Lantheus Holdings(LNTH) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, fair value measurements, and other financial details for the periods ended September 30, 2024 and December 31, 2023 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Assets ||| | Cash and cash equivalents | $866,386 | $713,656 | | Total current assets | $1,295,714 | $1,085,819 | | Total assets | $2,049,630 | $1,651,149 | | Liabilities and Stockholders' Equity ||| | Current portion of long-term debt and other borrowings | $564,713 | $823 | | Total current liabilities | $784,079 | $187,350 | | Total liabilities | $869,922 | $835,257 | | Total stockholders' equity | $1,179,708 | $815,892 | | Total liabilities and stockholders' equity | $2,049,630 | $1,651,149 | - Total assets increased by $398.5 million (24.1%) from December 31, 2023, to September 30, 2024, primarily driven by an increase in cash and cash equivalents and investment in equity securities[6] - Total current liabilities significantly increased from $187.4 million to $784.1 million, mainly due to the reclassification of the 2.625% Convertible Senior Notes due 2027 from long-term to current debt[6][71] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Revenues | $378,734 | $319,946 | $1,142,800 | $942,430 | | Gross profit | $242,126 | $199,951 | $739,746 | $479,674 | | Operating income | $133,743 | $112,361 | $343,107 | $227,156 | | Income before income taxes | $176,118 | $159,956 | $431,760 | $272,540 | | Net income | $131,093 | $131,957 | $324,232 | $223,281 | | Basic EPS | $1.89 | $1.93 | $4.69 | $3.27 | | Diluted EPS | $1.79 | $1.88 | $4.55 | $3.18 | - Revenues increased by 18.4% for the three months ended September 30, 2024, and 21.3% for the nine months ended September 30, 2024, compared to the prior year periods[9] - Net income for the nine months ended September 30, 2024, increased by 45.2% to $324.2 million, while diluted EPS rose to $4.55[9][172] Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Net income | $131,093 | $131,957 | $324,232 | $223,281 | | Other comprehensive income (loss): Foreign currency translation | $44 | $(83) | $(129) | $224 | | Comprehensive income | $131,137 | $131,874 | $324,103 | $223,505 | Condensed Consolidated Statements of Changes in Stockholders' Equity - Total stockholders' equity increased from $815.9 million at January 1, 2024, to $1,179.7 million at September 30, 2024[12] - Key changes include net income contributions of $131.1 million (Q1 2024), $62.1 million (Q2 2024), and $131.1 million (Q3 2024), and stock-based compensation of $15.4 million (Q1 2024), $18.5 million (Q2 2024), and $20.4 million (Q3 2024)[12] - Common stock shares issued increased from 69,863 at January 1, 2024, to 70,854 at September 30, 2024, primarily due to stock option exercises and employee stock plan purchases[12] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|\ | Net cash provided by operating activities | $387,020 | $192,973 | | Net cash (used in) provided by investing activities | $(219,413) | $18,008 | | Net cash used in financing activities | $(14,877) | $(12,612) | | Net increase in cash, cash equivalents and restricted cash | $152,764 | $198,508 | | Cash, cash equivalents and restricted cash, end of period | $868,049 | $615,749 | - Net cash provided by operating activities increased significantly to $387.0 million for the nine months ended September 30, 2024, from $193.0 million in the prior year, driven by higher net income and non-cash adjustments[15][192][193] - Net cash used in investing activities was $219.4 million for the nine months ended September 30, 2024, compared to $18.0 million provided in the prior year, primarily due to upfront payments for exclusive licenses, asset acquisitions, and equity security purchases[15][194][195] Notes to Condensed Consolidated Financial Statements Note 1. Basis of Presentation - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include all necessary normal and recurring adjustments for fair statement[21] - The Progenics Acquisition in June 2020 involved issuing common stock and contingent value rights (CVRs) tied to PYLARIFY sales, with the maximum CVR payment of $99.6 million fully satisfied in May 2023[23][24] Note 2. Summary of Significant Accounting Policies - Equity investments with readily determinable fair values are measured at fair value, with changes recorded as unrealized gains/losses[25] - The Company is evaluating the impact of new FASB ASUs 2023-07 (Segment Reporting) and 2023-09 (Income Taxes) which are effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively[26][27] Note 3. Revenue from Contracts with Customers - Revenues are classified into Radiopharmaceutical Oncology (PYLARIFY, AZEDRA), Precision Diagnostics (DEFINITY, TechneLite), and Strategic Partnerships and Other Revenue[28] - Production of AZEDRA was discontinued in Q1 2024[28] Revenue by Product Category (in thousands) | Category | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | PYLARIFY | $259,756 | $215,428 | $791,881 | $621,419 | | Total radiopharmaceutical oncology | $259,756 | $216,276 | $792,265 | $623,802 | | DEFINITY | $76,965 | $67,336 | $231,629 | $206,688 | | TechneLite | $20,480 | $23,272 | $70,380 | $65,853 | | Total precision diagnostics | $103,727 | $96,348 | $320,048 | $289,543 | | Strategic partnerships and other revenue | $15,251 | $7,322 | $30,487 | $29,085 | | Total revenues | $378,734 | $319,946 | $1,142,800 | $942,430 | Note 4. Fair Value of Financial Instruments - Financial instruments measured at fair value on a recurring basis include money market funds, contingent consideration liabilities, and equity investments, categorized into Level 1, 2, or 3 based on input observability[34] Fair Value of Financial Instruments (in thousands) as of September 30, 2024 | Category | Total Fair Value | Level 1 | Level 2 | Level 3 | |:---|:---|:---|:---|:---|\ | Assets: ||||| | Money market funds | $669,158 | $669,158 | $— | $— | | Investment securities | $158,791 | $158,791 | $— | $— | | Total assets | $827,949 | $827,949 | $— | $— | | Liabilities: ||||| | Contingent consideration liabilities | $1,294 | $— | $— | $1,294 | | Total liabilities | $1,294 | $— | $— | $1,294 | - The Company held 11,677,339 shares of Perspective common stock with a fair value of approximately $155.9 million, resulting in an unrealized gain of $77.6 million for the nine months ended September 30, 2024[38] - Contingent consideration liabilities, primarily related to the 2013 acquisition of AZEDRA and 1095, are Level 3 instruments, with a fair value of $1.3 million as of September 30, 2024, down from $2.7 million at December 31, 2023, partly due to a $1.5 million buyout of milestone rights[40][44][45][46] Note 5. Income Taxes Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Income tax expense | $45,025 | $27,999 | $107,528 | $49,259 | | Effective tax rate | 25.6% | 17.5% | 24.9% | 18.1% | - The effective income tax rate increased for both the three and nine months ended September 30, 2024, primarily due to a non-comparable benefit recorded in 2023 from the sale of the RELISTOR royalty asset, which made additional net operating losses available[49] Note 6. Inventory Inventory Composition (in thousands) | Category | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Raw materials | $28,729 | $31,259 | | Work in process | $21,178 | $13,807 | | Finished goods | $20,928 | $18,963 | | Total inventory | $70,835 | $64,029 | - Total inventory increased to $70.8 million at September 30, 2024, from $64.0 million at December 31, 2023, with the majority related to in-house manufacturing of DEFINITY[50] Note 7. Property, Plant and Equipment, Net Property, Plant and Equipment, Net (in thousands) | Category | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Land | $9,480 | $9,480 | | Buildings | $81,940 | $73,441 | | Machinery, equipment and fixtures | $105,900 | $102,576 | | Computer software | $54,182 | $27,259 | | Construction in progress | $35,177 | $40,964 | | Less: accumulated depreciation and amortization | $(117,167) | $(107,023) | | Total property, plant and equipment, net | $169,512 | $146,697 | - Net property, plant and equipment increased to $169.5 million at September 30, 2024, from $146.7 million at December 31, 2023[52] - The Company recorded a $6.3 million gain on the sale of assets for the nine months ended September 30, 2024, related to the transfer of the Somerset Facility sublease and associated assets to Perspective[54] - Assets held for sale, specifically a portion of the Billerica campus, are valued at $7.2 million and are expected to close in 2024[6][56] Note 8. Accrued Expenses, Other Liabilities and Other Long-Term Liabilities Accrued Expenses, Other Liabilities and Other Long-Term Liabilities (in thousands) | Category | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Accrued Expenses and Other Liabilities ||| | Compensation and benefits | $35,740 | $36,331 | | Freight, distribution and operations | $83,735 | $67,529 | | Accrued rebates, discounts and chargebacks | $21,924 | $16,070 | | Total accrued expenses and other liabilities | $174,452 | $145,338 | | Other Long-Term Liabilities ||| | Operating lease liabilities | $53,915 | $54,453 | | Long-term contingent liabilities | $1,294 | $2,700 | | Total other long-term liabilities | $61,993 | $63,321 | Note 9. Asset Retirement Obligations - The asset retirement liability, related to the decommissioning of radioactive-related operations at the North Billerica facility, was approximately $25.1 million as of September 30, 2024[59] - The Company provides financial assurance of $30.3 million via a surety bond to the Massachusetts Department of Public Health for decommissioning costs[60] Note 10. Intangibles, Net Intangibles, Net (in thousands) | Category | September 30, 2024 Net | December 31, 2023 Net | |:---|:---|:---|\ | Trademarks | $1,214 | $1,324 | | Customer relationships | $25,925 | $40,421 | | Currently marketed products | $83,456 | $94,523 | | Licenses | $10,338 | $14,261 | | Developed technology | $52,673 | $1,456 | | Total | $173,606 | $151,985 | - Total intangibles, net, increased to $173.6 million at September 30, 2024, from $152.0 million at December 31, 2023, primarily due to an increase in developed technology[61][63] - Amortization expense for intangible assets was $32.0 million for the nine months ended September 30, 2024, compared to $35.1 million in the prior year[63] - The Company acquired Meilleur in June 2024, adding a developed technology intangible asset of $40.3 million related to NAV-4694[68] Note 11. Long-Term Debt, Net, and Other Borrowings Long-Term Debt, Net, and Other Borrowings (in thousands) | Category | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Principal amount 2.625% Convertible Senior Notes due 2027 | $575,000 | $575,000 | | Unamortized debt issuance costs | $(11,283) | $(13,955) | | Finance lease liabilities | $1,609 | $1,448 | | Total | $565,326 | $562,493 | | Less: current portion of long-term debt and other borrowings | $(564,713) | $(823) | | Total long-term debt, net and other borrowings | $613 | $561,670 | - The 2.625% Convertible Senior Notes due 2027, with a principal amount of $575.0 million, were reclassified to current portion of long-term debt as of September 30, 2024, because conversion conditions were met[71][85] - The Company has a $350.0 million five-year revolving credit facility, with no outstanding borrowings as of September 30, 2024, and was in compliance with all covenants[72][74][200] Note 12. Derivative Instruments - The Company has used interest rate swaps in the past to manage variable rate debt cash flow variability but does not currently use them[87] Note 13. Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss (in thousands) | Metric | Foreign Currency Translation | Total Other Comprehensive Income (Loss) | |:---|:---|:---|\ | Balance at January 1, 2024 | $(1,037) | $(1,037) | | Other comprehensive loss before reclassifications | $(129) | $(129) | | Balance at September 30, 2024 | $(1,166) | $(1,166) | - Accumulated other comprehensive loss increased to $(1,166) thousand at September 30, 2024, from $(1,037) thousand at January 1, 2024, primarily due to foreign currency translation losses[88] Note 14. Stock-Based Compensation Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Cost of goods sold | $3,614 | $2,508 | $9,116 | $6,381 | | Sales and marketing | $3,813 | $2,823 | $9,681 | $7,044 | | General and administrative | $9,926 | $6,741 | $27,457 | $17,813 | | Research and development | $3,013 | $1,904 | $7,975 | $5,097 | | Total stock-based compensation expense | $20,366 | $13,976 | $54,229 | $36,335 | - Total stock-based compensation expense increased to $54.2 million for the nine months ended September 30, 2024, from $36.3 million in the prior year, reflecting higher expenses across all categories[89] Note 15. Leases Operating and Finance Lease Assets and Liabilities (in thousands) | Category | September 30, 2024 | December 31, 2023 | |:---|:---|:---|\ | Assets ||| | Operating lease assets | $39,346 | $45,325 | | Finance lease assets | $1,235 | $1,438 | | Total leased assets | $40,581 | $46,763 | | Liabilities ||| | Current operating lease liabilities | $2,062 | $1,904 | | Current finance lease liabilities | $996 | $823 | | Noncurrent operating lease liabilities | $53,915 | $54,453 | | Noncurrent finance lease liabilities | $613 | $625 | | Total leased liabilities | $57,586 | $57,805 | - The Company modified its Bedford Lease in May 2023, extending the term and adding office/laboratory space, resulting in an additional right-of-use asset and liability of $23.5 million as of September 1, 2023[90] - The weighted-average remaining lease term for operating leases is 13.0 years with a weighted-average discount rate of 7.5% as of September 30, 2024[92] Note 16. Net Income Per Common Share Net Income Per Common Share (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Net income | $131,093 | $131,957 | $324,232 | $223,281 | | Basic weighted-average common shares outstanding | 69,464 | 68,436 | 69,193 | 68,188 | | Diluted weighted-average common shares outstanding | 73,065 | 70,046 | 71,331 | 70,268 | | Basic income per common share | $1.89 | $1.93 | $4.69 | $3.27 | | Diluted income per common share | $1.79 | $1.88 | $4.55 | $3.18 | - The conversion option of the Convertible Notes had a dilutive impact on net income per share when the average stock price exceeded the conversion price of $79.81 per share[94] Note 17. Other Income Other Income (in thousands) | Category | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|:---|:---|\ | Foreign currency (gain) loss | $(46) | $9 | $192 | $31 | | Tax indemnification income, net | $— | $3,672 | $— | $3,344 | | Interest income | $(9,801) | $(4,540) | $(27,273) | $(12,090) | | Gain on sale of RELISTOR licensed intangible asset | $— | $(51,789) | $— | $(51,789) | | Total other income, net | $(9,953) | $(52,649) | $(27,785) | $(60,362) | - Other income, net, for the nine months ended September 30, 2024, was $(27.8) million, compared to $(60.4) million in the prior year, primarily due to higher interest income and the absence of the RELISTOR royalty asset sale gain from 2023[96] Note 18. Commitments and Contingencies - The Company is involved in various legal proceedings, including a patent infringement lawsuit filed by Novartis entities in January 2024 regarding PNT2003, which could result in a 30-month stay on FDA approval[97][141] - As of September 30, 2024, there was no material ongoing litigation to which the Company was a party, other than the PNT2003 patent infringement case[97] Note 19. Acquisition of Assets - In February 2023, the Company acquired Cerveau for MK-6240, an investigational PET imaging agent for Alzheimer's, with an upfront payment of $35.3 million and potential milestones up to $1.2 billion[98] - In January 2024, the Company entered into strategic agreements with Perspective Therapeutics, including purchasing 19.90% of Perspective's shares for approximately $78.2 million and obtaining an exclusive option for Pb212-VMT-α-NET for $28.0 million[99][100][101][127][128][130] - In June 2024, the Company acquired Meilleur for NAV-4694, an investigational PET imaging agent for Alzheimer's, with an upfront payment of $32.9 million and potential milestones up to $830.0 million[108][109] - In June 2024, the Company acquired global rights to RM2 from Life Molecular Imaging for $36.0 million upfront, including a clinical-stage radiotherapeutic and radiodiagnostic pair for GRPR-targeting[110] - In June 2024, the Company acquired global exclusive rights to two preclinical assets (DUNP19 and TROP2-targeted nanobody) from Radiopharm for an upfront payment of $2.0 million and made an initial equity investment of $5.0 million[105][106][107] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and key factors influencing its performance, including recent developments, product growth strategies, and liquidity. It also highlights forward-looking statements and risk factors Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements about plans, strategies, prospects, and industry estimates, which are subject to inherent uncertainties, risks, and changes in circumstances[112] - Key forward-looking areas include market expansion for PYLARIFY and DEFINITY, manufacturing capabilities, global raw material supply, strategic collaborations (POINT, Perspective, Radiopharm), regulatory approvals, and pipeline growth[112] Available Information - The Company makes its SEC filings, including Form 10-K, 10-Q, and 8-K, available free of charge on its investor relations website (investor.lantheus.com) and the SEC's website (www.sec.gov)[113](index=113&type=chunk)[114] Overview (Business) - Lantheus is a leading radiopharmaceutical-focused company, categorizing its products into Radiopharmaceutical Oncology, Precision Diagnostics, and Strategic Partnerships and Other Revenue[116] - Products are sold primarily to hospitals, independent diagnostic testing facilities, and radiopharmacies in the U.S., with international distribution in Canada, Europe, Australia, Asia-Pacific, Central America, and South America[118] Recent Developments - Acquired global rights to RM2 (LNTH-2402 and LNTH-2401) from Life Molecular Imaging for $36.0 million upfront, targeting GRPR in various cancers, with a Phase 1/2a study for prostate cancer planned in 2025[120] - Acquired Meilleur, including NAV-4694 (investigational F 18-PET imaging agent for Alzheimer's), for an upfront payment of $32.9 million, with potential for additional development and commercial milestone payments[122] - Acquired global, exclusive rights to two preclinical assets (TROP2-targeted nanobody and LRRC15-targeted monoclonal antibody) from Radiopharm for $2.0 million upfront[124] - Entered strategic agreements with Perspective Therapeutics, including an option to license Pb212-VMT-α-NET for $28.0 million, and purchased 19.90% of Perspective's outstanding shares for approximately $78.2 million[127][128][130] - Announced positive topline results from the Phase 3 SPLASH trial for PNT2002 in mCRPC, meeting its primary endpoint of radiographic progression-free survival, but overall survival results remain confounded by patient crossover[135] - The Abbreviated New Drug Application (ANDA) for PNT2003 was accepted by the FDA, but a patent infringement lawsuit by Novartis entities could result in a 30-month stay on approval[141] Key Factors Affecting Our Results The Company's financial performance is significantly influenced by the continued growth of PYLARIFY and DEFINITY, strategic partnerships, global supply chain stability for Mo-99 and other materials, and substantial investments in research and development for new product candidates - PYLARIFY's growth depends on sustaining its leadership in a competitive market, ensuring flexible access, and differentiating it through customer experience and strategic partnerships[151][154] - CMS's final rule for calendar year 2025 Medicare Hospital Outpatient Prospective Payment System (OPPS) will maintain separate payment for PYLARIFY after its Transitional Pass-Through (TPT) Status expires on December 31, 2024, for approximately 20% of traditional Medicare fee-for-service patients[152][153] - DEFINITY's growth is driven by physician education on ultrasound enhancing agents, with the Company holding an estimated 80% market share in the U.S. echocardiography segment, and recently received FDA approval for use in pediatric patients[156][157] - Strategic Partnerships and Other Revenue focus on monetizing assets, digital solutions (aPROMISE, aBSI), and biomarker platforms to support precision medicine and early innovation access[158][159][160] - The Company maintains a globally diverse Mo-99 supply chain but faces ongoing supplier and logistical challenges that can impact TechneLite generator supply[161][162] - Significant R&D investments are ongoing for PYLARIFY, PNT2002, PNT2003, MK-6240, NAV-4694, LNTH-1363S, RM2, TROP2, and LRRC15, with potential for substantial milestone and royalty payments[167][168][169] Results of Operations The Company experienced significant revenue and gross profit growth for both the three and nine months ended September 30, 2024, primarily driven by PYLARIFY and DEFINITY sales, alongside increased operating expenses due to investments in sales, marketing, general & administrative, and research & development Consolidated Results of Operations (in thousands, except percentages) | Metric | 3 Months Sep 2024 | 3 Months Sep 2023 | Change $ | Change % | 9 Months Sep 2024 | 9 Months Sep 2023 | Change $ | Change % | |:---|:---|:---|:---|:---|:---|:---|:---|:---|\ | Revenues | $378,734 | $319,946 | $58,788 | 18.4% | $1,142,800 | $942,430 | $200,370 | 21.3% | | Gross profit | $242,126 | $199,951 | $42,175 | 21.1% | $739,746 | $479,674 | $260,072 | 54.2% | | Operating income | $133,743 | $112,361 | $21,382 | 19.0% | $343,107 | $227,156 | $115,951 | 51.0% | | Net income | $131,093 | $131,957 | $(864) | (0.7)% | $324,232 | $223,281 | $100,951 | 45.2% | - Revenue growth was primarily driven by increased PYLARIFY sales (27.4% for nine months) and DEFINITY sales (12.1% for nine months), and new revenue from NAV-4694[175] - Gross profit for the nine months ended September 30, 2024, increased by 54.2% to $739.7 million, largely due to the absence of the AZEDRA impairment charge from 2023 and increased sales volumes[179] - Research and development expenses increased by 118.1% for the nine months ended September 30, 2024, to $132.8 million, mainly due to IPR&D expenses from recent asset acquisitions (Life Molecular Imaging, Radiopharm, Perspective) and increased employee-related costs[186] - Unrealized gains on equity investments increased by $75.5 million for the nine months ended September 30, 2024, primarily from the investment in Perspective's common stock[188] Liquidity and Capital Resources The Company's liquidity is strong, with significant cash generated from operations, but future capital requirements are substantial due to product development and commercialization. The reclassification of convertible notes to current debt highlights potential future cash needs Cash Flows Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | |:---|:---|:---|\ | Net cash provided by operating activities | $387,020 | $192,973 | | Net cash (used in) provided by investing activities | $(219,413) | $18,008 | | Net cash used in financing activities | $(14,877) | $(12,612) | - Net cash provided by operating activities increased to $387.0 million for the nine months ended September 30, 2024, driven by higher net income and non-cash adjustments[192] - Net cash used in investing activities was $219.4 million, primarily due to upfront payments for exclusive license options, asset acquisitions (Life Molecular Imaging, Meilleur, Radiopharm), and equity security purchases (Perspective)[194] - The $575.0 million Convertible Senior Notes due 2027 were reclassified to current debt as of September 30, 2024, as conversion conditions were met, potentially requiring significant cash payments upon conversion[208] - The Company had $866.4 million in cash and cash equivalents as of September 30, 2024, and believes its current cash, operating cash flow, and access to its $350.0 million revolving credit facility will be sufficient to meet cash requirements for the next twelve months and beyond[210][211] Critical Accounting Policies and Estimates - There have been no significant changes to the Company's critical accounting policies or underlying assumptions and estimates for the nine months ended September 30, 2024[213] Off-Balance Sheet Arrangements - The Company has a $30.3 million surety bond as financial assurance for the decommissioning of its North Billerica production facility, but no other off-balance sheet arrangements[214] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's market risk exposures have not materially changed since December 31, 2023, but it notes equity investment risk due to the fair value measurement of its investments in Perspective and Radiopharm - The Company's exposure to market risk has not materially changed since December 31, 2023[215] - Equity investment risk exists due to the $158.8 million carrying value of investments in Perspective and Radiopharm, which are recorded at fair value and subject to market price volatility[216] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024[217] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2024[218] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 18 to the condensed consolidated financial statements, which details an ongoing patent infringement lawsuit related to PNT2003 - Information on legal proceedings is incorporated from Note 18, 'Commitments and Contingencies,' which includes details on a patent infringement lawsuit concerning PNT2003[220] Item 1A. Risk Factors The Company's risk factors have not materially changed since December 31, 2023, but new details emphasize risks related to PYLARIFY's market competition and reimbursement post-TPT status, dependence on PMF partners, intense industry competition, and the conditional conversion feature of its convertible senior notes - Material changes to risk factors include PYLARIFY's ability to grow post-TPT Status expiration (December 31, 2024), competition from other PSMA PET imaging agents, and the need for adequate reimbursement[223][224][227] - Dependence on PMF partners for PYLARIFY sales, order fulfillment, invoicing, and payment collection poses a risk to business operations[230][231] - Significant competition exists across all product categories (PYLARIFY, DEFINITY, PNT2002, PNT2003, MK-6240, NAV-4694, LNTH-1363S, RM2) from larger, more diversified companies[233][234] - The conditional conversion feature of the $575.0 million 2.625% Convertible Senior Notes due 2027 was triggered in Q3 2024, making them convertible in Q4 2024, which could adversely affect liquidity and dilute existing stockholders if settled in shares[256][257] - The Company faces claims of patent infringement, including a lawsuit by Novartis entities regarding PNT2003, which could lead to costly litigation, delays, or restrictions on commercialization[249][251][252] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not make any share repurchases under publicly announced programs during the three months ended September 30, 2024, but withheld shares to satisfy tax withholding obligations for employees related to equity awards Shares Withheld for Tax Obligations (Three Months Ended September 30, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | |:---|:---|:---|\ | July 2024 | 5,981 | $122.89 | | August 2024 | 3,007 | $97.60 | | September 2024 | 2,636 | $107.51 | | Total | 11,624 | | - The Company does not currently intend to pay dividends and expects to retain future earnings for business growth and debt repayment, with dividend payments restricted by financing arrangements[261] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None[262] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[262] Item 5. Other Information Robert Marshall, CFO and Treasurer, entered into a Rule 10b5-1 trading plan for the potential sale of up to 20,000 shares of common stock between November 2024 and March 2025 - Robert Marshall, CFO and Treasurer, established a Rule 10b5-1 trading plan to potentially sell up to 20,000 shares of common stock between November 15, 2024, and March 17, 2025[263] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the equity incentive plan, certifications from the CEO and CFO, and XBRL-related documents - Key exhibits include the Eighth Amendment to the 2015 Equity Incentive Plan, certifications of the CEO and CFO (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[265] SIGNATURES - The report was signed by Brian Markison, Chief Executive Officer, and Robert J. Marshall, Jr., Chief Financial Officer and Treasurer, on November 6, 2024[268][269]