Lantheus Holdings, Inc. 10-K

Item 8. Financial Statements and Supplementary Data LANTHEUS HOLDINGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 76 Consolidated Balance Sheets 78 Consolidated Statements of Operations 79 Consolidated Statements of Comprehensive Income (Loss) 80 Consolidated Statements of Changes in Stockholders’ Equity 81 Consolidated Statements of Cash Flows 82 Notes to Consolidated Financial Statements 84 75 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Lantheus Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lantheus Holdings, Inc. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. Accounting for Convertible Notes— Refer to Notes 2 and 13 to the financial statements Critical Audit Matter Description On December 8, 2022, the Company issued $575 million in aggregate principal amount of 2.625% Convertible Senior Notes due 2027 (the “Notes”), which includes $75 million in aggregate principal amount of Notes sold pursuant to the full exercise of the initial purchasers’ option to purchase additional Notes. The Notes include conversion and redemption features that the Company determined should not be bifurcated as derivative instruments. We identified the accounting for the conversion feature and redemption features of the Notes to be a critical audit matter given the complexity in applying the accounting framework, including the determination of whether those features of the Notes should be bifurcated from the Notes and accounted for separately as a derivative instrument. The complexities required a high degree of auditor judgment and an increased extent of audit effort, including the involvement of professionals in our firm with specialized skills and knowledge in the accounting for financial instruments. How the Critical Audit Matter Was Addressed in the Audit 76 Table of Contents Our audit procedures related to management’s judgments of the accounting treatment of the conversion and redemption features of the Notes included the following among others: • We tested the design and effectiveness of internal controls over the evaluation of the features of the Notes and the related accounting conclusions. • With the assistance of professionals in our firm with specialized skills and knowledge in financial instruments we evaluated the appropriateness of the accounting conclusions, including the accounting for the conversion and redemption features. • We tested the completeness and accuracy of the Notes terms and assumptions utilized in the accounting conclusions through comparison to the underlying agreements and supporting documentation. /s/ Deloitte & Touche LLP Boston, Massachusetts February 23, 2023 We have served as the Company’s auditor since 2007. 77 Table of Contents Lantheus Holdings, Inc. Consolidated Balance Sheets (in thousands, except par value) December 31, 2022 2021 Assets Current assets Cash and cash equivalents $ 415,652 $ 98,508 Accounts receivable, net 213,397 89,336 Inventory 35,475 35,129 Other current assets 13,092 12,818 Total current assets 677,616 235,791 Property, plant and equipment, net 122,166 116,772 Intangibles, net 315,285 348,510 Goodwill 61,189 61,189 Deferred tax assets, net 110,647 62,764 Other long-term assets 34,355 38,758 Total assets $ 1,321,258 $ 863,784 Liabilities and stockholders’ equity Current liabilities Current portion of long-term debt and other borrowings $ 354 $ 11,642 Accounts payable 20,563 20,787 Short-term contingent liability 99,700 — Accrued expenses and other liabilities 127,084 58,068 Total current liabilities 247,701 90,497 Asset retirement obligations 22,543 20,833 Long-term debt, net and other borrowings 557,712 163,121 Other long-term liabilities 46,155 124,894 Total liabilities 874,111 399,345 Commitments and contingencies (see Note 20) Stockholders’ equity Preferred stock ($ 0.01 par value, 25,000 shares authorized; no shares issued and outstanding) — — Common stock ($ 0.01 par value, 250,000 shares authorized; 68,851 and 67,739 shares issued as of December 31, 2022 and 2021, respectively) 689 677 Additional paid-in capital 715,875 685,472 Treasury Stock at cost - 1,339 and no shares as of December 31, 2022 and 2021, respectively ( 75,000 ) — Accumulated deficit ( 193,158 ) ( 221,225 ) Accumulated other comprehensive loss ( 1,259 ) ( 485 ) Total stockholders’ equity 447,147 464,439 Total liabilities and stockholders’ equity $ 1,321,258 $ 863,784 The accompanying notes are an integral part of these consolidated financial statements. 78 Table of Contents Lantheus Holdings, Inc. Consolidated Statements of Operations (in thousands, except per share data) Year Ended December 31, 2022 2021 2020 Revenues $ 935,061 $ 425,208 $ 339,410 Cost of goods sold 353,358 237,513 200,649 Gross profit 581,703 187,695 138,761 Operating expenses Sales and marketing 100,243 68,422 40,901 General and administrative 133,584 150,395 69,270 Research and development 311,681 44,966 32,788 Total operating expenses 545,508 263,783 142,959 Gain on sales of assets — 15,263 — Operating income (loss) 36,195 ( 60,825 ) ( 4,198 ) Interest expense 7,185 7,752 9,479 Loss (gain) on extinguishment of debt 588 ( 889 ) — Other loss (income) 1,703 7,350 ( 2,198 ) Income (loss) before income taxes 26,719 ( 75,038 ) ( 11,479 ) Income tax (benefit) expense ( 1,348 ) ( 3,759 ) 1,994 Net income (loss) $ 28,067 $ ( 71,279 ) $ ( 13,473 ) Net income (loss) per common share: Basic $ 0.41 $ ( 1.06 ) $ ( 0.25 ) Diluted $ 0.40 $ ( 1.06 ) $ ( 0.25 ) Weighted-average common shares outstanding: Basic 68,487 67,486 54,134 Diluted 70,671 67,486 54,134 The accompanying notes are an integral part of these consolidated financial statements. 79 Table of Contents Lantheus Holdings, Inc. Consolidated Statements of Comprehensive Income (Loss) (in thousands) Year Ended December 31, 2022 2021 2020 Net income (loss) $ 28,067 $ ( 71,279 ) $ ( 13,473 ) Other comprehensive income: Foreign currency translation ( 505 ) ( 124 ) 330 Realized loss on cash flow hedges, net of tax ( 269 ) — — Unrealized gain (loss) on cash flow hedges, net of tax — 1,687 ( 1,418 ) Total other comprehensive (loss) income ( 774 ) 1,563 ( 1,088 ) Comprehensive income (loss) $ 27,293 $ ( 69,716 ) $ ( 14,561 ) The accompanying notes are an integral part of these consolidated financial statements. 80 Table of Contents Lantheus Holdings, Inc. Consolidated Statements of Changes in Stockholders’ Equity (in thousands) Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity Shares Amount Shares Amount Balance, January 1, 2020 39,251 $ 393 — $ — $ 251,641 $ ( 136,473 ) $ ( 960 ) $ 114,601 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 Vesting of restricted stock awards 847 8 — — ( 8 ) — — — 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 Balance, December 31, 2020 66,875 669 — — 665,530 ( 149,946 ) ( 2,048 ) 514,205 Net loss — — — — — ( 71,279 ) — ( 71,279 ) Other comprehensive income — — — — — — 1,563 1,563 Stock option exercises and employee stock plan purchases 360 3 — — 6,059 — — 6,062 Vesting of restricted stock awards 611 6 — — ( 6 ) — — — Shares withheld to cover taxes ( 107 ) ( 1 ) — — ( 2,045 ) — — ( 2,046 ) Stock-based compensation — — — — 15,934 — — 15,934 Balance, December 31, 2021 67,739 677 — — 685,472 ( 221,225 ) ( 485 ) 464,439 Net income — — — — — 28,067 — 28,067 Other comprehensive loss — — — — — — ( 774 ) ( 774 ) Stock option exercises and employee stock plan purchases 411 4 — — 8,908 — — 8,912 Vesting of restricted stock awards and units 845 9 — — ( 9 ) — — — Shares withheld to cover taxes ( 144 ) ( 1 ) — — ( 7,758 ) — — ( 7,759 ) Repurchase of common stock — — 1,339 ( 75,000 ) — — — ( 75,000 ) Stock-based compensation — — — — 29,262 — — 29,262 Balance, December 31, 2022 68,851 $ 689 1,339 $ ( 75,000 ) $ 715,875 $ ( 193,158 ) $ ( 1,259 ) $ 447,147 The accompanying notes are an integral part of these consolidated financial statements. 81 Table of Contents Lantheus Holdings, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 2020 Operating activities Net income (loss) $ 28,067 $ ( 71,279 ) $ ( 13,473 ) Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation, amortization and accretion 47,929 42,288 24,689 Impairment of long-lived assets — 9,729 9,935 Asset retirement obligation acceleration 280 5,259 — Gain on interest rate swap termination ( 5,494 ) — — Amortization of debt related costs 1,249 676 119 Changes in fair value of contingent assets and liabilities 34,700 72,400 ( 2,000 ) Charges incurred in connection with acquired IPR&D 260,000 — — Loss (gain) on extinguishment of debt 588 ( 889 ) — Provision for excess and obsolete inventory 7,145 4,057 2,365 Stock-based compensation 29,262 15,934 14,075 (Gain) loss on disposal of assets — ( 15,263 ) 2,250 Deferred taxes ( 48,016 ) 4,437 ( 1,334 ) Long-term indemnification receivable 9,554 7,121 ( 2,218 ) Long-term income tax payable and other long-term liabilities ( 12,477 ) ( 7,912 ) 2,828 Other 4,059 2,512 1,525 Increases (decreases) in cash from operating assets and liabilities: Accounts receivable ( 128,460 ) ( 33,102 ) ( 7,462 ) Inventory ( 7,508 ) ( 3,549 ) ( 8,459 ) Other current assets ( 2,440 ) ( 73 ) 1,941 Other long-term assets ( 533 ) — — Accounts payable 301 5,425 ( 4,224 ) Accrued expenses and other liabilities 63,575 16,145 ( 4,161 ) Net cash provided by operating activities 281,781 53,916 16,396 Investing activities Capital expenditures ( 18,347 ) ( 12,140 ) ( 12,474 ) Proceeds from sale of assets, net 1,800 15,823 — Acquisition of assets ( 260,000 ) — — Lending on bridge loan — — ( 10,000 ) Cash acquired in acquisition of business — — 17,562 Net cash (used in) provided by investing activities ( 276,547 ) 3,683 ( 4,912 ) Financing activities Proceeds from issuance of common stock 1,375 767 683 Equity issuance costs — — ( 3,777 ) Debt issuance costs ( 95 ) — — Proceeds from issuance of long-term debt, net 557,750 — — Payments on long-term debt and other borrowings ( 175,385 ) ( 43,348 ) ( 15,491 ) Deferred financing costs ( 2,315 ) — ( 1,224 ) Proceeds from interest rate swap termination 5,583 — — Proceeds from stock option exercises 7,537 5,295 77 Payments for minimum statutory tax withholding related to net share settlement of equity awards ( 7,759 ) ( 2,046 ) ( 2,129 ) Repurchase of common stock ( 75,000 ) — — Net cash provided by (used in) financing activities 311,691 ( 39,332 ) ( 21,861 ) Effect of foreign exchange rates on cash and cash equivalents ( 335 ) ( 310 ) 152 Net increase (decrease) in cash and cash equivalents and restricted cash 316,590 17,957 ( 10,225 ) Cash and cash equivalents and restricted cash, beginning of year 100,651 82,694 92,919 Cash and cash equivalents and restricted cash, end of year $ 417,241 $ 100,651 $ 82,694 82 Table of Contents Lantheus Holdings, Inc. Consolidated Statements of Cash Flows (Continued) (in thousands) Year Ended December 31, 2022 2021 2020 Reconciliation to amounts within the consolidated balance sheets Cash and cash equivalents $ 415,652 $ 98,508 $ 79,612 Cash and cash equivalents included in assets held for sale — — 941 Restricted cash included in other long-term assets 1,589 2,143 2,141 Cash, cash equivalents and restricted cash at end of period $ 417,241 $ 100,651 $ 82,694 Year Ended December 31, 2022 2021 2020 Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 5,064 $ 6,284 $ 9,368 Income taxes, net of refunds of $ 50 , $ 315 and $ 331 , respectively $ 54,049 $ 215 $ 340 Schedule of non-cash investing and financing activities Additions of property, plant and equipment included in liabilities $ 2,370 $ 1,262 $ 2,227 Consideration transferred in acquisition $ — $ — $ 419,009 The accompanying notes are an integral part of these consolidated financial statements. 83 Table of Contents Lantheus Holdings, Inc. Notes to Consolidated Financial Statements 1. Description of Business Lantheus Holdings, Inc., a Delaware corporation, is the parent company of Lantheus Medical Imaging, Inc. (“LMI”) and LMI is the parent company of Progenics Pharmaceuticals, Inc., a Delaware corporation (“Progenics”). See “Progenics Acquisition”. The Company develops, manufactures and commercializes innovative diagnostic and therapeutic products that assist clinicians in the diagnosis and treatment of cancer, heart disease 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 throughout the healthcare system. The Company’s commercial products are used by oncologists, urologists, nuclear medicine physicians, cardiologists, sonographers, technologists, radiologists, and internal medicine physicians working in a variety of clinical settings. The Company produces and markets its products throughout the U.S., selling primarily to hospitals, independent diagnostic testing facilities, government facilities, integrated delivery networks, radiopharmacies, clinics, and group practices. 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 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. Sales of the Company’s 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 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 Cardinal, RLS, UPPI, PharmaLogic and Jubilant Radiopharma. A small portion of the Company’s nuclear imaging product sales 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. We have licensed RELISTOR to Bausch, and the Company collects quarterly royalties based on those sales. AZEDRA sales are generated in the U.S. through an AZEDRA direct sales team. The Company also maintains its own direct sales force in Canada for certain of its products. 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 executive offices are located in Bedford, MA, with additional offices in North Billerica, MA, 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 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. 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 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. Based on the Company’s 2022 PYLARIFY net sales, the Company determined that the aggregate payment obligation under the CVRs was $ 99.7 million. The Company expects to make that payment during the first half of 2023. 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. 84 Table of Contents 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP. The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The estimates reflected in the Company’s consolidated financial statements include, but are not limited to, certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirement obligations, contingent assets and liabilities, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities and accrued expenses. Actual results could materially differ from those estimates or assumptions. Revenue Recognition The Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods and services. See Note 3, “Revenue from Contracts with Customers” for further discussion on revenues. Accounts Receivable, net Accounts receivable consist of amounts billed and currently due from customers. The Company maintains an allowance for doubtful accounts for estimated losses. In determining the allowance, consideration includes the probability of recoverability based on past experience and general economic factors. 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. Income Taxes The Company accounts for income taxes using an asset and liability approach. Income tax (benefit) expense represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax attributes are expected to be recovered or paid, and are adjusted for changes in tax rates and tax laws when such changes are enacted. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more-likely-than-not to be realized. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that the future tax benefit will not be realized. The assessment of whether or not a valuation allowance is required involves weighing both positive and negative evidence, including both historical and prospective information, with greater weight given to evidence that is objectively verifiable. A history of recent losses is negative evidence that is difficult to overcome with positive evidence. In evaluating prospective information there are four sources of taxable income: reversals of taxable temporary differences, items that can be carried back to prior tax years (such as net operating losses), pre-tax income, and prudent and feasible tax planning strategies. Adjustments to the deferred tax valuation allowances are made in the period when those assessments are made. The Company accounts for uncertain tax positions using a two-step recognition threshold and measurement analysis method to determine the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amounts recognized in the financial statements are recorded as adjustments to other long-term assets and liabilities, or adjustments to deferred taxes, or both. The Company records the related interest and penalties to income tax (benefit) expense. 85 Table of Contents Net Income (Loss) per Common Share The Company computes earnings per share using the two-class method. 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 as if those securities were converted or exercised. The Company’s potentially dilutive shares, which could include shares issuable upon conversion of the 2.625 % Convertible Senior Notes due 2027 (the “Notes”), are considered to be common stock equivalents and are only included in the calculation of diluted net income per share when their effect is dilutive. The Company has the option to settle the Notes through cash settlement or a combination of cash and share settlement provided that the principal is settled in cash and the conversion spread is settled in cash or shares as elected by the Company. The Company applies the if-converted method for diluted earnings in order to reflect the conversion spread. 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. Cash and Cash Equivalents Cash and cash equivalents include savings deposits, certificates of deposit and money market funds that have original maturities of three months or less when purchased. Restricted Cash Restricted cash as of December 31, 2022 and 2021, 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 Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable. 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 hospitals, independent diagnostic testing facilities, government facilities, integrated delivery networks, radiopharmacies, clinics, and group practices. As of December 31, 2022 and 2021, no customer accounted for greater than 10% of accounts receivable, net. No customer accounted for greater than 10% of revenues for the years ended December 31, 2022, 2021 and 2020. The Company relies on certain materials used in its development and manufacturing processes, some of which are procured from only one or a few sources. The failure of one of these suppliers to deliver on schedule could delay or interrupt the manufacturing or commercialization process and would adversely affect the Company’s operating results. 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 currently relies on JHS as its significant manufacturer of DEFINITY and its sole source manufacturer of NEUROLITE, CARDIOLITE and evacuation vials for TechneLite. The Company has Mo-99 supply agreements with IRE of Belgium, running through December 31, 2023, with auto-renewal provisions and terminable upon notice of non-renewal, and with NTP and its subcontractor ANSTO, running through December 31, 2024. The following table sets forth revenues for each of the Company’s products representing 10% or more of revenues: Year Ended December 31, 2022 2021 2020 PYLARIFY 56.4 % 10.2 % — % DEFINITY 26.2 % 54.7 % 62.8 % TechneLite 9.5 % 21.5 % 25.4 % Inventory 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. The Company records inventory when the Company takes title to the product. 86 Table of Contents The Company assesses the recoverability of inventory to determine whether adjustments for excess and obsolete inventory are required. Inventory that is in excess of future requirements is written down to its estimated net realizable value based on product shelf life, forecasted demand and other factors. Inventory costs associated with product that has not yet received regulatory approval are capitalized if the Company believes there is probable future commercial use of the product and future economic benefits of the asset. 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, 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 had no inventory pending regulatory approval as of December 31, 2022. Property, Plant and Equipment, net Property, plant & equipment are stated at cost. Replacements of major units of property are capitalized, and replaced properties are retired. Replacements of minor components of property and repair and maintenance costs are charged to expense as incurred. Certain costs to obtain or develop computer software are capitalized and amortized over the estimated useful life of the software. Depreciation and amortization are 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: Class Range of Estimated Useful Lives Buildings 10 - 50 years Land improvements 15 - 40 years Machinery and equipment 3 - 15 years Furniture and fixtures 15 years Leasehold improvements Lesser of lease term or 15 years Computer software 3 - 5 years Upon retirement or other disposal of property, plant & equipment, the cost and related amount of accumulated depreciation are removed from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds is included in operating income. Included within machinery, equipment and fixtures are spare parts. Spare parts include replacement parts relating to plant & equipment and are either recognized as an expense when consumed or reclassified and capitalized as part of the related asset and depreciated over the remaining useful life of the related asset. Business Combinations The Company accounts for business combinations using the acquisition method of accounting. The Company recognizes the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition. The Company assesses the fair value of assets acquired, including intangible assets, and liabilities assumed using a variety of methods. Each asset acquired and liability assumed is measured at fair value from the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred. During the measurement period, which extends no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, all adjustments are recorded in the 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. 87 Table of Contents Goodwill Goodwill is not amortized but is instead tested for impairment at least annually and whenever events or circumstances indicate that it is more likely-than-not that they may be impaired. The Company has elected to perform the annual test for goodwill impairment as of October 31 of each year. In performing the Company’s annual assessment, the Company is permitted to first perform a qualitative test and if necessary, perform a quantitative test. If the Company is required to perform the quantitative impairment test of goodwill, the Company compares the fair value of a reporting unit to its carrying value. If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. The Company estimates the fair value of its reporting units using discounted cash flow or other valuation models, such as comparative transactions and market multiples. The Company did no t recognize any goodwill impairment charges during the years ended December 31, 2022, 2021 or 2020. Intangible and Long-Lived Assets The Company tests intangible and 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. The Company measures the recoverability of assets to be held and used by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If those assets are considered to be impaired, the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded as permanent reductions in the carrying amount of the assets. See Note 7, “Property, Plant and Equipment, Net” for further details on impairment. Long-lived assets, other than goodwill and other intangible assets that are held for sale are recorded at the lower of the carrying value or the fair market value less the estimated cost to sell. Intangible assets, consisting of patents, trademarks, customer relationships, a currently marketed product, licenses and developed technology related to the Company’s products are amortized in a method equivalent to the estimated utilization of the economic benefit of the asset. Costs of IPR&D intangible assets acquired as part of an asset acquisition that have no alternative future use are expensed when incurred. Milestone payments made after regulatory approval are capitalized as an intangible asset and amortized over an estimated useful life of the product. Cash payments related to acquired IPR&D intangible assets are reflected as an investing cash flow in the Company's consolidated statement of cash flows. The Company’s IPR&D intangible assets includes intangible assets acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region. Because obtaining regulatory approval can include significant risks and uncertainties, the eventual realized value of the acquired IPR&D projects may vary from their fair value at the date of acquisition. The Company classifies IPR&D intangible assets acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts. Upon completion of the associated research and development efforts, the Company will determine the useful life and begin amortizing the assets to reflect their use over their remaining lives. Upon permanent abandonment, the Company writes-off the remaining carrying amount of the associated IPR&D intangible asset. IPR&D intangible assets are tested at least annually as of October 31 or when a triggering event occurs that could indicate a potential impairment and any impairment loss is recognized in the Company’s consolidated statements of operations. See Note 11, “Intangibles, net and Goodwill” for further details on impairment. Contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, product and environmental liability. The Company records accruals for those loss contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company does not recognize gain contingencies until realized. Convertible Notes Effective as of January 1, 2021, the Company early adopted the provisions of 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . Upon adoption, the Company determined there was no impact for the year ended December 31, 2021. The provisions of ASU 2020-06 became applicable for the year ended December 31, 2022 in connection with the issuance of the Notes. 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 88 Table of Contents embedded conversion features. The Company evaluates convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The change in fair value of any separately recognized derivative is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation. Fair Values of Financial Instruments The estimated fair values of the Company’s financial instruments, including its cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate the carrying values of these instruments due to their short term nature. The Company’s long-term debt has triggering events that would impact the fair value of the instruments. The Company determined that no triggering event has occurred during the year ended December 31, 2022. Since no triggering events have occurred, the estimated fair value of the Company’s long term debt approximates its carrying values. The fair value See Note 4, “Fair Value of Financial Instruments”. Contingent Consideration Liabilities The estimated fair value of contingent consideration liabilities, initially measured and recorded on the acquisition date, are considered to be a Level 3 instrument and are reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value. The contingent consideration liabilities are recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in general and administrative expenses in the consolidated statements of operations. The estimated fair value is determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that include significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success. Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement. Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement. Derivative Instruments The Company has used interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Further, the Company must formally document the hedging relationship at inception and, on at least a quarterly basis, continually reevaluate the relationship to ensure it remains highly effective throughout the life of the hedge. The Company does not enter into derivative financial instruments for speculative or trading purposes. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. During the years ended December 31, 2022, 2021 and 2020, the Company incurred $ 26.0 million, $ 17.5 million and $ 5.2 million, respectively in advertising and promotion costs, which are included in sales and marketing in the consolidated statements of operations. Research and Development Research and development costs are expensed as incurred and relate primarily to the development of new products to add to the Company’s portfolio and costs related to its medical affairs and medical information functions. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and recognized as an expense as the goods are delivered or the related services are performed. Foreign Currency The consolidated statements of operations of the Company’s foreign subsidiaries are translated into U.S. Dollars using weighted-average exchange rates. The net assets of the Company’s foreign subsidiaries are translated into U.S. Dollars using the end of period exchange rates. The impact from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which is included in accumulated other comprehensive loss in the consolidated balance sheets. Remeasurement of the Company’s foreign currency denominated transactions are included in net income. Transaction gains and losses are reported as a component of other loss (income) in the consolidated statements of operations. 89 Table of Contents Stock-Based Compensation The Company’s stock-based compensation cost is measured at the grant date of the stock-based award based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of the awards that will be forfeited. The Company estimates the fair value of each stock-based award on its measurement date using either the current market price of the stock, the Black-Scholes option valuation model or the Monte Carlo simulation valuation model, whichever is most appropriate. The Black-Scholes and Monte Carlo simulation valuation models incorporate assumptions such as stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. Expected volatility is based on the historical volatility of the Company’s stock price. The risk-free interest rates are based on quoted U.S. Treasury rates for securities with maturities approximating the awards’ expected lives. Expected lives are principally based on the Company’s historical exercise experience with previously issued awards. The expected dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying any in the foreseeable future. Expense for performance restricted stock awards is recognized based upon the fair value of the awards on the date of grant and the number of shares expected to vest based on the terms of the underlying award agreement and the requisite service period(s). Other Loss (Income) Other loss (income) consisted of the following: Year Ended December 31, (in thousands) 2022 2021 2020 Foreign currency losses (gains) $ 256 $ 274 $ 260 Tax indemnification expense (income), net 9,554 7,121 ( 2,218 ) Interest income ( 2,613 ) ( 45 ) ( 238 ) Interest rate swap termination ( 5,494 ) — — Other — — ( 2 ) Total other loss (income) $ 1,703 $ 7,350 $ ( 2,198 ) Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income. For the Company, other comprehensive income (loss) consists of foreign currency translation gains and losses as well as realized and unrealized gains and losses on cash flow hedges related to the Company’s interest rate swaps. The accumulated other comprehensive income (loss) balance consists entirely of foreign currency translation gains and losses and realized and unrealized gains and losses on outstanding cash flow hedges related to the Company’s interest rate swaps. Asset Retirement Obligations The Company’s compliance with federal, state, local and foreign environmental laws and regulations may require it to remove or mitigate the effects of the disposal or release of chemical substances in jurisdictions where it does business or maintains properties. The Company establishes accruals when those costs are legally obligated and can be reasonably estimated. Accrual amounts are estimated, which may include the assistance of third party environmental specialists, and are based on currently available information, regulatory requirements, remediation strategies, historical experience, the relative shares of the total remediation costs, a relevant discount rate, and the time periods of when estimated costs can be reasonably predicted. Changes in these assumptions could impact the Company’s future reported results. The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts campus. The Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an asset retirement obligation. The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. The liability is measured at the present value of the obligation expected to be incurred and is adjusted in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying values of the related long-lived assets and depreciated over the assets’ useful lives. 90 Table of Contents The Company has identified conditional asset retirement obligations related to the future removal and disposal of asbestos contained in certain of the buildings located on the Company’s North Billerica, Massachusetts campus. The Company believes the asbestos is appropriately contained and it is compliant with all applicable environmental regulations. If these properties undergo major renovations or are demolished, certain environmental regulations are in place, which specify the manner in which asbestos must be handled and disposed. The Company is required to record the fair value of these conditional liabilities if they can be reasonably estimated. As of December 31, 2022 and 2021, sufficient information was not available to estimate a liability for such conditional asset retirement obligations as the obligations to remove the asbestos from these properties have indeterminable settlement dates. As such, no liability for conditional asset retirement obligations has been recorded in the accompanying consolidated balance sheets as of December 31, 2022 and 2021. Self-Insurance Reserves The Company’s consolidated balance sheets at December 31, 2022 and 2021 include $ 0.9 million and $ 0.7 million of accrued liabilities associated with employee medical costs that are retained by the Company, respectively. The Company estimates the required liability of those claims on an undiscounted basis based upon various assumptions which include, but are not limited to, the Company’s historical loss experience and projected loss development factors. The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents (frequency) and change in the ultimate cost per incident (severity). Recent Accounting Pronouncements The Company has not adopted any new accounting standards during the year ended December 31, 2022. 91 Table of Contents 3. Revenue from Contracts with Customers Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. Disaggregation of Revenue The following table summarizes revenue by revenue source as follows: Year Ended December 31, Major Products/Service Lines (in thousands) 2022 2021 2020 Product revenue, net (1) $ 887,038 $ 400,356 $ 327,695 License and royalty revenues (2) 48,023 24,852 11,715 Total revenues $ 935,061 $ 425,208 $ 339,410 ______________________________ (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 of 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. 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 diagnostic imaging 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, 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 certain German litigation, 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 revenue 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: 92 Table of Contents Year Ended December 31, (in thousands) 2022 2021 2020 DEFINITY $ 244,993 $ 232,759 $ 195,865 TechneLite 88,864 91,293 84,945 Other precision diagnostics 22,825 26,973 36,824 Total precision diagnostics 356,682 351,025 317,634 PYLARIFY 527,405 43,414 — Other radiopharmaceutical oncology 4,102 5,473 10,022 Total radiopharmaceutical oncology 531,507 48,887 10,022 Strategic Partnerships and other revenue 46,872 25,296 11,754 Total revenues $ 935,061 $ 425,208 $ 339,410 Product Revenue, Net The Company sells its products principally to hospitals, independent diagnostic testing facilities, government facilities, integrated delivery networks, radiopharmacies, clinics, and group practices. 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. For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company typically invoices customers upon satisfaction of identified performance obligations. As the Company’s standard payment terms are 30 to 60 days from invoicing, the Company has elected to use the significant financing component practical expedient. The Company allocates the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs upon delivery to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Frequently, the Company receives orders for products to be delivered over multiple dates that may extend across several reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. The Company generally does not separately charge customers for shipping and handling costs, but any shipping and handling costs charged to customers are included in product revenue, net. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a current liability. Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the 93 Table of Contents Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect product revenue and earnings in the period such variances become known. Rebates and Allowances: The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The Company establishes a liability for such amounts, which is included in accrued expenses in the accompanying consolidated balance sheets. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes and administrative fees the Company is required to pay to group purchasing organizations. The Company estimates the amount of rebates and allowances that are explicitly stated in the Company’s contracts based on a combination of actual purchases and an estimate of the customer’s buying patterns. Product Returns: The Company generally offers customers a limited right of return due to non-conforming product. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. 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 Allowances Balance, January 1, 2021 $ 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 Provision related to current period revenues 26,683 Adjustments relating to prior period revenues 70 Payments or credits made during the period ( 24,331 ) Balance, December 31, 2022 $ 13,399 License and Royalty Revenues The Company has entered into licensing agreements, under which it licenses certain rights to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. The Company also has distribution licenses which are treated as combined performance obligations with the delivery of its products and are classified as product revenue, net. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the five-step approach stated earlier. The Company uses judgment in determining the number of performance obligations in a license agreement by assessing whether the license is distinct or should be combined with another performance obligation, as well as the nature of the license. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success. Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. 94 Table of Contents Milestone Payments: At the inception of each arrangement that includes development or sales milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. 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. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and royalty revenues and earnings in the period of adjustment. At December 31, 2022, the Company is constraining variable consideration related to development milestone payments requiring regulatory approvals and sales milestone payments related to achievement of certain sales targets. Royalty Revenues: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Contract Costs The Company recognizes an asset for incremental costs of obtaining a contract with a customer if it expects to recover those costs. The Company’s sales incentive compensation plans qualify for capitalization since these plans are directly related to sales achieved during a period of time. However, the Company has elected the practical expedient to expense the costs as they are incurred, within sales and marketing expenses, since the amortization period is less than one year. The Company recognized certain revenues as follows: Year Ended December 31, (in thousands) 2022 2021 Amounts included in the contract liability at the beginning of the period $ 244 $ 33 The Company did not record any revenue related to performance obligations satisfied (or partially satisfied) in previous periods during the years ended December 31, 2022 and 2021. The Company’s performance obligations are typically part of contracts that have an original expected duration of one year or less. As such, the Company is not disclosing the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially satisfied) as of the end of the reporting period. 95 Table of Contents 4. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability of fair value measurements, financial instruments are categorized based on a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: • Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. • Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). • Level 3 — Unobservable inputs that reflect a Company’s estimates about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data. The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of money market funds, interest rate swaps, a contingent receivable and contingent consideration liabilities. The Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the consolidated balance sheets at fair value using quoted prices in active markets for identical assets. The fair value of the interest rate swaps 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. The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the Progenics Acquisition at fair value based on inputs that are not observable in the market. Please refer to Note 8, “Business Combinations”, for further details on the acquisition. The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis: December 31, 2022 (in thousands) Total Fair Value Level 1 Level 2 Level 3 Assets: Money market $ 342,646 $ 342,646 $ — $ — Total assets $ 342,646 $ 342,646 $ — $ — Liabilities: Contingent consideration liabilities $ 111,600 $ — $ — $ 111,600 Total liabilities $ 111,600 $ — $ — $ 111,600 December 31, 2021 (in thousands) Total Fair Value Level 1 Level 2 Level 3 Assets: 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 Liabilities: Contingent consideration liabilities 86,200 — — 86,200 Total liabilities $ 86,200 $ — $ — $ 86,200 During the years ended December 31, 2022 and 2021, there were no transfers into or out of Level 3. On December 2, 2022, the Company voluntarily terminated the interest rate swap contracts in connection with the refinancing of debt. 96 Table of Contents 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. (“CytoDyn”) 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. During the fourth quarter of 2022, the Company reduced the probability to zero as CytoDyn withdrew their regulatory application. 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, subject to a maximum cap. Refer to Note 1, “Description of Business” for further details on the CVRs. The Company considers the contingent consideration liabilities relating to the CVRs a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value of these had been determined based on Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. Based on the U.S. net sales generated by PYLARIFY in 2022, the Company currently expects to pay out the full amount of the CVRs from available cash in the first half of 2023. The Company also assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”). These contingent consideration liabilities include potential payments of up to $ 70.0 million if the Company attains certain net sales targets primarily for AZEDRA and 1095 and a $ 5.0 million 1095 commercialization milestone. Additionally, there is a potential payment of up to $ 10.0 million related to a 1404 commercialization milestone. The Company’s total potential payments related to the 2013 Acquisition are approximately $ 85.0 million. The Company considers the contingent consideration liabilities relating to 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 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 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 as of December 31, 2022. Fair Value as of Assumptions (in thousands) December 31, 2022 December 31, 2021 Valuation Technique Unobservable Input December 31, 2022 December 31, 2021 Contingent receivable: Regulatory milestone $ — $ 2,500 Probability adjusted discounted cash flow model Period of expected milestone achievement N/A 2022 Probability of success 0 % 70 % Discount rate N/A 17 % Royalties — 6,800 Probability adjusted discounted cash flow model Probability of success 0 % 10 % - 60 % Discount rate N/A 17 % Total $ — $ 9,300 97 Table of Contents Fair Value as of Assumptions (in thousands) December 31, 2022 December 31, 2021 Valuation Technique Unobservable Input December 31, 2022 December 31, 2021 Contingent consideration liability: Net sales targets - PYLARIFY (CVRs) $ 99,700 $ 73,200 Probability adjusted discounted cash flow model (as of 12/31/2022) Monte Carlo simulation (as of 12/31/2021) Period of expected milestone achievement and sales targets 2022 - 2023 2022 - 2023 Probability of success 100 % N/A Discount rate N/A 17 % 1095 commercialization milestone 1,700 1,900 Probability adjusted discounted cash flow model Period of expected milestone achievement 2026 2026 Probability of success 40 % 40 % Discount rate 3.8 % 1.3 % Net sales targets - AZEDRA and 1095 10,200 11,100 Monte Carlo simulation Probability of success and sales targets 20 % - 100 % 40 % - 100 % Discount rate 16 % - 17 % 16 % - 17 % Total $ 111,600 $ 86,200 For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated: Financial Assets Financial Liabilities (in thousands) Years Ended December 31, Years Ended December 31, 2022 2021 2022 2021 Fair value, beginning of period $ 9,300 $ 11,300 $ 86,200 $ 15,800 Changes in fair value included in net income (loss) ( 9,300 ) ( 2,000 ) 25,400 70,400 Fair value, end of period $ — $ 9,300 $ 111,600 $ 86,200 The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in a general and administrative expense of $ 34.7 million for the year ended December 31, 2022 and was primarily due to changes in revenue forecasts, changes in market conditions, an increase in discount rates (excluding the CVRs) and the passage of time. The Company expects to make all applicable cash payments related to the CVRs in the first half of 2023. As of December 31, 2022, the Company had $ 99.7 million in current liabilities to account for the expected payments related to the CVRs. 98 Table of Contents 5. Income Taxes The components of income (loss) before provision (benefit) for income taxes consists of the following: Year Ended December 31, (in thousands) 2022 2021 2020 U.S. $ 29,012 $ ( 76,389 ) $ ( 5,495 ) International ( 2,293 ) 1,351 ( 5,984 ) Income (loss) before income taxes $ 26,719 $ ( 75,038 ) $ ( 11,479 ) The Company’s provision (benefit) for income taxes consists of the following: Year Ended December 31, (in thousands) 2022 2021 2020 Current Federal $ 42,532 $ — $ — State 4,302 ( 8,166 ) 3,158 International ( 166 ) ( 30 ) 170 46,668 ( 8,196 ) 3,328 Deferred Federal ( 39,920 ) 1,048 ( 1,506 ) State ( 8,315 ) 3,058 ( 178 ) International 219 331 350 ( 48,016 ) 4,437 ( 1,334 ) Income tax (benefit) expense $ ( 1,348 ) $ ( 3,759 ) $ 1,994 The reconciliation of income taxes at the U.S. federal statutory rate to the income tax (benefit) expense is as follows: Year Ended December 31, (in thousands) 2022 2021 2020 U.S. statutory rate $ 5,611 $ ( 15,758 ) $ ( 2,411 ) Permanent items 2,309 1,764 1,176 Acquisition costs - Progenics — — 2,723 Recognition of deferred tax asset - assets held for sale — — ( 3,000 ) Section 162(m) 247 1,028 717 Uncertain tax positions ( 12,629 ) ( 8,952 ) 2,818 Other tax credits ( 4,085 ) ( 990 ) ( 1,065 ) State and local taxes 67 656 1,457 Impact on deferred taxes of change in tax rate 4,169 3,049 — Non-deductible changes in fair value of contingent assets and liabilities 5,422 15,015 230 Foreign tax rate differential 68 23 ( 254 ) Valuation allowance ( 30 ) ( 400 ) ( 318 ) Benefit of windfall related to stock compensation ( 4,612 ) ( 1,164 ) ( 128 ) Change in indemnification deferred tax asset 2,343 1,786 ( 590 ) Other ( 228 ) 184 639 Income tax (benefit) expense $ ( 1,348 ) $ ( 3,759 ) $ 1,994 The components of deferred income tax assets (liabilities) are as follows: 99 Table of Contents December 31, (in thousands) 2022 2021 Deferred Tax Assets Federal benefit of state tax liabilities $ 1,739 $ 4,292 Reserves, accruals and other 31,532 27,159 Inventory obsolescence 919 297 Capitalized research and development 79,946 768 Amortization of intangibles other than goodwill — 502 Net operating loss carryforwards 88,014 122,944 Depreciation — 1,102 Deferred tax assets 202,150 157,064 Deferred Tax Liabilities Reserves, accruals and other ( 5,354 ) ( 3,026 ) Intangible assets ( 80,770 ) ( 87,351 ) Amortization of intangibles other than goodwill ( 385 ) — Depreciation ( 1,469 ) — Deferred tax liability ( 87,978 ) ( 90,377 ) Less: valuation allowance ( 3,525 ) ( 3,923 ) $ 110,647 $ 62,764 Recorded in the accompanying consolidated balance sheets as: Noncurrent deferred tax assets, net $ 110,647 $ 62,764 The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Under the Act, research and experimental expenditures incurred for tax years beginning after December 31, 2021, must be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. If the requirement to capitalize Section 174 expenditures is not modified, it may also impact our effective tax rate and our cash tax liability in future years.The increase in worldwide net deferred tax asset is primarily due to the tax capitalization of the Company’s current year research and development expenses that are not currently deductible in 2022, offset by utilization of a portion of its net operating losses. The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realizability of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluated all available positive and negative evidence. As of December 31, 2022 and 2021, the Company maintains a valuation allowance of $ 3.5 million and $ 3.9 million, respectively, related to net deferred tax assets of certain of its foreign subsidiaries and U.S. acquired tax credits. Utilization of net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 (“IRC Section 382”) and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change, as defined by IRC Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. At December 31, 2022, the Company had U.S. federal net operating loss carryforwards of approximately $ 338.4 million, $ 200.4 million of which will expire between 2024 and 2037, and $ 138.0 million of which can be carried forward indefinitely. The Company’s state net operating losses are $ 11.6 million on a tax-effected basis, which will expire between 2024 and 2040. The Company has state research credit carryforwards of $ 2.9 million, which will expire between 2024 and 2037. The Company has state investment tax credit carryforwards of $ 1.4 million net of federal impact which have no expiration date. The Company’s U.S. federal income tax returns are subject to examination for three years after the filing date of the return. The state and foreign income tax returns are subject to examination for periods varying from three to four years after filing, depending on the specific jurisdictions’ statutes of limitation, and in the case of Sweden, up to six years after the end of the financial year. 100 Table of Contents A reconciliation of the Company’s changes in uncertain tax positions for 2022 and 2021 is as follows: (in thousands) Amount Balance of uncertain tax positions as of January 1, 2021 $ 5,292 Additions related to current year tax positions — Reductions related to prior year tax positions ( 188 ) Settlements ( 1,446 ) Lapse of statute of limitations — Balance of uncertain tax positions as of December 31, 2021 3,658 Additions related to current year tax positions — Reductions related to prior year tax positions ( 1,180 ) Settlements ( 306 ) Lapse of statute of limitations ( 692 ) Balance of uncertain tax positions as of December 31, 2022 $ 1,480 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 an agreement to indemnify with BMS for any payments made to settle those uncertain tax positions with the taxing authorities. 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. As these reserves change, adjustments are included in income tax expense while the offsetting adjustment is included in other income. Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities. As of December 31, 2022 and 2021, total liabilities for uncertain tax positions including interest and penalties were $ 8.3 million and $ 20.9 million, respectively, consisting of uncertain tax positions of $ 1.5 million and $ 3.7 million, respectively, interest accruals of $ 6.4 million and $ 16.5 million, respectively, and penalty accruals of $ 0.4 million and $ 0.8 million, respectively. As of December 31, 2022 and 2021, these liabilities were included in other long-term liabilities. Included in the 2022, 2021 and 2020 tax provisions are a benefit of $ 12.6 million, a benefit of $ 9.0 million and an expense of $ 2.8 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 $ 3.9 million and $ 13.5 million at December 31, 2022 and 2021, respectively. Included in other (income) loss for the years ended December 31, 2022, 2021 and 2020, is tax indemnification expense (income), net of $ 9.6 million, $ 7.1 million and $( 2.2 ) million, respectively. On August 16, 2022, the “Inflation Reduction Act” (H.R. 5376) was signed into law in the United States. We do not currently expect the Inflation Reduction Act to have a material impact on our financial results. 6. Inventory Inventory consisted of the following: December 31, (in thousands) 2022 2021 Raw materials $ 19,987 $ 15,505 Work in process 8,234 13,042 Finished goods 7,254 6,582 Total inventory $ 35,475 $ 35,129 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 had been 101 Table of Contents manufactured through the Company’s in-house manufacturing capabilities. The Company received regulatory approval to manufacture DEFINITY at its new in-house manufacturing facility during the first quarter of 2022 and has no inventory pending regulatory approval as of December 31, 2022. 7. Property, Plant and Equipment, Net Property, plant and equipment, net, consisted of the following: December 31, (in thousands) 2022 2021 Land $ 13,450 $ 13,450 Buildings 76,329 73,559 Machinery, equipment and fixtures 92,604 83,608 Computer software 25,864 24,384 Construction in progress 14,047 10,686 222,294 205,687 Less: accumulated depreciation and amortization ( 100,128 ) ( 88,915 ) Total property, plant and equipment, net $ 122,166 $ 116,772 Depreciation and amortization expense related to property, plant & equipment, net, was $ 13.7 million, $ 13.2 million and $ 12.5 million for the years ended December 31, 2022, 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 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. 8. 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 stock options 7,125 Fair value of bridge loan settled at close 10,074 Fair value of contingent considerations (CVRs) 3,700 Total consideration transferred $ 419,009 102 Table of Contents 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 ) Other long-term liabilities ( 30,778 ) ( 380 ) ( 31,158 ) 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. 103 Table of Contents 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 $ 11.9 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the year ended December 31, 2020, respectively. These costs are recorded in general and administrative expenses in the consolidated statements of operations. Progenics Pro Forma Financial Information Progenics has been included in the Company’s consolidated financial statements since the acquisition date. Progenics contributed revenues of $ 12.4 million, as well as a net loss of $ 27.1 million to the Company’s consolidated statement of operations for the year ended December 31, 2020. The following unaudited pro forma financial information presents the Company’s results as if the Progenics Acquisition had occurred on January 1, 2019: Year Ended December 31, 2020 (in thousands) Amount Pro forma revenue $ 350,315 Pro forma net loss $ 29,190 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. 9. 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. 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 consolidated financial statements. The following table summarizes the major classes of assets and liabilities sold as of January 29, 2021, the date of sale: 104 Table of Contents (in thousands) January 29, 2021 Current Assets: Cash and cash equivalents $ 540 Accounts receivable, net 1,959 Inventory 530 Other current assets 65 Total current assets 3,094 Non-Current Assets: Property, plant & equipment, net 780 Intangibles, net 96 Other long-term assets 774 Total assets held for sale $ 4,744 Current Liabilities: Accounts payable $ 185 Accrued expense and other liabilities 369 Total current liabilities 554 Non-Current Liabilities: Asset retirement obligations 306 Other long-term liabilities 588 Total liabilities held for sale $ 1,448 The sale resulted in a pre-tax book gain of $ 15.3 million, which was recorded within operating income (loss) in the consolidated statements of operations for the year ended December 31, 2021. 10. 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 Somerset, New Jersey sites. As of December 31, 2022, the liability is measured at the present value of the obligation expected to be incurred, of approximately $ 25.1 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: (in thousands) Amount Balance, January 1, 2022 $ 20,833 Change in useful life estimate 280 Accretion expense 1,430 Balance, December 31, 2022 $ 22,543 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. The Company recorded a non-cash adjustment of $ 5.3 million in 2021 to anticipate a revision in the end of useful life by the end of 2022. 105 Table of Contents 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 $ 30.3 million surety bond. 11. Intangibles, Net and Goodwill Intangibles, net, consisted of the following: December 31, 2022 (in thousands) Useful Lives (in years) Amortization Method Cost Accumulated Amortization Net Trademarks 15 - 25 Straight-Line $ 13,540 $ ( 12,061 ) $ 1,479 Customer relationships 15 - 25 Accelerated 96,681 ( 95,009 ) 1,672 Currently marketed product 9 - 15 Straight-Line 275,700 ( 47,628 ) 228,072 Licenses 11 - 16 Straight-Line 85,800 ( 19,101 ) 66,699 Developed technology 9 Straight-Line 2,400 ( 677 ) 1,723 IPR&D N/A N/A 15,640 — 15,640 Total $ 489,761 $ ( 174,476 ) $ 315,285 December 31, 2021 (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 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 N/A 15,640 — 15,640 Total $ 489,960 $ ( 141,450 ) $ 348,510 The Company recorded amortization expense for its intangible assets of $ 33.2 million, $ 27.5 million and $ 10.8 million for the years ended December 31, 2022, 2021 and 2020, 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 intangible assets as of October 31, 2020. As a result of a timing delay in the development of an AZEDRA IPR&D intangible asset due to the impact of COVID-19, the Company determined that the carrying value of $ 18.3 million exceeded the fair value of the asset. Accordingly, the Company recorded a non-cash impairment charge of $ 2.7 million for the year ended December 31, 2020 in research and development expenses in the consolidated statements of operations. The estimated fair value of the AZEDRA IPR&D intangible asset was determined based on the present values of the expected cash flows. 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. 106 Table of Contents The below table summarizes the estimated aggregate amortization expense expected to be recognized on the above intangible assets: (in thousands) Amount 2023 $ 32,638 2024 32,563 2025 32,508 2026 32,497 2027 32,482 2028 and thereafter 136,957 Total $ 299,645 Changes in the carrying amounts of goodwill for the years ended December 31, 2022 and 2021, were as follows: December 31, (in thousands) 2022 2021 Balance, Beginning of year $ 61,189 $ 58,632 Increase from acquisition — 2,557 Balance, End of year $ 61,189 $ 61,189 12. 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: December 31, (in thousands) 2022 2021 Compensation and benefits $ 30,425 $ 22,730 Freight, distribution and operations 49,067 16,157 Accrued rebates, discounts and chargebacks 13,399 10,977 Accrued professional fees 8,668 2,850 Other 25,525 5,354 Total accrued expenses and other liabilities $ 127,084 $ 58,068 Operating lease liabilities (Note 17) $ 25,442 $ 16,546 Long-term contingent liability (Note 4) 11,900 86,200 Other long-term liabilities 8,813 22,148 Total other long-term liabilities $ 46,155 $ 124,894 13. Long-Term Debt, Net, and Other Borrowings As of December 31, 2022, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows: 107 Table of Contents (in thousands) Amount 2023 $ — 2024 — 2025 — 2026 — 2027 575,000 Total principal outstanding 575,000 Unamortized debt issuance costs ( 17,519 ) Finance lease liabilities 585 Total 558,066 Less: current portion ( 354 ) Total long-term debt, net, and other borrowings $ 557,712 In December 2022, the Company refinanced its existing credit facility, consisting of (i) a $ 200.0 million five-year term loan facility (the “2019 Term Facility”) and (ii) a $ 200.0 million five-year revolving credit facility (the “2019 Revolving Facility” and, together with the 2019 Term Facility, the “2019 Facility”), with a new $ 100.0 million delayed draw term loan facility (the “2022 Term Facility” and, the loans thereunder, the “Term Loans”) and a new $ 350.0 million five-year revolving credit facility (the “2022 Revolving Facility” and, together with the 2022 Term Facility, the “2022 Facility”). The Company used approximately $ 7.8 million of cash on hand to primarily repay the principal amount of the loans outstanding related to the 2019 Facility through the nine months ended September 30, 2022. In addition, in December 2022, the Company used approximately $ 167.6 million of cash on hand to repay in full the aggregate remaining principal amount of the loans outstanding under the 2019 Facility and to pay related interest, transaction fees and expenses. The Company paid off the 2019 Term Facility using available cash and did not utilize another term loan to fund the payoff. While the 2022 Term Facility allowed for a delayed draw term loan, the loan was not drawn upon. The Company recorded a loss on extinguishment of debt of $ 0.6 million related to the write-off of unamortized debt issuance costs and debt discounts associated with the 2019 Term Facility. In addition, the Company incurred and capitalized $ 2.7 million of new deferred financing costs related to the refinancing. 2022 Term Facility The Company expected to draw from the 2022 Term Facility only if a proposed offering of notes by the Company was not consummated. The commitment of the lenders to provide the 2022 Term Facility was terminated upon the completion of such note offering in December 2022. The 2022 Term Facility included a commitment fee equal to 0.20 % per annum on the average daily unused amount of the 2022 Term Facility, which would have been payable commencing on January 16, 2023 and would have ended on the earliest of (i) the day the Term Loans under the 2022 Term Facility were funded, (ii) the last day of the delayed draw availability period and (iii) the day the commitments under the 2022 Term Facility were reduced to zero. The Company did not draw from the 2022 Term Facility and, as such, no interest is due under this instrument. 2022 Revolving Facility Under the terms of the 2022 Revolving Facility, the lenders are committed to extending credit to the Company from time to time until December 2, 2027 consisting of revolving loans (the “Revolving Loans”) in an aggregate principal amount not to exceed $ 350.0 million (the “Revolving Commitment”) at any time, including a $ 20.0 million sub-facility for the issuance of letters of credit (the “Letters of Credit”) and a $ 10.0 million sub-facility for swingline loans (the “Swingline Loans”). The Letters of Credit, Swingline Loans and the Revolving Loans, if used, are expected to be used for working capital and for other general corporate purposes. The Revolving Loans bear interest, with pricing based from time to time at the Company’s election, at (i) the secured overnight financing rate as published by the Federal Reserve Bank of New York on its website plus an applicable margin that ranges from 1.50 % to 2.50 % based on the Company’s total net leverage ratio or (ii) the alternative base rate plus an applicable margin that ranges from 0.50 % to 1.50 % based on the Company’s total net leverage ratio. The 2022 Revolving Facility also includes an unused commitment fee at a rate ranging from 0.15 % to 0.35 % per annum based on the Company’s total net leverage ratio. The Company is permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in each case, without premium or penalty. On any business day on which the total amount of outstanding Revolving Loans, Letters of Credit and Swingline Loans exceeds the total Revolving Commitment, the Company must prepay the Revolving 108 Table of Contents Loans in an amount equal to such excess. The Company is not required to make mandatory prepayments under the 2022 Revolving Facility. As of December 31, 2022, there were no outstanding borrowings under the 2022 Revolving Facility. The Company has the right to request an increase to the Revolving Commitment in an aggregate principal amount of up to the sum of $ 335.0 million or consolidated EBITDA for the four consecutive fiscal quarters most recently ended, plus additional amounts in certain circumstances (collectively, the “Incremental Cap”), minus certain incremental term loans made pursuant to specified incremental term loan commitments (“Incremental Term Loans”). The Company has the right to request Incremental Term Loans in an aggregate principal amount of up to the Incremental Cap less any incremental increases to the Revolving Commitment. Proceeds of Incremental Term Loans may be used for working capital and for other general corporate purposes and will bear interest at rates agreed between the Company and the lenders providing the Incremental Term Loans. 2022 Facility Covenants The 2022 Facility contains a number of affirmative, negative and reporting covenants, as well as financial maintenance covenants pursuant to which the Company is required 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 ended December 31, 2022, must be at least 3.00 to 1.00. The maximum total net leverage ratio permitted by the financial covenant is displayed in the table below: 2022 Credit Agreement Period Total Net Leverage Ratio Q1 2023 to Q4 2023 4.00 to 1.00 Q1 2024 and thereafter 3.50 to 1.00 The 2022 Facility contains usual and customary restrictions on the ability of the Company and its subsidiaries to: (i) incur additional indebtedness (ii) create liens; (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; (iv) sell certain assets; (v) pay dividends on, repurchase or make distributions in respect of capital stock or make other restricted payments; (vi) make certain investments; (vii) repay subordinated indebtedness prior to stated maturity; and (viii) enter into certain transactions with its affiliates. Upon an event of default, the Administrative Agent will have the right to declare the loans and other obligations outstanding under the 2022 Facility immediately due and payable and all commitments immediately terminated. The 2022 Facility is guaranteed by Holdings, and certain subsidiaries of LMI, including Progenics and Lantheus MI Real Estate, LLC, and obligations under the 2022 Facility are generally secured by first priority liens over substantially all of the assets of each of LMI, Holdings, and certain subsidiaries of LMI, including Progenics and Lantheus MI Real Estate, LLC (subject to customary exclusions set forth in the transaction documents) owned as of December 2, 2022 or thereafter acquired. Convertible Notes On December 8, 2022, the Company issued $ 575.0 million in aggregate principal amount of 2.625 % Convertible Senior Notes due 2027 (the “Notes”), which includes $ 75.0 million in aggregate principal amount of Notes sold pursuant to the full exercise of the initial purchasers’ option to purchase additional Notes. The Notes were issued under an indenture, dated as of December 8, 2022 (the “Indenture”), among the Company, LMI (the “Guarantor”), a wholly owned subsidiary of the Company, as Guarantor, and U.S. Bank Trust Company, National Association, as Trustee. The net proceeds from the issuance of the Notes were approximately $ 557.8 million after deducting the initial purchasers’ discounts and offering expenses payable by the Company. The Notes are senior unsecured obligations of the Company. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Guarantor. The Notes bear interest at a rate of 2.625 % per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023, and will mature on December 15, 2027 unless earlier redeemed, repurchased or converted in accordance with their terms. The initial conversion rate for the Notes is 12.5291 shares of the Company’s common stock per $1,000 in principal amount of Notes (which is equivalent to an initial conversion price of approximately $ 79.81 per share of the Company’s common stock, representing an initial conversion premium of approximately 42.5 % above the closing price of $ 56.01 per share of the Company’s common stock on December 5, 2022). In no event shall the conversation rate per $1,000 in principal amount of notes exceed 17.8539 shares of the Company’s common stock. Prior to the close of business on the business day immediately preceding September 15, 2027, the Notes may be converted at the option of the holders only upon occurrence of specified events and during certain periods, and thereafter until the close of business on the business day immediately preceding the maturity date, the Notes may be converted at any time. The Company will satisfy any conversion by paying cash up to the aggregate principal amount of the Notes to be converted and by paying or delivering, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted. The Company may redeem for cash all or any 109 Table of Contents portion of the Notes, at its option, on or after December 22, 2025 if the closing sale price per share of the Company’s common stock exceeds 130 % of the conversion price of the Notes for a specified period of time. The redemption price will be equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company evaluated the Notes upon completion of the sale and concluded on the following features: • Conversion Feature: The Company determined that the conversion feature qualifies for the classification of equity. As a result, the conversion feature should not be bifurcated as a derivative instrument and the Notes were accounted for as a single liability. • Redemption Features: The redemption features were reviewed within the Notes and the Company determined that the redemption features are closely related to the Notes and as such should not be separately accounted for as a bifurcated derivative instrument. • Additional Interest Features: The Notes may result in additional interest if the Company fails to timely file any document or report that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The Company will pay additional interest on the notes at a rate equal to 0.25 % to 0.50 % per annum based on the principal amount of notes outstanding for each day the Company failure to file has occurred or the notes are not otherwise freely tradable. Further, if the notes are assigned a restricted CUSIP number or the notes are not otherwise freely tradable pursuant to Rule 144 under the Securities Act by holders other than our affiliates or holders that were our affiliates at any time during the three months immediately preceding as of the 385th day after the last date of original issuance of the notes offered hereby, the Company will pay additional interest on the notes at a rate equal to (i) 0.25 % to 0.50 % per annum based on the principal amount of notes outstanding for each day until the restrictive legend has been removed from the notes, the notes are assigned an unrestricted CUSIP and the notes are freely tradable. The Company concluded that the interest feature is unrelated to the credit risk and should be bifurcated from the Notes, however, the Company assessed the probabilities of triggering events occurring under these features and does not expect to trigger the aforementioned events. These events will continue to be monitored to determine whether the interest feature will be bifurcated if it has value. As of December 31, 2022, the carrying value of the Notes was $ 575.0 million, had an unamortized discount of zero , and the fair value of the liability was $ 575.0 million. The Company recorded interest expense of approximately $ 1.3 million related to the Notes for the year ended December 31, 2022. Royalty-Backed Loan On June 19, 2020, as a result of the acquisition, the Company assumed Progenics’ outstanding debt as of such date in the amount of $ 40.2 million. Progenics, through a wholly-owned subsidiary MNTX Royalties Sub LLC (“MNTX Royalties”), entered into a $ 50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P. (“HCRP”) on November 4, 2016. The Royalty-Backed Loan bore interest at a per annum rate of 9.5 % and was scheduled to mature on June 30, 2025. 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. 14. Derivative Instruments The Company has used interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt. In March 2020, the Company entered into interest rate swap contracts to fix the LIBOR rate on a notional amount of $ 100.0 million through May 31, 2024. The average fixed LIBOR rate on the interest rate swaps was approximately 0.82 %. This agreement involved the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount. The interest rate swaps were designated as cash flow hedges. In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s consolidated balance sheets at fair value, and changes in the fair value of the swap agreements were 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. On December 2, 2022, the Company voluntarily terminated the interest rate swap contracts in connection with the refinancing of debt. Upon termination, the Company received approximately $ 5.6 million in cash and the remaining balance of approximately $ 5.5 million in accumulated other comprehensive income (loss) related to the interest rate swap contracts were reclassified into earnings. 110 Table of Contents The following table presents the location and fair value amounts of derivative instruments reported in the consolidated balance sheet: (in thousands) December 31, 2022 December 31, 2021 Derivatives type Classification Assets: Interest rate swap Other long-term assets $ — $ 357 15. Accumulated Other Comprehensive Loss The components of Accumulated Other Comprehensive Loss, net of tax of zero and $ 0.1 million for the year ended December 31, 2022 and 2021, respectively, consisted of the following: (in thousands) Foreign currency translation Unrealized loss on cash flow hedges Accumulated other comprehensive loss Balance at January 1, 2022 $ ( 754 ) $ 269 $ ( 485 ) Other comprehensive income (loss) before reclassifications ( 505 ) 5,838 5,333 Amounts reclassified to earnings — ( 6,107 ) ( 6,107 ) Balance at December 31, 2022 $ ( 1,259 ) $ — $ ( 1,259 ) Balance at January 1, 2021 $ ( 630 ) $ ( 1,418 ) $ ( 2,048 ) Other comprehensive income (loss) before reclassifications ( 124 ) 962 838 Amounts reclassified to earnings — 725 725 Balance at December 31, 2021 $ ( 754 ) $ 269 $ ( 485 ) 16. Stock-Based Compensation Equity Incentive Plans As of December 31, 2022, 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 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. The Company adopted its 2015 Plan in June 2015 and subsequently amended the plan in April 2016, 2017, 2019, 2021 and 2022 which increased the common stock reserved for issuance under the plan to an aggregate 10,930,277 shares. The Company assumed Progenics equity plans due to the acquisition as discussed in Note 1, “Description of Business”. The Company no longer grants new equity awards under the Progenics equity plans. Stock-based compensation expense recognized in the consolidated statements of operations is summarized below: Year Ended December 31, (in thousands) 2022 2021 2020 Cost of goods sold $ 4,422 $ 2,370 $ 2,820 Sales and marketing 6,185 2,472 1,821 General and administrative 14,876 9,092 7,333 Research and development 3,779 2,000 2,101 Total stock-based compensation expense $ 29,262 $ 15,934 $ 14,075 Stock Options Stock option awards under the 2015 Plan are granted with an exercise price equal to the fair value of the Company’s common stock at the date of grant. All option awards have a ten-year contractual term. 111 Table of Contents A summary of option activity for 2022 is presented below: Total Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance at January 1, 2022 972,939 $ 18.73 4.7 10,145,135 Options granted 317,789 $ 53.55 Options exercised ( 397,822 ) $ 20.07 Options cancelled and forfeited ( 18,157 ) $ 38.20 Outstanding at December 31, 2022 874,749 $ 30.37 5.8 19,058,224 Vested and expected to vest at December 31, 2022 874,749 $ 30.37 5.8 19,058,224 Exercisable at December 31, 2022 517,424 $ 17.83 3.6 17,141,202 The table below summarizes the key weighted-average assumptions used in valuing stock options granted: Year Ended December 31, 2022 2021 2020 Expected volatility 62.1 % — % 71.1 % Risk-free interest rate 2.0 % — % 0.3 % Expected life (in years) 6.0 — 3.5 Expected dividend yield — — — During the years ended December 31, 2022, 2021 and 2020, 397,822 , 318,662 and 8,868 options were exercised having aggregate intrinsic values of $ 13.1 million, $ 1.6 million and $ 0.1 million, respectively. As of December 31, 2022, there was $ 7.0 million of unrecognized compensation expense related to outstanding stock options, which is expected to be recognized over a weighted-average period of 2.2 years. Restricted Stock A summary of restricted stock awards and restricted stock units activity for 2022 is presented below: Shares Weighted- Average Grant Date Fair Value Per Share Nonvested balance at January 1, 2022 1,330,374 $ 19.04 Granted 649,672 $ 51.51 Vested ( 624,069 ) $ 19.11 Forfeited ( 105,985 ) $ 30.81 Nonvested balance at December 31, 2022 1,249,992 $ 34.65 Restricted stock generally vest over 3 years. As of December 31, 2022, there was $ 30.1 million of unrecognized compensation expense related to outstanding restricted stock, which is expected to be recognized over a weighted-average period of 2.0 years. The weighted average grant-date fair value for restricted stock granted during the fiscal years ended December 31, 2022, 2021 and 2020 was $ 51.51 , $ 20.14 and $ 15.00 per share, respectively. The total fair value of restricted stock vested in fiscal years 2022, 2021 and 2020 was $ 11.9 million, $ 8.8 million and $ 7.6 million, respectively. Total Stockholder Return Restricted Stock Awards (“TSR Awards”) During the years ended December 31, 2022, 2021 and 2020, the Company granted total stockholder return (“TSR”) Awards that include a three-year market condition where the performance measurement period is three years . Vesting of the TSR Awards is based on the Company’s level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year period and is also subject to the continued employment of the grantees. The number of shares 112 Table of Contents that are earned over the performance period ranges from 0 % to 200 % of the initial award. The fair value of these awards are based on a Monte Carlo simulation valuation model with the following assumptions: Year Ended December 31, 2022 2021 2020 Expected volatility 56.6 % 54.0 % 53.3 % Risk-free interest rate 1.7 % 0.3 % 0.7 % Expected life (in years) 2.8 2.8 2.8 Expected dividend yield — — — A summary of TSR Award activity for 2022 is presented below: Shares Weighted- Average Grant Date Fair Value Per Share Nonvested balance at January 1, 2022 590,073 $ 30.49 Granted 304,212 $ 95.31 Vested ( 220,339 ) $ 39.92 Forfeited ( 15,071 ) $ 31.30 Nonvested balance at December 31, 2022 658,875 $ 48.58 As of December 31, 2022, there was $ 18.9 million of unrecognized compensation expense related to outstanding performance restricted stock which is expected to be recognized over a weighted-average period of 2.0 years. The weighted average grant-date fair value for TSR Awards granted during the fiscal years ended December 31, 2022, 2021 and 2020 was $ 95.31 , $ 31.25 and $ 23.43 per share, respectively. The total fair value of TSR Awards vested in fiscal years 2022, 2021 and 2020 was $ 8.8 million, $ 2.0 million and zero , respectively. Common Stock Repurchases In December 2022, the Company’s Board of Directors authorized the repurchase of up to $ 150.0 million in aggregate amount of the Company’s common stock under certain circumstances. The Company used approximately $ 75.0 million of the net proceeds from the Notes to repurchase shares of their common stock from purchasers of the Notes in privately negotiated transactions effected with or through one of the initial purchasers or its affiliate. The purchase price per share of the common stock repurchased in such transactions was equal to the closing sale price per share of the Company’s common stock on the date of the offering memorandum used for the Notes, which was $ 56.01 per share. Following this initial repurchase, The Company may from time to time repurchase additional shares of their common stock. In the year ended December 31, 2022, the Company purchased approximately 1.3 million shares of their outstanding common stock for $ 75.0 million as part of the program. The Company did no t purchase any shares of their outstanding common stock in the years ended December 31, 2021 and 2020, respectively. 17. Leases The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for vehicles, corporate offices and certain equipment. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease agreements with lease and non-lease components are accounted for separately. As the Company’s leases do not provide an implicit rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 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 (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 entered into an operating 113 Table of Contents lease agreement in February 2022 to lease office space in Bedford, Massachusetts, under a lease agreement expiring in June 2031, which commenced and was recorded in December 2022 for $ 11.0 million. Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to apply the short-term lease exemption. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Operating and finance lease assets and liabilities are as follows: (in thousands) Classification December 31, 2022 December 31, 2021 Assets Operating Other long-term assets $ 19,033 $ 8,788 Finance Property, plant and equipment, net 582 556 Total leased assets $ 19,615 $ 9,344 Liabilities Current Operating Accrued expenses and other liabilities $ 2,177 $ 1,599 Finance Current portion of long-term debt and other borrowings 354 392 Noncurrent Operating Other long-term liabilities 25,442 16,546 Finance Long-term debt, net and other borrowings 231 299 Total leased liabilities $ 28,204 $ 18,836 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: (in thousands) Year Ended December 31, 2022 Year Ended December 31, 2021 Operating lease expense $ 1,797 $ 2,312 Finance lease expense Amortization of ROU assets 426 330 Interest on lease liabilities 28 28 Short-term lease expense — 8 Total lease expense $ 2,251 $ 2,678 114 Table of Contents Other information related to leases were as follows: December 31, 2022 December 31, 2021 Weighted-average remaining lease term (Years): Operating leases 7.9 8.6 Finance leases 1.9 2.2 Weighted-average discount rate: Operating leases 4.8 % 4.4 % Finance leases 4.4 % 4.6 % (in thousands) Year Ended December 31, 2022 Year Ended December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,440 $ 2,071 Operating cash flows from finance leases 28 28 Financing cash flows from finance leases 384 339 ROU assets obtained in exchange for lease obligations: Operating leases 11,019 683 Finance leases 582 556 Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows: (in thousands) Operating Leases Finance Leases 2023 $ 3,462 $ 366 2024 3,887 203 2025 4,147 49 2026 4,245 — 2027 4,381 — Thereafter 13,599 — Total future minimum lease payments 33,721 618 Less: interest 6,102 33 Total $ 27,619 $ 585 18. Other Assets Other assets are comprised of the following: December 31, (in thousands) 2022 2021 Prepaid Expenses $ 12,887 $ 10,113 Current Contingent Asset (Note 4) — 2,500 Other Current Assets 205 205 Total other current assets $ 13,092 $ 12,818 ROU Asset (Note 17) $ 19,033 $ 8,788 Long-term Contingent Asset (Note 4) — 6,800 Other Long-Term Assets 15,322 23,170 Total other long-term assets $ 34,355 $ 38,758 115 Table of Contents 19. Net Income (Loss) Per Common Share A summary of net income (loss) per common share is presented below: Year Ended December 31, (in thousands, except per share amounts) 2022 2021 2020 Net income (loss) $ 28,067 $ ( 71,279 ) $ ( 13,473 ) Basic weighted-average common shares outstanding 68,487 67,486 54,134 Effect of dilutive stock options 439 — — Effect of dilutive restricted stock 1,745 — — Diluted weighted-average common shares outstanding 70,671 67,486 54,134 Basic income (loss) per common share $ 0.41 $ ( 1.06 ) $ ( 0.25 ) Diluted income (loss) per common share $ 0.40 $ ( 1.06 ) $ ( 0.25 ) Antidilutive securities excluded from diluted net income (loss) per common share 358 2,893 3,175 Impact of the Notes The Company considered whether the notes are participating securities through the two-class method. The Company determined that if a cash dividend is paid that is greater than the then stock price, the holder of notes will receive cash on an if-converted basis. While this feature is considered to be a participating right; basic earnings per share is only impacted if the Company’s earning exceeds the current share price, regardless of whether such dividend is declared. During the year ended December 31, 2022, no such dividend was declared. In addition, the Company is required to settle the principal amount of the Notes in cash upon conversion, and therefore, the Company uses the if-converted method for calculating any potential dilutive effect of the conversion option on diluted net income per share, if applicable, unless the application of the two-class method is dilutive. The conversion option will have a dilutive impact on net income per share of Common Stock when the average market price per share of the Company's Common Stock for a given period exceeds the conversion price of the Notes of $ 79.81 per share. During the year ended December 31, 2022, the weighted average price per share of the Company's Common Stock was below the conversion price of the Notes. 20. Commitments and Contingencies Purchase Commitments The Company has entered into purchasing arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. As of December 31, 2022, future payments required under purchase commitments are as follows: (in thousands) Amount 2023 5,716 2024 2,716 2025 2,716 2026 2,716 2027 and thereafter 2,716 Total $ 16,580 The Company has entered into agreements which contain certain percentage volume purchase requirements. The Company has excluded these future purchase commitments from the table above since there are no minimum purchase commitments or payments under these agreements. License Agreements The Company has entered into license agreements in which fixed payments have been committed to be paid on an annual basis. As of December 31, 2022, future fixed payments required under license agreements are $ 0.1 million. The Company may be required to pay additional amounts up to approximately $ 200.0 million in contingent payments under the Company’s license agreements. These contingent payments include potential milestone or contractual payment obligations contingent upon the 116 Table of Contents achievement or occurrence of future milestones or events and the amounts and timing of such potential obligations are unknown or uncertain. Legal Proceedings From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. In addition, the Company has in the past been, and may in the future be, subject to investigations by governmental and regulatory authorities, which expose it to greater risks associated with litigation, regulatory or other proceedings, as a result of which the Company could be required to pay significant fines or penalties. The costs and outcome of litigation, regulatory or other proceedings cannot be predicted with certainty, and some lawsuits, claims, actions or proceedings may be disposed of unfavorably to the Company and could have a material adverse effect on the Company’s results of operations or financial condition. In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, could materially and adversely affect its financial condition or results of operations. If a matter is both probable to result in material liability and the amount of loss can be reasonably estimated, the Company estimates and discloses the possible material loss or range of loss. If such loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements. As of December 31, 2022, the Company did not have any material ongoing litigation to which the Company was a party. 21. 401(k) Plan The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S. employees. The 401(k) Plan covers U.S. employees who meet certain eligibility requirements. Under the terms of the 401(k) Plan, the employees may elect to make tax-deferred contributions through payroll deductions within statutory and plan limits, and the Company may elect to make non-elective discretionary contributions. The Company may also make optional contributions to the 401(k) Plan for any plan year at its discretion. Expense recognized by the Company for matching contributions made to the 401(k) Plan was $ 3.1 million, $ 2.6 million and $ 0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. 22. Acquisition of Assets In December 2022, the Company made upfront payments of $ 260.0 million to POINT as a part of an asset acquisition with the potential for additional milestone payments of approximately $ 1.8 billion between the two licensed assets based on U.S. Food and Drug Administration (“FDA”) approval and net sales and commercial milestones. Under the terms of the PNT2002 License Agreement, Lantheus Two, LLC paid POINT an upfront cash payment of $ 250.0 million, and could pay up to an additional $ 281.0 million in milestone payments upon the achievement of specified U.S. and ex-U.S. regulatory milestones related to PNT2002. POINT is also eligible to receive up to $ 1.3 billion in sales milestone payments upon the achievement of specified annual sales thresholds of PNT2002. Under the terms of the PNT2003 License Agreement, Lantheus Three, LLC paid POINT an upfront cash payment of $ 10.0 million, and could pay up to an additional $ 34.5 million in milestone payments upon the achievement of specified U.S. and ex-U.S. regulatory milestones related to PNT2003. POINT is also eligible to receive up to $ 275.0 million in sales milestone payments upon the achievement of specified annual sales thresholds of PNT2003. Additionally, the Company will pay POINT royalties on net sales, beyond certain financial thresholds and subject to conditions, of 20 % for PNT2002 and 15 % for PNT2003. Costs of IPR&D projects acquired as part of an asset acquisition that have no alternative future use are expensed when incurred, and therefore, a charge of $ 260.0 million was recognized in research and development expenses during the year ended December 31, 2022. 23. Segment Information 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 imaging diagnostics, radiotherapeutics, and artificial intelligence solutions designed to enable clinicians to Find, Fight and Follow disease to deliver better patient outcomes. 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. 117 Table of Contents 24. Subsequent Event On February 6, 2023, the Company acquired Cerveau Technologies, Inc. (“Cerveau”). Cerveau’s asset is MK-6240, a second-generation F 18-labeled PET imaging agent that targets Tau tangles in Alzheimer’s disease that will expand our Pharma Services business. Under the terms of the agreement, Lantheus paid an upfront payment of $ 35 million and potentially will pay additional development and commercial milestone payments. Additionally, Lantheus will pay double-digit royalty payments for research revenue and commercial sales. Research revenue is derived from existing partnerships with pharmaceutical companies that use the imaging agent in clinical trials and includes milestone and dose-related payments. Structured as a stock purchase, the agreement specifies, among other things, that the seller will also provide transition and clinical development services for a prescribed time following the closing of the transaction. 118 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.