UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36569


LANTHEUS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


Delaware		35-2318913
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

331 Treble Cove Road		01862
North Billerica,	MA
(Address of principal executive offices)		(Zip Code)


(978)			671-8001
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	LNTH	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act) Yes ☐ No ☑

The registrant had ~~67,690,586~~68,634,063 shares of common stock, $0.01 par value, outstanding as of ~~October 28, 2021.~~April 22, 2022.

Table of Contents

LANTHEUS HOLDINGS, INC.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	65
	Notes to Condensed Consolidated Financial Statements	87
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2521
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3834
Item 4.	Controls and Procedures	3834
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3935
Item 1A.	Risk Factors	4036
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4538
Item 3.	Defaults Upon Senior Securities	4538
Item 4.	Mine Safety Disclosures	4538
Item 5.	Other Information	4538
Item 6.	Exhibits	4639
SIGNATURES		4740

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Lantheus Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	91,475	$	79,612	Cash and cash equivalents	$	105,355	$	98,508
Accounts receivable, net	Accounts receivable, net	64,054		54,002		Accounts receivable, net	172,283		89,336
Inventory	Inventory	33,949		35,744		Inventory	34,249		35,129
Other current assets	Other current assets	12,043		9,625		Other current assets	12,860		12,818
Assets held for sale		—		5,242

Total current assets	Total current assets	201,521		184,225		Total current assets	324,747		235,791
Property, plant and equipment, net	Property, plant and equipment, net	116,441		120,171		Property, plant and equipment, net	116,959		116,772
Intangibles, net	Intangibles, net	356,883		376,012		Intangibles, net	340,204		348,510
Goodwill	Goodwill	61,189		58,632		Goodwill	61,189		61,189
Deferred tax assets, net	Deferred tax assets, net	66,493		70,147		Deferred tax assets, net	47,868		62,764
Other long-term assets	Other long-term assets	45,289		60,634		Other long-term assets	42,199		38,758
Total assets	Total assets	$	847,816	$	869,821	Total assets	$	933,166	$	863,784
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt and other borrowings	Current portion of long-term debt and other borrowings	$	10,356	$	20,701	Current portion of long-term debt and other borrowings	$	12,878	$	11,642

Accounts payable	Accounts payable	20,508		16,284		Accounts payable	22,383		20,787
Accrued expenses and other liabilities	Accrued expenses and other liabilities	46,039		41,726		Accrued expenses and other liabilities	142,396		58,068
Liabilities held for sale		—		1,793

Total current liabilities	Total current liabilities	76,903		80,504		Total current liabilities	177,657		90,497
Asset retirement obligations	Asset retirement obligations	15,185		14,020		Asset retirement obligations	21,514		20,833
Long-term debt, net and other borrowings	Long-term debt, net and other borrowings	166,741		197,699		Long-term debt, net and other borrowings	159,369		163,121
Other long-term liabilities	Other long-term liabilities	89,643		63,393		Other long-term liabilities	58,776		124,894
Total liabilities	Total liabilities	348,472		355,616		Total liabilities	417,316		399,345
Commitments and contingencies (See Note 19)	Commitments and contingencies (See Note 19)	0		0		Commitments and contingencies (See Note 19)	0		0
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued and outstanding)	Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued and outstanding)	—		—		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; 67,659 and 66,875 shares issued and outstanding, respectively)		677		669
Common stock ($0.01 par value, 250,000 shares authorized; 68,570 and 67,739 shares issued and outstanding, respectively)						Common stock ($0.01 par value, 250,000 shares authorized; 68,570 and 67,739 shares issued and outstanding, respectively)	686		677
Additional paid-in capital	Additional paid-in capital	680,819		665,530		Additional paid-in capital	691,516		685,472
Accumulated deficit	Accumulated deficit	(181,010)		(149,946)		Accumulated deficit	(178,263)		(221,225)
Accumulated other comprehensive loss		(1,142)		(2,048)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	1,911		(485)
Total stockholders’ equity	Total stockholders’ equity	499,344		514,205		Total stockholders’ equity	515,850		464,439
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	847,816	$	869,821	Total liabilities and stockholders’ equity	$	933,166	$	863,784

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

Table of Contents

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Revenues	Revenues	$	102,073	$	88,544	$	295,646	$	245,258	Revenues	$	208,880	$	92,509
Cost of goods sold	Cost of goods sold	59,404		52,284		165,859		145,148		Cost of goods sold	79,810		51,479
Gross profit	Gross profit	42,669		36,260		129,787		100,110		Gross profit	129,070		41,030
Operating expenses	Operating expenses									Operating expenses
Sales and marketing	Sales and marketing	17,195		11,609		48,999		28,044		Sales and marketing	20,354		14,173
General and administrative	General and administrative	28,550		18,217		87,865		55,586		General and administrative	37,588		16,138
Research and development	Research and development	11,252		11,684		33,673		20,150		Research and development	12,203		10,360
Total operating expenses	Total operating expenses	56,997		41,510		170,537		103,780		Total operating expenses	70,145		40,671
Gain on sale of assets	Gain on sale of assets	—		—		15,263		—		Gain on sale of assets	—		15,263
Operating loss		(14,328)		(5,250)		(25,487)		(3,670)
Operating income										Operating income	58,925		15,622
Interest expense	Interest expense	1,569		2,808		6,224		6,668		Interest expense	1,509		2,718
Gain on extinguishment of debt	Gain on extinguishment of debt	—		—		(889)		—		Gain on extinguishment of debt	—		(889)
Other loss (income)		3,940		(596)		3,209		(1,702)
Loss before income taxes		(19,837)		(7,462)		(34,031)		(8,636)
Income tax (benefit) expense		(6,422)		(1,076)		(2,967)		1,425
Net loss		$	(13,415)	$	(6,386)	$	(31,064)	$	(10,061)
Net loss per common share:
Other income										Other income	(485)		(549)
Income before income taxes										Income before income taxes	57,901		14,342
Income tax expense										Income tax expense	14,939		5,334
Net income										Net income	$	42,962	$	9,008
Net income per common share:										Net income per common share:
Basic	Basic	$	(0.20)	$	(0.10)	$	(0.46)	$	(0.20)	Basic	$	0.63	$	0.13
Diluted	Diluted	$	(0.20)	$	(0.10)	$	(0.46)	$	(0.20)	Diluted	$	0.61	$	0.13
Weighted-average common shares outstanding:	Weighted-average common shares outstanding:									Weighted-average common shares outstanding:
Basic	Basic	67,623		66,820		67,409		49,858		Basic	68,008		67,094
Diluted	Diluted	67,623		66,820		67,409		49,858		Diluted	70,051		67,714

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

Table of Contents

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands)

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Net loss $ (13,415) $ (6,386) $ (31,064) $ (10,061)
Other comprehensive (loss) income:
Foreign currency translation (240) 185 55 (9)
Unrealized gain (loss) on cash flow hedges, net of tax 98 (89) 851 (1,541)
Total other comprehensive (loss) income (142) 96 906 (1,550)
Comprehensive loss $ (13,557) $ (6,290) $ (30,158) $ (11,611)


	Three Months Ended March 31,
	2022		2021
Net income	$	42,962	$	9,008
Other comprehensive income:

Foreign currency translation	140		102
Unrealized gain on cash flow hedges, net of tax	2,256		706
Total other comprehensive income	2,396		808
Comprehensive income	$	45,358	$	9,816

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

Table of Contents

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands)


		Nine Months Ended September 30, 2021										Three Months Ended March 31, 2022
		Common Stock			Additional Paid-In Capital	Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity					Common Stock						Additional Paid-In Capital		Accumulated Deficit	Accumulated Other Comprehensive Income		Total Stockholders’ Equity
		Shares	Amount												Shares		Amount			Total Stockholders’ Equity
Balance, January 1, 2021		66,875	$	669		$	665,530	$	(149,946)	$	(2,048)		$	514,205
Balance, January 1, 2022																Balance, January 1, 2022	67,739				$	677				$	685,472	$	(221,225)	$	(485)	$	464,439
Net income	Net income	—	—			—		9,008		—			9,008			Net income	—	—						—		42,962		—		42,962

Other comprehensive income	Other comprehensive income	—	—			—		—		808			808			Other comprehensive income	—	—						—		—		2,396		2,396
Stock option exercises and employee stock plan purchases	Stock option exercises and employee stock plan purchases	155	1			2,379		—		—			2,380			Stock option exercises and employee stock plan purchases	296	3						5,931		—		—		5,934
Vesting of restricted stock awards and units	Vesting of restricted stock awards and units	489	5			(5)		—		—			—			Vesting of restricted stock awards and units	645	7						(7)		—		—		—
Shares withheld to cover taxes	Shares withheld to cover taxes	(85)	(1)			(1,598)		—		—			(1,599)			Shares withheld to cover taxes	(110)	(1)						(5,503)		—		—		(5,504)
Stock-based compensation	Stock-based compensation	—	—			3,317		—		—			3,317			Stock-based compensation	—	—						5,623		—		—		5,623
Balance, March 31, 2021		67,434	$	674		$	669,623	$	(140,938)	$	(1,240)		$	528,119
Net loss		—	—			—		(26,657)		—			(26,657)
Balance, March 31, 2022																Balance, March 31, 2022	68,570	$	686					$	691,516	$	(178,263)	$	1,911	$	515,850

Other comprehensive income		—	—			—		—		240			240
Stock option exercises and employee stock plan purchases		116	1			2,042		—		—			2,043
Vesting of restricted stock awards and units		51	1			(1)		—		—			—
Shares withheld to cover taxes		(9)	—			(193)		—		—			(193)
Stock-based compensation		—	—			4,588		—		—			4,588
Balance, June 30, 2021		67,592	$	676		$	676,059	$	(167,595)	$	(1,000)		$	508,140
Net loss		—	—			—		(13,415)		—			(13,415)
Other comprehensive loss		—	—			—		—		(142)			(142)
Stock option exercises and employee stock plan purchases		48	1			960		—		—			961
Vesting of restricted stock awards and units		23	—			—		—		—			—
Shares withheld to cover taxes		(4)	—			(67)		—		—			(67)
Stock-based compensation		—	—			3,867		—		—			3,867
Balance, September 30, 2021		67,659	$	677		$	680,819	$	(181,010)	$	(1,142)		$	499,344

~~Table of Contents~~


		Nine Months Ended September 30, 2020										Three Months Ended March 31, 2021
		Common Stock			Additional Paid-In Capital	Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity					Common Stock						Additional Paid-In Capital		Accumulated Deficit	Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
		Shares	Amount												Shares		Amount			Total Stockholders’ Equity
Balance, January 1, 2020		39,251	$	393		$	251,641	$	(136,473)	$	(960)		$	114,601
Balance, January 1, 2021																Balance, January 1, 2021	66,875				$	669				$	665,530	$	(149,946)	$	(2,048)	$	514,205
Net income	Net income	—	—			—		3,337		—			3,337			Net income	—	—						—		9,008		—		9,008

Other comprehensive loss		—	—			—		—		(1,434)			(1,434)
Stock option exercises and employee stock plan purchases		33	—			366		—		—			366
Vesting of restricted stock awards and units		563	6			(6)		—		—			—
Shares withheld to cover taxes		(97)	(1)			(1,546)		—		—			(1,547)
Stock-based compensation		—	—			3,075		—		—			3,075
Balance, March 31, 2020		39,750	$	398		$	253,530	$	(133,136)	$	(2,394)		$	118,398
Net loss		—	—			—		(7,012)		—			(7,012)

Other comprehensive loss		—	—			—		—		(212)			(212)
Stock option exercises and employee stock plan purchases		7	—			50		—		—			50
Vesting of restricted stock awards and units		242	2			(2)		—		—			—
Shares withheld to cover taxes		(36)	(1)			(484)		—		—			(485)
Issuance of common stock, net of $3,776 issuance costs		26,845	269			394,065		—		—			394,334
Fair value of replacement options related to pre-acquisition services		—	—			7,125		—		—			7,125
Stock-based compensation		—	—			3,385		—		—			3,385
Balance, June 30, 2020		66,808	$	668		$	657,669	$	(140,148)	$	(2,606)		$	515,583
Net loss		—	—			—		(6,386)		—			(6,386)
Other comprehensive income	Other comprehensive income	—	—			—		—		96			96			Other comprehensive income	—	—						—		—		808		808
Stock option exercises and employee stock plan purchases	Stock option exercises and employee stock plan purchases	32	—			344		—		—			344			Stock option exercises and employee stock plan purchases	155	1						2,379		—		—		2,380
Vesting of restricted stock awards and units	Vesting of restricted stock awards and units	13	1			(1)		—		—			—			Vesting of restricted stock awards and units	489	5						(5)		—		—		—
Shares withheld to cover taxes	Shares withheld to cover taxes	(3)	(1)			(49)		—		—			(50)			Shares withheld to cover taxes	(85)	(1)						(1,598)		—		—		(1,599)
Stock-based compensation	Stock-based compensation	—	—			3,992		—		—			3,992			Stock-based compensation	—	—						3,317		—		—		3,317
Balance, September 30, 2020		66,850	$	668		$	661,955	$	(146,534)	$	(2,510)		$	513,579
Balance, March 31, 2021																Balance, March 31, 2021	67,434	$	674					$	669,623	$	(140,938)	$	(1,240)	$	528,119

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

Table of Contents

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Operating activities	Operating activities					Operating activities
Net loss		$	(31,064)	$	(10,061)
Adjustments to reconcile net loss to net cash flows from operating activities:
Net income						Net income	$	42,962	$	9,008
Adjustments to reconcile net income to net cash flows from operating activities:						Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation, amortization and accretion	Depreciation, amortization and accretion	30,088		16,295		Depreciation, amortization and accretion	11,786		8,123
Impairment of long-lived assets		9,540		7,275

ARO acceleration						ARO acceleration	293		—
Amortization of debt related costs	Amortization of debt related costs	430		199		Amortization of debt related costs	246		(61)
Changes in fair value of contingent assets and liabilities	Changes in fair value of contingent assets and liabilities	28,500		800		Changes in fair value of contingent assets and liabilities	18,400		300
Gain on extinguishment of debt	Gain on extinguishment of debt	(889)		—		Gain on extinguishment of debt	—		(889)

Provision for excess and obsolete inventory	Provision for excess and obsolete inventory	2,317		1,870		Provision for excess and obsolete inventory	2,519		1,395
Stock-based compensation	Stock-based compensation	11,772		10,452		Stock-based compensation	5,623		3,317

Gain on sale of assets	Gain on sale of assets	(15,263)		—		Gain on sale of assets	—		(15,263)

Deferred taxes	Deferred taxes	1,028		(781)		Deferred taxes	14,180		4,581
Long-term income tax receivable	Long-term income tax receivable	3,092		(1,664)		Long-term income tax receivable	(396)		(573)
Long-term income tax payable and other long-term liabilities	Long-term income tax payable and other long-term liabilities	(3,617)		2,114		Long-term income tax payable and other long-term liabilities	779		728
Other	Other	1,724		1,034		Other	829		655
(Decreases) increases in cash from operating assets and liabilities:	(Decreases) increases in cash from operating assets and liabilities:					(Decreases) increases in cash from operating assets and liabilities:
Accounts receivable	Accounts receivable	(7,721)		(703)		Accounts receivable	(85,155)		(2,346)
Inventory	Inventory	(625)		(9,593)		Inventory	(1,634)		3,889
Other current assets	Other current assets	1,998		1,563		Other current assets	(104)		(536)
Other long-term assets						Other long-term assets	(533)		—
Accounts payable	Accounts payable	4,776		3,762		Accounts payable	1,506		4,110

Accrued expenses and other liabilities	Accrued expenses and other liabilities	3,941		(6,735)		Accrued expenses and other liabilities	(1,037)		(6,620)
Net cash provided by operating activities	Net cash provided by operating activities	40,027		15,827		Net cash provided by operating activities	10,264		9,818
Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(7,596)		(8,689)		Capital expenditures	(3,190)		(2,520)
Proceeds from sale of assets, net	Proceeds from sale of assets, net	15,823		—		Proceeds from sale of assets, net	1,800		15,823
Lending on bridge loan		—		(10,000)
Cash acquired in acquisition of business		—		17,562
Net cash provided by (used in) investing activities		8,227		(1,127)

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

Payments on long-term debt and other borrowings	Payments on long-term debt and other borrowings	(40,757)		(11,166)		Payments on long-term debt and other borrowings	(2,609)		(35,572)
Equity issuance costs		—		(3,777)

Deferred financing costs		—		(1,223)

Proceeds from stock option exercises	Proceeds from stock option exercises	4,616		77		Proceeds from stock option exercises	5,357		2,043
Proceeds from issuance of common stock	Proceeds from issuance of common stock	768		683		Proceeds from issuance of common stock	577		337
Payments for minimum statutory tax withholding related to net share settlement of equity awards	Payments for minimum statutory tax withholding related to net share settlement of equity awards	(1,859)		(2,082)		Payments for minimum statutory tax withholding related to net share settlement of equity awards	(5,504)		(1,599)
Net cash used in financing activities	Net cash used in financing activities	(37,232)		(17,488)		Net cash used in financing activities	(2,179)		(34,791)
Effect of foreign exchange rates on cash, cash equivalents and restricted cash	Effect of foreign exchange rates on cash, cash equivalents and restricted cash	(99)		4		Effect of foreign exchange rates on cash, cash equivalents and restricted cash	151		(21)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	10,923		(2,784)		Net increase (decrease) in cash, cash equivalents and restricted cash	6,846		(11,691)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	82,694		92,919		Cash, cash equivalents and restricted cash, beginning of period	100,651		82,694
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	93,617	$	90,135	Cash, cash equivalents and restricted cash, end of period	$	107,497	$	71,003

Table of Contents

Lantheus Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

(in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Reconciliation to amounts within the condensed consolidated balance sheets	Reconciliation to amounts within the condensed consolidated balance sheets					Reconciliation to amounts within the condensed consolidated balance sheets
Cash and cash equivalents	Cash and cash equivalents	$	91,475	$	87,994	Cash and cash equivalents	$	105,355	$	68,861
Restricted cash included in other long-term assets	Restricted cash included in other long-term assets	2,142		2,141		Restricted cash included in other long-term assets	2,142		2,142
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	93,617	$	90,135	Cash, cash equivalents and restricted cash at end of period	$	107,497	$	71,003

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

Table of Contents

Lantheus Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note Regarding Company References and Trademarks

Unless the context otherwise requires, references to the “Company” and “Lantheus” refer to Lantheus Holdings, Inc. and its direct and indirect wholly-owned subsidiaries, references to “Holdings” refer to Lantheus Holdings, Inc. and not to any of its subsidiaries, references to “LMI” refer to Lantheus Medical Imaging, Inc., the direct subsidiary of Holdings, ~~and~~ references to “Progenics” refer to Progenics Pharmaceuticals, Inc., a wholly-owned subsidiary of ~~LMI.~~LMI, and references to “EXINI” refer to EXINI Diagnostics AB, a wholly-owned subsidiary of Progenics. Solely for convenience, the Company refers to trademarks, service marks and trade names without the TM, SM and ® symbols. Those references are not intended to indicate, in any way, that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks, service marks and trade names.

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics (as of the Closing Date, as defined below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement have been included. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2021~~2022 or any future period.

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, which resulted in a change in operating segments. Please refer to Note 20, “Segment Information”, for further details.

The condensed consolidated balance sheet at December 31, ~~2020~~2021 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities Exchange Commission (“SEC”) on February ~~25, 2021.~~24, 2022.

Progenics Acquisition

On June 19, 2020 (the “Closing Date”), pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2020 (the “Merger Agreement”), by and among Holdings, Plato Merger Sub, Inc., a wholly-owned subsidiary of Holdings (“Merger Sub”), and Progenics, Holdings completed the ~~previously announced~~ acquisition of Progenics by means of a merger of Merger Sub with and into Progenics, with Progenics surviving such merger as a wholly-owned subsidiary of Holdings (the “Progenics Acquisition”). Subsequently, on June 22, 2020, Holdings contributed all of the capital stock of Progenics to LMI, thereby making Progenics an indirect subsidiary of Holdings.

In accordance with the Merger Agreement, at the effective time of the Progenics Acquisition (the “Effective Time”), each share of Progenics common stock, par value $0.0013 per share, issued and outstanding immediately prior to the Effective Time (other than shares of Progenics common stock owned by Holdings, Progenics or any of their wholly-owned subsidiaries) was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $0.01 per share, and (ii) 1 contingent value right (a “CVR”) tied to the financial performance of PyL (18F-DCFPyL), Progenics’ prostate-specific membrane antigen (“PSMA”) targeted imaging agent designed to visualize prostate cancer. This agent was approved by the U.S. Food and Drug Administration (“FDA”) on May 26, 2021 under the name PYLARIFY (piflufolastat F 18), and the commercial launch of this agent ~~has begun.~~began in June 2021. Each CVR ~~will entitle~~entitles its holder to receive a pro rata share of aggregate cash payments equal to 40% of U.S. net sales generated by PYLARIFY in 2022 and 2023 in excess of $100.0 million and $150.0 million, respectively. In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9% of the total consideration the Company pays in the Progenics Acquisition (which the Company currently estimates could be approximately $100.0 million). The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024. No fractional shares of Holdings common stock were issued in the Progenics Acquisition, and Progenics’ former stockholders have received cash in lieu of any fractional shares of Holdings common stock. In addition, in accordance with the Merger Agreement, at the Effective Time, each Progenics stock option with a per share exercise price less than or equal to $4.42 (an “in-the-money Progenics stock option”) received in exchange for each such in-the money Progenics stock option: (i) an option to purchase Holdings common stock (each, a “Replacement Stock Option”) converted based on the Exchange Ratio, and (ii) a vested or unvested CVR depending on whether the underlying in-the-money Progenics stock option was vested or unvested at the Effective Time. Each Progenics stock option with a per share exercise price greater than $4.42 (an “out-of-the-money Progenics stock option”) received in exchange for such out-of-the-money Progenics stock options a Replacement Stock Option converted at an exchange ratio determined based on the average of the

Table of Contents

volume weighted average price per share of common stock of Progenics and Lantheus Holdings prior to the Effective Time, which exchange ratio was 0.31, the same as the Exchange Ratio. As a result of the acquisition, Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics ~~stockholders.~~

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

~~COVID-19~~

~~Table of Contents~~

~~The Company experienced operational~~stockholders and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020 and through the date of this filing, including the impact of stay-at-home mandates and advisories, and a decline in the volume of certain procedures and treatments using the Company’s products. For example, there has been a substantial reduction in pulmonary ventilation studies in which the Company’s product, Xenon, is used. As a result of the COVID-19 pandemic, the Company undertook a thorough analysis of all its discretionary expenses. In the first quarter of 2020, the Company implemented certain cost reduction initiatives. For most of the second quarter of 2020, the Company reduced the Company’s work week from 5 days to 4 days and reduced the pay for employees by varying amounts depending on level of seniority.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives and paused new enrollment in the ARROW Phase 2 study of 1095, a PSMA-targeted therapeutic, in metastatic castrate-resistant prostate cancer (“mCRPC”) patients to minimize the risk to subjects and healthcare providers during the pandemic. New enrollment in that study restarted in October 2020. GE Healthcare Limited (“GE Healthcare”), the Company’s development and commercialization partner for flurpiridaz fluorine-18 (“F 18”), also delayed enrollment in the second Phase 3 clinical trial of flurpiridaz F 18 because of the pandemic and resumed enrollment in the third quarter of 2020.

Although some of the restrictions, including stay-at-home mandates, imposed in response to the COVID-19 pandemic have been lifted in much of the United States (the “U.S.”), and there has been a rapid rollout and development of certain vaccines, the resurgence of COVID-19 infections did impact certain aspects of the Company’s business during the third quarter of 2021 and the pandemic could still have a future negative impact on the Company's business, particularly if there are additional resurgences as a result of mutations or other variations to the virus that increase its communicability or its impact on certain populations, geographic regions and the healthcare system, including elective procedures and hospital access. While the impact of COVID-19 on the Company’s results of operations and cash flows has been material, given continued uncertainty about the future trajectory of the pandemic, the Company remains unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows and whether the on-going impact of COVID-19 could lead to potential future impairments.option holders.

2. Summary of Significant Accounting Policies

~~Reclassifications~~

Certain immaterial reclassifications in the prior period condensed consolidated statements of cash flows have been reclassified to conform to the current year period financial statement presentation. Reclassifications include $0.2 million from provision for bad debt to other at September 30, 2020. The Company had a reclassification in presentation related to rebates and allowances within product revenue. Please refer to Note 3, “Revenue from Contracts with Customers” for further details.

Recent Accounting Pronouncements


~~Standard~~	~~Description~~	Effective Date for Company	~~Effect on the Condensed Consolidated Financial Statements~~


~~Accounting Standards Adopted During the Nine Months Ended September 30, 2021~~
~~ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)”~~	This ASU provides guidance to simplify the complexity associated with accounting for convertible instruments and derivatives. For convertible instruments, the number of major separation models required were reduced. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. This ASU further amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The ASU simplifies the diluted net income per share calculation in certain areas as well.	~~January 1, 2021~~	~~The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.~~

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

~~Table of Contents~~

3. Revenue from Contracts with Customers

The following table summarizes revenue by revenue source as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Major Products/Service Lines (in thousands)	Major Products/Service Lines (in thousands)	2021		2020		2021		2020		Major Products/Service Lines (in thousands)	2022		2021
Product revenue, net(1)	Product revenue, net(1)	$	96,678	$	83,661	$	277,559	$	238,801	Product revenue, net(1)	$	180,009	$	87,319
License and royalty revenues(2)	License and royalty revenues(2)	5,395		4,883		18,087		6,457		License and royalty revenues(2)	28,871		5,190
Total revenues	Total revenues	$	102,073	$	88,544	$	295,646	$	245,258	Total revenues	$	208,880	$	92,509

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

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

(2)The Company recognized $24.0 million license revenue in the first quarter of 2022 related to an agreement with Novartis Pharma AG. Please refer to Note 19, “Commitments and Contingencies” for further details on the license agreement.

The Company classifies its revenues into three product categories: precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and ~~other.~~other revenue. Precision diagnostics includes DEFINITY, TechneLite and other imaging diagnostic products. Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA. Strategic partnerships and other revenue includes strategic partnerships and other arrangements related to other products of the Company, such as royalty revenue from our license of RELISTOR.

On January 31, 2022, the Company entered into a global settlement agreement with Novartis Pharma AG (“Novartis”), Advanced Accelerator Applications USA, Inc. (“AAA”), Endocyte, Inc. (“Endocyte”) and their affiliates (the “Novartis Agreement”) to settle certain disputes between the parties. Under the Novartis Agreement, Novartis agreed to make a lump sum payment to the Company, as well as to reimburse the Company for certain fees and expenses in connection with the German litigation (please refer to Note 19 “Commitments and Contingencies”) and the Company agreed to license certain intellectual property to Novartis. In addition, the Company agreed to supply PYLARIFY for clinical purposes at an arms-length value which will be recorded in the future as product is provided. In accordance with the Company's ASC 606, Revenue from Contracts with Customers, assessment, Novartis is considered to be a customer. The Company determined that the $24.0 million constituted a single element which was satisfied on the date of the execution of the Novartis Agreement. The Company determined that the license of intellectual property carried a fair value of $24.0 million. As such, the Company assigned the value to the fair value of the license, which constitutes the entire transaction price and does not require further allocation. The Company determined that the $24.0 million represented the point at which the licensee was able to use and benefit from the license and recognized revenue when the license was granted to Novartis upon execution of the Novartis Agreement. The Company recognized the $24.0 million fee as revenue on its consolidated statement of operations for the quarter ended March 31, 2022. The Company received the $24.0 million payment in April 2022.

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

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2021
2020(1)
2021
2020(1)
   DEFINITY $ 57,636 $ 50,359 $ 173,448 $ 139,989
   TechneLite 22,680 21,113 69,252 62,560
   Other precision diagnostics 7,563 8,585 21,289 28,782
Total precision diagnostics 87,879 80,057 263,989 231,331
Radiopharmaceutical oncology 8,890 3,323 13,203 7,474
Strategic partnerships and other 5,304 5,164 18,454 6,453
   Total revenues $ 102,073 $ 88,544 $ 295,646 $ 245,258

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


	Three Months Ended March 31,
(in thousands)	2022		2021
DEFINITY	$	58,328	$	55,971
TechneLite	22,605		22,800
Other precision diagnostics	5,265		6,984
Total precision diagnostics	86,198		85,755
PYLARIFY	92,777		—
Other radiopharmaceutical oncology	1,327		1,500
Total radiopharmaceutical oncology	94,104		1,500
Strategic partnerships and other revenue	28,578		5,254
Total revenues	$	208,880	$	92,509

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.

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.

~~Table of Contents~~

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 condensed 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 13, “Derivative Instruments”, for further details on the interest rate swaps. The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the 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.~~

Table of Contents

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


		September 30, 2021									March 31, 2022
(in thousands)	(in thousands)	Total Fair Value		Level 1		Level 2		Level 3		(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
Money market	Money market	$	39,141	$	39,141	$	—	$	—	Money market	$	38,986	$	38,986	$	—	$	—
Interest rate swaps										Interest rate swaps	3,387		—		3,387		—
Contingent receivable	Contingent receivable	13,800		—		—		13,800		Contingent receivable	8,900		—		—		8,900
Total assets	Total assets	$	52,941	$	39,141	$	—	$	13,800	Total assets	$	51,273	$	38,986	$	3,387	$	8,900
Liabilities:	Liabilities:									Liabilities:
Interest rate swaps		$	766	$	—	$	766	$	—
Contingent consideration liabilities	Contingent consideration liabilities	46,800		—		—		46,800		Contingent consideration liabilities	$	104,200	$	—	$	—	$	104,200
Total liabilities	Total liabilities	$	47,566	$	—	$	766	$	46,800	Total liabilities	$	104,200	$	—	$	—	$	104,200


		December 31, 2020									December 31, 2021
(in thousands)	(in thousands)	Total Fair Value		Level 1		Level 2		Level 3		(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
Money market	Money market	$	35,457	$	35,457	$	—	$	—	Money market	$	40,140	$	40,140	$	—	$	—
Interest rate swaps										Interest rate swaps	357		—		357		—
Contingent receivable	Contingent receivable	11,300		—		—		11,300		Contingent receivable	9,300		—		—		9,300
Total assets	Total assets	$	46,757	$	35,457	$	—	$	11,300	Total assets	$	49,797	$	40,140	$	357	$	9,300
Liabilities:	Liabilities:									Liabilities:
Interest rate swaps		$	1,908	$	—	$	1,908	$	—
Contingent consideration liabilities	Contingent consideration liabilities	15,800		—		—		15,800		Contingent consideration liabilities	$	86,200	$	—	$	—	$	86,200
Total liabilities	Total liabilities	$	17,708	$	—	$	1,908	$	15,800	Total liabilities	$	86,200	$	—	$	—	$	86,200

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, there were no transfers into or out of Level 3.

As part of the Progenics Acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc. related to a prior sale of certain intellectual property. The Company has the right to receive $5.0 million upon regulatory approval and a 5% royalty on net sales of approved products. The Company considers the contingent receivable a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flows that included significant estimates and assumptions pertaining to regulatory events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.

As part of the Progenics Acquisition, the Company issued CVRs and recorded the fair value as part of consideration transferred. Each CVR entitles its holder to receive a pro rata share of aggregate cash payments equal to 40% of U.S. net sales generated by PYLARIFY in 2022 and 2023 in excess of $100.0 million and $150.0 million, respectively, subject to a maximum cap (which the Company currently estimates could be approximately $100.0 million). Refer to Note 1, “Basis of Presentation” for further details on the CVRs. Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”). These contingent consideration liabilities include potential payments of up to $70.0 million if the Company attains certain net sales targets primarily for AZEDRA and 1095 and a $5.0 million 1095 commercialization milestone. Additionally, there is a potential payment of up to $10.0 million related to a 1404 commercialization milestone. The Company’s total potential payments related to the 2013 Acquisition are approximately $85.0 million. The Company considers the contingent consideration liabilities relating to the CVRs and the 2013 Acquisition, each a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value of these was determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that included significant

~~Table of Contents~~

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 ~~the~~those development projects and subsequent commercial success.

Significant changes in any of the probabilities of success, the probabilities as to the periods in which sales targets and milestones will be achieved, discount rates or underlying revenue forecasts would result in a significantly higher or lower fair value measurement. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations. The Company can give no assurance that the actual

Table of Contents

amounts paid, if any, in connection with the contingent consideration liabilities, including the CVRs, will be consistent with any recurring fair value estimate of such contingent consideration liabilities.

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at ~~September 30, 2021.~~March 31, 2022.


		Fair Value at						Assumptions					Fair Value at						Assumptions
(in thousands)	(in thousands)	September 30, 2021		December 31, 2020		Valuation Technique	Unobservable Input	September 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021		Valuation Technique	Unobservable Input	March 31, 2022		December 31, 2021
Contingent receivable:	Contingent receivable:											Contingent receivable:
Regulatory milestone	Regulatory milestone	$	3,300	$	3,200	Probability adjusted discounted cash flow model	Period of expected milestone achievement	2022		2021		Regulatory milestone	$	2,500	$	2,500	Probability adjusted discounted cash flow model	Period of expected milestone achievement	2022		2022
							Probability of success	90	%	90	%							Probability of success	70	%	70	%
							Discount rate	18	%	24	%							Discount rate	18	%	17	%
Royalties	Royalties	10,500		8,100		Probability adjusted discounted cash flow model						Royalties	6,400		6,800		Probability adjusted discounted cash flow model
							Probability of success	13% - 77%		13% - 77%								Probability of success	10% - 60%		10% - 60%
							Discount rate	18	%	24	%							Discount rate	18	%	17	%
Total	Total	$	13,800	$	11,300							Total	$	8,900	$	9,300

Fair Value at Assumptions
(in thousands) September 30, 2021 December 31, 2020 Valuation Technique Unobservable Input September 30, 2021 December 31, 2020
Contingent consideration liability:
Net sales targets - PYLARIFY (CVRs) $ 33,200 $ 4,200 Monte Carlo simulation Period of expected milestone achievement 2022 - 2023 2022 - 2023
Discount rate 18 % 24 %
1095 commercialization milestone 1,900 2,200 Probability adjusted discounted cash flow model
Period of expected milestone achievement 2026 2026
Probability of success 40 % 45 %
Discount rate 0.9 % 0.5 %
Net sales targets - AZEDRA and 1095 11,700 9,400 Monte Carlo simulation
Probability of success 40% - 100% 40% - 100%
Discount rate 17% - 18% 23% - 24%
Total $ 46,800 $ 15,800

~~Table of Contents~~


	Fair Value at						Assumptions
(in thousands)	March 31, 2022		December 31, 2021		Valuation Technique	Unobservable Input	March 31, 2022		December 31, 2021
Contingent consideration liability:
Net sales targets - PYLARIFY (CVRs)	$	91,700	$	73,200	Monte Carlo simulation	Period of expected milestone achievement and sales targets	2022 - 2023		2022 - 2023

						Discount rate	18	%	17	%
1095 commercialization milestone	1,800		1,900		Probability adjusted discounted cash flow model
						Period of expected milestone achievement	2026		2026
						Probability of success	40	%	40	%
						Discount rate	2.1	%	1.3	%



Net sales targets - AZEDRA and 1095	10,700		11,100		Monte Carlo simulation
						Probability of success and sales targets	40% - 100%		40% - 100%
						Discount rate	17% - 18%		16% - 17%
Total	$	104,200	$	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) Nine Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Fair value, beginning of period $ 11,300 $ — $ 15,800 $ —
Progenics acquisition — 10,100 — 16,300
Changes in fair value included in net loss 2,500 100 31,000 900
Fair value, end of period $ 13,800 $ 10,200 $ 46,800 $ 17,200

Table of Contents


	Financial Assets				Financial Liabilities
(in thousands)	Three Months Ended March 31,				Three Months Ended March 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	(400)		900		18,000		1,200

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

The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of ~~$28.5~~$18.4 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and was primarily due to changes in revenue forecasts, changes in market conditions, ~~a decrease~~an increase in discount rates and the passage of time. The Company expects to issue any applicable cash payments related to the CVRs as early as the first quarter of 2023 and the first quarter of 2024. As of March 31, 2022, the Company has $83.3 million in current liabilities and $8.4 million in long term liabilities to account for the expected payments related to the CVRs.

5. Income Taxes

~~Historically, the~~The Company ~~has calculated its provision for~~calculates income taxes ~~during its interim~~at the end of each reporting ~~periods by applying an estimate of~~period based on the ~~annual~~estimated effective tax rate for the full year, adjusted for any discrete events which are recorded in the period they occur. Cumulative adjustments to ~~“ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete events). For~~ the ~~three- and nine-month periods ended September 30, 2021, the Company has computed its provision for income taxes under the discrete method, which allows the Company to calculate its~~ tax provision ~~based upon~~are recorded in the ~~actual effective tax rate for the year-to-date period. We determined that since small changes~~reporting period in ~~estimated “ordinary” income would result in significant changes~~which a change in the estimated annual effective tax rate ~~the historical method would not provide a reliable estimate for the three- and nine-month periods ended September 30, 2021.~~is determined. The Company’s income tax expense is presented below:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Income tax (benefit) expense		$	(6,422)	$	(1,076)	$	(2,967)	$	1,425
Income tax expense										Income tax expense	$	14,939	$	5,334

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, and weighed the objective evidence and expected impact. The Company assessed the need for a valuation allowance against certain state tax credit carryforwards added through the Progenics Acquisition. The Company continues to ~~record~~retain other valuation allowances of $1.2 million against the net deferred tax assets of its U.K. subsidiary, and $2.0 million against the net deferred tax assets of its Sweden subsidiary.

In connection with the Company’s acquisition of the medical imaging business from Bristol-Myers Squibb (“BMS”) in 2008, the Company recorded a liability for uncertain tax positions related to the acquired business and simultaneously entered into a tax indemnification agreement with BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the state taxing authorities. Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments to be paid on behalf of the Company by BMS, net of actual tax benefits received by the Company. The tax indemnification receivable is recorded within other long-term assets.

During the third quarter of 2021, the Company entered into a settlement agreement with one state and accordingly reduced the amount of the uncertain tax positions by $5.5 million. The settlement payment to that state and the tax indemnification payment from BMS will be made in the fourth quarter of 2021. The Company continues to accrue interest on the outstanding uncertain tax positions.

In accordance with the Company’s accounting policy, the change in the tax liabilities, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense. As these reserves change ~~(for example, by the state tax settlement noted above),~~ adjustments are included in income tax expense while the offsetting adjustment is included in other income. Assuming that the remaining receivable from BMS continues to be considered recoverable by the Company, there will be no effect on net income and no net cash outflows related to these liabilities.

~~Table of Contents~~

In addition to the state tax settlement noted above, for the nine months ended September 30, 2021, the Company released $0.7 million of liabilities for uncertain tax positions, including interest and penalties of $0.5 million. This included a release of liabilities of $0.1 million, including interest and penalties of $0.4 million, due to a change in estimate with respect to the Company’s indemnified uncertain tax positions arising from new information obtained during the year. The remaining release of $0.2 million of liability was due to the lapse of a statute of limitations.

On June 19, 2020, the Company completed the Progenics Acquisition in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code. The transaction resulted in an ownership change of Progenics under Section 382 of the Internal Revenue Code and a limitation on the utilization of Progenics’ precombination tax attributes. All of Progenics’ precombination federal research and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation. Deferred tax liabilities arising from the purchase accounting basis step-up in identified intangibles were recorded at acquisition, resulting in an initial net overall deferred tax liability for Progenics after the application of acquisition accounting.

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

6. Inventory

Inventory consisted of the following:

(in thousands) September 30,
2021 December 31,
2020
Raw materials $ 15,173 $ 16,000
Work in process 11,560 11,212
Finished goods 7,216 8,532
Total inventory $ 33,949 $ 35,744

Table of Contents


(in thousands)	March 31, 2022		December 31, 2021
Raw materials	$	13,861	$	15,505
Work in process	13,071		13,042
Finished goods	7,317		6,582
Total inventory	$	34,249	$	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 ~~September 30,~~December 31, 2021, the Company had ~~$3.2~~$6.1 million of such product costs included in inventories related to DEFINITY that ~~have~~had been manufactured through the Company’s in-house manufacturing ~~capabilities, which is awaiting~~capabilities. The Company received regulatory ~~approval.~~approval for the manufacture of DEFINITY at its new in-house manufacturing facility during the first quarter of 2022 and has no inventory pending regulatory approval as of March 31, 2022.

7. Property, Plant and Equipment, Net

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


(in thousands)	(in thousands)	September 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Land	Land	$	13,450	$	13,450	Land	$	13,450	$	13,450
Buildings	Buildings	73,285		70,381		Buildings	73,560		73,559
Machinery, equipment and fixtures	Machinery, equipment and fixtures	82,596		77,854		Machinery, equipment and fixtures	84,983		83,608
Computer software	Computer software	24,223		23,644		Computer software	24,766		24,384
Construction in progress	Construction in progress	8,887		11,254		Construction in progress	12,186		10,686
		202,441		196,583			208,945		205,687
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(86,000)		(76,412)		Less: accumulated depreciation and amortization	(91,986)		(88,915)
Total property, plant and equipment, net	Total property, plant and equipment, net	$	116,441	$	120,171	Total property, plant and equipment, net	$	116,959	$	116,772

Depreciation and amortization expense related to property, plant and equipment, net, was ~~$3.6~~$3.1 million and ~~$3.4~~$3.0 million ~~for the three months ended September 30, 2021 and 2020, respectively, and $9.8 million and $9.1 million for the nine months ended September 30, 2021 and 2020, respectively.~~

~~Table of Contents~~

The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable. During the three months ended September 30, 2021, the Company reviewed certain facts relating to an asset group that included the right-of-use (“ROU”) asset associated with the lease of office space in the World Trade Center (the “WTC lease”) in New York City and resulted in a change to the asset group due to the negotiation of a sublease. Please refer to Note 16, “Leases” for further details.

During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of the COVID-19 pandemic related to certain other nuclear legacy manufacturing assets, the Company determined certain impairment triggers had occurred. Accordingly, the Company performed an undiscounted cash flow analysis as of March 31, 2020. Based on the undiscounted cash flow analysis, the Company determined that the manufacturing assets had net carrying values that exceeded their estimated undiscounted future cash flows. The Company then estimated the fair values of the asset group based on their discounted cash flows. The carrying value exceeded the fair value and as a result, the Company recorded a non-cash impairment of $7.3 million for the nine months ended September 30, 2020 in cost of goods sold in the condensed consolidated statements of operations.

~~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 options~~	~~7,125~~
~~Fair value of bridge loan settled at close~~	~~10,074~~
~~Fair value of contingent considerations (CVRs)~~	~~3,700~~
~~Total consideration transferred(1)~~	$	~~419,009~~

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

The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The Company recorded a measurement period adjustment of $2.6 million related to deferred taxes for the three months ended March 31, 2022 and 2021, ~~which finalized all measurement period adjustments related to the Progenics Acquisition.~~respectively.

~~The following table summarizes the provisional amounts recognized for assets acquired~~

8. Accrued Expenses and Other Liabilities and Other Long-Term Liabilities

Accrued expenses and other liabilities ~~assumed as~~and other long-term liabilities are comprised 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.following:

~~Table of Contents~~

(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.

The goodwill recognized is attributable to future technologies that are not separately identifiable that could potentially add to the currently developed and pipeline products and Progenics’ assembled workforce. Future technologies did not meet the criteria for recognition separately from goodwill because they are part of the future development and growth of the business. Goodwill of $45.5 million recognized in connection with the acquisition is not deductible for tax purposes.

The Company recognized $1.6 million and $10.5 million of acquisition-related costs, including legal, accounting, compensation arrangements and other related fees that were expensed when incurred in the three and nine months ended September 30, 2020, respectively. These costs are recorded in general and administrative expenses in the condensed consolidated statements of operations.

~~Progenics Pro Forma Financial Information~~

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

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

~~Table of Contents~~


	Nine Months Ended September 30, 2020
~~(in thousands)~~	~~Amount~~
~~Pro forma revenue~~	$	~~256,163~~
~~Pro forma net loss~~	~~27,143~~

The unaudited pro forma financial information for all periods presented adjusts for the effects of material business combination items, including amortization of acquired intangible assets, transaction-related costs, adjustments to interest expense related to the assumption of long-term debt, retention and severance bonuses and the corresponding income tax effects of each. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the Progenics Acquisition actually taken place on January 1, 2019. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the Progenics Acquisition, including, but not limited to, revenue enhancements, cost savings or operating synergies that the combined company may achieve as a result of the Progenics Acquisition.


(in thousands)	March 31, 2022		December 31, 2021
Compensation and benefits	$	10,629	$	22,730
Freight, distribution and operations	26,581		16,157
Accrued rebates, discounts and chargebacks	10,793		10,977
Accrued professional fees	3,596		2,850
Short-term contingent liability (Note 4)	83,300		—
Other	7,497		5,354
Total accrued expenses and other liabilities	$	142,396	$	58,068

Operating lease liabilities (Note 16)	$	16,207	$	16,546
Long-term contingent liability (Note 4)	20,900		86,200
Other long-term liabilities	21,669		22,148
Total other long-term liabilities	$	58,776	$	124,894

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

Table of Contents

and the Company determined that the fair value of the net assets being sold significantly exceeded the carrying value as of December 31, 2020. The transaction was consummated on January 29, 2021.

The purchase price for the stock sale was $18.0 million in cash, ~~which includes~~including a holdback amount of $1.8 million ~~to be due to~~which the Company ~~in January~~received during the first quarter of 2022; the purchase price also included a working capital adjustment. The SPA contains customary representations, warranties and covenants by each of the parties. Subject to certain limitations, the buyer will be indemnified for damages resulting from breaches or inaccuracies of the Company’s representations, warranties and covenants in the SPA.

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

The Company ~~does not believe~~determined that this sale of certain net assets ~~reported as held for sale in the international segment prior to the change in segments in the first quarter of 2021, constituted~~did not constitute a strategic shift that ~~would have~~had a major effect on ~~its~~the Company’s operations or financial results. As a result, this transaction iswas not classified as discontinued operations in the Company’s accompanying condensed consolidated financial statements.

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

~~Table of Contents~~

(in thousands) January 29, 2021 December 31, 2020
Current Assets:
Cash and cash equivalents $ 540 $ 941
Accounts receivable, net 1,959 2,191
Inventory 530 420
Other current assets 65 43
Total current assets 3,094 3,595
Non-Current Assets:
Property, plant & equipment, net 780 761
Intangibles, net 96 96
Other long-term assets 774 790
Total assets held for sale $ 4,744 $ 5,242
Current Liabilities:
Accounts payable $ 185 $ 224
Accrued expense and other liabilities 369 661
Total current liabilities 554 885
Non-Current Liabilities:
Asset retirement obligations 306 302
Other long-term liabilities 588 606
Total liabilities held for sale $ 1,448 $ 1,793



(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 in the condensed consolidated statements of operations for the ~~nine~~three months ended ~~September 30,~~March 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 ~~site.~~and Somerset, New Jersey sites. As of ~~September 30, 2021,~~March 31, 2022, the liability is measured at the present value of the obligation expected to be incurred, of approximately $26.4 million.

The Company previously operated a production facility which manufactured and processed radioactive materials at its San Juan, Puerto Rico site. As of December 31, 2020, the liability for the San Juan, Puerto Rico site was recorded in liabilities held for sale and the sale was consummated on January 29, 2021.

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

Table of Contents


(in thousands)	Amount
Balance at January 1, ~~2021~~2022	$	~~14,020~~20,833

Accretion expense	~~1,165~~388
Accelerated Costs	293
Balance at ~~September 30, 2021~~March 31, 2022	$	~~15,185~~21,514

In December 2021, the Company evaluated the accretion timeline of an asset group due to a revision in the planned period of use at the North Billerica site. As a result of the accelerated timeline, the Company determined the asset group’s present value exceeded the current value recorded as of December 31, 2021. Accordingly, the Company recorded a non-cash adjustment of $5.3 million to anticipate a revision in the end of useful life by the end of 2022.

The Company is required to provide the ~~U.S. Nuclear Regulatory Commission and~~ 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 ~~facility~~facilities upon closure, although the Company ~~does not intend~~has no current plans to close the ~~facility.~~facilities. The Company has provided this financial assurance in the form of a $28.2 million surety bond.

11. Intangibles, Net

Intangibles, net, consisted of the following:

~~Table of Contents~~


		September 30, 2021								March 31, 2022
(in thousands)	(in thousands)	Amortization Method	Cost		Accumulated Amortization		Net		(in thousands)	Useful Lives (in years)	Amortization Method	Cost		Accumulated Amortization		Net
Trademarks	Trademarks	Straight-Line	$	13,540	$	(11,372)	$	2,168	Trademarks	15 - 25	Straight-Line	$	13,540	$	(11,648)	$	1,892
Customer relationships	Customer relationships	Accelerated	96,923		(94,461)		2,462		Customer relationships	15 - 25	Accelerated	96,962		(94,856)		2,106
Currently marketed products	Currently marketed products	Straight-Line	275,700		(17,275)		258,425		Currently marketed products	9 - 15	Straight-Line	275,700		(29,416)		246,284
Licenses	Licenses	Straight-Line	85,800		(9,668)		76,132		Licenses	11 - 16	Straight-Line	85,800		(13,441)		72,359
Developed technology	Developed technology	Straight-Line	2,400		(344)		2,056		Developed technology	9	Straight-Line	2,400		(477)		1,923
IPR&D	IPR&D	N/A	15,640		—		15,640		IPR&D	N/A	N/A	15,640		—		15,640
Total	Total		$	490,003	$	(133,120)	$	356,883	Total			$	490,042	$	(149,838)	$	340,204


		December 31, 2020								December 31, 2021
(in thousands)	(in thousands)	Amortization Method	Cost		Accumulated Amortization		Net		(in thousands)	Useful Lives (in years)	Amortization Method	Cost		Accumulated Amortization		Net
Trademarks	Trademarks	Straight-Line	$	13,540	$	(10,958)	$	2,582	Trademarks	15 - 25	Straight-Line	$	13,540	$	(11,510)	$	2,030
Customer relationships	Customer relationships	Accelerated	96,865		(93,770)		3,095		Customer relationships	15 - 25	Accelerated	96,880		(94,630)		2,250
Currently marketed product	Currently marketed product	Straight-Line	142,900		(5,053)		137,847		Currently marketed product	9 - 15	Straight-Line	275,700		(23,345)		252,355
Licenses	Licenses	Straight-Line	85,800		(4,008)		81,792		Licenses	11 - 16	Straight-Line	85,800		(11,555)		74,245
Developed technology	Developed technology	Straight-Line	2,400		(144)		2,256		Developed technology	9	Straight-Line	2,400		(410)		1,990
IPR&D	IPR&D	N/A	148,440		—		148,440		IPR&D	N/A	N/A	15,640		—		15,640
Total	Total		$	489,945	$	(113,933)	$	376,012	Total			$	489,960	$	(141,450)	$	348,510

The Company recorded amortization expense for its intangible assets of ~~$8.4~~$8.3 million and ~~$4.8~~$4.7 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $19.1 million and $6.1 million for the nine months ended September 30, 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.

Table of Contents

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


(in thousands)	(in thousands)	Amount		(in thousands)	Amount
Remainder of 2021		$	8,370
2022		33,233
Remainder of 2022				Remainder of 2022	$	24,923
2023	2023	32,634		2023	32,634
2024	2024	32,563		2024	32,563
2025	2025	32,508		2025	32,508
2026 and thereafter		201,935
2026				2026	32,497
2027 and thereafter				2027 and thereafter	169,439
Total	Total	$	341,243	Total	$	324,564

~~Table of Contents~~

12. Long-Term Debt, Net, and Other Borrowings

As of ~~September 30, 2021,~~March 31, 2022, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:


(in thousands)	(in thousands)	Amount		(in thousands)	Amount
Remainder of 2021		$	2,500
2022		11,250
Remainder of 2022				Remainder of 2022	$	8,750
2023	2023	15,000		2023	15,000
2024	2024	148,750		2024	148,750

Total principal outstanding	Total principal outstanding	177,500		Total principal outstanding	172,500
Unamortized debt discount	Unamortized debt discount	(548)		Unamortized debt discount	(448)
Unamortized debt issuance costs	Unamortized debt issuance costs	(473)		Unamortized debt issuance costs	(387)

Finance lease liabilities	Finance lease liabilities	618		Finance lease liabilities	582

Total	Total	177,097		Total	172,247
Less: current portion	Less: current portion	(10,356)		Less: current portion	(12,878)
Total long-term debt, net and other borrowings	Total long-term debt, net and other borrowings	$	166,741	Total long-term debt, net and other borrowings	$	159,369

At ~~September 30, 2021,~~March 31, 2022, the Company’s interest rate under the five-year secured term loan facility, which matures on June 30, 2024 (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”) was ~~2.1%~~2.2%.

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

13. Derivative Instruments

The Company uses interest rate swaps to reduce the variability in cash flows associated with a portion of the Company’s forecasted interest payments on its variable rate debt. In March 2020, the Company entered into interest rate swap contracts to fix the LIBOR rate on a notional amount of $100.0 million through May 31, 2024. The average fixed LIBOR rate on the interest rate swaps is approximately 0.82%. This agreement involves the receipt of floating rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount. The interest rate swaps were designated as cash flow hedges. In accordance with hedge accounting, the interest rate swaps are recorded on the Company’s condensed consolidated balance sheets at fair value, and changes in the fair value of the swap agreements are recorded to other comprehensive loss and reclassified to interest expense in the period during which the hedged transaction affected earnings or it will become probable that the forecasted transaction would not occur. At ~~September 30, 2021,~~March 31, 2022, accumulated other comprehensive ~~loss~~income included ~~$0.7~~$1.0 million of pre-tax deferred ~~losses~~gains that are expected to be reclassified to earnings during the next 12 months.

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

(in thousands) September 30, 2021 December 31, 2020
Derivatives type Classification
Liabilities:
Interest rate swap Accrued expenses and other liabilities $ 766 $ 1,908

~~14. Accumulated Other Comprehensive Loss~~

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

2016

Table of Contents

(in thousands) Foreign currency translation Unrealized loss on cash flow hedges Accumulated other comprehensive loss
Balance at January 1, 2021 $ (630) $ (1,418) $ (2,048)
Other comprehensive income before reclassifications 55 312 367
Amounts reclassified to earnings — 539 539
Balance at September 30, 2021 $ (575) $ (567) $ (1,142)
Balance at January 1, 2020 $ (960) $ — $ (960)
Other comprehensive loss before reclassifications (9) (1,784) (1,793)
Amounts reclassified to earnings — 243 243
Balance at September 30, 2020 $ (969) $ (1,541) $ (2,510)

(in thousands)

March 31, 2022

December 31, 2021

Derivatives type

Classification

Assets:

Interest rate swap

Other long-term assets

3,387

357

14. Accumulated Other Comprehensive Income (Loss)

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


(in thousands)	Foreign currency translation		Unrealized loss on cash flow hedges		Accumulated other comprehensive loss
Balance at January 1, 2022	$	(754)	$	269	$	(485)
Other comprehensive income before reclassifications	140		2,086		2,226
Amounts reclassified to earnings	—		170		170
Balance at March 31, 2022	$	(614)	$	2,525	$	1,911

Balance at January 1, 2021	$	(630)	$	(1,418)	$	(2,048)
Other comprehensive loss before reclassifications	102		533		635
Amounts reclassified to earnings	—		173		173
Balance at March 31, 2021	$	(528)	$	(712)	$	(1,240)

15. Stock-Based Compensation

The following table presents stock-based compensation expense recognized in the Company’s accompanying condensed consolidated statements of operations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Cost of goods sold	Cost of goods sold	$	144	$	864	$	1,672	$	2,127	Cost of goods sold	$	912	$	622
Sales and marketing	Sales and marketing	684		621		1,726		1,268		Sales and marketing	1,013		350
General and administrative	General and administrative	2,330		1,926		6,641		5,735		General and administrative	3,002		1,920
Research and development	Research and development	709		581		1,733		1,322		Research and development	696		425
Total stock-based compensation expense	Total stock-based compensation expense	$	3,867	$	3,992	$	11,772	$	10,452	Total stock-based compensation expense	$	5,623	$	3,317

Table of Contents

16. Leases

Operating and finance lease assets and liabilities are as follows:
(in thousands) Classification September 30,
2021 December 31,
2020
Assets
Operating Other long-term assets $ 8,287 $ 18,441
Finance Property, plant and equipment, net 508 525
Total leased assets $ 8,795 $ 18,966
Liabilities
Current
     Operating Accrued expenses and other liabilities $ 1,397 $ 1,164
     Finance Current portion of long-term debt and other borrowings 356 249
Noncurrent
     Operating Other long-term liabilities 16,391 17,501
     Finance Long-term debt, net and other borrowings 262 246
Total leased liabilities $ 18,406 $ 19,160

~~Table of Contents~~

The Company leases office space in the World Trade Center in New York City. In the third quarter of 2021, the Company negotiated a sublease agreement with an unrelated third party that was signed on October 11, 2021 (the “Sublease”) and has a term of nine years, which represents the remaining term of the WTC lease. Both the WTC lease and the Sublease are classified by the Company as operating leases. As a result of the negotiations of the Sublease, the Company determined that an impairment triggering event had occurred. Accordingly, the Company performed an undiscounted cash flow analysis related to the asset group as of September 30, 2021. Based on the undiscounted cash flow analysis, the Company determined that the asset group, including the ROU asset, had net carrying values that exceeded their estimated undiscounted future cash flows. The Company then estimated the fair value of the asset group based on its discounted cash flows. The carrying value exceeded the fair value and, as a result, the Company recorded a non-cash impairment of $9.5 million for the three and nine months ended September 30, 2021 in general and administrative expenses in the condensed consolidated statements of operations.


(in thousands)	Classification	March 31, 2022		December 31, 2021
Assets
Operating	Other long-term assets	$	8,675	$	8,788
Finance	Property, plant and equipment, net	602		556
Total leased assets		$	9,277	$	9,344
Liabilities
Current
Operating	Accrued expenses and other liabilities	$	1,619	$	1,599
Finance	Current portion of long-term debt and other borrowings	378		392
Noncurrent
Operating	Other long-term liabilities	16,207		16,546
Finance	Long-term debt, net and other borrowings	204		299
Total leased liabilities		$	18,408	$	18,836

17. Net ~~Loss~~Income Per Common Share

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands, except per share amounts)	(in thousands, except per share amounts)	2021		2020		2021		2020		(in thousands, except per share amounts)	2022		2021
Net loss		$	(13,415)	$	(6,386)	$	(31,064)	$	(10,061)
Net income										Net income	$	42,962	$	9,008

Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	67,623		66,820		67,409		49,858		Basic weighted-average common shares outstanding	68,008		67,094
Effect of dilutive stock options										Effect of dilutive stock options	406		82
Effect of dilutive restricted stock										Effect of dilutive restricted stock	1,637		538

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

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

Basic income per common share										Basic income per common share	$	0.63	$	0.13
Diluted income per common share										Diluted income per common share	$	0.61	$	0.13

Antidilutive securities excluded from diluted net income per common share	Antidilutive securities excluded from diluted net income per common share	3,051		2,588		3,051		1,657		Antidilutive securities excluded from diluted net income per common share	377		1,349

18. Other ~~Loss (Income)~~Income

Other ~~loss (income)~~income consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Foreign currency losses (gains)		$	127	$	(33)	$	156	$	187
Tax indemnification loss (income), net		3,823		(555)		3,092		(1,664)
Foreign currency (gains) losses										Foreign currency (gains) losses	$	(81)	$	42
Tax indemnification income, net										Tax indemnification income, net	(396)		(573)
Interest income	Interest income	(11)		(7)		(39)		(221)		Interest income	(8)		(17)

Other	Other	1		(1)		—		(4)		Other	—		(1)
Total other loss (income)		$	3,940	$	(596)	$	3,209	$	(1,702)
Total other income										Total other income	$	(485)	$	(549)

Table of Contents

19. Commitments and Contingencies

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 condensed consolidated financial statements.

As of ~~September 30, 2021,~~March 31, 2022, the Company ~~had the following~~did not have any material ongoing litigation in which the Company was a ~~party:~~party. During the first quarter of 2022, the Company was able to resolve certain litigation matters as set forth below:

On January 31, 2022, the Company entered into a global settlement agreement with Novartis, AAA, Endocyte and certain of their affiliates to settle certain disputes between the parties, as further described below:

German PSMA-617 Litigation

On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court in Mannheim, Germany (the “German District Court” and, such litigation, the “German Litigation”). In this Complaint, MIP claimed that the discovery and development of PSMA-617 was related to work performed under a research collaboration sponsored by MIP. MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University. On February 27, 2019, Endocyte, a wholly owned subsidiary of Novartis, filed a motion to intervene in the German Litigation. Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.

In connection with this dispute, MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) for certain U.S. patent applications filed by the University to support MIPs claim that it is the co-owner of these pending U.S. patent applications (the “Ownership Claim”).

On February 27, 2019, the German District Court set €0.4 million as the amount MIP must deposit with the German District Court as security in the event of an unfavorable final decision on the merits of the dispute. On August 24, 2020, the German District Court issued its decision dismissing MIP’s claims, stating that MIP failed to discharge its burden of proof in the matter.

MIP filed a Notice of Appeal of the German District Court’s decision on September 24, 2020 and filed its appeal brief on November 26, 2020. The University and Endocyte each filed oppositions to MIP’s Notice of Appeal on March 12, 2021 and an oral hearing for the appeal was scheduled for September 28, 2022, at the Higher Regional Court Karlsruhe.

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

Post-Grant Review Proceeding

On February 4, 2021, AAA, a wholly-owned subsidiary of Novartis and parent of Endocyte, filed a petition for post-grant review of U.S. Patent No. 10,640,461 (the “’461 patent”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO. The ’461 patent is owned by MIP. In the petition, AAA challenged the patentability of certain claims of the ’461 patent. The PTAB instituted Post-Grant Review proceedings (the “PGR Proceeding”) on July 29, 2021. Pursuant to the terms of the Novartis Agreement, the PGR Proceeding was terminated.

Global Settlement Agreement

In addition to the dismissal of the German Litigation, the withdrawal of the Ownership Claim and the termination of the PGR Proceeding, under the Novartis Agreement, the parties, among other things, cross-licensed certain patent rights to one another, and Novartis made a $24.0 million lump sum payment to the Company and also reimbursed the Company for certain fees and expenses the Company is required to pay to the University in connection with the German Litigation. The Company received the $24.0 million payment in April 2022.

RELISTOR European Opposition Proceedings

2219

Table of Contents

In October 2015, Progenics received notices of opposition to 3 European patents relating to methylnaltrexone: EP1615646, EP2368553 and EP2368554. Notices of opposition were filed separately at the European Patent Office (the “EPO”) by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH. Between May 11, 2017 and July 4, 2017, the Opposition Division of the EPO (the “Opposition Division”) provided notice that the 3 European patents would be revoked. Each of these matters was appealed to the Appeal Board of the EPO. On November 13, 2020, Progenics withdrew the appeal for EP2368553 and EP2368554. Notices of termination of the proceedings with revocation of the patent were issued on November 23, 2020 for both patents.

Progenics continued its appeal ~~for~~on the revocation of the third patent, EP1615646. Oral proceedings for EP1615646 were held at the Appeal Board of the EPO on September 22, 2020. The revocation decision under appeal was set aside and the case was remitted to the Opposition Division for further prosecution. An oral hearing was held before the Opposition Division on September 27, 2021. The ~~parties are awaiting the~~Opposition Division issued its final written ~~decision of~~opinion on November 11, 2021, indicating that the ~~Opposition Division.~~patent will be maintained in amended form. The final written decision of the Opposition Division iswas appealable to the Appeal Board of the EPO by either party. ~~Because the outcome of opposition and appeal proceedings at the EPO is uncertain, the Company cannot predict how or when~~Progenics appealed this ~~matter will ultimately be resolved.~~

~~German PSMA-617 Litigation~~

On November 8, 2018, Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), filed a complaint against the University of Heidelberg (the “University”) in the District Court in Mannheim, Germany (the “German District Court”). In this Complaint, MIP claimed that the discovery and development of PSMA-617 was related to work performed under a research collaboration sponsored by MIP. MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-617 that were filed by the University. On February 27, 2019, Endocyte, Inc., a wholly owned subsidiary of Novartis AG, filed a motion to intervene in the German litigation. Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.

On November 27, 2018, MIP requested that the EPO stay the examination of a certain European Patent and related Divisional Applications, pending a decision from the German District Court on MIP’s Complaint. On December 10, 2018, the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective November 27, 2018. MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in corresponding U.S. patent applications (U.S. Serial Nos. 15/131,118; 15/805,900; 16/038,729, 16/114,988, 16/510,495, 16/551,198, and 17/110,558). MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S. patent applications (U.S. Serial Nos. 16/510,495, 16/551,198). On March 6, 2020, MIP filed with the USPTO a notice stating that the Power of Attorney in certain pending U.S. patent applications was signed by less than all applicants or owners of the applications.

~~On February 27, 2019, the German District Court set €0.4 million as the amount MIP must deposit with the German District Court as security in the event of an unfavorable final~~ decision on the merits of the dispute. The German District Court held the first oral hearing in the case on August 6, 2019. The German District Court considered procedural matters and granted the parties the rightJanuary 20, 2022 to make further submissions. A further oral hearing occurred July 23, 2020, during which the German District Court heard live testimony from several witnesses, testifying on behalf of the defendants. On August 24, 2020, the German District Court issuedhold open its ~~decision dismissing MIP’s claims, stating~~option to file Grounds for Appeal. Given that ~~MIP failed to discharge its burden of proof in the matter.~~

~~MIP~~neither opponent filed a Notice of Appeal, ~~of the German District Court’s decision on September 24, 2020 and filed~~Progenics withdrew its ~~appeal brief on November 26, 2020. The University and Endocyte each filed oppositions to MIP’s~~ Notice of Appeal on February 23, 2022. The Opposition Division communicated the Closure of Opposition Proceedings on March ~~12, 2021. An oral hearing for~~7, 2022. The patent will proceed to issuance, in amended form, with the appeal is scheduled for February 9, 2022, at the Higher Regional Court Karlsruhe. MIP is also considering its legal and procedural alternatives against the defendants in other jurisdictions and proceedings. If MIP is not successful in its appeal, it will be responsible for the German courtpayment of publication fees and ~~fees and disbursements~~submission of ~~defendant’s and intervenor’s counsel, both at first instance and on appeal. Most of such fees and disbursements at first instance are covered~~translated claims by ~~a cash security deposited with the German District Court. Because the outcome of litigation is uncertain, the Company cannot predict how or when this matter will ultimately be resolved.~~June 11, 2022.

~~Petition for Post-Grant Review~~

On February 4, 2021, Advanced Accelerator Applications USA, Inc. (“AAA”) filed a petition for post-grant review of U.S. Patent No. 10,640,461 (the “’461 patent”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO. The ’461 patent is owned by MIP. In the petition, AAA challenges the patentability of claims 1, 45, and 47 of the ’461 patent under 35 U.S.C. §§ 112 and 102(a)(1). The PTAB instituted Post-Grant Review (“PGR”) proceedings on July 29, 2021. MIP’s written response to the PTAB is due by December 9, 2021. The PTAB generally issues a final written decision on the validity of the challenged claims within one year of institution of the PGR proceedings. The outcome of PGR proceedings is uncertain and the Company cannot predict whether the challenged claims 1, 45 and 47 of the ‘461 patent will be deemed to be valid or invalid.

~~Table of Contents~~

20. Segment Information

In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, including the impact on the Company’s business of the acquisition of Progenics described in ~~Notes~~Note 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 1 business segment: the development, manufacture and sale of innovative ~~diagnostic~~imaging diagnostics, targeted therapeutics, and ~~therapeutic agents~~artificial intelligence solutions to Find, Fight and ~~products that assist clinicians in the diagnosis and treatment of heart disease, cancer and other diseases.~~Follow serious medical conditions. 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.

~~21. Subsequent Events~~

~~On October 11, 2021, the Company signed a sublease for certain office space. See Note 16, “Leases”, for further details.~~

2420

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements, including, in particular, statements about our plans, strategies, prospects and industry estimates are subject to risks and uncertainties. These statements identify prospective information and can generally be identified by words such as “anticipates,” “believes,” “can,” “could,” “estimates,” “expects,” “hopes,” “intends,” “launch,” “may,” “pipeline,” “plans,” “predicts,” “seeks,” “should,” “target,” “will,” “would” and similar expressions, or by express or implied discussions regarding potential marketing approvals or new indications for the collaborations, products candidates or approved products described in this Quarterly Report on Form 10-Q, or regarding potential future revenues from such collaborations, product candidates and products. Examples of forward-looking statements include statements we make relating to our outlook and expectations including, without limitation, in connection with: (i) ~~the impact of the global COVID-19 pandemic on our business, financial conditions and prospects; (ii)~~ continued market expansion and penetration for our established commercial products, particularly DEFINITY, in the face of segment competition and potential generic competition, including as a result of patent and regulatory exclusivity ~~expirations; (iii)~~expirations and challenges; (ii) our ability to ~~successfully launch~~continue to grow PYLARIFY as a commercial product, including (A) our ability to obtain FDA approval for additional ~~PET~~positron emission tomography (“PET”) manufacturing facilities (“PMFs”) ~~that could~~to manufacture PYLARIFY, (B) the ability of ~~those~~ PMFs to ~~supply~~manufacture PYLARIFY to ~~customers, and~~meet product demand, (C) our ability to sell PYLARIFY to ~~customers; (iv)~~customers, (D) our ability to obtain and maintain adequate coding, coverage and payment for PYLARIFY, and (E) our ability to establish PYLARIFY as a leading PSMA PET imaging agent in a competitive environment in which other PSMA PET imaging agents have been approved and additional ones are in development; (iii) the global Molybdenum-99 (“Mo-99”) supply; (v) our products manufactured at Jubilant HollisterStier (“JHS”) and our modified formulation of DEFINITY (“DEFINITY RT”) to be commercially manufactured at Samsung Biologics (“SBL”), including(iv) our ability to ~~renew, modify or replace those agreements as may be necessary; (vi) the continued integration of the Progenics~~have third party manufacturers manufacture our products and ~~product candidate portfolio into our business following the Progenics Acquisition; (vii)~~ our ability to use our in-house manufacturing capacity; ~~(viii)~~(v) our ability to successfully launch ~~aPROMISE, otherwise known as~~ PYLARIFY AI as a commercial product; (vi) the continuing impact of the global COVID-19 pandemic on our business, financial condition and prospects; (vii) the efforts and timing for clinical development of our product candidates and new clinical applications for our products, in each case, that we may develop, including 1095 and LMI 1195, or that our strategic partners may develop, including flurpiridaz fluorine-18 (“F 18”); (viii) our ability to identify and acquire or in-license additional diagnostic and therapeutic product opportunities in oncology and other strategic areas; and (ix) the potential reclassification by the FDA of certain of our products and product candidates from drugs to devices with the expense, complexity and potentially more limited competitive protection such reclassification could cause; (x) the efforts and timing for clinical development of our product candidates and new clinical applications for our products, in each case, that we or our strategic partners may develop, including 1095 and flurpiridaz F 18; and (xi) our ability to develop highly contextualized assessments of disease burden using artificial intelligence (“AI”).cause. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, such statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. These statements are neither statements of historical fact nor guarantees or assurances of future performance. The matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. We caution you, therefore, against relying on any of these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q.

Any forward-looking statement made by us in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Available Information

Our global Internet site is www.lantheus.com. We routinely make available important information, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC, free of charge on our website at investor.lantheus.com. We recognize our website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with our disclosure obligations under SEC Regulation FD. Information contained on our website shall not be deemed incorporated into, or to be part of this Quarterly Report on Form 10-Q, and any website references are not intended to be made through active hyperlinks.

Our reports filed with, or furnished to, the SEC are also available on the SEC’s website at www.sec.gov, and for Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, in an iXBRL (Inline Extensible Business Reporting Language) format. iXBRL is an electronic coding language used to create interactive financial statement data over the Internet. The information on our website is neither part of nor incorporated by reference into this Quarterly Report on Form 10-Q.

2521

Table of Contents

The following discussion and analysis of our financial condition and results of operations should be read together with the condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report on Form 10-Q as well as the other factors described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q.

Overview

Our Business

We are an established leader and fully integrated provider committed to innovative imaging diagnostics, targeted therapeutics, and artificial intelligence solutions to Find, Fight and Follow serious medical conditions. ~~Clinicians use~~We classify our ~~agents and~~ products in ~~echocardiography,~~three categories: precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other revenue. Our leading precision diagnostic products assist healthcare professionals (“HCPs”) Find and Follow diseases in non-oncologic conditions. Our radiopharmaceutical oncology diagnostics and therapeutics help HCPs Find, Fight and Follow cancer. Our strategic partnerships and other revenue category focuses on facilitating precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms, and also includes royalty revenue from our license of RELISTOR.

Our commercial products are used by cardiologists, urologists, oncologists, internal medicine physicians, nuclear ~~imaging,~~medicine physicians, radiologists, sonographers and ~~oncologic therapeutics.~~technologists working in a variety of clinical settings. We believe that ~~the resulting~~our diagnostic products provide improved diagnostic information that enables ~~healthcare providers~~HCPs to better detect and characterize, or rule out, disease, ~~potentially achieving~~with the potential to achieve better patient outcomes, ~~reducing~~reduce patient risk and ~~limiting~~limit overall costs for ~~payers~~payors and throughout the ~~entire~~ healthcare system.

Our commercial products are used by cardiologists, nuclear medicine physicians, radiologists, oncologists, urologists, internal medicine physicians, technologists and sonographers working in a variety of clinical settings. We sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.

We produce and market our ~~agents and~~ products throughout the ~~U.S.~~United States (the “U.S.”), selling primarily to ~~radiopharmacies,~~clinics, group practices, hospitals, integrated delivery networks, ~~hospitals, clinics~~ and ~~group practices.~~radiopharmacies. We sell our ~~agents and~~ products outside the U.S. through a combination of direct distribution in Canada and ~~third-party~~third party distribution relationships in Europe, Canada, Australia, Asia-Pacific, Central America and ~~Latin~~South America.

Our headquarters are located in North Billerica, Massachusetts, with additional offices in Somerset, New Jersey; Montreal, Canada and Lund, Sweden.

In the first quarter of ~~fiscal year~~ 2021, we completed the evaluation of our operating and reporting structure, including the impact on our business of the acquisition of Progenics and the sale of our Puerto Rico subsidiary, ~~in the first quarter,~~ which resulted in a change in our operating segments to one reportable business segment.

Key Factors Affecting Our Results

Our business and financial performance have been, and continue to be, affected by the following:

PYLARIFY Approval, ~~and~~ Commercial Launch and Revenue Growth

On May 27, 2021, we announced that the FDA had approved PYLARIFY, an F 18-labeled ~~positron emission tomography (“PET”)~~PET imaging agent targeting prostate-specific membrane antigen (“PSMA”). PYLARIFY is a product in our radiopharmaceutical oncology product category. We commercially launched PYLARIFY in the U.S. in June 2021.

PYLARIFY is a radioactive diagnostic agent indicated for PET imaging of PSMA-positive lesions in men with prostate cancer with suspected metastasis who are candidates for initial definitive therapy and with suspected recurrence based on elevated serum prostate-specific antigen (“PSA”) levels. PYLARIFY works by binding to PSMA, a protein that is overexpressed on the surface of more than 90% of primary and metastatic prostate cancer cells. PYLARIFY works with PET/CT technology to produce a combined PET/CT scan that enables the ~~visualization~~reader of ~~primary~~the PET/CT scan to detect and locate the disease.

According to the American Cancer Society, prostate ~~tumors as well as bone~~cancer is the second most common cancer in American men -- one in eight American men will be diagnosed with prostate cancer in their lifetimes and ~~soft tissue metastases,~~over 3.1 million American men are living with ~~potential high clinical utility~~prostate cancer today. Based on estimates from third party sources regarding the incidence of prostate cancer in men in the ~~detection~~U.S., we believe the market potential for all PSMA PET imaging agents in the U.S. could be up to 250,000 annual scans, comprised of ~~recurrent and/~~90,000 scans for patients with intermediate, unfavorable or high/very high risk of suspected metastases of prostate cancer; 130,000 scans for patients with suspected recurrence of prostate cancer; and 30,000 scans for patients with metastatic castration-resistant prostate ~~cancer.~~ cancer (“mCRPC”) who may be under consideration for PSMA-targeted therapy for the treatment of adult patients with PSMA-positive mCRPC who have already been treated with other anticancer treatments (androgen receptor pathway inhibition and taxane-based chemotherapy). However, because we are still early in the commercialization of PYLARIFY, we can give no assurance as to how clinical practice may evolve or what our ultimate market penetration may be.

Table of Contents

In March 2022, we announced a strategic collaboration with Novartis to include PYLARIFY in prostate cancer trials with Pluvicto, Novartis’ recently approved PSMA-targeted therapeutic. As part of the agreement with Novartis, we will supply PYLARIFY for the selection of patients with prostate cancer, and Novartis will provide all PYLARIFY-related clinical imaging data to us. In addition, the Society for Nuclear Medicine and Molecular Imaging, or SNMMI, recently updated their appropriate use criteria, noting that PSMA PET imaging agents, including PYLARIFY, can be used for patient selection for PSMA-targeted radioligand therapy.

The approval of PYLARIFY was based on data from two Company-sponsored pivotal studies (“OSPREY” and “CONDOR”) designed to establish the safety and diagnostic performance of PYLARIFY across the prostate cancer disease continuum. Results from OSPREY (Cohort A) demonstrated improvement in specificity and positive predictive value of PYLARIFY PET imaging over conventional imaging in men at risk for metastatic prostate cancer prior to initial definitive therapy. CONDOR studied men with biochemical recurrent prostate cancer. In patients with biochemical recurrent prostate cancer and non-informative baseline imaging, PYLARIFY demonstrated high correct localization and detection rates, including in patients with early recurrent disease with low, ~~prostate-specific antigen (“PSA”)~~but rising, PSA blood ~~level values~~levels (median PSA 0.8 ng/mL).

Upon ~~approval,~~commercial launch in June 2021, PYLARIFY was immediately available in select parts of the U.S.~~, such as~~ Over the ~~mid-Atlantic and~~course of the ~~South. Since its approval,~~remainder of 2021, PYLARIFY availability ~~has~~ expanded into additional regions ~~including six of the largest metropolitan areas in the U.S. - New York, Los Angeles/San Diego, Chicago, Dallas, Houston,~~ and ~~Washington, D.C. – as well as select locations in the Southeast, the Midwest, the Southwest, the Northeast and the Northwest.~~is now broadly available nationwide. We ~~expect PYLARIFY availability to~~ continue to expand ~~across~~our geographic coverage, customer contracting and market access coverage to serve our customers and the U.S. ~~over the remainder of the year, with broad nationwide availability anticipated by year end.~~prostate cancer community.

The commercial launch of PYLARIFY ishas been complex and expensive. During 2021, we hired additional employees to assist us with the commercialization of PYLARIFY, including in sales, marketing, reimbursement, quality and medical affairs. To manufacture PYLARIFY, we ~~have~~ assembled and ~~are qualifying~~qualified a nationwide network of PMFs with radioisotope-producing cyclotrons that make ~~fluorine-18,~~F 18, which has a 110-minute half-life, so PYLARIFY is manufactured and distributed rapidly to end-users. After being made on a cyclotron at a PMF, the F 18 is then combined with certain chemical ingredients in specially designed chemistry synthesis boxes to manufacture PYLARIFY. The finished PYLARIFY ~~which~~ is then quality control tested and transferred to a radiopharmacist who prepares and dispenses patient-specific doses of the final product. Because each of the PMFs manufacturing these products is deemed by the FDA to be a separate manufacturing site, each has to be separately approved by the FDA. Although PYLARIFY is now broadly available nationwide and we ~~are able~~continue to ~~provide PYLARIFY in the regions listed above,~~qualify additional PMFs, we can give no assurance that the FDA will continue to approve PMFs in accordance with our planned roll-out schedule. If FDA approval of manufacturing sites is delayed or withdrawn, our future business, results of operations, financial condition and cash flows could be adversely affected.

In addition to the network of PMFs, we have also been working with academic medical centers in the U.S. that have radioisotope-producing cyclotrons and which have expressed an interest in manufacturing PYLARIFY. Under this initiative, we enter into a fee-for-service arrangement under which the academic medical center’s PMF manufactures and supplies batches of PYLARIFY, and its radiopharmacy prepares patient-ready unit doses, in each case for and on behalf of us. We then sell those unit doses to the academic medical center’s hospitals and clinics, and in some instances, to additional customers in the academic medical center’s geographic area, in each case, under separate purchase agreements. The academic medical center’s PMF’s ability to manufacture and supply batches of PYLARIFY is subject to FDA approval, and we can give no assurance that the FDA will approve such PMFs in accordance with our planned roll-out schedule.

Our commercial launch also required obtaining adequate ~~reimbursement~~coding, coverage and payment for PYLARIFY, ~~will be critical,~~ including not only coverage from Medicare, Medicaid and other government payors, as well as private payors, but also appropriate payment levels, ~~which~~to adequately cover our customers’ costs of using PYLARIFY in PSMA PET/CT imaging procedures. We received notification that our Healthcare Procedure Coding System (“HCPCS”) code, which enables streamlined billing, went into effect as of January 1, 2022. In addition, effective January 1, 2022, the Centers for Medicare and Medicaid Services (“CMS”) granted Transitional Pass-Through Payment Status in the hospital outpatient setting (“TPT Status”) for PYLARIFY, enabling traditional Medicare to provide an incremental payment for PET/CT scans performed with PYLARIFY in that setting. TPT Status for PYLARIFY is expected to expire December 31, 2024. After TPT Status expires, under current Medicare rules, PYLARIFY, similar to other diagnostic radiopharmaceuticals, would not be separately reimbursed in the hospital outpatient setting but rather would be included as part of the facility fee a hospital otherwise receives for a PET/CT imaging procedure, and the facility fee does not always adequately cover the total cost of the procedure. We can give no assurance that any CMS reimbursement in the hospital outpatient setting that follows the expiration of TPT Status will be adequate to cover the cost of a PYLARIFY PET/CT imaging procedure.

We actively pursue patents in connection with PYLARIFY, both in the U.S. and internationally. In the U.S. for PYLARIFY, we have four Orange Book-listed patents, including composition of matter patents, which expire in 2030 and 2037. Outside of the U.S., we are currently pursuing additional PYLARIFY patents to obtain similar patent protection as in the U.S.

PYLARIFY AI Clearance and Use

2623

Table of Contents

~~manufacturing~~During 2021, we also announced that our subsidiary, EXINI, was granted 510(k) clearance by the FDA in the U.S. and ~~distribution costs associated~~received CE marking in Europe for aPROMISE. We commercially launched aPROMISE under the name PYLARIFY AI in the U.S. in November 2021.

PYLARIFY AI is artificial intelligence medical device software developed to assist with ~~an F 18-based agent. We can give no assurance that pass-through status will be granted or that other adequate reimbursement can be secured to allow PYLARIFY to become successfully commercialized.~~

~~Key Factors Affecting Our Results~~

~~Our 2021 financial performance will reflect full year results of~~ the ~~Progenics business, whereas the prior year only incorporated results since the Closing Date. We also expect that the approval~~reading and quantification of PYLARIFY scans. The technology automatically analyzes a PSMA PET/CT image to segment anatomical regions – 51 bones and 12 soft tissue organs. This image segmentation enables automated localization, detection and quantification of potential PSMA-avid lesions in ~~May 2021 and subsequent launch will result in increased revenues.~~

~~Our business and financial performance have been, and continue to be, affected~~a PSMA PET/CT image, which data is then incorporated into the reporting system used by ~~the following:~~

~~COVID-19 Pandemic~~

The global COVID-19 pandemic has had, and may continue to have, a material impact on our business. Towards the end of the first quarter of 2020 we began to experience, and through the date of this filing we are continuing to experience, impacts to our business and operations related to the COVID-19 pandemic, including the impact of stay-at-home mandates and advisories, and a decline in the volume of certain procedures and treatments using our products.

For example, there has been a substantial reduction in pulmonary ventilation studies in which our product, Xenon, is used because of institutional concerns and professional society guidelines relating to the possible spread of COVID-19 to technicians and other patients, given that Xenon is both inhaled and exhaled by the patient. As a result, Xenon sales have decreased significantly. In March 2021, the Society of Nuclear Medicine and Medical Imaging (“SNMMI”), updated its guidance regarding in-hospital respiratory inhalation procedures administered (or performed) during the pandemic, modifying its previous position. Based on advances in testing and procedural protocols since the onset of the pandemic as well as increasing vaccination rates, SNMMI now allows that under appropriate conditions for safe administration, pulmonary ventilation studies can be performed where necessary to reach a definitive diagnosis for a patient. Notwithstanding this change in March 2021, our Xenon sales through the third quarter of 2021 continued to be at reduced levels, and we expect these reduced levels to continue for at least as long as COVID-19 precautions remain in place. We can give no assurance that Xenon sales will return to historic levels.

As a result of the COVID-19 pandemic, we undertook a thorough analysis of all our discretionary expenses. In the first quarter of 2020, we implemented certain cost reduction initiatives. For most of the second quarter of 2020, we reduced our work week from five days to four days and reduced the pay for our personnel by varying amounts, depending on level of seniority.

During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives, and new enrollment in the ARROW Phase 2 study of 1095 in mCRPC patients was paused to minimize the risk to subjects and healthcare providers during the pandemic. New enrollment in that study restarted in October 2020.

GE Healthcare, our development and commercialization partner for flurpiridaz F 18, also delayed enrollment in the second Phase 3 clinical trial because of the pandemic and resumed enrollment in the third quarter of 2020.

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

While we are currently unable to estimate the impact of COVID-19 on our overall 2021 operations and financial results, we ended the third quarter of 2021 with $91.5 million of cash and cash equivalents. With our available liquidity and prudent expense management, we currently believe that we have sufficient financial resources to operate our business, support our customers, launch PYLARIFY as a new commercial product, and support the continued development of our product candidate pipeline, although we can give no assurances that we will have sufficient liquidity for all of these items, as the future trajectory of the pandemic is unknown and may affect our liquidity.physicians.

Anticipated Continued Growth of DEFINITY and Expansion of Our Ultrasound Microbubble Franchise

We believe the market opportunity for our ultrasound microbubble enhancing agent, DEFINITY, continues to be significant. Historically, DEFINITY has been our fastest growing and highest margin commercial product. We anticipate DEFINITY sales will continue to grow in the future. As we continue to educate the physician and healthcare provider community about the benefits and risks of DEFINITY, we believe we will be able to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms. In a U.S. market with three echocardiography ultrasound enhancing agents approved by the FDA, we estimate that DEFINITY had over 80% of the market as of December 31, ~~2020.~~

~~Table of Contents~~

2021.

As we continue to pursue expanding our microbubble franchise, our activities include:

•Patents - We continue to actively pursue additional patents in connection with DEFINITY and DEFINITY RT, both in the U.S. and internationally. In the U.S. for DEFINITY, we ~~now own a total of four~~have five Orange Book-listed method of use patents, one of which expires in 2035 and ~~three~~four of which expire in 2037, as well as additional manufacturing patents that are not Orange Book-listed expiring in 2023 and 2037. In the U.S. for DEFINITY RT, we ~~now own a total of five~~have six Orange Book-listed patents, including a composition of matter patent which expires in 2035. Outside of the U.S., ~~while our original DEFINITY patent protection and regulatory exclusivity have generally expired,~~ we are currently ~~prosecuting~~pursuing additional DEFINITY and DEFINITY RT patents to obtain similar patent protection as in the U.S. The Orange Book-listed patents include a patent on the use of VIALMIX RFID which expires in 2037; we have submitted additional VIALMIX RFID patent applications ~~have been submitted~~ in major markets throughout the world.

Hatch-Waxman Act - Even though our longest duration Orange Book-listed DEFINITY patent extends until March 2037, because our Orange Book-listed composition of matter patent expired in June 2019, we may face generic DEFINITY challengers in the near to intermediate term. Under the Hatch-Waxman Act, the FDA can approve Abbreviated New Drug Applications (“ANDAs”) for generic versions of drugs if the ANDA applicant demonstrates, among other things, that (i) its generic candidate is the same as the innovator product by establishing bioequivalence and providing relevant chemistry, manufacturing and product data, and (ii) either the marketing of that generic candidate does not infringe anthe Orange Book-listed ~~patent~~patent(s) or ~~that an~~the Orange Book-listed ~~patent~~patent(s) is invalid. Similarly, the FDA can approve a Section 505(b)(2) New Drug Application (“505(b)(2)”) from an applicant that relies on some of the information required for marketing approval to come from studies which the applicant does not own or have a legal right of reference. With respect to ~~any~~the Orange Book-listed ~~patent~~patent(s) covering ~~the~~an innovator product, the ANDA applicant or the Section 505(b)(2) applicant (if relying on studies related to the innovator product) (together, the “Applicant”) must give a notice (a “Notice”) to the innovator ~~(a “Notice”) that the ANDA applicant certifies~~of its certification that its generic candidate will not infringe the innovator’s Orange Book-listed ~~patent~~patent(s) or that the Orange Book-listed ~~patent~~patent(s) is invalid. The innovator can then ~~challenge~~file suit against the ~~ANDA applicant in court~~Applicant within 45 days of receiving ~~that~~the Notice, and FDA approval to commercialize the generic candidate will be stayed (that is, delayed) for up to 30 months (measured from the date on which a Notice is received) while the patent dispute between the innovator and the ~~ANDA applicant~~Applicant is resolved in court. The 30-month stay could potentially expire sooner if the courts determine that no infringement had occurred or that the challenged Orange Book-listed patent is invalid or if the parties otherwise settle their dispute.

As of the date of filing of this Quarterly Report on Form 10-Q, we have not received any Notice from an ~~ANDA applicant.~~Applicant. If we were to (i) receive any such Notice in the future, (ii) bring a patent infringement suit against the ~~ANDA applicant~~Applicant within 45 days of receiving that Notice, and (iii) successfully obtain the full 30-month stay, then the ~~ANDA applicant~~Applicant would be precluded from commercializing a generic version of DEFINITY prior to the expiration of that 30-month stay period and, potentially, thereafter, depending on how the patent dispute is resolved. Solely by way of example and not based on any knowledge we currently have, if we received a Notice from an ~~ANDA applicant~~Applicant in ~~November 2021~~May 2022 and the full 30-month stay ~~was~~were obtained, then the ~~ANDA applicant~~Applicant would be precluded from commercialization until at least ~~May~~November 2024. If we received a Notice some number of months in the future and the full 30-month stay ~~was~~were obtained, the commercialization date would roll forward in the future by the same ~~calculation.~~number of months. In the event a 505(b)(2) applicant does not rely on studies related to the innovator product, the 30-month stay would not apply, but additional clinical studies may be required.

•DEFINITY RT - ~~In November 2020, the FDA approved our supplemental new drug application (“sNDA”) for DEFINITY RT.~~ DEFINITY RT ~~is a~~became commercially available in the fourth quarter of 2021. A modified formulation of DEFINITY that allows both storage and shipment at room temperature, ~~(DEFINITY’s previously approved formulation requires refrigerated storage). The modified formulation~~DEFINITY RT provides clinicians an additional choice and allows for greater utility of this formulation in broader clinical settings. ~~We believe DEFINITY RT will become commercially available in the fourth quarter of 2021, although that timing cannot be assured.~~ Given its physical characteristics, we

Table of Contents

believe DEFINITY RT is also well-suited for inclusion in kits requiring microbubbles for other indications and applications (including in kits developed by third parties of the type described in the paragraph entitled ~~Additional Clinical Applications~~Microbubble Franchise below).

•~~Vialmix~~VIALMIX RFID – ~~In August 2020, we announced the FDA approved our sNDA for~~VIALMIX RFID, our next-generation activation device designed specifically for both DEFINITY and DEFINITY ~~RT.~~RT, became commercially available in the fourth quarter of 2021. The activation rate and time are controlled by VIALMIX RFID through the use of radio-frequency identification technology (“RFID”) to ensure reproducible activation of DEFINITY and DEFINITY RT. The RFID tag, which is affixed to the vial label, enables the DEFINITY or DEFINITY RT vial to be appropriately activated ~~when utilized~~ with the VIALMIX RFID activation device. ~~We believe VIALMIX RFID will become available in the fourth quarter of 2021, although that timing cannot be assured.~~

•~~Additional Clinical Applications~~ - As we continue to look for other opportunities to expand our microbubble franchise, we are evaluating new indications and clinical applications beyond echocardiography and ultrasound enhancing agent imaging generally. Prior to 2021, we entered into the following collaborations: (i) Cerevast Medical, Inc. (“Cerevast”) in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to improve blood flow in occluded retinal veins in the eye; (ii) CarThera SAS (“CarThera”) for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma; and (iii) Insightec Ltd. (“Insightec”) which will use our microbubbles in connection with the development of Insightec’s transcranial guided focused ultrasound device for the treatment of glioblastoma as well as other neurodegenerative conditions. In April 2021, we announced a strategic collaboration with Allegheny Health Network (“AHN”) which will use our microbubbles in combination with AHN’s ultrasound-assisted non-viral gene transfer technology for the development of a proposed treatment

~~Table of Contents~~

of xerostomia. Xerostomia is a lack of saliva production leading to dry mouth and has a variety of causes, including radiotherapy and chemotherapy, the chronic use of drugs and rheumatic and dysmetabolic diseases.

•~~In-House Manufacturing -~~ We have completed construction of specialized, in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products. We believe this investment will allow us to better control DEFINITY manufacturing and inventory, reduce our costs in a potentially more price competitive environment, and provide us with supply chain redundancy. We have filed our sNDA with the FDA and currently expect to have DEFINITY manufactured at this facility commercially available in early 2022, although the approval of our sNDA and that timing cannot be assured.

•~~DEFINITY in China -~~ In March 2020, in connection with our Chinese development and distribution arrangement with Double-Crane Pharmaceutical Company (“Double-Crane”), we filed an Import Drug License application with the National Medical Products Administration, or the NMPA, for the use of DEFINITY for the echocardiography indication. We believe this is an important milestone in our efforts to commercialize DEFINITY in China. Double-Crane is also in the process of analyzing the clinical results relating to the liver and kidney indications and will also work with us to prepare an Import Drug License application for those indications.

Global Mo-99 Supply

We currently have Mo-99 supply agreements with Institute for Radioelements (“IRE”), running through December 31, 2022, with auto-renewal provisions ~~subject to~~that are terminable upon notice of non-renewal, and with NTP Radioisotopes (“NTP”), acting for itself and on behalf of its subcontractor, the Australian Nuclear Science and Technology Organisation (“ANSTO”), running through ~~December 31, 2021,~~June 30, 2022, and for which we are currently negotiating an ~~extension. We also have a Xenon supply agreement with IRE which runs through June 30, 2022, and which is subject to further~~ extension.

Although we have a globally diverse Mo-99 supply with IRE in Belgium, NTP in South Africa, and ANSTO in Australia, we still face supplier and logistical challenges in our Mo-99 supply chain. The NTP processing facility had periodic outages in 2017, 2018 and 2019. When NTP was not producing, we relied on Mo-99 supply from both IRE and ANSTO to limit the impact of the NTP outages. In 2019 and 2020, ANSTO experienced multiple facility issues that resulted in ANSTO outages and volume limitations, during which time we relied on IRE and NTP to limit the impact of those outages and limitations. Because of the COVID-19 pandemic, we experienced challenges receiving regularly scheduled orders of Mo-99 from our global suppliers, particularly in the second quarter of 2020. We continue to manage these various supply chain challenges, but depending on reactor and processor schedules and operations, at times we have not been able to fill some or all of the demand for our TechneLite generators on certain manufacturing days. A prolonged disruption of service from one of our three Mo-99 processing sites or one of their main Mo-99-producing reactors could have a substantial negative effect on our business, results of operations, financial condition and cash flows.

~~We are also pursuing additional sources of Mo-99 from potential new producers to further~~To augment our current ~~supply. In November 2014,~~supply of Mo-99, we ~~entered into~~have a strategic arrangement with SHINE Medical Technologies LLC (“SHINE”) for the future supply of Mo-99. Under the terms of the supply agreement, entered into in November 2014, SHINE will provide Mo-99 produced using its proprietary LEU-solution technology for use in our TechneLite generators once SHINE’s facility becomes operational and receives all necessary regulatory approvals, which SHINE now estimates will occur in ~~late 2022.~~2023. The term of this arrangement provides for three years of supply of Mo-99. However, we cannot assure you that SHINE ~~or any other possible additional sources of Mo-99~~ will ~~result in~~be able to produce commercial quantities of Mo-99 for our business, or that ~~these new suppliers~~SHINE, together with our current suppliers, will be able to deliver a sufficient quantity of Mo-99 to meet our needs.

Inventory Supply

We obtain a substantial portion of our imaging agents from a ~~third-party~~third party supplier. JHS is currently a significant supplier of DEFINITY and our sole source manufacturer of ~~DEFINITY,~~ NEUROLITE, Cardiolite and evacuation vials, the latter being an ancillary component for our TechneLite generators. ~~We are currently seeking approval from certain foreign regulatory authorities for~~On February 23, 2022, our wholly-owned subsidiary, LMI, entered into a Manufacturing and Supply Agreement (the “MSA”) with JHS, effective as of February 23, 2022, pursuant to which JHS will manufacture, ~~certain of~~and LMI will purchase, our DEFINITY, NEUROLITE, Cardiolite and evacuation vial products. ~~Until we receive these approvals, we will face continued limitations on where we can sell those products outside~~The new MSA supersedes all of the ~~U.S.~~prior agreements of the parties. The initial term of the MSA runs through December 31, 2027 and can be further extended by mutual agreement of the parties. The MSA requires LMI to purchase from JHS specified percentages of its total requirements for DEFINITY, as well as specified quantities of NEUROLITE, Cardiolite and evacuation vial products, each year during the contract term. Either party can terminate the MSA upon the occurrence of certain events, including the material breach or bankruptcy of the other party. In addition to JHS, we rely on ~~SBL~~Samsung BioLogics as our sole source manufacturer of DEFINITY RT. Our manufacturing agreement with JHS relating to DEFINITY expires in February 2022, and our manufacturing agreements relating to NEUROLITE and Cardiolite expire in December 2023, in each case, with auto-renewal provisions subject to notice of non-renewal. On July 27,

In 2021, we received a letter from JHS that it was providing notice of non-renewal of our manufacturing agreement relating to DEFINITY, but that JHS remained interested in negotiating a new agreement. We are actively negotiating a new manufacturing agreement with JHS for DEFINITY, although there is no assurance that we will be able to reach an agreement on mutually acceptable terms or at all. Incompleted the event we are not able to enter into an agreement on mutually acceptable terms or at all, we expect that we would exercise our right under our current agreement with JHS to request a terminal supply of DEFINITY in an amount sufficient to meet our supply needs for DEFINITY until our in-house manufacturing facility is operational and producing enough DEFINITY to meet our supply needs, although there is no assurance that there would be no disruption.

~~Table of Contents~~

~~We have completed~~ construction of a specialized in-house manufacturing ~~capabilities~~facility at our North Billerica ~~Massachusetts facility~~campus for purposes of producing DEFINITY and, potentially, other sterile vial ~~products, which will also allow us to optimize our costs and reduce our supply chain risk, including in the event~~products. On February 22, 2022, we ~~cannot enter into a new agreement with JHS for DEFINITY as noted above. We have filed~~received FDA approval of our sNDA, ~~with the FDA~~authorizing commercial manufacturing of DEFINITY at our new facility, and ~~currently expect to have DEFINITY~~inventory that we had previously manufactured at this facility became commercially ~~available~~saleable. We believe this facility will allow us to better manage DEFINITY manufacturing and inventory, reduce our costs in ~~early 2022, although the approval of our sNDA~~a potentially more price competitive environment, and ~~that timing cannot be assured.~~provide us with supply chain redundancy.

Radiopharmaceuticals are decaying radioisotopes with half-lives ranging from a few hours to several days. These products cannot be kept in inventory because of their limited shelf lives and are subject to just-in-time manufacturing, processing and distribution, which takes place at our facilities in North Billerica, Massachusetts and Somerset, New Jersey.

~~Integration~~COVID-19 Pandemic

Table of Contents

The global COVID-19 pandemic has had, and may continue to have, a material impact on our business. Towards the end of the ~~Progenics Acquisition~~

~~On June 19,~~first quarter of 2020 we ~~completed~~began to experience, and through the ~~Progenics Acquisition. Progenics’ portfolio~~date of ~~products~~this filing we are continuing to experience, impacts to our business and ~~product candidates included, among other things, therapeutic agents designed~~operations related to ~~target cancer (AZEDRA, 1095~~the COVID-19 pandemic, including the impact of hospital staffing challenges, vaccination mandates, employee absences due to illness, and ~~PSMA TTC)~~a decline in the volume of certain procedures and treatments using our products.

Although many of the restrictions, including stay-at-home mandates, imposed in response to the COVID-19 pandemic have been lifted in much of the U.S., ~~diagnostic imaging agents designed to target PSMA for prostate cancer (PYLARIFY~~ and 1404), RELISTOR for opioid-induced constipation, AI imaging technologies and leronlimab being developed for HIV infection. Progenics’ revenue was generated from two principal sources: first, royaltiesthere has been a rapid rollout and development of multiple vaccines and ~~commercial milestones from strategic partnerships, including royalties from Bausch Health Companies, Inc. (“Bausch”) from~~boosters, the resurgence of COVID-19 infections continued to impact certain aspects of our business during the first quarter of 2022. For example, we believe sales of ~~RELISTOR;~~DEFINITY were impacted by elevated case counts and ~~second, AZEDRA sales.~~hospitalizations but improved over the course of the quarter, even amidst ongoing hospital nursing and sonographer shortages.

The ~~ultimate success of the Progenics Acquisition will depend~~pandemic could still have a future negative impact on our ~~ability to successfully combine the~~ business, particularly if there are additional resurgences as a result of ~~Progenics with our own and realize the anticipated benefits, including synergies, cost savings, innovation and operational efficiencies and revenue growth from the acquisition.~~

~~Our combined business is now larger and significantly more complex than our business was immediately prior~~mutations or other variations to the ~~consummation of~~virus that further increase its communicability or its impact on certain populations, geographic regions and the ~~Progenics Acquisition. Our ability to successfully manage this combined business will depend upon our ability to continue to integrate~~healthcare system, including elective procedures and manage the combined business with its increased scale and scope, and increased costs and complexity. In addition, the CVRs issued as partial consideration for the Progenics Acquisition create additional operational obligations and accounting complexity. See Part II, Item 1A. “Risk Factors - The CVRs we issued as part of the Progenics Acquisition may result in substantial future payments and could divert the attention of our management; in addition, the actual payments made in connection with the CVRs, if any, may not be consistent with the estimated fair value of the CVRs that we are required to prepare for accounting purposes.” We can give no assurance that the actual amounts paid, if any, in connection with the CVRs will be consistent with any recurring fair value estimate of such CVRs.hospital access.

Research and Development Expenses

To remain a leader in the marketplace, we have historically made and will continue to make substantial investments in new product development ~~including, among other things,~~and lifecycle management for existing products.

•For PYLARIFY, our ~~flurpiridaz F 18 clinical~~ development ~~program, the expenses~~ of ~~which are now being borne by GE Healthcare. The Progenics Acquisition~~PYLARIFY resulted in ~~additional and substantial clinical development expense. The PYLARIFY NDA filed with the FDA on September 29, 2020, was approved~~approval by the FDA in May 2021.

•For PYLARIFY AI, our development of PYLARIFY AI resulted in a 510(k) clearance granted by the FDA in July 2021.

•For 1095, the ARROW Phase 2 study in mCRPC patients had been paused to minimize risk to subjects and healthcare providers during the pandemic, and new enrollment in that study restarted in October 2020. In the fourth quarter of 2021, we completed an interim analysis of the ARROW Phase 2 ~~study. The Independent Data Monitoring Committee recommended~~study in mCRPC patients in the fourth quarter of 2021 and are continuing that study ~~continue~~ without modifications. We currently expect to complete enrollment in the ARROW Phase 2 study later in 2022.

~~We also are planning additional clinical development work for AZEDRA in two new potential therapeutic indications – neuroblastoma and gastroenteropancreatic neuroendocrine tumors – and~~•For LMI 1195, aswe plan to initiate a ~~diagnostic agent~~Phase 3 clinical trial for the use of LMI 1195 for the diagnosis and management of ~~neuroblastoma. In addition,~~neuroblastoma tumors in pediatric and adult populations. We expect to initiate approximately 20 clinical sites in the ~~Company has developed aPROMISE,~~U.S. to enroll approximately 100 patients with known or suspected neuroblastoma.

•We are also exploring additional lifecycle management opportunities for some of our artificial intelligence-based, deep learning-enabled, medical device software, which we also refer to as PYLARIFY AI, and which is further described below under the heading “Additional Initiatives”. current products, including AZEDRA.

Our investments in these additional clinical activities and lifecycle management opportunities will increase our operating expenses and impact our results of operations and cash flow, and we can give no assurances as to whether any of ~~these~~our clinical development candidates or lifecycle management opportunities will be ~~approved.~~successful.

~~Additional~~Strategic Initiatives

~~In addition to integrating the new assets and programs resulting from the Progenics Acquisition, we~~We continue to seek ways to further expand our portfolio of products and product candidates and ~~how best~~ to optimize the value of our current assets, evaluating a number of different opportunities to collaborate with others or to acquire or in-license additional products, product candidates, businesses and technologies to drive our future growth. ~~Consistent with the Progenics Acquisition,~~In particular, we believe that diagnostic and therapeutic product opportunities in oncology and other strategic areas will be critical to our future success, and we are ~~particularly interested in~~committed to further augmenting our commercial portfolio with revenue opportunities of a similar magnitude as DEFINITY and PYLARIFY, either through strategic transactions or internal development.

Oncology

As we continue to pursue expanding our ~~presence~~strategic partnerships, our Pharma Services activities and strategic partnerships in oncology ~~in both radiotherapeutics and diagnostics.~~include:

•In May 2019, we commenced an initiative to build out our Pharma Services capabilities, which resides in our strategic partnerships and other revenue product category, by entering into a strategic collaboration and license agreementProstate Cancer - We collaborate with NanoMab, a privately-held biopharmaceutical company focusing on the development of next generation radiopharmaceuticals for cancer precision medicine. We believe this collaboration will provide the first broadly-available

~~Table of Contents~~

~~PD-L1 imaging biomarker research tool to~~ pharmaceutical companies developing therapies and ~~academic centers conducting clinical trials on immuno-oncology treatments, including combination therapies.~~diagnostics in prostate cancer.

•◦In March ~~2021,~~2022, we acquired from Ratio Therapeutics LLC (“Ratio”) (previously Noria Therapeutics, Inc.) exclusive, worldwide rights to NTI-1309, an innovative imaging biomarker that targets fibroblast activation protein (“FAP”), an emerging targetannounced a collaboration with broad potential imaging applicability and use in oncology. Under the terms of this agreement, Ratio will drive the early clinical development of NTI-1309. We are integrating NTI-1309 into our portfolio of imaging biomarkers as part of our Pharma Services offering. Upon further clinical development, we will assess options to bring NTI-1309 to market as a diagnostic or potentially a therapeutic agent.

•~~We have also expanded our Pharma Services offering~~Novartis to include piflufolastat F 18 for pharmaceutical companies developing PSMA-targeted therapies and have entered into clinical supply agreements with each of Regeneron, Bayer and POINT BioPharma for use of piflufolastat F 18PYLARIFY in prostate cancer ~~drug~~trials with Pluvicto. As part of the agreement with Novartis, the Company will provide PYLARIFY for the selection of patients with prostate cancer, and Novartis will provide all PYLARIFY related clinical imaging data to the Company.

◦In January 2022, we announced a collaboration with the Prostate Cancer Clinical Trial Consortium (“PCCTC”), a premier multicenter clinical research organization that specializes in prostate cancer research. The intent of the strategic collaboration is to integrate our AI platform into PCCTC studies to advance the development ~~programs.~~ and validation of novel AI-enabled biomarkers.

◦In September 2021, we entered into a development and commercialization collaboration with RefleXion Medical, Inc. to evaluate the use of piflufolastat F 18 to enable real-time therapeutic guidance of biology-guided radiotherapy in prostate cancer using the RefleXion X1X1TM platform.

Table of Contents

◦TM ~~platform.~~Prior to 2021, we also entered into several other separate agreements, including with POINT Biopharma and Regeneron, under which we supply piflufolastat F 18 in connection with their clinical studies, and Curium, under which we licensed exclusive rights to Curium to develop and commercialize piflufolastat F 18 in Europe.

•~~Our subsidiary, EXINI Diagnostics AB (“EXINI”~~Immuno-Oncology - In May 2019, we entered into a strategic collaboration and license agreement with NanoMab, a privately-held biopharmaceutical company focused on the development of next generation radiopharmaceuticals for cancer precision medicine.

•Pan-Oncology - In March 2021, we acquired from Ratio Therapeutics LLC (previously Noria Therapeutics, Inc.)~~, has developed PYLARIFY AI, which is designed~~ exclusive, worldwide rights to ~~allow healthcare professionals~~NTI-1309, an innovative imaging biomarker that targets fibroblast activation protein, an emerging target with broad potential imaging applicability and ~~researchers to perform quantitative assessments of PSMA PET/CT~~use in oncology. ~~Clinicians~~Upon further clinical development, we will ~~have the option~~assess options to ~~utilize PYLARIFY AI with PYLARIFY~~bring NTI-1309 to ~~increase the efficiency and reproducibility of the PSMA PET/CT assessments. Earlier this year,~~market as a diagnostic or potentially a therapeutic product.

Microbubble Franchise

In addition, we continue to expand our microbubble franchise. In April 2021, we announced ~~that EXINI was granted 510(k) clearance by~~a strategic collaboration with Allegheny Health Network (“AHN”), which will use our microbubbles in combination with AHN’s ultrasound-assisted non-viral gene transfer technology for the ~~FDA for PYLARIFY AI~~development of a proposed treatment of xerostomia. Xerostomia is a lack of saliva production leading to dry mouth and has a variety of causes, including radiotherapy and chemotherapy, the chronic use of drugs and rheumatic and dysmetabolic diseases. Prior to 2021, we entered into microbubble collaborations with the following parties: (i) Cerevast Medical, Inc. (“Cerevast”), in which our microbubbles will be used in connection with Cerevast’s ocular ultrasound device to improve blood flow in occluded retinal veins in the ~~U.S.~~eye; (ii) CarThera SAS, for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma; and ~~that EXINI received CE Mark clearance~~(iii) Insightec Ltd. (“Insightec”), which will use our microbubbles in connection with the development of Insightec’s transcranial guided focused ultrasound device for ~~PYLARIFY AI~~the treatment of glioblastoma as well as other neurodegenerative conditions.

Generally, our costs in ~~Europe.~~

connection with the strategic partnerships relate to the supply of drug and other ancillary expenses and the benefits can include possible supply, milestone and royalty payments, additional intellectual property rights and strategic relationships. We can give no assurance as to if or when or if any of these ~~Pharma Services~~ collaborations and other new initiatives will be successful or accretive to earnings.

~~In addition, as described above, we continue to expand our microbubble franchise. See “Anticipated Continued Growth~~

Table of ~~DEFINITY and Expansion of Our Ultrasound Microbubble Franchise–New Clinical Applications” for further details.~~Contents

Results of Operations

The following is a summary of our consolidated results of operations:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		Change $		Change %		2021		2020		Change $		Change %		(in thousands)	2022		2021		Change $		Change %
Revenues	Revenues	$	102,073	$	88,544	$	13,529	15.3	%	$	295,646	$	245,258	$	50,388	20.5	%	Revenues	$	208,880	$	92,509	$	116,371	125.8	%
Cost of goods sold	Cost of goods sold	59,404		52,284		7,120		13.6	%	165,859		145,148		20,711		14.3	%	Cost of goods sold	79,810		51,479		28,331		55.0	%
Gross profit	Gross profit	42,669		36,260		6,409		17.7	%	129,787		100,110		29,677		29.6	%	Gross profit	129,070		41,030		88,040		214.6	%
Operating expenses	Operating expenses																	Operating expenses
Sales and marketing	Sales and marketing	17,195		11,609		5,586		48.1	%	48,999		28,044		20,955		74.7	%	Sales and marketing	20,354		14,173		6,181		43.6	%
General and administrative	General and administrative	28,550		18,217		10,333		56.7	%	87,865		55,586		32,279		58.1	%	General and administrative	37,588		16,138		21,450		132.9	%
Research and development	Research and development	11,252		11,684		(432)		(3.7)	%	33,673		20,150		13,523		67.1	%	Research and development	12,203		10,360		1,843		17.8	%
Total operating expenses	Total operating expenses	56,997		41,510		15,487		37.3	%	170,537		103,780		66,757		64.3	%	Total operating expenses	70,145		40,671		29,474		72.5	%
Gain on sale of assets	Gain on sale of assets	—		—		—		N/A		15,263		—		15,263		N/A		Gain on sale of assets	—		15,263		(15,263)		N/A
Operating loss		(14,328)		(5,250)		(9,078)		172.9	%	(25,487)		(3,670)		(21,817)		594.5	%
Operating income																		Operating income	58,925		15,622		43,303		277.2	%
Interest expense	Interest expense	1,569		2,808		(1,239)		(44.1)	%	6,224		6,668		(444)		(6.7)	%	Interest expense	1,509		2,718		(1,209)		(44.5)	%
Gain on extinguishment of debt	Gain on extinguishment of debt	—		—		—		N/A		(889)		—		(889)		N/A		Gain on extinguishment of debt	—		(889)		889		N/A
Other loss (income)		3,940		(596)		4,536		(761.1)	%	3,209		(1,702)		4,911		(288.5)	%
Loss before income taxes		(19,837)		(7,462)		(12,375)		165.8	%	(34,031)		(8,636)		(25,395)		294.1	%
Income tax (benefit) expense		(6,422)		(1,076)		(5,346)		496.8	%	(2,967)		1,425		(4,392)		(308.2)	%
Net loss		$	(13,415)	$	(6,386)	$	(7,029)	110.1	%	$	(31,064)	$	(10,061)	$	(21,003)	208.8	%
Other income																		Other income	(485)		(549)		64		(11.7)	%
Income before income taxes																		Income before income taxes	57,901		14,342		43,559		303.7	%
Income tax expense																		Income tax expense	14,939		5,334		9,605		180.1	%
Net income																		Net income	$	42,962	$	9,008	$	33,954	376.9	%

~~Table of Contents~~

Comparison of the Periods Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

Revenues

We classify our revenues into three product categories: precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and ~~other.~~other revenue. Precision diagnostics includes DEFINITY, TechneLite and other imaging diagnostic products. Radiopharmaceutical oncology consists primarily of PYLARIFY and AZEDRA. Strategic partnerships and other revenue includes out-licensing arrangements, which includes $24.0 million of revenue recognized pursuant to the Novartis Agreement, partnerships ~~related to~~that focus on facilitating precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms, and on our other products, ~~of the Company,~~ such as ~~RELISTOR, that improve patient outcomes and care.~~RELISTOR.

Table of Contents

Revenues are summarized by product category on a net basis as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2021
2020(1)
Change $ Change % 2021 2020 Change $ Change %
   DEFINITY $ 57,636 $ 50,359 $ 7,277 14.5 % $ 173,448 $ 139,989 $ 33,459 23.9 %
   TechneLite 22,680 21,113 1,567 7.4 % 69,252 62,560 6,692 10.7 %
   Other precision diagnostics 7,563 8,585 (1,022) (11.9) % 21,289 28,782 (7,493) (26.0) %
Total precision diagnostics 87,879 80,057 7,822 9.8 % 263,989 231,331 32,658 14.1 %
Radiopharmaceutical oncology 8,890 3,323 5,567 167.5 % 13,203 7,474 5,729 76.7 %
Strategic partnerships and other 5,304 5,164 140 2.7 % 18,454 6,453 12,001 186.0 %
   Total revenues $ 102,073 $ 88,544 $ 13,529 15.3 % $ 295,646 $ 245,258 $ 50,388 20.5 %

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


	Three Months Ended March 31,
(in thousands)	2022		2021		Change $		Change %
DEFINITY	$	58,328	$	55,971	$	2,357	4.2	%
TechneLite	22,605		22,800		(195)		(0.9)	%
Other precision diagnostics	5,265		6,984		(1,719)		(24.6)	%
Total precision diagnostics	86,198		85,755		443		0.5	%
PYLARIFY	92,777		—		92,777		N/A
Other radiopharmaceutical oncology	1,327		1,500		(173)		(11.5)	%
Total radiopharmaceutical oncology	94,104		1,500		92,604		6,173.6	%
Strategic partnerships and other revenue	28,578		5,254		23,324		443.9	%
Total revenues	$	208,880	$	92,509	$	116,371	125.8	%

The increase in revenues for the three months ended ~~September 30, 2021,~~March 31, 2022, as compared to the prior year period, is primarily driven by ~~increases~~the commercial launch of PYLARIFY and $24.0 million of revenue recognized pursuant to the Novartis Agreement, and an increase in DEFINITY ~~and TechneLite~~sales volume period over period ~~as a result of~~due to improving conditions relative to the COVID-19 pandemic in the prior ~~year and the commercial launch of PYLARIFY,~~year. The increase is offset, in part, by ~~the divestiture of our Puerto Rico business during the first quarter of 2021.~~

The increase in revenues for the nine months ended September 30, 2021, as compared to the prior year period, is primarily driven by increases in DEFINITY and TechneLite volume period over period as a result of the COVID-19 pandemic in the prior year, the addition of the Progenics product portfolio, including the commercial launch of PYLARIFY. This increase is partially offset by continued COVID-19 related reducedlower sales volumes ~~in Xenon and the divestiture of our Puerto Rico business during the first quarter of fiscal year 2021.~~from other precision diagnostic products.

Rebates and Allowances

Estimates for rebates and allowances represent our estimated obligations under contractual arrangements with third parties. Rebate accruals and allowances are recorded in the same period the related revenue is recognized, resulting in a reduction to revenue and the establishment of a liability which is included in accrued expenses. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes and growth, Medicaid rebate programs for our products, administrative fees of group purchasing organizations and certain distributor related commissions. The calculation of the accrual for these rebates and allowances is based on an estimate of the third-party’s ~~buying patterns~~expected purchases and the resulting applicable contractual rebate to be earned over a contractual period.

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


(in thousands)	Rebates and Allowances
Balance, January 1, ~~2021~~2022	$	~~9,350~~10,977
Provision related to current period revenues	~~19,459~~6,411
Adjustments relating to prior period revenues	~~(33)~~62
Payments or credits made during the period	~~(19,361)~~(6,657)
Balance, ~~September 30, 2021~~March 31, 2022	$	~~9,415~~10,793

~~Table of Contents~~

Gross Profit

The increase in gross profit for the three months ended ~~September 30, 2021,~~March 31, 2022, as compared to the prior year period, is primarily due to ~~DEFINITY volume increases and~~ PYLARIFY post commercial launch sales volume ~~increases,~~and the $24.0 million pursuant to the Novartis Agreement, which are partially offset by amortization expense of ~~assets~~ acquired ~~in the Progenics Acquisition.~~

The increase in gross profit for the nine months ended September 30, 2021, as compared to the prior year period is primarily due to DEFINITY volume increases and an asset impairment loss of $7.3 million on other nuclear products that occurred in the prior year. This increase was offset, in part, by lower Xenon unit volumes and increased radioisotope transportation costs, both due to COVID-19, as well as amortization expense ofintangible assets ~~acquired~~ in the Progenics Acquisition.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and other related costs for personnel in field sales, marketing and customer service functions. Other costs in sales and marketing expenses include the development and printing of advertising and promotional material, professional services, market research and sales meetings.

Sales and marketing expenses increased ~~$5.6 million and $21.0~~$6.2 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 as compared to the prior year period. This was primarily driven by the ~~integration of the Progenics sales and marketing organization, preparation~~commercialization activities for the launch of PYLARIFY and increased employee-related costs (including the hiring of new employees during 2021 in connection with the commercialization activities for PYLARIFY), as well as the reduced level of marketing promotional programs and travel during the prior year due to the impact of the COVID-19 pandemic.

Table of Contents

General and Administrative

General and administrative expenses consist of salaries and other related costs for personnel in executive, finance, legal, information technology and human resource functions. Other costs included in general and administrative expenses are professional fees for information technology services, external legal fees, consulting and accounting services as well as bad debt expense, certain facility and insurance costs, including director and officer liability insurance.

General and administrative expenses increased ~~$10.3~~$21.5 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the prior period. This was primarily driven by the ~~$9.5~~$18.4 million ~~sublease impairment charge and $2.6 million~~net expense for the fair value ~~adjustment~~adjustments to the contingent asset and liabilities in the ~~third~~first quarter of ~~2021~~2022 (an increase of ~~$1.8~~$18.1 million from the prior year period) (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs), and increased employee-related costs, offset by acquisition-related costs associated with the Progenics Acquisition in the prior ~~year.~~

General and administrative expenses increased $32.3 million for the nine months ended September 30, 2021 compared to the prior year period. This was primarily driven by the $28.5 million fair value adjustment to the contingent asset and liabilities (an increase of $27.7 million from the prior year period), $9.5 million sublease impairment charge and higher headcount related costs following the Progenics Acquisition, offset by acquisition-related costs associated with the Progenics Acquisition in the prior year and synergy capture in the current year.

Research and Development

Research and development expenses relate primarily to the development of new products to add to our portfolio and costs related to our medical affairs, medical information and regulatory functions.

Research and development expenses ~~decreased $0.4~~increased $1.8 million for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to the prior year period. This was primarily driven by the ~~filing fee~~level of activity of the ARROW Phase 2 study of 1095, investment in medical affairs related to PYLARIFY and higher overall headcount related costs, offset by the expenses related to filing fees for the PYLARIFY New Drug Application and preparation activities for the launch of PYLARIFY during the prior year ~~period; offset by phasing of the ARROW Phase 2 study of 1095 and higher overall headcount related costs.~~

Research and development expenses increased $13.5 million for the nine months ended September 30, 2021 as compared to the prior year period. This was primarily driven by the integration of the Progenics research and development organization now supporting our pipeline, which includes 1095, preparation activities for the launch of PYLARIFY and higher employee-related costs due to the impact of the COVID-19 pandemic during the prior year period; offset by the filing fee related to the PYLARIFY New Drug Application during the prior year period.

~~Gain on Sale of Assets~~

~~We sold 100% of the stock of our Puerto Rico radiopharmacy subsidiary resulting in a pre-tax book gain of $15.3 million for the nine months ended September 30, 2021.~~

~~Table of Contents~~

Interest Expense

Interest expense decreased by approximately ~~$0.4~~$1.2 million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the prior year period due to lower interest rates on our long-term ~~debt.~~

~~Gain on Extinguishment of Debt~~

~~For~~debt and the ~~nine months ended September 30, 2021, we realized a $0.9 million gain on extinguishment of debt related to the voluntary~~ repayment of ~~the outstanding principal on~~ the Royalty-Backed Loan on March 31, 2021.

Income Tax ~~(Benefit)~~ Expense

The income tax ~~benefit~~expense recorded for the three months ended ~~September 30, 2021~~March 31, 2022 was primarily due to ~~the tax benefit of a release of uncertain tax position liability, and a~~ pre-tax ~~loss~~profits reported during the quarter, partially offset by the ~~accrual of interest~~benefit associated with ~~uncertain tax positions.~~

The income tax benefit recorded for the nine months ended September 30, 2021 was primarily due to the tax benefit of released of uncertain tax position liabilities and the pre-tax loss reported during the period, partially offset by the accrual of interest associated with uncertain tax positions and the impact of permanent item adjustments including the accrual of contingent consideration liabilities.stock compensation deductions.

We regularly assess our ability to realize our deferred tax assets. Assessing the realizability of deferred tax assets requires significant management judgment. In determining whether our deferred tax assets are more-likely-than-not realizable, we evaluate all available positive and negative evidence, and weigh the objective evidence and expected impact. We continue to record a valuation allowance against certain of our foreign net deferred tax assets and a small component of our domestic deferred tax assets.

Our effective tax rate for each reporting period is presented as follows:

Nine Months Ended
September 30,
2021 2020
Effective tax rate 8.7% (16.5)%


	Three Months Ended March 31,
	2022	2021
Effective tax rate	25.8%	37.2%

Our effective tax rate in fiscal ~~2021~~2022 differs from the U.S. statutory rate of 21% principally due to ~~releases~~the accrual of ~~uncertain tax position liabilities~~state taxes and the impact of non-deductible contingency reserve expense.

The decrease in the effective income tax rate for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 is primarily due to the ~~reduction in tax benefit resulting from the accrual~~increased amount of ~~non-deductible contingency reserve expense.~~stock compensation benefits recorded during that quarter.

3430

Table of Contents

Liquidity and Capital Resources

Cash Flows

The following table provides information regarding our cash flows:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	40,027	$	15,827	Net cash provided by operating activities	$	10,264	$	9,818
Net cash provided by (used in) investing activities		$	8,227	$	(1,127)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	$	(1,390)	$	13,303
Net cash used in financing activities	Net cash used in financing activities	$	(37,232)	$	(17,488)	Net cash used in financing activities	$	(2,179)	$	(34,791)

Net Cash Provided by Operating Activities

Net cash provided by operating activities of ~~$40.0~~$10.3 million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~driven~~ primarily ~~by depreciation, amortization and accretion expense~~comprised of ~~$30.1 million, a~~net income adjusted for the net effect of non-cash items such as the change in fair value of contingent assets and liabilities of ~~$28.5~~$18.4 million (refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities, including CVRs)~~, stock-based compensation expense of $11.8 million, impairment of long-lived assets of $9.5 million and a net increase of $2.4 million related to movements in our~~. The primary working capital ~~accounts during the period. The overall increases in~~sources of cash ~~from our working capital accounts~~ were ~~primarily driven by an increase in sales collections,~~ the timing of payments to large ~~vendors,~~vendors. The primary working capital uses of cash were an increase in trade receivables from timing of sale orders and an increase in ~~fees related to PYLARIFY sales. These net sources~~collection period as well as the timing of ~~cash were offset by a net loss of $31.1 million and a gain on sale of assets of $15.3 million.~~inventory purchases.

Net cash provided by operating activities of ~~$15.8~~$9.8 million in the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was driven primarily by ~~$16.3~~net income of $9.0 million, of depreciation, amortization and accretion expense of $8.1 million, stock-based compensation expense of ~~$10.5~~$3.3 million, and ~~impairment~~deferred income taxes of ~~long-lived assets of $7.3~~$4.6 million. These net sources of cash were offset by a ~~net loss~~gain on sale of ~~$10.1~~assets of $15.3 million and a net decrease of ~~$11.7~~$1.5 million related to movements in our working capital accounts during the period. The overall decreases in cash from our working capital accounts were primarily driven by the payment of prior year annual bonuses as well as ~~change~~increased receivables from sales offset by a reduction in inventory ~~related~~due to ~~the COVID-19 impact on products and~~obsolescence as well as the timing of ~~batch processes and accruals related to general and administrative expenses in connection with the acquisition of Progenics.~~inventory purchases.

Net Cash (Used in) Provided by ~~(Used in)~~ Investing Activities

Net cash used in investing activities during the three months ended March 31, 2022 was primarily due to $3.2 million of capital expenditures offset by cash proceeds of $1.8 million received from the sale of our Puerto Rico subsidiary.

Net cash provided by investing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 was primarily due to cash proceeds of $15.8 million received from the sale of our Puerto Rico subsidiary, which was offset by ~~$7.6~~$2.5 million of capital expenditures.

Net cash used in investing activities during the nine months ended September 30, 2020 reflected $10.0 million in lending on a note receivable to Progenics prior to the acquisition and $8.7 million in capital expenditures offset by $17.6 million of acquired cash related to the non-cash Progenics Acquisition.

Net Cash Used in Financing Activities

Net cash used in financing activities during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 is primarily attributable to the payments on long-term debt and other borrowings of $2.6 million related to the 2019 Term Facility and payments for minimum statutory tax withholding related to net share settlement of equity awards of $5.5 million offset by proceeds of $5.4 million from stock option exercises.

Net cash used in financing activities during the three months ended March 31, 2021 is primarily attributable to the payments on long-term debt and other borrowings of ~~$40.8~~$35.6 million related to the 2019 Term Facility and Royalty-Backed Loan, including a voluntary repayment of the outstanding principal on the Royalty-Backed Loan and payments for minimum statutory tax withholding related to net share settlement of equity awards of ~~$1.9~~$1.6 million offset by proceeds of ~~$4.6~~$2.0 million from stock option exercises.

Net cash used in financing activities during the nine months ended September 30, 2020 is primarily attributable to the payments on long-term debt and other borrowings of $11.2 million related to the 2019 Term Facility and Royalty-Backed Loan, equity issuance costs related to the acquisition of Progenics of $3.8 million, and payments for minimum statutory tax withholding related to net share settlement of equity awards of $2.1 million.

External Sources of Liquidity

In June 2019, we refinanced our 2017 $275.0 million five-year term loan facility with the 2019 Term Facility. In addition, we replaced our $75.0 million revolving facility with our current five-year revolving credit facility (the “2019 Revolving Facility” and together with the 2019 Term Facility, the “2019 Facility”). The terms of the 2019 Term Facility are set forth in the Credit Agreement, dated as of June 27, 2019, by and among us, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral ~~agent.~~agent, which was amended on June 19, 2020 (as amended, the “2019 Credit Agreement”). We have the right to request an increase to the 2019 Term Facility or request the establishment of one or more new incremental term loan facilities, in an aggregate principal amount of up to $100.0 million, plus additional amounts, in certain circumstances.

~~Table of Contents~~

We are permitted to voluntarily repay the 2019 Term Loans, in whole or in part, without premium or penalty. The 2019 Term Facility requires us to make mandatory prepayments of the outstanding 2019 Term Loans in certain circumstances. The 2019 Term Facility amortizes at 5.0% per year through September 30, 2022 and 7.5% thereafter, until its June 27, 2024 maturity date.

Table of Contents

Under the terms of the 2019 Revolving Facility, the lenders thereunder agreed to extend credit to us from time to time until June 27, 2024 consisting of revolving loans in an aggregate principal amount not to exceed $200.0 million at any time outstanding. The 2019 Revolving Facility includes a $20.0 million sub-facility for the issuance of ~~Letters~~letters of ~~Credit.~~credit (the “Letters of Credit”). The 2019 Revolving Facility includes a $10.0 million sub-facility for ~~Swingline Loans.~~swingline loans (the “Swingline Loans”). The Letters of Credit, Swingline Loans and the borrowings under the 2019 Revolving Facility are expected to be used for working capital and other general corporate purposes.

~~Please refer to our Form 10-K for fiscal year ended December 31, 2020 for further details on~~Under the ~~2019 Facility.~~

~~On June 19, 2020, we amended our~~ 2019 Credit Agreement, ~~(the “Amendment”) as~~loans bear interest at LIBOR plus a ~~result of~~spread that ranges from 1.50% to 3.00% or the ~~impact of~~Base Rate (as defined in the ~~COVID-19 pandemic on our business and operations~~2019 Credit Agreement) plus a spread that ranges from 0.50% to 2.00%, and the ~~near-term higher level of indebtedness resulting~~commitment fee ranges from ~~our decision not~~0.15% to ~~immediately repay the Progenics debt secured by the RELISTOR royalties following the Progenics Acquisition.~~

~~The Amendment provides for, among other things, modifications to~~0.40%, in each case based on our ~~financial maintenance covenants. The covenant related to~~ Total Net Leverage Ratio (as defined in the ~~Amended~~2019 Credit Agreement) ~~was waived from the date of the Amendment through December 31, 2020.~~ .

The maximum total net leverage ratio and interest coverage ratio permitted by the financial covenant in our 2019 Credit Agreement is displayed in the table below:


~~2020 Amended~~2019 Credit Agreement
Period			Total Net Leverage Ratio
Q3 2021 and ~~Thereafter~~thereafter			3.50 to 1.00

Period			Interest Coverage Ratio
Q2 2021 and thereafter			3.00 to 1.00

As of ~~September 30, 2021,~~March 31, 2022, we were in compliance with all financial and other covenants under the ~~Amendment.~~2019 Credit Agreement.

~~For the period beginning~~Please refer to our Form 10-K for fiscal year ended December 31, 2021 for further details on the ~~date of~~2019 Facility and the ~~Amendment and ending on the Adjustment Date (as defined in the Amended~~2019 Credit Agreement) for the fiscal quarter ending March 31, 2021, loans under the Amended Credit Agreement bear interest at LIBOR plus 3.25% or the Base Rate plus 2.25%. On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, loans bear interest at LIBOR plus a spread that ranges from 1.50% to 3.00% or the Base Rate plus a spread that ranges from 0.50% to 2.00%, in each case based on our Total Net Leverage Ratio.

The commitment fee applicable to the Revolving Facility was 0.50% until the Adjustment Date for the fiscal quarter ending March 31, 2021. On and after the Adjustment Date for the fiscal quarter ending on March 31, 2021, the commitment fee ranges from 0.15% to 0.40% based on our Total Net Leverage Ratio.Agreement.

On June 19, 2020, as a result of the Progenics Acquisition, we assumed Progenics outstanding debt as of such date in the amount of $40.2 million. On November 4, 2016, Progenics, through aits wholly-owned subsidiary, MNTX Royalties Sub LLC, ~~(“MNTX Royalties”),~~ entered into ~~a $50.0 million loan agreement (the “Royalty-Backed Loan”) with a fund managed by HealthCare Royalty Partners III, L.P. (“HCRP”) on November 4, 2016. Under the terms of~~ the Royalty-Backed Loan, the lenders had no recourse to Progenics or any of its assets other than the right to receive royalty payments from the commercial sales of RELISTOR products owed under Progenics’ license agreement with Salix Pharmaceuticals, Inc., a wholly-owned subsidiary of Bausch. The RELISTOR royalty payments were used to repay the principal and interest on the loan.Loan. The Royalty-Backed Loan bore interest at ~~a per annum~~an annual rate of 9.5% and was scheduled to mature on June 30, 2025. On June 22, 2020, HCRP waived the automatic acceleration of the Royalty-Backed Loan that otherwise would have been triggered by the consummation of the Progenics Acquisition and MNTX Royalties agreed not to prepay the loan until after December 31, 2020.

On March 31, 2021, we 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.

Our ability to fund our future capital needs will be affected by our ability to continue to generate cash from operations and may be affected by our ability to access the capital markets, money markets or other sources of funding, as well as the capacity and terms of our financing arrangements.

~~Table of Contents~~

We may from time to time repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our balance sheet. These actions may include prepayments of our term loans or other retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise. The amount of debt that may be retired, if any, could be material and would be decided at the sole discretion of our Board of Directors and will depend on market conditions, our cash position and other considerations.

Funding Requirements

Our future capital requirements will depend on many factors, including:

•The level of product sales and the pricing environment of our currently marketed products, particularly DEFINITY and PYLARIFY, as well as any additional products that we may market in the future, including decreased product sales resulting from the COVID-19 pandemic;

•Revenue mix shifts and associated volume and selling price changes that could result from contractual status changes with key customers and additional competition;

•The continued costs of the ~~PYLARIFY commercial launch and our ability to successfully commercialize~~ongoing commercialization of PYLARIFY;

•The costs of acquiring or in-licensing, developing, obtaining regulatory approval for, and commercializing, new products, businesses or technologies, together with the costs of pursuing opportunities that are not eventually consummated;

•Our investment in the further clinical development and commercialization of products and development candidates, including AZEDRA, ~~PYLARIFY,~~ 1095, and LMI ~~1195, aBSI and PSMA AI;~~1195;

Table of Contents

•The costs of investing in our facilities, equipment and technology infrastructure;

•The costs and timing of establishing or amending manufacturing and supply arrangements for commercial supplies of our products and raw materials and components;

•Our ability to have product manufactured and released from ~~JHS and other~~ manufacturing sites in a timely manner in the future, ~~including our ability to negotiate a new manufacturing agreement with JHS for DEFINITY,~~ or to ~~begin and ramp up our manufacturing of DEFINITY~~manufacture products at our in-house manufacturing ~~facility~~facilities in ~~an amount~~amounts sufficient to meet our supply needs;

•The costs of further commercialization of our existing products, particularly in international markets, including product marketing, sales and distribution and whether we obtain local partners to help share such commercialization costs;

•The extent to which we choose to establish collaboration, co-promotion, distribution or other similar arrangements for our marketed products;

•The legal costs relating to maintaining, expanding and enforcing our intellectual property portfolio, pursuing insurance or other claims and defending against product liability, regulatory compliance, intellectual property or other claims; ~~and~~

•The cost of interest on any additional borrowings which we may incur under our financing ~~arrangements.~~arrangements; and

~~Until we successfully become dual sourced for~~•The impact of sustained inflation on our ~~principal products, we~~costs of goods sold and operating expenses.

We are vulnerable to future supply ~~shortages.~~chain shortages, disruptions or delays, especially for our single sourced products, raw materials and components. Disruption in our financial performance could also occur if we experience significant adverse changes in product or customer mix, broad economic downturns, sustained inflation, adverse industry or company conditions or catastrophic external events, including pandemics such as COVID-19, natural disasters and political or military conflict. If we experience one or more of these events in the future, we may be required to further implement expense reductions, such as a delay or elimination of discretionary spending in all functional areas, as well as scaling back select operating and strategic initiatives.

If our capital resources become insufficient to meet our future capital requirements, we would need to finance our cash needs through public or private equity offerings, debt financings, assets securitizations, sale-leasebacks or other financing or strategic alternatives, to the extent such transactions are permissible under the covenants of our 2019 Credit Agreement. Additional equity or debt financing, or other transactions, may not be available on acceptable terms, if at all. If any of these transactions require an amendment or waiver under the covenants in our 2019 Credit Agreement, which could result in additional expenses associated with obtaining the amendment or waiver, we will seek to obtain such a waiver to remain in compliance with those covenants. However, we cannot be assured that such an amendment or waiver would be granted, or that additional capital will be available on acceptable terms, if at all.

At ~~September 30, 2021,~~March 31, 2022, our only current committed external source of funds is our borrowing availability under our 2019 Revolving Facility. We had ~~$91.5~~$105.4 million of cash and cash equivalents at ~~September 30, 2021.~~March 31, 2022. Our 2019 Facility, as amended, contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. Incremental borrowings under the 2019 Revolving Facility, as amended, may affect our ability to comply with the covenants in the 2019 Facility, as amended, including the financial covenants restricting consolidated net leverage and interest coverage. Accordingly, we may be limited in utilizing the full amount of our 2019 Revolving Facility, as amended, as a source of liquidity.

~~Table of Contents~~

The CVRs we issued in the Progenics Acquisition entitle holders thereof to future cash payments of 40% of PYLARIFY net sales over (i) $100.0 million in 2022 and (ii) $150.0 million in 2023, which, if payable, we currently intend to fund from our then-available cash. In no event will our aggregate payments under the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9% (which we currently estimate could be approximately $100.0 million) of the total consideration we pay in the Progenics Acquisition. Refer to Note 4, “Fair Value of Financial Instruments”, for further details on contingent consideration liabilities.

Based on our current operating plans, ~~including our prudent expense management in response to the COVID-19 pandemic,~~ we believe ~~that~~ our ~~existing~~balance of cash and cash equivalents, ~~results~~which totaled $105.4 million as of March 31, 2022, along with cash generated by ongoing operations and ~~availability under~~continued access to our 2019 Revolving Facility, ~~as amended,~~ will be sufficient to ~~continue to fund~~satisfy our ~~liquidity~~cash requirements ~~for~~over the ~~foreseeable future.~~next twelve months and beyond.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ materially from these estimates under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.

Table of Contents

There have been no other significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies in the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. For further information, refer to our summary of significant accounting policies and estimates in our Annual Report on Form 10-K filed for the year ended December 31, ~~2020.~~2021.

Off-Balance Sheet Arrangements

We are required to provide the ~~U.S. Nuclear Regulatory Commission and~~ Massachusetts Department of Public Health and New Jersey Department of Environmental Protection financial assurance demonstrating our ability to fund the decommissioning of our North Billerica, Massachusetts and Somerset, New Jersey production ~~facility~~facilities upon closure, though we do not intend to close the ~~facility.~~facilities. We have provided this financial assurance in the form of a $28.2 million surety bond.

Since inception, we have not engaged in any other off-balance sheet arrangements, including structured finance, special purpose entities or variable interest entities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk, see Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Our exposures to market risk have not changed materially since December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), its principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of the period covered by this report.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are continually monitoring and assessing the pandemic status and geopolitical environment to determine any potential impact on the design and operating effectiveness of our internal controls over financial reporting.

3834

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to certain legal proceedings is included in Note 19, “Commitments and Contingencies”, to the condensed consolidated financial statements contained in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

3935

Table of Contents

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, except as set forth below:

Our ability to continue to grow PYLARIFY as a commercial product is dependent on (A) our ability to obtain FDA approval for additional PMFs to manufacture PYLARIFY, (B) the ability of PMFs to manufacture PYLARIFY to meet product demand, (C) our ability to sell PYLARIFY to customers, (D) our ability to obtain and maintain adequate coding, coverage and payment for PYLARIFY, and (E) our ability to establish PYLARIFY as a leading PSMA PET imaging agent in a competitive environment in which other PSMA PET imaging agents have been approved and additional ones are in development.

The ~~near-term growth~~commercial launch of PYLARIFY has been complex and expensive. To manufacture PYLARIFY, we assembled and qualified a nationwide network of PMFs with radioisotope-producing cyclotrons that make F 18, which has a 110-minute half-life, so PYLARIFY is manufactured and distributed rapidly to end-users. Because each of the PMFs manufacturing these products is deemed by the FDA to be a separate manufacturing site, each has to be separately approved by the FDA. Although we successfully qualified 21 PMFs in 2021 and continue to qualify additional PMFs in 2022, such that PYLARIFY is broadly available across the U.S. (including through our efforts to fly doses to certain markets ahead of PMF activation), we can give no assurance that the FDA will continue to approve PMFs in accordance with our planned roll-out schedule. If FDA approval of manufacturing sites is delayed or withdrawn, our future business, results of operations, financial condition and cash flows could be adversely affected.

PYLARIFY is sold in the U.S. to hospitals, independent imaging centers and government facilities and some sales are generated through a PYLARIFY direct sales team as well as a sales team at some of our ~~business is substantially dependent~~PMF partners. We generally do not use group purchasing arrangements to sell PYLARIFY and require each customer to enter into a contract directly with us or our PMFs. During 2021, we hired additional employees to assist us with this commercialization of PYLARIFY. Our ability to continue to successfully grow PYLARIFY depends, in part, on our ability to continue to ~~grow~~enter into arrangements directly with the ~~appropriate use of DEFINITY in suboptimal echocardiograms in the face of increased segment competition from other existing echocardiography agents~~hospitals, independent imaging centers and ~~potential generic competitors.~~

The growth of our business is substantially dependent on our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms. There were approximately 31.5 million echocardiograms in 2020 according to a third-party source. Assuming 20% of echocardiograms produce suboptimal images, as stated in the clinical literature, we estimate that approximately 6.3 million echocardiograms in 2020 produced suboptimal images. We estimate that DEFINITY held over 80% of the U.S. market for ultrasound enhancing agents in echocardiography procedures as of December 31, 2020. DEFINITY currently competes with Optison, a GE Healthcare product, Lumason, a Bracco Diagnostics Inc. (“Bracco”) product (known as SonoVue outside the U.S.), as well as echocardiography without ultrasound enhancing agents and other non-echocardiography agents.

We launched DEFINITY in 2001, and we continue to actively pursue additional patents in connection with DEFINITY and DEFINITY RT, both in the U.S. and internationally. In the U.S. for DEFINITY we now own a total of four Orange Book-listed method of use patents, one of which expires in 2035 and three of which expire in 2037, as well as additional manufacturing patents that are not Orange Book-listed expiring in 2021, 2023 and 2037. In the U.S. for DEFINITY RT, we own a total of five Orange Book-listed patents, including a composition of matter patent which expires in 2035. Outside of the U.S., while our original DEFINITY patent protection and regulatory exclusivity have generally expired, we are currently prosecuting additional DEFINITY and DEFINITY RT patents to obtain similar patent protection as in the U.S. The Orange Book-listed patents include a patent on the use of VIALMIX RFID, which expires in 2037; additional VIALMIX RFID patent applications have been submitted in major markets throughout the world.

Because our Orange Book-listed composition of matter patent expired in June 2019, we may face generic DEFINITY challengers in the near to intermediate term. Under the Hatch-Waxman Act, the FDA can approve ANDAs for generic versions of drugs before the expiration of an Orange Book-listed patent covering the innovator product if the ANDA applicant demonstrates, among other things, that (i) its generic candidate is the same as the innovator product by establishing bioequivalence and providing relevant chemistry, manufacturing and product data, and (ii) the marketing of that generic candidate does not infringe an Orange Book-listed patent or that an Orange Book-listed patent is invalid. The ANDA applicant must also give Notice to the innovator, which would then enable the innovator to challenge the ANDA applicant in court within 45 days of receiving such Notice. If the innovator challenges the ANDA applicant in court in a timely manner, then FDA approval to commercialize the generic candidate will be stayed (that is, delayed) for up to 30 months while the dispute between the innovator and the ANDA applicant is resolved in court. The 30 month stay can be shortened if the patent infringement suit is resolved in the ANDA applicant’s favor before the 30 month stay expires, and this may involve a successful challenge of the patent’s validity in USPTO proceedings and appeals process.

~~As of the date of filing of this Quarterly Report on Form 10-Q, we have not received any such Notice from any ANDA applicant, but we can give no assurance~~government facilities that we will not receive a Notice in the future. If we were to receive any such Notice in the future, we would review the Notice, evaluate the strength of any potential patent infringement claims, and be prepared to challenge the ANDA applicant in a timely fashion, which would thereby trigger the stay of up to 30 months. We can give no assurance that we would have grounds to file a patent infringement suit, that we would obtain the full 30 month stay, that we would be successful on the merits asserting that a generic candidate infringes our Orange Book-listed patent,serve. Any delay or that we would be successful defending the validity of our Orange Book-listed patent in court or in a USPTO adversarial proceeding. In addition, as discussed in our risk factor “Our business and industry are subject to complex and costly regulations. If government regulations are interpreted or enforced in a manner adverse to us or our business, we may be subject to enforcement actions, penalties, exclusion and other material limitations on our operations.”set forth below, if the FDA reclassified one or more of our imaging agents, such as DEFINITY, as a “device” rather than a “drug”, we do not know when such reclassification would become effective, how any transition rules would be formulated or applied, and whether or not the legal framework provided by the Hatch-Waxman Act would be preserved for some time after such reclassification.

As part of our microbubble franchise strategy, (i) we have developed and received FDA approval for DEFINITY RT, a modified formulation of DEFINITY, (ii) we look for other opportunities to expand our microbubble franchise, including new applications beyond echocardiography and ultrasound enhancing agent imaging generally such as our strategic arrangements with Cerevast, CarThera and Insightec, and (iii) we have completed construction of our specialized in-house manufacturing capabilities at our North Billerica facility for DEFINITY and, potentially, other sterile vial products. However, we can give no assurance that our microbubble franchise strategy will be successful or that a modified formulation, new applications or new manufacturing capabilities will grow our microbubble franchise.

~~Table of Contents~~

~~We believe DEFINITY RT will become commercially available in the fourth quarter of 2021, although that timing cannot be assured.~~

If we are not able to continue to (i) grow DEFINITY and DEFINITY RT sales, which depend on one or more of the growth of echocardiograms, the growth in the appropriate use of ultrasound enhancing agents in suboptimal echocardiograms, and our ability to sustain and grow our leading position in the U.S. echocardiography ultrasound enhancing agent market, or (ii) be successful with our microbubble franchise strategy, we may not be able to continue to grow the revenue and cash flow of our business, which could have a negative effect on our business, results of operations and financial condition.

Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering our products to our customers in the required quantities, within the required timeframes, or at all, which could result in order cancellations and decreased revenues.

We obtain a substantial portion of our products from third party manufacturers and suppliers. We rely on JHS as our sole source manufacturer of DEFINITY, NEUROLITE, Cardiolite and evacuation vials. We rely on SBL as our sole source manufacturer of DEFINITY RT.

Based on our current estimates, we believe that we will have sufficient supply of DEFINITY, NEUROLITE, Cardiolite and evacuation vials from JHS, and sufficient supply of saline from our sole manufacturer, to meet expected demand. However, we can give no assurances that JHS or our other manufacturing partner will be able to manufacture and distribute our products in a high quality and timely manner and in sufficient quantities to allow us to avoid product stock-outs and shortfalls. In addition, on July 27, 2021, we received a letter from JHS that it was providing notice of non-renewal of our manufacturing agreement relating to DEFINITY, but that JHS remained interested in negotiating a new agreement. We are actively negotiating a new manufacturing agreement with JHS for DEFINITY, although there is no assurance that we will be able to reach an agreement on mutually acceptable terms or at all. In the event we are not ableinability to enter into these arrangements could have an agreement on mutually acceptable terms or at all, we expect that we would exercise our right under our current agreement with JHS to request a terminal supply of DEFINITY in an amount sufficient to meet our supply needs for DEFINITY until our in-house manufacturing facility is operational and producing enough DEFINITY to meet our supply needs, although there is no assurance that there would be no disruption.

Xenon is captured as a by-product of the Mo-99 production process. We receive bulk unprocessed Xenon from IRE resulting from highly-enriched uranium (“HEU”) Mo-99 production, which we process and finish for our customers. We do not yet receive Xenon resulting from low-enriched uranium (“LEU”) Mo-99 production at IRE and can give no assurances as to the timing of the availability of LEU Xenon. We believe we will have a sufficient supply of Xenon to meet our customers’ needs. However, until IRE converts to LEU Xenon production or we can qualify an additional source of bulk unprocessed Xenon, we will rely on IRE as a sole source provider of HEU Xenon.

1095 is currently manufactured only at the Center for Probe Development and Commercialization (“CPDC”). Until December 2019, the CPDC was subject to an Import Alert by the FDA, which restricted the CPDC’s ability to ship products to the U.S. Although the CPDC has since been cleared by the FDA to ship products to the U.S., there can be no guarantee that the CPDC, or any other third-party manufacturer that we may partner with in the future, will not be subject to similar restrictions in the future.

In addition to the products described above, for reasons of quality assurance or cost-effectiveness, we purchase certain components and raw materials from sole suppliers (including, for example, the lead casing for our TechneLite generators and the lipid blend material used in the processing of DEFINITY). Because we do not control the actual production of many of the products we sell and many of the raw materials and components that make up the products we sell, we may be subject to delays caused by interruption in production based on events and conditions outside of our control. At our North Billerica, Massachusetts facility, we manufacture TechneLite on a highly automated production line, as well as Thallium and Gallium using our older cyclotron technology and Xenon using our hot cell infrastructure. As with all manufacturing facilities, equipment and infrastructure age and become subject to increasing maintenance and repair. If we or one of our manufacturing partners experiences an event, including a labor dispute, natural disaster, fire, power outage, machinery breakdown, security problem, failure to meet regulatory requirements, product quality issue, technology transfer issue or other issue, we may be unable to manufacture the relevant products at previous levels or on the forecasted schedule, if at all. Due to the stringent regulations and requirements of the governing regulatory authorities regarding the manufacture of our products, we may not be able to quickly restart manufacturing at a third party or our own facility or establish additional or replacement sources for certain products, components or materials.

In addition to our existing manufacturing relationships, we are also pursuing new manufacturing relationships to establish and secure additional or alternative suppliers for our commercial products. We have also completed construction of our specialized in-house manufacturing capabilities at our North Billerica, Massachusetts facility. This project should not only deliver efficiencies and supply chain redundancy for our current portfolio but also should afford us increased flexibility as we consider external opportunities. However, we cannot assure you that these activities or any of our additional supply activities will be successful or that we will be able to avoid or mitigate interim supply shortages before new sources of product are fully functional and qualified. In addition, we cannot assure you that our existing manufacturers or suppliers or any new manufacturers or suppliers can

~~Table of Contents~~

adequately maintain either their financial health, technical capabilities or regulatory compliance to allow continued production and supply. A reduction or interruption in manufacturing, or an inability to secure alternative sources of raw materials or components, could eventually have a material adverse ~~effect~~impact on our future business, results of operations, financial condition and cash flows.

~~Our~~In addition, obtaining adequate coding, coverage and payment for PYLARIFY is critical, including not only coverage from Medicare, Medicaid and other government payors, as well as private payors, but also appropriate payment levels to adequately cover our customers’ costs of using PYLARIFY in PET/CT imaging procedures. We received notification that our HCPCS code, which enables streamlined billing, went into effect as of January 1, 2022. In addition, effective January 1, 2022, CMS granted Transitional Pass-Through Payment Status for PYLARIFY, enabling traditional Medicare to provide an incremental payment for PET/CT scans performed with PYLARIFY in the hospital outpatient setting. If other government payors or private payors do not provide adequate reimbursement for the use of PYLARIFY, our future business, results of operations, financial condition and ~~industry are subject~~cash flows could be adversely affected.

The successful growth of PYLARIFY is also dependent on our ability to ~~complex and costly regulations. If government regulations are interpreted or enforced~~establish PYLARIFY as a leading PSMA PET imaging agent in a ~~manner~~competitive environment in which other PSMA PET imaging agents have been approved and additional ones are in development. PYLARIFY currently competes with Telix Pharmaceuticals Limited’s recently-approved Illuccix (gallium-68 PSMA-11 injection), Novartis AG’s recently-approved Locametz (gallium-68 PSMA-11 injection) and Bracco’s Axumin (fluciclovine F 18). We also face potential competition from an F 18 PSMA PET imaging agent that Bracco has in late stage clinical development, which we believe could be approved by the FDA for commercialization later in 2022 or in 2023. To the extent we lose market share to existing or future competitors, such loss of market share could have an adverse ~~to us or our business, we may be subject to enforcement actions, penalties, exclusion and other material limitations~~impact on our ~~operations.~~future business, results of operations, financial condition and cash flows. Moreover, because we are still early in the commercialization of PYLARIFY, we can give no assurance as to how clinical practice may evolve or what our ultimate market penetration or market share may be.

~~Both before~~Our success in growing PYLARIFY also depends, in part, on our successfully establishing the use of PYLARIFY for approved indications and ~~after~~potentially for additional indications. For example, we believe the recent approval of ~~our products~~Pluvicto for the treatment of adult patients with PSMA-positive mCRPC who have already been treated with other anticancer treatments (androgen receptor pathway inhibition and ~~agents~~taxane-based chemotherapy) creates a new addressable market for the use of PSMA PET imaging in development, we, our products, development agents, operations, facilities, suppliers, distributors, contract manufacturers, contract research organizations and contract testing laboratories are subject to extensive and, in certain circumstances, expanding regulation by federal, state and local government agenciespatient selection for PSMA-targeted therapy that increases the total addressable market in the U.S. by an additional 30,000 new scans per year for patients with mCRPC. However, the prescribing information for Pluvicto specifies that a PSMA-11 based PSMA PET imaging agent be used for patient selection, and PYLARIFY is not a PSMA-11 based imaging agent. In March 2022, we announced a strategic collaboration with Novartis to include PYLARIFY in prostate cancer trials with Pluvicto. While we note that FDA-approved labels for F 18 based and PSMA-11 based PSMA PET imaging agents have generally been treated as ~~well as non-U.S.~~a class of drugs, including recently by the Society for Nuclear Medicine and ~~transnational laws and regulations, with regulations differing from country~~Molecular Imaging in its appropriate use criteria, we can give no assurances that the Novartis prostate cancer trials using PYLARIFY will be successful, that the Pluvicto prescribing information will be expanded to ~~country, including, among other things, anti-trust and competition laws and regulations and~~ incorporate F 18 based PSMA PET imaging agents like PYLARIFY or how clinical practice may evolve. To

Table of Contents

the ~~recently enacted General Data Protection Regulation~~extent we are unsuccessful in establishing the European Union. In the U.S., the FDA regulates, among other things, the pre-clinical testing, clinical trials, manufacturing, safety, efficacy, potency, labeling, storage, record keeping, quality systems, advertising, promotion, sale, distribution, and import and exportuse of ~~drug products. We are required to register our business~~PYLARIFY for ~~permits and/~~approved or ~~licenses with, and comply with the stringent requirements~~new indications, such lack of the FDA, the U.S. Nuclear Regulatory Commission, the U.S. Department of Health and Human Services, Health Canada, the European Medicines Agency, the U.K. Medicines and Healthcare Products Regulatory Agency, the NMPA, state and provincial boards of pharmacy, state and provincial health departments and other federal, state and provincial agencies. Violation of any of these regulatory schemes, individually or collectively,success could ~~disrupt our business and~~ have ~~a material~~an adverse ~~effect~~impact on our future business, results of operations, financial condition and cash flows.

~~Under U.S. law, for example, we are required~~We face significant competition in our business and may not be able to report certain adverse events and production problems, if any, to the FDA. We also have similar adverse event and production reporting obligations outside of the U.S., including to the EMA and MHRA. Additionally, we must comply with requirements concerning advertising and promotioncompete effectively.

The markets for our products ~~including the prohibition on the promotion of~~are highly competitive and continually evolving. Our principal competitors for our current commercial products ~~for indications~~and leading clinical development candidates include large, global companies that are more diversified than we are and that have ~~not been~~substantial financial, manufacturing, sales and marketing, distribution and other resources:

•For DEFINITY, our competitors currently include GE Healthcare and Bracco.

•For PYLARIFY, our competitors currently include approved imaging agents from Telix Pharmaceuticals Limited, Novartis AG and Bracco, and may in the future include an F 18 PSMA PET imaging agent that Bracco has in late stage clinical development, which we believe could be approved by the FDA for commercialization later in 2022 or in 2023. In addition, the University of California, San Francisco and the University of California, Los Angeles have approved NDAs for a ~~so-called “off-label use”~~ gallium-68 PSMA-11 injection for PSMA PET imaging, which we believe will primarily be used within their hospital systems.

•For a number of our radiopharmaceutical commercial products, our competitors currently include Curium, GE Healthcare, Bracco and Jubilant Life Sciences, an affiliate of JHS and Jubilant Radiopharma, as well as other competitors, including NorthStar and potentially BWXT Medical.

•For RELISTOR, our principal competitors include Nektar Therapeutics, in collaboration with AstraZeneca PLC; Cubist Pharmaceuticals, a subsidiary of Merck & Co., Inc.; Mallinckrodt plc, in collaboration with Takeda Pharmaceutical Company Limited; and BioDelivery Sciences International, Inc.; together with other prescription, as well as over-the-counter, laxatives used as first line therapy for OIC.

•For AZEDRA, there are currently no FDA approved anticancer treatments in the U.S. for malignant, recurrent, and/or ~~promotion~~unresectable pheochromocytoma and paraganglioma.

•For 1095, our principal competitors in the field of radiopharmaceutical therapeutics for mCRPC include Novartis AG, which recently received FDA approval for its PSMA-targeted therapeutic; and may include POINT Biopharma, Telix Pharmaceuticals Limited, and Bayer HealthCare Pharmaceuticals Inc., each of which have product candidates in development.

•For LMI 1195, our principal competitors may include GE Healthcare’s iobenguane 123 injection.

•For flurpiridaz, our principal competitors may include rubidium generators from Bracco and Jubilant Radiopharma.

We cannot anticipate the actions of our current or future competitors in the same or competing diagnostic modalities, such as significant price reductions on products that ~~is inconsistent with the approved labeling. If the FDA determines that our promotional materials constitute unlawful promotion, it could request that we modify our promotional materials or subject us~~are comparable to ~~regulatory or enforcement actions. Also, quality control and manufacturing procedures at~~ our own, ~~facility and at third party suppliers must conform to cGMP regulations and other applicable law~~development of new products that are more cost-effective or have superior performance than our current products or the introduction of generic versions after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMPs and other applicable law, and, from time to time, makes those cGMPs more stringent. Accordingly, we and others with whom we work must expend time, money, and effort in all areasour proprietary products lose their patent protection. In addition, distributors of regulatory compliance, including manufacturing, production and quality control. If in the future issues arise at a third party manufacturer, the FDA could take regulatory action which could limit or suspend the ability of that third party to manufacture our products could attempt to shift end-users to competing diagnostic modalities and products, or bundle the sale of a portfolio of products, in either case to the detriment of our specific products. Our current or future products could be rendered obsolete or uneconomical as a result of these activities.

Further, the radiopharmaceutical industry continues to evolve strategically, with several market participants either recently sold or for sale. In addition, the supply-demand dynamics of the industry are complex because of large market positions of some participants, legacy businesses, government subsidies (in particular, relating to the manufacture of radioisotopes), and group purchasing arrangements. We cannot predict what impact new owners and new operators may have ~~any additional products approved at~~on the ~~relevant facility for manufacture until the issues are resolved~~strategic decision-making of our competitors, customers and ~~remediated. Such a limitation or suspension~~suppliers, and such decision-making could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We are also subject to laws and regulations that govern financial and other arrangements between pharmaceutical manufacturers and healthcare providers, including federal and state anti-kickback statutes, federal and state false claims laws and regulations, federal and state “sunshine” laws and regulations and other fraud and abuse laws and regulations.

We must offer discounted pricing or rebates on purchases of pharmaceutical products under various federal and state healthcare programs, such as the Medicaid drug rebate program, the “federal ceiling price” drug pricing program, the 340B drug pricing program and the Medicare Part D Program. We must also report specific prices to government agencies under healthcare programs, such as the Medicaid drug rebate program and Medicare Part B. As a specific example, in 2010, we entered into a Medicaid Drug Rebate Agreement with the federal government for some but not all of our products, and in 2016 entered into a separate Medicaid Drug Rebate Agreement for the balance of our products. These agreements require us to report certain price information to the federal government. Determination of the rebate amount that we pay to state Medicaid programs for our products, of prices charged to government and certain private payors for our products, or of amounts paid for our products under government healthcare programs, depends upon information reported by us to the government. If we provide customers or government officials with inaccurate information about the products’ pricing or eligibility for coverage, or the products fail to satisfy coverage requirements, we could be terminated from the rebate program, be excluded from participation in government healthcare programs, or be subject to potential liability under the False Claims Act or other laws and regulations.

Failure to comply with other requirements and restrictions placed upon us or our third party manufacturers or suppliers by laws and regulations can result in fines, civil and criminal penalties, exclusion from federal healthcare programs and debarment. Possible consequences of those actions could include:

~~• Substantial modifications to our business practices and operations;~~

~~• Significantly reduced demand for our products (if products become ineligible for reimbursement under federal and state healthcare programs);~~

~~Table of Contents~~

~~• A total or partial shutdown of production in one or more of the facilities where our products are produced while the alleged violation is being remediated;~~

~~• Delays in or the inability to obtain future pre-market clearances or approvals; and~~

~~• Withdrawals or suspensions of our current products from the market.~~

Regulations are subject to change as a result of legislative, administrative or judicial action, which may also increase our costs or reduce sales or otherwise adversely impact our products. For example, on April 16, 2021 in the case Genus Medical Technologies LLC v. Food and Drug Administration, the U.S. Court of Appeals for the D.C. Circuit held that a product (other than a combination product) that meets the definitions of both “drug” and “device” in the Federal Food, Drug, and Cosmetic Act (the “FDCA”) must be regulated as a device. On August 9, 2021, the FDA announced that, as part of its implementation of this court decision, the FDA intends to regulate products that meet both the device and drug definition as devices, except where Congress intended a different classification. The FDA further indicated that it intends to bring previously classified products into line with the court decision and will reexamine whether individual imaging agents meet the device definition. In connection with its announcement, the FDA requested comments from the industry on five topics: categories of products implicated by the court decision; the transition process; the transition timing; user fee transitions; and determining drug or device status. We plan to submit comments to the FDA in response to its request for comments by the November 30, 2021 deadline. While we question whether the FDA has authority to make this change, believe that pre-existing law already establishes that a broad spectrum of imaging agents have already been established by Congress to be “drugs”, and do not believe that any of our imaging agents meets the definition of a “device” under the FDCA, we can give no assurance that the FDA will agree with our position. In addition, if the FDA determines that one or more of our imaging agents meet the definition of a “device”, we do not know when such reclassification would be effective, how any transition rules would be formulated or applied, and whether or not the legal framework provided by the Hatch-Waxman Act would be preserved for some time after such reclassification. A reclassification of one or more of our imaging agents as a “device” could have a material adverse effect on our business, results of operations, financial condition and cash flows.

~~Ultrasound enhancing agents may cause side effects which could limit our ability to sell DEFINITY.~~

DEFINITY is an ultrasound enhancing agent based on perflutren lipid microspheres. In 2007, the FDA received reports of deaths and serious cardiopulmonary reactions following the administration of ultrasound micro-bubble enhancing agents used in echocardiography. Four of the 11 reported deaths were caused by cardiac arrest occurring either during or within 30 minutes following the administration of the ultrasound enhancing agent; most of the serious but non-fatal reactions also occurred in this time frame. As a result, in October 2007, the FDA requested that we and GE Healthcare, which distributes Optison, a competitor to DEFINITY, add a boxed warning to these products emphasizing the risk for serious cardiopulmonary reactions and that the use of these products was contraindicated in certain patients. In a strong reaction by the cardiology community to the FDA’s new position, a letter was sent to the FDA, signed by 161 doctors, stating that the benefit of these ultrasound enhancing agents outweighed the risks and urging that the boxed warning be removed. In May 2008, the FDA substantially modified the boxed warning. On May 2, 2011, the FDA held an advisory committee meeting to consider the status of ultrasound micro-bubble contrast agents and the boxed warning. In October 2011, we received FDA approval of further modifications to the DEFINITY label, including: further relaxing the boxed warning; eliminating the sentence in the Indication and Use section “The safety and efficacy of DEFINITY with exercise stress or pharmacologic stress testing have not been established” (previously added in October 2007 in connection with the imposition of the box warning); and including summary data from the post-approval CaRES (Contrast echocardiography Registry for Safety Surveillance) safety registry and the post-approval pulmonary hypertension study. Further, in January 2017, the FDA approved an additional modification to the DEFINITY label, removing the contraindication statement related to use in patients with a known or suspected cardiac shunt. Bracco’s ultrasound enhancing agent, Lumason, has substantially similar safety labeling as DEFINITY and Optison. In April 2021, after reviewing certain adverse events that occurred in patients with a prior history of allergic reactions to polyethylene glycol (“PEG”), an inactive excipient in both DEFINITY and Lumason, the FDA and the marketing authorization holders of these products agreed to an additional contraindication for use of these products, including advising clinicians to assess patients for prior PEG hypersensitivity before administering these products. If additional safety issues arise (not only with DEFINITY but also potentially with Optison and Lumason), this may result in unfavorable changes in labeling or result in restrictions on the approval of our product, including removal of the product from the market. Lingering safety concerns about DEFINITY among some healthcare providers or future unanticipated side effects or safety concerns associated with DEFINITY could limit expanded use of DEFINITY and have a material adverse effect on the unit sales of this product and our financial condition and results of operations.

In the U.S., we are heavily dependent on a few large customers to generate a majority of our revenues for our nuclear medical imaging products. Outside of the U.S., we rely primarily on distributors to generate a substantial portion of our revenue.

~~Table of Contents~~

In the U.S., we have historically relied on a limited number of radiopharmacy customers, primarily Cardinal, RLS, UPPI, Jubilant Radiopharma and PharmaLogic, to distribute our current largest volume nuclear imaging products. Among the existing radiopharmacies in the U.S., continued consolidations, divestitures and reorganizations may have a negative effect on our business, results of operations, financial condition and cash flows. We generally have distribution arrangements with our major radiopharmacy customers pursuant to multi-year contracts, each of which is subject to renewal. Recently, we extended our contract with Jubilant Radiopharma with respect to certain products, other than TechneLite and Thallium-201, through December 31, 2023. If these contracts are terminated prior to the expiration of their term, or are not renewed, or are renewed on terms that are less favorable to us, then such an event could have a material adverse effect on our business, results of operations, financial condition and cash flows.

For all of our medical imaging products, we continue to experience significant pricing pressures from our competitors, large customers and group purchasing organizations, and any significant, additional pricing pressures could lead to a reduction in revenue which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Outside of the U.S. and Canada, we have no sales force and, consequently, rely on third-party distributors, either on a country-by-country basis or on a multi-country, regional basis, to market, sell and distribute our products. In Canada, we maintain our own direct sales force to sell DEFINITY. In certain circumstances, distributors may also sell competing products to our own or products for competing diagnostic modalities and may have incentives to shift sales towards those competing products. As a result, we cannot assure you that our international distributors will increase or maintain current levels of unit sales or that we will be able to increase or maintain our current unit pricing, which, in turn, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

The CVRs we issued as part of the Progenics Acquisition may result in substantial future payments and could divert the attention of our management; in addition, the actual payments made in connection with the CVRs, if any, may not be consistent with the estimated fair value of the CVRs that we are required to prepare for accounting purposes.

As part of the consideration for the Progenics Acquisition, we issued CVRs to the stockholders of Progenics and holders of in-the-money Progenics equity awards entitling them to future cash payments of 40% of PYLARIFY net sales over $100.0 million in 2022 and over $150.0 million in 2023. These payments could be substantial and could adversely impact our liquidity. In addition, we are obligated to exercise a level of effort, expertise and resources consistent with those normally used in a medical diagnostics business similar to our size and resources with respect to developing, seeking regulatory approval for and commercializing a product of similar market potential at a similar stage in its development or product life to PYLARIFY. We are also required to produce net sales statements for PYLARIFY that may be reviewed and challenged by CVR holders, with any disagreement to be resolved by an independent accountant. These requirements could divert management time and resources and result in additional costs.

Because the CVRs are considered contingent consideration liabilities, for accounting purposes we are required by U.S. GAAP to estimate their fair value on a recurring basis. Adjustments in the estimated fair value of the CVRs can impact our consolidated financial statements on a quarterly or annual basis. The estimated fair value of the CVRs is determined based on a Monte Carlo simulation model that include significant estimates and assumptions pertaining to commercialization events, sales targets, market conditions and discount rates. These estimates and assumptions are subject to the judgment of our management team and are not prepared with a view towards public disclosure of projected sales. Our sales targets are also subject to significant economic, competitive, industry and other uncertainties and contingencies, which are difficult to predict and in many cases are beyond our control. We can give no assurance that the actual amounts paid, if any, in connection with the CVRs will be consistent with any recurring fair value estimate for such CVRs.

4437

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases

The following table presents information with respect to purchases of common stock we made during the three months ended ~~September 30, 2021.~~March 31, 2022. The Company does not currently have a share repurchase program in effect. The 2015 Equity Incentive Plan, adopted by the Company on June 24, 2015, as amended on April 26, 2016 and as further amended on April 27, 2017, April 24, 2019, April 28, 2021 and April 28, ~~2021~~2022 (the “2015 Plan”), provides for the withholding of shares to satisfy minimum statutory tax withholding obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy minimum tax withholding obligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item 2. ~~These shares are then sold in compliance with Rule 10b5-1 into the market to allow the Company to satisfy the tax withholding requirements in cash.~~

Period Total Number of
Shares Purchased Average Price Paid
per Share Total Number of
Shares Purchased as
Part of Publicly
Announced Programs Approximate Dollar
Value of Shares that
May Yet Be Purchased Under
the Program
July 2021** 1,086 $ 26.20 * *
August 2021** 1,077 $ 25.63 * *
September 2021** 2,737 $ 25.61 * *
Total 4,900 *

Period

Total Number of
Shares Purchased

Average Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Programs

Approximate Dollar
Value of Shares that
May Yet Be Purchased Under
the Program

January 2022**

382

29.16

February 2022**

33,400

47.46

March 2022**

75,908

51.49

Total

109,690

________________________________

* These amounts are not applicable as the Company does not have a share repurchase program in effect.

** Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards.

Dividend Policy

We did not declare or pay any dividends, and we do not currently intend to pay dividends in the foreseeable future. We currently expect to retain future earnings, if any, for the foreseeable future, to finance the growth and development of our business and to repay indebtedness. Our ability to pay dividends is restricted by our financing arrangements. See Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-External Sources of Liquidity” for further information.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On July 27, 2021, we received a letter from JHS that it was providing notice of non-renewal of our manufacturing agreement relating to DEFINITY, but that JHS remained interested in negotiating a new agreement. We are actively negotiating a new manufacturing agreement with JHS for DEFINITY, although there is no assurance that we will be able to reach an agreement on mutually acceptable terms or at all. In the event we are not able to enter into an agreement on mutually acceptable terms or at all, we expect that we would exercise our right under our current agreement with JHS to request a terminal supply of DEFINITY in an amount sufficient to meet our supply needs for DEFINITY until our in-house manufacturing facility is operational and producing enough DEFINITY to meet our supply needs, although there can be no assurance that there would be no disruption.None.

4538

Table of Contents

Item 6. Exhibits

INCORPORATED BY REFERENCE

EXHIBIT
NUMBER

DESCRIPTION OF EXHIBITS

FORM

FILE
NUMBER

EXHIBIT

FILING
DATE

10.1* †

Manufacturing and Supply Agreement with Jubilant HollisterStier, effective as of February 23, 2022.

10.2* +

Form of Restricted Stock Unit Award Agreement (Employee Time-Based Vesting) of Lantheus Holdings, Inc.

10.3* +

Form of Restricted Stock Unit Award Agreement (Relative Total Shareholder Return Performance-Based Vesting) of Lantheus Holdings, Inc.

10.4* +

Form of Stock Option Award Agreement (Time Vesting) of Lantheus Holdings, Inc.

31.1*

Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).

31.2*

Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).

32.1**

Certification pursuant to 18 U.S.C. Section 1350.

101.INS*

Inline XBRL Instance Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

† Portions of this exhibit have been omitted for confidential treatment pursuant to Item 601(b)(10)(iv) of Regulation S-K.

Indicates management contract or compensatory plan or arrangements

4639

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



LANTHEUS HOLDINGS, INC.

By:						/s/ MARY ANNE HEINO
Name:						Mary Anne Heino
Title:						President and Chief Executive Officer (Principal Executive Officer)
Date:						~~November 4, 2021~~April 29, 2022

LANTHEUS HOLDINGS, INC.

By:						/s/ ROBERT J. MARSHALL, JR.
Name:						Robert J. Marshall, Jr.
Title:						Chief Financial Officer and Treasurer (Principal Financial Officer)
Date:						~~November 4, 2021~~April 29, 2022

4740



(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