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Lantheus Holdings, Inc. Reports 2017 Second Quarter Financial Results; Exceeds Second Quarter and Raises Full-Year 2017 Guidance

16:02 EDT 1 Aug 2017 | Businesswire
Lantheus Holdings, Inc.
  • Posts Q2 revenue of $88.8 million; net income of $13.6 million and Adjusted EBITDA of $27.9 million, which includes the impact of receipt of an up-front payment of $5.0 million from GE Healthcare under the flurpiridaz F 18 collaboration and license agreement
  • DEFINITY® worldwide revenue increases 20% over prior year period

Lantheus Holdings, Inc. (the “Company”) (NASDAQ: LNTH), parent company of Lantheus Medical Imaging, Inc. (“LMI”), a global leader in the development, manufacture and commercialization of innovative diagnostic imaging agents and products, today reported financial results for its second quarter ended June 30, 2017.

The Company’s worldwide revenues for the second quarter of 2017 totaled $88.8 million, which includes the impact of the one-time $5.0 million up-front payment from GE Healthcare under the flurpiridaz F 18 collaboration and license agreement. This represents an increase of 13.9% compared to $78.0 million for the prior year period, and exceeds second quarter guidance of $79 million to $82 million, which excluded the impact of the up-front payment received from GE Healthcare. Revenue results were also driven by 19.9% growth in worldwide sales of DEFINITY®, 5.8% growth in worldwide sales of TechneLite® and 17.0% growth in worldwide sales of Xenon compared to the second quarter of 2016.

Net income for the second quarter of 2017 totaled $13.6 million, or $0.35 per diluted share, compared to $7.4 million, or $0.24 per diluted share, for the second quarter of 2016. The increase is primarily attributable to the up-front payment from GE Healthcare as well as DEFINITY revenue growth and lower interest expense related to the refinancing of debt in March 2017. This was partially offset by increased operating expenses and the divestiture of the Company’s Australian radiopharmacy business during the third quarter of 2016.

The Company’s second quarter 2017 Adjusted EBITDA (as outlined in the GAAP to non-GAAP reconciliation provided below) was $27.9 million, or 31.5% of revenues, which includes the up-front payment from GE Healthcare. This compares to $21.4 million, or 27.5% of revenues, for the prior year period, and exceeded the previously provided second quarter guidance of $18 million to $20 million, which excluded the impact of the up-front payment received from GE Healthcare. In addition to the up-front payment under the GE Healthcare agreement, second quarter results were driven by DEFINITY worldwide revenue growth, partially offset by sales and marketing expenses attributable to sales growth in DEFINITY and costs related to strategic initiatives.

“For the quarter, we delivered strong financial results, exceeding our guidance,” commented Mary Anne Heino, President and CEO. “Steady growth of our flagship imaging agent, DEFINITY, complemented by performance of our nuclear medicine products portfolio, continues to drive our results. Therefore, we are updating our full-year guidance. Our priority for the remainder of the year is to build upon our first half success as we continue to invest in strategic initiatives for long-term growth.”

Outlook

The Company has increased its full-year 2017 worldwide revenue guidance range to $318 million to $322 million from $313 million to $318 million, and expects worldwide revenues in the range of $75 million to $78 million for the third quarter of 2017.

The Company has also increased its full-year 2017 guidance range for Adjusted EBITDA, as described in the GAAP to non-GAAP reconciliation provided later in this release, to $82 million to $85 million from $80 million to $83 million, measuring 25.5% to 26.7% of worldwide revenues. For the third quarter of 2017, the Company expects Adjusted EBITDA in the range of $17 million to $19 million.

The full-year guidance for both revenue and Adjusted EBITDA excludes the impact of the up-front payment received from GE Healthcare.

The Company’s guidance for worldwide revenues and Adjusted EBITDA are forward-looking statements. They are subject to various risks and uncertainties that could cause the Company’s actual results to differ materially from guidance. Forward-looking statements are not predictions of the Company’s actual performance. See the cautionary information about forward-looking statements in the “Safe-Harbor Statement” section of this press release.

Internet Posting of Information

The Company routinely posts information that may be important to investors in the “Investors” section of its website at www.lantheus.com. The Company encourages investors and potential investors to consult its website regularly for important information about the Company.

Conference Call and Webcast

As previously announced, the Company will host a conference call starting at 4:30 p.m. Eastern Time today. To access the live conference call via telephone, please dial 1-866-498-8390 (U.S. callers) or 1-678-509-7599 (international callers) and provide passcode 55191482. A live audio webcast of the call also will be available in the Investors section of the Company’s website at www.lantheus.com.

A replay of the audio webcast will be available in the Investors section of our website at www.lantheus.com approximately two hours after completion of the call and will be archived for 30 days.

The conference call will include a discussion of non-GAAP financial measures. Reference is made to the most directly comparable GAAP financial measures, the reconciliation of the differences between the two financial measures, and the other information included in this press release, our Form 8-K filed with the SEC today, or otherwise available in the Investor Relations section of our website located at www.lantheus.com.

The conference call may include forward-looking statements. See the cautionary information about forward-looking statements in the safe-harbor section of this press release.

About Lantheus Holdings, Inc. and Lantheus Medical Imaging, Inc.

Lantheus Holdings, Inc. is the parent company of LMI, a global leader in the development, manufacture and commercialization of innovative diagnostic imaging agents and products. LMI provides a broad portfolio of products, including the echocardiography contrast agent DEFINITY® Vial for (Perflutren Lipid Microsphere) Injectable Suspension; TechneLite® (Technetium Tc99m Generator), a technetium-based generator that provides the essential medical isotope used in nuclear medicine procedures; and Xenon (Xenon Xe 133 Gas), an inhaled radiopharmaceutical imaging agent used to evaluate pulmonary function and for imaging the lungs. The Company is headquartered in North Billerica, Massachusetts with offices in Puerto Rico and Canada. For more information, visit www.lantheus.com.

Non-GAAP Financial Measures

The Company uses non-GAAP financial measures, such as revenues excluding the impact of foreign currency; adjusted operating income; adjusted net income; Adjusted EBITDA; adjusted net income per share - diluted; and free cash flow. The Company’s management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the Company’s operations, period over period. The measures may exclude such items which may be highly variable, difficult to predict and of a size that could have substantial impact on the Company’s reported results of operations for a period. Management uses these and other non-GAAP measures internally for evaluation of the performance of the business, including the allocation of resources and the evaluation of results relative to employee performance compensation targets. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

Safe Harbor for Forward-Looking and Cautionary Statements

This press release contains “forward-looking statements” as defined under U.S. federal securities laws, including statements about our 2017 outlook. Forward-looking statements may be identified by their use of terms such as anticipate, believe, confident, could, estimate, expect, intend, may, plan, predict, project, target, will and other similar terms. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to materially differ from those described in the forward- looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes 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. Risks and uncertainties that could cause our actual results to materially differ from those described in the forward-looking statements are discussed in our filings with the Securities and Exchange Commission (including those described in the Risk Factors section in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q). This press release includes forward-looking non-GAAP guidance for 2017 Adjusted EBITDA. No reconciliation of this forward-looking non-GAAP guidance was included in this press release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

– Tables Follow –

 

Lantheus Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Revenues $ 88,837 $ 77,966 $ 170,196 $ 154,440
Cost of goods sold   42,890   42,215   84,487   84,988
Gross profit   45,947   35,751   85,709   69,452
Operating expenses
Sales and marketing 11,603 9,843 21,817 19,150
General and administrative 11,203 9,238 23,473 18,751
Research and development   5,244   2,608   10,595   5,644
Total operating expenses 28,050 21,689 55,885 43,545
Gain on sale of assets     (117 )     (5,945)
Operating income 17,897 14,179 29,824 31,852
Interest expense 4,285 6,983 9,705 14,008
Loss on extinguishment of debt 2,161
Other income   (552 )   (401 )   (1,129 )   (466)
Income before income taxes 14,164 7,597 19,087 18,310
Provision for income taxes   569   247   1,354   637
Net income $ 13,595 $ 7,350 $ 17,733 $ 17,673
Net income per common share outstanding:
Basic $ 0.37 $ 0.24 $ 0.48 $ 0.58
Diluted $ 0.35 $ 0.24 $ 0.46 $ 0.58
 
Weighted-average common shares:
Basic   37,235   30,378   37,063   30,373
Diluted   38,900   30,543   38,726   30,454
 

Lantheus Holdings, Inc.
Consolidated Segment Revenues Analysis
(in thousands – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016   % Change 2017   2016   % Change
United States    
DEFINITY $ 39,211 $ 32,698 19.9 % $ 76,134 $ 63,491 19.9 %
TechneLite 23,220 21,643 7.3 % 46,529 43,376 7.3 %
Xenon 7,925 6,773 17.0 % 15,983 14,945 6.9 %
Other   7,744   4,020   92.6 %   10,481   8,255   27.0 %
Total United States   78,100   65,134   19.9 %   149,127   130,067   14.7 %
International
DEFINITY 917 776 18.2 % 1,706 1,405 21.4 %
TechneLite 3,498 3,609 (3.1 )% 7,015 6,712 4.5 %
Xenon 2 1 100.0 % 4 3 33.3 %
Other   6,320   8,446   (25.2 )%   12,344   16,253   (24.1 )%
Total International   10,737   12,832   (16.3 )%   21,069   24,373   (13.6 )%
Worldwide
DEFINITY 40,128 33,474 19.9 % 77,840 64,896 19.9 %
TechneLite 26,718 25,252 5.8 % 53,544 50,088 6.9 %
Xenon 7,927 6,774 17.0 % 15,987 14,948 7.0 %
Other   14,064   12,466   12.8 %   22,825   24,508   (6.9 )%
Total Revenues $ 88,837 $ 77,966   13.9 % $ 170,196 $ 154,440   10.2 %
 
 

Lantheus Holdings, Inc.
Supplemental Revenue Information
(unaudited)

   
June 30, 2017
Quarter to Date Sales Growth/(Decline)

Domestic
As
Reported

 

 

Int’l
Constant
Currency

 

 

Int’l As
Reported

 

 

Total
Constant
Currency

 

 

Total As
Reported

 

Products          
DEFINITY 19.9 % 22.4 % 18.2 % 20.0 % 19.9 %
TechneLite 7.3 % 0.5 % (3.1 )% 6.3 % 5.8 %
Xenon 17.0 % 100.0 % 100.0 % 17.0 % 17.0 %
Other   92.6 %   (24.5 )%   (25.2 )%   13.3 %   12.8 %
Total Revenues   19.9 %   (14.6 )%   (16.3 )%   14.2 %   13.9 %
 
June 30, 2017
Year to Date Sales Growth/(Decline)

Domestic
As
Reported

 

Int’l
Constant
Currency

 

Int’l As
Reported

 

Total
Constant
Currency

 

Total As
Reported

 

Products
DEFINITY 19.9 % 21.7 % 21.4 % 20.0 % 19.9 %
TechneLite 7.3 % 4.8 % 4.5 % 6.9 % 6.9 %
Xenon 6.9 % 33.3 % 33.3 % 7.0 % 7.0 %
Other   27.0 %   (24.0 )%   (24.1 )%   (6.8 )%   (6.9 )%
Total Revenues   14.7 %   (13.4 )%   (13.6 )%   10.2 %   10.2 %
 
 

Lantheus Holdings, Inc.
Reconciliation of Revenues to Revenues Excluding the Impact of Foreign Currency
(in thousands – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
International

Revenues

  Total

Revenues

International

Revenues

  Total

Revenues

Revenues $ 10,737 $ 88,837 $ 21,069 $ 170,196
Currency impact as compared to prior period   217   217   34   34
Revenues, excluding the impact of foreign currency $ 10,954 $ 89,054 $ 21,103 $ 170,230
 
 

Lantheus Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Operating income $ 17,897 $ 14,179 $ 29,824 $ 31,852
Reconciling items impacting operating income:
Campus consolidation costs including depreciation 2,441 4,982
Offering and other costs 351 529
Non-recurring refinancing related fees 26 1,721
Gain on sale of assets     (117 )     (5,945 )
Adjusted operating income $ 20,715 $ 14,062 $ 37,056 $ 25,907
Adjusted operating income, as a percentage revenues   23.3 %   18.0 %   21.8 %   16.8 %
 
     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Net income $ 13,595 $ 7,350 $ 17,733 $ 17,673
Reconciling items impacting operating expenses:
Campus consolidation costs including depreciation 2,441 4,982
Offering and other costs 351 529
Non-recurring refinancing related fees 26 1,721
Gain on sale of assets (117 ) (5,945 )
Reconciling items impacting non-operating expenses:
Loss on debt extinguishment       2,161  
Adjusted net income $ 16,413 $ 7,233 $ 27,126 $ 11,728
Adjusted net income, as a percentage of revenues   18.5 %   9.3 %   15.9 %   7.6 %
 
 

Lantheus Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Net income per share - diluted $ 0.35 $ 0.24 $ 0.46 $ 0.58
Reconciling items impacting operating expenses:
Campus consolidation costs including depreciation $ 0.06 $ $ 0.13 $
Offering and other costs $ 0.01 $ $ 0.01 $
Non-recurring refinancing related fees $ $ $ 0.04 $
Gain on sale of assets $ $ $ $ (0.19 )
Reconciling items impacting non-operating expenses:
Loss on debt extinguishment $ $ $ 0.06 $
Adjusted net income per share - diluted $ 0.42 $ 0.24 $ 0.70 $ 0.39
Weighted-average common shares outstanding – diluted   38,900   30,543   38,726   30,454
 
 

Lantheus Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Net income $ 13,595 $ 7,350 $ 17,733 $ 17,673
Interest expense, net 4,280 6,978 9,697 13,996
Provision for income taxes(a) 78 107 374 201
Depreciation 3,450 2,222 7,964 4,229
Amortization of intangible assets   1,661   2,089   3,307   4,195
EBITDA 23,064 18,746 39,075 40,294
Stock and incentive plan compensation 1,510 916 2,802 1,488
Asset write-off(b) 961 349 1,273 846
Severance and recruiting costs(c) 228 762 367 1,431
Offering and other costs(d) 351 5 529 9
Campus consolidation costs 666 693
Debt refinancing costs 26 1,721
Extinguishment of debt 2,161
Gain on sales of assets (117 ) (5,945 )
New manufacturer costs(e)   1,141   746   1,977   1,646
Adjusted EBITDA $ 27,947 $ 21,407 $ 50,598 $ 39,769
Adjusted EBITDA, as a percentage of revenues   31.5 %   27.5 %   29.7 %   25.8 %
 

(a) Represents provision for income taxes, less tax indemnification associated with BMS.
(b) Represents non-cash losses incurred associated with the write-down of inventory and write-off of long-lived assets.
(c) The amounts consist of severance and recruitment costs related to employees, executives and directors.
(d) Represents offering costs incurred on behalf of certain shareholders pursuant to a registration rights agreement and other non-recurring costs.
(e) Represents internal and external costs associated with establishing new manufacturing sources for our commercial and clinical candidate products.

 

Lantheus Holdings, Inc.
Reconciliation of Free Cash Flow
(in thousands – unaudited)

     
Three Months Ended
June 30,
Six Months Ended
June 30,
2017   2016 2017   2016
Cash provided by operating activities $ 20,567 $ 17,635 $ 26,091 $ 21,415
Capital expenditures   (3,402 )   (736 )   (8,301 )   (2,388 )
Free cash flow $ 17,165 $ 16,899 $ 17,790 $ 19,027
 
 

Lantheus Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands – unaudited)

     
June 30,
2017
December 31,
2016
Assets
Current assets:
Cash and cash equivalents $ 57,154 $ 51,178
Accounts receivable, net 43,246 36,818
Inventory 21,151 17,640
Other current assets   4,072     5,183
Total current assets 125,623 110,819
Property, plant & equipment, net 91,863 94,187
Intangibles, net 13,456 15,118
Goodwill 15,714 15,714
Other long-term assets   21,222   20,060
Total assets $ 267,878 $ 255,898
Liabilities and Stockholders’ Deficit
Current liabilities:
Current portion of long-term debt $ 2,750 $ 3,650
Revolving line of credit
Accounts payable 17,674 18,940
Accrued expenses and other liabilities   22,640     21,249
Total current liabilities 43,064 43,839
Asset retirement obligations 9,891 9,370
Long-term debt, net 265,929 274,460
Other long-term liabilities   36,174     34,745
Total liabilities 355,058 362,414
Stockholders’ deficit   (87,180 )   (106,516 )
Total liabilities and stockholders’ deficit $ 267,878 $ 255,898
 

Lantheus Holdings, Inc.
Investors
Gary Santo, 978-671-8960
Head of Capital Markets and Investor Relations
or
Media
Meara Murphy, 978-671-8508
Director, Investor Relations and Corporate Communications

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