Lantheus Holdings, Inc. Reports 2015 Third Quarter Financial Results

Third quarter worldwide DEFINITY® revenue increased 19% as-reported and 20% in constant currency

Lantheus posts third quarter net income of $5.4 million and Adjusted EBITDA of $19.4 million

NORTH BILLERICA, Mass.--()--Lantheus Holdings, Inc. (the “Company”) (NASDAQ: LNTH), parent company of Lantheus Medical Imaging, Inc. (“LMI”), a global leader in developing, manufacturing, selling and distributing innovative diagnostic imaging agents and products, today reported financial results for its third quarter ending September 30, 2015.

Worldwide revenue for the third quarter of 2015 totaled $74.1 million, representing a decrease of 2% as-reported compared to $75.7 million reported for the third quarter of 2014. Constant currency revenue increased by 1% versus the prior year period.

The Company’s third quarter 2015 net income totaled $5.4 million or $0.18 per diluted share, an improvement of $6.3 million compared to a net loss of $900,000 or $(0.05) per diluted share in the third quarter of 2014. Third quarter net income results reflect gross margin expansion driven by the continued strong performance of DEFINITY® along with the effect of customer-specific changes within the Company’s nuclear medicine portfolio that occurred earlier this year, accompanied by reduced interest expense resulting from the Company’s recent debt refinancing.

The Company’s third quarter 2015 Adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, increased to $19.4 million, or 26.2% of reported revenue, compared to $19.1 million, or 25.2% of reported revenue, in the third quarter of 2014.

Mary Anne Heino, President and CEO commented, “Our third quarter performance reflects the continued successful execution of our business strategy. During the third quarter we again experienced a strong sales performance for DEFINITY, driven by the continued growth of the U.S. ultrasound contrast market. DEFINITY sales increased by 20% in constant currency while growing sequentially for the thirteenth consecutive quarter. At the same time, our nuclear medicine portfolio continued to exhibit the profile of improved customer mix and profitability that we established earlier this year.”

Ms. Heino continued, “Overall, DEFINITY’s growing contribution combined with continued gross margin improvement and operating expense management has significantly expanded our operating and Adjusted EBITDA margins since last year, driving those margins to 18% and 26%, respectively, of reported revenue for the third quarter. Altogether, we are very pleased with our third quarter results and look forward to the remainder of this year and beyond, as we continue to focus on strengthening our operating model and enhancing our ability to meet and exceed the needs of our customers.”

Outlook

The Company anticipates worldwide revenue for full-year 2015 of approximately $292 million to $294 million, representing a constant currency change over last year of approximately negative (1)% to 0%, compared to previous guidance of $293 million to $297 million. This range assumes a negative full-year impact from currency of approximately $7 million, or 2%, compared to 2014.

The Company continues to anticipate full-year 2015 Adjusted EBITDA, as described in the GAAP to non-GAAP reconciliation provided later in this release, of $72 million to $75 million, representing approximately 25% to 26% of reported revenue.

The Company’s revenue and Adjusted EBITDA targets exclude the effect of possible future acquisitions or divestitures, other material future business developments and the adjustments of earnings as-reported to as-adjusted that are set forth in the GAAP to non-GAAP reconciliations provided later in this release.

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

Internet Posting of Information

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

Conference Call and Webcast

As previously announced, the Company will host a conference call starting at 4:30 p.m. (Eastern Time) today. To access the live conference call via telephone, please dial 1-866-498-8390 (U.S. callers) or 1-678-509-7599 (international callers) and provide passcode 57541328. A live audio webcast of the call also will be available on the homepage of the Company’s website at www.lantheus.com.

A replay of the telephone conference call and audio webcast will be available from approximately 8:30 p.m. ET on November 4, 2015 through midnight on November 18, 2015. To access a replay of the conference call, dial 1-855-859-2056 (U.S. callers) or 1-404-537-3406 (international callers), and provide passcode 57541328. A replay of this conference call will also be available in the Investor Relations section of our website located at www.lantheus.com.

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

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

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

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

Non-GAAP Financial Measures

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

Safe Harbor for Forward-Looking and Cautionary Statements

This press release contains “forward-looking statements” as defined under U.S. federal securities laws, including statements about our 2015 outlook. These statements reflect management’s current knowledge, assumptions, beliefs, estimates and expectations and express management’s current view of future performance, results and trends. Forward-looking statements may be identified by their use of terms such as anticipate, believe, confident, could, estimate, expect, intend, may, plan, predict, project, target, will and other similar terms. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to materially differ from those described in the forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Risks and uncertainties that could cause our actual results to materially differ from those described in the forward-looking statements are discussed in our filings with the Securities and Exchange Commission (including those described in the Risk Factors section of our prospectus dated June 24, 2015 and filed with the SEC on June 26, 2015, and as may be further set forth or supplemented in our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q).

 
Lantheus Holdings, Inc. and subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share data – unaudited)

       
Three Months Ended Nine Months Ended
September 30, September 30,
  2015       2014     2015       2014  
 
Revenues $ 74,123 $ 75,682 $ 222,260 $ 224,631
Cost of goods sold   40,418       44,044     120,119       131,873  
Gross profit 33,705 31,638 102,141 92,758
Operating expenses
Sales and marketing expenses 8,633 8,327 26,934 27,227
General and administrative expenses 9,206 11,041 33,773 28,883
Research and development expenses   2,458       3,049     11,292       8,958  
Total operating expenses 20,297 22,417 71,999 65,068
Operating income 13,408 9,221 30,142 27,690
Interest expense, net (7,100 ) (10,585 ) (31,599 ) (31,704 )
Loss on extinguishment of debt (15,528 )
Other income (expense), net   (183 )     441     234       (148 )
Income (loss) before income taxes 6,125 (923 ) (16,751 ) (4,162 )
Provision (benefit) for income taxes   739       (56 )   1,911       (374 )
Net income (loss) $ 5,386     $ (867 ) $ (18,662 )   $ (3,788 )
 
Net income (loss) per common share
Basic and diluted $ 0.18 $ (0.05 ) $ (0.83 ) $ (0.21 )
 
Common shares
Basic 30,359,516 18,080,968 22,443,257 18,080,496
Diluted 30,761,771 18,080,968 22,443,257 18,080,496
 
 
Lantheus Holdings, Inc. and subsidiaries
Consolidated Revenue Analysis

(dollars in thousands – unaudited)

           
 
Three Months Ended Nine Months Ended
September 30, September 30,
 
  2015   2014 % change     2015   2014 % change  
U.S.
DEFINITY 28,323 23,764 19.2 % 81,333 68,768 18.3 %
TechneLite 14,557 20,879 (30.3 )% 47,367 61,602 (23.1 )%
Xenon 12,713 8,914 42.6 % 37,937 27,519 37.9 %
Other   3,619   5,872 (38.4 )%   11,620   16,919 (31.3 )%
Total U.S. $ 59,212 $ 59,429 (0.4 )% $ 178,257 $ 174,808 2.0 %
 
International
DEFINITY 560 497 12.7 % 1,644 1,368 20.2 %
TechneLite 2,666 2,733 (2.5 )% 8,078 8,576 (5.8 )%
Xenon 10 2 400.0 % 28 6 366.7 %
Other   11,675   13,021 (10.3 )%   34,253   39,873 (14.1 )%
Total International $ 14,911 $ 16,253 (8.3 )% $ 44,003 $ 49,823 (11.7 )%
 
Worldwide
DEFINITY 28,883 24,261 19.1 % 82,977 70,136 18.3 %
TechneLite 17,223 23,612 (27.1 )% 55,445 70,178 (21.0 )%
Xenon 12,723 8,916 42.7 % 37,965 27,525 37.9 %
Other   15,294   18,893 (19.0 )%   45,873   56,792 (19.2 )%
Total Revenues $ 74,123 $ 75,682 (2.1 )% $ 222,260 $ 224,631 (1.1 )%
 
 
Lantheus Holdings, Inc. and subsidiaries
Supplemental Revenue Information
(unaudited)
         
 
 
September 30, 2015 Quarter to Date Sales Growth/(Decline)

Domestic As
Reported

Int’l Constant
Currency

Int’l As
Reported

Total Constant
Currency

Total As
Reported

Products
DEFINITY 19% 37% 13% 20% 19%
TechneLite (30)% 13% (2)% (25)% (27)%
Xenon 43% 450% 400% 43% 43%
Other (38)%   3%   (10)%   (10)%   (19)%
Total Revenues 0%   6%   (8)%   1%   (2)%
 
 
 
September 30, 2015 Year to Date Sales Growth/(Decline)

Domestic As
Reported

Int’l Constant
Currency

Int’l As
Reported

Total Constant
Currency

Total As
Reported

Products
DEFINITY 18% 39% 20% 19% 18%
TechneLite (23)% 5% (6)% (20)% (21)%
Xenon 38% 433% 367% 38% 38%
Other (31)%   (4)%   (14)%   (12)%   (19)%
Total Revenues 2%   (1)%   (12)%   1%   (1)%
 
 
Lantheus Holdings, Inc. and subsidiaries

Reconciliation of Revenues to Revenues Excluding the Impact of Foreign Currency

(dollars in thousands – unaudited)

       
 
 
Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015
International Net Sales Total Net Sales International Net Sales Total Net Sales
 
Net sales, as reported $ 14,911 $ 74,123 $ 44,003 $ 222,260
Currency impact as compared to prior period   2,282   2,282   5,180   5,180
Net sales, excluding the impact of foreign currency $ 17,193 $ 76,405 $ 49,183 $ 227,440
 
 
Lantheus Holdings, Inc. and subsidiaries
Reconciliations of As Reported Results to Non-GAAP Financial Measures

(in thousands, except per share data – unaudited)

       
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2015     2014     2015     2014  
Operating Income
Operating Income, as reported $ 13,408 $ 9,221 $ 30,142 $ 27,690
Reconciling items impacting
Operating Income:
Campus Consolidation Costs 3,630
Sponsor Termination Costs           6,527      
Operating income, as adjusted $ 13,408   $ 9,221   $ 40,299   $ 27,690  
 
Operating Income, as adjusted, as a percentage of net sales   18.1 %   12.2 %   18.1 %   12.3 %
       
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2015     2014     2015     2014  
Net income (loss)
Net income (loss), as reported $ 5,386 $ (867 ) $ (18,662 ) $ (3,788 )
Reconciling items impacting
Gross Profit:
Campus Consolidation Costs 77
Reconciling items impacting
Operating Expenses:
Campus Consolidation Costs 3,553
Sponsor Termination Costs 6,527
Reconciling items impacting
Non-operating Expenses:
Loss on Debt Extinguishment 15,528
Interest Upon Redemption of Senior Notes           3,250      
Net income (loss), as adjusted $ 5,386   $ (867 ) $ 10,273   $ (3,788 )
 
Net income (loss), as adjusted, as a percentage of net sales   7.3 %   (1.1 )%   4.6 %   (1.7 )%
 
Net income (loss), as adjusted, per common share
Basic $ 0.18 $ (0.05 ) $ 0.46 $ (0.21 )
Diluted $ 0.18 $ (0.05 ) $ 0.45 $ (0.21 )
 
Common shares
Basic 30,359,516 18,080,968 22,443,257 18,080,496
Diluted 30,761,771 18,080,968 22,730,167 18,080,496
 
 
Lantheus Holdings, Inc. and subsidiaries
Reconciliation of As Reported Results to Non-GAAP Financial Measures

(dollars in thousands – unaudited)

       
 
Three Months Ended Nine Months Ended
September 30, September 30,
  2015     2014     2015     2014  
EBITDA
Net income (loss), as reported $ 5,386 $ (867 ) $ (18,662 ) $ (3,788 )
Interest expense, net 7,100 10,585 31,599 31,704
Provision (benefit) for income taxes 300 (415 ) 695 (536 )
Depreciation 1,940 2,163 9,649 6,514
Amortization of intangible assets   1,888     2,275     5,678     6,848  
EBITDA 16,614 13,741 28,959 40,742
Reconciling items impacting
EBITDA:

Non-cash stock-based compensation

591 247 1,524 782

Legal fees relating to business interruption claim

4 462 67 927
Asset write-off 631 639 1,182 1,150
Severance and recruiting costs 634 211 853 512
Sponsor fee and other 22 2,582 7,340 3,091
Extinguishment of debt 15,528
New manufacturer costs   953     1,175     2,568     4,188  
Adjusted EBITDA $ 19,449   $ 19,057   $ 58,021   $ 51,392  
 

Adjusted EBITDA as a percentage of net sales

  26.2 %   25.2 %   26.1 %   22.9 %
 
 
Lantheus Holdings, Inc. and subsidiaries
Reconciliation of Free Cash Flow

(dollars in thousands – unaudited)

       
 
 
Three Months Ended Nine Months Ended
September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
 
Net cash provided by operating activities $ 5,417 $ 20,513 $ 9,136 $ 15,465
Capital expenditures   (2,307 )   (1,823 )   (8,419 )   (5,303 )
Free cash flow $ 3,110   $ 18,690   $ 717   $ 10,162  
 
 
Lantheus Holdings, Inc. and subsidiaries
Condensed Consolidated Balance Sheets

(dollars in thousands – unaudited)

   
 
September 30, 2015   December 31, 2014
Assets
Current assets
Cash and cash equivalents $ 21,922 $ 19,739
Accounts receivable, net 39,724 41,540
Inventory 16,579 15,582
Other current assets   5,210     4,374  
Total current assets 83,435 81,235
 
Property, plant and equipment, net 92,393 96,014
Capitalized software development costs, net 1,981 2,421
Intangibles, net 22,489 27,191
Goodwill 15,714 15,714
Other long-term assets   20,120     20,578  
Total assets $ 236,132   $ 243,153  
 
Liabilities and stockholders' deficit
Current liabilities
Line of credit $ $ 8,000
Accounts payable 10,700 15,665
Accrued expenses and other liabilities 19,968 24,863
Current portion of long-term debt   3,650      
Total current liabilities 34,318 48,528
Asset retirement obligation 8,074 7,435
Long-term debt, net 350,367 392,863
Other long-term liabilities   33,518     33,597  
Total liabilities   426,277     482,423  
 
Stockholders' deficit   (190,145 )   (239,270 )
Total liabilities and stockholders' deficit $ 236,132   $ 243,153  

Contacts

Lantheus Holdings, Inc.
Investor Relations
John Bakewell, 978-436-7073
or
Media Relations
Meara Murphy, 978-671-8508

Release Summary

Lantheus Holdings, Inc. (NASDAQ: LNTH) today reported financial results for its third quarter ending September 30, 2015.

Contacts

Lantheus Holdings, Inc.
Investor Relations
John Bakewell, 978-436-7073
or
Media Relations
Meara Murphy, 978-671-8508