Lantheus Holdings(LNTH) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents Lantheus Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with accompanying notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $414,076 | $415,652 | | Total current assets | $752,219 | $677,616 | | Total assets | $1,337,720 | $1,321,258 | | Liabilities & Equity | | | | Total current liabilities | $154,043 | $247,701 | | Total liabilities | $785,075 | $874,111 | | Total stockholders' equity | $552,645 | $447,147 | - Total liabilities decreased significantly from $874.1 million at year-end 2022 to $785.1 million, primarily due to the settlement of a $99.7 million short-term contingent liability related to CVRs[9] Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $321,700 | $223,723 | $622,484 | $432,603 | | Gross Profit | $202,647 | $138,029 | $279,723 | $267,099 | | Operating Income | $124,139 | $63,204 | $114,795 | $122,129 | | Net Income | $94,131 | $43,058 | $91,324 | $86,020 | | Diluted EPS | $1.33 | $0.61 | $1.31 | $1.22 | - Revenues for the three months ended June 30, 2023, increased by 43.8% year-over-year, driven by strong product sales. Net income for the same period more than doubled to $94.1 million from $43.1 million in the prior year[12] Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $76,234 | $82,861 | | Net cash used in investing activities | ($65,210) | ($5,733) | | Net cash used in financing activities | ($12,720) | ($4,190) | - Cash from operating activities decreased slightly to $76.2 million for the first six months of 2023, impacted by a decrease in accruals from the CVR payment and an increase in accounts receivable[170] - Cash used in investing activities increased significantly to $65.2 million, primarily due to the $45.3 million acquisition of Cerveau and $19.9 million in capital expenditures[22][172] Notes to Condensed Consolidated Financial Statements Revenue by Product Category (in thousands) | Product Category | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | PYLARIFY | $210,522 | $130,232 | $405,992 | $223,009 | | DEFINITY | $70,529 | $62,306 | $139,353 | $120,634 | | TechneLite | $21,594 | $19,440 | $42,580 | $42,045 | | Strategic partnerships & other | $12,783 | $5,454 | $21,763 | $34,032 | - In May 2023, the company paid $99.6 million in full satisfaction of the Contingent Value Rights (CVRs) obligation tied to PYLARIFY's 2022 sales performance[31][41] - In February 2023, the company acquired Cerveau Technologies, Inc. for an upfront payment of approximately $35.3 million, with an additional $10.0 million paid in May 2023 and potential future milestone payments[95][96] - The company recorded non-cash impairment charges in Q1 2023 totaling $132.0 million ($116.4 million in COGS and $15.6 million in R&D) related to the AZEDRA asset group after halting development activities for a future indication[61][62] - On August 2, 2023, the company sold its right to RELISTOR net sales royalties for an initial payment of approximately $98.0 million[102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong performance to PYLARIFY and DEFINITY growth, with total revenues up 43.9% for H1 2023, maintaining strong liquidity with $414.1 million cash and a $350 million credit facility Results of Operations Revenue Change by Product Category - Six Months Ended June 30, 2023 vs 2022 (in thousands) | Product Category | Change $ | Change % | | :--- | :--- | :--- | | Total radiopharmaceutical oncology | $182,263 | 80.9% | | Total precision diagnostics | $19,887 | 11.5% | | Strategic partnerships and other revenue | ($12,269) | (36.1)% | - The increase in revenue for H1 2023 was primarily driven by an 82.1% increase in PYLARIFY sales volume. The decrease in Strategic Partnerships revenue was due to a $24.0 million one-time licensing payment from Novartis recognized in the prior year[150][151] - G&A expenses for H1 2023 decreased by $20.8 million, primarily due to a $35.8 million net reduction from fair value adjustments to contingent liabilities, partially offset by increased employee costs and technology investments[161] - R&D expenses for H1 2023 increased by $19.5 million, mainly due to a $15.6 million IPR&D asset impairment loss related to AZEDRA[163] Liquidity and Capital Resources - As of June 30, 2023, the company had $414.1 million in cash and cash equivalents and access to a $350.0 million revolving credit facility, which was undrawn[184][176] - Net cash from operating activities for H1 2023 was $76.2 million, a decrease from $82.9 million in H1 2022, mainly due to the CVR payment and increased accounts receivable[169][170] - In December 2022, the company issued $575.0 million in 2.625% Convertible Senior Notes due 2027, with net proceeds of approximately $557.8 million[80][179] - Management believes that current cash, cash generated from operations, and access to the revolving facility will be sufficient to meet capital requirements for the next twelve months and beyond[185] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposures since December 31, 2022, as detailed in its Annual Report on Form 10-K - The company's exposures to market risk have not changed materially since December 31, 2022[190] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[191] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[192] PART II. OTHER INFORMATION Legal Proceedings As of June 30, 2023, the company reported no material ongoing litigation to which it was a party - As of June 30, 2023, the Company did not have any material ongoing litigation to which it was a party[93][195] Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2022[197] Unregistered Sales of Equity Securities and Use of Proceeds This section details share repurchases for tax obligations, noting $75 million remaining under the $150 million repurchase program, and the company's policy to retain earnings for growth Share Repurchases (Withheld for Taxes) - Q2 2023 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | 11,215 | $89.16 | | May 2023 | 3,997 | $98.11 | | June 2023 | 1,272 | $89.81 | | Total | 16,484 | | - As of June 30, 2023, approximately $75.0 million remained available for repurchase under the publicly announced program authorized in December 2022[198][199] - The company did not declare or pay any dividends and does not intend to in the foreseeable future, retaining earnings for business growth and debt repayment[200] Other Information This section discloses that Board members and the President entered into Rule 10b5-1 trading plans for potential future sales of common stock during Q2 2023 - During May and June 2023, multiple members of the Board of Directors and the company's President entered into Rule 10b5-1 trading plans for the potential sale of common stock[203][204][208] Exhibits This section lists exhibits filed with the 10-Q report, including an amended office lease, the 2023 Employee Stock Purchase Plan, and CEO/CFO certifications - Filed exhibits include an amended office lease, the Lantheus Holdings, Inc. 2023 Employee Stock Purchase Plan, and CEO/CFO certifications[210]