What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-29 compared with 2021-11-04 · 203 added, 355 removed, 408 unchanged (58% of the section changed)

3 unchanged sentences

(in thousands, except par value)

September 30,

2022 December 31,

4 unchanged sentences

Other current assets 12,860 12,818

Assets held for sale — 5,242

Total current assets 324,747 235,791

10 unchanged sentences

Accrued expenses and other liabilities 142,396 58,068

Liabilities held for sale — 1,793

Total current liabilities 177,657 90,497

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Accumulated deficit ( 178,263 ) ( 221,225 )

Accumulated other comprehensive loss ( 1,142 ) ( 2,048 )

Accumulated other comprehensive income (loss) 1,911 ( 485 )

Total stockholders’ equity 515,850 464,439

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Revenues $ 208,880 $ 92,509

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Gain on sale of assets — 15,263

Operating loss ( 14,328 ) ( 5,250 ) ( 25,487 ) ( 3,670 )

Operating income 58,925 15,622

Interest expense 1,509 2,718

Gain on extinguishment of debt — ( 889 )

Other loss (income) 3,940 ( 596 ) 3,209 ( 1,702 )

Loss before income taxes ( 19,837 ) ( 7,462 ) ( 34,031 ) ( 8,636 )

Income tax (benefit) expense ( 6,422 ) ( 1,076 ) ( 2,967 ) 1,425

Net loss $ ( 13,415 ) $ ( 6,386 ) $ ( 31,064 ) $ ( 10,061 )

Net loss per common share:

Other income ( 485 ) ( 549 )

Income before income taxes 57,901 14,342

Income tax expense 14,939 5,334

Net income $ 42,962 $ 9,008

Net income per common share:

Basic $ 0.63 $ 0.13

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net loss $ ( 13,415 ) $ ( 6,386 ) $ ( 31,064 ) $ ( 10,061 )

Other comprehensive (loss) income:

Net income $ 42,962 $ 9,008

Other comprehensive income:

Foreign currency translation 140 102

Unrealized gain (loss) on cash flow hedges, net of tax 98 ( 89 ) 851 ( 1,541 )

Total other comprehensive (loss) income ( 142 ) 96 906 ( 1,550 )

Comprehensive loss $ ( 13,557 ) $ ( 6,290 ) $ ( 30,158 ) $ ( 11,611 )

Unrealized gain on cash flow hedges, net of tax 2,256 706

Total other comprehensive income 2,396 808

Comprehensive income $ 45,358 $ 9,816

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Common Stock Additional

12 unchanged sentences

Balance, March 31, 2022 68,570 $ 686 $ 691,516 $ ( 178,263 ) $ 1,911 $ 515,850

Net loss — — — ( 26,657 ) — ( 26,657 )

Other comprehensive income — — — — 240 240

Stock option exercises and employee stock plan purchases 116 1 2,042 — — 2,043

Vesting of restricted stock awards and units 51 1 ( 1 ) — — —

Shares withheld to cover taxes ( 9 ) — ( 193 ) — — ( 193 )

Stock-based compensation — — 4,588 — — 4,588

Balance, June 30, 2021 67,592 $ 676 $ 676,059 $ ( 167,595 ) $ ( 1,000 ) $ 508,140

Net loss — — — ( 13,415 ) — ( 13,415 )

Other comprehensive loss — — — — ( 142 ) ( 142 )

Stock option exercises and employee stock plan purchases 48 1 960 — — 961

Vesting of restricted stock awards and units 23 — — — — —

Shares withheld to cover taxes ( 4 ) — ( 67 ) — — ( 67 )

Stock-based compensation — — 3,867 — — 3,867

Balance, September 30, 2021 67,659 $ 677 $ 680,819 $ ( 181,010 ) $ ( 1,142 ) $ 499,344

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Common Stock Additional

6 unchanged sentences

Net income — — — 9,008 — 9,008

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

Stock option exercises and employee stock plan purchases 33 — 366 — — 366

Vesting of restricted stock awards and units 563 6 ( 6 ) — — —

Shares withheld to cover taxes ( 97 ) ( 1 ) ( 1,546 ) — — ( 1,547 )

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

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

Net loss — — — ( 7,012 ) — ( 7,012 )

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

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

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

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

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

26,845 269 394,065 — — 394,334

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

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

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

Net loss — — — ( 6,386 ) — ( 6,386 )

Other comprehensive income — — — — 808 808

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Stock-based compensation — — 3,317 — — 3,317

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

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

Net loss $ ( 31,064 ) $ ( 10,061 )

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

Net income $ 42,962 $ 9,008

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

Depreciation, amortization and accretion 11,786 8,123

Impairment of long-lived assets 9,540 7,275

ARO acceleration 293 —

Amortization of debt related costs 246 ( 61 )

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Other current assets ( 104 ) ( 536 )

Other long-term assets ( 533 ) —

Accounts payable 1,506 4,110

4 unchanged sentences

Proceeds from sale of assets, net 1,800 15,823

Lending on bridge loan — ( 10,000 )

Cash acquired in acquisition of business — 17,562

Net cash provided by (used in) investing activities 8,227 ( 1,127 )

Net cash (used in) provided by investing activities ( 1,390 ) 13,303

Financing activities

Payments on long-term debt and other borrowings ( 2,609 ) ( 35,572 )

Equity issuance costs — ( 3,777 )

Deferred financing costs — ( 1,223 )

Proceeds from stock option exercises 5,357 2,043

9 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Reconciliation to amounts within the condensed consolidated balance sheets

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

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

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

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

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

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or any future period.

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

Please refer to Note 20, “Segment Information”, for further details.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or any future period.

The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S.

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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”).

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”).

Subsequently, on June 22, 2020, Holdings contributed all of the capital stock of Progenics to LMI, thereby making Progenics an indirect subsidiary of Holdings.

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.

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.

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

Each CVR entitles 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.

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 estimates could be approximately $ 100.0 million).

The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024.

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

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

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 certain procedures and treatments using the Company’s products.

For example, there has 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 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 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 certain vaccines, the resurgence of COVID-19 infections did impact certain aspects of the Company’s business during the third quarter of 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.

While the impact of COVID-19 on the Company’s results of operations and cash flows has been material, given continued uncertainty about the future trajectory of the pandemic, the Company remains unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows and whether the on-going impact of COVID-19 could lead to potential future impairments.

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 or unvested 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 and option holders.

Summary of Significant Accounting Policies

Reclassifications

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

Reclassifications include $ 0.2 million from provision for bad debt to other at September 30, 2020.

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

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

Recent Accounting Pronouncements

Standard Description

Effective Date

Effect on the Condensed Consolidated Financial Statements

Accounting Standards Adopted During the Nine Months Ended September 30, 2021

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

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

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

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

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

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

The Company has not adopted any new accounting standards during the three months ended March 31, 2022 .

Revenue from Contracts with Customers

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

Major Products/Service Lines (in thousands) 2022 2021

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________________________________

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

The Company applies the

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

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

The Company applies the same revenue recognition policies and judgments for all its principal products.

(2) The Company recognized $ 24.0 million license revenue in the first quarter of 2022 related to an agreement with Novartis Pharma AG.

Please refer to Note 19, “Commitments and Contingencies” for further details on the license agreement.

The Company classifies its revenues into three product categories:

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

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 includes partnerships related to other products of the Company, such as RELISTOR.

Strategic partnerships and other revenue includes strategic partnerships and other arrangements related to other products of the Company, such as royalty revenue from our license of RELISTOR.

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

(“AAA”), Endocyte, Inc.

(“Endocyte”) and their affiliates (the “Novartis Agreement”) to settle certain disputes between the parties.

Under the Novartis Agreement, Novartis agreed to make a lump sum payment to the Company, as well as to reimburse the Company for certain fees and expenses in connection with the German litigation (please refer to Note 19 “Commitments and Contingencies”) and the Company agreed to license certain intellectual property to Novartis.

In addition, the Company agreed to supply PYLARIFY for clinical purposes at an arms-length value which will be recorded in the future as product is provided.

In accordance with the Company's ASC 606, Revenue from Contracts with Customers , assessment, Novartis is considered to be a customer.

The Company determined that the $ 24.0 million constituted a single element which was satisfied on the date of the execution of the Novartis Agreement.

The Company determined that the license of intellectual property carried a fair value of $ 24.0 million.

As such, the Company assigned the value to the fair value of the license, which constitutes the entire transaction price and does not require further allocation.

The Company determined that the $ 24.0 million represented the point at which the licensee was able to use and benefit from the license and recognized revenue when the license was granted to Novartis upon execution of the Novartis Agreement.

The Company recognized the $ 24.0 million fee as revenue on its consolidated statement of operations for the quarter ended March 31, 2022.

The Company received the $ 24.0 million payment in April 2022.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

2021 2020 (1)

DEFINITY $ 58,328 $ 55,971

2 unchanged sentences

Total precision diagnostics 86,198 85,755

Radiopharmaceutical oncology 8,890 3,323 13,203 7,474

Strategic partnerships and other 5,304 5,164 18,454 6,453

PYLARIFY 92,777 —

Other radiopharmaceutical oncology 1,327 1,500

Total radiopharmaceutical oncology 94,104 1,500

Strategic partnerships and other revenue 28,578 5,254

Total revenues $ 208,880 $ 92,509

________________________________

(1) The Company reclassified rebates and allowances of $ 5.5 million and $ 13.8 million within each product category, which included $ 5.1 million and $ 12.6 million for DEFINITY, $ 0.3 million and $ 0.9 million for TechneLite and $ 0.1 million and $ 0.2 million for other precision diagnostics, for the three and nine months ended September 30, 2020, respectively.

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

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

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

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

September 30, 2021

March 31, 2022

(in thousands) Total Fair

1 unchanged sentence

Money market $ 38,986 $ 38,986 $ — $ —

Interest rate swaps 3,387 — 3,387 —

Contingent receivable 8,900 — — 8,900

Total assets $ 51,273 $ 38,986 $ 3,387 $ 8,900

Interest rate swaps $ 766 $ — $ 766 $ —

Contingent consideration liabilities $ 104,200 $ — $ — $ 104,200

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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

Total liabilities $ 86,200 $ — $ — $ 86,200

During the three and nine months ended September 30, 2021, there were no transfers into or out of Level 3.

During the three months ended March 31, 2022, 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.

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

Each CVR entitles 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, subject to a maximum cap (which the Company currently estimates could be approximately $ 100.0 million).

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

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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, the probabilities as to the periods in which milestones will be achieved, discount rates or underlying revenue forecasts would result in a significantly higher or lower fair value measurement.

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 with respect to 1095 and 1404 are the probabilities of achieving regulatory approval of those development projects and subsequent commercial success.

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 condensed consolidated statements of operations.

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 at September 30, 2021.

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 at March 31, 2022.

Fair Value at Assumptions

(in thousands) September 30, 2021 December 31, 2020 Valuation Technique Unobservable Input September 30, 2021 December 31, 2020

(in thousands) March 31, 2022 December 31, 2021 Valuation Technique Unobservable Input March 31, 2022 December 31, 2021

Contingent receivable:

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Fair Value at Assumptions

(in thousands) September 30, 2021 December 31, 2020 Valuation Technique Unobservable Input September 30, 2021 December 31, 2020

(in thousands) March 31, 2022 December 31, 2021 Valuation Technique Unobservable Input March 31, 2022 December 31, 2021

Contingent consideration liability:

Net sales targets - PYLARIFY (CVRs) $ 33,200 $ 4,200 Monte Carlo simulation Period of expected milestone achievement 2022 - 2023 2022 - 2023

Net sales targets - PYLARIFY (CVRs) $ 91,700 $ 73,200 Monte Carlo simulation Period of expected milestone achievement and sales targets 2022 - 2023 2022 - 2023

Discount rate 18 % 17 %

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Net sales targets - AZEDRA and 1095 10,700 11,100 Monte Carlo simulation

Probability of success 40 % - 100 %

Probability of success and sales targets 40 % - 100 %

Discount rate 17 % - 18 %

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Financial Assets Financial Liabilities

(in thousands) Nine Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) Three Months Ended

March 31, Three Months Ended

2022 2021 2022 2021

Fair value, beginning of period $ 9,300 $ 11,300 $ 86,200 $ 15,800

Progenics acquisition — 10,100 — 16,300

Changes in fair value included in net loss 2,500 100 31,000 900

Changes in fair value included in net income ( 400 ) 900 18,000 1,200

Fair value, end of period $ 8,900 $ 12,200 $ 104,200 $ 17,000

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 28.5 million for the nine months ended September 30, 2021 and was primarily due to changes in revenue forecasts, changes in market conditions, a decrease in discount rates and the passage of time.

Historically, the Company has calculated its provision for income taxes during its interim reporting periods by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete events).

For the three- and nine-month periods ended September 30, 2021, the Company has computed its provision for income taxes under the discrete method, which allows the Company to calculate its tax provision based upon the actual effective tax rate for the year-to-date period.

We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three- and nine-month periods ended September 30, 2021.

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $ 18.4 million for the three months ended March 31, 2022 and was primarily due to changes in revenue forecasts, changes in market conditions, an increase in discount rates and the passage of time.

The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024.

As of March 31, 2022, the Company has $ 83.3 million in current liabilities and $ 8.4 million in long term liabilities to account for the expected payments related to the CVRs.

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

Cumulative adjustments to the tax provision are recorded in the reporting period in which a change in the estimated annual effective tax rate is determined.

The Company’s income tax expense is presented below:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

Income tax (benefit) expense $ ( 6,422 ) $ ( 1,076 ) $ ( 2,967 ) $ 1,425

Income tax expense $ 14,939 $ 5,334

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

2 unchanged sentences

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

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

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

subsidiary, and $ 2.0 million against the net deferred tax assets of its Sweden subsidiary.

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

During the third quarter of 2021, the Company entered into a settlement agreement with one state and accordingly reduced the amount of the uncertain tax positions by $ 5.5 million.

The settlement payment to that state and the tax indemnification payment from BMS will be made in the fourth quarter of 2021.

The Company continues to accrue interest on the outstanding uncertain tax positions.

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

As these reserves change (for example, by the state tax settlement noted above), adjustments are included in income tax expense while the offsetting adjustment is included in other income.

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

Assuming that the remaining 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.

In addition to the state tax settlement noted above, for the nine months ended September 30, 2021, the Company released $ 0.7 million of liabilities for uncertain tax positions, including interest and penalties of $ 0.5 million.

This included a release of liabilities of $ 0.1 million, including interest and penalties of $ 0.4 million, due to a change in estimate with respect to the Company’s indemnified uncertain tax positions arising from new information obtained during the year.

The remaining release of $ 0.2 million of liability was due to the lapse of a statute of limitations.

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

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

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

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

The Company finalized the acquisition accounting for income taxes in the first quarter of 2021 resulting in a reduction of deferred tax assets, primarily related to state research credit carryforwards and an increase to goodwill of $ 2.6 million.

The Company finalized the accounting for the Progenics Acquisition for income taxes in the first quarter of 2021 resulting in a reduction of deferred tax assets, primarily related to state research credit carryforwards and an increase to goodwill of $ 2.6 million.

Inventory consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2022 December 31,

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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 September 30, 2021, the Company had $ 3.2 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.

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

The Company received regulatory approval for the manufacture of DEFINITY at its new in-house manufacturing facility during the first quarter of 2022 and has no inventory pending regulatory approval as of March 31, 2022.

Property, Plant and Equipment, Net

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

(in thousands) September 30,

(in thousands) March 31,

2022 December 31,

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Total property, plant and equipment, net $ 116,959 $ 116,772

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.6 million and $ 3.4 million for the three months ended September 30, 2021 and 2020, respectively, and $ 9.8 million and $ 9.1 million for the nine months ended September 30, 2021 and 2020, respectively.

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

During the three months ended September 30, 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 16, “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.

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

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

The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $ 7.3 million for the nine months ended September 30, 2020 in cost of goods sold in the condensed consolidated statements of operations.

Business Combinations

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

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 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.

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

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

(in thousands) Amount

Issuance of common stock $ 398,110

Fair value of replacement options 7,125

Fair value of bridge loan settled at close 10,074

Fair value of contingent considerations (CVRs) 3,700

Total consideration transferred (1)

(1) Non-cash investing and financing activities in the condensed consolidated statements of cash flows

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

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

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

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

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

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

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

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

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

(in thousands) Amounts Recognized as of Acquisition Date

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

(as adjusted)

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

Accounts receivable 5,787 — 5,787

Inventory 915 160 1,075

Other current assets 3,250 434 3,684

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

Identifiable intangible assets (weighted average useful life):

Currently marketed product ( 15 years)

142,100 800 142,900

Licenses ( 11.5 years)

87,500 ( 1,700 ) 85,800

Developed technology ( 9 years)

3,000 ( 600 ) 2,400

IPR&D 150,900 200 151,100

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

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

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

Depreciation and amortization expense related to property, plant and equipment, net, was $ 3.1 million and $ 3.0 million for the three months ended March 31, 2022 and 2021, respectively.

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) March 31,

2022 December 31,

Compensation and benefits $ 10,629 $ 22,730

Freight, distribution and operations 26,581 16,157

Accrued rebates, discounts and chargebacks 10,793 10,977

Accrued professional fees 3,596 2,850

Short-term contingent liability (Note 4) 83,300 —

Other 7,497 5,354

Total accrued expenses and other liabilities $ 142,396 $ 58,068

Operating lease liabilities (Note 16) $ 16,207 $ 16,546

Long-term contingent liability (Note 4) 20,900 86,200

Other long-term liabilities 21,669 22,148

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

Deferred tax liabilities ( 3,717 ) ( 2,258 ) ( 5,975 )

Goodwill 42,051 3,424 45,475

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

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.

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

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

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

As part of the 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.

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

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

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

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

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

Progenics Pro Forma Financial Information

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

Progenics contributed revenues of $ 5.9 million and $ 6.9 million, as well as a net loss of $ 12.6 million and $ 15.8 million to the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2020, respectively.

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

Nine Months Ended

September 30, 2020

(in thousands) Amount

Pro forma revenue $ 256,163

Pro forma net loss 27,143

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 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.

Total other long-term liabilities $ 58,776 $ 124,894

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 assets were classified as held for sale

and the Company determined that the fair value of the net assets being sold significantly exceeded the carrying value as of December 31, 2020.

The transaction was consummated on January 29, 2021.

The purchase price for the stock sale was $ 18.0 million in cash, which includes a holdback amount of $ 1.8 million to be due to the Company in January 2022;

The purchase price for the stock sale was $ 18.0 million in cash, including a holdback amount of $ 1.8 million which the Company received during the first quarter of 2022;

the purchase price also included a working capital adjustment.

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

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

The Company does not believe this sale of certain net assets, reported as held for sale in the international segment prior to the change in segments in the first quarter of 2021, constituted a strategic shift that would have a major effect on its operations or financial results.

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

The following table summarizes the major classes of assets and liabilities sold as of January 29, 2021 (date of sale) and held for sale as of December 31, 2020:

The Company determined that this sale of certain net assets did not constitute a strategic shift that had a major effect on the Company’s operations or financial results.

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

The following table summarizes the major classes of assets and liabilities sold as of January 29, 2021 (date of sale):

(in thousands)

January 29, 2021 December 31, 2020

January 29, 2021

Current Assets:

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Total assets held for sale

$ 4,744 $ 5,242

Current Liabilities:

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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 income in the condensed consolidated statements of operations for the nine months ended September 30, 2021.

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

Asset Retirement Obligations

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

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

As of September 30, 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 Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and Somerset, New Jersey sites.

As of March 31, 2022, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 26.4 million.

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

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Accretion expense 388

Balance at September 30, 2021 $ 15,185

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.

Accelerated Costs 293

Balance at March 31, 2022 $ 21,514

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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Intangibles, net, consisted of the following:

September 30, 2021

(in thousands) Amortization Method Cost Accumulated Amortization Net

Trademarks Straight-Line $ 13,540 $ ( 11,372 ) $ 2,168

Customer relationships Accelerated 96,923 ( 94,461 ) 2,462

Currently marketed products Straight-Line 275,700 ( 17,275 ) 258,425

Licenses Straight-Line 85,800 ( 9,668 ) 76,132

March 31, 2022

(in thousands) Useful Lives

(in years) Amortization Method Cost Accumulated Amortization Net

Trademarks 15 - 25

Straight-Line $ 13,540 $ ( 11,648 ) $ 1,892

Customer relationships 15 - 25

Accelerated 96,962 ( 94,856 ) 2,106

Currently marketed products 9 - 15

Straight-Line 275,700 ( 29,416 ) 246,284

Licenses 11 - 16

Straight-Line 85,800 ( 13,441 ) 72,359

Developed technology 9 Straight-Line 2,400 ( 477 ) 1,923

IPR&D N/A 15,640 — 15,640

IPR&D N/A N/A 15,640 — 15,640

Total $ 490,042 $ ( 149,838 ) $ 340,204

December 31, 2021

(in thousands) Amortization Method Cost Accumulated Amortization Net

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

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

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

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

(in thousands) Useful Lives

(in years) Amortization Method Cost Accumulated Amortization Net

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

The Company recorded amortization expense for its intangible assets of $ 8.4 million and $ 4.8 million for the three months ended September 30, 2021 and 2020, respectively, and $ 19.1 million and $ 6.1 million for the nine months ended September 30, 2021 and 2020, respectively.

The Company recorded amortization expense for its intangible assets of $ 8.3 million and $ 4.7 million for the three months ended March 31, 2022 and 2021, respectively.

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

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Long-Term Debt, Net, and Other Borrowings

As of September 30, 2021, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

As of March 31, 2022, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:

(in thousands) Amount

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Total long-term debt, net and other borrowings $ 159,369

At September 30, 2021, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility”) was 2.1 %.

At March 31, 2022, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”) was 2.2 %.

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

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

At September 30, 2021, accumulated other comprehensive loss included $ 0.7 million of pre-tax deferred losses that are expected to be reclassified to earnings during the next 12 months.

At March 31, 2022, accumulated other comprehensive income included $ 1.0 million of pre-tax deferred gains that are expected to be reclassified to earnings during the next 12 months.

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

(in thousands) September 30, 2021 December 31, 2020

(in thousands) March 31, 2022 December 31, 2021

Derivatives type Classification

Interest rate swap Accrued expenses and other liabilities $ 766 $ 1,908

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax of $ 0.2 million and $ 0.5 million for the nine months ended September 30, 2021 and 2020, respectively, consisted of the following:

Interest rate swap Other long-term assets $ 3,387 $ 357

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax of $ 0.9 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively, consisted of the following:

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

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Amounts reclassified to earnings — 170 170

Balance at September 30, 2021 $ ( 575 ) $ ( 567 ) $ ( 1,142 )

Balance at March 31, 2022 $ ( 614 ) $ 2,525 $ 1,911

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

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Amounts reclassified to earnings — 173 173

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

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

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

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Operating and finance lease assets and liabilities are as follows:

(in thousands) Classification September 30,

(in thousands) Classification March 31,

2022 December 31,

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Total leased liabilities $ 18,408 $ 18,836

The Company leases office space in the World Trade Center in New York City.

In the third quarter of 2021, 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 three and nine months ended September 30, 2021 in general and administrative expenses in the condensed consolidated statements of operations.

Net Loss Per Common Share

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

Net Income Per Common Share

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2022 2021

Net loss $ ( 13,415 ) $ ( 6,386 ) $ ( 31,064 ) $ ( 10,061 )

Net income $ 42,962 $ 9,008

Basic weighted-average common shares outstanding 68,008 67,094

Basic and diluted loss per common share $ ( 0.20 ) $ ( 0.10 ) $ ( 0.46 ) $ ( 0.20 )

Effect of dilutive stock options 406 82

Effect of dilutive restricted stock 1,637 538

Diluted weighted-average common shares outstanding 70,051 67,714

Basic income per common share $ 0.63 $ 0.13

Diluted income per common share $ 0.61 $ 0.13

Antidilutive securities excluded from diluted net income per common share 377 1,349

Other Loss (Income)

Other loss (income) consisted of the following:

Other income consisted of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

Foreign currency losses (gains) $ 127 $ ( 33 ) $ 156 $ 187

Tax indemnification loss (income), net 3,823 ( 555 ) 3,092 ( 1,664 )

Foreign currency (gains) losses $ ( 81 ) $ 42

Tax indemnification income, net ( 396 ) ( 573 )

Interest income ( 8 ) ( 17 )

Other — ( 1 )

Total other loss (income) $ 3,940 $ ( 596 ) $ 3,209 $ ( 1,702 )

Total other income $ ( 485 ) $ ( 549 )

Commitments and Contingencies

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

As of September 30, 2021, the Company had the following material ongoing litigation in which the Company was a party:

As of March 31, 2022, the Company did not have any material ongoing litigation in which the Company was a party.

During the first quarter of 2022, the Company was able to resolve certain litigation matters as set forth below:

On January 31, 2022, the Company entered into a global settlement agreement with Novartis, AAA, Endocyte and certain of their affiliates 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” and, such litigation, the “German Litigation”).

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, 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.

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.

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.

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 was 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, among other things, cross-licensed certain patent rights to one another, and Novartis made a $ 24.0 million lump sum payment to the Company and also reimbursed the Company for certain fees and expenses the Company is required to pay to the University in connection with the German Litigation.

The Company received the $ 24.0 million payment in April 2022.

RELISTOR European Opposition Proceedings

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

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

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.

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

The parties are awaiting the final written decision of the Opposition Division.

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

Because the outcome of opposition and appeal proceedings at the EPO is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.

German PSMA-617 Litigation

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.

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

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

On November 27, 2018, MIP requested that the EPO stay the examination of a certain European Patent 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, and 17/110,558).

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

patent applications (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.

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.

The University and Endocyte each filed oppositions to MIP’s Notice of Appeal on March 12, 2021.

An oral hearing for the appeal is scheduled for February 9, 2022, at the Higher Regional Court Karlsruhe.

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 a 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.

Petition for Post-Grant Review

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

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

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

The ’461 patent is owned by MIP.

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

§§ 112 and 102(a)(1).

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

MIP’s written response to the PTAB is due by December 9, 2021.

The PTAB generally issues a final written decision on the validity of the challenged claims within one year of institution of the PGR proceedings.

The outcome of PGR proceedings is uncertain and the Company cannot predict whether the challenged claims 1, 45 and 47 of the ‘461 patent will be deemed to be valid or invalid.

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 a Notice of Appeal, Progenics withdrew its Notice of Appeal on February 23, 2022.

The Opposition Division communicated the Closure of Opposition Proceedings on March 7, 2022.

The patent will proceed to issuance, in amended form, with the payment of publication fees and submission of translated claims by June 11, 2022.

Segment Information

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, including the impact on the Company’s business of the acquisition of Progenics described in 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.

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, including the impact on the Company’s business of the acquisition of Progenics described in Note 1, 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 agents and products that assist clinicians in the diagnosis and treatment of heart disease, cancer and other diseases.

the development, manufacture and sale of innovative imaging diagnostics, targeted therapeutics, and artificial intelligence solutions to Find, Fight and Follow serious medical conditions.

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

1 unchanged sentence

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 October 11, 2021, the Company signed a sublease for certain office space.

See Note 16, “Leases”, for further details.

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

What changed 10-Q

Item 1. Financial Statements