Lantheus Holdings, Inc. Reports Fourth Quarter and Full Year 2018 Financial Results

  • Worldwide revenues of $86.3 million and $343.4 million for fourth
    quarter and full year 2018, respectively; representing an increase of
    6.2% and 3.6% over the prior year period, respectively
  • Net income of $13.3 million and $40.5 million for the fourth
    quarter and full year 2018, representing a decrease of $83.8 million
    and $82.9 million over the prior period, respectively, driven by
    adjustments in tax reporting resulting in a net tax benefit of $85.9
    million that was realized in 2017
  • EBITDA of $20.0 million and $77.9 million for fourth quarter and
    full year 2018, representing an increase of 55.6% and 13.0% over the
    prior year period, respectively; adjusted EBITDA of $25.2 million and
    $98.1 million for fourth quarter and full year, representing an
    increase of 21.0% and 4.3% over the prior year period, respectively
  • The Company provides first quarter and full year 2019 revenue and
    adjusted fully diluted earnings per share guidance

NORTH BILLERICA, Mass.–(BUSINESS WIRE)–Lantheus Holdings, Inc. (the “Company”) (NASDAQ: LNTH), parent company
of Lantheus Medical Imaging, Inc. (“LMI”), a global leader in the
development, manufacture and commercialization of innovative diagnostic
imaging agents and products, today reported financial results for its
fourth quarter and full year ended December 31, 2018.

The Company’s worldwide revenues for the fourth quarter of 2018 totaled
$86.3 million, compared with $81.2 million for the fourth quarter of
2017, representing an increase of 6.2% over the prior year period. Full
year 2018 worldwide revenues were $343.4 million, compared with $331.4
million in 2017, representing an increase of 3.6% over the prior year.

The Company’s fourth quarter 2018 net income was $13.3 million, or 15.4%
of revenues, as compared to $97.1 million, or 119.6% of revenues in
2017, representing a decrease of 86.3%, or $83.8 million, over the prior
year period. Full year 2018 net income was $40.5 million, or 11.8% of
revenues, as compared to $123.4 million, or 37.2% of revenues in 2017,
representing a decrease of $82.9 million, or 67.2%, over the prior year.
The fourth quarter and full year 2018 decrease is driven by adjustments
in tax reporting resulting in a net tax benefit of $85.9 million that
was realized in 2017.

The Company’s fourth quarter 2018 EBITDA was $20.0 million, or 23.1% of
revenues, as compared to $12.8 million, or 15.8% of revenues in 2017,
representing an increase of 55.6% over the prior year period. Full year
2018 EBITDA was $77.9 million, or 22.7% of revenues, as compared to
$68.9 million, or 20.8% of revenues in 2017, representing an increase of
13.0% over the prior year. Adjusted EBITDA for the fourth quarter 2018
was $25.2 million, or 29.2% of revenues, compared to $20.8 million, or
25.7% of revenues in 2017, representing an increase of 21.0% over the
prior year period. Full year 2018 adjusted EBITDA was $98.1 million, or
28.6% of revenues, compared to $94.1 million, or 28.4% of revenues in
2017, representing an increase of 4.3% over the prior year. See
“Non-GAAP Measures” below for a reconciliation of EBITDA and adjusted
EBITDA to net income.

“The fourth quarter marked a great finish to a strong year for
Lantheus,” said Mary Anne Heino, President and CEO of Lantheus. “We
delivered another solid quarter with 6.2% revenue growth, supported by
continued mid-teens worldwide sales growth of DEFINITY. Our 2018
performance is a testament to the strength of the Lantheus team and the
opportunities afforded us as a partner of choice in the markets we
serve. We enter 2019 confident that Lantheus is well positioned to drive
sustainable growth in a dynamic healthcare environment.”

Outlook

The Company guidance for the first quarter and full year 2019 is as
follows:

     

Guidance Issued
February 19, 2019

Q1 FY 2019 Revenue Growth 3.0% – 6.0%
Q1 FY 2019 Revenue $85 million – $87.5 million
Q1 FY 2019 Adjusted Diluted EPS $0.23 – $0.25
 
FY 2019 Revenue Growth 4.25% – 5.75%
FY 2019 Revenue $358 million – $363 million
FY 2019 Adjusted Diluted EPS $1.14 – $1.17
 

In the future, the Company will not separately report or forecast EBITDA
or adjusted EBITDA. The Company believes that because it has matured as
a public company and de-levered, adjusted fully diluted earnings per
share is now a more appropriate metric to evaluate its financial
performance. The Company does not provide GAAP income per common share
or a reconciliation of adjusted diluted EPS to GAAP income per common
share on a forward-looking basis because the Company is unable to
predict with reasonable certainty business development and
acquisition-related expenses, purchase accounting fair value
adjustments, and any one-time, non-recurring charges without
unreasonable effort. These items are uncertain, depend on various
factors, and could be material to results computed in accordance with
GAAP. As a result, it is the Company’s view that such quantitative
reconciliation of adjusted diluted EPS on a forward-looking basis is not
available.

Internet Posting of Information

The Company routinely posts information that may be important to
investors in the “Investors” section of its website at http://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 on
Wednesday, February 20, 2019 at 8:00 a.m. ET. 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 4056488.
A live audio webcast of the call also will be available in the Investors
section of the Company’s website at www.lantheus.com.

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

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

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

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

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

Non-GAAP Financial Measures

The Company uses non-GAAP financial measures, such adjusted net income
and its line components; adjusted net income per share – diluted;
EBITDA, adjusted EBITDA; 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.

This press release includes forward-looking non-GAAP guidance for 2019
adjusted diluted EPS. No reconciliation of this forward-looking non-GAAP
guidance was included in this press release because, due to the high
variability and difficulty in making accurate forecasts and projections
of some of the excluded information and the fact that some of the
excluded information is not readily ascertainable or accessible, the
Company is unable to quantify certain amounts that would be required to
be included in the most directly comparable GAAP financial measure
without unreasonable efforts.

We changed our definition of adjusted net income during the fourth
quarter of 2018 to exclude share-based compensation expense,
amortization of acquired intangible assets, asset impairment charges,
restructuring charges, other charges associated with permitted
acquisitions, charges and gains associated with product or business line
discontinuance, changes in contingent purchase price, legal settlements
and other one-time, non-recurring charges which do not represent ongoing
costs to the business. We believe this change provides a more
transparent and comparable view of our financial performance as well as
reflects the maturity of the Company as a public entity and its
anticipated trajectory of growth and profitability. Accordingly, all
prior periods reflected in this press release have been recast to
reflect the current definition.

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 2018
outlook. Forward-looking statements may be identified by their use of
terms such as anticipate, believe, confident, could, estimate, expect,
intend, may, plan, predict, project, target, will and other similar
terms. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to materially differ from
those described in the forward-looking statements. Readers are cautioned
not to place undue reliance on the forward-looking statements contained
herein, which speak only as of the date hereof. The Company undertakes
no obligation to publicly update any forward-looking statement, whether
as a result of new information, future developments or otherwise, except
as may be required by law. Risks and uncertainties that could cause our
actual results to materially differ from those described in the
forward-looking statements are discussed in our filings with the
Securities and Exchange Commission (including those described in the
Risk Factors section in our Annual Reports on Form 10-K and our
Quarterly Reports on Form 10-Q).

 

Lantheus Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data – unaudited)

 
  Three Months Ended
December 31,
  Year Ended
December 31,
2018   2017 2018   2017
Revenues $ 86,271 $ 81,241 $ 343,374 $ 331,378
Cost of goods sold 42,426   43,342   168,489   169,243  
Gross profit 43,845   37,899   174,885   162,135  
Operating expenses
Sales and marketing 9,911 10,423 43,159 42,315
General and administrative 12,440 14,293 50,167 49,842
Research and development 4,551   3,976   17,071   18,125  
Total operating expenses 26,902 28,692 110,397 110,282
Operating income 16,943 9,207 64,488 51,853
Interest expense 4,611 4,263 17,405 18,410
Loss on extinguishment of debt 281 2,442
Other income (410 ) (6,601 ) (2,465 ) (8,638 )
Income before income taxes 12,742 11,264 49,548 39,639
Income tax (benefit) expense (551 ) (85,862 ) 9,030   (83,746 )
Net income $ 13,293   $ 97,126   $ 40,518   $ 123,385  
Net income per common share:
Basic $ 0.35   $ 2.58   $ 1.06   $ 3.31  
Diluted $ 0.34   $ 2.47   $ 1.03   $ 3.17  
Weighted-average common shares outstanding:
Basic 38,465   37,580   38,233   37,276  
Diluted 39,492   39,294   39,501   38,892  
 
 

Lantheus Holdings, Inc.

Consolidated Segment Revenues Analysis

(in thousands – unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2018   2017   % Change 2018   2017   % Change

United States

DEFINITY $ 47,359 $ 40,546 16.8 % $ 178,440 $ 153,581 16.2 %
TechneLite 17,262 21,339

(19.1

)%

74,042 90,489 (18.2 )%
Other 8,130   9,411   (13.6 )% 36,098   45,932   (21.4 )%
Total United States 72,751   71,296   2.0 % 288,580   290,002   (0.5 )%

International

DEFINITY 1,206 1,153 4.6 % 4,633 3,687 25.7 %
TechneLite 6,105 3,405 79.3 % 24,816 14,155 75.3 %
Other 6,209   5,387   15.3 % 25,345   23,534   7.7 %
Total International 13,520   9,945   35.9 % 54,794   41,376   32.4 %

Worldwide

DEFINITY 48,565 41,699 16.5 % 183,073 157,268 16.4 %
TechneLite 23,367 24,744 (5.6 )% 98,858 104,644 (5.5 )%
Other 14,339   14,798   (3.1 )% 61,443   69,466   (11.5 )%
Total Revenues $ 86,271   $ 81,241   6.2 % $ 343,374   $ 331,378   3.6 %
 
 

Lantheus Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except per share data – unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2018   2017 2018   2017
Net income $ 13,293   $ 97,126   $ 40,518   $ 123,385  
Stock and incentive plan compensation 2,481 2,034 9,496 6,769
Amortization of acquired intangible assets 581 836 2,648 3,342
Campus consolidation costs 3 51 1,157 1,152
Asset impairment charges 912 912
One-time contract and termination costs 2,210 2,210
Debt financing costs 836 2,557
Extinguishment of debt and termination costs 281 2,442
Offering and other costs(a) (26 ) 576
Income tax benefit for release of valuation allowances (3,969 ) (141,094 ) (3,969 ) (141,094 )
Impact of tax charge on deferred taxes 45,129 45,129
Income tax effect of non-GAAP adjustments(b)   (1,123 )   (3,426 )   (5,126 )   (10,404 )
Adjusted net income $ 11,266   $ 4,869   $ 44,724   $ 36,976  
Adjusted net income, as a percentage of revenues   13.1 %   6.0 %   13.0 %   11.2 %
 
 

Three Months Ended
December 31,

Year Ended
December 31,

2018 2017 2018 2017
Net income per share – diluted $ 0.34   $ 2.47   $ 1.03   $ 3.17  
Stock and incentive plan compensation 0.06 0.05 0.24 0.18
Amortization of acquired intangible assets 0.02 0.02 0.06 0.09
Campus consolidation costs 0.03 0.03
Asset impairment charges 0.02 0.02
One-time contract and termination costs 0.06 0.06
Debt financing costs 0.02 0.07
Extinguishment of debt and termination costs 0.01 0.06
Offering and other costs(a) 0.01
Income tax benefit for release of valuation allowances (0.10 ) (3.59 ) (0.10 ) (3.63 )
Impact of tax charge on deferred taxes 1.15 1.16
Income tax effect of non-GAAP adjustments(b)   (0.03 )   (0.09 )   (0.13 )   (0.27 )
Adjusted net income per share – diluted $ 0.29   $ 0.12   $ 1.13   $ 0.95  
Weighted-average common shares outstanding – diluted   39,492     39,294     39,501     38,892  
 

(a) Represents offering costs incurred on behalf of certain shareholders
pursuant to a registration rights agreement and other non-recurring
costs.

(b) The income tax effect of the adjustments between GAAP net income and
non-GAAP adjusted net income takes into account the tax treatment and
related tax rate that apply to each adjustment in the applicable tax
jurisdiction.

 

Lantheus Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands – unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2018   2017 2018   2017
Net income $ 13,293 $ 97,126 $ 40,518 $ 123,385
Interest expense, net 4,476 4,257 17,237 18,391
Income tax (benefit) expense (a) (1,186 ) (92,759 ) 6,175 (92,113 )
Depreciation 1,844 2,419 7,377 12,485
Amortization of intangible assets 1,541   1,794   6,552   6,747  
EBITDA 19,968 12,837 77,859 68,895
Stock and incentive plan compensation 2,481 2,034 9,496 6,769
Asset write-off (b) 443 1,246 3,716 3,430
Severance and recruiting costs (c) 342 682 2,569 1,715
Offering and other costs (d) (26 ) 576
Campus consolidation costs 3 51 1,157 1,152
Debt refinancing costs 836 2,557
Extinguishment of debt and debt retirement costs 281 2,442
New manufacturer costs (e) 1,972 688 3,273 4,304
One-time contract and termination costs   2,210     2,210  
Adjusted EBITDA $ 25,209   $ 20,839   $ 98,070   $ 94,050  
Adjusted EBITDA, as a percentage of revenues 29.2 % 25.7 % 28.6 % 28.4 %
 

(a) Represents income tax (benefit) expense, less tax indemnification
income associated with BMS. During the three and twelve months ended
December 31, 2018, this amount includes the release of our Canadian
valuation allowance against our deferred tax assets. During the three
and twelve months ended December 31, 2017, this amount includes the
release of our domestic valuation allowance against our deferred tax
assets and changes enacted under the Tax Cuts and Jobs Act of 2017.

(b) Represents non-cash losses incurred associated with the write-down
of land, inventory and other write-offs of long-lived assets. During the
three and twelve months ended December 31, 2017, the amount includes an
impairment of land of $0.9 million.

(c) The amounts consist of severance and recruitment costs related to
employees, executives and directors.

(d) Represents offering costs incurred on behalf of certain shareholders
pursuant to a registration rights agreement and other non-recurring
costs.

(e) Represents internal and external costs associated with establishing
new manufacturing sources for our commercial and clinical candidate
products.

 

Lantheus Holdings, Inc.

Reconciliation of Free Cash Flow

(in thousands – unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

2018   2017 2018   2017
Net cash provided by operating activities $ 17,306 $ 13,086 $ 61,193 $ 54,777
Capital expenditures (7,366 ) (5,954 ) (20,132 ) (17,543 )
Free cash flow $ 9,940   $ 7,132   $ 41,061   $ 37,234  
 
 

Lantheus Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands – unaudited)

 
  December 31,
2018
  December 31,
2017
Assets
Current assets
Cash and cash equivalents $ 113,401 $ 76,290
Accounts receivable, net 43,753 40,259
Inventory 33,019 26,080
Other current assets 5,242   5,221
Total current assets 195,415 147,850
Property, plant and equipment, net 107,888 92,999
Intangibles, net 9,133 11,798
Goodwill 15,714 15,714
Deferred tax assets, net 81,449 87,010
Other long-term assets 30,232   28,487
Total assets $ 439,831   $ 383,858
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt $ 2,750 $ 2,750
Revolving line of credit
Accounts payable 17,955 17,464
Accrued expenses and other liabilities 32,050   26,536
Total current liabilities 52,755 46,750
Asset retirement obligations 11,572 10,412
Long-term debt, net 263,709 265,393
Other long-term liabilities 40,793   38,012
Total liabilities 368,829   360,567
Total stockholders’ equity 71,002   23,291
Total liabilities and stockholders’ equity $ 439,831   $ 383,858
 

Contacts

Investors:
Mark Kinarney
Director, Investor Relations
978-671-8842

Media:
Meara Murphy
Director, Corporate Communications
978-671-8508

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