 and 2019, 318,662 , 8,868 and 67,558 options were exercised having aggregate intrinsic values of $ 1.6 million, $ 0.1 million and $ 0.6 million, respectively.

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The total fair value of restricted stock vested in fiscal years 2021, 2020 and 2019 was $ 8.8 million, $ 7.6 million and $ 6.8 million, respectively.

Performance Restricted Stock Awards

Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets.

The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly.

The performance targets include the achievement of internal performance targets only.

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

Shares Weighted-

Average Grant

Date Fair Value Per Share

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 — $ —

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”)

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Granted 260,748 $ 31.25

Vested ( 86,513 ) $ 22.76

Forfeited ( 75,933 ) $ 30.02

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The weighted average grant-date fair value for TSR Awards granted during the fiscal years ended December 31, 2021, 2020 and 2019 was $ 31.25 , $ 23.43 and $ 39.92 per share, respectively.

Adoption of ASC Topic 842, “Leases”

The Company adopted ASC 842 on January 1, 2019, using the prospective approach which provides a method for recording existing leases at adoption using the effective date of the standard as its initial application date.

ASC 842 generally requires all leases to be recognized on the balance sheet.

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 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.

ASC 842 did not materially impact the Company’s consolidated results of operations, equity or cash flows as of the adoption date or for the periods presented.

The Company determines if an arrangement is a lease at inception.

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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 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 (the “WTC Lease”), 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 entered into an operating lease related to office space in Somerset, New Jersey, under a lease agreement expiring in August 2026, which was recorded in October 2021 for $ 0.7 million.

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

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Total leased liabilities $ 18,836 $ 19,160

In the third quarter of 2021, with respect to the office space in the World Trade Center, the Company negotiated a sublease agreement with an unrelated third party that was signed on October 11, 2021 (the “Sublease”) and has a term of nine years , which represents the remaining term of the WTC Lease.

Both the WTC Lease and the Sublease are classified by the Company as operating leases.

As a result of the negotiations of the Sublease, the Company determined that an impairment triggering event had occurred.

Accordingly, the Company performed an undiscounted cash flow analysis related to the asset group as of September 30, 2021.

Based on the undiscounted cash flow analysis, the Company determined that the asset group, including the ROU asset, had net carrying values that exceeded their estimated undiscounted future cash flows.

The Company then estimated the fair value of the asset group based on its discounted cash flows.

The carrying value exceeded the fair value and, as a result, the Company recorded a non-cash impairment of $ 9.5 million for the year ended December 31, 2021 in general and administrative expenses in the consolidated statements of operations.

The components of lease expense were as follows:

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Total $ 18,145 $ 691

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

Other assets are comprised of the following:

(in thousands) 2021 2020

Prepaid Expenses $ 10,113 $ 9,175

Current Contingent Asset (Note 4) 2,500 —

Other Current Assets 205 450

Total other current assets $ 12,818 $ 9,625

ROU Asset (Note 17) $ 8,788 $ 18,441

Long-term Contingent Asset (Note 4) 6,800 11,300

Other Long-Term Assets 23,170 30,893

Total other long-term assets $ 38,758 $ 60,634

Net (Loss) Income Per Common Share

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As of December 31, 2021, 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.

On January 31, 2022, the Company entered into a global settlement agreement with Pharma AG (“Novartis”), Advanced Accelerator Applications USA, Inc.

(“AAA”), Endocyte, Inc.

(“Endocyte”) and certain of their affiliates (the “Novartis Agreement”) to settle certain disputes between the parties, as further described below:

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.

On February 27, 2019, Endocyte, a wholly owned subsidiary of Novartis, 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.

In connection with this dispute, MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) for certain U.S.

patent applications filed by the University to support MIPs claim that it is the co-owner of these pending U.S.

patent applications (the “Ownership Claim”).

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 University and Endocyte each filed oppositions to MIP’s Notice of Appeal on March 12, 2021 and an oral hearing for the appeal was scheduled for September 28, 2022, at the Higher Regional Court Karlsruhe.

Pursuant to the terms of the Novartis Agreement, the German Litigation was dismissed and the Ownership Claim withdrawn.

Post-Grant Review Proceeding

On February 4, 2021, AAA, a wholly-owned subsidiary of Novartis and parent of Endocyte, 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 USPTO.

The ’461 patent is owned by MIP.

In the petition, AAA challenged the patentability of certain claims of the ’461 patent.

The PTAB instituted Post-Grant Review proceedings (the “PGR Proceeding”) on July 29, 2021.

Pursuant to the terms of the Novartis Agreement, the PGR Proceeding will be terminated.

Global Settlement Agreement

In addition to the dismissal of the German Litigation, the withdrawal of the Ownership Claim and the termination of the PGR Proceeding, under the Novartis Agreement, the parties will, among other things, cross-license certain patent rights to one another, and Novartis will make a $ 24.0 million lump sum payment to the Company and also reimburse the Company for certain fees and expenses the Company is required to pay to the University in connection with the German Litigation.

RELISTOR European Opposition Proceedings

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 at the European Patent Office (the “EPO”) by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH.

Between May 11, 2017 and July 4, 2017, the Opposition Division of the EPO (the “Opposition Division”) provided notice that the three European patents would be revoked.

Each of these matters was appealed to the Appeal Board of the EPO.

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.

Progenics continued its appeal on the revocation of the third patent, EP1615646.

Oral proceedings for EP1615646 were held at the Appeal Board of the EPO on September 22, 2020.

The revocation decision under appeal was set aside and the case was remitted to the Opposition Division for further prosecution.

An oral hearing was held before the Opposition Division on September 27, 2021.

The Opposition Division issued its final written opinion on November 11, 2021, indicating that the patent will be maintained in amended form.

The final written decision of the Opposition Division was appealable to the Appeal Board of the EPO by either party.

Progenics appealed this decision on January 20, 2022 to hold open its option to file Grounds for Appeal.

Given that neither opponent filed an Notice of Appeal, Progenics intends to withdraw its notice to allow the patent to issue in amended form.

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

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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 medical imaging products, focused primarily on cardiovascular diagnostic imaging.

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 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

Rebates and allowances ( 4 ) ( 15 ) ( 4 )

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

Rebates and allowances ( 19,071 ) ( 16,568 ) ( 12,841 )

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

(in thousands) 2020 2019 2018

Operating income

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

International 6,165 7,386 8,161

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 (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

Total depreciation and amortization $ 23,251 $ 12,087 $ 12,769

(in thousands) 2020 2019

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

Allowance for doubtful accounts

Year ended December 31, 2020 $ 942 $ 313 $ ( 160 ) $ ( 7 ) $ 1,088

Year ended December 31, 2019 $ 1,119 $ 146 $ ( 323 ) $ — $ 942

Year ended December 31, 2018 $ 977 $ 321 $ ( 179 ) $ — $ 1,119

Rebates and allowances

Year ended December 31, 2020 $ 6,985 $ 19,675 $ ( 16,706 ) $ ( 604 ) $ 9,350

Year ended December 31, 2019 $ 4,654 $ 16,729 $ ( 14,237 ) $ ( 161 ) $ 6,985

Year ended December 31, 2018 $ 2,860 $ 13,202 $ ( 11,047 ) $ ( 361 ) $ 4,654

________________________________

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

In the first quarter of 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 Notes 1 and 8, and the sale of the Puerto Rico subsidiary in the first quarter, which resulted in a change in operating and reportable segments.

The Company now operates as one business segment:

the development, manufacture and sale of innovative diagnostic and therapeutic 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.

Subsequent Events

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.

On January 31, 2022, the Company entered into a global settlement agreement with Novartis, AAA, Endocyte and their affiliates to settle certain disputes between the parties.

Under the Novartis Agreement, Novartis will make a lump sum payment and reimburse the Company for certain fees and expenses in connection with the German Litigation.

See Note 20, “Commitments and Contingencies”, for further details.

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