~~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.


•	Level 3 — Unobservable inputs that reflect a Company’s estimates about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.

The Company’s financial assets measured at fair value on a recurring basis consist of money market ~~funds.~~funds and interest rate swaps. 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 are 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 10, “Derivative Instruments”, for further details on the interest rate swaps.

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


	June 30, 2019								March 31, 2020
(in thousands)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Money market	$	16,813	$	16,813	$	—	$	—	$	42,051	$	42,051	$	—	$	—
Interest rate swaps									1,330		—		1,330		—
Total	$	16,813	$	16,813	$	—	$	—	$	43,381	$	42,051	$	1,330	$	—



	December 31, 2019
(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Money market	$	39,530	$	39,530	$	—	$	—
Total	$	39,530	$	39,530	$	—	$	—

December 31, 2018
(in thousands)
Total Fair
Value
Level 1 Level 2 Level 3
Money market $ 61,391
$ 61,391
$ —
$ —
Total $ 61,391
$ 61,391
$ —
$ —

5.Income Taxes

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full year, adjusted for any discrete events which are recorded in the period they occur. The Company’s effective tax rate in fiscal ~~2019~~2020 differs from the U.S. federal statutory rate of 21% principally due to the impact of state taxes and the accrual of interest on uncertain tax ~~positions, offset by tax benefits arising from stock compensation deductions.~~positions. Cumulative adjustments to the tax provision are recorded in the interim period in which a change in the estimated annual effective tax rate is determined. The Company’s income tax expense is presented below:



	Three Months Ended March 31,
(in thousands)	2020		2019
Income tax expense	$	2,192	$	2,815

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 2018 2019 2018
Income tax expense $ 1,698
$ 2,219
$ 4,513
$ 6,015

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 ~~evaluates~~evaluated all available positive and negative evidence, and ~~weighs~~weighed the objective evidence and expected impact. The Company continues to record a valuation allowance of $1.2 million against ~~certain foreign~~the net deferred tax ~~assets.~~assets of its U.K. subsidiary.

In connection with the Company’s acquisition of the medical imaging business from ~~Bristol Myers~~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. A~~BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the taxing authorities. Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments, net of actual tax benefits ~~received.~~received, to be paid on behalf of the Company by BMS. The tax indemnification receivable is ~~recognized~~recorded within other long-term assets. ~~Changes in the tax indemnification asset are recognized within other income in the condensed consolidated statement of operations.~~

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

6. Inventory

Inventory consisted of the following:



(in thousands)	March 31, 2020		December 31, 2019
Raw materials	$	11,607	$	11,417
Work in process	12,445		9,450
Finished goods	6,762		8,313
Total inventory	$	30,814	$	29,180

(in thousands) June 30,
2019 December 31,
2018
Raw materials $ 11,647
$ 11,100
Work in process 9,513
4,261
Finished goods 11,254
17,658
Total inventory $ 32,414
$ 33,019

7. Property, Plant and Equipment, Net

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



(in thousands)	March 31, 2020			December 31, 2019
Land	$	13,450		$	13,450
Buildings	69,622			75,654
Machinery, equipment and fixtures	76,251			87,763
Computer software	20,768			20,739
Construction in progress	11,165			10,546
	191,256			208,152
Less: accumulated depreciation and amortization	(82,643		)	(91,655		)
Total property, plant and equipment, net	$	108,613		$	116,497

(in thousands) June 30,
2019 December 31,
2018
Land $ 13,450
$ 13,450
Buildings 65,042
64,444
Machinery, equipment and fixtures 70,615
69,298
Computer software 20,294
19,266
Construction in progress 31,393
24,169
200,794
190,627
Less: accumulated depreciation and amortization (87,677 ) (82,739 )
Total property, plant and equipment, net $ 113,117
$ 107,888

Depreciation and amortization expense related to property, plant and equipment, net, was $3.0 million and $2.5 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, respectively.

The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable. As a result of a decline in expected future cash flows and ~~2018, respectively,~~the effect of COVID-19 related to certain other nuclear legacy manufacturing assets in the U.S. segment, 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 ~~$5.0 million and $5.1~~as a result, the Company recorded a non-cash impairment of $7.3 million for the ~~six~~three months ended ~~June 30, 2019 and 2018, respectively.~~March 31, 2020 in cost of goods sold in the condensed consolidated statement of operations.

8. Asset Retirement Obligations

The Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an asset retirement obligation. The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts and San Juan, Puerto Rico sites. As of March 31, 2020, the liability is measured at the present value of the obligation expected to be incurred, of approximately $26.9 million.

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



(in thousands)	Amount
Balance at January 1, 2020	$	12,883
Accretion expense	360
Balance at March 31, 2020	$	13,243

The Company is required to provide the U.S. Nuclear Regulatory Commission and Massachusetts Department of Public Health financial assurance demonstrating the Company’s ability to fund the decommissioning of its North Billerica, Massachusetts production facility upon closure, although the Company does not intend to close the facility. The Company has provided this financial assurance in the form of a $28.2 million surety bond.

The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. As of June 30, 2019, the liability is measured at the present value of the obligation expected to be incurred, of approximately $26.9 million, and is adjusted in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying values of the related long-lived assets and depreciated over the assets’ useful lives.

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

(in thousands) Amount
Balance at January 1, 2019 $ 11,572
Revisions in estimated cash flows 20
Accretion expense 645
Balance at June 30, 2019 $ 12,237

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

In June 2019, the Company refinanced its previous $275 million five-year term loan agreement (the “2017 Term Facility”) with a new five-year $200 million term loan facility (the “2019 Term Facility” and the loans thereunder, the “2019 Term Loans”). In addition, the Company replaced its previous $75 million five-year revolving credit facility (the “2017 Revolving Facility”) with a new $200 million five-year revolving credit facility (the “2019 Revolving Facility” and, together with the 2019 Term Facility, the “2019 Facility”). The terms of the 2019 Facility are set forth in the Credit Agreement, dated as of June 27, 2019 (the “2019 Credit Agreement”), by and among Holdings, the Company, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral agent. The Company has 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 million, plus additional amounts, in certain circumstances.

The net proceeds of the 2019 Term Facility, together with approximately $73 million of cash on hand, were used to refinance in full the aggregate remaining principal amount of the loans outstanding under the 2017 Term Facility and pay related interest, transaction fees and expenses. No amounts were outstanding under the 2017 Revolving Facility at that time. The Company accounted

for the refinancing of the 2017 Term Facility as a debt extinguishment and the 2017 Revolving Facility as a debt modification by evaluating the refinancing on a creditor by creditor basis. The Company recorded a loss on extinguishment of debt of $3.2 million related to the write-off of unamortized debt issuance costs and debt discounts. In addition, the Company incurred and capitalized $2.8 million of new debt issuance costs and debt discounts related to the refinancing.

~~2019 Term Facility~~

The Term Loans under the 2019 Term Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBOR plus a spread ranging from 1.25% to 2.25% as determined by the Company’s total net leverage ratio (as defined in the 2019 Credit Agreement) or (ii) the Base Rate (as defined in the 2019 Credit Agreement) plus a spread ranging from 0.25% to 1.25% as determined by the Company’s total net leverage ratio. At June 30, 2019, the Company’s interest rate under the 2019 Term Facility was 4.2%.

The Company is permitted to voluntarily prepay the 2019 Term Loans, in whole or in part, without premium or penalty. The 2019 Term Facility requires the Company to make mandatory prepayments of the outstanding 2019 Term Loans in certain circumstances. The Term loan matures in June 2024.

As of ~~June 30, 2019,~~March 31, 2020, the Company’s maturities of principal obligations under its long-term debt and other borrowings are as follows:



(in thousands)	Amount
Remainder of 2020	$	7,500
2021	10,000
2022	11,250
2023	15,000
2024	148,750
Total principal outstanding	192,500
Unamortized debt discount	(458		)
Unamortized debt issuance costs	(730		)
Finance lease liabilities	319
Total	191,631
Less: current portion	(10,143		)
Total long-term debt, net and other borrowings	$	181,488

(in thousands) Amount
Remainder of 2019 $ 5,000
2020 10,000
2021 10,000
2022 11,250
2023 15,000
2024 148,750
Total principal outstanding 200,000
Unamortized debt discount (539 )
Unamortized debt issuance costs (859 )
Finance lease liabilities 240
Total 198,842
Less: current portion (10,136 )
Total long-term debt, net and other borrowings $ 188,706

~~2019 Revolving Facility~~

~~Under~~At March 31, 2020, the terms of the 2019 Revolving Facility, the lenders thereunder agreed to extend credit to the Company from time to time until June 27, 2024 consisting of revolving loans (the “Revolving Loans” and, together with the Term Loans, the “Loans”) in an aggregate principal amount not to exceed $200 million (the “Revolving Commitment”) at any time outstanding. The 2019 Revolving Facility includes a $20 million sub-facility for the issuance of letters of credit (the “Letters of Credit”). The 2019 Revolving Facility includes a $10 million sub-facility for swingline loans (the “Swingline Loans”). The Letters of Credit, Swingline Loans and the borrowingsCompany’s interest rate under the 2019 ~~Revolving~~Term Facility was 2.5%.

10. 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. 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 March 31, 2020, accumulated other comprehensive loss included $0.4 million of pre-tax deferred losses that are expected to be ~~used for working capital and other general corporate purposes.~~reclassified to earnings during the next 12 months.

The ~~Revolving Loans under~~following table presents the 2019 Revolving Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBOR plus a spread ranging from 1.25% to 2.25% as determined by the Company’s total net leverage ratio or (ii) the Base Rate plus a spread ranging from 0.25% to 1.25% as determined by the Company’s total net leverage ratio. The 2019 Revolving Facility also includes a commitment fee, which ranges from 0.15% to 0.30% as determined by the Company’s total net leverage ratio.

The Company is permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in each case, without premium or penalty. On any business day on which the total amountlocation and fair value amounts of outstanding Revolving Loans and Letters of Credit exceeds the total Revolving Commitment, the Company must prepay the Revolving Loans in an amount equal to such excess. As of June 30, 2019, there were no outstanding borrowings under the 2019 Revolving Facility.

~~2019 Facility Covenants~~

The 2019 Facility contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. The 2019 Facility requires the Company to be in quarterly compliance, measured on a trailing four quarter basis, with two financial covenants. The minimum interest coverage ratio, commencing with the fiscal quarter ending

~~September 30, 2019, must be at least 3.00 to 1.00. The maximum total net leverage ratio permitted by the financial covenant is displayed~~derivative instruments reported in the ~~table below:~~condensed consolidated balance sheet:



(in thousands)		March 31, 2020		December 31, 2019
Derivatives type	Classification
Liabilities:
Interest rate swap	Accrued expenses and other liabilities	$	1,330	$	—



~~2019 Facility Financial Covenant~~
~~Period~~	~~Total Net Leverage Ratio~~
~~Q3 2019 to Q2 2020~~	~~4.00 to 1.00~~
~~Q3 2020 to Q2 2021~~	~~3.75 to 1.00~~
~~Thereafter~~	~~3.50 to 1.00~~

The Company may elect to increase the maximum total net leverage ratio by 0.50 to 1.00 (subject to a maximum of 4.25 to 1.00) up to two separate times during the term of the 2019 Facility in connection with any Material Acquisition (as defined in the Credit Agreement).

The 2019 Facility contains usual and customary restrictions on the ability of the Company and its subsidiaries to: (i) incur additional indebtedness (ii) create liens; (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; (iv) sell certain assets; (v) pay dividends on, repurchase or make distributions in respect of capital stock or make other restricted payments; (vi) make certain investments; (vii) repay subordinated indebtedness prior to stated maturity; and (viii) enter into certain transactions with its affiliates.

Upon an event of default, the administrative agent under the Credit Agreement will have the right to declare the Loans and other obligations outstanding immediately due and payable and all commitments immediately terminated or reduced.

The 2019 Facility is guaranteed by Holdings and Lantheus MI Real Estate, LLC, and obligations under the 2019 Facility are generally secured by first priority liens over substantially all of the assets of each of LMI, Holdings and Lantheus MI Real Estate, LLC (subject to customary exclusions set forth in the transaction documents) owned as of June 27, 2019 or thereafter acquired.

~~10.~~11. Accumulated Other Comprehensive Loss

The components of Accumulated Other Comprehensive Loss, net of tax of $0.3 million and $0.0 million for the three months ended March 31, 2020 and March 31, 2019, respectively, consisted of the following:



(in thousands)	Foreign currency translation			Unrealized loss on cash flow hedges			Accumulated other comprehensive loss
Balance at January 1, 2020	$	(960	)	$	—		$	(960	)
Other comprehensive loss before reclassifications	(446		)	(988		)	(1,434		)
Amounts reclassified to earnings	—			—			—
Balance at March 31, 2020	$	(1,406	)	$	(988	)	$	(2,394	)

Balance at January 1, 2019	$	(1,108	)	$	—		$	(1,108	)
Other comprehensive income before reclassifications	56			—			56
Amounts reclassified to earnings	—			—			—
Balance at March 31, 2019	$	(1,052	)	$	—		$	(1,052	)

12. 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 March 31,
(in thousands)	2020		2019
Cost of goods sold	$	618	$	440
Sales and marketing	253		451
General and administrative	1,815		1,574
Research and development	389		255
Total stock-based compensation expense	$	3,075	$	2,720

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 2018 2019 2018
Cost of goods sold $ 531
$ 261
$ 971
$ 490
Sales and marketing 508
397
959
699
General and administrative 1,881
1,221
3,455
2,201
Research and development 438
337
693
622
Total stock-based compensation expense $ 3,358
$ 2,216
$ 6,078
$ 4,012

~~11. Leases~~

~~Adoption of ASC Topic 842, “Leases”~~

The Company adopted ASC 842 on January 1, 2019, using the prospective approach which provides a method for recording existing leases at adoption using the effective date of the standard as its initial application date. ASC 842 generally requires all leases to be recognized on the balance sheet. In addition, the Company elected the relief package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company not to reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for any existing leases. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the guidance of ASC 840, Leases. The adoption of ASC 842 resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019. ASC 842 did not materially impact the Company’s condensed consolidated results of operations, equity or cash flows as of the adoption date or for the periods presented.

~~Leases~~

~~The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for vehicles, corporate offices and certain equipment.~~

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease agreements with lease and non-lease components are accounted for separately. As the Company’s leases do not provide an implicit rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to apply the short-term lease exemption. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

~~Operating and finance lease assets and liabilities are as follows:~~

(in thousands) Classification June 30, 2019
Assets
Operating Other long-term assets $ 1,021
Finance Property, plant and equipment, net 237
Total leased assets $ 1,258
Liabilities
Current
     Operating Accrued expenses and other liabilities $ 185
     Finance Current portion of long-term debt and other borrowings 136
Noncurrent
     Operating Other long-term liabilities 910
     Finance Long-term debt, net and other borrowings 104
Total leased liabilities $ 1,335

~~The~~ ~~components of lease expense were as follows:~~

(in thousands) Three Months Ended
June 30, 2019 Six Months Ended
June 30, 2019
Operating lease expense $ 56
$ 112
Finance lease expense
Amortization of ROU assets 30
59
Interest on lease liabilities 1
3
Short-term lease expense 22
45
Total lease expense $ 109
$ 219

~~Other~~ ~~information related to leases were as follows:~~



	~~June 30, 2019~~
~~Weighted average remaining lease term (Years):~~
~~Operating leases~~	~~5.3~~
~~Finance leases~~	~~2.2~~
~~Weighted average discount rate:~~
~~Operating leases~~	~~5.1%~~
~~Finance leases~~	~~6.2%~~

~~(in thousands)~~	~~Six Months Ended~~ ~~June 30, 2019~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows from operating leases~~	~~114~~
~~Operating cash flows from finance leases~~	3
~~Financing cash flows from finance leases~~	60
~~ROU assets obtained in exchange for lease obligations:~~
~~Operating leases~~	—
~~Finance leases~~	~~160~~

~~Future~~ ~~minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows:~~

(in thousands) Operating Leases Finance Leases
Remainder of 2019 $ 116
$ 91
2020 238
79
2021 238
58
2022 238
29
2023 238
—
Thereafter 178
—
Total future minimum lease payments 1,246
257
Less: interest 151
17
Total $ 1,095
$ 240

~~12.~~13. Net Income Per Common Share

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



	Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2019
Net income	$	3,337	$	9,949

Basic weighted-average common shares outstanding	39,433		38,603
Effect of dilutive stock options	28		58
Effect of dilutive restricted stock	641		1,126
Diluted weighted-average common shares outstanding	40,102		39,787

Basic income per common share	$	0.08	$	0.26
Diluted income per common share	$	0.08	$	0.25

Antidilutive securities excluded from diluted net income per common share	604		222

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands, except per share amounts) 2019 2018 2019 2018
Net income $ 6,412
$ 9,745
$ 16,361
$ 17,956

Basic weighted-average common shares outstanding 38,972
38,233
38,789
38,060
Effect of dilutive stock options 98
37
80
90
Effect of dilutive restricted stock 1,169
1,128
1,195
1,318
Diluted weighted-average common shares outstanding 40,239
39,398
40,064
39,468

Basic income per common share $ 0.16
$ 0.25
$ 0.42
$ 0.47
Diluted income per common share $ 0.16
$ 0.25
$ 0.41
$ 0.45

Antidilutive securities excluded from diluted net income per common share 31
327
55
300

~~13.~~14. Other Income

Other income consisted of the following:



	Three Months Ended March 31,
(in thousands)	2020			2019
Foreign currency (losses) gains	$	(314	)	$	42
Tax indemnification income, net	555			802
Interest income	109			283
Other	—			60
Total other income	$	350		$	1,187

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 2018 2019 2018
Foreign currency gains (losses) $ 47
$ (359 ) $ 89
$ (287 )
Tax indemnification income 802
687
1,604
1,528
Interest income 276
8
559
15
Other 187
—
247
—
Total other income $ 1,312
$ 336
$ 2,499
$ 1,256

~~14.~~ 15. Commitments and Contingencies

Legal Proceedings ~~and Contingencies~~

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.~~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.

The Company is currently in arbitration with Pharmalucence in connection with a Manufacturing and Supply Agreement dated November 12, 2013, under which Pharmalucence agreed to manufacture and supply DEFINITY for the Company. The commercial arrangement contemplated by that agreement was repeatedly delayed and ultimately never successfully realized. After extended settlement discussions between Sun Pharma, the ultimate parent of Pharmalucence, and the Company, which did not lead to a mutually acceptable outcome, on November 10, 2017, the Company filed an arbitration demand (and later an amended arbitration demand) with the American Arbitration Association against Pharmalucence, alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious misrepresentation and violation of the Massachusetts Consumer Protection Law, also known as Chapter 93A. The Company is seeking monetary damages but cannot predict the outcome of this dispute resolution proceeding and whether the Company will be able to obtain any financial recovery as a result of this proceeding.

As of ~~June 30, 2019,~~ ~~except as disclosed above~~March 31, 2020, the Company had no material ongoing litigation in which the Company was a party. In addition, the Company had no material ongoing regulatory or other proceedings and no knowledge of any investigations by government or regulatory authorities in which the Company is a target, in either case, that the Company believes could have a material and adverse effect on its current business.

~~15.~~16. Segment Information

The Company reports ~~two~~2 operating segments, U.S. and International, based on geographic customer base. The results of these operating segments are regularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer. The Company’s segments derive revenues through the manufacture, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascular diagnostic imaging. All goodwill has been allocated to the U.S. operating segment. The Company does not identify or allocate assets to its segments.

Selected information regarding the Company’s segments is provided as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 2018 2019 2018
Revenues from external customers
U.S. $ 75,190
$ 74,086
$ 150,624
$ 145,574
International 10,515
11,487
21,591
22,629
Total revenues from external customers $ 85,705
$ 85,573
$ 172,215
$ 168,203
Operating income
U.S. $ 12,689
$ 14,292
$ 27,273
$ 28,448
International 1,848
1,634
3,433
2,615
Total operating income 14,537
15,926
30,706
31,063
Interest expense 4,543
4,298
9,135
8,348
Loss on extinguishment of debt 3,196
—
3,196
—
Other income (1,312 ) (336 ) (2,499 ) (1,256 )
Income before income taxes $ 8,110
$ 11,964
$ 20,874
$ 23,971



	Three Months Ended March 31,
(in thousands)	2020			2019
Revenue by product from external customers
U.S.
DEFINITY	$	55,010		$	49,716
TechneLite	19,356			20,058
Other nuclear	9,062			9,524
Rebates and allowances	(4,683		)	(3,864		)
Total U.S. Revenues	78,745			75,434
International
DEFINITY	1,781			1,395
TechneLite	3,742			4,087
Other nuclear	6,438			5,596
Rebates and allowances	(2		)	(2		)
Total International Revenues	11,959			11,076
Worldwide
DEFINITY	56,791			51,111
TechneLite	23,098			24,145
Other nuclear	15,500			15,120
Rebates and allowances	(4,685		)	(3,866		)
Total Revenues	$	90,704		$	86,510



	Three Months Ended March 31,
(in thousands)	2020			2019
Operating income
U.S.	$	4,988		$	14,584
International	2,137			1,585
Total operating income	7,125			16,169
Interest expense	1,946			4,592
Other income	(350		)	(1,187		)
Income before income taxes	$	5,529		$	12,764

17. Subsequent Events

On April 1, 2020, the Company drew down $100.0 million under its 2019 Revolving Facility, the proceeds of which the Company has currently invested in short-term, interest-bearing instruments.

On April 2, 2020, the Company and Progenics issued a joint press release announcing that they had decided to reschedule their respective special meetings of stockholders to vote on matters related to the Progenics Transaction from April 28, 2020 to June 16, 2020. The rescheduled special meetings will allow both companies the time necessary to respond to the COVID-19 pandemic and its effect on each company’s business and on the combined entity and provide appropriate disclosure to their shareholders.

The Company is continuing to monitor the latest developments regarding the COVID-19 pandemic and its impact on the Company’s business, financial condition, results of operations and prospects. On April 10, 2020, the Company announced several steps that it has taken to respond to the COVID-19 pandemic intended to maintain financial flexibility. These actions include transitioning to a four day work week to better align manufacturing, supply, distribution and other activities with reduced product demand, reducing non-essential discretionary expenses, and reducing executive and employee compensation effective April 13, 2020 for the balance of the second quarter of 2020. In addition, our Board of Directors has also reduced director and committee member compensation by 35% for the second half of the year and has elected to receive all remaining compensation payable in 2020 in the form of time-based restricted stock units that will vest on the first anniversary of the grant date, rather than in cash.

On April 14, 2020, the Company entered into a support agreement (the “Support Agreement”) with Velan Capital, L.P., Altiva Management Inc., Velan Capital Partners LP, Velan Capital Holdings LLC, Velan Capital Investment Management LP, Velan Principals GP LLC, Velan Capital Management LLC, Balaji Venkataraman, Deepak Sarpangal and Kevin McNeill (collectively, the “Velan Stockholders”), pursuant to which, among other things and subject to the terms and conditions set forth in the Support Agreement, the Velan Stockholders agreed to vote (or cause to be voted) their respective shares of Company and Progenics common stock in favor of certain matters relating to the Progenics Transaction, and that the Velan Stockholders will abide by certain customary standstill provisions, in each case, subject to the terms and conditions set forth in the Support Agreement.

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 include words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “should,” “could,” “predicts,” “hopes” and similar expressions. 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 or prospects; (ii) continued market expansion and penetration for our commercial products, particularly DEFINITY, in the face of segment competition and potential generic competition as a result of patent and regulatory exclusivity expirations; ~~(ii)~~(iii) the global Molybdenum-99 (“~~Moly”~~Mo-99”) supply; ~~(iii)~~(iv) our products manufactured at Jubilant HollisterStier (“JHS”); ~~(iv)~~(v) our efforts in new product ~~development;~~development and ~~(v)~~new clinical applications for our products; (vi) the ~~potential acquisition or in-licensing of additional~~Progenics Transaction; (vii) our capacity to use in-house manufacturing; and (viii) our ability to commercialize our products ~~businesses or technologies to drive our future growth.~~in new ex-U.S. markets. 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. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:

The impact of the global COVID-19 pandemic on our business, financial condition or prospects, including a decline in the volume of procedures using our products, potential delays and disruptions to global supply chains, manufacturing activities, logistics, operations, employees and contractors, the business activities of our suppliers, distributors, customers and other business partners, as well as the effects on worldwide economies, financial markets, social institutions, labor markets and healthcare systems;

Our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of segment competition from other echocardiography contrast agents, including Optison from GE Healthcare Limited (“GE Healthcare”) and Lumason from Bracco Diagnostics Inc. (“Bracco”), and potential generic competition as a result of patent and regulatory exclusivity expirations;

The instability of the global ~~Moly~~Mo-99 supply, including (i) periodic outages at the NTP Radioisotopes (“NTP”) processing facility in South Africa in 2017, 2018 and 2019, and (ii) a ~~recent outage~~recently resolved production volume limitations at ~~ANSTO’s~~the Australian Nuclear Science and Technology Organisation’s (“ANSTO”) new ~~Moly~~Mo-99 processing facility in Australia, in each case resulting in our inability to fill some or all of the demand for our TechneLite generators on certain manufacturing days during the outage periods;

Our dependence upon third parties for the manufacture and supply of a substantial portion of our products, raw materials and components, including DEFINITY at JHS;

The extensive costs, time and uncertainty associated with new product development, including further product development relying on external development partners or ~~potentially developed~~developing internally;

Our ability to identify and acquire or in-license additional products, businesses or technologies to drive our future growth;

Our ability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others;

~~Risks associated with our on-going internal clinical development of: DEFINITY for a left ventricular ejection fraction (“LVEF”) indication;~~

Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, including a modified formulation of DEFINITY at Samsung BioLogics (“SBL”) in South Korea;

Risks associated with our investment in, and construction of, additional specialized manufacturing capabilities at our North Billerica, Massachusetts facility, including our ability to bring the new capabilities online by 2021;

Our dependence on key customers for our medical imaging products, and our ability to maintain and profitably renew our contracts with those key customers, including GE Healthcare, Cardinal Health (“Cardinal”), United Pharmacy Partners (“UPPI”), ~~GE Healthcare and~~ Jubilant Radiopharma formerly known as Triad Isotopes, Inc. (“Jubilant Radiopharma”);

~~Risks associated with revenues~~ and ~~unit volumes for Xenon in pulmonary studies as a result of increased competition from Curium;~~PharmaLogic Holdings Corp (“PharmaLogic”);

Risks associated with our lead agent in development, flurpiridaz F 18, which in 2017 we out-licensed to GE Healthcare, including:

The ability to successfully complete the Phase 3 development ~~program;~~program, including delays in enrollment that will result from the COVID-19 pandemic;

The ability to obtain Food and Drug Administration (“FDA”) approval; and

The ability to gain post-approval market acceptance and adequate reimbursement;

Risks associated with our development agent, LMI 1195, for patient populations that would benefit from molecular imaging of the norepinephrine pathway, including: (i) finalizing a Special Protocol Assessment (“SPA”) with the FDA in connection with our Phase 3 clinical program to demonstrate improved risk stratification of ischemic heart failure patients eligible for cardioverter defibrillator implantation,including designing and ~~(ii) designing~~timely completing two Phase 3 clinical trials for the diagnosis and management of neuroendocrine tumors in pediatric and adult populations, respectively;

Risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto;

The dependence of certain of our customers upon third-party healthcare payors and the uncertainty of third-party coverage and reimbursement rates;

The existence and market success of competitor products;

Uncertainties regarding the impact of U.S. and state healthcare reform measures and proposals on our business, including measures and proposals related to reimbursement for our current and potential future products, controls over drug pricing, drug pricing transparency and generic drug competition;

Our being subject to extensive government regulation and oversight, our ~~potential inability~~ability to comply with those regulations and the costs of compliance;

Potential liability associated with our marketing and sales practices;

The occurrence of any serious or unanticipated side effects with our products;

Our exposure to potential product liability claims and environmental, health and safety liability;

Our ability to introduce new products and adapt to an evolving technology and medical practice landscape;

Risks associated with prevailing economic or political conditions and events and financial, business and other factors beyond our control;

Risks associated with our international ~~operations;~~operations, including potential global disruptions in air transport due to COVID-19, which could adversely affect our international supply chains for radioisotopes and other critical materials as well as international distribution channels for our commercial products;

Our ability to adequately qualify, operate, maintain and protect our facilities, equipment and technology infrastructure;

Our ability to hire or retain skilled employees and key personnel;

Our ability to utilize, or limitations in our ability to utilize, net operating loss carryforwards to reduce our future tax liability;

Risks related to our outstanding indebtedness and our ability to satisfy those obligations;

Costs and other risks associated with the Sarbanes-Oxley Act and the Dodd-Frank Act, including in connection with becoming a large accelerated filer as of December 31, 2019;

Risks related to the ownership of our common stock;

Risks related to the Progenics Transaction, including:

We or Progenics may be unable to obtain stockholder approval as required;

Conditions to the closing of the Progenics Transaction may not be satisfied;

The Progenics Transaction may involve unexpected costs, liabilities or delays;

The ability of our or Progenics’ business to retain and hire key personnel and maintain relationships with customers, suppliers and others with whom we or Progenics do business, or on our or Progenics’ operating results and business generally;

Our or Progenics’ respective businesses may suffer as a result of uncertainty surrounding the Progenics Transaction and disruption of management’s attention due to the Progenics Transaction;

The occurrence of any event, change or other circumstances that could give rise to the termination of our agreement with Progenics;

Unanticipated risks to our integration plan including in connection with timing, talent, and the potential need for additional resources;

New or previously unidentified manufacturing, regulatory, or research and development issues in the Progenics business;

Risks that the anticipated benefits of the Progenics Transaction or other commercial opportunities may otherwise not be fully realized or may take longer to realize than expected;

Risks relating to the COVID-19 pandemic and its effect on each company’s business and on the combined entity;

Risks that contractual contingent value rights (“CVRs”) we will issue as part of the Progenics Transaction may result in substantial future payments and could divert the attention of our management;

Risks that in connection with the Progenics Transaction, the exercise of appraisal rights by dissenting stockholders could increase the aggregate amount we have to pay for Progenics;

We or Progenics may be adversely affected by other economic, business, and/or competitive factors;

The impact of legislative, regulatory, competitive and technological changes;

Other risks to the consummation of the Progenics Transaction, including the risk that the Progenics Transaction will not be consummated within the expected time period or at all; and

Other factors that are described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December ~~31, 2018, in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March~~ 31, 2019 and in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q.

Factors that could cause or contribute to such differences include, but are not limited to, those that are discussed in other documents we file with the SEC. 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 www.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 ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language) format. ~~XBRL~~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 in this Quarterly Report on Form 10-Q.

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, ~~2018, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2019, and Part II, Item IA. “Risk Factors” in this Quarterly Report on Form 10-Q.~~2019.

Overview

Our Business

We are a global leader in the development, manufacture and commercialization of innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis and treatment of cardiovascular and other diseases. Clinicians use our imaging agents and products across a range of imaging modalities, including echocardiography and nuclear imaging. We believe that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system.

Our commercial products are used by cardiologists, nuclear physicians, radiologists, 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 sell our products globally and operate our business in two reportable segments, which are further described below:

~~U.S. Segment~~ produces and markets our medical imaging agents and products throughout the U.S. In the U.S., we primarily sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.

~~International Segment~~ operations consist of production and distribution activities in Puerto Rico and some direct distribution activities in Canada. Additionally, within our International Segment, we have established and maintain third-party distribution relationships under which our products are marketed and sold in Europe, Canada, Australia, Asia-Pacific and Latin America.


•	U.S. Segment produces and markets our medical imaging agents and products throughout the U.S. In the U.S., we primarily sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.


•	International Segment operations consist of production and distribution activities in Puerto Rico and some direct distribution activities in Canada. Additionally, within our International Segment, we have established and maintain third-party distribution relationships under which our products are marketed and sold in Europe, Canada, Australia, Asia-Pacific and Latin America.

Our Product Portfolio

Our product portfolio includes an ultrasound contrast agent, ~~and~~ nuclear imaging products ~~as well as~~and a ~~nuclear therapeutic~~radiotherapeutic product. Our principal products include the following:

~~DEFINITY~~ ~~is a~~ ~~microbubble~~ contrast agent used in ultrasound exams of the heart, also known as echocardiography exams. DEFINITY contains perflutren-containing lipid microspheres and is indicated in the U.S. for use in patients with suboptimal echocardiograms to assist in imaging the left ventricular chamber and left endocardial border of the heart in ultrasound procedures.

~~TechneLite~~ is a Technetium generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neurolite and other Technetium-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses Moly as its active ingredient.


•	DEFINITY is a microbubble contrast agent used in ultrasound exams of the heart, also known as echocardiography exams. DEFINITY contains perflutren-containing lipid microspheres and is indicated in the U.S. for use in patients with suboptimal echocardiograms to assist in imaging the left ventricular chamber and left endocardial border of the heart in ultrasound procedures.


•	TechneLite is a Technetium (“Tc-99m”) generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neurolite and other Tc-99m-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses Mo-99 as its active ingredient.

Sales of our microbubble contrast agent, DEFINITY, are made in the U.S. and Canada through a DEFINITY direct sales team. In the U.S., our nuclear imaging products, including TechneLite, Xenon, Neurolite and Cardiolite, are primarily distributed through commercial radiopharmacies, the majority of which are controlled by or associated with GE Healthcare, Cardinal, UPPI, ~~GE Healthcare~~Jubilant

Radiopharma and ~~Jubilant Radiopharma.~~PharmaLogic. A small portion of our nuclear imaging product sales in the U.S. are made through our direct sales force to hospitals and clinics that maintain their own in-house radiopharmaceutical preparation capabilities. We own one radiopharmacy in Puerto Rico where we sell our own products as well as products of third parties to end-users.

We also maintain our own direct sales force in Canada for certain of our ~~products in Canada.~~products. In Europe, Australia, Asia-Pacific and Latin America, we generally rely on third-party distributors to market, sell and distribute our nuclear imaging and contrast agent products, either on a country-by-country basis or on a multi-country regional basis.

Progenics Transaction

On October 1, 2019, we entered into the Initial Merger Agreement to acquire all of the issued and outstanding shares of Progenics common stock by means of a merger of a wholly-owned subsidiary of the Company with and into Progenics in which Progenics stockholders would have received 0.2502 shares of our common stock for each share of Progenics common stock, representing an approximately 35% aggregate ownership stake in the combined company. The transaction contemplated by the Initial Merger Agreement was unanimously approved by the Boards of Directors of both companies and was subject to the terms and conditions set forth in the Initial Merger Agreement, including, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company.

On February 20, 2020, we entered into the Amended Merger Agreement with Progenics, which amends and restates the Initial Merger Agreement. Under the terms of the Amended Merger Agreement, the Company will acquire all of the issued and outstanding shares of Progenics common stock by means of a merger of a wholly-owned subsidiary of the Company with and into Progenics in which Progenics stockholders will receive, for each share of Progenics stock held at the time of the closing of the Progenics Transaction, merger consideration consisting of 0.31 of a share of our common stock and a non-tradeable CVR tied to the financial performance of PyL. Each CVR will entitle its holder to receive a pro rata share of aggregate cash payments equal to 40% of U.S. net sales generated by PyL in 2022 and 2023 in excess of $100 million and $150 million, respectively. In no event will our aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Transaction, exceed 19.9% of the total consideration we pay in the Progenics Transaction. Following the closing of the Progenics Transaction, the aggregate ownership stake of the former Progenics stockholders will be approximately 40% of the combined company. Progenics’ stockholders will also be entitled to appraisal rights as provided under Delaware law.

In addition, pursuant to the Amended Merger Agreement, the holder of each in-the-money Progenics Stock Option will be entitled to receive in exchange for each such in-the-money option (i) a Company Stock Option converted based on the 0.31 exchange ratio and (ii) a vested or unvested CVR depending on whether the underlying option is vested. Holders of out-of-the-money Progenics Stock Options will receive Company Stock Options converted on an exchange ratio adjusted based on actual trading prices of common stock of Progenics and the Company prior to the closing of the Progenics Transaction.

The Progenics Transaction was unanimously approved by the Boards of Directors of both companies and requires, among other things, the affirmative vote of a majority of the outstanding shares of common stock of Progenics and a majority of votes cast by the holders of the common stock of the Company. The Progenics Transaction is currently expected to close in June 2020, subject to the satisfaction or waiver of certain closing conditions. Following the closing of the Progenics Transaction, which the parties intend to report as tax-deferred to Progenics’ stockholders with respect to the stock component of the merger consideration for U.S. federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH.

On March 15, 2020, Progenics and LMI entered into a bridge loan agreement, pursuant to which LMI agreed to provide for a secured short-term loan to Progenics on or after May 1, 2020 in an aggregate principal amount of up to $10.0 million. The bridge loan matures on the earlier to occur of (a) September 30, 2020 and (b) the date on which Progenics enters into a debt financing or similar arrangements or any amendment to, or replacement of, its existing debt provided by one or more third parties following the termination date of the merger agreement, in either case, having aggregate net cash proceeds that exceed the amount then required to repay all obligations under the bridge loan agreement in full in cash. The bridge loan bears interest at a rate per annum of 9.5% and is secured through the pledge to LMI of all of the issued and outstanding shares of capital stock of MIPI and any debt of MIPI owed to Progenics.

On April 14, 2020, the Company entered into the Support Agreement with the Velan Stockholders pursuant to which, among other things and subject to the terms and conditions set forth in the Support Agreement, the Velan Stockholders agreed to vote (or cause to be voted) their respective shares of Company and Progenics common stock in favor of certain matters relating to the Progenics Transaction, and that the Velan Stockholders will abide by certain customary standstill provisions, in each case, subject to the terms and conditions set forth in the Support Agreement.

The ~~following table sets forth~~transaction is now expected to close in June 2020, subject to certain closing conditions. Upon completion of the acquisition, which the parties intend to report as tax-deferred to Progenics’ stockholders with respect to the stock component of the merger consideration for U.S. federal income tax purposes, the combined company will continue to be headquartered in North Billerica, Massachusetts and will trade on the NASDAQ under the ticker symbol LNTH.

See Part I, Item 1A. “Risk Factors” in our ~~revenues:~~

Three Months Ended
June 30, Six Months Ended
June 30,
(in thousands) 2019 % of
Revenues 2018 % of
Revenues 2019 % of
Revenues 2018 % of
Revenues
DEFINITY $ 54,629
63.7 % $ 46,098
53.9 % $ 105,740
61.4 % $ 90,753
54.0 %
TechneLite 20,106
23.5 % 23,478
27.4 % 44,251
25.7 % 44,873
26.7 %
Other nuclear 15,246
17.8 % 19,381
22.7 % 30,366
17.6 % 38,867
23.1 %
Rebates and allowances (4,276 ) (5.0 )% (3,384 ) (4.0 )% (8,142 ) (4.7 )% (6,290 ) (3.7 )%
Total revenues $ 85,705
100.0 % $ 85,573
100.0 % $ 172,215
100.0 % $ 168,203
100.0 %
Annual Report on form 10-K for the year ended December 31, 2019, for information regarding certain risks associated with our proposed acquisition of Progenics.

Key Factors Affecting Our Results

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

COVID-19 Pandemic

The global COVID-19 pandemic will 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 related safety measures such as the delay of elective medical procedures, resulting in a decline in the volume of procedures using our products. We cannot predict the magnitude or duration of the pandemic’s impact on our business.

As a result of the COVID-19 pandemic, we undertook a thorough analysis of all of our discretionary expenses. In the first quarter of 2020 we implemented certain cost reduction initiatives, including, among other things, reducing travel and promotional expenses and implementing a hiring freeze through the balance of 2020. In addition, effective April 13, 2020 for the balance of the second quarter of 2020, we reduced our work week from five days to four days in order to better align manufacturing, supply, distribution and other activities with reduced product demand. We also reduced pay for our personnel, including a 75% reduction for Mary Anne Heino, our President and Chief Executive Officer, a 35% reduction for members of our executive team, a 25% reduction for our vice presidents, and across-the-board reductions of 20% of salaries for our other salaried employees and 20% of hours for our hourly employees for that same time period. In addition, our Board of Directors has also reduced director and committee member compensation by 35% for the second half of the year and has elected to receive all remaining compensation payable in 2020 in the form of time-based restricted stock units that will vest on the first anniversary of the grant date, rather than in cash. These pay reduction measures may impact our ability to maintain employee morale and motivate and retain management personnel and other key employees. We intend to reevaluate the executive and employee pay reduction measures at the end of the second quarter. We can give no assurances that we will not have to take additional cost reduction measures if the pandemic continues to adversely affect the volume of procedures using our products.

While we are currently unable to estimate the impact of COVID-19 on our overall 2020 operations and financial results, we ended the first quarter of 2020 with $95.7 million of cash and cash equivalents. In addition, as a precaution, in early April 2020 we drew $100 million on our existing $200 million revolving line of credit, which draw we intend to repay upon consummation of the Progenics Transaction in order to remain in compliance with the applicable financial covenants in our 2019 Facility. With our available liquidity and prudent expense management, we believe we will be able to maintain a state of preparedness to resume full business activities to support our customers as external conditions allow, although we can give no assurances that we will have sufficient liquidity if the pandemic continues to adversely affect the volume of procedures using our products for an extended period of time.

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

We believe the market opportunity for our ultrasound microbubble contrast agent, DEFINITY, continues to be significant. DEFINITY is our fastest growing and highest margin commercial product. We anticipate DEFINITY sales will continue to grow ~~and that DEFINITY will constitute a greater share of our overall product mix in 2019 as compared to prior years.~~over the longer term. 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 contrast agents approved by the FDA, we estimate that DEFINITY had over 80% of the market as of December 31, ~~2018.~~2019.

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

•

Patents - We continue to actively pursue additional patents in connection with DEFINITY, both in the U.S. and internationally. In the U.S., three of our recently issued method of use patents covering DEFINITY were listed in the Orange Book. We now have 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. Outside of the U.S., while our DEFINITY patent protection and regulatory exclusivity have generally expired, we are currently prosecuting additional patents to try to obtain similar method of use and manufacturing patent protection as granted in the U.S.

~~Patents -~~ We continue to actively pursue additional patents in connection with DEFINITY, both in the U.S. and internationally. In the U.S., we have an Orange Book-listed method of use patent expiring in March 2037 and additional manufacturing patents that are not Orange Book-listed expiring in 2021, 2023 and 2037. Outside of the U.S., while our DEFINITY patent protection and regulatory exclusivity have generally expired, we are currently prosecuting additional patents to try to obtain similar method of use patent protection as granted in the U.S.

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) the marketing of that generic candidate does not infringe an Orange Book-listed patent. With respect to any Orange Book-listed patent covering the innovator product, the ANDA applicant must give a notice to the innovator (a “Notice”) that the ANDA applicant certifies that its generic candidate will not infringe the innovator’s Orange Book-listed patent or that the Orange Book-listed patent is invalid. The innovator can then challenge the ANDA applicant in court within 45 days of receiving that 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 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. If we were to (i) receive any such Notice in the future, (ii) bring a patent infringement suit against the ANDA applicant within 45 days of receiving that Notice, and (iii) successfully obtain the full 30 month stay, then the ANDA 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 in ~~August 2019~~May 2020 and the full 30 month stay was obtained, then the ANDA applicant would be precluded from commercialization until at least ~~February~~November 2022. If we received a Notice some number of months in the future and the full 30 month stay was obtained, the commercialization date would roll forward in the future by the same calculation.

•

Modified Formulation - We are developing at SBL a modified formulation of DEFINITY. We believe this modified formulation will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings. We were recently granted a composition of matter patent on the modified formulation which runs through 2035. If the modified formulation is approved by the FDA, then this patent would be eligible to be listed in the Orange Book. We currently believe that, if approved by the FDA, the modified formulation could become commercially available in early 2021, although that timing cannot be assured. Given its physical characteristics, the modified formulation may also be 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 next paragraph).

•

New 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 contrast imaging generally. For example, in April 2019, we announced a strategic development and commercial collaboration with Cerevast Medical, Inc. (“Cerevast”) in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to target improving blood flow in occluded retinal veins in the eye. Retinal vein occlusion is one of the most common causes of vision loss worldwide. In December 2019, we announced a strategic commercial supply agreement with CarThera for the use of our microbubbles in combination with SonoCloud, a proprietary implantable device in development for the treatment of recurrent glioblastoma. Glioblastoma is a lethal and devastating form of brain cancer with median survival of 15 months after diagnosis.

•

In-House Manufacturing - We are currently building specialized in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products. We believe the investment in these efforts 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 currently expect to be in a position to use this in-house manufacturing capability by early 2021, although that timing cannot be assured.

•

DEFINITY in China - On March 19, 2020 in connection with our Chinese development and distribution arrangement with Double Crane Pharmaceutical Company, we filed an Import Drug License application with the NMPA, or National Medical Products Administration, for the use of DEFINITY for the echocardiography indication. Our application is now undergoing initial review by the NMPA. 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.

~~LVEF Indication -~~ We are currently conducting two well-controlled Phase 3 studies designed to demonstrate improved accuracy of LVEF measurements with DEFINITY-enhanced echocardiography versus unenhanced echocardiography. The truth standard in these studies is cardiac magnetic resonance imaging. The studies are being conducted at 20 U.S. sites and will eventually enroll a total of approximately 300 subjects. We believe DEFINITY could improve the accuracy of LVEF calculations, giving clinicians greater confidence in patient management decisions. An LVEF indication could substantially

~~increase the addressable market for contrast-enhanced echocardiography. We believe that DEFINITY, as the market leader, would benefit from the expanded addressable market.~~

~~Modified Formulation -~~ We are developing at SBL a modified formulation of DEFINITY. We believe this modified formulation will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings. We were recently granted a composition of matter patent on the modified formulation which runs through December 2035. If the modified formulation is approved by the FDA, then this patent would be eligible to be listed in the Orange Book. We currently believe that, if approved by the FDA, the modified formulation could become commercially available in 2020, although that timing cannot be assured. Given its physical characteristics, the modified formulation may also be better 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 next paragraph).

~~New 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 contrast imaging generally. For example, we recently announced a strategic development and commercial collaboration with Cerevast Medical, Inc. in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to target improving blood flow in occluded retinal veins in the eye. Retinal vein occlusion is one of the most common causes of vision loss worldwide.

~~In-House Manufacturing -~~ We are currently building specialized in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products. We believe the investment in these efforts 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 currently expect to be in a position to use this in-house manufacturing capability by early 2021, although that timing cannot be assured.

See Part I, Item 1A. “Risk Factors—The growth of our business is substantially dependent on our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of increased segment competition from other existing echocardiography agents and potential generic competitors as a result of future patent and regulatory exclusivity expirations,” “—If we are unable to protect our intellectual property, our competitors could develop and market products with features similar to our products, and demand for our products may decline,” “—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,” and “—Item 1. Business—Our Product Portfolio—DEFINITY and the Expansion of Our Ultrasound Microbubble Franchise,” of our Annual Report on Form 10-K for the year ended December 31, 2018.

Global ~~Moly~~ Mo-99 Supply

We currently have ~~Moly~~Mo-99 supply agreements with Institute for Radioelements (“IRE”), running through December 31, ~~2019,~~2022, and renewable by us on a year-to-year basis thereafter, and with ~~ANSTO~~NTP and ~~NTP,~~ANTSO, running through December 31, ~~2020.~~2021. 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 ~~Moly~~Mo-99 supply ~~including LEU-based Moly,~~ with IRE in Belgium, ~~ANSTO in Australia and~~ NTP in South Africa and ANSTO in Australia, we still face supplier and logistical challenges in our ~~Moly~~Mo-99 supply chain. The NTP processing facility has had periodic outages in 2017, 2018 and 2019. When NTP was not producing, we relied on ~~Moly~~Mo-99 supply from both IRE and ANSTO to limit the impact of the NTP outages. In the second quarter of 2019, ANSTO experienced ~~facility~~technical issues in its existing ~~Moly~~Mo-99 processing facility which resulted in a decrease in ~~Moly~~Mo-99 available to us. In addition, as ANSTO transitioned from its existing ~~Moly~~Mo-99 processing facility to its new ~~Moly~~Mo-99 processing facility in the second quarter of 2019, ANSTO experienced start-up and transition challenges, which also resulted in a decrease in ~~Moly~~Mo-99 available to us. Further, starting in late June 2019 until April 2020, ANSTO’s new ~~Moly~~Mo-99 processing facility had ~~an unscheduled~~ production ~~outage,~~volume limitations imposed on it by the Australian Radiation Protection and Nuclear Safety Agency which limited our ability to receive Mo-99 from ANSTO. During that time we ~~are now relying~~relied on IRE and NTP to limit the impact of ~~that~~those ANSTO ~~outage.~~outages and volume limitations. As ANSTO increases its production volume over the course of 2020, we expect to receive increasing supply from ANSTO. Because of the COVID-19 pandemic, we have recently experienced challenges receiving regularly scheduled orders of Mo-99 from our global suppliers due to the partial or complete delay or cancellation of international flights by our airfreight carriers. Because of these various supply chain constraints, depending on reactor and processor schedules and operations, we have not been able to fill some or all of the demand for our TechneLite generators on certain manufacturing days.

ANSTO’s new ~~Moly~~Mo-99 processing facility could eventually increase ANSTO’s ~~Moly~~Mo-99 production capacity from approximately 2,000 curies per week to 3,500 curies per week with additional committed financial and operational resources. ~~We recently received approval from both the FDA and Health Canada for our use of Moly supplied from ANSTO’s new Moly processing facility in manufacturing our TechneLite generators.~~ At full ramp-up capacity, ANSTO’s new facility could provide incremental supply to our globally diversified ~~Moly~~Mo-99 supply chain and therefore mitigate some risk among our ~~Moly~~Mo-99 suppliers, although we can give no assurances to that effect. In addition, we also have a strategic arrangement with SHINE Medical Technologies, Inc. (“SHINE”), a Wisconsin-based company, for the future supply of ~~Moly.~~Mo-99. Under the terms of that agreement, SHINE will provide us ~~Moly~~Mo-99 once SHINE’s facility becomes operational and receives all necessary approvals, which SHINE now estimates will occur in 2022.

See Part II, Item 1A. “Risk Factors—The global supply of Moly is fragile and not stable. Our dependence on a limited number of third party suppliers for Moly could prevent us from delivering some of our products to our customers in the required quantities, within the required timeframe, or at all, which could result in order cancellations and decreased revenues” of this Quarterly Report on Form 10-Q and Part 1, Item 1A. “Risk Factors—The instability of the global supply of Moly, including supply shortages, has resulted in increases in the cost of Moly, which has negatively affected our margins, and more restrictive agreements with suppliers, which could further increase our costs” of our Annual Report on Form 10-K for the year ended December 31, 2018.

Inventory Supply

We obtain a substantial portion of our imaging agents from a third-party ~~suppliers.~~supplier. JHS is currently 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 JHS to manufacture certain of our products. Until we receive these approvals, we will face continued limitations on where we can sell those products outside of the U.S.

In addition to JHS, we are also currently working to secure additional alternative suppliers for our key products as part of our ongoing supply chain diversification strategy. We have ongoing development and technology transfer activities for a modified formulation of DEFINITY with SBL, which is located in South Korea. We currently believe that if approved by the FDA, the modified formulation could be commercially available in ~~2020,~~2021, although that timing cannot be assured. We are also building in-house specialized manufacturing capabilities at our North Billerica, Massachusetts facility, as part of a larger strategy to create a competitive advantage in specialized manufacturing, which will also allow us to optimize our costs and reduce our supply chain risk. We can give no assurance as to when or if we will be successful in these efforts or that we will be able to successfully manufacture any additional commercial products at our North Billerica, Massachusetts facility. See Part I, Item 1A. “Risk Factors—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” of our Annual Report on Form 10-K for the year ended December 31, 2018.

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 North Billerica, Massachusetts facility.

Research and Development Expenses

To remain a leader in the marketplace, we have historically made substantial investments in new product development. ~~As a result, the positive contributions of those internally funded research and development programs have been a key factor in~~For flurpiridaz F 18, our ~~historical results and success. On~~positron emission tomography (“PET”)-based myocardial perfusion imaging agent, on April 25, 2017, we announced entering into a definitive, exclusive Collaboration and License Agreement with GE Healthcare for the agent’s continued Phase 3 development and worldwide ~~commercialization~~commercialization. Because of flurpiridaz F 18. As part of our microbubble franchise strategy, for our proposed LVEF indication for DEFINITY, we are currently conducting two well-controlled Phase 3 studies designed to demonstrate improved accuracy of LVEF measurements with DEFINITY-enhanced echocardiography versus unenhanced echocardiography.the COVID-19 pandemic, GE Healthcare believes enrollment in that global clinical development program will be delayed. For LMI 1195, our PET-based molecular imaging agent for the norepinephrine pathway, we are currently working with the FDA to finalize an SPA in connection with our Phase 3 clinical program to demonstrate improved risk stratification of ischemic heart failure patients eligible for cardioverter defibrillator implantation. We are also currently designing two Phase 3 clinical trials for the use of LMI 1195 for the diagnosis and management of neuroendocrine tumors in pediatric and adult populations, respectively. The FDA has ~~already~~ granted an Orphan Drug designation for the use of LMI 1195 in the management indication. We have also received notice of eligibility for a rare pediatric disease priority review voucher for a subsequent human drug application so long as LMI 1195 is approved by the FDA for its rare pediatric disease indication prior to September 30, 2022. Our investments in these additional clinical activities will increase our operating expenses and impact our results of operations and cash ~~flow.~~flow and we can give no assurances as to whether or when LMI 1195 would be approved.

As part of our microbubble franchise strategy, we also conducted two Phase 3, open-label, multicenter studies (which we refer to as BENEFIT 1 and BENEFIT 2) to evaluate LVEF measurement accuracy and reproducibility of DEFINITY contrast-enhanced and unenhanced echocardiography as compared to non-contrast cardiac magnetic resonance imaging (“CMRI”), used as the truth standard. In February 2020, we announced the results of BENEFIT 1. After reviewing the BENEFIT 1 study results, we concluded that there was no statistically significant improvement in the accuracy of LVEF values for contrast-enhanced echocardiography versus unenhanced echocardiography as compared to CMRI. In addition, analyses of the secondary endpoints revealed no improvement in inter-reader variability between the contrast-enhanced and unenhanced echocardiograms for LVEF assessments. We have recently completed our review of the BENEFIT 2 study results, and those results are similar to the previously reported BENEFIT 1 results, namely that the BENEFIT 2 study results also did not meet its primary endpoint. Among the secondary endpoints in BENEFIT 2, inter-reader variability for left ventricular volume measurements improved when using DEFINITY versus unenhanced ultrasound, while there was no improvement in the LVEF inter-reader variability. In both studies, a post-hoc analysis did show statistically significant improvements in left ventricular diastolic and systolic volume measurements with contrast-enhanced versus unenhanced echocardiography when compared to CMRI. Although we very much see the continued value of the use of contrast in suboptimal echocardiograms to opacify the left ventricular chamber and improve the delineation of the left ventricular endocardial border, at this point, we do not foresee spending additional time or effort pursuing an LVEF indication for DEFINITY.

New Initiatives

We continue to ~~evaluate~~seek ways to expand our product portfolio, evaluating a number of different opportunities to acquire or in-license additional products, businesses and technologies to drive our future growth. We are particularly interested in expanding our presence in ~~oncology. We recently~~oncology, in radiotherapeutics as well as diagnostics. In addition to the Progenics Transaction described above, in May 2019 we entered into a strategic collaboration and license agreement with NanoMab Technology Limited, 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 imaging biomarker research tool to pharmaceutical companies and academic centers conducting research and development on PD-L1 immuno-oncology treatments, including combination therapies. We can give no assurance as to when or if this collaboration will be successful or accretive to earnings.

See Part I, Item 1A. “Risk Factors-Our business depends on our ability to successfully introduce new products and adapt to a changing technology and medical practice landscape” and “-Our future growth may depend on our ability to identify and acquire or in-license additional products, businesses or technologies, and if we do not successfully do so, or otherwise fail to integrate any new products, lines of business or technologies into our operations, we may have limited growth opportunities and it could result in significant impairment charges or other adverse financial consequences” of our Annual Report on Form 10-K for the year ended December 31, 2018. See also Part II, Item 1A. “Risk Factors - The process of developing new drugs and obtaining regulatory approval is complex, time-consuming and costly, and the outcome is not certain” or our Quarterly Report on form 10-Q for the quarter ended March 31, 2019.

Results of Operations

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


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(in thousands)	2019			2018			2019			2018			2020			2019
Revenues	$	85,705		$	85,573		$	172,215		$	168,203		$	90,704		$	86,510
Cost of goods sold	41,132			41,727			83,558			82,048			52,702			42,426
Gross profit	44,573			43,846			88,657			86,155			38,002			44,084
Operating expenses
Sales and marketing	10,948			12,130			21,345			22,770			10,130			10,397
General and administrative	13,293			11,575			25,882			24,118			16,699			12,589
Research and development	5,795			4,215			10,724			8,204			4,048			4,929
Total operating expenses	30,036			27,920			57,951			55,092			30,877			27,915
Operating income	14,537			15,926			30,706			31,063			7,125			16,169
Interest expense	4,543			4,298			9,135			8,348			1,946			4,592
Loss on extinguishment of debt	3,196			—			3,196			—
Other income	(1,312		)	(336		)	(2,499		)	(1,256		)	(350		)	(1,187		)
Income before income taxes	8,110			11,964			20,874			23,971			5,529			12,764
Income tax expense	1,698			2,219			4,513			6,015			2,192			2,815
Net income	$	6,412		$	9,745		$	16,361		$	17,956		$	3,337		$	9,949

Comparison of the Periods Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~

Revenues

Segment revenues are summarized by product as follows:


	Three Months Ended June 30,											Six Months Ended June 30,											Three Months Ended March 31,
(in thousands)	2019			2018			Change $			Change %		2019			2018			Change $			Change %		2020			2019			Change $			Change %
U.S.
DEFINITY	$	53,466		$	45,103		$	8,363		18.5	%	$	103,182		$	88,609		$	14,573		16.4	%	$	55,010		$	49,716		$	5,294		10.6	%
TechneLite	16,865			19,343			(2,478		)	(12.8	)%	36,923			37,406			(483		)	(1.3	)%	19,356			20,058			(702		)	(3.5	)%
Other nuclear	9,127			13,031			(3,904		)	(30.0	)%	18,651			25,848			(7,197		)	(27.8	)%	9,062			9,524			(462		)	(4.9	)%
Rebates and allowances	(4,268		)	(3,391		)	(877		)	25.9	%	(8,132		)	(6,289		)	(1,843		)	29.3	%	(4,683		)	(3,864		)	(819		)	21.2	%
Total U.S. revenues	75,190			74,086			1,104			1.5	%	150,624			145,574			5,050			3.5	%	78,745			75,434			3,311			4.4	%
International
DEFINITY	1,163			995			168			16.9	%	2,558			2,144			414			19.3	%	1,781			1,395			386			27.7	%
TechneLite	3,241			4,135			(894		)	(21.6	)%	7,328			7,467			(139		)	(1.9	)%	3,742			4,087			(345		)	(8.4	)%
Other nuclear	6,119			6,350			(231		)	(3.6	)%	11,715			13,019			(1,304		)	(10.0	)%	6,438			5,596			842			15.0	%
Rebates and allowances	(8		)	7			(15		)	(214.3	)%	(10		)	(1		)	(9		)	900.0	%	(2		)	(2		)	—			—	%
Total International revenues	10,515			11,487			(972		)	(8.5	)%	21,591			22,629			(1,038		)	(4.6	)%	11,959			11,076			883			8.0	%
Worldwide
DEFINITY																							56,791			51,111			5,680			11.1	%
TechneLite																							23,098			24,145			(1,047		)	(4.3	)%
Other nuclear																							15,500			15,120			380			2.5	%
Rebates and allowances																							(4,685		)	(3,866		)	(819		)	21.2	%
Total revenues	$	85,705		$	85,573		$	132		0.2	%	$	172,215		$	168,203		$	4,012		2.4	%	$	90,704		$	86,510		$	4,194		4.8	%

The increase in the U.S. segment revenues for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to the prior year period is primarily due to ~~an $8.4~~a $5.3 million increase in DEFINITY revenue as a result of higher unit volumes. This increase was offset, in part, by a $2.5 million decrease in TechneLite revenue driven by lower volume as a result of a temporary supplier disruption, lower Xenon and other nuclear product volume and an increase in rebate and allowance provisions.

~~The increase in the U.S. segment revenues for the six months ended June 30, 2019, as compared to the prior year period is primarily due to~~ a $14.6 million increase in DEFINITY revenue as a result of higher unit volumes. This increase was offset, in part, by decreases primarily associated with lower Xenon and other nuclear product volume and an increase in rebate and allowance provisions. of $0.8 million, lower TechneLite revenue driven by supplier disruptions and COVID-19 impact on international logistics and a decrease in Other Nuclear revenue primarily associated with lower Xenon volume as a result of COVID-19.

The ~~decrease~~increase in the International segment revenues for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to the prior year period is primarily due to a ~~decrease of $0.9~~$0.8 million increase in Other Nuclear revenue driven by an increase in Neurolite volume and $0.4 million increase in DEFINITY revenue driven by increased volume. This increase was offset, in part, by TechneLite revenue ~~largely related~~due primarily to opportunistic incremental demand in the prior year ~~period and temporary supplier disruptions in the current period, and a negative exchange rate impact of approximately $0.2 million.~~

The decrease in the International segment revenues for the six months ended June 30, 2019, as compared to the prior year period is primarily due to lower volumes of other nuclear products and a negative exchange rate impact of approximately $0.4 million, offset in part, by higher DEFINITY revenue driven by increased volume.period.

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 and the resulting applicable contractual rebate ~~or commission rate(s)~~ 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			Rebates and Allowances
Balance, January 1, 2019	$	4,654
Balance, January 1, 2020				$	6,985
Provision related to current period revenues	8,042			4,650
Adjustments relating to prior period revenues	100			35
Payments or credits made during the period	(7,385		)	(6,070		)
Balance, June 30, 2019	$	5,411
Balance, March 31, 2020				$	5,600



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

331 Treble Cove Road ~~North Billerica, MA~~		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



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



Large accelerated filer	☐☑	Accelerated filer	þ☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging Growth Company	þ☐



		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets ~~as of June 30, 2019 and December 31, 2018~~	1
	Condensed Consolidated Statements of Operations ~~for the Three and Six Months Ended June 30, 2019 and 2018~~	2
	Condensed Consolidated Statements of Comprehensive Income ~~for the Three and Six Months Ended June 30, 2019 and 2018~~	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~for the Three and Six Months Ended June 30, 2019 and 2018~~	4
	Condensed Consolidated Statements of Cash Flows ~~for the Six Months Ended June 30, 2019 and 2018~~	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1615
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2830
Item 4.	Controls and Procedures	2830
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2931
Item 1A.	Risk Factors	2931
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3134
Item 3.	Defaults Upon Senior Securities	3134
Item 4.	Mine Safety Disclosures	3134
Item 5.	Other Information	3134
Item 6.	Exhibits	3235
SIGNATURES		3336



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



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


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	56,885		$	113,401		$	95,713		$	92,919
Accounts receivable, net	45,527			43,753			44,883			43,529
Inventory	32,414			33,019			30,814			29,180
Other current assets	5,035			5,242			8,967			7,283
Total current assets	139,861			195,415			180,377			172,911
Property, plant and equipment, net	113,117			107,888			108,613			116,497
Intangibles, net	8,239			9,133			6,930			7,336
Goodwill	15,714			15,714			15,714			15,714
Deferred tax assets, net	79,170			81,449			70,454			71,834
Other long-term assets	34,149			30,232			22,037			21,627
Total assets	$	390,250		$	439,831		$	404,125		$	405,919
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt and other borrowings	$	10,136		$	2,750		$	10,143		$	10,143
Accounts payable	17,149			17,955			18,980			18,608
Accrued expenses and other liabilities	26,072			32,050			32,836			37,360
Total current liabilities	53,357			52,755			61,959			66,111
Asset retirement obligations	12,237			11,572			13,243			12,883
Long-term debt, net and other borrowings	188,706			263,709			181,488			183,927
Other long-term liabilities	43,703			40,793			29,037			28,397
Total liabilities	298,003			368,829			285,727			291,318
Commitments and contingencies (See Note 14)
Commitments and contingencies (See Note 15)
Stockholders’ equity
Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued and outstanding)	—			—			—			—
Common stock ($0.01 par value, 250,000 shares authorized; 39,043 and 38,466 shares issued and outstanding, respectively)	390			385
Common stock ($0.01 par value, 250,000 shares authorized; 39,750 and 39,251 shares issued and outstanding, respectively)							398			393
Additional paid-in capital	244,600			239,865			253,530			251,641
Accumulated deficit	(151,779		)	(168,140		)	(133,136		)	(136,473		)
Accumulated other comprehensive loss	(964		)	(1,108		)	(2,394		)	(960		)
Total stockholders’ equity	92,247			71,002			118,398			114,601
Total liabilities and stockholders’ equity	$	390,250		$	439,831		$	404,125		$	405,919



	Six Months Ended June 30, 2018
	Common Stock					Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance, January 1, 2018	37,765		$	378		$	232,960		$	(209,013	)	$	(1,034	)	$	23,291
Net income	—		—			—			8,211			—			8,211
Forfeiture of dividend equivalent right	—		—			—			355			—			355
Other comprehensive income	—		—			—			—			—			—
Stock option exercises and employee stock plan purchases	94		1			719			—			—			720
Vesting of restricted stock awards and units	174		2			(2		)	—			—			—
Shares withheld to cover taxes	(36	)	(1		)	(708		)	—			—			(709		)
Stock-based compensation	—		—			1,796			—			—			1,796
Balance, March 31, 2018	37,997		$	380		$	234,765		$	(200,447	)	$	(1,034	)	$	33,664
Net income	—		—			—			9,745			—			9,745
Other comprehensive income	—		—			—			—			4			4
Stock option exercises and employee stock plan purchases	111		1			625			—			—			626
Vesting of restricted stock awards and units	286		3			(3		)	—			—			—
Shares withheld to cover taxes	(96	)	(1		)	(1,721		)	—			—			(1,722		)
Stock-based compensation	—		—			2,216			—			—			2,216
Balance, June 30, 2018	38,298		$	383		$	235,882		$	(190,702	)	$	(1,030	)	$	44,533


	Six Months Ended June 30, 2019																	Three Months Ended March 31, 2020
	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			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance, January 1, 2019	38,466		$	385		$	239,865		$	(168,140	)	$	(1,108	)	$	71,002
Balance, January 1, 2020																		39,251		$	393		$	251,641		$	(136,473	)	$	(960	)	$	114,601
Net income	—		—			—			9,949			—			9,949			—		—			—			3,337			—			3,337
Other comprehensive income	—		—			—			—			56			56			—		—			—			—			(1,434		)	(1,434		)
Stock option exercises and employee stock plan purchases	37		—			606			—			—			606			33		—			366			—			—			366
Vesting of restricted stock awards and units	365		4			(4		)	—			—			—			563		6			(6		)	—			—			—
Shares withheld to cover taxes	(50	)	(1		)	(1,119		)	—			—			(1,120		)	(97	)	(1		)	(1,546		)	—			—			(1,547		)
Stock-based compensation	—		—			2,720			—			—			2,720			—		—			3,075			—			—			3,075
Balance, March 31, 2019	38,818		$	388		$	242,068		$	(158,191	)	$	(1,052	)	$	83,213
Net income	—		—			—			6,412			—			6,412
Other comprehensive income	—		—			—			—			88			88
Stock option exercises and employee stock plan purchases	9		—			120			—			—			120
Vesting of restricted stock awards and units	253		3			(3		)	—			—			—
Shares withheld to cover taxes	(37	)	(1		)	(943		)	—			—			(944		)
Stock-based compensation	—		—			3,358			—			—			3,358
Balance, June 30, 2019	39,043		$	390		$	244,600		$	(151,779	)	$	(964	)	$	92,247
Balance, March 31, 2020																		39,750		$	398		$	253,530		$	(133,136	)	$	(2,394	)	$	118,398



	Three Months Ended March 31, 2019
	Common Stock					Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance, January 1, 2019	38,466		$	385		$	239,865		$	(168,140	)	$	(1,108	)	$	71,002
Net income	—		—			—			9,949			—			9,949
Other comprehensive income	—		—			—			—			56			56
Stock option exercises and employee stock plan purchases	37		—			606			—			—			606
Vesting of restricted stock awards and units	365		4			(4		)	—			—			—
Shares withheld to cover taxes	(50	)	(1		)	(1,119		)	—			—			(1,120		)
Stock-based compensation	—		—			2,720			—			—			2,720
Balance, March 31, 2019	38,818		$	388		$	242,068		$	(158,191	)	$	(1,052	)	$	83,213



Standard	Description	Effective Date for Company	Effect on the Condensed Consolidated Financial Statements
Recently Issued Accounting Standards Not Yet Adopted
ASU 2020-04, “Reference Rate Reform (Topic 848)”	This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.	March 12, 2020 through December 31, 2022	The Company does not expect that the adoption of this standard will have a material impact on the Company’s condensed consolidated financial statements.
Accounting Standards Adopted During the Three Months Ended March 31, 2020
ASU 2016-13, ~~Financial~~“Financial Instruments-Credit Losses (Topic 326) ”	This ASU will require financial instruments measured at amortized cost and accounts receivable to be presented at the net amount expected to be collected. The new model requires an entity to estimate credit losses based on historical information, current information and reasonable and supportable forecasts that affect the collectability of the reported amount. ~~ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019.~~	~~January 1, 2020~~	~~The Company is currently evaluating the impact that this standard will have on its consolidated financial statements.~~
~~Accounting Standards Adopted During the Six Months Ended June 30, 2019~~
~~ASU 2016-02, Leases (Topic 842)~~	This ASU supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires all leases to be recognized on the balance sheet. In July 2018, an amendment was made that allows companies the option of using the effective date of the new standard as the initial application date (at the beginning of the period in which it is adopted, rather than at the beginning of the earliest comparative period).	January 1, ~~2019~~2020	~~See Note 11, "Leases" for the required disclosures related to the impact of adopting this standard.~~ The adoption of this ~~standard resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019. The~~ standard did not have a material impact on the Company’s condensed consolidated ~~statements of operations, equity or cash flows.~~ financial statements.


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


•	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.



	December 31, 2018
(in thousands)	Total Fair Value		Level 1		Level 2		Level 3
Money market	$	61,391	$	61,391	$	—	$	—
Total	$	61,391	$	61,391	$	—	$	—



(in thousands)	Amount
Remainder of 2019	$	5,000
2020	10,000
2021	10,000
2022	11,250
2023	15,000
2024	148,750
Total principal outstanding	200,000
Unamortized debt discount	(539		)
Unamortized debt issuance costs	(859		)
Finance lease liabilities	240
Total	198,842
Less: current portion	(10,136		)
Total long-term debt, net and other borrowings	$	188,706



(in thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense	$	56	$	112
Finance lease expense
Amortization of ROU assets	30		59
Interest on lease liabilities	1		3
Short-term lease expense	22		45
Total lease expense	$	109	$	219



(in thousands)	Operating Leases		Finance Leases
Remainder of 2019	$	116	$	91
2020	238		79
2021	238		58
2022	238		29
2023	238		—
Thereafter	178		—
Total future minimum lease payments	1,246		257
Less: interest	151		17
Total	$	1,095	$	240



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
April 2019**	31,516	$	25.16	*	*
May 2019**	5,312	$	25.00	*	*
June 2019**	472	$	26.45	*	*
Total	37,300			*


*	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.



		~~INCORPORATED BY REFERENCE~~
~~EXHIBIT~~ ~~NUMBER~~	~~DESCRIPTION OF EXHIBITS~~	~~FORM~~	~~FILE~~ ~~NUMBER~~	~~EXHIBIT~~	~~FILING~~ ~~DATE~~
~~10.1*+~~	~~Retirement Agreement, effective April 18, 2019, between Lantheus Medical Imaging, Inc. and Cesare Orlandi, M.D.~~
~~10.2+~~	~~Fourth Amendment to Lantheus Holdings, Inc. 2015 Equity Incentive Plan~~	~~8-K~~	~~001-3656919772146~~	~~10.1~~	~~April 26, 2019~~
10.3*	Credit Agreement dated as of June 27, 2019 by and among Wells Fargo Bank, N.A., as administrative agent and collateral agent, each of the lenders from time to time party thereto, Lantheus Medical Imaging, Inc., as borrower, and 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*	~~XBRL Instance Document~~
101.SCH*	~~XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*	~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*	~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~



		INCORPORATED BY REFERENCE
EXHIBIT NUMBER	DESCRIPTION OF EXHIBITS	FORM	FILE NUMBER	EXHIBIT	FILING DATE
2.1	Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2020, among Lantheus Holdings, Inc., Plato Merger Sub, Inc. and Progenics Pharmaceuticals, Inc.	8-K	001-36569	2.1	2/20/2020
10.1	Form of Contingent Value Rights Agreement	8-K	001-36569	10.1	2/20/2020
10.2	Bridge Loan Agreement, dated as of March 15, 2020, among Lantheus Medical Imaging, Inc. and Progenics Pharmaceuticals, Inc.	S-4/A	333-234627	10.2	3/16/2020
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)


+	Indicates management contract or compensatory plan or arrangement.




LANTHEUS HOLDINGS, INC.

By:		/s/ MARY ANNE HEINO
Name:		Mary Anne Heino
Title:		President and Chief Executive Officer (Principal Executive Officer)
Date:		~~July 25, 2019~~April 30, 2020

LANTHEUS HOLDINGS, INC.

By:		/s/ ROBERT J. MARSHALL, JR.
Name:		Robert J. Marshall, Jr.
Title:		Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
Date:		~~July 25, 2019~~April 30, 2020