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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-36569
LANTHEUS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 35-2318913
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
331 Treble Cove Road01862
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareLNTHThe Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   


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Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act)    Yes      No  
The registrant had 67,604,097 shares of common stock, $0.01 par value, outstanding as of July 23, 2021.


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LANTHEUS HOLDINGS, INC.
TABLE OF CONTENTS
Page


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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Lantheus Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value)
June 30,
2021
December 31,
2020
Assets
Current assets
Cash and cash equivalents$91,500 $79,612 
Accounts receivable, net54,892 54,002 
Inventory31,719 35,744 
Other current assets8,102 9,625 
Assets held for sale 5,242 
Total current assets186,213 184,225 
Property, plant and equipment, net118,493 120,171 
Intangibles, net365,259 376,012 
Goodwill61,189 58,632 
Deferred tax assets, net64,777 70,147 
Other long-term assets61,871 60,634 
Total assets$857,802 $869,821 
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt and other borrowings$10,372 $20,701 
Accounts payable21,471 16,284 
Accrued expenses and other liabilities41,983 41,726 
Liabilities held for sale 1,793 
Total current liabilities73,826 80,504 
Asset retirement obligations14,797 14,020 
Long-term debt, net and other borrowings169,249 197,699 
Other long-term liabilities91,790 63,393 
Total liabilities349,662 355,616 
Commitments and contingencies (See Note 18)
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; 67,592 and 66,875 shares issued and outstanding, respectively)
676 669 
Additional paid-in capital676,059 665,530 
Accumulated deficit(167,595)(149,946)
Accumulated other comprehensive loss(1,000)(2,048)
Total stockholders’ equity508,140 514,205 
Total liabilities and stockholders’ equity$857,802 $869,821 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Revenues$101,064 $66,010 $193,573 $156,714 
Cost of goods sold54,976 40,162 106,455 92,864 
Gross profit46,088 25,848 87,118 63,850 
Operating expenses
Sales and marketing17,631 6,305 31,804 16,435 
General and administrative43,177 20,670 59,315 37,369 
Research and development12,061 4,418 22,421 8,466 
Total operating expenses72,869 31,393 113,540 62,270 
Gain on sale of assets  15,263  
Operating (loss) income(26,781)(5,545)(11,159)1,580 
Interest expense1,937 1,914 4,655 3,860 
Gain on extinguishment of debt  (889) 
Other income(182)(756)(731)(1,106)
 Loss before income taxes(28,536)(6,703)(14,194)(1,174)
Income tax (benefit) expense(1,879)309 3,455 2,501 
Net loss$(26,657)$(7,012)$(17,649)$(3,675)
Net loss per common share:
Basic$(0.39)$(0.16)$(0.26)$(0.09)
Diluted$(0.39)$(0.16)$(0.26)$(0.09)
Weighted-average common shares outstanding:
Basic67,505 43,135 67,300 41,284 
Diluted67,505 43,135 67,300 41,284 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Net loss$(26,657)$(7,012)$(17,649)$(3,675)
Other comprehensive income (loss):
Foreign currency translation194 252 296 (194)
Unrealized gain (loss) on cash flow hedges, net of tax46 (464)752 (1,452)
Total other comprehensive income (loss)240 (212)1,048 (1,646)
Comprehensive loss$(26,417)$(7,224)$(16,601)$(5,321)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
(in thousands)

Six Months Ended June 30, 2021
Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
Balance, January 1, 202166,875 $669 $665,530 $(149,946)$(2,048)$514,205 
Net income— — — 9,008 — 9,008 
Other comprehensive income— — — — 808 808 
Stock option exercises and employee stock plan purchases155 1 2,379 — — 2,380 
Vesting of restricted stock awards and units489 5 (5)— —  
Shares withheld to cover taxes(85)(1)(1,598)— — (1,599)
Stock-based compensation— — 3,317 — — 3,317 
Balance, March 31, 202167,434 $674 $669,623 $(140,938)$(1,240)$528,119 
Net loss— — — (26,657)— (26,657)
Other comprehensive income— — — — 240 240 
Stock option exercises and employee stock plan purchases116 1 2,042 — — 2,043 
Vesting of restricted stock awards and units51 1 (1)— —  
Shares withheld to cover taxes(9)— (193)— — (193)
Stock-based compensation— — 4,588 — — 4,588 
Balance, June 30, 202167,592 $676 $676,059 $(167,595)$(1,000)$508,140 


Six Months Ended June 30, 2020
Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
Balance, January 1, 202039,251 $393 $251,641 $(136,473)$(960)$114,601 
Net income— — — 3,337 — 3,337 
Other comprehensive loss— — — — (1,434)(1,434)
Stock option exercises and employee stock plan purchases33 — 366 — — 366 
Vesting of restricted stock awards and units563 6 (6)— —  
Shares withheld to cover taxes(97)(1)(1,546)— — (1,547)
Stock-based compensation— — 3,075 — — 3,075 
Balance, March 31, 202039,750 $398 $253,530 $(133,136)$(2,394)$118,398 
Net loss— — — (7,012)— (7,012)
Other comprehensive loss— — — — (212)(212)
Stock option exercises and employee stock plan purchases7 — 50 — — 50 
Vesting of restricted stock awards and units242 2 (2)— —  
Shares withheld to cover taxes(36)(1)(484)— — (485)
Issuance of common stock, net of $3,776 issuance costs
26,845 269 394,065 — — 394,334 
Fair value of replacement options related to pre-acquisition services— — 7,125 — — 7,125 
Stock-based compensation— — 3,385 — — 3,385 
Balance, June 30, 202066,808 $668 $657,669 $(140,148)$(2,606)$515,583 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 30,
20212020
Operating activities
Net loss$(17,649)$(3,675)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation, amortization and accretion17,749 7,764 
Impairment of long-lived assets 7,275 
Amortization of debt related costs185 338 
Changes in fair value of contingent assets and liabilities25,900  
Gain on extinguishment of debt(889) 
Provision for excess and obsolete inventory2,039 1,531 
Stock-based compensation7,905 6,460 
Gain on sale of assets(15,263) 
Deferred taxes2,685 1,067 
Long-term income tax receivable(731)(1,109)
Long-term income tax payable and other long-term liabilities1,147 1,409 
Other1,097 614 
Increases (decreases) in cash from operating assets and liabilities:
Accounts receivable1,551 2,087 
Inventory1,888 (6,777)
Other current assets2,171 1,742 
Accounts payable5,888 (3,452)
Accrued expenses and other liabilities14 (8,022)
Net cash provided by operating activities35,687 7,252 
Investing activities
Capital expenditures(5,176)(4,953)
Proceeds from sale of assets, net15,823  
Lending on bridge loan (10,000)
Cash acquired in acquisition of business 17,562 
Net cash provided by investing activities10,647 2,609 
Financing activities
Payments on long-term debt and other borrowings(38,137)(7,032)
Equity issuance costs (345)
Deferred financing costs (1,225)
Proceeds from stock option exercises4,086 50 
Proceeds from issuance of common stock337 366 
Payments for minimum statutory tax withholding related to net share settlement of equity awards(1,792)(2,032)
Net cash used in financing activities(35,506)(10,218)
Effect of foreign exchange rates on cash, cash equivalents and restricted cash120 (112)
Net increase (decrease) in cash, cash equivalents and restricted cash10,948 (469)
Cash, cash equivalents and restricted cash, beginning of period82,694 92,919 
Cash, cash equivalents and restricted cash, end of period$93,642 $92,450 

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Lantheus Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(in thousands)
Six Months Ended
June 30,
20212020
Reconciliation to amounts within the condensed consolidated balance sheets
  Cash and cash equivalents$91,500 $90,309 
  Restricted cash included in other long-term assets2,142 2,141 
      Cash, cash equivalents and restricted cash at end of period$93,642 $92,450 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lantheus Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note Regarding Company References and Trademarks
Unless the context otherwise requires, references to the “Company” and “Lantheus” refer to Lantheus Holdings, Inc. and its direct and indirect wholly-owned subsidiaries, references to “Holdings” refer to Lantheus Holdings, Inc. and not to any of its subsidiaries, references to “LMI” refer to Lantheus Medical Imaging, Inc., the direct subsidiary of Holdings and references to “Progenics” refer to Progenics Pharmaceuticals, Inc., a wholly-owned subsidiary of LMI. Solely for convenience, the Company refers to trademarks, service marks and trade names without the TM, SM and ® symbols. Those references are not intended to indicate, in any way, that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks, service marks and trade names.
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its direct and indirect wholly-owned subsidiaries, including Progenics (as of the Closing Date, as defined below), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement have been included. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or any future period.
In the first quarter of fiscal year 2021, the Company completed the evaluation of its operating and reporting structure, which resulted in a change in operating segments. Please refer to Note 19, “Segment Information”, for further details.
The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities Exchange Commission (“SEC”) on February 25, 2021.
Progenics Acquisition
On June 19, 2020 (the “Closing Date”), pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of February 20, 2020 (the “Merger Agreement”), by and among Holdings, Plato Merger Sub, Inc., a wholly-owned subsidiary of Holdings (“Merger Sub”), and Progenics, Holdings completed the previously announced acquisition of Progenics by means of a merger of Merger Sub with and into Progenics, with Progenics surviving such merger as a wholly-owned subsidiary of Holdings (the “Progenics Acquisition”).
In accordance with the Merger Agreement, at the effective time of the Progenics Acquisition (the “Effective Time”), each share of Progenics common stock, par value $0.0013 per share, issued and outstanding immediately prior to the Effective Time (other than shares of Progenics common stock owned by Holdings, Progenics or any of their wholly-owned subsidiaries) was automatically cancelled and converted into the right to receive (i) 0.31 (the “Exchange Ratio”) of a share of Holdings common stock, par value $0.01 per share, and (ii) one contingent value right (a “CVR”) tied to the financial performance of PyL (18F-DCFPyL), Progenics’ prostate-specific membrane antigen (“PSMA”) targeted imaging agent designed to visualize prostate cancer. This agent was approved by the U.S. Food and Drug Administration (“FDA”) on May 26, 2021 under the name PYLARIFY (piflufolastat F 18), and the commercial launch of this agent has begun. 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 PYLARIFY in 2022 and 2023 in excess of $100.0 million and $150.0 million, respectively. In no event will the Company’s aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the Progenics Acquisition, exceed 19.9% (which the Company estimates could be approximately $100.0 million) of the total consideration the Company pays in the Progenics Acquisition. No fractional shares of Holdings common stock were issued in the Progenics Acquisition, and Progenics’ former stockholders have received cash in lieu of any fractional shares of Holdings common stock. As a result of the acquisition, Holdings issued 26,844,877 shares of Holdings common stock and 86,630,633 CVRs to former Progenics stockholders.
Please refer to Note 8, “Business Combinations”, for further details on the acquisition.
COVID-19
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The Company experienced operational and financial impacts from the COVID-19 pandemic beginning late in the first quarter of 2020 and through the date of this filing, including the impact of stay-at-home mandates and advisories, and a decline in the volume of certain procedures and treatments using the Company’s products. For example, there has been a substantial reduction in pulmonary ventilation studies in which the Company’s product, Xenon, is used. As a result of the COVID-19 pandemic, the Company undertook a thorough analysis of all its discretionary expenses. In the first quarter of 2020, the Company implemented certain cost reduction initiatives. For most of the second quarter of 2020, the Company reduced the Company’s work week from five days to four days and reduced the pay for employees by varying amounts depending on level of seniority.
During the second quarter of 2020, Progenics also implemented certain cost reduction initiatives and paused new enrollment in the Phase 2 trial of 1095 in metastatic castrate-resistant prostate cancer (“mCRPC”) patients to minimize the risk to subjects and healthcare providers during the pandemic. New enrollment in that study restarted in October 2020. GE Healthcare Limited (“GE Healthcare”), the Company’s development and commercialization partner for flurpiridaz fluorine-18 (“F 18”), also delayed enrollment in the second Phase 3 clinical trial of flurpiridaz F 18 because of the pandemic and resumed enrollment in the third quarter of 2020.
Although the COVID-19 pandemic appears to have begun to recede in much of the United States, the pandemic could still have a future negative impact on the Company's business, particularly if there is a resurgence as a result of mutations or other variations to the virus that increase its communicability or its impact on certain populations. While the impact of COVID-19 on the Company’s results of operations and cash flows has been material, given continued uncertainty about the future trajectory of the pandemic, the Company remains unable to accurately predict the impact of COVID-19 on its overall 2021 operations and financial results or cash flows and whether the on-going impact of COVID-19 could lead to potential future impairments.
2. Summary of Significant Accounting Policies
Reclassifications
Certain immaterial reclassifications in the prior period consolidated statement of cash flows have been reclassified to conform to the current year period financial statement presentation. Reclassifications include $0.2 million from provision for bad debt to other at June 30, 2020. The Company had a reclassification in presentation related to rebates and allowances within product revenue. Please refer to Note 3, “Revenue from Contracts with Customers” for further details.
Recent Accounting Pronouncements
StandardDescription 
Effective Date
for Company
 
Effect on the Condensed Consolidated Financial Statements
Accounting Standards Adopted During the Six Months Ended June 30, 2021
ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)”
This ASU provides guidance to simplify the complexity associated with accounting for convertible instruments and derivatives. For convertible instruments, the number of major separation models required were reduced. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. This ASU further amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The ASU simplifies the diluted net income per share calculation in certain areas as well.
January 1, 2021The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
3. Revenue from Contracts with Customers
The following table summarizes revenue by revenue source as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
Major Products/Service Lines (in thousands)2021202020212020
    Product revenue, net(1)

$93,562 $64,927 $180,881 $155,140 
    License and royalty revenues7,502 1,083 12,692 1,574 
Total revenues$101,064 $66,010 $193,573 $156,714 
________________________________
(1)The Company’s principal products include DEFINITY and TechneLite and are categorized within product revenue, net. The Company applies the
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same revenue recognition policies and judgments for all its principal products.
The Company classifies its revenues into three product categories: precision diagnostics, radiopharmaceutical oncology, and strategic partnerships and other. Precision diagnostics includes DEFINITY, TechneLite and other imaging diagnostic products. Radiopharmaceutical oncology consists primarily of AZEDRA and PYLARIFY. Strategic partnerships and other includes partnerships related to other products, such as RELISTOR, that improve patient outcomes and care.
Revenue by product category on a net basis is as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2021
2020(1)
2021
2020(1)
   DEFINITY$59,842 $37,125 $115,813 $89,630 
   TechneLite23,772 18,668 46,572 41,447 
   Other precision diagnostics6,742 7,140 13,726 20,197 
Total precision diagnostics90,356 62,933 176,111 151,274 
Radiopharmaceutical oncology2,812 2,183 4,312 4,151 
Strategic partnerships and other7,896 894 13,150 1,289 
   Total revenues$101,064 $66,010 $193,573 $156,714 
________________________________
(1)The Company reclassified rebates and allowances of $3.5 million and $8.2 million within each product category, which included $3.2 million and $7.5 million for DEFINITY, $0.3 million and $0.6 million for TechneLite and zero and $0.1 million for other precision diagnostics, for the three and six months ended June 30, 2020, respectively.
The Company’s performance obligations are typically part of contracts that have an original expected duration of one year or less. As such, the Company is not disclosing the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially satisfied) as of the end of the reporting period.
4. Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability of fair value measurements, financial instruments are categorized based on a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
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.
Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
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 and liabilities measured at fair value on a recurring basis consist of money market funds, interest rate swaps, a contingent receivable and contingent consideration liabilities. 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 is 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 13, “Derivative Instruments”, for further details on the interest rate swaps. The Company recorded a contingent receivable and the contingent consideration liabilities resulting from the Progenics Acquisition at fair value based on inputs that are not observable in the market. Please refer to Note 8, “Business Combinations”, for further details on the acquisition.
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The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis:
June 30, 2021
(in thousands)Total Fair
Value
Level 1Level 2Level 3
Assets:
   Money market$38,547 $38,547 $ $ 
   Contingent receivable13,400   13,400 
Total assets$51,947 $38,547 $ $13,400 
Liabilities:
   Interest rate swaps$897 $ $897 $ 
   Contingent consideration liabilities43,800   43,800 
Total liabilities$44,697 $ $897 $43,800 
December 31, 2020
(in thousands)Total Fair
Value
Level 1Level 2Level 3
Assets:
   Money market$35,457 $35,457 $ $ 
   Contingent receivable11,300   11,300 
Total assets$46,757 $35,457 $ $11,300 
Liabilities:
   Interest rate swaps$1,908 $ $1,908 $ 
   Contingent consideration liabilities15,800   15,800 
Total liabilities$17,708 $ $1,908 $15,800 

During the three and six months ended June 30, 2021, there were no transfers into or out of Level 3.
As part of the Progenics Acquisition, the Company acquired the right to receive certain future milestone and royalty payments due to Progenics from CytoDyn Inc. related to a prior sale of certain intellectual property. The Company has the right to receive $5.0 million upon regulatory approval and a 5% royalty on net sales of approved products. The Company considers the contingent receivable a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flows that included significant estimates and assumptions pertaining to regulatory events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.
As part of the Progenics Acquisition, the Company issued CVRs and recorded the fair value as part of consideration transferred. Refer to Note 1, “Basis of Presentation” for further details on the CVRs. Additionally, the Company assumed contingent consideration liabilities related to a previous acquisition completed by Progenics in 2013 (“2013 Acquisition”). These contingent consideration liabilities include potential payments of up to $70.0 million if the Company attains certain net sales targets primarily for AZEDRA and 1095 and a $5.0 million 1095 commercialization milestone. Additionally, there is a potential payment of up to $10.0 million related to a 1404 commercialization milestone. The Company’s total potential payments related to the 2013 Acquisition are approximately $85.0 million. The Company considers the contingent consideration liabilities relating to the CVRs and the 2013 Acquisition, each a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value of these was determined based on probability adjusted discounted cash flows and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs are the probabilities of achieving regulatory approval of the development projects and subsequent commercial success.
Significant changes in any of the probabilities of success, the probabilities as to the periods in which milestones will be achieved, discount rates or underlying revenue forecasts would result in a significantly higher or lower fair value measurement. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the condensed consolidated statements of operations. The Company can give no assurance that the actual amounts paid, if any, in connection with the contingent consideration liabilities, including the CVRs, will be consistent with any recurring fair value estimate of such contingent consideration liabilities.
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The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of assets and liabilities using Level 3 inputs at June 30, 2021.

Fair Value atAssumptions
(in thousands)June 30, 2021December 31, 2020Valuation TechniqueUnobservable InputJune 30, 2021December 31, 2020
Contingent receivable:
Regulatory milestone$3,300 $3,200 Probability adjusted discounted cash flow modelPeriod of expected milestone achievement20222021
Probability of success90 %90 %
Discount rate18 %24 %
Royalties10,100 8,100 Probability adjusted discounted cash flow model
Probability of success
13% - 77%
13% - 77%
Discount rate18 %24 %
Total$13,400 $11,300 

Fair Value atAssumptions
(in thousands)June 30, 2021December 31, 2020Valuation TechniqueUnobservable InputJune 30, 2021December 31, 2020
Contingent consideration liability:
Net sales targets - PYLARIFY (CVRs)$30,400 $4,200 Monte-Carlo simulationPeriod of expected milestone achievement2022 - 20232022 - 2023
Discount rate18 %24 %
1095 commercialization milestone1,900 2,200 Probability adjusted discounted cash flow model
Period of expected milestone achievement20262026
Probability of success40 %45 %
Discount rate0.9 %0.5 %
Net sales targets - AZEDRA and 109511,500 9,400 Monte-Carlo simulation
Probability of success
40% - 100%
40% - 100%
Discount rate
17% - 18%
23% - 24%
Total$43,800 $15,800 

For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated:

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Financial AssetsFinancial Liabilities
(in thousands)Six Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Fair value, beginning of period$11,300 $ $15,800 $ 
Progenics acquisition 10,100  16,300 
Changes in fair value included in net loss2,100  28,000  
Fair value, end of period$13,400 $10,100 $43,800 $16,300 
The change in fair value of the contingent financial asset and contingent financial liabilities, including the CVRs, resulted in an expense of $25.9 million for the six months ended June 30, 2021 and was primarily due to changes in revenue forecasts, changes in market conditions, a decrease in discount rates and the passage of time.
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. 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
June 30,
Six Months Ended
June 30,
(in thousands)2021202020212020
Income tax (benefit) expense$(1,879)$309 $3,455 $2,501 
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 evaluated all available positive and negative evidence, and weighed the objective evidence and expected impact. The Company assessed the need for a valuation allowance against certain state tax credit carryforwards added through the Progenics Acquisition. The Company continues to record other valuation allowances of $1.2 million against the net deferred tax assets of its U.K. subsidiary, and $2.2 million against the net deferred tax assets of its Sweden subsidiary.
In connection with the Company’s acquisition of the medical imaging business from Bristol-Myers Squibb (“BMS”) in 2008, the Company recorded a liability for uncertain state tax positions related to the acquired business and simultaneously entered into a tax indemnification agreement with BMS under which BMS agreed to indemnify the Company for any payments made to settle those uncertain tax positions with the state taxing authorities. Accordingly, a long-term receivable is recorded to account for the expected value to the Company of future indemnification payments to be paid on behalf of the Company by BMS, net of actual tax benefits received by the Company. The tax indemnification receivable is recorded within other long-term assets.
In accordance with the Company’s accounting policy, the change in the tax liabilities, penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within income tax expense. 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.
For the three and six months ended June 30, 2021, the Company released $0.7 million of liabilities for uncertain tax positions, including interest and penalties of $0.5 million. This included a release of liabilities of $0.5 million, including interest and penalties of $0.4 million, due to a change in estimate with respect to the Company’s indemnified uncertain tax positions arising from an effective settlement during the year. The remaining release of $0.2 million of liability was due to the lapse of a statute of limitations.
On June 19, 2020, the Company completed the Progenics Acquisition in a transaction that is expected to qualify as a tax-deferred reorganization under Section 368 of the Internal Revenue Code. The transaction resulted in an ownership change of Progenics under Section 382 of the Internal Revenue Code and a limitation on the utilization of Progenics’ precombination tax attributes. All of Progenics’ precombination federal research and Orphan drug credits have been removed from the balance sheet, and the gross carrying value of the tax loss carryforwards reduced to their realizable value on the opening balance sheet, in accordance with the Section 382 limitation. Deferred tax liabilities arising from the purchase accounting basis step-up in identified intangibles were recorded at acquisition, resulting in an initial net overall deferred tax liability for Progenics after the application of acquisition accounting.
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The Company finalized the acquisition accounting for income taxes in the first quarter of 2021 resulting in a reduction of deferred tax assets, primarily related to state research credit carryforwards and an increase to goodwill of $2.6 million.
6. Inventory
Inventory consisted of the following:
        
(in thousands)June 30,
2021
December 31,
2020
Raw materials$14,578 $16,000 
Work in process11,687 11,212 
Finished goods5,454 8,532 
Total inventory$31,719 $35,744 
Inventory costs associated with products that have not yet received regulatory approval are capitalized if the Company believes there is probable future commercial use of the product and future economic benefit of the asset. If future commercial use of the product is not probable, then inventory costs associated with such product are expensed during the period the costs are incurred. As of June 30, 2021, the Company had $2.6 million of such product costs included in inventories related to DEFINITY that have been manufactured through the Company’s in-house manufacturing capabilities, which is awaiting regulatory approval.
7. Property, Plant and Equipment, Net
Property, plant and equipment, net, consisted of the following:
(in thousands)June 30,
2021
December 31,
2020
Land$13,450 $13,450 
Buildings72,472 70,381 
Machinery, equipment and fixtures83,758 77,854 
Computer software24,110 23,644 
Construction in progress7,431 11,254 
201,221 196,583 
Less: accumulated depreciation and amortization(82,728)(76,412)
Total property, plant and equipment, net$118,493 $120,171 
Depreciation and amortization expense related to property, plant and equipment, net, was $3.2 million and $2.7 million for the three months ended June 30, 2021 and 2020, respectively, and $6.2 million and $5.7 million for the six months ended June 30, 2021 and 2020, 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. During the three months ended March 31, 2020, as a result of a decline in expected future cash flows and the effect of COVID-19 related to certain other nuclear legacy manufacturing assets, 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 as a result, the Company recorded a non-cash impairment of $7.3 million for the six months ended June 30, 2020 in cost of goods sold in the condensed consolidated statement of operations.
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8. Business Combinations
On June 19, 2020, the Company completed the Progenics Acquisition. The acquisition combined the commercialization, supply chain and manufacturing expertise of the Company with the currently commercialized products and research and development (“R&D”) pipeline of Progenics. Progenics brought to the Company several commercial products and a pipeline of product candidates that further diversify the Company’s commercial and clinical development portfolios.
Under the terms of the Merger Agreement, the Company acquired all the issued and outstanding shares of Progenics common stock for a purchase price of $419.0 million by means of an all-stock transaction, which includes options to purchase Holdings common stock (“Replacement Stock Options”) for precombination services as well as CVRs.
The CVRs were accounted for as contingent consideration, the fair value of which was determined using a Monte-Carlo simulation. Additionally, the fair value of Replacement Stock Options related to precombination services was recorded as a component of consideration transferred. Finally, as a result of the acquisition, Lantheus effectively settled an existing bridge loan with Progenics at the recorded amount (principal and accrued interest) of $10.1 million, representing the effective settlement of a preexisting relationship. This effective settlement of the bridge loan was treated as a component of consideration transferred. The Company determined that the bridge loan was at market terms and no gain or loss was recorded upon settlement.
The acquisition date fair value of the consideration transferred in the acquisition consisted of the following:
(in thousands)Amount
Issuance of common stock$398,110 
Fair value of replacement options7,125 
Fair value of bridge loan settled at close10,074 
Fair value of contingent considerations (CVRs)3,700 
Total consideration transferred(1)
$419,009 
(1)Non-cash investing and financing activities in the condensed consolidated statements of cash flows
The transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The Company recorded a measurement period adjustment of $2.6 million related to deferred taxes for the three months ended March 31, 2021, which finalized all measurement period adjustments related to the Progenics Acquisition.
The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of the acquisition date, as well as measurement period adjustments made to the amounts initially recorded in June 2020. The measurement period adjustments primarily resulted from finalizing the fair values of certain intangible assets and liabilities, deferred taxes and other changes to certain tangible assets and liability accounts. Measurement period adjustments were recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. The related impact to net loss that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the consolidated financial statements.
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(in thousands)Amounts Recognized as of Acquisition Date
(as previously reported)
Measurement Period AdjustmentsAmounts Recognized as of Acquisition Date
(as adjusted)
Cash and cash equivalents$15,421 $— $15,421 
Accounts receivable5,787 — 5,787 
Inventory915 160 1,075