Lantheus Annual Report 2012

Plain-text annual report

Use these links to rapidly review the documentTABLE OF CONTENTS Item 15. Exhibits and Financial Statement SchedulesTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-KCommission File Number 333-169785LANTHEUS MEDICAL IMAGING, INC.(Exact name of registrant as specified in its charter)Delaware(State of incorporation) 51-0396366(IRS Employer Identification No.)331 Treble Cove Road, North Billerica,MA(Address of principal executive offices) 01862(Zip Code)(978) 671-8001(Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No (Mark One)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the fiscal year ended December 31, 2012o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the transition period from to Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No  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 of1934 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 suchfiling requirements for the past 90 days. Yes o No  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes  No o Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or anyamendment to this form 10-K o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act) Yes o No  The registrant is a privately-held corporation, and accordingly, as of June 30, 2012, there is no public market for its common stock. The registranthad one thousand shares of common stock, $0.01 par value per share, issued and outstanding as of March 28, 2013. Large accelerated filer o Accelerated filer o Non-accelerated filer (Do not check if asmaller reporting company) Smaller reporting company oTable of ContentsEXPLANATORY NOTE The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during thepreceding 12 months but is not subject to such filing requirements.Table of ContentsTABLE OF CONTENTS Page PART I Item 1. Business 3 Item 1A. Risk Factors 28 Item 1B. Unresolved Staff Comments 53 Item 2. Properties 53 Item 3. Legal Proceedings 53 Item 4. Mine Safety Disclosures 54 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities 55 Item 6. Selected Financial Data 55 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 59 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 85 Item 8. Financial Statements and Supplementary Data 87 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 136 Item 9A. Controls and Procedures 136 Item 9B. Other Information 136 PART III Item 10. Directors, Executive Officers and Corporate Governance 137 Item 11. Executive Compensation 142 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 160 Item 13. Certain Relationships and Related Transactions, and Director Independence 160 Item 14. Principal Accountant Fees and Services 162 PART IV Item 15. Exhibits and Financial Statement Schedules 163 Table of ContentsPART ICautionary Note Regarding Forward-Looking Statements Some of the statements contained in this annual report are forward-looking statements. Such forward-looking statements are subject to risks anduncertainties, including, in particular, statements about our plans, strategies, prospects and industry estimates. These statements identify prospectiveinformation and include words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "should," "predicts," "hopes" andsimilar expressions. Examples of forward-looking statements include, but are not limited to, statements we make regarding: (i) our liquidity, includingour belief that our existing cash, cash equivalents and anticipated revenues are sufficient to fund our existing operating expenses, capital expendituresand liquidity requirements for at least the next twelve months; (ii) our outlook and expectations including, without limitation, in connection withcontinued market expansion and penetration for our commercial products, particularly DEFINITY; (iii) expected new product launch dates and marketexclusivity periods; and (iv) outlook and expectations related to product manufactured at Ben Venue Laboratories, Inc., or BVL and JubilantHollisterStier, or JHS. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy andother future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes incircumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They areneither statements of historical fact nor guarantees or assurances of future performance. The matters referred to in the forward-looking statementscontained in this annual report may not in fact occur. We caution you therefore against relying on any of these forward-looking statements. Importantfactors 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:•our dependence upon third parties for the manufacture and supply of a substantial portion of our products, including our currentdependence on BVL, as one of our two manufacturers of DEFINITY and Cardiolite products and our sole source manufacturer forNeurolite until JHS becomes our primary supplier of DEFINITY, Cardiolite products and Neurolite; •risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto; •risks associated with the technology transfer programs to secure production of our products, at alternate contract manufacturer sites; •our dependence on a limited number of third-party suppliers and the instability of global molybdenum-99, or Moly, supply; •a sustained decrease in TechneLite generator demand following the end of the global Moly shortage; •our dependence on key customers, primarily Cardinal Health, Inc., or Cardinal, United Pharmacy Partners, Inc., or UPPI, and GEHealthcare, for our nuclear imaging products, and our ability to maintain and profitably renew our contracts and relationships with thosekey customers; •our ability to continue to increase segment penetration for DEFINITY in suboptimal echocardiograms; •our ability to compete effectively; •ongoing generic competition to Cardiolite products and continued loss of market share;1Table of Contents•the dependence of certain of our customers upon third-party healthcare payors and the uncertainty of third-party coverage andreimbursement rates; •uncertainties regarding the impact of U.S. healthcare reform on our business, including related reimbursements for our current andpotential future products; •our being subject to extensive government regulation and our potential inability to comply with such regulations; •risks associated with being able to negotiate relationships with potential strategic partners to advance our clinical development programson acceptable terms, or at all; •the extensive costs, time and uncertainty associated with new product development, including further product development relying onexternal development partners; •our ability to complete our Phase 3 clinical program for our lead clinical candidate, flurpiridaz F 18, relying on external developmentpartners together with our ability to obtain FDA approval and gain post-approval market acceptance and adequate reimbursement relyingon commercial partners; •potential liability associated with our marketing and sales practices; •the occurrence of any side effects with our products; •our inability to introduce new products and adapt to an evolving technology and diagnostic landscape; •our exposure to potential product liability claims and environmental liability; •our inability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others; •risks related to our outstanding indebtedness and our ability to satisfy such obligations; •risks associated with the current economic environment, including the U.S. credit markets; •risks associated with our international operations; •our inability to adequately protect our facilities, equipment and technology infrastructure; •our inability to hire or retain skilled employees and the loss of any of our key personnel; •costs and other risks associated with the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act of2010; and •other factors that are described in "Risk Factors," beginning on page 28. Any forward-looking statement made by us in this annual report speaks only as of the date on which it is made. Factors or events that could causeour 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 publiclyupdate any forward looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.Trademarks We own or have the rights to various trademarks, service marks and trade names, including, among others, the following: DEFINITY®,TechneLite®, Cardiolite®, Neurolite®, Ablavar®, Vialmix® and Lantheus Medical Imaging® referred to in this annual report. Solely for convenience,we refer to trademarks, service marks and trade names in this annual report without the TM, SM and ® symbols. Such references are not intended toindicate, in any way, that we will not assert, to the fullest extent2Table of Contentspermitted under applicable law, our rights to our trademarks, service marks and trade names. Each trademark, trade name or service mark of any othercompany appearing in this annual report, such as Myoview® and Optison® are, to our knowledge, owned by such other company.Item 1. Business Unless the context requires otherwise, references to the "Company," "Lantheus," "LMI," "our company," "we," "us" and "our" refer to LantheusMedical Imaging, Inc. and its direct and indirect subsidiaries, references to "Lantheus Intermediate" refer to only Lantheus MI Intermediate, Inc., theparent of Lantheus, and references to "Holdings" refer only to Lantheus MI Holdings, Inc., the parent of Lantheus Intermediate.Overview We are a global leader in developing, manufacturing and distributing innovative diagnostic medical imaging agents and products that assistclinicians in the diagnosis of cardiovascular diseases such as coronary artery disease, congestive heart failure and stroke, peripheral vascular disease andother diseases. Our current marketed products are used by nuclear physicians, cardiologists, radiologists, internal medicine physicians, technologistsand sonographers working in a variety of clinical settings. We sell our products to radiopharmacies, hospitals, clinics, group practices, integrateddelivery networks, group purchasing organizations and, in certain circumstances, wholesalers. In addition to our marketed products, we have threecandidates in clinical and pre-clinical development. We market our products globally and have operations in the United States, Puerto Rico, Canada and Australia and distribution relationships inEurope, Asia Pacific and Latin America.Our Products Our products assist clinicians in the diagnosis of cardiovascular and other diseases. We believe our imaging agents provide physicians withimproved diagnostic information that enables them to better identify and characterize—or rule out—disease, potentially achieve improved patientoutcomes, reduce patient risk and contain overall costs across the healthcare system.DEFINITY DEFINITY is an ultrasound contrast imaging agent delivered intravenously and indicated for use in patients with suboptimal echocardiograms.Numerous patient conditions can decrease the quality of images of the left ventricle, the primary pumping chamber of the heart. Of the nearly 27 millionechocardiograms performed each year in the United States, it is estimated that 20%, or approximately five million echocardiograms, produce suboptimalimages. The use of DEFINITY during echocardiography allows physicians to significantly improve their assessment of the function of the left ventricle. DEFINITY is a clear, colorless, sterile liquid, which upon activation by Vialmix, a medical device specifically designed for DEFINITY, becomes ahomogenous, opaque, milky white injectable suspension of perflutren-containing lipid microspheres. After activation and intravenous injection,DEFINITY improves the ultrasound delineation of the left ventricular endocardial border, or innermost layer of tissue that lines the chamber of the leftventricle. Better visualization of the ventricle wall allows clinicians to see wall motion abnormalities, namely that the heart muscle is not expanding andcontracting in a normal, consistent and predictable way. This allows clinicians to make more informed decisions about disease status. DEFINITY offersflexible dosing and administration through an IV bolus injection or continuous IV infusion. We believe DEFINITY's synthetic lipid-cased coating givesthe compound a distinct competitive advantage because it provides a strong ultrasound signal without using human albumin.3Table of Contents Since the launch of the product in 2001, DEFINITY has been used in imaging procedures in over 4.0 million patients throughout the world. In2012, DEFINITY was the leading ultrasound imaging agent used by echocardiologists, used in approximately two percent of all echocardiogramsperformed in the United States. DEFINITY primarily competes with Optison, a GE Healthcare product, as well as other imaging modalities. In October 2007, the U.S. Food and Drug Administration, or the FDA, requested that all of the manufacturers of ultrasound contrast agents,including DEFINITY, add a boxed warning to their products to notify physicians and patients about potentially serious safety concerns or risks posedby the products. See "Item 1A—Risk Factors—Ultrasound contrast agents may cause side effects which could limit our ability to sell DEFINITY." DEFINITY has historically been manufactured exclusively at BVL. We recently commenced manufacturing DEFINITY at JHS at its facility inSpokane, WA. See "—Raw Materials and Supply Relationships—Ben Venue Laboratories, Inc. and Technology Transfer." DEFINITY is currently patent protected in the United States until 2021 and in numerous foreign jurisdictions with protection until 2019.DEFINITY generated revenues of $51.4 million, $68.5 million and $60.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.DEFINITY represented approximately 18%, 19% and 17% of our total revenues in 2012, 2011 and 2010, respectively.TechneLite TechneLite is a self-contained system or generator of technetium, a radioactive isotope or radioisotope, used by radiopharmacies to prepare variousnuclear imaging agents. The TechneLite generator is a little larger than a coffee can in size and the self-contained system houses a vertical glass columnat its core that contains fission-produced Moly. Moly is a radioisotope that is produced in research reactors by bombarding uranium-235 with neutrons.Moly has a 66 hour half-life and degrades into, among other things, technetium, a radioisotope with a much shorter half-life of only six hours. Duringour manufacturing process, Moly is added to the column within the generator where it is adsorbed onto alumina powder. The column is sterilized,enclosed in a lead shield and further sealed in a cylindrical plastic container, which is then shipped to our radiopharmacy customers. Because of the66 hour half-life of Moly, radiopharmacies typically purchase TechneLite generators on a weekly basis. Technetium is the medical isotope that is attached to the chemical composition of Cardiolite and a number of other radiopharmaceuticals during theradiolabeling process. To radiolabel technetium-based radiopharmaceuticals, a vial of sterile saline and a vacuum vial are each affixed to the top of aTechneLite generator. The sterile saline is pulled through the generator where it attracts technetium resulting from the degrading of Moly within thegenerator column. The technetium-containing radioactive saline is then pulled into the vacuum vial and combined by a radiopharmacist with theapplicable imaging agent, and individual patient-specific radiolabeled imaging agent doses are then prepared. When administered, the imaging agentbinds to specific tissues and organs for a period of time, illustrating the functional health of the imaged tissues. Our ability to produce and marketTechneLite is highly dependent on our supply of Moly. See "—Raw Materials and Supply Relationships—Molybdenum-99." TechneLite is produced in thirteen size variations and is currently marketed in North America, Latin America and Australia, largely toradiopharmacies that prepare unit doses of radiopharmaceutical imaging agents and ship these directly to hospitals. We have supply arrangements withsignificant radiopharmacy chains, including Cardinal, UPPI and GE Healthcare. In the United States, TechneLite is estimated to have about 39% of themarket share of this segment and primarily competes with technetium-based generators produced by the Mallinckrodt division of Covidien, PLC., orMallinckrodt.4Table of Contents Moly can be produced using targets made of either highly enriched uranium, or HEU, or low enriched uranium, or LEU. LEU consists of uraniumthat contains less than 20% of the uranium-235 isotope. HEU is often considered weapons grade material, with 20% or more of uranium-235. OnJanuary 2, 2013, President Obama signed into law the American Medical Isotopes Production Act of 2011 (AMIPA) as part of the 2013 NationalDefense Authorization Act. The AMIPA encourages the domestic production of LEU Moly and provides for the eventual prohibition of the export ofHEU from the United States. In addition, the Centers for Medicare and Medicaid Services (CMS) recently stipulated in the 2013 final Medicarepayment rules, for Medicare Hospital Outpatients, that CMS will provide incremental reimbursement for every technetium diagnostic dose producedfrom non-HEU sourced Moly. Our LEU TechneLite generator satisfies the new reimbursement requirements under the CMS 2013 rules. Although TechneLite has no current patent protection, given the significant know-how and trade secrets associated with the methods ofmanufacturing and assembling the TechneLite generator, we believe we have a substantial amount of valuable and defensible proprietary intellectualproperty associated with the product. In addition, we are pursuing patent protection in the United States and other countries on component technology,which, if granted, will expire in 2029. TechneLite generated revenues of $114.2 million, $131.2 million and $122.0 million for the years endedDecember 31, 2012, 2011 and 2010, respectively. TechneLite represented approximately 40%, 37% and 34% of total revenues in 2012, 2011 and 2010,respectively.Cardiolite Cardiolite, also known by its generic name sestamibi, is a technetium-based radiopharmaceutical imaging agent used in myocardial perfusionimaging, or MPI, procedures to detect coronary artery disease using single-photon emission computed tomography, or SPECT. An MPI test is anoninvasive exam used to assess blood flow to the muscle of the heart. Prior to the exam, Cardiolite, sold as a vial of lyophilized powder, is chemicallycombined with radioactive saline from a technetium-based generator, like TechneLite, and prepared for intravenous injection. Upon injection, Cardioliteenters the blood stream and is taken up by the heart muscle cells that receive sufficient blood flow, while the heart is imaged by a SPECT camera thatdetects the gamma rays released by technetium attached to the Cardiolite. The resulting images provide clinicians with a 3-D map of where the bloodflow to the heart is adequate. This product is primarily used for detecting coronary artery disease. MPI tests with Cardiolite provide clinicians withimportant diagnostic information pertaining to risk of adverse patient outcomes, such as heart attack and unexpected death caused by loss of heartfunction. Cardiolite was approved by the FDA in 1990 and its market exclusivity expired in July 2008. With the advent of generic competition in September2008, we have faced significant and continued pricing pressure on Cardiolite. Early on in the generic period, we believe we were able to retainsubstantial segment share because of strong brand awareness and loyalty within the cardiology community, as well as our relationships with keydistribution partners. As part of our strategy to continue to compete in this generic segment, we also sell Cardiolite in the form of a generic sestamibi at aslightly lower price to branded Cardiolite while at the same time continuing to sell branded Cardiolite throughout the MPI segment. We believe thisstrategy of selling branded as well as generic sestamibi allows us to continue to sell a meaningful amount of Cardiolite products in a generic segment byhaving multiple sestamibi offerings that are attractive in terms of brand as well as price. With our recent supply challenges, we believe our share of thesestamibi segment has continued to decrease. See "Item 1A—Risk Factors—Generic competition has significantly eroded our share of the MPI segmentfor Cardiolite products and will likely continue to do so." Cardiolite has historically been manufactured at BVL and a secondary manufacturer. We have undertaken a technology transfer program forCardiolite to secure and qualify production at the JHS5Table of Contentsfacility in Spokane, WA. See "—Raw Materials and Supply Relationships—Ben Venue Laboratories, Inc. and Technology Transfer." Our ability to market Cardiolite products is highly dependent on our supply of Moly. See "—Raw Materials and Supply Relationships—Molybdenum-99." Cardiolite is currently marketed in North America, Europe, Latin America, Asia Pacific and Australia and generic sestamibi is currently marketedin the United States. Since the launch of Cardiolite in 1991, Cardiolite products have been used to image approximately 51 million patients in the UnitedStates. Cardiolite products generated revenues of $35.0 million, $66.1 million and $77.4 million for the years ended December 31, 2012, 2011 and2010, respectively. Cardiolite represented approximately 12%, 19% and 22% of total revenues in 2012, 2011 and 2010, respectively. Included inCardiolite revenues are branded Cardiolite and generic sestamibi revenues, some of which we produce and some of which we procure from time to timefrom third parties.Other Marketed Products In addition to the products listed above, our other products are important imaging agents in specific segments, which provide a stable base ofrecurring revenue. Most of these products have a favorable industry position as a result of our substantial infrastructure investment, our specializedworkforce, our technical know-how and our established industry position and customer relationships.•Xenon Xe 133 Gas, is a radiopharmaceutical inhaled gas used to assess pulmonary function and evaluate blood flow, particularly in thebrain. Xenon is manufactured by a third party and packaged in-house. In 2012, 2011 and 2010, Xenon Xe 133 Gas representedapproximately 10%, 8% and 6%, respectively, of our total revenues. •Neurolite, is an injectable radiopharmaceutical imaging agent used with SPECT technology to identify the location of strokes in patientswho have already suffered from a stroke. We launched Neurolite in 1995. In 2012, 2011 and 2010, Neurolite represented approximately2%, 3% and 5%, respectively, of our total revenues. •Thallium Tl 201, is an injectable radiopharmaceutical imaging agent used in MPI studies using a gamma camera for the diagnosis andlocalization of myocardial infarction, or MI. Thallium does not need to be chemically combined with technetium. We have marketedThallium since 1977 and manufacture it in-house using cyclotrons. In 2012, 2011 and 2010, Thallium represented approximately 2%,2% and 5%, respectively, of our total revenues. •Gallium Ga67, is an injectable radiopharmaceutical imaging agent used in demonstrating the presence of Hodgkin's disease, lymphomasand bronchogenic carcinomas. We manufacture Gallium in-house using cyclotrons. In 2012, 2011and 2010, Gallium representedapproximately 2%, of each of our total revenues. •Samarium 153, is a radioisotope used to prepare Quadramet, an injectable radiopharmaceutical used to treat severe bone pain associatedwith certain kinds of cancer. We receive Samarium from a third party and finish and package it in-house for a different third party. Ineach of 2012, 2011 and 2010, Samarium represented approximately 2% of our total revenues. •Ablavar, is a gadolinium-based contrast agent and the first and only contrast agent approved for use in magnetic resonance angiography,or MRA, in the United States. We launched Ablavar in January 2010. In 2012, 2011 and 2010, Ablavar represented approximately0.9%, 0.5% and 0.2%, respectively, of our total revenues. For revenue and other financial information for our U.S. and International segments, see Note 18, "Segment Information" to our consolidatedfinancial statements.6Table of ContentsDistribution, Marketing and Sales We distribute our nuclear imaging products in the United States and internationally through radiopharmacies, distributor relationships and ourdirect sales force. In the United States, these agents are primarily distributed through radiopharmacies, the majority of which are controlled by orassociated with Cardinal, UPPI, GE Healthcare and Triad Isotopes Inc., or Triad. In the United States, we sell DEFINITY through our direct sales forceof approximately 80 representatives. In 2013, we have transitioned the sales and manufacturing efforts for Ablavar from our direct sales force to ourcustomer service team in order to allow our direct sales force to drive our DEFINITY resurgence plan following our recent supply challenges. In addition, we own radiopharmacies and sell directly to end users in Canada, Puerto Rico and Australia. In the rest of the world, includingEurope, Asia Pacific and Latin America, we utilize distributor relationships to market, distribute and sell our products. In March 2012, we entered into anew distribution arrangement for DEFINITY in China, Hong Kong S.A.R. and Macau S.A.R. with Double-Crane. We believe that the Chinese markethas strong growth potential for the use of contrast in echocardiography. In July 2010, we announced a new distribution arrangement for DEFINITY inIndia, another market which we believe eventually has strong growth potential for the use of contrast in echocardiography. These distributionagreements did not have a significant impact on our revenues during 2012. Cardinal maintains approximately 156 radiopharmacies that are typically located in large, densely populated urban areas. We estimate thatCardinal's radiopharmacies distributed approximately 46% of the aggregate U.S. SPECT doses sold in the first half of 2012 (the latest informationcurrently available to us). We currently have two agreements with Cardinal, one for the distribution of TechneLite generators, Gallium, Xenon, Thalliumand Neurolite (the TechneLite Agreement) and the other for the distribution of Cardiolite products (the Cardiolite Agreement). The agreements containprovisions allowing for early termination by either party. The TechneLite Agreement allows for termination upon the occurrence of specified events,including a material breach of a provision of the TechneLite Agreement by either party and force majeure events. The Cardiolite Agreement allows fortermination upon the occurrence of specified events, including a material breach of a material provision of the Cardiolite Agreement by either party,Cardinal's termination of its business operations in the nuclear medicine industry, Cardinal's failure to follow trademark usage guidelines and forcemajeure events. The TechneLite and Cardiolite agreements both expire on December 31, 2014. UPPI is a cooperative purchasing group of over 68 independently owned or smaller chain radiopharmacies located in the United States. UPPI'spharmacies are typically broadly geographically dispersed, with some urban presence and a substantial number of pharmacies located in suburban andrural areas of the country. We estimate that these independent radiopharmacies plus an additional 31 unofficial independent radiopharmacies, distributedover one-quarter of the aggregate U.S. SPECT doses sold in the first half of 2012. We currently have an agreement with UPPI for the distribution ofboth Cardiolite and TechneLite products to pharmacies or families of pharmacies within the UPPI cooperative purchasing group. The agreementcontains specified pricing levels based upon specified purchase amounts for UPPI. We are entitled to terminate the UPPI agreement upon 60 dayswritten notice. The UPPI agreement expires on December 31, 2013. GE Healthcare maintains 31 radiopharmacies that purchase our TechneLite generators. These radiopharmacies primarily distribute GE Healthcare'sMyoview, a technetium-labeled MPI agent. We estimate that GE Healthcare distributed approximately 10% of the aggregate U.S. SPECT doses sold inthe first half of 2012. We currently have one agreement with GE Healthcare for the distribution of TechneLite and other products. The agreementprovides that GE Healthcare will purchase TechneLite generators as well as certain other products in the United States or Canada from us. Ouragreement, which expires on December 31, 2017, may be terminated by either party on (i) three years' written notice relating to TechneLite prior toDecember 31, 2013, (ii) two years' written notice relating to7Table of ContentsTechneLite on and after December 31, 2013 and (iii) six months' written notice relating to the other products. Our agreement also allows for terminationupon the occurrence of specified events including a material breach by either party, bankruptcy by either party and force majeure events. In addition to the distribution arrangements for our radiopharmaceutical products described above, we also sell our radiopharmaceutical productsdirectly to hospitals and clinics that maintain in-house radiopharmaceutical capabilities and operations, although this is a small percentage of overall salesbecause the majority of hospitals and clinics do not maintain these in-house capabilities. For our contrast agent DEFINITY, in the United States wehave a direct sales force of approximately 80 representatives that calls on prescribers as well as group purchasing organizations and integrated deliverynetworks. We believe that this sales force will also be the basis of our sales force that will market and sell future imaging agents. For the year endedDecember 31, 2012, sales by our direct sales force represented approximately 18% of our total revenues. We own five radiopharmacies in Canada and two radiopharmacies in each of Australia and Puerto Rico. We also maintain our own direct salesforces in these markets so we can control the marketing, distribution and sale of our imaging agents in these regions. In the rest of the world, we rely on distributors to market, distribute and sell our products, either on a country-by-country basis or on a multi-country regional basis.Customers For the year ended December 31, 2012, our largest customers were Cardinal, GE Healthcare and UPPI, accounting for approximately 27%, 11%,and 8%, respectively, of our global net sales.Competition We compete primarily on the ability of our products to capture market share. We believe that our key product characteristics such as provenefficacy, reliability and safety coupled with our core competencies such as our efficient manufacturing processes, established distribution network, fieldsales organization and customer service, are important factors that distinguish us from our competitors. The market for diagnostic medical imaging agents is highly competitive and continually evolving. Our principal competitors in existing diagnosticmodalities include large, global companies that are more diversified than we are and have substantial financial, manufacturing, sales and marketing,distribution and other resources, such as Mallinckrodt, GE Healthcare, Ion Beam Applications, Bayer Schering Pharma AG, or Bayer, BraccoDiagnostics Inc., or Bracco, and DRAXIS Specialty Pharmaceuticals Inc. (an affiliate of JHS), or Draxis, as well as other competitors. We cannotanticipate their competitive actions, such as price reductions on products that are comparable to our own, development of new products that are morecost-effective or have superior performance than our current products, the introduction of generic versions when our proprietary products lose theirpatent protection or the new entry into a generic segment in which we already are a participant. Our current or future products could be renderedobsolete or uneconomical as a result of this competition. Generic competition has substantially eroded our share for Cardiolite, beginning in September 2008 when the first generic product was launched.We are currently aware of four separate third-party generic offerings of sestamibi. We also sell our own generic version of sestamibi. See "Item 1A—Risk Factors—Generic competition has significantly eroded our share of the MPI segment for Cardiolite products and will likely continue to do so."Raw Materials and Supply Relationships We rely on certain raw materials and supplies to create our products. Due to the specialized nature of our products and the limited supply of rawmaterials in the market, we have relationships8Table of Contentswith several key suppliers. While all of our raw materials are important to our products, our most widely used raw material is Moly. For the year endedDecember 31, 2012, our largest supplier of all of our raw materials and supplies was Nordion, accounting for approximately 23% of our totalpurchases.Molybdenum-99 TechneLite and Cardiolite both depend on Moly, the radioisotope which is produced by bombarding Uranium-235 with neutrons in researchreactors. Moly is the most common radioisotope used for medical diagnostic imaging purposes. With a 66 hour half-life, Moly degrades intotechnetium, another radioisotope with a half-life of six hours that is the isotope that is attached to the chemical composition of Cardiolite and a numberof other radiopharmaceuticals during the radiolabeling process. There are nine major medical isotope reactors located around the world which produce significant amounts of Moly:•NRU, owned and operated by Atomic Energy of Canada Limited, or AECL, a Crown corporation of the Government of Canada, locatedin Chalk River, Ontario; •High Flux Reactor, or HFR, located in The Netherlands; •BR2 located in Belgium; •OSIRIS located in France; •SAFARI located in South Africa; •OPAL located in Australia; •LVR-10 located in the Czech Republic; •MARIA located in Poland; and •RA-8 located in Argentina. Moly produced at these reactors is then finished at one of six processing sites:•Nordion, formerly known as MDS Nordion, in Canada; •Covidien in The Netherlands; •NTP Radioisotopes, or NTP, in South Africa; •Institute for Radioelements, or IRE, in Belgium; •ANSTO in Australia; and •CNEA in Argentina. Finished Moly is then sold to technetium generator manufacturers, including us. These reactors are taken off-line for short periods of time forperiodic refueling and routine inspection and maintenance. For example, the NRU reactor was off-line for four weeks starting in April 2012 for routineinspection and maintenance. However, reactors are less frequently taken off-line for longer durations. From May 2009 until August 2010, the NRUreactor was taken off-line due to a heavy water leak in the reactor vessel and subsequent extended repairs. See "Item 7—Management's Discussion andAnalysis of Financial Condition and Results of Operations" for a discussion of the impact that this global shortage had on our business. Historically, our largest supplier of Moly has been Nordion, which relies on the NRU reactor for its supply of Moly. In addition, because Xenonis a by-product of the Moly production process and is currently captured only by Nordion, we are reliant on Nordion as our sole supplier of Xenon tomeet our customer demand. Our agreement with Nordion contains minimum purchase requirements. The agreement allows for termination upon theoccurrence of certain events, including failure by us to9Table of Contentspurchase a minimum amount of Moly, failure to comply with material obligations by either party, bankruptcy of either party or force majeure events. OnOctober 19, 2012, we entered into Amendment No. 2 (the "Nordion Amendment") with Nordion to the Molybdenum-99 Purchase and SupplyAgreement, dated April 1, 2010. Under the Nordion Amendment, we are now committed to purchase minimum percentage requirements, of our totalMoly requirement through December 2015. The agreement, as amended, allows for termination upon the occurrence of certain events, including, but notlimited to, certain cost increases experienced by Nordion (but in such event not earlier than October 1, 2014), failure to comply with material obligationsby either party, bankruptcy of either party or force majeure events. Our agreement with NTP includes their consortium partner, ANSTO. The agreement contains minimum percentage volume requirements andallows for termination upon the occurrence of certain events, including failure by NTP to provide our required amount of Moly, material breach of anyprovision by either party, bankruptcy by either party and force majeure events. Additionally, we have the ability to terminate the agreement with sixmonths written notice prior to the expiration of the term of the agreement. On October 30, 2012, we entered into Amendment No. 3 (the "NTPAmendment") with NTP, effective as of October 1, 2012, to the Molybdenum-99 Sales Agreement, dated April 1, 2009. The NTP Amendment extendsthe contract term of the agreement to December 31, 2017 and modifies our future purchase volumes and supply fees. The NTP Amendment alsoprovides for the increased supply of Moly derived from LEU targets from NTP and ANSTO. In March 2013, we entered into a similar agreement with IRE (the "IRE Agreement"). IRE previously supplied us as a subcontractor under theNTP agreement and, similar to the agreement with NTP, the IRE Agreement contains minimum percentage volume requirements and allows fortermination upon the occurrence of certain events, including failure by IRE to provide our required amount of Moly, material breach of any provision byeither party, bankruptcy by either party and force majeure events. Under the terms of the five year IRE Agreement, which expires on December 31,2017, IRE is expected to provide certain increased quantities of Moly during periods of supply shortage or failure. The IRE Agreement also providesfor an increased supply of Moly derived from LEU targets upon IRE's completion of its ongoing conversion program to modify its facilities andprocesses in accordance with Belgian nuclear security commitments. We are also pursuing additional sources of Moly and Xenon from potential new producers around the world to further augment our currentsupply. In addition, we are exploring a number of alternative projects that seek to produce Moly and Xenon with existing or new reactors ortechnologies.Other Materials We have additional supply arrangements for active pharmaceutical ingredients, or APIs, excipients, packaging materials and other materials andcomponents, none of which are exclusive, but a number of which are sole source, and all of which we believe are either in good standing or easilyreplaceable without any material disruption to our business.Manufacturing We maintain manufacturing operations at our North Billerica, Massachusetts facility, where we manufacture TechneLite on a highly-automatedproduction line. We also manufacture Thallium and Gallium at this site using our cyclotron technology. We manufacture, finish and distribute ourradiopharmaceutical products on a just-in-time basis, and supply our customers with these products either by next day delivery services or by eitherground or air custom logistics. In addition to our in-house manufacturing capabilities, a substantial portion of our products are manufactured by third-party suppliers, and in certain instances, we rely on sole source manufacturing. To ensure the quality of the products that are manufactured by thirdparties, all raw materials are sent to our North Billerica facility where they are tested by us prior to use. Furthermore, the final product is sent back to usfor10Table of Contentsfinal quality control testing prior to shipment. We have expertise in the design, development and validation of complex manufacturing systems andprocesses, and our strong execution and quality control culture supports our just-in-time manufacturing model at our North Billerica facility.Ben Venue Laboratories, Inc. and Technology Transfer We currently rely on BVL as one of our two manufacturers for DEFINITY and Cardiolite product supply and our sole source manufacturer forNeurolite. BVL manufactures our products within the South Complex of its Bedford, Ohio facility. In July 2010, BVL temporarily shut down theSouth Complex to upgrade the facility to meet certain regulatory requirements. In anticipation of this shutdown, BVL manufactured for us additionalinventory of these products to meet our expected needs during the shutdown period, which was originally anticipated to end in March 2011. After a series of unexpected delays, in the second quarter of 2012, BVL resumed manufacturing DEFINITY and allowed us to release productbeginning at the end of the second quarter of 2012. BVL has also resumed manufacturing Cardiolite products and has allowed us to release theseproducts to the market. We currently believe that Neurolite will again become available from BVL in the latter half of 2013. We can give no assurancesthat BVL will be able to continue to successfully manufacture and distribute our products through December 31, 2013. See "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 ourproducts to our customers in the required quantities, within the required timeframe, or at all, which could result in order cancellations and decreasedrevenues." In August 2011, BVL announced that it will be transitioning out of the contract manufacturing business after December 31, 2013. Because ofBVL's ongoing regulatory issues and our mutual desire to enter into a new contractual relationship to replace the original arrangement, we and BVL:(i) terminated the original manufacturing agreement (the "2008 Agreement") and entered into a Settlement and Mutual Release Agreement (the"Settlement Agreement"); (ii) entered into a Transition Services Agreement (the "Transition Services Agreement"), under which BVL has manufacturedfor us an initial supply of DEFINITY, Cardiolite, Neurolite, and certain TechneLite accessories; and (iii) entered into a Manufacturing and ServiceContract (the "Manufacturing and Service Contract") under which BVL will continue to manufacture for us supplies of DEFINITY, Cardiolite,Neurolite, and certain TechneLite accessories following the initial supply provided under the Transition Services Agreement through 2013. The 2008Agreement had an initial term of five years.•In the Settlement Agreement, we and BVL agreed to a broad mutual waiver and release for all matters that occurred prior to the date ofthe Settlement Agreement, a covenant not to sue and a settlement payment to us in the amount of $30.0 million. •Under the Transition Services Agreement, BVL has manufactured for us an initial supply of DEFINITY, Cardiolite, Neurolite andcertain TechneLite accessories, and made weekly payments to us in the aggregate amount of $5.0 million. The agreement allows fortermination upon the occurrence of specified events, including material breach by either party, bankruptcy by either party, force majeureevents or sale, wind-down or cessation of business by BVL, and absent negligence or willful misconduct we have no further remediesunder this agreement. The agreement expires upon the earlier of (a) the release of the final batch of product accepted by us pursuant tothe terms of the Transition Services Agreement or (b) December 31, 2013. •Under the Manufacturing and Service Contract, BVL will continue to manufacture for us supplies of DEFINITY, Cardiolite, Neuroliteand certain TechneLite accessories following the initial supply provided under the Transition Services Agreement. The agreement allowsfor unilateral termination by BVL in the event that regulatory action prevents manufacturing for the full term of the agreement. Theagreement also allows for termination upon the occurrence of specified events, including material breach or bankruptcy by either party,or force majeure11Table of Contentsevents or sale, wind-down or cessation of business by BVL. The agreement expires on December 31, 2013. In connection with these transition plans, we have expedited a number of technology transfer programs to secure and qualify production of ourBVL-manufactured products from alternate contract manufacturer sites.•DEFINITY—We entered into a Manufacturing and Supply Agreement, effective as of February 1, 2012, with JHS, for the manufactureof DEFINITY. Under the agreement, JHS has agreed to manufacture DEFINITY for an initial term of five years. We have the right toextend the agreement for an additional five-year period, with automatic renewals for additional one year periods thereafter. Theagreement allows for termination upon the occurrence of certain events such as a material breach or default by either party, or bankruptcyby either party. The agreement also requires us to place orders for a minimum percentage of our requirements for DEFINITY with JHS.On May 3, 2012, we entered into the First Amendment, effective as of May 3, 2012, to the Manufacturing and Supply Agreement,which increased the minimum percentage of our requirements for DEFINITY with JHS during such term. We are also seeking to secureadditional contract manufacturers for DEFINITY. In February 2013, the FDA informed us that the JHS facility was approved tomanufacture DEFINITY, and we have since commenced shipping JHS-manufactured DEFINITY to customers. •Cardiolite—We currently have a secondary manufacturer for a portion of our Cardiolite products supply. We also entered into aManufacturing and Supply Agreement, effective as of May 3, 2012, with JHS for the manufacture of Cardiolite products. Under theagreement, JHS has agreed to manufacture product for an initial term of five years. We have the right to extend the agreement for anadditional five-year period, with automatic renewals for additional one year periods thereafter. The agreement allows for terminationupon the occurrence of specified events, including material breach or bankruptcy by either party. The agreement requires us to placeorders for a minimum percentage of our requirements for Cardiolite with JHS during such term. We are also considering additionalcontract manufacturers for Cardiolite. •Neurolite—We entered into a Manufacturing and Supply Agreement, effective as of May 3, 2012, with JHS for the manufacture ofNeurolite. Under the agreement, JHS has agreed to manufacture product for an initial term of five years. We have the right to extend theagreement for an additional five-year period, with automatic renewals for additional one year periods thereafter. The agreement allowsfor termination upon the occurrence of specified events, including material breach or bankruptcy by either party. The agreement alsorequires us to place orders for a minimum percentage of our requirements for Neurolite with JHS during such term. We are alsoconsidering additional contract manufacturers for Neurolite. Based on our current projections, we believe that we will have sufficient supply of DEFINITY from both BVL and JHS to meet expected demandand sufficient Cardiolite product supply from BVL and our alternate supplier to meet expected demand. We currently believe that Neurolite will againbecome available from BVL in the latter half of 2013. We also currently anticipate JHS-manufactured Neurolite and Cardiolite to be available whentechnology transfer and regulatory approval at JHS are completed, although Neurolite supply will continue to be constrained until BVL can manufactureand release additional batches of the product. We are pursuing new manufacturing relationships to establish and secure additional long-term oralternative suppliers as described above, but it is uncertain of the timing as to when these arrangements could provide meaningful quantities of product.See "Item 1A—Risk Factors—Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could preventus from delivering our products to our customers in the required quantities, within the required timeframe, or at all, which could result in ordercancellations and decreased revenues" and "Risk Factors—Challenges with product quality or product performance, including defects, caused by us orour suppliers could result in a decrease in customers and sales, unexpected expenses and loss of market share."12Table of Contents On January 22, 2013, BVL announced it had voluntarily entered into a consent decree with the FDA relating to current Good ManufacturingPractice requirements at its Bedford, Ohio facility. Under the consent decree, the FDA has given BVL approval to continue to manufacture all of ourproducts for us. However, we can give no assurances that, operating under the consent decree, BVL will be able to manufacture and distribute ourproducts for us in a timely manner and in sufficient quantities through the termination of our Manufacturing and Supply Agreement. See "Item 1A—Risk Factors—Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us fromdelivering our products to our customers in the required quantities, with the required time frame, or at all, which could result in order cancellations anddecreased revenues."Mallinckrodt We rely on sole source manufacturing for Ablavar at Mallinckrodt. The agreement requires us to purchase a minimum amount of Ablavar and canbe amended or terminated by mutual written agreement at any time. See "Item 1A—Risk Factors—Our business depends on our ability to successfullyintroduce new products and adapt to a changing technology and diagnostic landscape". The agreement also allows for termination upon the occurrenceof certain events such as a material breach or default by either party, or bankruptcy by either party. In October 2011, we entered into an amendment toextend the term of the agreement from September 30, 2012 until September 30, 2014, reduce the amount of API we are obligated to purchase over theterm of the agreement, and increase the amount of finished drug product we are obligated to purchase over the term of the agreement. At December 31,2012, the remaining purchase commitment under the amended agreement was approximately $9.4 million.Research and Development For the years ended December 31, 2012, 2011 and 2010, we invested $40.6 million, $40.9 million and $45.1 million, respectively, in research anddevelopment. Our research and development team includes our medical affairs and medical information functions, which educate physicians on thescientific aspects of our commercial products and the approved indications, labeling and the costs of monitoring adverse events. We have developed astrong pipeline of three development candidates which were discovered and developed in-house and are protected by patents and patent applications weown in the United States and numerous foreign jurisdictions. In March 2013, we began to implement a strategic shift in how we will fund our importantR&D programs. We will reduce over time our internal R&D resources while at the same time we seek to engage strategic partners to assist us in thefurther development and commercialization of our important development candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. See"Item 1A—Risk Factors—We may not be able to develop or commercialize our product candidates without successful strategic partners for our productcandidates."Flurpiridaz F 18—PET Perfusion Agent—Myocardial Perfusion We are developing flurpiridaz F 18, a radiopharmaceutical imaging agent radiolabeled with fluorine-18, which we believe has the potential tobecome a leading next-generation MPI agent to work with positron emission tomography, or PET, technology. Today, most MPI procedures useSPECT technology with gamma cameras. Although this imaging provides substantial clinical value, there is growing interest in the medical communityto utilize technology such as PET that can provide meaningful advantages. PET is an imaging technology that when used in combination with anappropriate radiopharmaceutical imaging agent can provide important insights into physiologic and metabolic processes in the body and be useful inevaluating a variety of conditions including neurological disease, heart disease and cancer. PET imaging has demonstrated broad utility for13Table of Contentsdiagnosis, prognosis, disease staging and therapeutic response. Images generated with PET technology typically exhibit very high image resolutionbecause of substantially higher signal to noise efficiency, a measure of the efficiency by which energy can be captured to create an image. Although SPECT imaging used in conjunction with a radiopharmaceutical imaging agent, such as Cardiolite, is most commonly used for MPIstudies, PET imaging has gained considerable support in the field of cardiovascular imaging as it offers many advantages to SPECT imaging. Theseadvantages include: higher image quality, quantitative heart muscle blood flow information, improved diagnostic accuracy, more accurate riskstratification and reduced patient radiation exposure. The use of PET technology in MPI tests represents a broad emerging application for a technologymore commonly associated with oncology and neurology. We anticipate that the adoption of PET technology in MPI tests will increase significantly inthe future and that flurpiridaz F 18 could be an important agent in that segment.Flurpiridaz F 18 Clinical Overview We submitted an Investigational New Drug Application, or IND, for flurpiridaz F 18 to the FDA in August 2006. Our clinical program to date hasconsisted of three Phase 1 studies and a Phase 2 clinical trial, conducted from 2007 to 2010, involving 208 subjects who received PET MPI performedwith flurpiridaz F 18.Flurpiridaz F 18 Phase 2 Trial We evaluated flurpiridaz F 18 in a Phase 2 trial consisting of 176 subjects from 21 centers. These subjects underwent rest and stress flurpiridazF 18 and SPECT MPI, both of which were evaluated for safety. 86 subjects underwent coronary angiography, the current standard clinical method fordiagnosing coronary artery disease. Coronary angiography is an invasive procedure using fluoroscopy performed in a cardiac catheterization lab whilethe subject is under mild sedation. These 86 subjects formed the population for evaluating diagnostic performance. PET MPI was performed withflurpiridaz F 18 at rest and at stress utilizing pharmacological coronary vasodilation or treadmill exercise. Unlike currently available PET imaging agentsfor MPI with half lives measured in seconds, flurpiridaz F 18 can be used in conjunction with treadmill exercise given its substantially longer 110minute half-life. The Phase 2 trial results showed the following:•a significantly higher percentage of images were rated as either excellent or good quality with PET imaging, compared to SPECTimaging for stress images (98.8% vs. 84.9%, p<0.01) and rest images (95.3% vs. 69.8%, p<0.01); •diagnostic certainty of interpretation, the percentage of cases with definitely abnormal or definitely normal interpretation, wassignificantly higher for flurpiridaz F 18 compared to SPECT (90.7% vs. 75.6%, p<0.01); •the area under the ROC curve (the relative operating characteristic curve comparing the true positive rate to the false positive rate forcoronary artery disease diagnosis) was significantly higher for flurpiridaz F 18 than SPECT (0.82±0.05 vs. 0.70±0.05, p<0.05),indicating higher diagnostic performance; •sensitivity with flurpiridaz F 18 imaging was significantly higher than SPECT (78.8% vs. 61.5%, p=0.02); •although a trend toward higher specificity was noted, due to the limited number of patients, the study was not statistically powered toconclusively demonstrate this advantage; and •no drug-related serious adverse events were observed.14Table of Contents The results of the Phase 2 trial demonstrated that PET MPI with flurpiridaz F 18 provided superior image quality, diagnostic certainty anddiagnostic performance for detecting coronary artery disease compared to SPECT MPI, the current standard for the non-invasive detection of coronaryartery disease. The data also demonstrated a positive safety profile for PET imaging with flurpiridaz F 18.Flurpiridaz F 18 Phase 3 Trial In March 2011, we received Special Protocol Assessment approval from the FDA for our so-called 301 trial, our first of two clinical trials in ourPhase 3 clinical program for flurpiridaz F 18. We received a Special Protocol Assessment for our so-called 302 trial, our second Phase 3 clinical trial inApril 2012. The Phase 3 program includes our 301 trial and our 302 trial, which are each open-label, multicenter trials to assess the diagnostic efficacy,both sensitivity and specificity, of flurpiridaz F 18 PET MPI, compared with SPECT MPI in the detection of significant coronary artery disease. Thetrials will enroll a total of approximately 1,350 subjects at approximately 100 sites globally. Coronary angiography will be the truth standard for allsubjects. The clinical development program includes hypotheses for superiority for sensitivity and non-inferiority for specificity with an adequatesample size to demonstrate superior specificity if present. We enrolled our first subject in our 301 trial in June 2011, and an interim analysis of theresults of the first 50% of the subjects who completed the 301 trial should be completed in the second quarter of 2013. As a result of the shift in ourR&D strategy, we will complete the 301 trial while seeking to engage strategic partners to assist us with the further development and possiblecommercialization of the agent.PET Manufacturing Facilities For flurpiridaz F 18, we will have to implement a new manufacturing model where we provide the chemical ingredients of the imaging agent toPET radiopharmacies that have fluorine-18 radioisotope-producing cyclotrons on premises. The ingredients will be combined with fluorine-18manufactured in these radiopharmacies in specially designed chemistry synthesis boxes to generate the final radiopharmaceutical imaging agent,flurpiridaz F 18. Radiopharmacists will be able to prepare and dispense patient-specific doses from the final product. However, because each of thesePET radiopharmacies will be deemed by the FDA to be a separate manufacturing site for flurpiridaz F 18, each will have to be included in our NewDrug Application, or NDA, and subsequent FDA filings. As a result, we will have quality and oversight responsibility for these PET radiopharmacies,unlike the current relationship we have with our nuclear imaging agent distributors that operate radiopharmacies. Such responsibilities will require us tocommit additional financial and human resources, and will potentially expose us to additional liability. We are currently in the process of evaluating theoperational and economic implications of this new manufacturing model.(18)F LMI 1195—Cardiac Neuronal Activity Imaging Agent We are developing 18F LMI 1195, also an internally discovered small molecule, designed to go to cardiac sympathetic neurons, the nerves whichregulate the heart. Sympathetic nerve activation increases the heart rate, constricts blood vessels and raises blood pressure by releasing aneurotransmitter called norepinephrine throughout the heart. Changes in the cardiac sympathetic nervous system have been related to the potential forheart failure progression and susceptibility to sometimes fatal arrhythmias. Heart failure is a major public health problem in North America, associated with high morbidity and mortality, frequent hospitalizations and amajor cost burden on the community. In the U.S. alone, there are over 5 million patients living with heart failure, and over a half million new diagnoseseach year. Mortality for this condition is around 8-12% annually. Expensive therapies for heart failure are often utilized without effective predictors ofpatient response. Costly device therapies (for example,15Table of Contentsimplantable cardiac defibrillators, or ICDs, and cardiac resynchronization therapy, or CRT) are often used, although they sometimes do not provide anybenefits or are activated in only a minority of recipients. Conversely, heart failure clinical practice guidelines currently preclude the use of device therapyin many patients who might benefit. Thus, a key opportunity is to better match patients to treatment based on the identification of the underlyingmolecular status of disease progression. 18F LMI 1195 is taken up by the transporter that regulates norepinephrine released by the sympathetic nervous system at multiple nerve endings ofthe heart. We believe that PET imaging of 18F LMI 1195 may help clinicians to evaluate the status of the cardiac sympathetic nervous system in heartfailure patients and guide drug therapy or the usefulness of anti-arrhythmia devices such as ICDs. In several clinical studies, the use of ICDs in heart failure patients have demonstrated a decreased risk of sudden cardiac death, which claims asmany as 450,000 lives every year in the United States. According to the American Heart Association, patients who have suffered a heart attack have afour to six times higher risk of sudden cardiac death, while chronic heart failure patients have a six to nine times higher risk of sudden cardiac death.Approximately fourteen ICD implants are needed over a five-year period to save one life and the use of ICDs, costing between approximately $50,000and $100,000 per procedure, are expensive. As a result, we believe patients and the healthcare system would both benefit from the ability to moreaccurately identify patients who would benefit from an ICD placement. We have completed a Phase 1 study of 18F LMI 1195 using PET imaging. Twelve normal subjects were injected intravenously withapproximately 6 millicuries of LMI 1195, imaged sequentially for a period of approximately 5 hours and monitored closely to observe any potentialadverse events. Excellent quality images were obtained and the radiation dose to the subjects was found to be well within acceptable limits. Bloodradioactivity cleared quickly and lung activity was low throughout the study. The agent appeared to have a favorable safety profile. As a result of theshift in our R&D strategy, we will seek to engage strategic partners to assist us with the on-going development activities relating to this agent.LMI 1174—Vascular Remodeling We are developing LMI 1174, an internally discovered gadolinium-based MRI agent targeted to elastin in the arterial walls and atheroscleroticplaque. We believe that this agent will allow non-invasive assessment of plaque location, burden, type of arterial wall remodeling and therefore thepotential for a vascular event, which, in turn, could lead to heart attack or stroke. Elastin has a key role in the structure of the arterial wall and in biological signaling functions. Several pathological stimuli may be responsible fortriggering elastogenesis in atherosclerosis, leading to a marked increase in elastin content during plaque development. In addition to the increase inelastin seen in autopsy samples from patients with carotid atherosclerosis, there is also an increase of elastin in aortic aneurysm samples. As a result, anelastin-specific imaging agent may facilitate noninvasive detection of remodeling of the arterial walls. Arterial plaque rupture is a leading cause of heart attack and stroke. In 2002, approximately 865,000 people in the United States had a new orrecurrent MI and 179,514 died of the event. The majority of these events occurred in individuals older than 35 years of age, an age range thatapproximately totaled 140 million people in 2002. Of the individuals who died of heart attacks, more than 50% had not had a previous history of heartdisease. This indicates that the health care community is not currently identifying and treating individuals at risk of MI from arterial plaque rupture.Similarly, there are approximately 500,000 new and 200,000 recurrent strokes each year, which resulted in 162,672 deaths in 2002, the most recent yearfor which data is available. Again, we believe there is a substantial opportunity to better identify individuals at risk of having such an event. The majorrisk factors for atherosclerosis, including systemic hypertension, diabetes, cigarette smoking,16Table of Contentsfamily history and hypercholesterolemia, have contributed to the continued burden of coronary artery disease. The majority of the assessments of atherosclerosis are currently obtained using angiography or MPI. We believe that MRI technology using LMI1174 provides the opportunity to identify the presence and characteristics of atherosclerosis and to prescribe treatments to prevent or minimize the risksof cardiovascular events. In our preclinical work, we have identified a series of low molecular weight molecules that bind to elastin and final optimization is ongoing. Ourlead molecule, LMI 1174, has been used to demonstrate utility in a number of different animal models. As a result of the shift in our R&D strategy, wewill seek to engage strategic partners to assist us with the on-going development activities relating to this agent.Intellectual Property Patents, trademarks and other intellectual property rights are very important to our business. We also rely on trade secrets, manufacturing know-how, technological innovations and licensing agreements to maintain and improve our competitive position. We review third-party proprietary rights,including patents and patent applications, as available, in an effort to develop an effective intellectual property strategy, avoid infringement of third-partyproprietary rights, identify licensing opportunities and monitor the intellectual property owned by others. Our ability to enforce and protect ourintellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture marketposition in such countries by utilizing technologies that are similar to those developed or licensed by us. Competitors also may harm our sales bydesigning products that mirror the capabilities of our products or technology without infringing our intellectual property rights. If we do not obtainsufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could beimpaired, which would limit our growth and future revenue.Trademarks, Service Marks and Trade Names We own various trademarks, service marks and trade names, including DEFINITY, Cardiolite, TechneLite, Ablavar, Neurolite and LantheusMedical Imaging. We have registered these six trademarks, as well as others, in the United States and numerous foreign jurisdictions.Patents We actively seek to protect the proprietary technology that we consider important to our business, including chemical species, compositions andformulations, their methods of use and processes for their manufacture, as new intellectual property is developed. In addition to seeking patentprotection in the United States, we file patent applications in numerous foreign countries in order to further protect the inventions that we considerimportant to the development of our foreign business. We also rely upon trade secrets and contracts to protect our proprietary information. As ofFebruary 28, 2013, our patent portfolio included a total of 44 issued U.S. patents, 230 issued foreign patents, 22 pending patent applications in theUnited States and 145 pending foreign applications including claims covering the composition of matter and methods of use for all of our preclinical andclinical stage candidates. Our patents cover many of our commercial products, and our patent protection is generally in the United States, Canada, Mexico, most of WesternEurope and Scandinavia (including Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Italy, Luxembourg, Netherlands, Norway,Spain, Switzerland and Sweden), and markets in Asia (including China, Hong Kong, Japan, Singapore and South Korea) and Latin America (includingArgentina and Brazil). For DEFINITY, we hold a number of different compositions of matter, use, formulation and manufacturing patents, with U.S.patent17Table of Contentsprotection until 2021 and patent or regulatory extension protection in Canada, Europe and parts of Asia until 2019. For Ablavar, we hold a number ofdifferent compositions of matter, use, formulation and manufacturing patents, with the last U.S. patent not expiring until 2020 with regulatory extension.Neither Cardiolite nor Neurolite is covered any longer by patent protection in either the United States or the rest of the world and we are not currentlyaware of any proposed generic competitors to Neurolite. Although TechneLite has no current patent protection, given the significant know-how andtrade secrets associated with the methods of manufacturing and assembling the TechneLite generator, we believe we have a substantial amount ofvaluable and defensible proprietary intellectual property associated with the product. In addition, we are pursuing specific patent protection in the UnitedStates and other countries on component technology, which, if granted, will expire in 2029. Thallium, Gallium and Xenon are all genericradiopharmaceuticals. We have patents and patent applications in numerous jurisdictions covering composition, use, formulation and manufacturing of flurpiridaz F 18,one of which, if granted, will expire in 2033 and in the United States a composition patent expiring in 2026 and a method of use patent expiring in 2028in the absence of any regulatory extension. We also have patent applications in numerous jurisdictions covering composition, use, and synthesis of ourcardiac neuronal imaging agent candidate, some of which, if granted, will expire in 2027 and some in 2031 in the absence of any patent term adjustmentor regulatory extensions and in Europe a composition patent expiring in 2027 in the absence of any regulatory extension. Additionally, we have patentapplications in numerous jurisdictions covering composition, use and synthesis of our vascular remodeling compound, some of which if granted, willexpire in 2029 and some in 2030 in the absence of any patent term adjustment or regulatory extensions and in the United States a composition andmethod of use patent expiring in 2031 in the absence of any regulatory extension. In addition to patents, we rely where necessary upon unpatented trade secrets and know-how, proprietary information, and continuingtechnological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentialityagreements with our collaborators, employees, consultants and other third parties and invention assignment agreements with our employees. Theseconfidentiality agreements may not prevent unauthorized disclosure of trade secrets and other proprietary information, and we cannot assure you that anemployee or an outside party will not make an unauthorized disclosure of our trade secrets, other technical know-how or proprietary information. Wemay not have adequate remedies for any unauthorized disclosure. This might happen intentionally or inadvertently. It is possible that a competitor willmake use of such information, and that our competitive position will be compromised, in spite of any legal action we might take against persons makingsuch unauthorized disclosures. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To theextent that our collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to therights in related or resulting know-how and inventions. In addition, we license a limited number of third-party technologies and other intellectual property rights that are incorporated into some elementsof our drug discovery and development efforts. These licenses are not material to our business, and the technologies can be obtained from multiplesources. We are currently party to separate royalty-free, non-exclusive, cross-licenses with each of Bracco, GE Healthcare and Imcor PharmaceuticalCompany which give us freedom to operate in connection with contrast-enhanced ultrasound imaging technology. We also in-license certain freedom tooperate rights for Ablavar from, among others, Bayer.18Table of ContentsRegulatory MattersFood and Drug Laws The development, manufacture, sale and distribution of our products are subject to comprehensive governmental regulation both within and outsidethe United States. A number of factors substantially increase the time, difficulty and costs incurred in obtaining and maintaining the approval to marketnewly developed and existing products. These factors include governmental regulation, such as detailed inspection of and controls over research andlaboratory procedures, clinical investigations, manufacturing, narcotic licensing, marketing, sampling, distribution, import and export, record keepingand storage and disposal practices, together with various post-marketing requirements. Governmental regulatory actions can result in the seizure orrecall of products, suspension or revocation of the authority necessary for their production and sale as well as other civil or criminal sanctions. Our activities in the development, manufacture, packaging or repackaging of our pharmaceutical and medical device products subjects us to a widevariety of laws and regulations. We are required to register for permits and/or licenses with, seek approvals from and comply with operating andsecurity standards of the FDA, the U.S. Nuclear Regulatory Commission ("NRC"), the U.S. Department of Health and Human Services ("HHS"),Health Canada, the European Medicines Agency ("EMA"), and various state and provincial boards of pharmacy, state and provincial controlledsubstance agencies, state and provincial health departments and/or comparable state and provincial agencies as well as foreign agencies, and certainaccrediting bodies depending upon the type of operations and location of product distribution, manufacturing and sale. The FDA and various state regulatory authorities regulate the research, testing, manufacture, safety, labeling, storage, recordkeeping, premarketapproval, marketing, advertising and promotion, import and export and sales and distribution of pharmaceutical products in the United States. Prior tomarketing a pharmaceutical product, we must first receive FDA approval. Specifically, in the United States, the FDA regulates drugs under the FederalFood, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, and implementing regulations. The process of obtaining regulatoryapprovals and compliance with appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time andfinancial resources. The process required by the FDA before a drug product may be marketed in the United States generally involves the following:•completion of preclinical laboratory tests, animal studies and formulation studies according to Good Laboratory Practices regulations; •submission to the FDA of an IND which must become effective before human clinical studies may begin; •performance of adequate and well-controlled human clinical studies according to Good Clinical Practices and other requirements, toestablish the safety and efficacy of the proposed drug product for its intended use; •submission to the FDA of a New Drug Application, or NDA, for a new drug; •satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug product is produced to assesscompliance with current Good Manufacturing Practices, or cGMP, regulations; and •FDA review and approval of the NDA. The testing and approval process requires substantial time, effort, and financial resources, and we cannot be certain that any approvals for ourproduct candidates will be granted on a timely basis, if at all. Once a pharmaceutical product candidate is identified for development, it enters thepreclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity, formulation,19Table of Contentsand stability, as well as animal studies to assess its potential safety and efficacy. This testing culminates in the submission of the IND to the FDA. Oncethe IND becomes effective, the clinical trial program may begin. Human clinical studies are typically conducted in three sequential phases that mayoverlap or be combined: Phase 1. The product is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism,distribution and excretion. In the case of some products for severe or life-threatening diseases, especially when the product may be tooinherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients. Phase 2. Involves studies in a limited patient population to identify possible adverse effects and safety risks, to evaluate preliminarily theefficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage and schedule. Phase 3. Clinical studies are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population atgeographically dispersed clinical study sites. These studies are intended to collect sufficient safety and effectiveness data to support the NDA forFDA approval. Sponsors may request a special protocol assessment from the FDA. The FDA's special protocol assessment process creates a written agreementbetween the sponsoring company and the FDA regarding the clinical trial design and other clinical trial issues that can be used to support approval of acandidate product. The special protocol assessment is intended to provide assurance that if the agreed-upon clinical trial protocols are followed and thetrial endpoints are achieved, the data may serve as the primary basis for an efficacy claim in support of an NDA. However, the special protocolassessment agreement is not a guarantee of an approval of a product or any permissible claims about the product. In particular, the special protocolassessment is not binding on the FDA if public health concerns become evident that are unrecognized at the time that the special protocol assessmentagreement is entered into, other new scientific concerns regarding product safety or efficacy arise, or if the sponsor company fails to comply with theagreed upon trial protocols. Progress reports detailing the results of the clinical studies must be submitted at least annually to the FDA and safety reports must be submitted tothe FDA and the investigators for serious and unexpected adverse events. Submissions must also be made to inform the FDA of certain changes to theclinical trial protocol. Federal law also requires the sponsor to register the trials on public databases when they are initiated, and to disclose the results ofthe trials on public databases upon completion. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, ifat all. The FDA or the sponsor may suspend or terminate a clinical study at any time on various grounds, including a finding that the research subjectsor patients are being exposed to an unacceptable health risk. Similarly, an institutional review board, or IRB, can suspend or terminate approval of aclinical study at its institution if the clinical study is not being conducted in accordance with the IRB's requirements or if the drug product has beenassociated with unexpected serious harm to patients. Failure to register a trial or disclose study results within the required time periods could result inpenalties, including civil monetary penalties. Concurrent with clinical studies, companies usually complete additional animal studies and must also develop additional information about thechemistry and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance withcGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among otherthings, the manufacturer must develop methods for testing the identity, strength, quality, and purity of the final product. Additionally, appropriatepackaging must be20Table of Contentsselected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over itsshelf life. The results of product development, preclinical studies, and clinical studies, along with descriptions of the manufacturing process, analytical testsconducted on the drug product, proposed labeling, and other relevant information, are submitted to the FDA as part of an NDA for a new drug,requesting approval to market the product. The submission of an NDA is subject to the payment of a substantial user fee, pursuant to the PrescriptionDrug User Fee Act ("PDUFA"), which was first enacted in 1992 to provide the FDA with additional resources to speed the review of important newmedicines. A waiver of such fee may be obtained under certain limited circumstances. PDUFA expires every five years and must be reauthorized byCongress. PDUFA IV expired on September 30, 2012, and was renewed as Title I of the FDA Safety and Innovation Act ("FDASIA"). The PDUFAV reauthorization reflected an agreement reached after months of discussion between FDA, industry and other stakeholders. The current PDUFA Vagreement focuses on improving the efficiency and predictability of the review process, strengthening the agency regulatory science base and enhancingbenefit-risk assessment and post-approval safety surveillance. The approval process is lengthy and difficult and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied. TheFDA has substantial discretion in the product approval process, and it is impossible to predict with any certainty whether and when the FDA will grantmarketing approval. The FDA may on occasion require the sponsor of an NDA to conduct additional clinical studies or to provide other scientific ortechnical information about the product, and these additional requirements may lead to unanticipated delay or expense. Even if such data and informationis submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical studies are not alwaysconclusive, and the FDA may interpret data differently than we interpret the same data. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use mayotherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings orprecautions be included in the product labeling. In addition, the FDA may require Phase 4 testing which involves clinical studies designed to furtherassess a drug product's safety and effectiveness after NDA approval. The FDA also may impose risk evaluation mitigation strategies, or REMS, on aproduct if the FDA believes there is a reason to monitor the safety of the drug in the marketplace. REMS are a regulatory tool that the FDA appliesbased on a case-by-case assessment as to whether a REMS is needed. While the FDA has not used its REMS enforcement authority for every productapproval, it has exercised this authority on a regular basis, and it is anticipated the agency will continue to do so going forward. REMS could addtraining requirements for healthcare professionals, safety communications efforts, and limits on channels of distribution, among other things. Thesponsor would be required to evaluate and monitor the various REMS activities and adjust them if need be. Whether a REMS would be imposed on anyof our products and any resulting financial impact is uncertain at this time. Any drug products for which we receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, productsampling and distribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion andadvertising requirements. The FDA strictly regulates labeling, advertising, promotion, and other types of information on products that are placed on themarket. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label and promotional claimsmust be appropriately balanced with important safety information and otherwise be adequately substantiated. Further, manufacturers of drugs mustcontinue to comply with cGMP requirements, which are extensive and require considerable time, resources, and21Table of Contentsongoing investment to ensure compliance. In addition, changes to the manufacturing process generally require prior FDA approval before beingimplemented, and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject tofurther FDA review and approval. Drug product manufacturers and other entities involved in the manufacturing and distribution of approved drugs products are required to registertheir establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain otheragencies for compliance with cGMP and other laws. The cGMP requirements apply to all stages of the manufacturing process, including theproduction, processing, sterilization, packaging, labeling, storage and shipment of the drug product. Manufacturers must establish validated systems toensure that products meet specifications and regulatory standards, and test each product batch or lot prior to its release. In addition, in February 2012,the FDA announced that on June 12, 2012, it will begin to require that the manufacturers of commercial PET products, including radiopharmacies,hospitals and academic medical centers, either submit an NDA or Abbreviated New Drug Application, or ANDA, in order to produce PET drugs forclinical use, or produce the drugs under an IND. In December 2012, the FDA issued several guidances, including one using a detailed question andanswer format, for PET drug producers that describe the approval process and set forth a description of FDA regulation of PET products. The FDA also regulates the preclinical and clinical testing, design, manufacture, safety, efficacy, labeling, storage, record keeping, sales anddistribution, postmarket adverse event reporting, import/export and advertising and promotion of any medical devices that we distribute pursuant to theFDCA and FDA's implementing regulations. The Federal Trade Commission shares jurisdiction with the FDA over the promotion and advertising ofcertain medical devices. The FDA can also impose restrictions on the sale, distribution or use of devices at the time of their clearance or approval, orsubsequent to marketing. Currently, two medical devices, both of which are manufactured by third parties who hold the product clearances, compriseonly a small portion of our total revenue. The FDA may withdraw a pharmaceutical or medical device product approval if compliance with regulatory standards is not maintained or ifproblems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on theproduct or even complete withdrawal of the product from the market. Further, the failure to maintain compliance with regulatory requirements mayresult in administrative or judicial actions, such as fines, warning letters, holds on clinical studies, product recalls or seizures, product detention orrefusal to permit the import or export of products, refusal to approve pending applications or supplements, restrictions on marketing or manufacturing,injunctions, or civil or criminal penalties. Because our operations include nuclear pharmacies and related businesses, such as cyclotron facilities used to produce PET products used indiagnostic medical imaging, we are subject to regulation by the NRC or the departments of health of each state in which we operate and the applicablestate boards of pharmacy. In addition, the FDA is also involved in the regulation of cyclotron facilities where PET products are produced andcompliance with cGMP requirements and United States Pharmacopeia (USP) requirements for PET drug compounding. Drug laws also are in effect in many of the non-U.S. markets in which we conduct business. These laws range from comprehensive drug approvalrequirements to requests for product data or certifications. In addition, inspection of and controls over manufacturing, as well as monitoring of adverseevents, are components of most of these regulatory systems. Most of our business is subject to varying degrees of governmental regulation in thecountries in which we operate, and the general trend is toward increasingly stringent regulation. The exercise of broad regulatory powers by the FDAcontinues to result in increases in the amount of testing and documentation required for approval or clearance of new drugs and devices, all of whichadd to the expense of product introduction. Similar22Table of Contentstrends also are evident in major non-U.S. markets, including Canada, the European Union, Australia and Japan. To assess and facilitate compliance with applicable FDA, NRC and other state, federal and foreign regulatory requirements, we regularly reviewour quality systems to assess their effectiveness and identify areas for improvement. As part of our quality review, we perform assessments of oursuppliers of the raw materials that are incorporated into products and conduct quality management reviews designed to inform management of keyissues that may affect the quality of our products. From time to time, we may determine that products we manufactured or marketed do not meet ourspecifications, published standards, such as those issued by the International Standards Organization, or regulatory requirements. When a quality orregulatory issue is identified, we investigate the issue and take appropriate corrective action, such as withdrawal of the product from the market,correction of the product at the customer location, notice to the customer of revised labeling and other actions.Drug Price Competition and Patent Term Restoration Act of 1984 The Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, provides for: (1) restoration of a portionof a product's patent term that was lost during clinical development and application review by the FDA; (2) statutory protection, known as exclusivity,against the FDA's acceptance or approval of certain competitor applications; and (3) the legal basis for the approval of ANDAs. Patent term extension can compensate for time lost during product development and the regulatory review process by returning up to five years ofpatent life for a patent that covers a new product or its use. This period is generally one-half the time between the effective date of an IND and thesubmission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Patent term extensions,however, are subject to a maximum extension of five years, and the patent term extension cannot extend the remaining term of a patent beyond a total of14 years. The application for patent term extension is subject to approval by the U.S. Patent and Trademark Office in conjunction with the FDA. The Hatch-Waxman Act also provides for a period of statutory protection for new drugs that receive NDA approval from the FDA. If the FDAapproves a new drug NDA as a new chemical entity, meaning that the FDA has not previously approved any other new drug containing the same activeentity, then the Hatch-Waxman Act prohibits an abbreviated application by a generic competitor, with some exceptions, for a period of five years fromthe date of approval of the NDA. The Hatch-Waxman Act will not prevent the filing or approval of a full NDA, as opposed to an abbreviatedapplication, for any drug, but the competitor would be required to conduct its own clinical trials, and any use of the drug for which marketing approvalis sought could not violate another NDA holder's patent claims. If FDA approves an NDA for a new drug containing an active ingredient that waspreviously approved by the FDA, but the NDA is for a drug that includes new clinical data to support an innovation over the previously approved drug,then the Hatch-Waxman statutory exclusivity period is only three years from the date of the NDA approval that covers the innovation. Thus, the threeyear exclusivity does not prohibit the FDA, with limited exceptions, from approving generic drugs containing the same active ingredient but without thenew innovation. The Hatch-Waxman Act also permits the FDA to approve ANDAs for generic versions of drugs assuming the approval would not violate anotherNDA holder's patent claims. The ANDA process provides that an ANDA applicant needs only to submit data demonstrating that its product isbioequivalent to the innovator product as well as relevant chemistry, manufacturing and product data. The Hatch-Waxman Act also instituted a third typeof drug application that requires the same information as a NDA, including full reports of clinical and preclinical studies, except that some of theinformation from the reports required for marketing approval comes from studies which the applicant23Table of Contentsdoes not own or have a legal right of reference. This type of application, a 505(b)(2) NDA, permits a manufacturer to obtain marketing approval for adrug without needing to conduct or obtain a right of reference for all of the required studies.Healthcare Reform Act and Related Laws In March 2010, the President signed one of the most significant healthcare reform measures in decades the Patient Protection and Affordable CareAct, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively, the Healthcare Reform Act. The Healthcare ReformAct substantially changes the way in which healthcare will be financed by both governmental and private insurers and has a significant impact on thepharmaceutical industry. The Healthcare Reform Act contains a number of provisions that affect coverage and reimbursement of drug products and themedical imaging procedures in which our drug products are used. Key provisions, implemented in 2010 and after, include the following:•establishing a presumed utilization rate of 75% for imaging equipment costing $1 million or more in the physician office and free-standing imaging facility setting for dates of service on or after January 1, 2011, which presumed utilization rate affects the Medicare perprocedure medical imaging reimbursement. Under the American Taxpayer Relief Act of 2012, the presumed utilization rate was furtherincreased to 90% for 2014 and subsequent years, which reduces the Medicare per procedure medical imaging reimbursement; •increasing of the minimum rebate percentage of the average manufacturer price for Medicaid rebates payable by manufacturers of brand-name drugs (such as us) from 15.1% to the higher of 23.1% of the average manufacturer price or the difference between the averagemanufacturer price and the best price; •extending Medicaid rebates payable by manufacturers of brand-name drugs to drugs paid by Medicaid managed care organizations; •imposing a non-deductible annual fee on pharmaceutical manufacturers or importers who sell brand name prescription drugs to specifiedfederal government programs; and •imposing a non-deductible excise tax on medical devices effective in 2013. The Healthcare Reform Act also establishes an Independent Payment Advisory Board, or IPAB, to reduce the per capita rate of growth inMedicare spending. Beginning in 2014, the IPAB is mandated to propose changes in Medicare payments if it is determined that the rate of growth ofMedicare expenditures exceeds target growth rates or the projected percentage increase for the medical expenditures portion of the Consumer PriceIndex is greater than the projected percentage increase in the Consumer Price Index for all items. A proposal made by the IPAB must be implementedby the Centers for Medicare and Medicaid Services, or CMS, unless Congress adopts a proposal that achieves the necessary savings. IPAB proposalsmay impact payments for physician and free-standing imaging services beginning in 2015 and for hospital services beginning in 2020. The Healthcare Reform Act also amended the federal self-referral laws, requiring referring physicians to inform patients under certaincircumstances that the patients may obtain services, including MRI, computed tomography, PET, and certain other diagnostic imaging services, from aprovider other than that physician, his or her group practice, another physician in his or her group practice, or another individual under directsupervision of the physician or another physician in the group practice. The referring physician must provide each patient with a written list of othersuppliers who furnish such services in the area in which the patient resides. Effective January 1, 2011, this new information provision could have theeffect of shifting where certain diagnostic medical imaging procedures are performed.24Table of Contents Separately, the Budget Control Act of 2011 established mandatory across-the-board cuts to the Medicare Program. These cuts were slated to gointo effect as of January 1, 2013, but the American Taxpayer Relief Act delayed these cuts until March 1, 2013. The Healthcare Reform Act has been subject to political and judicial challenge. In 2012, the Supreme Court considered the constitutionality ofcertain provisions of the law. The court upheld as constitutional the mandate for individuals to obtain health insurance, but held that the provisionallowing the federal government to withhold certain Medicaid funds to states that do not expand state Medicaid programs was unconstitutional. Theimpact of the court's ruling remains uncertain. Political and judicial challenges to the law may continue in the wake of the court's ruling.Healthcare Fraud and Abuse Laws We are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claimslaws. The Federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing essentially anythingof value, directly or indirectly, in order to generate business, including the purchase or prescription of a drug, that is reimbursable by federal health careprograms such as Medicare or Medicaid. The scope of the Federal Anti-Kickback Statute is broad. Regulatory "safe harbors" protect certainarrangements within the scope of the statute that meet the specific requirements of the safe harbor. Arrangements outside of the safe harbor may besubject to scrutiny by government enforcement agencies and prosecuted if the arrangement is considered abusive. Many states have adopted lawssimilar to the Federal Anti-Kickback Statute. The scope of these state prohibitions vary and may prohibit proposed or actual financial interactionsinvolving business reimbursed under private health insurance as well as under government health care programs. At the federal and state level, theremay not be regulations, guidance or court decisions that apply the laws to particular industry practices. There is therefore a possibility that our practicesmight be challenged under the anti-kickback laws. Federal and state false claims laws generally prohibit anyone from knowingly and willingly presenting claims for payment to third party payors(including Medicare and Medicaid) or causing such claims to be presented when the claims involve reimbursed drugs or services that are false orfraudulent, items or services not provided as claimed, or medically unnecessary items or services. The Federal Civil False Claims Act, or False ClaimsAct, applies to false claims involving federal healthcare programs and permits a private individual acting as a "whistleblower" to bring actions on behalfof the federal government alleging violations of the False Claims Act and to share in any monetary recovery. State false claims acts may apply where aclaim is submitted to any third party payor (whether private health insurance or a government health care program). Government enforcement agenciesand private whistleblowers have asserted liability under false claims acts for claims submitted involving inadequate care, kickbacks, improper promotionof off-label uses (i.e., uses not expressly approved by the FDA in a drug's label), mis-reporting of drug prices to federal agencies andmisrepresentations of services rendered. The Healthcare Reform Act revised the False Claims Act to provide that a claim arising from a violation of theFederal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Our future activities relating to the reportingof discount and rebate information and other information affecting federal, state and third-party reimbursement of our products and to the sale andmarketing of our products may be subject to scrutiny under these laws. Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices ofpharmaceutical manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers or requiredisclosure to the government and public of such interactions. The laws include federal "sunshine" provisions enacted in 2010 as part of the HealthcareReform Act, and final regulations implementing this law were promulgated in February 2013. The sunshine provisions apply to applicablemanufacturers with products reimbursed under Medicare, Medicaid, and the Children's Health Insurance Program, and25Table of Contentsrequire those manufacturers to disclose annually to CMS (for re-disclosure to the public) certain payments or transfers of value made to physicians andtheir immediate family members. Manufacturers must report data for the period from August to December 2013 by March 31, 2014, and CMS willrelease the data by September 30, 2014. Separately, the Healthcare Reform Act requires manufacturers to submit information on the identity andquantity of drug samples requested and distributed during each year. This provision was to be effective on April 1, 2012. The FDA indicated its intentto exercise enforcement discretion through October 1, 2012, and stated that it would issue notice to industry prior to beginning enforcement of thissection. At this time, the FDA has not issued any materials to suggest it is enforcing this requirement. State laws may also require disclosure ofpharmaceutical pricing information and marketing expenditures. Many of these laws and regulations contain ambiguous requirements. Given the lack ofclarity in laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent federal and state laws andregulations. Federal and state authorities are paying increased attention to enforcement of fraud and abuse laws within the pharmaceutical industry and privateindividuals have been active in alleging violations of the laws and bringing suits on behalf of the government under the False Claims Act. We are unableto predict whether we would be subject to actions under fraud and abuse laws or the impact of such actions. If we were subject to allegationsconcerning, or were convicted of violating, these laws, our business could be harmed. Violations of federal and state laws related to fraud and abuse arepunishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such asMedicare and Medicaid. Even the costs of defending such claims could adversely affect our financial performance. Violations of international fraud andabuse laws could result in similar penalties, including exclusion from participation in health programs outside the United States.Other Healthcare Laws Our operations may be affected by the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its implementing regulations,which established uniform standards for certain "covered entities" (healthcare providers, health plans and healthcare clearinghouses) governing theconduct of certain electronic healthcare transactions and protecting the security and privacy of protected health information. The American Recovery andReinvestment Act of 2009, commonly referred to as the economic stimulus package, included the Health Information Technology for Economic andClinical Health Act, or HITECH, which expands HIPAA's privacy and security standards. HITECH became effective on February 17, 2010, andimplementing regulations were released in January 2013. Among other things, HITECH makes certain HIPAA privacy and security standards directlyapplicable to "business associates", independent contractors of covered entities that receive or obtain protected health information in connection withproviding a service on behalf of covered entities. HITECH also increased the civil and criminal penalties that may be imposed and gave state attorneysgeneral new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees andcosts associated with pursuing federal civil actions. Although we believe that we are neither a "covered entity" nor a "business associate" under thelegislation, a business associate relationship may be imputed from facts and circumstances even in the absence of an actual business associateagreement. In addition, HIPAA and HITECH may affect our interactions with customers who are covered entities or their business associates.Laws Relating to Foreign Trade We are subject to various federal and foreign laws that govern our international business practices with respect to payments to governmentofficials. Those laws include the U.S. Foreign Corrupt Practices Act, or FCPA, which prohibits U.S. companies and their representatives from paying,offering to pay, promising, or authorizing the payment of anything of value to any foreign government official, government staff member, politicalparty, or political candidate for the purpose of obtaining or26Table of Contentsretaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. In many countries, the health careprofessionals we regularly interact with may meet the FCPA's definition of a foreign government official. The FCPA also requires public companies tomake and keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequate system of internalaccounting controls. Those laws also include the U.K. Bribery Act 2010, or Bribery Act, which proscribes giving and receiving bribes in the public and private sectors,bribing a foreign public official, and failing to have adequate procedures to prevent employees and other agents from giving bribes. U.S. companies thatconduct business in the United Kingdom generally will be subject to the Bribery Act. Penalties under the Bribery Act include potentially unlimited finesfor companies and criminal sanctions for corporate officers under certain circumstances. Our policies mandate compliance with these anti-bribery laws. Our operations reach many parts of the world that have experienced governmentalcorruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despiteour training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committedby our employees or agents.Health and Safety Laws We are also subject to various federal, state and local laws, regulations and recommendations, both in the United States and abroad, relating to safeworking conditions, laboratory and manufacturing practices and the use, transportation and disposal of hazardous or potentially hazardous substances.Environmental Matters We are subject to various federal, state and local laws and regulations relating to the protection of the environment, human health and safety in theUnited States and in other jurisdictions in which we operate. Our operations, like those of other medical product companies, involve the transport, use,handling, storage, exposure to and disposal of materials and wastes regulated under environmental laws, including hazardous and radioactive materialsand wastes. We cannot assure you that we have been or will be in compliance with environmental and health and safety laws at all times. If we violatethese laws and regulations, we could be fined, criminally charged or otherwise sanctioned by regulators. We believe that our operations currentlycomply in all material respects with applicable environmental laws and regulations. Certain environmental laws and regulations assess liability on current or previous owners or operators of real property for the cost of investigation,removal or remediation of hazardous materials or wastes at such formerly owned or operated properties or at third-party properties at which they havedisposed of hazardous materials or wastes. In addition to cleanup actions brought by governmental authorities, private parties could bring personalinjury, property damage or other claims due to the presence of, or exposure to, hazardous materials or wastes. We currently are not party to any claimsor any obligations to investigate or remediate contamination at any of our facilities. We are required to maintain a number of environmental permits and nuclear licenses for our North Billerica facility, which is our primarymanufacturing, packaging and distribution facility. In particular, we must maintain a nuclear byproducts materials license issued by the Commonwealthof Massachusetts. This license requires that we provide financial assurance demonstrating our ability to cover the cost of decommissioning anddecontaminating, or D&D, the Billerica site at the end of its use as a nuclear facility. We currently estimate the D&D cost at the Billerica site to beapproximately $22.6 million. As of December 31, 2012 and 2011, we have a liability balance associated with the fair value of the asset retirementobligations of approximately $5.4 million and $4.9 million, respectively. We have recorded accretion expense of $0.6 million, $0.5 million and$0.4 million during the years ended December 31, 2012, 2011 and 2010, respectively. We currently provide this financial assurance in27Table of Contentsthe form of surety bonds. We generally contract with third parties for the disposal of wastes generated by our operations. Prior to disposal, we store anylow level radioactive waste at our facilities until the materials are no longer considered radioactive, as allowed by our licenses and permits. Environmental laws and regulations are complex, change frequently and have become more stringent over time. While we have budgeted for futurecapital and operating expenditures to maintain compliance with these laws and regulations, we cannot assure you that our costs of complying withcurrent or future environmental protection, health and safety laws and regulations will not exceed our estimates or adversely affect our results ofoperations and financial condition. Further, we cannot assure you that we will not be subject to additional environmental claims for personal injury orcleanup in the future based on our past, present or future business activities. While it is not feasible to predict the future costs of ongoing environmentalcompliance, it is reasonably probable that there will be a need for future provisions for environmental costs that, in management's opinion, are not likelyto have a material effect on our financial condition, but could be material to the results of operations in any one accounting period.Employees As of December 31, 2012, we had 585 employees, of which 458 were located in the United States and 127 were located internationally, andapproximately 83 contractors. None of our employees are represented by a collective bargaining unit, and we believe that our relationship with ouremployees is excellent. In 2013, we initiated a reduction in the number of our employees and contractors in connection with the strategic shift in our R&D program.Corporate History Founded in 1956 as New England Nuclear Corporation, we were purchased by E. I. du Pont de Nemours and Company in 1981. Bristol-MyersSquibb Company, or BMS, subsequently acquired the diagnostic medical imaging business as part of its acquisition of DuPont Pharmaceuticals in2001. Avista Capital Partners, L.P. and its affiliates, or collectively, Avista, acquired the medical imaging business from BMS in January 2008.Our Sponsor Avista is a leading private equity firm with offices in New York, NY, Houston, TX and London, UK. Founded in 2005 as a spin-out from theformer DLJ Merchant Banking Partners, or DLJMB, franchise, Avista's strategy is to make controlling or influential minority investments primarily ingrowth-oriented energy, healthcare, media, consumer and industrial companies. Through its team of seasoned investment professionals and industryexperts, Avista seeks to partner with exceptional management teams to invest in and add value to well-positioned businesses.Item 1A. Risk Factors You should carefully consider the following risks. These risks could materially affect our business, results of operations or financial condition,cause the trading price of our outstanding notes to decline materially or cause our actual results to differ materially from those expected or thoseexpressed in any forward-looking statements made by us or on our behalf. These risks are not exclusive, and additional risks to which we are subjectinclude, but are not limited to, other risks and uncertainties that are not currently known to us or that we currently deem to be immaterial, the factorsmentioned under "Cautionary Note Regarding Forward-Looking Statements" and the risks of our businesses described elsewhere in this annualreport.28Table of ContentsOur dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering ourproducts to our customers in the required quantities, within the required timeframe, or at all, which could result in order cancellations anddecreased revenues. We obtain a substantial portion of our products from third party suppliers. We currently rely on BVL as one of our two manufacturers ofDEFINITY and Cardiolite product supply and our sole source manufacturer for Neurolite. We also rely on Mallinckrodt as our sole manufacturer forAblavar. In August 2011, BVL announced that it will be transitioning out of the contract manufacturing business after December 31, 2013. In February2013, the FDA informed us that the JHS facility was approved to manufacture DEFINITY, and we have since commenced shipping JHS-manufacturedDEFINITY to customers. We also have on-going technology transfer activities at JHS for our Cardiolite product supply and Neurolite, but we can giveno assurances as to when that technology transfer will be completed and when we will actually receive supply of Cardiolite products and Neurolite fromJHS. In the meantime, we also have an alternate manufacturer for a limited supply of Cardiolite. We are also currently working to secure additionalalternative suppliers for our key products as part of our on-going supply chain diversification strategy. In addition, for reasons of quality assurance orcost effectiveness, we purchase certain components and raw materials from sole suppliers (including, for example, the lead casing for our TechneLitegenerators). Because we do not control the actual production of many of the products we sell, we may be subject to delays caused by interruption inproduction based on conditions outside of our control. At our North Billerica, Massachusetts facility, we manufacture TechneLite on a relatively new,highly automated production line, as well as Thallium and Gallium using our older cyclotron technology. If we or one of our manufacturing partnersexperiences an event, including a labor dispute, natural disaster, fire, power outage, security problem, failure to meet regulatory requirements, productquality issue, technology transfer issue or other issue, we may be unable to manufacture the relevant products at previous levels or on the forecastedschedule, if at all. Due to the stringent regulations and requirements of the governing regulatory authorities regarding the manufacture of our products,we may not be able to quickly restart manufacturing at a third party or our own facility or establish additional or replacement sources for certainproducts, components or materials. In July 2010, BVL temporarily shutdown the South Complex, which is the facility where BVL manufactures products for a number of customers,including us, in order to upgrade the facility to meet certain regulatory requirements. BVL had previously planned for the shutdown of the SouthComplex to run through March 2011 and to resume production of our products in April 2011. In anticipation of the shutdown, BVL manufactured forus additional inventory of these products to meet our expected needs during this period. After a series of unexpected delays, in the second quarter of2012, BVL resumed manufacturing DEFINITY and allowed us to release product beginning at the end of the second quarter of 2012. BVL has alsoresumed manufacturing Cardiolite products, and we are supplying these products to the market. We currently believe that Neurolite will again becomeavailable from BVL in the latter half of 2013. We can give no assurances that BVL will be able to continue to manufacture and distribute our productsthrough the balance of 2013 or that JHS will be able to manufacture and distribute our products in a high quality and timely manner and in sufficientquantities to allow us to avoid product stock-outs and shortfalls as we transition from BVL to JHS as our primary manufacturer during 2013. Currently,the regulatory authorities in certain countries prohibit us from marketing products manufactured by BVL, and JHS has not yet obtained approval ofsuch regulatory authorities that would permit us to market products manufactured by JHS. Accordingly, until such regulatory approvals have beenobtained, our international business, results of operations, financial condition, and cash flows will continue to be adversely affected. Because of BVL's ongoing regulatory issues and our mutual desire to enter into a new contractual relationship to replace the original arrangement,in March 2012 we terminated the 2008 Agreement, entered into a Settlement Agreement, agreed to receive initial supplies from BVL pursuant to theTransition Services Agreement, and entered into a longer term arrangement pursuant to a29Table of ContentsManufacturing Services Agreement. For more detail on the arrangement, see "Item 1. Business—Raw Materials and Supply Relationships—Ben VenueLaboratories, Inc. and Technology Transfer." Despite this new contractual relationship, BVL can terminate (i) the new Transition Services Agreement inthe event that regulatory action prevents manufacturing our products for at least nine months during the term of the agreement and upon the occurrenceof certain specified events, including material breach by us, bankruptcy, force majeure events and BVL's sale, wind-down or cessation of business and(ii) the new Manufacturing and Service Contract, in the event that regulatory action prevents manufacturing for the full term of the agreement and uponthe occurrence of specified events, including material breach by us, bankruptcy, force majeure events and BVL's sale, wind-down or cessation ofbusiness. On January 22, 2013, BVL announced it had voluntarily entered into a consent decree with the FDA relating to current Good ManufacturingPractice requirements at its Bedford, Ohio facility. Under the consent decree, the FDA has given BVL approval to continue to manufacture all of ourproducts for us. However, we can give no assurances that, operating under the consent decree, BVL will be able to manufacture and distribute ourproducts in a timely manner and in sufficient quantities to allow us to avoid stock-outs or shortfalls as we transition from BVL to JHS as our primarymanufacturer during 2013. In addition to our existing manufacturing relationships, we are also pursuing the new manufacturing relationships described above to establish andsecure additional or alternative suppliers for DEFINITY, Cardiolite and Neurolite. We cannot assure you, however, that these activities, will besuccessful, or that before such alternate manufacturers or sources of product are fully functional and qualified that we will be able to avoid or mitigateinterim supply shortages. In addition, we cannot assure you that our existing suppliers or any new suppliers can adequately maintain either theirfinancial health or regulatory compliance to allow continued production and supply. A reduction or interruption in manufacturing, or an inability tosecure alternative sources of raw materials or components, could eventually have a material adverse effect on our business, results of operations,financial condition and cash flows.Challenges with product quality or product performance, including defects, caused by us or our suppliers could result in a decrease in customersand sales, unexpected expenses and loss of market share. The manufacture of our products is highly exacting and complex and must meet stringent quality requirements, due in part to strict regulatoryrequirements, including the FDA's cGMPs. Problems may arise during manufacturing for a variety of reasons including equipment malfunction, failureto follow specific protocols and procedures, defective raw materials and environmental factors. Additionally, manufacturing flaws, component failures,design defects, off-label uses or inadequate disclosure of product-related information could result in an unsafe condition or the injury or death of apatient. Such events could lead to a recall of, or issuance of a safety alert relating to, our products. We also may undertake voluntarily to recall productsor temporarily shutdown production lines based on internal safety and quality monitoring and testing data. Quality, regulatory, and recall challenges could cause us to incur significant costs, including costs to replace products, lost revenue, damage tocustomer relationships, time and expense spent investigating the cause and costs of any possible settlements or judgments related thereto and potentiallycause similar losses with respect to other products. Such challenges could also divert the attention of our management and employees from productdevelopment efforts. If we deliver products with defects, or if there is a perception that our products or the processes related thereto contain errors ordefects, we could incur additional recall and product liability costs, and our credibility and the market acceptance and sales of our products could bematerially adversely affected. Due to the strong name recognition of our brands, an adverse event involving one of our products could result in reducedmarket acceptance and demand for all products within that brand, and could harm our reputation and our ability to market our products in the future. Insome circumstances, adverse events arising from or30Table of Contentsassociated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applicationsfor new product approvals. Such challenges could have a material adverse effect on our business, results of operations, financial condition and cashflows.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 fromdelivering some of our products to our customers in the required quantities, within the required timeframe, or at all, which could result in ordercancellations and decreased revenues. A critical ingredient of TechneLite, currently our largest product by annual revenues, is Moly. There are nine major reactors located around theworld which produce large scale amounts of Moly: NRU located in Canada; HFR located in The Netherlands; BR2 located in Belgium; OSIRIS locatedin France; SAFARI located in South Africa; OPAL located in Australia; LVR-10 located in the Czech Republic; MARIA located in Poland; and RA-8located in Argentina. Moly produced at these reactors is then finished at one of six processing sites: Nordion (formerly known as MDS Nordion) inCanada; Covidien in The Netherlands; IRE in Belgium; NTP in South Africa; ANSTO in Australia; and CNEA in Argentina. Finished Moly is thensold to technetium generator manufacturers, including us. Historically, our largest supplier of Moly has been Nordion which has relied on the NRUreactor owned and operated by AECL, located in Chalk River, Ontario. This reactor was off-line from May 2009 until August 2010 due to a heavywater leak in the reactor vessel. The inability of the NRU reactor to produce Moly and Nordion to finish Moly during the shutdown period had adetrimental effect on our business, results of operations and cash flows. As a result of the NRU reactor shutdown, we experienced business interruptionlosses. We estimate the quantity of such losses to be, in the aggregate, more than $70 million, including increases in the cost of obtaining limitedamounts of Moly from alternate, more distant, suppliers, and substantial decreases in sales revenue as a result of significantly curtailed manufacturing ofTechneLite generators and our decreased ability to sell other Moly-based medical imaging products, including Cardiolite, in comparison to ourforecasted results. The Government of Canada has stated publicly its intent to exit the isotope business when the NRU reactor's current license expiresin October 2016. As part of the conditions for the relicensing of the NRU reactor through October 2016, the Canadian government has asked AECL to shut downthe reactor for at least four weeks at least once a year for inspection and maintenance. The next shutdown period is currently scheduled to run from mid-April 2013 until mid-May 2013. We currently believe that we will be able to source all of our standing-order customer demand for Moly during thistime period from our other suppliers. However, because Xenon is a by-product of the Moly production process and is currently captured only by NRU,during this shutdown period, we do not currently believe that we will be able to supply all of our standing-order customer demand for Xenon. There canbe no assurance that such off-line periods will last for the stated time or that the NRU will not experience other unscheduled shutdowns in the future.Further prolonged scheduled or unscheduled shutdowns would limit the amount of Moly and Xenon available to us and limit the quantity of TechneLitethat we could manufacture, distribute and sell and the amount of Xenon that we could distribute and sell, resulting in a further substantial negative effecton our business, results of operations, financial condition and cash flows. In the face of the NRU reactor operating challenges, the lack of a long-term commitment by the Government of Canada to the medical isotopeindustry and the NRU reactor re-licensure risks, we entered into Moly supply agreements with NTP, ANSTO and IRE to augment our supply of Moly.While this additional Moly supply allowed us to continue to manufacture and sell technetium generators during the NRU reactor shutdown, thisreplacement capacity was not at the time sufficient to replace the quantity of supply we otherwise received from Nordion. A prolonged disruption ofservice from one of our significant Moly suppliers could have a material adverse effect on our business, results of operations, financial condition andcash flows. We are also pursuing additional sources of Moly from potential new producers around the world to further augment our current supply, butwe31Table of Contentscannot assure you that these possible additional sources of Moly will result in commercial quantities of Moly for our business, or that these newsuppliers together with our current suppliers will be able to deliver a sufficient quantity of Moly to meet our needs. U.S., Canadian and international governments have encouraged the development of a number of alternative Moly production projects with existingreactors and technologies as well as new technologies. However, the Moly produced from these projects will likely not become available until 2015 orlater. As a result, there is a limited amount of Moly available which could limit the quantity of TechneLite that we could manufacture, distribute and sell,resulting in a further substantial negative effect on our business, results of operations, financial condition and cash flows. Further supply challenges in the global Moly supply chain could have a substantial and negative effect on us. For example, currently, the HFRreactor is off-line, and HFR's operator has stated that it is not possible to provide a prospective return to service date. Although only a small portion ofthe Moly we purchase is manufactured at the HFR reactor, if the HFR reactor does not return to service prior to the scheduled NRU shutdown in April2013, the demand for Moly manufactured at the remaining global suppliers will increase substantially, and there may not be sufficient near-term capacityto meet either aggregate market demand or our own customer demand, which could have a negative effect on our business, results of operations,financial condition and cash flows.The instability of the global supply of Moly and recent supply shortages have resulted in increases in the cost of Moly, which has negativelyaffected our margins, and more restrictive agreements with suppliers, which could further increase our costs. With the general instability in the global supply of Moly and supply shortages during 2009 and 2010, we have faced substantial increases in thecost of Moly in comparison to historical costs. We are generally able to pass these Moly cost increases on to our customers in our customer contracts. Ifwe are not able to do so in the future, our margins may decline further with respect to our TechneLite generators, which could have a material adverseeffect on our business, results of operations, financial condition and cash flows.The Moly supply shortage caused by the NRU reactor shutdown has had a negative effect on the demand for some of our products, which willlikely continue in the future. The Moly supply shortage also had a negative effect on the use of other technetium generator-based diagnostic medical imaging agents, includingCardiolite products. With less Moly, we manufactured fewer generators for radiopharmacies and hospitals to make up unit doses of Cardiolite products,resulting in decreased share of Cardiolite products in favor of Thallium, an older medical isotope that does not require Moly, and other diagnosticmodalities. With the return to service of the NRU reactor, we have seen increased sales of TechneLite. However, TechneLite unit volume has notreturned to pre-shortage levels for, we believe, a number of reasons, including: (i) changing staffing and utilization practices in radiopharmacies, whichhave resulted in an increased number of unit-doses of technetium-based radiopharmaceuticals being made from available amounts of technetium;(ii) shifts to alternative diagnostic imaging modalities during the Moly supply shortage, which have not returned to technetium-based procedures; and(iii) decreased amounts of technetium being used in unit-doses of technetium-based radiopharmaceuticals due to growing concerns about patientradiation dose exposure. We do not know if the staffing and utilization practices in radiopharmacies, the mix between technetium and non-technetium-based diagnostic procedures and the increased concerns about radiation exposure will allow technetium demand to ever return to pre-shortage levels,which could have a material adverse effect on our business, results of operations, financial condition and cash flows.32Table of ContentsOur just-in-time manufacturing of radiopharmaceutical products relies on the timely receipt of radioactive raw materials and the timely shipmentof finished goods, and any disruption of our supply or distribution networks could have a negative effect on our business. Because a number of our radiopharmaceutical products, including our TechneLite generators, rely on radioisotopes with limited half-lives, we mustmanufacture, finish and distribute these products on a just-in-time basis because the underlying radioisotope is in a constant state of radio-decay. Forexample, if we receive Moly in the morning of a manufacturing day for TechneLite generators, we will generally ship finished generators to customersby the end of the business day. Shipment of generators may be by next day delivery services or by either ground or air custom logistics. Any delay inus receiving radioisotopes from suppliers or being able to have finished products delivered to customers because of weather or other unforeseentransportation issues could have a negative effect on our business, results of operations, financial condition and cash flows.In the United States, we are heavily dependent on a few large customers to generate a majority of our revenues for our nuclear imaging products.Outside of the United States, we rely on distributors to generate a substantial portion of our revenue. In the United States, we rely on a limited number of radiopharmacy chains, primarily Cardinal, GE Healthcare and UPPI, to distribute our currentlargest volume nuclear imaging products and generate a majority of our revenues. These three customers accounted for approximately 47.3% of our totalrevenues in the fiscal year ended December 31, 2012, with Cardinal, GE Healthcare, and UPPI accounting for 27.4%, 11.5% and 8.4%, respectively.Among the existing radiopharmacies in the United States, continued consolidations, divestitures and reorganizations may have a negative effect on ourbusiness, results of operations, financial condition or cash flows. We generally have distribution arrangements with our major radiopharmacy customerspursuant to multi-year contracts, each of which is subject to renewal, from as soon as December 2013 until as late as December 2017. If these contractsare not in force through the balance of their term or are not renewed, or the terms are less favorable to us, it could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows. Outside of the United States, Canada, Australia and Puerto Rico, we have no radiopharmacies or sales force and therefore rely on distributors,either on a country-by-country basis or on a multi-country, regional basis, to market, distribute and sell our products. These distributors accounted forapproximately 16%, 19% and 23% of total non-U.S. revenues for the fiscal years ended December 31, 2012, 2011 and 2010, respectively. In certaincircumstances, these distributors may also sell competing products to our own or products for competing diagnostic modalities. As a result, we cannotassure you that our international distributors will increase or maintain our current levels of unit sales or increase or maintain our current unit pricing,which, in turn, could have a material adverse effect on our business, results of operations, financial condition and cash flows.We face significant competition in our business and may not be able to compete effectively. The market for diagnostic medical imaging agents is highly competitive and continually evolving. Our principal competitors in existing diagnosticmodalities include large, global companies with substantial financial, manufacturing, sales and marketing, and logistics resources that are morediversified than us, such as Mallinckrodt, GE Healthcare, Ion Beam Applications, Bayer, Bracco and Draxis, as well as other competitors. We cannotanticipate their competitive actions, such as price reductions on products that are comparable to our own, development of new products that are morecost-effective or have superior performance than our current products, the introduction of generic versions when our proprietary products lose theirpatent protection or the new entry into a generic segment in which we are already a participant. Our current or future products could be renderedobsolete or uneconomical as a result of this competition. Our failure to compete effectively could cause us to lose market share to our competitors andhave a material adverse effect on our business, results of operations, financial condition and cash flows.33Table of ContentsGeneric competition has significantly eroded our share of the MPI segment for Cardiolite products and will likely continue to do so. We are currently aware of four separate third-party generic offerings of sestamibi, the first of which launched in September 2008. Cardioliteproducts accounted for approximately 12%, 19% and 22% of our total revenues in the fiscal years ended December 31, 2012, 2011, and 2010,respectively. Included in Cardiolite is branded Cardiolite and generic sestamibi, some of which we produce and some of which we procure from thirdparties. With the advent of generic competition in September 2008, we have faced significant and continued pricing pressure on Cardiolite. To the extentgeneric competitors further reduce their prices, we may be forced to further reduce the price of our Cardiolite products and lose additional segmentshare, which would have an adverse effect on our business, results of operations, financial condition and cash flows. See "Item 7—Management'sDiscussion and Analysis of Financial Condition and Results of Operations." In addition, because several of the products we manufacture became lessavailable due to recent supply challenges, certain of our customers may have begun to favor a generic offering or a competing agent or diagnosticmodality. If we experience continued pricing pressure or such product or modality shift is sustained, it could have a material adverse effect on ourbusiness, results of operation, financial condition and cash flows.The growth of our business is substantially dependent on increased segment penetration for DEFINITY in suboptimal echocardiograms. With on-going generic competition to our Cardiolite products, reduced demand for certain of our radiopharmaceutical products in comparison tohistoric levels and on-going challenges with Ablavar market acceptance, the growth of our business is substantially dependent on increased segmentpenetration for DEFINITY in suboptimal echocardiographs. Of the nearly 27 million echocardiograms performed each year in the United States, it isestimated that 20%, or approximately five million echocardiograms, produce suboptimal images. Based on our own estimates, we believe thatDEFINITY is used in approximately 2% of all echocardiograms or approximately 10% of all suboptimal echocardiograms. If we are not able tocontinue to grow DEFINITY sales through increased segment penetration, we will not be able to grow the revenue and cash flow of the business orcontinue to fund our other growth initiatives at planned levels, which could have a negative effect on long term value.We may not be able to develop or commercialize our product candidates without successful strategic partners. In March 2013, we began to implement a strategic shift in how we will fund our important R&D programs. We will reduce over time our internalR&D resources while at the same time we seek to engage strategic partners to assist us in the further development and commercialization of ourimportant development candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. However, we may not be able to negotiate relationshipswith potential strategic partners on acceptable terms, or at all. If we are unable to establish or maintain such strategic partnerships, we may have to limitthe size or scope of, or delay, of our development programs, or undertake further development activities at our own expense. In addition, ourdependence on strategic partnerships is subject to a number of risks, including:•the inability to control the amount or timing of resources that our partners may devote to developing the product candidates; •the possibility that we may be required to relinquish important rights, including intellectual property, marketing and distribution rights; •the receipt of lower revenues than if we were to commercialize such products ourselves; •our failure to receive future milestone payments or royalties if a partner fails to commercialize one of our product candidatessuccessfully;34Table of Contents•the possibility that a partner could separately move forward with a competing product candidate developed either independently or incollaboration with others, including our competitors; •the possibility that our strategic partners may experience financial difficulties; •business combinations or significant changes in a partner's business strategy that may adversely affect that partner's willingness or abilityto complete its obligations under any arrangement with us; and •the possibility that our partners may operate in countries where their operations could be negatively impacted by changes in the localregulatory environment or by political unrest. Any of these factors either alone or taken together could have a material adverse effect on our business, results of operations, financial conditionand cash flows.Certain of our customers are highly dependent on payments from third-party healthcare payors, including government sponsored programs,particularly Medicare, in the United States and other countries in which we operate, and reductions in third-party coverage and reimbursementrates for our products could adversely affect our business and results of operations. A substantial portion of our revenue depends, in part, on the extent to which the costs of our products purchased by our customers are reimbursedby third-party private and governmental payors, including Medicare, Medicaid and other U.S. government sponsored programs as well as other non-U.S. governmental payors and private payors. These third-party payors exercise significant control over patient access and increasingly use theirenhanced bargaining power to secure discounted rates and other requirements that may increase the cost of service or reduce demand for our products.Our potential customers' ability to obtain appropriate reimbursement for products and services from these third-party payors affects the selection ofproducts they purchase and the prices they are willing to pay. If these third-party payors do not provide appropriate reimbursement for the costs of ourproducts, deny their coverage or reduce their current levels of reimbursement, healthcare professionals may not prescribe our products and providersand suppliers may not purchase our products. In addition, demand for new products may be limited unless we obtain favorable reimbursement policies(including coverage, coding and payment) from governmental and private third-party payors at the time of the product's introduction. Third-party payorscontinually review their coverage policies for existing and new therapies and can deny coverage for treatments that include the use of our products orrevise payment policies such that payments do not adequately cover the cost of our products. Even if third-party payors make coverage andreimbursement available, such reimbursement may not be adequate or these payors' reimbursement policies may have an adverse effect on our business,results of operations, financial condition and cash flows. Over the past several years, Medicare has implemented numerous changes to payment policies for imaging procedures, some of which have had anegative impact on utilization of imaging services. These include limiting payments in physician offices and free-standing imaging facility settings basedupon rates paid to hospital outpatient departments, reducing payments for certain imaging procedures when performed together with other imagingprocedures in the same family of procedures, and making significant revisions to the methodology for determining the practice expense portion ofMedicare payment, which covers physician office expenses, including staff, equipment and supplies. In 2010, CMS, began a four year transition tochanges in the practice expense methodology based upon the Physician Practice Information Survey, or PPIS, which collected information on physicianpractice expenses by specialty. For 2013, CMS estimates that these changes will reduce payments for cardiology services by 2% and for nuclearmedicine services by 2%. In addition, two other changes to the practice expense calculations have recently been adopted. First, the American TaxpayerRelief Act of 2012 increased the utilization rate for certain imaging equipment from 75% to 90% in the physician office and free-standing imagingfacility setting, which decreases payment rates for the technical component of35Table of Contentsmedical imaging procedures. Second, in 2013, CMS finalized a policy to use a sliding scale approach for loan interest rates based on the current SmallBusiness Administration ("SBA") maximum interest rates for different categories of loan size (price of the equipment) and maturity (useful life of theequipment). Insofar as the interest rate affects practice expense calculations, this sliding scale approach will result in lower reimbursement rates forphysician office and freestanding imaging providers. There continues to be instability in the Hospital Outpatient Prospective Payment System payment rates for certain imaging procedures in the lastseveral years, including cardiac PET and echocardiography with contrast. For example, for 2013, CMS finalized a policy to make an additional paymentto hospitals that utilize products with non-HEU, meaning the product is 95% derived from non-HEU sources. Although some of our products aremanufactured using non-HEU, not all of our products meet CMS's definition of non-HEU, and therefore this payment will not be available for allproducts used by our customers. This payment as well as other changes to the Hospital Outpatient Prospective Payment System payment rates couldinfluence the decisions by hospital outpatient physicians to perform procedures that involve our products. For 2010, CMS reduced the per procedure medical imaging reimbursement in the physician office and free-standing imaging facility. CMStransitioned further reductions in payments through 2013. In addition, effective January 1, 2013, CMS implemented a multiple procedure paymentreduction for certain diagnostic cardiovascular procedures. Under this reduction, full payment is made for the most expensive technical componentservice, and payment is made at 75% for subsequent technical components furnished by the physician (or by physicians in the same group practice) tothe same patient on the same day. We believe that these changes will continue to result in certain physicians and group practices ceasing to provide theseservices and will have the further effect of shifting where certain medical imaging procedures are performed from the physician office and free-standingimaging facility settings to the hospital outpatient setting, which we believe has incrementally reduced the overall number of diagnostic medical imagingprocedures performed. Further, these changes could slow the acceptance and introduction of next-generation imaging equipment into the marketplace,which, in turn, could adversely impact the future market adoption of certain of our imaging agents already in the market or currently in clinical orpreclinical development. We expect that there will continue to be proposals to reduce or limit Medicare and Medicaid payment for diagnostic services.To the extent any of these or other provisions of the Healthcare Reform Act have the effect of reducing the aggregate number of diagnostic medicalimaging procedures performed in the United States, our business, results of operations, financial condition and cash flows would be adversely affected.See "Item 1—Business—Regulatory Matters." Under the statutory Medicare sustainable growth rate formula, payments under the Medicare Physician Fee Schedule could have decreasedsignificantly over the past several years without Congressional intervention. In the past, when the application of the statutory formula would haveresulted in lower payments, Congress has passed interim legislation to prevent the reductions. For 2013, President Obama signed the AmericanTaxpayer Relief Act of 2012, which prevented the negative update factor from going into effect and continues the zero percent update for physicianservices furnished between January 1, 2013 and December 31, 2013. If Congress fails to intervene to prevent the negative update factor in the futurethrough either another temporary measure or a permanent revision to the statutory formula, payments to physicians may be reduced.Reforms to the United States healthcare system may adversely affect our business. A significant portion of our patient volume is derived from U.S. government healthcare programs, principally Medicare, which are highly regulatedand subject to frequent and substantial changes. For example, in March 2010, the President signed one of the most significant healthcare reformmeasures in decades, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act,or, collectively, the Healthcare Reform Act. The Healthcare36Table of ContentsReform Act contains a number of provisions that affect coverage and reimbursement of drug products and the medical imaging procedures in which ourdrug products are used. See "Item 1—Business—Regulatory Matters—Healthcare Reform Act and Related Laws." We cannot assure you that theHealthcare Reform Act, as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannotpredict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business. In addition, other legislative changes have been proposed and adopted since the Healthcare Reform Act was enacted. In August 2011, the Presidentsigned into law the Budget Control Act of 2011. The Budget Control Act includes provisions to raise the U.S. Treasury Department's borrowing limit,known as the federal debt ceiling, and to reduce the federal deficit. The Budget Control Act contemplates the imposition of automatic spendingreductions beginning in 2013 if timely action is not taken by Congress to reduce the deficit. Timely action was not taken, but legislation was enacted todelay the automatic reductions until March 1, 2013 and reduce the amount of automatic reduction. The automatic reduction, if implemented, would notaffect Medicaid, but reductions in payments to Medicare providers may be made up to 2% of the originally budgeted amount. Any significant spendingreductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, and/or any significant taxesor fees that may be imposed on us, as part of any broader deficit-reduction effort or legislative replacement to the Budget Control Act, could have anadverse impact on our results of operations. Enforcement of the U.S. federal debt ceiling has been suspended through May 18, 2013. If the U.S. federal government fails to suspendenforcement of the debt ceiling beyond May 18, 2013 or to increase the debt ceiling and, as a result, is unable to satisfy its financial obligations,including under Medicare, Medicaid and other publicly funded or subsidized health programs, our results of operations could be adversely impacted. The full impact on our business of the Healthcare Reform Act and the other new laws is uncertain. Nor is it clear whether other legislative changeswill be adopted or how such changes would affect our industry generally or our ability to successfully commercialize our products or the developmentof new products.The Healthcare Reform Act could potentially reduce the number of diagnostic medical imaging procedures performed or could reduce the amountof reimbursements paid for such procedures. The Healthcare Reform Act, based on February 2013 estimates from the Congressional Budget Office, is expected to extend coverage toapproximately 27 million previously uninsured Americans. We cannot predict how many, if any, of those additional insureds would be current or futurecandidates for diagnostic medical imaging or, if as a result of such larger pool of insured Americans, the aggregate number of diagnostic medicalimaging procedures performed in the United States would increase. Further, the implementation of the Healthcare Reform Act could potentially reduce the aggregate number of diagnostic medical imaging proceduresperformed in the United States. Under the Healthcare Reform Act, referring physicians under the federal self-referral law must inform patients that theymay obtain certain services, including MRI, computed tomography, PET, and certain other diagnostic imaging services from a provider other than thatphysician, another physician in his or her group practice, or another individual under the direct supervision of the physician or another physician in thegroup practice. The referring physician must provide each patient with a written list of other suppliers who furnish such services in the area in which thepatient resides. This new information provision could have the effect of shifting where certain diagnostic medical imaging procedures are performed,which could potentially reduce the overall number of diagnostic medical imaging procedures performed.37Table of Contents Further, we expect that there will continue to be proposals to reduce or limit Medicare and Medicaid payment for services. Rates paid by someprivate third-party payors are based, in part, on established physician, clinic and hospital charges and are generally higher than Medicare payment rates.Reductions in the amount of reimbursement paid for diagnostic medical imaging procedures and changes in the mix of our patients between non-governmental payors and government sponsored healthcare programs and among different types of non-government payor sources, could have amaterial adverse effect on our business, results of operations, financial condition and cash flows.Our business and industry are subject to complex and costly regulations. If government regulations are interpreted or enforced in a manneradverse to us or our business, we may be subject to enforcement actions, penalties, exclusion and other material limitations on our operations. Both before and after the approval of our products and product candidates, we, our products, product candidates, operations, facilities, suppliers,distributors, contract manufacturers, contract research organizations and contract testing laboratories are subject to extensive regulation by federal, stateand local government agencies in the United States as well as non-U.S. and transnational laws and regulations, with regulations differing from countryto country. In the United States, the FDA regulates, among other things, the pre-clinical testing, clinical trials, manufacturing, safety, efficacy, potency,labeling, storage, record keeping, quality systems, advertising, promotion, sale, distribution, and import and export of drug products. We are required toregister our business for permits and/or licenses with, and comply with the stringent requirements of the FDA, the NRC, the HHS, Health Canada, theEMA, state and provincial boards of pharmacy, state and provincial health departments and other federal, state and provincial agencies. For example, we are required to report certain adverse events and production problems, if any, to the FDA. Additionally, we must comply withrequirements concerning advertising and promotion for our products, including the prohibition on the promotion of our products for indications thathave not been approved by the FDA or a so-called "off-label use." If the FDA determines that our promotional materials constitute the unlawfulpromotion of an off-label use, it could request that we modify our promotional materials or subject us to regulatory or enforcement actions. Also, qualitycontrol and manufacturing procedures at our own facility and at third-party suppliers must conform to cGMP regulations and other applicable law afterapproval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMPs and other applicable law, and, from time to time,makes such cGMPs more stringent. Accordingly, we and others with whom we work must expend time, money, and effort in all areas of regulatorycompliance, including manufacturing, production, and quality control. For example, in June and July 2011, the FDA inspected our facility in Billerica,MA. Following the inspection, the FDA made eight so called "483 observations", which we believe we have since substantially remediated. We alsofiled a field alert and initiated a recall in connection with six lots of Cardiolite and Neurolite manufactured by BVL prior to the shutdown. Althoughthere were no significant changes in product safety risk profiles with relatively stable adverse event rates being reported and although the rates ofserious adverse medical events had also not changed significantly and are rare for these products, our medical risk assessment determined that there wasa theoretical risk to patients associated with the injection of product from these lots because of the identification of certain particulate matter in a limitednumber of vials from these lots, which was introduced during the BVL manufacturing process. In connection with the field alerts, we conducted a100% inspection for the presence of foreign matter for all unexpired lots of Cardiolite within our control, including retained vials, stability samples andany remaining inventory. After completing the inspections, we concluded that the probability of patient exposure to foreign matter was very low and theoverall patient risk associated with Cardiolite product in the field was very low. Accordingly, we concluded that Cardiolite lots in the field were suitablefor use and all inspected material was returned to active inventory status.38Table of Contents As an example of our third party manufacturers having to conform to cGMP regulations and other applicable laws, on January 22, 2013, BVLannounced it had voluntarily entered into a consent decree with the FDA relating to cGMP requirements at its Bedford, Ohio facility. Under the consentdecree, the FDA has given BVL approval to continue to manufacture all of our products for us. However, we can give no assurances that, operatingunder the consent decree, BVL will be able to manufacture and distribute our products in a timely manner and in sufficient quantities to allow us toavoid stock-outs and shortfalls as we transition from BVL to JHS as our primary manufacturer during 2013. In addition, in February 2012, the FDA announced that on June 12, 2012, it will begin to require that the manufacturers of commercial PETproducts, including radiopharmacies, hospitals and academic medical centers, either submit an NDA or ANDA for producing PET drugs for clinicaluse, or produce the drugs under an IND. We are also subject to laws and regulations that govern financial and other arrangements between pharmaceutical manufacturers and healthcareproviders, including federal and state anti-kickback statutes, federal and state false claims laws and regulations, beneficiary inducement laws andregulations, and other fraud and abuse laws and regulations. For example, in 2010, we entered into a Medicaid Drug Rebate Agreement for certain ofour products, which could subject us to potential liability under the False Claims Act, civil monetary penalties, or liability under other laws andregulations in connection with the covered products as well as the products not covered by the agreement. Although we and most of our competitorshad not previously entered into such an agreement and it is unclear that it is required, we received inquiries from several states and decided to enter intosuch agreement. Determination of the rebate amount for our products under the Medicaid program, as well as determination of payment amounts underMedicare and certain other third-party payers, including government payers, depends upon information reported by us to the government. If we providecustomers or government officials with inaccurate information about the products' eligibility for reimbursement, or the products fail to satisfy eligibilityrequirements, we could be subject to potential liability under the False Claims Act or other laws and regulations or be subject to civil monetary penalties. Additionally, funds received under all healthcare reimbursement programs are subject to audit with respect to the proper billing by customers. Ourcustomers engage in billing, and retroactive adjustments of revenue received from these programs could occur. Failure to comply with other requirements and restrictions placed upon us by laws and regulations can result in fines, civil and criminal penalties,exclusion from federal health care programs and debarment. Possible consequences of such actions could include:•substantial modifications to our business practices and operations; a total or partial shutdown of production in one or more of ourfacilities while we remediate the alleged violation; •delays in or the inability to obtain future pre-market clearances or approvals; and •withdrawals or suspensions of current products from the market. Regulations are subject to change as a result of legislative, administrative or judicial action, which may also increase our costs or reduce sales.Violation of any of these regulatory schemes, individually or collectively, could disrupt our business and have a material adverse effect on our business,results of operations, financial condition and cash flows.It is time consuming and costly to obtain regulatory approval for our product candidates, which could delay or prevent us from being able togenerate revenue from product sales. We are not permitted to market our product candidates in the United States or other countries until we have received requisite regulatory approvals.For example, securing FDA approval for a new39Table of Contentsdrug requires the submission of an NDA, to the FDA for our drug candidates. The NDA must include extensive nonclinical and clinical data andsupporting information to establish the product candidate's safety and effectiveness for each indication. The NDA must also include significantinformation regarding the chemistry, manufacturing and controls for the product. The FDA review process can take many years to complete, andapproval is never guaranteed. If a product is approved, the FDA may limit the indications for which the product may be marketed, require extensivewarnings on the product labeling, impose restricted distribution programs, require expedited reporting of certain adverse events, or require costlyongoing requirements for post-marketing clinical studies and surveillance or other risk management measures to monitor the safety or efficacy of theproduct candidate. Markets outside of the United States also have requirements for approval of drug candidates with which we must comply prior tomarketing. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure we will be able to obtain regulatoryapproval in other countries, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process inother countries. Also, any regulatory approval of any of our products or product candidates, once obtained, may be withdrawn. Approvals might not begranted on a timely basis, if at all. Any failure or significant delay in completing clinical trials for our product candidates (for example, because of our greater future reliance onstrategic partners to assist us in our development programs), or in receiving regulatory approval for the sale of our product candidates, may severelyharm our business and delay or prevent us from being able to generate revenue from product sales. See "—Our business and industry are subject tocomplex and costly regulations. If government regulations are interpreted or enforced in a manner adverse to us or our business, we may be subject toenforcement actions, penalties, exclusion and other material limitations on our operations."Our marketing and sales practices may contain risks that could result in significant liability, require us to change our business practices andrestrict our operations in the future. We are subject to federal, state and local laws targeting fraud and abuse in the healthcare industry, including the federal fraud and abuse laws,including the False Claims Act and Federal Anti-Kickback Statute, the FCPA, the Bribery Act, the self-referral laws and restrictions on the promotionof off-label uses of our products. Violations of these laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment andexclusion from participation in healthcare programs such as Medicare and Medicaid as well as health programs outside the United States. These lawsand regulations are complex and subject to changing interpretation and application, which could restrict our sales or marketing practices. Even minor andinadvertent irregularities could potentially give rise to a charge that the law has been violated. Although we believe we maintain an appropriatecompliance program, we cannot be certain that the program will adequately detect or prevent violations and/or the relevant regulatory authorities maydisagree with our interpretation. Additionally, if there is a change in law, regulation or administrative or judicial interpretations, we may have to changeone or more of our business practices to be in compliance with these laws. Required changes could be costly and time consuming. The Healthcare Reform Act, through its federal "sunshine" provisions, also imposes new requirements on device and drug manufacturers to reportany "payment or transfer of value" to physicians and teaching hospitals; or ownership and investment interests held by physicians or their immediatefamily members. The first report for financial interactions and ownership interests is due in 2014 (covering August 1, 2011 through December 31,2011). Failure to submit required information may result in civil monetary penalties of up to $150,000 per year (and up to $1 million per year for"knowing failures"). Separately, the Healthcare Reform Act requires manufacturers to submit information on the identity and quantity of drug samples requested anddistributed by a manufacturer during each year. The provision was to be effective on April 1, 2012, but the FDA indicated that it would exercise40Table of Contentsenforcement discretion until October 1, 2012, and would issue a notice prior to its decision to begin enforcing this decision. At this time, FDA has notpublished a notice to begin enforcement of this provision. State laws may also require disclosure of pharmaceutical pricing information and marketingexpenditures. We believe we have developed appropriate protocols to implement these reporting requirements. Any irregularities or mistakes in ourreporting, however, could result in a finding that we have been non-compliant with these requirements, which could subject us to the penalty provisionsof applicable federal and state laws and regulations. The Healthcare Reform Act also provides greater financial resources to be allocated to enforcement of the fraud and abuse laws and clarifies orlowers the standard of proof for the Federal Anti-Kickback Statute and other criminal healthcare fraud statutes, which may increase overall compliancecosts for industry participants, including us. A person or entity does not need to have actual knowledge of the Federal Anti-Kickback Statute or aspecific intent to violate the Federal Anti-Kickback Statute. In addition, the Healthcare Reform Act revised the False Claims Act to provide that a claimarising from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. The violationof these laws, or our exclusion from programs such as Medicare, Medicaid and other governmental programs as a result of a violation of such laws,could have a material adverse effect on our business, results of operations, financial condition and cash flows.Ultrasound contrast agents may cause side effects which could limit our ability to sell DEFINITY. DEFINITY is an ultrasound contrast agent based on perflutren lipid microspheres. In 2007, the FDA received reports of deaths and seriouscardiopulmonary reactions following the administration of ultrasound micro-bubble contrast agents used in echocardiography. Four of the 11 reporteddeaths were caused by cardiac arrest occurring either during infusion or within 30 minutes following the administration of the contrast agent; most ofthe serious but non-fatal reactions also occurred in this time frame. As a result, in October 2007, the FDA requested that we and GE Healthcare, whichdistributes Optison, a competitor to DEFINITY, add a boxed warning to these products emphasizing the risk for serious cardiopulmonary reactions andthat the use of these products was contraindicated in certain patients. In a strong reaction by the cardiology community to the FDA's new position, aletter was sent to the FDA, signed by 161 doctors, stating that the benefit of these ultrasound contrast agents outweighed the risks and urging that theboxed warning be removed. In May 2008, the FDA substantially modified the boxed warning. On May 2, 2011, the FDA held an advisory committeemeeting to consider the status of ultrasound micro-bubble contrast agents and the boxed warning. In October 2011, we received FDA approval offurther modifications to the DEFINITY label, including: further relaxing the boxed warning; eliminating the sentence in the Indication and Use section"The safety and efficacy of DEFINITY with exercise stress or pharmacologic stress testing have not been established" (previously added in October2007 in connection with the imposition of the box warning); and including summary data from the post-approval CaRES (Contrast echocardiographyRegistry for Safety Surveillance) safety registry and the post-approval pulmonary hypertension study. If additional safety issues arise, this may result infurther changes in labeling or result in restrictions on the approval of our product, including removal of the product from the market. Lingering safetyconcerns about DEFINITY among some healthcare providers or future unanticipated side effects or safety concerns associated with DEFINITY couldhave a material adverse effect on the unit sales of this product and our financial condition and results of operations.Our business depends on our ability to successfully introduce new products and adapt to a changing technology and diagnostic landscape. The healthcare industry is characterized by continuous technological development resulting in changing customer preferences and requirements.The success of new product development depends on41Table of Contentsmany factors, including our ability to anticipate and satisfy customer needs, obtain regulatory approval on a timely basis based on performance of theclinical candidate versus its clinical study competitor, develop and manufacture products in a cost-effective and timely manner, maintain advantageouspositions with respect to intellectual property and differentiate our products from our competitors. To compete successfully in the marketplace, we mustmake substantial investments in new product development whether internally or externally through licensing or acquisitions. Our failure to introducenew and innovative products in a timely manner would have an adverse effect on our business, results of operations, financial condition and cash flows. Even if we are able to develop, manufacture and obtain regulatory approvals for our new products, the success of these products would dependupon market acceptance and adequate reimbursement. Levels of market acceptance for our new products could be affected by a number of factors,including:•the availability of alternative products from our competitors; •the price of our products relative to those of our competitors including, for example, in the case of flurpiridaz F 18, the significantlyhigher projected unit dose cost of flurpiridaz F 18 in comparison to sestamibi; •the timing of our market entry; •our ability to market and distribute our products effectively, including, in the case of flurpiridaz F 18, the creation of a complex field-based manufacturing and distribution network involving PET cyclotrons located at radiopharmacies where the agent will bemanufactured and distributed rapidly to end-users, given the agent's 110-minute half-life; •market acceptance of our products, including, in the case of flurpiridaz F 18, sufficient market penetration of PET cameras to whichnuclear cardiologists have reasonable access; and •our ability to obtain adequate reimbursement, including, in the case of flurpiridaz F 18, obtaining not only coverage from Medicare,Medicaid, other government payors as well as private payors but also appropriate payment levels which adequately cover thesubstantially higher manufacturing and distribution costs associated with a PET MPI agent, in comparison to, for example, sestamibi. The field of diagnostic medical imaging is dynamic, with new products, including equipment and agents, continually being developed and existingproducts continually being refined. Our own diagnostic imaging agents compete not only with other similarly administered imaging agents but also withimaging agents employed in different and often competing diagnostic modalities. New imaging agents in a given diagnostic modality may be developedthat provide benefits superior to the then-dominant agent in that modality, resulting in commercial displacement. Similarly, changing perceptions aboutcomparative efficacy and safety including, among other things, comparative radiation exposure, as well as changing availability of supply may favor oneagent over another or one modality over another. For example, prior to the outage of the NRU reactor from 2009 to 2010, we experienced a slow annualdecline in demand for Thallium as an MPI agent, in favor of Cardiolite which has superior safety and efficacy characteristics. To the extent there istechnological obsolescence in any of our products that we manufacture, resulting in lower unit sales or decreased unit sales prices, we will haveincreased unit overhead allocable to the remaining share, which could have a material adverse effect on our business, results of operations, financialcondition and cash flows. In addition, in the case of a comparatively new product such as Ablavar, because the market acceptance of Ablavar has been much slower than weinitially anticipated and because of the magnitude of the required purchase minimums originally contained in the agreement with Mallinckrodt, we haveentered into two separate amendments to the agreement in August 2010 and October 2011 to reduce the minimum purchase requirements. Significantcash outflows will still be required during the42Table of Contentsterm of this purchase commitment and for costs incurred in connection with the product launch, with limited cash inflows from Ablavar until marketpenetration increases further. In the fourth quarter of 2010, we recorded an inventory write-down of approximately $10.9 million for Ablavar finishedgood product that had already been manufactured by Mallinckrodt that would likely expire prior to its sale to and use by customers. In the secondquarter of 2011, we recorded an impairment charge of $23.5 million, the full remaining value of the product's intellectual property. In addition, in thesecond and fourth quarters of 2011, we recorded a further inventory write-down of approximately $13.5 million and $12.3 million, respectively, and aloss of $1.9 million and $3.7 million, respectively, for the portion of committed purchases of Ablavar that we did not believe we would be able to sellprior to product expiry. Finally, in the third quarter of 2012, we recorded an additional inventory write-down of approximately $10.6 million and a lossof $1.9 million for the portion of committed purchases of Ablavar that we do not believe we will be able to sell prior to product expiry. At December 31, 2012, we had a net Ablavar inventory balance of $2.8 million and the remaining purchase commitment under the agreement withMallinckrodt was approximately $9.4 million, of which $7.5 million is recorded as an accrued contract loss. In 2013, we have transitioned the sales andmarketing efforts for Ablavar from our direct sales force to our customer service team in order to allow our direct sales force to drive our DEFINITYresurgence plan following our recent supply challenges. If we do not meet our current sales goals or cannot sell the product we have committed topurchase prior to its expiration, we could incur additional inventory losses and/or losses on our purchase commitments. Our current portfolio of products primarily focuses on heart disease and vascular disease. This particular focus, however, may not be in our long-term best interest if the incidence and prevalence of heart disease and vascular disease decrease over time. Despite the aging population in the affluentparts of the world where diagnostic medical imaging is most frequently used, government and private efforts to promote preventative cardiac carethrough exercise, diet and improved medications could decrease the overall demand for our products, which could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows.The process of developing new drugs is complex, time-consuming and costly, and the outcome is not certain. We currently have three pipeline candidates, two of which (flurpiridaz F 18 and our cardiac neuronal imaging agent) are currently in clinicaldevelopment, while a third pipeline candidate (our vascular remodeling agent) is in pre-clinical development. To obtain regulatory approval for theseproduct candidates, we must conduct extensive human tests, which are referred to as clinical trials, as well as meet other rigorous regulatoryrequirements. Satisfaction of all regulatory requirements typically takes many years and requires the expenditure of substantial resources. A number ofother factors may cause significant delays in the completion of our clinical trials, including unexpected delays in the initiation of clinical sites, slowerthan projected enrollment, competition with ongoing clinical trials and scheduling conflicts with participating clinicians, regulatory requirements, limitson manufacturing capacity and failure of a product candidate to meet required standards for administration to humans. In addition, it may take longerthan we project to achieve study endpoints and complete data analysis for a trial or we may decide to slow down the enrollment in a trial in order toconserve financial resources. In March 2013, we began to implement a strategic shift in how we will fund our important R&D programs. We willreduce over time our internal R&D resources while at the same time we seek to engage strategic partners to assist us in the further development andcommercialization of our important development candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. Depending upon the terms ofany such strategic partnership that we can negotiate with prospective strategic partners, the development of our pipeline candidates could also be delayedby the timing of the consummation of such transactions as well as factors specific to the partner or partners involved, and we can give no assurancesthat any such transaction will ever be consummated.43Table of Contents Our product candidates are also prone to the risks of failure inherent in drug development and testing. The results of preliminary studies do notnecessarily predict clinical success, and larger and later-stage clinical trials may not produce the same results as earlier-stage trials. Sometimes, productcandidates that have shown promising results in early clinical trials have subsequently suffered significant setbacks in later clinical trials. Productcandidates in later-stage clinical trials may fail to show desired safety and efficacy traits, despite having progressed through initial clinical testing.Further, the data collected from clinical trials of our product candidates may not be sufficient to support regulatory approval, or regulators could interpretthe data differently and less favorably than we do. Further, the design of a clinical trial can determine whether its results will support approval of aproduct, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. Clinical trials of potential productsoften reveal that it is not practical or feasible to continue development efforts. Regulatory authorities may require us or our partners to conduct additionalclinical testing, in which case we would have to expend additional time and resources. The approval process may also be delayed by changes ingovernment regulation, future legislation or administrative action or changes in regulatory policy that occur prior to or during regulatory review. Thefailure to provide clinical and preclinical data that are adequate to demonstrate to the satisfaction of the regulatory authorities that our product candidatesare safe and effective for their proposed use will delay or preclude approval and will prevent us from marketing those products. Even if our product candidates proceed successfully through clinical trials and receive regulatory approval, there is no guarantee that an approvedproduct can be manufactured in commercial quantities at reasonable cost or that such a product will be successfully marketed. For example, flurpiridazF 18 will require the creation of a complex, field-based manufacturing and distribution network involving PET cyclotrons located at radiopharmacieswhere the agent will be manufactured and distributed rapidly to end-users, given the agent's 110-minute half-life. Our development costs will increase ifwe are required to complete additional or larger clinical trials with respect to product candidates. If the delays or costs are significant, our financialresults and our ability to commercialize our product candidates will be adversely affected. In addition, in the case of flurpiridaz F 18, obtaining adequatereimbursement is critical, including not only coverage from Medicare, Medicaid, other government payors as well as private payors but also appropriatepayment levels which adequately cover the substantially higher manufacturing and distribution costs associated with a PET MPI agent in comparison to,for example, sestamibi. Because in the future we intend to partner with strategic partners for the development, manufacturing and commercialization of our developmentcandidates, if we can successfully obtain regulatory and reimbursement approval for such candidate or candidates, we will likely have to share ameaningful portion of the economic benefit that those products generate with our partner or partners. However, we can give no assurance that any suchpartnering transaction will ever be consummated.A heightened public or regulatory focus on the radiation risks of diagnostic imaging could have an adverse effect on our business. We believe that there has been heightened public and regulatory focus on radiation exposure, including the concern that repeated doses of radiationused in diagnostic imaging procedures pose the potential risk of long-term cell damage, cancer and other diseases. For example, starting in January2012, CMS requires the accreditation of facilities providing the technical component of advanced imaging services, including CT, MRI, PET andnuclear medicine, in non-hospital free-standing settings. In August 2011, the Joint Commission (an independent, not-for-profit organization thataccredits and certifies more than 19,000 health care organizations and programs in the United States) issued an alert on the radiation risks of diagnosticimaging and recommended specific actions of providing "the right test and the right dose through effective processes, safe technology and a culture ofsafety."44Table of Contents Heightened regulatory focus on risks caused by the radiation exposure received by diagnostic imaging patients could lead to increased regulation ofradiopharmaceutical manufacturers or health care providers who perform procedures that use our imaging agents, which could make the proceduresmore costly, reduce the number of providers who perform procedures and/or decrease the demand for our products. In addition, heightened public focuson or fear of radiation exposure could lead to decreased demand for our products by patients or by health care providers who order the procedures inwhich our agents are used. Although we believe that our diagnostic imaging agents when properly used do not expose patients and health care providersto unsafe levels of radiation, any of the foregoing risks could have an adverse effect on our business, results of operations, financial condition and cashflows.In the ordinary course of business, we may be subject to product liability claims and lawsuits, including potential class actions, alleging that ourproducts have resulted or could result in an unsafe condition or injury. Any product liability claim brought against us, with or without merit, could be costly to defend and could result in an increase of our insurancepremiums. Although we have not had any such claims to date, claims that could be brought against us might not be covered by our insurance policies.Furthermore, even where the claim is covered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount ofany settlement or judgment that is in excess of our policy limits, which we believe are consistent with other pharmaceutical companies in the diagnosticmedical imaging industry. We may not be able to obtain insurance on terms acceptable to us or at all, since insurance varies in cost and can be difficult toobtain. Our failure to maintain adequate insurance coverage or successfully defend against product liability claims could have a material adverse effecton our business, results of operations, financial condition and cash flows.We use hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive. Our operations use hazardous materials and produce hazardous wastes, including radioactive, chemical and, in certain circumstances, biologicalmaterials and wastes. We are subject to a variety of federal, state and local laws and regulations as well as non-U.S. laws and regulations relating to thetransport, use, handling, storage, exposure to and disposal of these materials and wastes. Environmental laws and regulations are complex, changefrequently and have become more stringent over time. We are required to obtain, maintain and renew various environmental permits and nuclearlicenses. Although we believe that our safety procedures for transporting, using, handling, storing and disposing of, and limiting exposure to, thesematerials and wastes comply in all material respects with the standards prescribed by applicable laws and regulations, the risk of accidentalcontamination or injury cannot be eliminated. We place a high priority in these safety procedures and seek to limit any inherent risks. We generallycontract with third parties for the disposal of wastes generated by our operations. Prior to disposal, we store any low level radioactive waste at ourfacilities until the materials are no longer considered radioactive. Although we believe we have complied in all material respects with all applicableenvironmental, health and safety laws and regulations, we cannot assure you that we have been or will be in compliance with all such laws at all times.If we violate these laws, we could be fined, criminally charged or otherwise sanctioned by regulators. We may be required to incur further costs tocomply with current or future environmental and safety laws and regulations. In addition, in the event of accidental contamination or injury from thesematerials, we could be held liable for any damages that result and any such liability could exceed our resources. While we have budgeted for current and future capital and operating expenditures to maintain compliance with these laws and regulations, wecannot assure you that our costs of complying with current or future environmental, health and safety laws and regulations will not exceed our estimatesor45Table of Contentsadversely affect our results of operations and financial condition. Further, we cannot assure you that we will not be subject to additional environmentalclaims for personal injury, investigation or cleanup in the future based on our past, present or future business activities.If we are unable to protect our intellectual property, our competitors could develop and market products with features similar to our products, anddemand for our products may decline. Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technologies andproduct candidates as well as successfully defending these patents and trade secrets against third-party challenges. We will only be able to protect ourintellectual property from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them. The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions forwhich important legal principles remain unresolved. In addition, changes in either the patent laws or in interpretations of patent laws in the United Statesor other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed orenforced in our patents or in third-party patents. The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequatelyprotect our rights or permit us to gain or keep our competitive advantage. For example:•we might not have been the first to make the inventions covered by each of our pending patent applications and issued patents, and wecould lose our patent rights as a result; •we might not have been the first to file patent applications for these inventions or our patent applications may not have been timely filed,and we could lose our patent rights as a result; •others may independently develop similar or alternative technologies or duplicate any of our technologies; •it is possible that none of our pending patent applications will result in any further issued patents; •our issued patents may not provide a basis for commercially viable drugs, may not provide us with any protection from unauthorized useof our intellectual property by third parties, and may not provide us with any competitive advantages; •our patent applications or patents may be subject to interferences, oppositions, post-grant review, reexaminations or similaradministrative proceedings; •we may not develop additional proprietary technologies that are patentable; or •the patents of others may have an adverse effect on our business. Moreover, the issuance of a patent is not conclusive as to its validity or enforceability. A third party may challenge the validity or enforceability ofa patent even after its issuance by the U.S. Patent and Trademark Office. It is also uncertain how much protection, if any, will be afforded by our patentsif we attempt to enforce them and they are challenged in court or in other proceedings, which may be brought in U.S. or non-U.S. jurisdictions tochallenge the validity of a patent. The defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings are costly,time consuming to pursue and result in diversion of resources. The outcome of these proceedings is uncertain and could significantly harm ourbusiness. If we are not able to defend the patents of our technologies and products, then we will not be able to46Table of Contentsexclude competitors from marketing products that directly compete with our products, which could have a material adverse effect on our business,results of operations, financial condition and cash flows. We will also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.However, trade secrets are difficult to protect. We use reasonable efforts to protect our trade secrets, but our employees, consultants, contractors, outsidescientific partners and other advisors may unintentionally or willfully disclose our confidential information to competitors or other third parties.Enforcing a claim that a third party improperly obtained and is using our trade secrets is expensive and time consuming, and the outcome isunpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors mayindependently develop equivalent knowledge, methods and know-how. We often rely on confidentiality agreements with our collaborators, employees,consultants and other third parties and invention assignment agreements with our employees to protect our trade secrets and other know-how andproprietary information concerning our business. These confidentiality agreements may not prevent unauthorized disclosure of trade secrets and otherproprietary information, and there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our tradesecrets, other technical know-how or proprietary information. We may not have adequate remedies for any unauthorized disclosure. This might happenintentionally or inadvertently. It is possible that a competitor will make use of such information, and that our competitive position will be compromised,in spite of any legal action we might take against persons making such unauthorized disclosures, which could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows. We rely on our trademarks, trade names, and brand names to distinguish our products from the products of our competitors, and have registered orapplied to register many of these trademarks, including DEFINITY, Cardiolite, TechneLite, Ablavar, Neurolite and Lantheus Medical Imaging. Wecannot assure you that any pending trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwisechallenge our use of the trademarks. If our trademarks are successfully challenged, we could be forced to rebrand our products, which could result inloss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you thatcompetitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.We may be subject to claims that we have infringed, misappropriated or otherwise violated the patent or other intellectual property rights of a thirdparty. The outcome of any such claims is uncertain and any unfavorable result could adversely affect our business, financial condition andresults of operations. We may be subject to claims by third parties that we have infringed, misappropriated or otherwise violated their intellectual property rights. Whilewe believe that the products that we currently manufacture using our proprietary technology do not infringe upon or otherwise violate proprietary rightsof other parties or that meritorious defenses would exist with respect to any assertions to the contrary, we cannot assure you that we would not be foundto infringe on or otherwise violate the proprietary rights of others. We may be subject to litigation over infringement claims regarding the products we manufacture or distribute. This type of litigation can be costlyand time consuming and could generate significant expenses, damage payments (potentially including treble damages) or restrictions or prohibitions onour use of our technology, which could adversely affect our results of operations. In addition, if we are found to be infringing on proprietary rights ofothers, we may be required to develop non-infringing technology, obtain a license (which may not be available on reasonable terms, or at all), makesubstantial one-time or ongoing royalty payments, or cease making, using and/or selling the infringing products, any of which could have a materialadverse effect on our business, results of operations, financial condition and cash flows.47Table of ContentsWe may be adversely affected by the current economic environment. Our ability to attract and retain customers, invest in and grow our business and meet our financial obligations depends on our operating andfinancial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and otherfactors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures. Wecannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business. We are exposed to risks associated with reduced profitability and the potential financial instability of our customers, many of which may beadversely affected by volatile conditions in the financial markets. For example, unemployment and underemployment, and the resultant loss ofinsurance, may decrease the demand for healthcare services and pharmaceuticals. If fewer patients are seeking medical care because they do not haveinsurance coverage, our customers may experience reductions in revenues, profitability and/or cash flow that could lead them to modify, delay or cancelorders for our products. If customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be ableto pay, or may delay payment of, accounts receivable that are owed to us. This, in turn, could adversely affect our financial condition and liquidity. Inaddition, if economic challenges in the United States result in widespread and prolonged unemployment, either regionally or on a national basis, prior tothe effectiveness of certain provisions of the Healthcare Reform Act, a substantial number of people may become uninsured or underinsured. In turn,this may lead to fewer individuals pursuing or being able to afford diagnostic medical imaging procedures. To the extent economic challenges result infewer procedures being performed, our business, results of operations, financial condition and cash flows could be adversely affected.Our business is subject to international economic, political and other risks that could negatively affect our results of operations or financialposition. For the years ended December 31, 2012, 2011 and 2010, 27%, 25% and 25%, respectively, of our total revenues were derived from countriesoutside the United States. We anticipate that revenue from non-U.S. operations will grow. Accordingly, our business is subject to risks associated withdoing business internationally, including:•less stable political and economic environments and changes in a specific country's or region's political or economic conditions; •international customers which are agencies or institutions of foreign governments, •currency fluctuations; •potential negative consequences from changes in tax laws affecting our ability to repatriate profits; •unfavorable labor regulations; •greater difficulties in relying on non-U.S. courts to enforce either local or U.S. laws, particularly with respect to intellectual property; •greater difficulties in managing and staffing non-U.S. operations; •the need to ensure compliance with the numerous regulatory and legal requirements applicable to our business in each of thesejurisdictions and to maintain an effective compliance program to ensure compliance with these requirements; •changes in public attitudes about the perceived safety of nuclear facilities; •changes in trade policies, regulatory requirements and other barriers; •civil unrest or other catastrophic events; and •longer payment cycles of non-U.S. customers and difficulty collecting receivables in non-U.S. jurisdictions.48Table of Contents These factors are beyond our control. The realization of any of these or other risks associated with operating in non-U.S. countries could have amaterial adverse effect on our business, results of operations or financial condition.We face currency and other risks associated with international sales. We generate significant revenue from export sales, as well as from operations conducted outside the United States. During the years endedDecember 31, 2012, 2011 and 2010, the net impact of foreign currency changes on transactions was a loss of $579,000, $156,000 and $209,000,respectively. Operations outside the United States expose us to risks including fluctuations in currency values, trade restrictions, tariff and traderegulations, U.S. export controls, non-U.S. tax laws, shipping delays, and economic and political instability. For example, violations of U.S. exportcontrols, including those administered by the U.S. Treasury Department's Office of Foreign Assets Control, could result in fines, other civil or criminalpenalties and the suspension or loss of export privileges which could have a material adverse affect on our business, results of operations, financialconditions and cash flows. The functional currency of each of our non-U.S. operations is generally the local currency, although one non-U.S. operation's functional currencyis the U.S. Dollar. Exchange rates between some of these currencies and U.S. Dollar have fluctuated significantly in recent years and may do so in thefuture. Historically, we have not used derivative financial instruments or other financial instruments to hedge such economic exposures. It is possiblethat fluctuations in exchange rates will have a negative effect on our results of operations.U.S. credit markets may impact our ability to obtain financing or increase the cost of future financing, including, in the event we obtain financingwith a variable interest rate, interest rate fluctuations based on macroeconomic conditions that are beyond our control. As of December 31, 2012, we had approximately $400.0 million of total principal indebtedness consisting entirely of the Notes issued May 10,2010 and March 16, 2011 and due May 15, 2017. We also have a revolving line of credit, the Facility, which provides for total borrowings up to$35 million. We currently have no amounts outstanding, other than an $8.8 million unfunded Standby Letter of Credit at December 31, 2012. Duringperiods of volatility and disruption in the U.S., European, or global credit markets, obtaining additional or replacement financing may be more difficultand the cost of issuing new debt or replacing our Facility could be higher than under our current Facility. Higher cost of new debt may limit our abilityto have cash on hand for working capital, capital expenditures and acquisitions on terms that are acceptable to us. Additionally, the Facility has avariable interest rate. By its nature, a variable interest rate will move up or down based on changes in the economy and other factors, all of which arebeyond our control. If interest rates increase, our interest expense could increase, affecting earnings and reducing cash flows available for workingcapital, capital expenditures and acquisitions.Many of our customer relationships outside of the United States are, either directly or indirectly, with governmental entities, and we could beadversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States. The FCPA, the United Kingdom Bribery Act of 2010 and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibitcompanies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing anyimproper business advantage. It also requires us to keep books and records that accurately and fairly reflect our transactions. Because of thepredominance of government-sponsored healthcare systems around the world, many of our customer relationships49Table of Contentsoutside of the United States are, either directly or indirectly, with governmental entities and are therefore subject to the FCPA and similar anti-briberylaws in non-U.S. jurisdictions. In addition, the United Kingdom Bribery Act of 2010 has been enacted, and its provisions extend beyond bribery offoreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitationpayments and penalties. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmentalcorruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despiteour training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committedby our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effecton our results of operations, financial condition and cash flows.Our business depends on the continued effectiveness and availability of our information technology infrastructure, and failures of thisinfrastructure could harm our operations. To remain competitive in our industry, we must employ information technologies to support manufacturing processes, quality processes,distribution, R&D and regulatory applications and that capture, manage and analyze the large streams of data generated in our clinical trials incompliance with applicable regulatory requirements. We rely extensively on technology to allow the concurrent conduct of work sharing around theworld. As with all information technology, our infrastructure ages and becomes subject to increasing maintenance and repair and our systems generallyare vulnerable to potential damage or interruptions from fires, blackouts, telecommunications failures and other unexpected events, as well as to break-ins, sabotage or intentional acts of vandalism. Given the extensive reliance of our business on technology, any substantial disruption or resulting loss ofdata that is not avoided or corrected by our backup measures could harm our business, operations and financial condition.We may not be able to hire or retain the number of qualified personnel, particularly scientific, medical and sales personnel, required for ourbusiness, which would harm the development and sales of our products and limit our ability to grow. Competition in our industry for highly skilled scientific, healthcare and sales personnel is intense. If we are unable to retain our existing personnel,or attract and train additional qualified personnel, either because of competition in our industry for such personnel or because of insufficient financialresources, our growth may be limited and it could have a material adverse effect on our business.If we lose the services of our key personnel, our business could be adversely affected. Our success is substantially dependent upon the performance, contributions and expertise of our chief executive officer, executive leadership andsenior management team. Jeffrey Bailey, our Chief Executive Officer and President, and other members of our executive leadership and seniormanagement team play a significant role in generating new business and retaining existing customers. We have employment agreements with Mr. Baileyand a limited number of other individuals on our executive leadership team, although we cannot prevent them from terminating their employment withus. We do not maintain key man life insurance policies on any of our executive officers. Our inability to retain our existing executive leadership andsenior management team, maintain an appropriate internal succession program or attract and retain additional qualified personnel could have a materialadverse effect on our business.50Table of ContentsWe have a substantial amount of indebtedness which may limit our financial and operating activities and may adversely affect our ability to incuradditional debt to fund future needs. As of December 31, 2012, we had approximately $400.0 million of total principal indebtedness consisting entirely of the Notes, which mature onMay 15, 2017. As of December 31, 2012, there were no amounts outstanding under the Facility, other than an $8.8 million unfunded Standby Letter ofCredit. Our substantial indebtedness and any future indebtedness we incur could:•require us to dedicate a substantial portion of cash flow from operations to the payment of interest on and principal of our indebtedness,thereby reducing the funds available for other purposes; •make it more difficult for us to satisfy and comply with our obligations with respect to the Notes, namely the payment of interest andprincipal; •subject us to increased sensitivity to interest rate increases; •make us more vulnerable to economic downturns, adverse industry or company conditions or catastrophic external events; •limit our ability to withstand competitive pressures; •reduce our flexibility in planning for or responding to changing business, industry and economic conditions; and/or •place us at a competitive disadvantage to competitors that have relatively less debt than we have. In addition, our substantial level of indebtedness could limit our ability to obtain additional financing on acceptable terms, or at all, for workingcapital, capital expenditures and general corporate purposes. Our liquidity needs could vary significantly and may be affected by general economicconditions, industry trends, performance and many other factors not within our control.We may not be able to generate sufficient cash flow to meet our debt service obligations. Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations, which are currently $39.0 millionof interest per year based on our $400.0 million in total principal indebtedness as of December 31, 2012 related to the Notes, which principal is due atmaturity on May 15, 2017, will depend on our future financial performance, which will be affected by a range of economic, competitive and businessfactors, many of which are outside of our control. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, includinginterest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuringour debt, selling assets, entering into additional corporate collaborations or licensing arrangements for one or more of our products or productcandidates, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible,that any assets could be sold, licensed or partnered, or, if sold, licensed or partnered, of the timing of the transactions and the amount of proceedsrealized from those transactions, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permittedunder the terms of our various debt instruments then in effect. Furthermore, our ability to refinance would depend upon the condition of the financialand credit markets. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commerciallyreasonable terms or on a timely basis, would have an adverse effect on our business, results of operations and financial condition.51Table of ContentsDespite our substantial indebtedness, we may incur more debt, which could exacerbate the risks described above. We and our subsidiaries may be able to incur substantial additional indebtedness in the future subject to the limitations contained in the agreementsgoverning our debt, including the Indenture (as defined below) governing the Notes. Although these agreements restrict us and our restrictedsubsidiaries from incurring additional indebtedness, these restrictions are subject to important exceptions and qualifications. For example, we aregenerally permitted to incur certain indebtedness, including indebtedness to finance acquisitions of similar businesses, indebtedness arising in theordinary course of business, indebtedness among restricted subsidiaries and us and indebtedness relating to hedging obligations. We are also permittedto incur indebtedness under the Indenture governing the Notes so long as we comply with an interest coverage ratio of 1.2 to 1.0, determined on a proforma basis for the most recently completed four fiscal quarters. See "Item 7—Management's Discussion and Analysis of Financial Condition andResults of Operations—Liquidity and Capital Resources—External Sources of Liquidity." If we or our subsidiaries incur additional debt, the risks thatwe and they now face as a result of our high leverage could intensify. In addition, the Indenture governing the Notes and the agreement governing theFacility will not prevent us from incurring obligations that do not constitute indebtedness under the agreements.Our debt agreements contain restrictions that will limit our flexibility in operating our business. The Indenture governing the Notes and the agreement governing the Facility contain various covenants that limit our ability to engage in specifiedtypes of transactions. These covenants limit our and our restricted subsidiaries' ability to, among other things:•incur additional debt; •pay dividends or make other distributions; •redeem stock; •issue stock of subsidiaries; •make certain investments; •create liens; •enter into transactions with affiliates; and •merge, consolidate or transfer all or substantially all of our assets. Additionally, the agreement governing the Facility requires us to maintain certain financial ratios. If there is a breach of the financial ratios when there is more than $10 million outstanding under the Facility, a cross-default of the Indenture wouldoccur. A breach of any of these covenants could result in a default under the Indenture governing the Notes and the agreement governing the Facility.On January 26, 2012, October 11, 2012 and March 25, 2013, we executed amendments to the Facility which revised the financial covenants, certaindefinitions used to calculate compliance with those covenants and the definition of annualized EBITDA from a trailing twelve month basis to anannualized basis beginning in the first quarter of 2013. Although we believe that anticipated EBITDA amounts will be sufficient such that we will be incompliance with the financial covenants, as amended, if our upcoming quarterly earnings are not sufficient, we could be in violation of the leverage ratiocovenant. We may also be unable to take advantage of business opportunities that arise because of the limitations imposed on us by the restrictivecovenants under our indebtedness.52Table of ContentsItem 1B. Unresolved Staff Comments None.Item 2. Properties Our executive offices and primary manufacturing facilities are located at our North Billerica, Massachusetts facility, which we own. In addition, asof December 31, 2012, we lease 7 facilities in Canada, 2 in Australia and 2 in Puerto Rico. Our owned facilities consist of approximately 578,000square feet of manufacturing, laboratory, mixed use and office space, and our leased facilities consist of approximately 67,766 square feet. We believeall of these facilities are well-maintained and suitable for the office, radiopharmacy, manufacturing or warehouse operations conducted in them. The following table summarizes information regarding our significant leased and owned properties, as of December 31, 2012:Item 3. Legal Proceedings From time to time, we are a party to various legal proceedings arising in the ordinary course of business. In addition, we have in the past been, andmay in the future be, subject to investigations by regulatory authorities which expose it to greater risks associated with litigation, regulatory or otherproceedings, as a result of which we could be required to pay significant fines or penalties. The outcome of litigation, regulatory or other proceedingscannot be predicted with certainty, and some lawsuits, claims, actions or proceedings may be disposed of unfavorably to us. In addition, intellectualproperty disputes often have a risk of injunctive relief which, if imposed against us, could materially and adversely affect its financial condition orresults of operations. On December 16, 2010, we filed suit against one of our insurance carriers seeking to recover business interruption losses associated with the NRUreactor shutdown and the ensuing global Moly supply shortage (Lantheus Medical Imaging, Inc., Plaintiff v. Zurich American Insurance Company,Defendant, United States District Court, Southern District of New York, Case No. 10 Civ 9371). The claim is the result of the shutdown of the NRUreactor in Chalk River, Ontario. The NRU reactor was off-line from May 2009 until August 2010 due to a "heavy water" leak in the reactor vessel. Thedefendant answered the complaint on January 21, 2011, denying substantially all of the allegations, presenting certain defenses and requesting dismissalof the case with costs and disbursements. On April 4, 2011, the parties had their first pre-trial conference in United States District Court for the53Location Squarefootage Owned/LeasedUnited States North Billerica, Massachusetts 578,000 OwnedCanada Montreal 8,729 LeasedMississauga 13,747 LeasedDorval 13,079 LeasedQuebec 6,261 LeasedHamilton 5,300 LeasedVancouver 880 LeasedAustralia Melbourne 4,634 LeasedAdelaide 4,306 LeasedPuerto Rico San Juan 9,550 LeasedPonce 1,280 LeasedTable of ContentsSouthern District of New York, and discovery has commenced and is continuing. We cannot be certain what amount, if any, or when, if ever, we willbe able to recover for business interruption losses related to this matter.Item 4. Mine Safety Disclosures Not applicable.54Table of ContentsPART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market and Dividend Information Our outstanding common stock is privately held and there is no established public trading market for our common stock. There is one stockholderof record of our common stock as of December 31, 2012. On March 21, 2011 and on May 10, 2010, our Board of Directors declared dividends of$150.0 million and $163.8 million, respectively, to our sole stockholder, Intermediate, which declared dividends of equal amounts to Holdings. See"Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—ExternalSources of Liquidity." We do not expect to make comparable cash dividends in the future on a continuous basis, but may, from time to time, declareadditional dividends to our sole stockholder in an amount to be determined. See "Item 13—Certain Relationships and Related Transactions, and DirectorIndependence" and Note 17, "Related Party Transactions" to our consolidated financial statements for a discussion regarding transactions andagreements we have with Avista and "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 10,"Financing Arrangements" to our consolidated financial statements for a discussion of restrictive covenants under the agreements governing ourindebtedness.Unregistered Sales of Equity Securities We sold no equity securities during the year ended December 31, 2012.Securities Authorized for Issuance Under Equity Compensations Plans See "Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized forIssuance Under Equity Compensation Plans."Item 6. Selected Financial Data Basis of Financial Information Following our purchase of the medical imaging business from Bristol-Myers Squibb Company, or BMS, with the financial sponsorship of Avistaon January 8, 2008 (the "Acquisition"), our audited financial statements were prepared at the Lantheus Intermediate level rather than at the Lantheuslevel due to covenants in our financial arrangements undertaken in connection with the Acquisition.Non-GAAP Financial Measures EBITDA and Adjusted EBITDA and the ratios related thereto, or our EBITDA Measures, as defined below and presented in this annual report,are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in theUnited States, or GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to netincome (loss) or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities asmeasures of our liquidity. Our EBITDA Measures may not be comparable to similarly titled measures of other companies and are not measures of performance calculated inaccordance with GAAP. We have included information concerning our EBITDA Measures in this annual report because we believe that suchinformation is used by certain investors as one measure of a company's historical performance. Furthermore, certain financial ratios included in our debtcovenants are based on EBITDA as defined in the debt agreements. See Note 10, "Financing Arrangements."55Table of Contents Our EBITDA Measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of ouroperating results or cash flows as reported under GAAP. Some of these limitations are:•they do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; •they do not reflect changes in, or cash requirements for, our working capital needs; •they do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments, on ourdebt; •although depreciation is a non-cash charge, the assets being depreciated will often have to be replaced in the future, and our EBITDAMeasures do not reflect any cash requirements for such replacements; •they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; and •other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. Because of these limitations, our EBITDA Measures should not be considered as measures of discretionary cash available to us to invest in thegrowth of our business. We compensate for these limitations by relying primarily on our GAAP results and using our EBITDA Measures only forsupplemental purposes. Please see the consolidated financial statements included elsewhere in this annual report for our GAAP results.Selected Financial Data The following table sets forth certain selected consolidated financial data for Lantheus Intermediate, our parent company and a guarantor of theNotes, as of and for the fiscal years ended December 31, 2012, 2011, 2010, 2009 and 2008, which have been derived from the audited consolidatedfinancial statements of Lantheus Intermediate. See "—Basis of Financial Information." For the purpose of convenience, the selected financial data as of and for the year ended December 31, 2008 assumed an effective date of January 1,2008 for the Acquisition. We determined that the operating results between the effective date and the acquisition date are not material and these resultshave been included with our 2008 operating results. The 2008 operating results include net revenues of approximately $12.0 million, gross profit ofapproximately $8.3 million, operating income of approximately $5.4 million and net income of $3.3 million relating to the period from January 1, 2008through January 7, 2008. The results indicated below and elsewhere in this annual report are not necessarily indicative of our future performance. You should read thisinformation together with "Item 7—Management's56Table of ContentsDiscussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included inItem 8 of this annual report.57 Year Ended December 31, 2012 2011 2010 2009 2008 (dollars in thousands) Statement of Comprehensive (Loss)Income Data: Total revenues $288,105 $356,292 $353,956 $360,211 $536,844 Cost of goods sold 211,049 255,466 204,006 184,844 244,496 Loss on firm purchase commitment 1,859 5,610 — — — General and administrative expenses 32,520 32,057 30,042 35,430 64,909 Sales and marketing expenses 37,437 38,689 45,384 42,337 45,730 Research and development expense 40,604 40,945 45,130 44,631 34,682 Proceeds from manufacturer (34,614) — — — — In-process research and development — — — — 28,240 Operating (loss) income (750) (16,475) 29,394 52,969 118,787 Interest expense (42,014) (37,658) (20,395) (13,458) (31,038)Loss on early extinguishment of debt — — (3,057) — — Interest income 252 333 179 73 693 Other (expense) income, net (44) 1,429 1,314 2,720 2,950 Income (loss) before income taxes (42,556) (52,371) 7,435 42,304 91,392 Provision (benefit) for income taxes (555) 84,098 2,465 21,952 48,606 Net (loss) income $(42,001)$(136,469)$4,970 $20,352 $42,786 Statement of Cash Flows Data: Net cash flows provided by (used in): Operating activities $523 $22,420 $26,317 $95,783 $178,445 Investing activities (8,145) (7,694) (8,550) (38,351) (530,832)Financing activities (2,039) (6,991) (17,550) (49,102) 376,466 Other Financial Data: EBITDA(1) $26,815 $16,832 $62,037 $96,214 $192,797 Adjusted EBITDA(1) 59,070 80,084 85,228 104,060 253,882 Capital expenditures 7,920 7,694 8,335 8,856 12,175 Balance Sheet Data (at period end): Cash and cash equivalents $31,595 $40,607 $33,006 $31,480 $21,036 Total assets 322,926 358,804 495,881 492,543 528,035 Total liabilities 497,279 492,007 342,447 181,964 240,226 Current portion of long-term debt — — — 30,000 15,000 Total long-term debt, net 398,822 398,629 250,000 63,649 127,751 Total stockholder's (deficit) equity (174,353) (133,203) 153,434 310,579 287,809 (1)EBITDA is defined as net (loss) income plus interest, income taxes, depreciation and amortization. EBITDA is a measure usedby management to measure operating performance. Adjusted EBITDA is defined as EBITDA, further adjusted to excludeunusual items and other adjustments required or permitted in calculating Adjusted EBITDA under the indenture governing theCompany's notes and the credit agreement for the Company's revolving credit facility. Adjusted EBITDA is also used bymanagement to measure operating performance and by investors to measure a company's ability to service its debt and meet itsother cash needs. Management believes that the inclusion of the adjustments to EBITDA applied in presenting AdjustedEBITDA are appropriate to provide additional information to investors about the Company's performance across reportingperiods onTable of Contents58a consistent basis by excluding items that it does not believe are indicative of its core operating performance. See "—Non-GAAPFinancial Measures."The following table provides a reconciliation of our net (loss) income to EBITDA and Adjusted EBITDA for the periodspresented: Year Ended December 31, 2012 2011 2010 2009 2008 (dollars in thousands) Net (loss) income $(42,001)$(136,469)$4,970 $20,352 $42,786 Interest expense, net 41,762 37,325 20,216 13,385 30,345 Provision for income taxes(a) (901) 82,718 1,215 20,392 46,131 Depreciation and amortization 27,955 33,258 35,636 42,085 73,535 EBITDA 26,815 16,832 62,037 96,214 192,797 Non-cash stock-based compensation 1,240 (969) 1,634 1,209 1,368 Loss on early extinguishment of debt — — 3,057 — — Legal fees(b) 1,455 2,017 — — — Loss on firm purchase commitment(c) 1,859 5,610 — — — Asset write-off(d) 13,095 52,973 14,084 4,125 5,791 Inventory step-up expense(e) — — — — 8,189 Acquired in-process R&D(f) — — — — 28,240 Severance and recruiting costs(g) 1,761 1,995 1,001 — 13,775 Transaction expenses(h) — — — — 2,742 Sponsor fee and other(i) 1,042 1,020 1,090 1,060 980 New manufacturer costs(j) 8,945 606 1,816 910 — Ablavar launch costs(k) — — 509 542 — Run-rate savings(l) 2,858 — — — — Adjusted EBITDA $59,070 $80,084 $85,228 $104,060 $253,882 (a)Represents provision for income taxes, less tax indemnification associated with an agreement with BMS, and in 2011includes the establishment of a full valuation allowance against the U.S. deferred tax assets. (b)Represents legal services incurred in connection with our business interruption claim associated with the NRU reactorshutdown in 2009 to 2010. (c)Represents a loss associated with a portion of the committed purchases of Ablavar that we do not believe we will be ableto sell prior to expiration. (d)Represents non-cash losses incurred associated with the write-down of inventory and write-off of long-lived assets. The2012 amount consists primarily of a $10.6 million inventory write-down related to Ablavar. The 2011 amount consistsprimarily of a $25.8 million inventory write-down related to Ablavar and a $23.5 million impairment charge to adjust thecarrying value of the Ablavar patent portfolio asset to its fair value of zero. The 2010 amount consists primarily of a$10.9 million inventory write-down related to Ablavar. The 2009 amount is primarily related to the write-down ofaccessories related to our TechneLite product as a result of the global Moly shortage and Cardiolite inventory acquiredfrom BMS. The 2008 amount was primarily related to our DEFINITY product as a result of the boxed warning inOctober 2007.Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with "Item 6—SelectedFinancial Data" and the consolidated financial statements and the related notes included in Item 8 of this annual report. This discussion containsforward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks anduncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors,including those set forth under "Item 1A—Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements."Overview We are a global leader in developing, manufacturing and distributing innovative diagnostic medical imaging agents and products that assistclinicians in the diagnosis of cardiovascular diseases such as coronary artery disease, congestive heart failure and stroke, peripheral vascular disease andother diseases. We were founded in 1956 as New England Nuclear Corporation and purchased by E. I. du Pont de Nemours and Company in 1981. Wewere subsequently acquired by BMS, as part of its acquisition of DuPont Pharmaceuticals in 2001. On January 8, 2008, Avista purchased the medicalimaging business from BMS for an aggregate purchase price of $518.7 million, and the medical imaging business is now known as LMI. Our current marketed products are used by nuclear physicians, cardiologists, radiologists, internal medicine physicians, technologists andsonographers working in a variety of clinical settings. We sell our products to radiopharmacies, hospitals, clinics, group practices, integrated deliverynetworks, group purchasing organizations and, in certain circumstances, wholesalers. In addition to our marketed products, we have three candidates inclinical and pre-clinical development. We market our products globally and have operations in the United States, Puerto Rico, Canada and Australia and distribution relationships inEurope, Asia Pacific and Latin America.59(e)Represents the revaluation of inventory as a result of the impact of purchase accounting in connection with theAcquisition. (f)Represents in-process R&D relating to the Acquisition. Immediately following the closing of the Acquisition, the in-process R&D was expensed. (g)In 2012 and 2011, consists of severance and recruitment costs related to employees, executives and directors. In 2010,consists of severance costs relating to one of our executive officers and a work force reduction in the fourth quarter. In2008, consists of severance costs relating to the closure of our European operations following the Acquisition. (h)Represents legal, information technology and human resource advisory services and other advisory fees incurred inconnection with the Acquisition. (i)Represents annual sponsor monitoring fee and related expenses. (j)Represents internal and external costs associated with establishing new manufacturing sources for our commercial andclinical candidate products. (k)Represents costs associated with the launch of Ablavar. (l)Represents run-rate cost savings, operating expense reductions and other expense and cost-saving synergies realized orexpected to be taken (calculated on a pro forma basis).Table of ContentsOur Products Our principal products include the following: DEFINITY is an ultrasound contrast agent used in ultrasound exams of the heart, also known as echocardiography exams. DEFINITY containsperflutren-containing lipid microspheres and is indicated in the United States for use in patients with suboptimal echocardiograms to assist in imagingthe left ventricular chamber and left endocardial border of the heart in ultrasound procedures. We launched DEFINITY in 2001, and its last patent in theUnited States will currently expire in 2021 and in numerous foreign jurisdictions in 2019. TechneLite is a technetium-based generator which provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite and othertechnetium-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses Moly as its main active ingredient. Cardiolite is a technetium-based radiopharmaceutical imaging agent used in MPI procedures to detect coronary artery disease using SPECT.Cardiolite was approved by the FDA in 1990, and its market exclusivity expired in July 2008. Xenon is a radiopharmaceutical inhaled gas used to assess pulmonary function and evaluate blood flow, particularly in the brain. Xenon ismanufactured by a third party and packaged in-house. In the United States, our nuclear imaging products, including Cardiolite and TechneLite, are primarily distributed through over 350radiopharmacies that are controlled by or associated with Cardinal, UPPI, GE Healthcare and Triad. A small portion of our nuclear imaging productsales in the United States are made through our direct sales force to hospitals and clinics that maintain their own in-house radiopharmaceuticalcapabilities. Sales of our contrast agent, DEFINITY, are made through our direct sales force of approximately 80 representatives. Outside the UnitedStates, we own five radiopharmacies in Canada and two radiopharmacies in each of Puerto Rico and Australia. We also maintain a direct sales force ineach of these countries. In the rest of the world, we rely on third-party distributors to market, distribute and sell our nuclear imaging and contrast agentproducts, either on a country-by-country basis or on a multi-country regional basis. The following table sets forth our revenue derived from our principal products: Included in Cardiolite is branded Cardiolite and generic sestamibi, some of which we produce and some of which we procure from third parties.60 Year Ended December 31, (dollars in thousands) 2012 % 2011 % 2010 % DEFINITY $51,431 17.9 $68,503 19.2 $59,968 16.9 TechneLite 114,249 39.7 131,241 36.9 122,044 34.5 Cardiolite 34,995 12.1 66,127 18.6 77,422 21.9 Xenon 30,075 10.4 26,761 7.5 19,932 5.6 Other 46,604 16.2 53,130 14.9 66,381 18.8 Net product revenues $277,354 96.3 $345,762 97.1 $345,747 97.7 License and other revenues 10,751 3.7 10,530 2.9 8,209 2.3 Total revenues $288,105 100.0 $356,292 100.0 $353,956 100.0 Table of ContentsKey Factors Affecting Our Results Our business and financial performance have been, and continue to be, affected by the following:Inventory Supply We currently rely on BVL as one of our two manufacturers of DEFINITY and Cardiolite products and the sole source manufacturer of Neurolite.In July 2010, BVL implemented a planned shutdown of the facility in which it manufactures products for a number of customers, including us, in orderto upgrade the facility to meet certain regulatory requirements. In anticipation of this shutdown, BVL manufactured for us additional inventory of theseproducts to meet our expected needs during the shutdown period which was anticipated to end in March 2011. Because the shutdown and restartactivities took substantially longer than anticipated by either BVL or us, we could not meet all of the demand for certain products during the second halfof 2011 and the first three quarters of 2012, resulting in overall revenue decline in comparison to the prior periods. BVL resumed manufacturingDEFINITY in the second quarter of 2012 and allowed us to release product at the end of the second quarter of 2012. BVL has also resumedmanufacturing Cardiolite products and has allowed us to release those products to the market. We currently believe that Neurolite will again becomeavailable from BVL in the latter half of 2013. We can give no assurances that BVL will be able to manufacture and release product for us on a timelyand consistent basis in the future or that we will not have short or longer term stock outs in the future. We have also expedited a number of technology transfer programs to secure and qualify production of our BVL-manufactured products to alternatecontract manufacturing sites. In February 2013, the FDA informed us that the JHS facility was approved to manufacture DEFINITY, and we havesince commenced shipping JHS-manufactured DEFINITY to customers. We also have on-going technology transfer activities at JHS for our Cardioliteproduct and Neurolite supply, but we can give no assurances as to when that technology transfer will be completed and we will actually receive supplyof Cardiolite products and Neurolite from JHS. In the meantime, we also have an alternate manufacturer for Cardiolite. We are also pursuing newmanufacturing relationships to establish and secure additional long-term or alternative suppliers of our key products, but we are uncertain of the timingas to when any other supply arrangement would provide meaningful quantities of product to us. If BVL is not able to continue to manufacture andrelease adequate product supply on a timely and consistent basis, we are unable to regain and grow sufficient market share, or we are not able to obtainadequate amounts of such products from alternate suppliers (including DEFINITY, Cardiolite and Neurolite), our financial results will be negativelyimpacted and we will need to implement additional expense reductions such as a delay of discretionary spending including possible reductions in salesand marketing and research and development activities, as well as other operating and strategic initiatives. See "Item 1A—Risk Factors—Ourdependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering our products toour customers in the required quantities, within the required timeframe, or at all, which could result in order cancellations and decreased revenues."Growth of DEFINITY We believe the market opportunity for our contrast agent, DEFINITY, remains significant. As we better educate the physician and healthcareprovider community about the benefits and risks of this product, we believe we will experience further penetration of suboptimal echocardiograms.Prior to the supply issues with BVL in 2012, sales of DEFINITY continually increased year over year since June 2008, when we were able to have theboxed warning on DEFINITY modified. Unit sales of DEFINITY had decreased substantially in late 2007 and early 2008 as a result of an FDArequest in October 2007 that all manufacturers of ultrasound contrast agents add a boxed warning to their products to notify physicians and patientsabout potentially serious safety concerns or risks posed by the products.61Table of ContentsHowever, in May 2008, the boxed warning was modified by the FDA in response to the substantial advocacy efforts of prescribing physicians. InOctober 2011, we received FDA approval of further modifications to the DEFINITY label, including: further relaxing the boxed warning; eliminatingthe sentence in the Indication and Use section "The safety and efficacy of DEFINITY with exercise stress or pharmacologic stress testing have not beenestablished" (previously added in October 2007 in connection with the imposition of the box warning); and including summary data from the post-approval CaRES (Contrast echocardiography Registry for Safety Surveillance) safety registry and the post-approval pulmonary hypertension study.However, as discussed above under "Inventory Supply", the future growth of our DEFINITY sales will be dependent on the ability of BVL to continueto manufacture and release DEFINITY on a timely and consistent basis for the remainder of 2013, our ability to continue to increase segmentpenetration for DEFINITY in suboptimal echocardiograms and JHS to transition to becoming our primary supplier of DEFINITY during 2013. See"Item 1A—Risk Factors—The growth of our business is substantially dependent on increased segment penetration for DEFINITY in suboptimalechocardiograms."Global Moly Supply Historically, our largest supplier of Moly, our highest volume raw material, has been Nordion (Canada) Inc. ("Nordion"), which has relied on theNRU reactor in Chalk River, Ontario. This reactor was off-line from May 2009 until August 2010 due to a heavy water leak in the reactor vessel. Aspart of the conditions for the relicensing of the NRU reactor through October 2016, the Canadian government has asked Atomic Energy of CanadaLimited, or AECL, to shut down the reactor for at least four weeks at least once a year for inspection and maintenance. The 2013 shutdown period iscurrently scheduled to run from mid-April 2013 to mid-May 2013. We currently believe that we will be able to source all of our standing-ordercustomer demand for Moly during this time period from our other suppliers. On October 19, 2012 and October 30, 2012, the Company executedamendments to agreements with Nordion and NTP, our largest Moly suppliers, which extended the contract terms of those agreements to December 31,2015 and December 31, 2017, respectively, and changed the commitments under the agreement from unit volume to percentage volume purchaserequirements. During the 2009 to 2010 period when the NRU reactor was off-line, instability in the global supply of Moly and supply shortages resulted insubstantial volatility in the cost of Moly in comparison to historical costs. We were able to pass some of these Moly cost increases on to our customersthrough our customer contracts. With less Moly, we manufactured fewer TechneLite generators for radiopharmacies and hospitals to make up unitdoses of Cardiolite, resulting in decreased sales of TechneLite and Cardiolite in favor of other diagnostic modalities that did not use Moly during the2009 to 2010 period when the NRU reactor was off-line.Demand for TechneLite Since the global Moly supply shortage in 2009 to 2010, we have experienced reduced demand for TechneLite generators from pre-shortage levelseven though volume has increased in absolute terms from shortage levels following the return of our normal Moly supply in August 2010. We do notknow if overall industry demand for technetium will ever return to pre-shortage levels. We believe that TechneLite unit volume has not returned to pre-shortage levels for a number of reasons, including: (i) changing staffing andutilization practices in radiopharmacies, which have resulted in increased efficiencies in the preparation of unit doses of technetium-basedradiopharmaceuticals; (ii) shifts to alternative diagnostic imaging modalities during the 2009 to 2010 Moly supply shortage, which have not returned totechnetium-based procedures; and (iii) decreased amounts of technetium being used in unit-doses of technetium-based radiopharmaceuticals due toincreased concerns about patient radiation dose exposure. We also believe that there has been an overall decline in the MPI study market because ofdecreased levels of patient studies during the Moly62Table of Contentsshortage period that have not returned to pre-shortage levels and industry-wide cost-containment initiatives that have resulted in a transition of whereimaging procedures are performed from free standing imaging centers to the hospital setting. We expect these factors will continue to affect technetiumdemand in the future. On November 1, 2012, the Centers for Medicare and Medicaid Services ("CMS") announced the 2013 final Medicare payment rules for hospitaloutpatient settings and physician offices. Under the final rules, CMS is now reimbursing an incremental $10 for each technetium dose produced from agenerator for a diagnostic procedure in a hospital outpatient setting that is reimbursed by Medicare if such technetium dose is produced from a generatorcontaining Moly sourced from at least 95 percent LEU. We currently understand that CMS expects to continue this incentive program for theforeseeable future. Beginning in January 2013, we now offer a TechneLite generator which contains Moly sourced from at least 95 percent LEU andwhich satisfies the requirements for reimbursement under this incentive program. It is too early to tell whether this incremental reimbursement for LEUMoly generators will result in a material increase in our generator sales.Cardiolite Competitive Pressures Cardiolite's market exclusivity expired in July 2008. In September 2008, the first of several competing generic products to Cardiolite was launched.With continued pricing pressure from generic competitors, we also sell our Cardiolite product in the form of a generic sestamibi at the same time as wecontinue to sell branded Cardiolite throughout the MPI segment. We believe this strategy of selling branded as well as generic sestamibi has slowed oursegment share loss by having multiple sestamibi offerings that are attractive in terms of brand, as well as price. In addition to pricing pressure due to generics, our Cardiolite products have also faced a share decline in the MPI segment due to a change inprofessional society appropriateness guidelines, on-going reimbursement pressures, the limited availability of Moly during the NRU reactor shutdown,the limited availability of Cardiolite products to us during the BVL outage, and the increase in use of other diagnostic modalities as a result of a shift tomore available imaging agents and modalities. Following the generic event, we believe we had been able to maintain share for our branded product in ageneric segment, because of brand awareness, loyalty to the agent within the cardiology community and our strong relationships with our distributionpartners. We believe the continuing effects from the BVL outage and continued generic competition will result in further share erosion for our Cardioliteproducts.Research and Development Expenses To remain competitive in the marketplace, we have historically made substantial investments in new product development. As a result, the positivecontributions of those internally funded research and development programs have been a key factor in the Company's historical results and success. InMarch 2013, we began to implement a strategic shift in how we will fund our important R&D programs. We will reduce over time our internal R&Dresources while at the same time seeking to engage strategic partners to assist us in the further development and commercialization of our importantdevelopment candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. As a result of this shift, we will complete our 301 trial forflurpiridaz F 18 with internal funding while we seek to engage strategic partners to assist us with the further development and possiblecommercialization of the agent. For our other two important development candidates, 18F LMI 1195 and LMI 1174, we will also seek to engagestrategic partners to assist us with the on-going development activities relating to these agents. We expect to internally fund expenses over the nextseveral years for the clinical development of all of these product candidates as we work with our strategic partners. We also expect to incur andinternally fund increases in manufacturing infrastructure costs for research and development initiatives as we approach the later stages of clinicaldevelopment.63Table of ContentsAblavar Prior to the issuance of the September 30, 2012 financial statements, we implemented a reduction in the sales force dedicated to Ablavar. Weperformed an analysis of expected future sales of our Ablavar product, based on an updated sales forecast reflecting the reduction in sales forcepersonnel dedicated to Ablavar, and recorded in the third quarter of 2012 to cost of goods sold an inventory write-down of $10.6 million and a reserveof $1.9 million associated with the portion of the committed purchases of Ablavar product that we did not believe we would sell prior to expiry. In2013, we decided to stop selling Ablavar actively through our sales force and transferred responsibility for supporting future sales to our customerservice organization. Prior to the issuance of the June 30, 2011 and December 31, 2011 financial statements, we performed an analyses of expected future sales of ourAblavar product and recorded an inventory write-down to cost of goods sold of $13.5 million and $12.3 million in the second and fourth quarters of2011, respectively, which represented the cost of Ablavar finished good product and API that we did not believe we would be able to sell prior to itsexpiration. We completed updated sales forecasts for Ablavar based on actual sales through June 30, 2011 and December 31, 2011 in consideration ofour supply agreement for API and finished good product. Based on the updated sales forecasts, coupled with the aggregate six-year shelf life of APIand finished goods, we recorded in cost of goods sold a loss of $1.9 million and $3.7 million in the second and fourth quarters of 2011, respectively,for the loss associated with the portion of the committed purchases of Ablavar product that we did not believe we would be able to sell prior to itsexpiration. Additionally, we determined that the write-down of Ablavar inventory during the six months ended June 30, 2011 represented an event thatwarranted assessment of the intellectual property associated with Ablavar for its recoverability and concluded that the intellectual property was notrecoverable and in the second quarter of 2011, recorded in cost of goods sold an impairment of this intangible asset of $23.5 million. After giving effect to these adjustments, as of December 31, 2012 and 2011, we have a total of $2.8 million and $12.2 million, respectively, ofAblavar inventory on hand. At December 31, 2012 and 2011, we had approximately $9.4 million and $11.1 million, respectively, of remainingcommitted Ablavar purchase obligations, of which $7.5 million and $5.6 million, respectively, is included in our accrued contract loss. In 2013, we havetransitioned the sales and marketing efforts for Ablavar from our direct sales force to our customer service team in order to allow our direct sales forceto drive our DEFINITY resurgence plan following our recent supply challenges. If we do not meet our current sales goals or cannot sell the product wehave committed to purchase prior to its expiration, we could incur additional inventory write-downs and/or losses on our purchase commitments. In October 2011, we entered into Amendment No. 2 to the Supply Agreement dated as of April 6, 2009 between Mallinckrodt and us. TheAblavar agreement provides for the manufacture and supply by Mallinckrodt of Ablavar API and finished drug product for us. Among other things,Amendment No. 2 (i) extends the term of the Ablavar agreement from September 30, 2012 until September 30, 2014, (ii) reduces the amount of APIMallinckrodt is obligated to supply to us and we are obligated to purchase from Mallinckrodt over the term of the Ablavar agreement and (iii) increasesthe amount of finished drug product Mallinckrodt is obligated to supply to us and we are obligated to purchase from Mallinckrodt over the term of theAblavar agreement. As a result of Amendment No. 2, our aggregate future purchase obligations of LMI under the Ablavar agreement were reducedfrom approximately $33.8 million to approximately $20.9 million. As of December 31, 2012, our remaining obligation under this agreement isapproximately $9.4 million.64Table of ContentsOperating Results The following have been included in our results as of and for the year ended December 31, 2012:•limited supply of DEFINITY, Cardiolite and Neurolite product inventory as a result of the BVL outage, and higher material cost forCardiolite because of more expensive sourcing from our current alternate manufacturer of Cardiolite and from third party manufacturersof generic sestamibi; •an additional inventory write-down of $10.6 million and a reserve of $1.9 million for an additional loss associated with the portion of thecommitted purchases of Ablavar product that we do not believe will be sold prior to expiry, as a result of the reduction of the Ablavarsales and marketing effort; •in June 2012, we began to supply DEFINITY produced by BVL again to customers, which resulted in increasing revenues starting inthe third quarter and increased sales incentive compensation; •continued generic competition to Cardiolite; •limited Ablavar revenues to offset costs related to the commercialization of the product; •underabsorption of manufacturing overhead due to BVL outage; •action taken on March 1, 2012 to reduce our workforce in an effort to reduce costs and increase operating efficiencies; and •a total of $35.0 million received from BVL to compensate us for business losses under (i) the Settlement Agreement and (ii) theTransition Services Agreement. During the year ended December 31, 2012, we incurred a net loss of $42.0 million and an operating loss of $0.8 million. We have developed plansand taken steps that we believe will enable us to strengthen our operations and meet our operating and financing requirements. In March 2013, webegan to implement a strategic shift in how we will fund our important R&D programs. We will reduce over time our internal R&D resources while atthe same time seeking to engage strategic partners to assist us in the further development and commercialization of our important developmentcandidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. We will complete our 301 trial for flurpiridaz F 18 with internal funding while weseek to engage strategic partners to assist us with the further development and possible commercialization of the agent. For our other two importantdevelopment candidates, 18F LMI 1195 and LMI 1174, we will also seek to engage strategic partners to assist us with the on-going developmentactivities relating to these agents. We expect to internally fund expenses over the next several years for the clinical development of these productcandidates as we work with our strategic partners.65Table of ContentsYears Ended December 31, 2012, 2011 and 2010 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 Revenues Net productrevenues $277,354 $345,762 $345,747 $(68,408) (19.8)%$15 —%License and otherrevenues 10,751 10,530 8,209 221 2.1 2,321 28.3 Total revenues 288,105 356,292 353,956 (68,187) (19.1) 2,336 0.6 Cost of goods sold 211,049 255,466 204,006 (44,417) (17.4) 51,460 25.2 Loss on firmpurchasecommitment 1,859 5,610 — (3,751) (66.9) 5,610 100.0 Total cost ofgoods sold 212,908 261,076 204,006 (48,168) (18.4) 57,070 28.0 Gross profit 75,197 95,216 149,950 (20,019) (21.0) (54,734) (36.5) Operating expenses General andadministrativeexpenses 32,520 32,057 30,042 463 1.4 2,015 6.7 Sales andmarketingexpenses 37,437 38,689 45,384 (1,252) (3.2) (6,695) (14.8)Research anddevelopmentexpenses 40,604 40,945 45,130 (341) (0.8) (4,185) (9.3)Proceeds frommanufacturer (34,614) — — (34,614) (100.0) — — Total operatingexpenses 75,947 111,691 120,556 (35,744) (32.0) (8,865) (7.4) Operating (loss)income (750) (16,475) 29,394 15,725 95.4 (45,869) (156.0)Interest expense (42,014) (37,658) (20,395) (4,356) 11.6 (17,263) 84.6 Loss on earlyextinguishment ofdebt — — (3,057) — — 3,057 100.0 Interest income 252 333 179 (81) (24.3) 154 86.0 Other (expense)income, net (44) 1,429 1,314 (1,473) (103.1) 115 8.8 (Loss) incomebefore incometaxes (42,556) (52,371) 7,435 9,815 18.7 (59,806) (804.4)Provision (benefit)for income taxes (555) 84,098 2,465 (84,653) (100.7) 81,633 3,311.7 Net (loss)income (42,001) (136,469) 4,970 94,468 69.2 (141,439) (2,845.9) Foreign currencytranslation, net oftaxes 964 (337) 1,150 1,301 386.1 (1,487) (129.3) 66Totalcomprehensive(loss) income $(41,037)$(136,806)$6,120 $95,769 70.0%$(142,926) (2,335.4)% Table of ContentsComparison of the Years Ended December 31, 2012, 2011, and 2010Revenues Revenues are summarized as follows: Total revenues decreased $68.2 million, or 19.1%, to $288.1 million in the year ended December 31, 2012, as compared to $356.3 million in theyear ended December 31, 2011. U.S. segment revenue decreased $58.4 million, or 21.7%, to $210.0 million in the same period, as compared to $268.4million in the prior year. The decrease in the U.S. segment over the prior year is primarily due to the BVL outage impacting our supply of DEFINITY,Cardiolite, and Neurolite, which represented $35.5 million of unit volume revenue decreases. We also experienced lower pricing on Cardiolite andDEFINITY products in 2012, which represented $11.1 million of the decrease in U.S. segment revenues. We experienced lower TechneLite revenuesdue to the loss of a significant customer during the second quarter of 2012, resulting in lower revenues of $8.0 million. A decline in a significantcustomer's market share resulted in lower revenues of $4.1 million in 2012. Offsetting these decreases were increases in revenue for the U.S. segmentof Xenon, with price increases of $5.1 million offset in part by lower unit volumes of $1.8 million. The International segment revenues decreased $9.8 million, or 11.2%, to $78.1 million in the year ended December 31, 2012, as compared to $87.9million in the year ended December 31, 2011. The decrease was primarily due to the BVL outage impacting our supply of Cardiolite and Neurolite inthe international markets and TechneLite decreases due to lower unit volume and pricing in certain markets.67 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States DEFINITY $50,377 $67,442 $58,846 $(17,065) (25.3)%$8,596 14.6%TechneLite 101,049 114,833 108,262 (13,784) (12.0) 6,571 6.1 Cardiolite 13,851 39,214 50,408 (25,363) (64.7) (11,194) (22.2)Xenon 30,048 26,728 19,883 3,320 12.4 6,845 34.4 Other currentlymarketedproducts 3,935 9,618 19,138 (5,683) (59.1) (9,520) (49.7) Total U.S. netproduct revenues 199,260 257,835 256,537 (58,575) (22.7) 1,298 0.5 License andother revenues 10,751 10,530 8,209 221 2.1 2,321 28.3 Total U.S. revenues $210,011 $268,365 $264,746 $(58,354) (21.7)%$3,619 1.4% International DEFINITY $1,054 $1,061 $1,122 $(7) (0.7)%$(61) (5.4)%TechneLite 13,200 16,408 13,782 (3,208) (19.6) 2,626 19.1 Cardiolite 21,144 26,913 27,014 (5,769) (21.4) (101) (0.4)Xenon 27 33 49 (6) (18.2) (16) (32.7)Other currentlymarketedproducts 42,669 43,512 47,243 (843) (1.9) (3,731) (7.9) Total Internationalnet productrevenues $78,094 $87,927 $89,210 $(9,833) (11.2)$(1,283) (1.4) Net productrevenues $277,354 $345,762 $345,747 $(68,408) (19.8)%$15 —%License and otherrevenues 10,751 10,530 8,209 221 2.1 2,321 28.3 Total revenues $288,105 $356,292 $353,956 $(68,187) (19.1)%$2,336 0.6% Table of Contents Total revenues increased $2.3 million, or 0.6%, to $356.3 million in the year ended December 31, 2011, as compared to $354.0 million in the yearended December 31, 2010. U.S. segment revenue increased $3.6 million, or 1.4%, to $268.4 million in the same period, as compared to $264.7 millionin the prior year. This increase in the U.S. segment over the prior year is primarily driven by increased sales of DEFINITY, due to the increase in thenumber of contrast studies performed, TechneLite, which had been adversely impacted from May 2009 until August 2010 by a global Moly shortage asa result of the NRU reactor outage and Xenon, primarily due to price increases. Offsetting these increases were lower Thallium revenues primarily dueto customers returning to technetium-based studies following the return of a normal Moly supply and lower Cardiolite and Neurolite revenues primarilydue to the BVL supply shortage and continued generic pressure on Cardiolite. The International segment revenues decreased $1.3 million, or 1.4%, to $87.9 million in the year ended December 31, 2011, as compared to $89.2million in the year ended December 31, 2010. The decrease was primarily driven by a decrease in Thallium revenues as customers returned totechnetium-based studies following the return of a normal Moly supply, as well as a decrease in Cardiolite and Neurolite revenues as a result of therecent product recall and supply issues, resulting in stock outs of product in certain international markets. Offsetting these decreases was the impact offavorable foreign currency exchange of approximately $4.2 million and higher TechneLite revenues due to an increase in global Moly availabilityfollowing the return of a normal Moly supply in 2011 as compared to 2010.Rebates and Allowances Estimates for rebates and allowances represent our estimated obligations under contractual arrangements with third parties. Rebate accruals andallowances are recorded in the same period the related revenue is recognized, resulting in a reduction to product revenue and the establishment of aliability which is included in accrued expenses. These rebates result from performance-based offers that are primarily based on attaining contractuallyspecified sales volumes and growth, Medicaid rebate programs for certain products, administration fees of group purchasing organizations, and certaindistributor related commissions. The calculation of the accrual for these rebates and allowances is based on an estimate of the third party's buyingpatterns 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:68(in thousands) Rebates Allowances Total Balance, as of January 1, 2010 $427 $41 $468 Current provisions relating to revenues in current year 3,072 555 3,627 Adjustments relating to prior years' estimate — — — Payments/credits relating to revenues in current year (2,171) (454) (2,625)Payments/credits relating to revenues in prior years (418) (41) (459) Balance, as of December 31, 2010 910 101 1,011 Current provisions relating to revenues in current year 3,672 474 4,146 Adjustments relating to prior years' estimate (116) — (116)Payments/credits relating to revenues in current year (2,617) (441) (3,058)Payments/credits relating to revenues in prior years (493) (101) (594) Balance, as of December 31, 2011 1,356 33 1,389 Current provisions relating to revenues in current year 3,224 291 3,515 Adjustments relating to prior years' estimate (145) — (145)Payments/credits relating to revenues in current year (2,232) (223) (2,455)Payments/credits relating to revenues in prior years (661) (35) (696) Balance, as of December 31, 2012 $1,542 $66 $1,608 Table of Contents Sales rebates were approximately $1.5 million and $1.4 million at December 31, 2012 and December 31, 2011, respectively. The increase in theaccrual resulted principally from the timing of payments. In October 2010, we entered into a Medicaid Drug Rebate Agreement for certain of ourproducts, which did not have a material impact on our results of operations in 2010, 2011 or 2012. If the demand for these products through theMedicaid program increases in the future, our rebates associated with this program could increase and could have a material impact on future results ofoperations.Cost of Goods Sold Cost of goods sold consists of manufacturing, distribution, definite lived intangible asset amortization and other costs related to our commercialproducts. In addition, it includes the write off of excess and obsolete inventory. Cost of goods sold is summarized as follows: Total cost of goods sold decreased $48.2 million, or 18.4%, to $212.9 million in the year ended December 31, 2012, as compared to$261.1 million in the year ended December 31, 2011. U.S. segment cost of goods sold decreased approximately $50.4 million, or 24.4%, to$156.1 million in same period, as compared to $206.5 million in the prior year period. The primary contributing factor to the decrease in the U.S.segment cost of goods sold was the prior period write-off for Ablavar intangible assets of $23.5 million and the decrease of $18.9 million in amountsrecorded for Ablavar inventory write-down and contract loss reserves associated with Ablavar inventory purchase commitments. We also incurredlower TechneLite material costs of $12.6 million due to lower unit volumes and lower cost with our primary supplier beginning in November 2012.These decreases were partially offset by higher DEFINITY technology transfer costs of $4.9 million, take or pay losses of $4.3 million on purchasecommitments for Moly and higher Cardiolite manufacturing costs of $1.5 million due to increased material expenses as a result of sourcing materialfrom an alternate higher cost manufacturer due to the BVL outage. For the year ended December 31, 2012, the International segment cost of goods sold increased $2.2 million, or 4.0%, to $56.8 million, ascompared to $54.6 million in the prior year period. Cost of goods sold in our International segment increased primarily due to temporary increases incosts for third party sestamibi and a substitute product for Neurolite. These increases were partially offset by lower Cardiolite, Neurolite and TechneLiteunit volumes in certain markets. Total cost of goods sold increased $57.1 million, or 28.0%, to $261.1 million in the year ended December 31, 2011, as compared to $204.0 millionin the year ended December 31, 2010. U.S. segment cost of goods sold increased approximately $58.0 million, or 39.1%, to $206.5 million in sameperiod, as compared to $148.5 million in the prior year period. The primary contributing factors to the increase in the U.S. segment cost of goods soldwere charges resulting from on-hand inventory shelf life, an assessment of future Ablavar sales and the related effect on committed supply and animpairment of the Ablavar patent portfolio intangible asset. The total costs included in cost of goods sold of the inventory reserve, the loss contractreserve and the intangible impairment was $54.9 million for the year ended December 31, 2011, as compared to a $10.9 million write-off of Ablavarinventory in 2010, an69 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States $156,098 $206,450 $148,454 $(50,352) (24.4)%$57,996 39.1%International 56,810 54,626 55,552 2,184 4.0 (926) (1.7) Total Cost ofGoods Sold $212,908 $261,076 $204,006 $(48,168) (18.4)%$57,070 28.0% Table of Contentsincrease of $44.0 million. The U.S. segment also incurred higher costs as we produced more TechneLite after the return to normal Moly supplyfollowing the outage of the NRU reactor in Chalk River, Ontario. Increases in Thallium and Gallium costs also occurred as a result of lowerInternational segment volume, the effect of which burdened the U.S. segment with a greater share of manufacturing overhead expenses. Similarly, wealso experienced higher Neurolite manufacturing costs due primarily to lower International segment volume as a direct result of the longer than expectedBVL shutdown and product recalls, the effect of which burdened the U.S. segment with more costs due to lower absorption. These increases werepartially offset by a decrease in amortization of intangible customer relationships. For the year ended December 31, 2011, the International segment cost of goods sold decreased $0.9 million, or 1.7%, to $54.6 million, ascompared to $55.5 million in the prior year period. Cost of goods sold in our International segment decreased primarily due to lower Neurolite volumesas a result of the longer than expected BVL outage and product recall. We also experienced lower Thallium costs due to lower volumes resulting fromcustomers switching to technetium-based studies and lower third party and other product costs due to favorable mix and lower material costs. Thesedecreases were partially offset primarily by higher manufacturing costs in our radiopharmacies.Gross Profit Total gross profit decreased $20.0 million, or 21.0%, to $75.2 million in the year ended December 31, 2012, as compared to $95.2 million in theyear ended December 31, 2011. U.S. segment gross profit decreased $8.0 million, or 12.9%, to $53.9 million, as compared to $61.9 million in the prioryear period. Gross profit in the U.S. segment decreased primarily due to lower profits of $40.9 million from Cardiolite, DEFINITY, and Neurolitecaused by supply issues resulting from the BVL outage. We also experienced decreased profits of $5.5 million from TechneLite, driven by $4.3 millionof take or pay losses on purchase commitments for Moly, $4.1 million in lower margins from lower unit sales, offset by $2.9 million in higher sellingprice given the customer mix. Additionally, we incurred increased DEFINITY technology transfer costs of $4.9 million and higher Cardiolitemanufacturing costs of $1.5 million in 2012 due to increased material expenses as a result of sourcing material from an alternate higher costmanufacturer as a result of the BVL outage, contributed to a lower gross profit over the prior period. These decreases were partially offset by the priorperiod write-off for Ablavar intangible assets of $23.5 million and the decrease of $18.9 million in amounts recorded for Ablavar inventory write-downand contract loss reserves associated with Ablavar inventory purchase commitments and higher Xenon gross profit due to price increases of$5.1 million offset by lower unit volumes reducing gross profit by $2.0 million. For the year ended December 31, 2012, the International segment gross profit decreased $12.0 million, or 36.1%, to $21.3 million, as compared to$33.3 million in the prior year period. Gross profit in our International segment decreased due to lower Cardiolite and Neurolite unit sales volumesrelated to the product shortage issues resulting from the BVL outage, higher material expenses as we sourced material from alternate higher costmanufacturers and lower units sales volumes given competitive pressures in certain markets. These decreases were partially offset by higher profitsfrom Neurolite ligand, which was unaffected by the BVL product shortage.70 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States $53,913 $61,915 $116,292 $(8,002) (12.9)%$(54,377) (46.8)%International 21,284 33,301 33,658 (12,017) (36.1) (357) (1.1) Total Gross Profit $75,197 $95,216 $149,950 $(20,019) (21.0)%$(54,734) (36.5)% Table of Contents Total gross profit decreased $54.7 million, or 36.5%, to $95.2 million in the year ended December 31, 2011, as compared to $150.0 million in theyear ended December 31, 2010. U.S. segment gross profit decreased $54.4 million, or 46.8%, to $61.9 million, as compared to $116.3 million in theprior year period. Gross profit in the U.S. segment decreased primarily due to the $44.0 million incremental expense in 2011 arising from the Ablavarinventory, loss contract reserves and intangible asset impairment previously discussed. We also experienced a decrease in Cardiolite and Neurolite profitrelating to revenue loss from the longer than anticipated BVL outage and product recall, coupled with higher manufacturing costs arising fromunabsorbed capacity due primarily to the inability to manufacture product as a result of the longer than expected BVL shutdown. A decrease in Thalliumprofit also occurred due to customers sourcing product from competitors and higher manufacturing cost. These decreases were partially offset by anincrease in DEFINITY profit as demand continued to increase as well as higher profit from Xenon due to an increase in price. For the year ended December 31, 2011, the International segment gross profit decreased $0.4 million, or 1.1%, to $33.3 million, as compared to$33.7 million in the prior year period. Gross profit in our International segment decreased largely due to a decrease in Thallium gross profit due to lowervolume as customers returned to technetium-based studies. We also experienced increased manufacturing costs in our radiopharmacies and a decrease inCardiolite gross profit relating to the longer than anticipated BVL outage. These decreases were partially offset by an increase in TechneLite gross profitfollowing the return to normal Moly supply and an increase in third party and other products profit due to lower material costs, favorable mix andhigher revenues from fluorodeoxyglucose ("FDG"), a PET imaging cancer agent, and generic sestamibi.General and Administrative General and administrative expenses consist of salaries and other related costs for personnel in executive, finance, legal, information technologyand human resource functions. Other costs included in general and administrative expenses are professional fees for information technology services,external legal fees, consulting and accounting services as well as bad debt expense, certain facility and insurance costs, including director and officerliability insurance. Total general and administrative expenses increased approximately $0.5 million, or 1.4%, to $32.5 million in the year ended December 31, 2012, ascompared to $32.1 million in the year ended December 31, 2011. In the U.S. segment, general and administrative expenses increased $0.8 million, or2.6%, to $30.2 million, as compared to $29.4 million in the prior year period. The increase was primarily due to a $0.9 million increase in stockcompensation driven by the reversal of stock-based compensation expense in 2011 relating to the determination that the achievement of certainperformance targets was no longer probable and current year modifications to stock option agreements. In addition, depreciation expense increasedapproximately $0.3 million over the prior year as a result of certain capital spending projects occurring in late 2011 and early 2012 related primarily toinformation technology improvements. Offsetting this increase was an overall reduction in costs associated with external support primarily related toinformation technology. For the year ended December 31, 2012, general and administrative expenses in the International segment decreased $0.3 million or 11.9%, to$2.3 million as compared to $2.6 million in the prior year71 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States $30,192 $29,415 $27,193 $777 2.6%$2,222 8.2%International 2,328 2,642 2,849 (314) (11.9) (207) (7.3) Total General andAdministrative $32,520 $32,057 $30,042 $463 1.4%$2,015 6.7% Table of Contentsperiod. This decrease was primarily due to a recovery of previously reserved accounts receivable during 2012 and reduced headcount in 2012 ascompared to 2011. Total general and administrative expenses increased $2.0 million, or 6.7%, to $32.1 million in the year ended December 31, 2011, as compared to$30.0 million in the year ended December 31, 2010. In the U.S. segment, general and administrative expenses increased $2.2 million, or 8.2%, to$29.4 million, as compared to $27.2 million in the prior year period. The increase primarily related to legal expenses for a business interruptioninsurance claim, as well as higher salaries and benefits for additional experienced personnel. These increases were partly offset by lower professionalservices fees driven by cost containment initiatives. For the year ended December 31, 2011, general and administrative expenses in the International segment decreased $0.2 million or 7.3%, to$2.6 million as compared to $2.8 million in the prior year period. This decrease was primarily driven by lower recruitment fees and bad debt expense.Sales and Marketing Sales and marketing expenses consist primarily of salaries and other related costs for personnel in field sales, marketing, business development,and customer service functions. Other costs in sales and marketing expenses include the development and printing of advertising and promotionalmaterial, professional services, market research, and sales meetings. Total sales and marketing expenses decreased $1.3 million, or 3.2%, to $37.4 million in the year ended December 31, 2012, as compared to$38.7 million in the year ended December 31, 2011. In the U.S. segment, sales and marketing expense decreased $0.4 million, or 1.2%, to $33.6 millionin the same period, as compared to $34.0 million in the prior year. Overall, there were lower expenses on sales and marketing activities as a result of$1.6 million of reductions in discretionary spending due to the prolonged BVL outage. Additionally, salary and other personnel costs in 2012 were$1.3 million lower primarily due to the workforce reductions during the second quarter of 2011 and March 2012. These decreases were offset by a$1.1 million reversal of stock-based compensation expense in the first quarter of 2011 and $1.4 million of increased sales incentive compensationrelated to the return of DEFINITY product to the market in June 2012. As a percentage of net revenue in the U.S. segment, sales and marketingexpenses were 16.0%, 12.7% and 15.4% for the years ended December 31, 2012, 2011 and 2010, respectively. For the year ended December 31, 2012, the International segment sales and marketing expense decreased $0.9 million or 18.3%, to $3.8 million ascompared to $4.6 million in the prior year period. The decrease in sales and marketing expenses in the International segment was primarily due to lowerheadcount and expenses on sales and marketing activities as a result of reductions in discretionary spending due to the prolonged BVL outage. As apercentage of net revenue, sales and marketing expenses in the International segment were 4.9%, 5.3% and 5.2% for the years ended December 31,2012, 2011 and 2010, respectively. Total sales and marketing expenses decreased $6.7 million, or 14.8%, to $38.7 million in the year ended December 31, 2011, as compared to$45.4 million in the year ended December 31, 2010. In the U.S. segment, sales and marketing expense decreased $6.7 million, or 16.5%, to$34.0 million in the72 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States $33,638 $34,040 $40,762 $(402) (1.2)%$(6,722) (16.5)%International 3,799 4,649 4,622 (850) (18.3) 27 0.6 Total Sales andMarketing $37,437 $38,689 $45,384 $(1,252) (3.2)%$(6,695) (14.8)% Table of Contentssame period, as compared to $40.8 million in the prior year. The decrease related primarily to the discontinued use of a contracted sales force supportingAblavar, as part of a sales force reorganization in the fourth quarter of 2010. Compensation costs were lower due to a non-recurring reduction of stockcompensation expense resulting from an expired liability award. Other decreases, driven by cost containment initiatives, include market researchprimarily related to Ablavar and lower professional services. These decreases were partly offset by increased variable incentive compensation for thesales force. For the year ended December 31, 2011, the International segment sales and marketing expense remained relatively flat.Research and Development Research and development expenses relate primarily to the development of new products to add to the Company's portfolio and costs related to itsmedical affairs and medical information functions. Total research and development expense decreased $0.3 million, or 0.8%, to $40.6 million for the year ended December 31, 2012, as compared to$40.9 million in the year ended December 31, 2011. In the U.S. segment, research and development expense increased approximately $0.1 million, or0.2%, to $40.4 million, as compared to $40.3 million in the prior year period. Research and development expense in the U.S. segment remainedrelatively flat from 2011 to 2012. We continued to actively enroll patients and activate sites for our flurpiridaz F 18 Phase 3 program. In the first half of2011, we were primarily in the planning and preparation stage for our flurpiridaz F 18 Phase 3 program. We enrolled our first patient in this Phase 3program during the second quarter of 2011. The resulting increase in clinical activity in 2012 were related to our clinical research organization,investigator expenses, drug products, lab supplies, and consultants by $5.3 million. These increases were offset by a reduction in workforce in thesecond quarter of 2011 by $4.4 million and the decrease in depreciation expense of $0.9 million. For the year ended December 31, 2012, the International segment research and development expenses decreased approximately $0.4 million, or73.7%, to $0.1 million, as compared to $0.6 million in the prior year period. The decrease in research and development expenses for the Internationalsegment was primarily due to a reduction in workforce in the second quarter of 2011. Total research and development expense decreased $4.2 million, or 9.3%, to $40.9 million for the year ended December 31, 2011, as compared to$45.1 million in the year ended December 31, 2010. In the U.S. segment, research and development expense decreased $4.3 million, or 9.5%, to$40.3 million, as compared to $44.6 million in the prior year period. The decrease in research and development expense in the U.S. segment wasprimarily due to the timing of clinical activity related to our flurpiridaz F 18 program. During the first half of 2011, we were primarily in the planningand preparation stage for our flurpiridaz F 18 Phase 3 trial. At the end of the second quarter, we enrolled our first patient and continued to actively enrollpatients and activate sites during the second half of 2011 and throughout 2012. In 2010, we had costs related to multiple clinical trials, principally, theflurpiridaz F 18 Phase 2 clinical trial and our DEFINITY Phase 4 clinical trial. These clinical trial expenses were offset, in part, by the closure and finaltrue-up of our Cardiolite Pediatrics clinical trial.73 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 United States $40,457 $40,387 $44,639 $70 0.2%$(4,252) (9.5)%International 147 558 491 (411) (73.7) 67 13.6 Total Research andDevelopment $40,604 $40,945 $45,130 $(341) (0.8)%$(4,185) (9.3)% Table of ContentsThis reduction of clinical activity in 2011 resulted in lower costs related to drug products, lab supplies, clinical site monitoring and consultants.Additionally, we had a decrease in personnel related costs resulting from a work force reduction in June 2011, fewer independent medical educationgrants and lower regulatory filing fees as the 2010 results include a one-time fee to the FDA for a supplemental New Drug Application, or sNDA, forour DEFINITY product. For the year ended December 31, 2011, the International segment research and development expenses increased $0.1 million, or 13.6%, to$0.6 million, as compared to $0.5 million in the prior year period. Research and development expenses in the International segment remained relativelyconsistent. Our research and development expenses related to our flurpiridaz F 18 program for 2010 consisted primarily of costs related to the completion ofour Phase 2 and the planning of our Phase 3 clinical trials. We commenced our Phase 3 trials in the second quarter of 2011 and enrolled patients for thefirst of two Phase 3 trials during 2012. We expect to incur additional expenses related to the completion of the first Phase 3 trial in 2013.Proceeds from Manufacturer For the year ended December 31, 2012 as compared to the year ended December 31, 2011, proceeds from manufacturer increased by $34.6 millionas a result of the receipt of the $30.0 million from BVL to compensate us for business losses and an additional $5.0 million under the TransitionServices Agreement. During the first quarter of 2012, BVL and LMI terminated their original manufacturing agreement and entered into the SettlementAgreement, the Transition Services Agreement and the Manufacturing and Services Contract.Other Income (Expense), NetInterest Expense For the year ended December 31, 2012 compared to the same period in 2011, interest expense increased by 11.6% to $42.0 million from$37.7 million, as a result of the issuance of $150.0 million of New Notes in the first quarter of 2011. For the year ended December 31, 2011 compared to the same period in 2010, interest expense increased by 84.6% to $37.7 million from$20.4 million, as a result of the issuance of $150.0 million of New Notes in the first quarter of 2011. See Note 10, "Financing Arrangements" in ouraccompanying consolidated financial statements.74 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 Interest expense $(42,014)$(37,658)$(20,395)$(4,356) 11.6%$(17,263) 84.6%Loss on earlyextinguishmentof debt — — (3,057) — — 3,057 (100.0)Interest income 252 333 179 (81) (24.3) 154 86.0 Other (expense)income, net (44) 1,429 1,314 (1,473) (103.1) 115 8.8 Total OtherExpense, net $(41,806)$(35,896)$(21,959)$(5,910) 16.5%$(13,937) 63.5% Table of ContentsInterest Income For the year ended December 31, 2012 compared to the same period in 2011, interest income decreased by 24.3% to $252,000 from $333,000,primarily as a result of a decrease in cash in interest bearing accounts. For the year ended December 31, 2011 compared to the same period in 2010, interest income increased by 86.0% to $0.3 million from$0.2 million, primarily as a result of an increase in cash in interest bearing accounts.Other Income, net For the year ended December 31, 2012 compared to the same period in 2011, other (expense) income, net decreased by 103.1% to $(44,000) from$1.4 million primarily due to a decrease in the tax indemnification asset and changes in foreign currency exchange rates. For the year ended December 31, 2011 compared to the same period in 2010, other income, net increased by 8.8% to $1.4 million from$1.3 million primarily as a result of an increase in the amount of income recognized related to our tax indemnification agreement with BMS offsetslightly by foreign currency exchange.Provision (Benefit) for Income Taxes For the year ended December 31, 2012 compared to the same period in 2011, provision (benefit) for income taxes decreased by 100.7% to $(0.6)million from $84.1 million due primarily to the valuation allowance that was recorded in the prior period and the release of prior year's tax uncertain taxpositions due to the lapse of statutes in 2012. For the year ended December 31, 2011 compared to the same period in 2010, provision for income taxes increased by 3,311.7% to $84.1 millionfrom $2.5 million, due primarily to the increase in valuation allowance. We have generated domestic pre-tax losses for the past two years. This loss history demonstrates negative evidence concerning our ability to utilizeour gross deferred tax assets. In order to overcome the presumption of recording a valuation allowance against our net deferred tax assets, we must havesufficient positive evidence that we can generate sufficient taxable income to utilize these deferred tax assets within the carryover or forecast period.Although we have no history of expiring net operating losses or other tax attributes, the cumulative domestic loss incurred over the three year periodended December 31, 2012 is a significant component of objective negative evidence and limits our ability to consider other subjective evidence such asour projections for future growth. On the basis of this evaluation, as of December 31, 2012, we continue to maintain a full valuation allowance on theportion of our domestic deferred tax assets that is not more-likely-than-not to be realized. Accordingly, the valuation allowance has increased by$20.2 million in 2012 for losses not benefited. Our effective tax rate for the years ended December 31, 2012, 2011, and 2010 was 1.3%, 160.7%, and 33.1%. Our tax rate is affected by recurringitems, such as tax rates in foreign jurisdictions and the relative amount of income we earn in those jurisdictions, which we expect to be fairly consistentin the near term. It is also affected by discrete events that may occur in any given year, but are not consistent75 2012 comparedto 2011 2011 comparedto 2010 December 31, Change$ Change% Change$ Change% (dollars in thousands) 2012 2011 2010 Provision (benefit)for income taxes $(555)$84,098 $2,465 $(84,653) (100.7)%$81,633 3,311.7%Table of Contentsfrom year to year. The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 35% andour effective tax rate during the years ended:December 31, 2012•A $20.2 million increase to our valuation allowance against net domestic deferred tax assets. •A $2.3 million reduction relating to prior year uncertain tax positions for a closed tax year. •A $1.8 million reduction relating to a state income tax benefit consisting of $1.1 million related to state NOL's, $0.3 million related toresearch credits, and $0.4 million to other changes to state deferred taxes.December 31, 2011•A $102.7 million increase to our valuation allowance against net domestic deferred tax assets. •A $1.1 million increase in our uncertain tax positions relating to state tax nexus and transfer pricing. •A $2.6 million increase relating to the establishment of a deferred tax liability for foreign subsidiary earnings that are no longerconsidered permanently reinvested. •A $1.8 million reduction relating to a state income tax benefit associated with changes to deferred taxes.December 31, 2010•A $2.7 million increase in our uncertain tax positions for state tax nexus and transfer pricing. •A $1.3 million reduction in taxes payable relating to the release of prior year tax uncertain tax positions. •A $0.7 million reduction relating to federal research credits. Undistributed earnings of various foreign subsidiaries aggregated $2.5 million, $14.1 million and $9.5 million at December 31, 2012, 2011, and2010, respectively. For the year ended December 31, 2012 and 2011, the Company has recorded a deferred tax liability of $1.1 million and $5.9 million,respectively, relating to the additional tax that would be due in the U.S. upon repatriation of these earnings.Liquidity and Capital ResourcesCash Flows The following table provides information regarding our cash flows:76 % Change Year Ended December 31, 2012Comparedto 2011 2011Comparedto 2010 2012 2011 2010 (dollars in thousands) Cash provided by (used in): Operating activities $523 $22,420 $26,317 (97.7)% (14.8)%Investing activities (8,145) (7,694) (8,550) 5.9% (10.0)%Financing activities (2,039) (6,991) (17,550) (70.8)% (60.2)%Table of ContentsNet Cash Provided by Operating Activities Cash provided by operating activities is primarily driven by our earnings and changes in working capital. The decrease in cash provided byoperating activities for the year ended December 31, 2012 as compared to 2011 was primarily driven by the impact of decreased unit sales due to theBVL outage. These decreases were offset by: (1) the receipt of the $35.0 million BVL settlement in 2012; (2) an amended purchase agreement for oneof our products of which $1.7 million of required purchases were made during the year ended December 31, 2012, versus $24.8 million for the yearended December 31, 2011; and (3) the timing of payments made to vendors. The decrease in cash provided by operating activities for the year ended December 31, 2011 as compared to 2010 was primarily driven by lowerrevenues due to the supply challenges as a result of the recall and prolonged BVL outage, offset, in part, by a contract amendment with Mallinckrodtwhich decreased our 2011 purchase commitments of Ablavar product.Net Cash Used in Investing Activities Our primary uses of cash in investing activities are for the purchase of property and equipment. Net cash used in investing activities in 2012, 2011and 2010 reflected the purchase of property and equipment for $7.9 million, $7.7 million and $8.3 million, respectively.Net Cash Used in Financing Activities Our primary historical uses of cash in financing activities are principal payments on our then existing term loan and line of credit. On May 10,2010 and March 21, 2011 we issued $250.0 million and $150.0 million, respectively, of our Notes and paid associated financing costs, paid outstandingprincipal on the term loan and issued dividends to Holdings. Net cash used in 2011 and 2010 primarily represents the results of these activities as wellas the draw down and repayment in 2011 of $10.0 million on our line of credit. Since 2010, our primary source of cash flows from financing activities has been the proceeds from the issuance of the Notes. Going forward, weexpect our primary source of cash flows from financing activities to be further issuances of securities or other financing arrangements into which wemay enter. Our primary historical uses of cash in financing activities are principal payments on our term loan and line of credit as well as dividends toHoldings, our parent. See "—External Sources of Liquidity."External Sources of Liquidity On May 10, 2010, we issued $250.0 million in aggregate principal amount of 9.750% Senior Notes due in 2017, or the Restricted Notes, at facevalue, net of issuance costs of $10.1 million, under the indenture, dated as of May 10, 2010. The net proceeds were used to repay $77.9 million dueunder our outstanding credit agreement and to pay a $163.8 million dividend to Holdings. Holdings utilized the dividend to repay a $75.0 milliondemand note and to repurchase $90.0 million of Holdings' Series A Preferred Stock at the accreted value. The $75.0 million Demand Note was issuedin June 2009, was payable on demand, and had an interest rate equal to the greater of the prime rate plus 2.25% or LIBOR plus 5.0%; the interest rate atDecember 31, 2009 was 5.5%. On February 2, 2011, we consummated an exchange offer where we exchanged $250.0 million aggregate principalamount of our Restricted Notes for an equal principal amount of 9.750% Senior Notes due 2017, or the Exchange Notes, that were registered under theSecurities Act, with substantially identical terms in all respects. On March 21, 2011, we issued an additional $150.0 million in aggregate principal amount of our New Restricted Notes at face value, net ofissuance costs of $4.9 million, under the indenture, dated as of May 10, 2010, as supplemented by the First Supplemental Indenture, dated as ofMarch 14, 2011, and the Second Supplemental Indenture, dated as of March 21, 2011, or together, the Indenture. The77Table of Contentsnet proceeds were used to fund a $150.0 million dividend to Holdings. Holdings utilized the dividend to repurchase all of the remaining Holdings'Series A Preferred Stock at the accreted value of approximately $44 million and to issue an approximate $106 million dividend to our commonsecurityholders. On May 10, 2011, we consummated an exchange offer where we exchanged $150.0 million aggregate principal amount of NewRestricted Notes for an equal principal amount of 9.750% Senior Notes due 2017, or the New Exchange Notes, registered under the Securities Act,with substantially identical terms in all respects. The Exchange Notes and the New Exchange Notes, or together, the Notes mature on May 15, 2017. Interest on the Notes accrues at a rate of9.750% per year and is payable semiannually in arrears on May 15 and November 15 commencing on November 15, 2010 for the Notes issued onMay 10, 2010 and May 15, 2011 for the Notes issued on March 21, 2011. Our annual interest expense increased from $24.4 million to $39.0 million asa result of the March 21, 2011 issuance of Notes. In connection with the Restricted Notes issuance, LMI entered into a revolving facility (the "Facility") for total borrowings up to $42.5 millionwith the ability to request the lenders to increase the Facility by an additional amount of up to $15.0 million at the discretion of the lenders. In March2011, LMI received the consent of the lenders under the Facility to amend the agreement to allow us to use the net proceeds of the March 2011 issuanceas described above. The amendment also increased the consolidated total leverage ratio to accommodate the New Restricted Notes issuance anddecreased the consolidated interest coverage ratio to accommodate the associated increase in semiannual interest payments. Additionally, the amendmentadjusted the effective interest rate of borrowings thereunder. The amendment was consummated concurrently with the consummation of the NewRestricted Notes issuance. Interest on the Facility was set at either LIBOR plus 3.75% or the Reference Rate (as defined in the agreement) plus 2.75%.The Facility expires on May 10, 2014, at which time all outstanding borrowings are due and payable. On January 26, 2012, we executed a second amendment to the Facility to modify the financial covenants. Also, during 2012, we entered into anunfunded Standby Letter of Credit for up to $8.8 million to support a surety bond related to a statutory decommissioning obligation we have inconnection with our Billerica facility. The letter of credit decreased the borrowing availability under the Facility by $8.8 million. On October 11, 2012, we executed a third amendment to the Facility which further modified the financial covenants and certain definitions used tocalculate compliance with those covenants. We incurred approximately $0.2 million in fees and expenses associated with this amendment. On March 25, 2013, we executed a fifth amendment to the Facility which reduced the aggregate borrowing capacity under the Facility from$42.5 million to $35.0 million and further modified the financial covenants and certain definitions used to calculate compliance with those covenants.Interest on the Facility was set at either LIBOR plus 4.75% or the Reference Rate (as defined in the agreement) plus 3.75%. We incurred approximately$0.1 million in fees and expenses associated with this amendment. The Notes and the Facility contain affirmative and negative covenants, as well as restrictions on the ability of LMI, Lantheus Intermediate and itssubsidiaries to: (i) incur additional indebtedness or issue preferred stock; (ii) repay subordinated indebtedness prior to its stated maturity; (iii) paydividends on, repurchase or make distributions in respect of its capital stock or make other restricted payments; (iv) make certain investments; (v) sellcertain assets; (vi) create liens; (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and (viii) enter into certaintransactions with our affiliates. The Notes contain customary events of default provisions, including payment default and cross-acceleration for non-payment of any outstanding indebtedness, where such indebtedness exceeds $10.0 million. The Facility also contains customary default provisions, andwe are required to comply with financial covenants in the Facility including a total leverage ratio and interest78Table of Contentscoverage ratio, beginning with the quarter ended September 30, 2010, as well as limitations on the amount of capital expenditures. The financial ratiosare determined by the Company's EBITDA (as defined in the Facility), or the Facility EBITDA. The total leverage ratio is the financial covenant that iscurrently most restrictive. On January 26, 2012, October 11, 2012 and March 25, 2013, the Company executed amendments to the Facility which revised the financialcovenants, certain definitions used to calculate compliance with those covenants and the definition of annualized EBITDA from a trailing twelve monthbasis to an annualized basis beginning in the first quarter of 2013. The revised financial covenants, as amended, are displayed in the table below.Revolving Credit Facility Financial Covenants As of December 31, 2012, we were in compliance with all applicable financial covenants. As of December 31, 2012 and the date hereof, therewere no amounts outstanding under the Facility other than the unfunded Standby Letter of Credit in the amount of $8.8 million. At December 31, 2012,we had $33.7 million of borrowing availability under the Facility. As of the date hereof, we have $26.2 million of borrowing availability under theFacility. If JHS and BVL are not able to continue to manufacture and release product supply on a timely and consistent basis, or we are unable to continueto grow DEFINITY sales, then we will need to implement certain additional expense reductions, such as a delay or elimination of discretionaryspending in all functional areas, as well as other operating and strategic initiatives. See "Item 1A—Risk Factors—We may not be able to generatesufficient cash flow to meet our debt service obligations." On March 20, 2012, pursuant to our new contractual relationship with BVL, we terminated the 2008 Agreement and entered into the SettlementAgreement, the Transition Services Agreement and the Manufacturing and Service Contract. In the Settlement Agreement, BVL and we agreed to abroad mutual waiver and release for all matters that occurred prior to the date of the Settlement Agreement, a covenant not to sue and a settlementpayment for us in the amount of $30.0 million. We also received from BVL weekly payments in the aggregate amount of $5.0 million under theTransition Services Agreement. We used this $35.0 million of proceeds for working capital purposes. On December 27, 2012, we entered into a second amendment to a license and supply agreement with one of our customers, which extended theterm from December 31, 2012 to December 31, 2014 and established new pricing and purchase requirements over the extended term. The secondamendment also provided for the supply of TechneLite generators containing molybdenum-99 sourced from LEU targets. The agreement includes a$3.0 million upfront payment by our customer to us and potential future milestone payments. During 2012, we received the $3.0 million upfrontpayment, of which $1.5 million is included in deferred revenue as a current liability and $1.5 million is included in other long-term liabilities atDecember 31, 2012. We are recognizing the upfront payment as revenue on a straight-line basis over the term of the two year agreement. The milestonepayments are contingent upon us continuing to supply the customer with certain product.79Period TotalLeverage Ratio InterestCoverage Ratio Q3 2012 7.25 to 1.00 1.20 to 1.00 Q4 2012 8.00 to 1.00 1.20 to 1.00 Q1 2013 8.80 to 1.00 1.10 to 1.00 Q2 2013 10.00 to 1.00 1.00 to 1.00 Q3 2013 8.20 to 1.00 1.25 to 1.00 Q4 2013 7.50 to 1.00 1.40 to 1.00 Q1 2014 7.00 to 1.00 1.45 to 1.00 Thereafter 7.00 to 1.00 1.45 to 1.00 Table of Contents We may from time to time repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our balance sheet.These actions may include open market repurchases of any notes outstanding, prepayments of our term loans or other retirements or refinancing ofoutstanding debt. The amount of debt that may be repurchased or otherwise retired, if any, would be decided upon at the sole discretion of our Board ofDirectors and will depend on market conditions, trading levels of our debt from time to time, our cash position and other considerations.Funding Requirements Our future capital requirements will depend on many factors, including:•our ability to have product manufactured and released from JHS, BVL and other manufacturing sites in the future; •the level of product sales of our currently marketed products, particularly DEFINITY, and any additional products that we may market inthe future; •the scope, progress, results and costs of development activities for our current development candidates and whether we obtain partners tohelp share such development costs; •the costs, timing and outcome of regulatory review of our development candidates; •the number of, and development requirements for, additional development candidates that we pursue; •the costs of commercialization activities, including product marketing, sales and distribution and whether we obtain partners to help sharesuch commercialization costs; •the costs and timing of establishing manufacturing and supply arrangements for clinical and commercial supplies of our developmentcandidates and products; •the extent to which we acquire or invest in products, businesses and technologies; •the extent to which we choose to establish collaboration, co-promotion, distribution or other similar arrangements for our marketedproducts and development candidates; •the legal costs relating to maintaining, expanding and enforcing our intellectual property portfolio, pursuing insurance or other claims anddefending against product liability, regulatory compliance or other claims; •the cost of interest on any additional borrowings which we may incur under our financing arrangements. If our capital resources become insufficient to meet our future capital requirements, we would need to finance our cash needs through public orprivate equity offerings, asset securitizations, debt financings, sale-leasebacks or other financing or strategic alternatives, to the extent such transactionsare permissible under the covenants of the Facility and the Indenture. Additional equity or debt financing, or other transactions, may not be available onacceptable terms, if at all. If any of these transactions require an amendment or waiver under the covenants in the Facility and under the Indenture, whichcould result in additional expenses associated with obtaining the amendment or waiver, we will seek to obtain such a waiver to remain in compliancewith the covenants of the Facility and the Indenture. However, we cannot be assured that such an amendment or waiver would be granted, or thatadditional capital will be available on acceptable terms, if at all. Our only current committed external source of funds is borrowing availability under the Facility. We generated a net loss of $42.0 million duringthe year ended December 31, 2012 and had $31.6 million of cash and cash equivalents at December 31, 2012. In March 2013, we began to implement astrategic shift in how we will fund our important R&D programs. We will reduce over80Table of Contentstime our internal R&D resources while at the same time we seek to engage strategic partners to assist us in the further development andcommercialization of our important development candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. Based on our current operatingplans, we believe that our existing cash and cash equivalents, results of operations and availability under the Facility will be sufficient to continue tofund our liquidity requirements for at least the next twelve months. However, if JHS and BVL are not able to continue to manufacture and releaseadequate product supply on a timely and consistent basis, or we are unable to continue to grow DEFINITY sales, then we will need to implementadditional expense reductions, such as a delay or elimination of discretionary spending in all functions as well as other operating and strategic initiatives.Contractual Obligations Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude contingent contractualliabilities for which we cannot reasonably predict future payment, including contingencies related to potential future development, financing, certainsuppliers, contingent royalty payments and/or scientific, regulatory, or commercial milestone payments under development agreements. The followingtable summarizes our contractual obligations as of December 31, 2012:Off-Balance Sheet Arrangements Since inception, we have not engaged in any off-balance sheet arrangements, including structured finance, special purpose entities or variableinterest entities.Effects of Inflation We do not believe that inflation has had a significant impact on our revenues or results of operations since inception. We expect our cost of productsales and other operating expenses will change in the future in line with periodic inflationary changes in price levels. Because we intend to retain andcontinue to use our property and equipment, we believe that the incremental inflation related to the replacement costs of such items will not materiallyaffect our operations. However, the rate of inflation affects our expenses, such as those for employee compensation and contract services,81 Payments Due by Period Total Less than1 Year 1 - 3Years 3 - 5Years More than5 Years (dollars in thousands) Debt obligations (principal) $400,000 $— $— $400,000 $— Interest on debt obligations 175,500 39,000 78,000 58,500 — Operating leases(1) 3,725 990 1,553 668 514 Purchase obligations(2) 9,450 9,450 — — — Asset retirement obligation 5,416 — — — 5,416 Other long-term liabilities(3) 34,711 — — — 34,711 Total contractual obligations $628,802 $49,440 $79,553 $459,168 $40,641 (1)Operating leases include minimum payments under leases for our facilities and certain equipment. (2)Purchase obligations include fixed or minimum payments under manufacturing and service agreements with third-parties. (3)Due to the uncertainty related to the timing of the reversal of uncertain tax positions, the liability is not subject to fixed paymentterms and the amount and timing of payments, if any, which we will make related to this liability are not known.Table of Contentswhich could increase our level of expenses and the rate at which we use our resources. While we generally believe that we will be able to offset theeffect of price-level changes by adjusting our product prices and implementing operating efficiencies, any material unfavorable changes in price levelscould have a material adverse affect on our financial condition, results of operations and cash flows.Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which havebeen prepared in accordance with GAAP. These financial statements require us to make estimates and judgments that affect our reported assets andliabilities, revenues and expenses, and other financial information. Actual results may differ materially from these estimates under different assumptionsand conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particularaccounting standard. We believe the following represent our critical accounting policies and estimates used in the preparation of our financial statements.Revenue Recognition Our revenue is generated from the sales of our diagnostic imaging agents to wholesalers, distributors, radiopharmacies and directly to hospitals andclinics. We recognize revenue when evidence of an arrangement exists, title has passed, substantially all the risks and rewards of ownership havetransferred to the customer, the selling price is fixed or determinable and collectability is reasonably assured. For transactions for which revenuerecognition criteria have not yet been met, the respective amounts are recorded as deferred revenue until such point in time when criteria are met andrevenue can be recognized. Revenue is recognized net of reserves, which consist of allowances for returns and sales rebates. The estimates of theseallowances are based on historical sales volumes and mix and require assumptions and judgments to be made in order to make such estimates. In theevent that the sales mix is different from our estimates, we may be required to pay higher or lower total price adjustments than we previously estimated.Any changes to these estimates are recorded in the current period. In 2012, 2011 and 2010, these changes in estimates were not material to our results. Revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether thedelivered element has stand-alone value to the customer. Supply or service transactions may involve the charge of a nonrefundable initial fee withsubsequent periodic payments for future products or services. The up-front fees, even if nonrefundable, are earned (and revenue is recognized) as theproducts and/or services are delivered and performed over the term of the arrangement.Inventory Inventories include material, direct labor and related manufacturing overhead, and are stated at the lower of cost or market determined on a first-in,first-out basis. We record inventory when we take delivery and title to the product. Any commitment for product ordered but not yet received is includedas purchase commitments in our contractual obligations table. We assess the recoverability of inventory to determine whether adjustments forimpairment are required. Inventory that is in excess of future requirements is written down to its estimated net realizable value-based upon estimates offorecasted demand for our products. The estimates of demand require assumptions to be made of future operating performance and customer demand. Ifactual demand is less than what has been forecasted by management, additional inventory write downs may be required. Inventory costs associated with product that has not yet received regulatory approval are capitalized if we believe there is probable futurecommercial use of the product and future economic benefit of the asset. If future commercial use of the product is not probable, then inventory costs82Table of Contentsassociated with such product are expensed during the period the costs are incurred. At December 31, 2012, we had $1.5 million of such product costsincluded in inventories. Subsequent to year end, the contract manufacturer received regulatory approval to manufacture this product. At December 31,2011, we had no such inventories.Goodwill, Intangibles and Long-Lived Assets Goodwill is not amortized, but is instead tested for impairment at least annually and whenever events or circumstances indicate that it is more likelythan not that they may be impaired. We have elected to perform the annual test for indications of goodwill impairment as of October 31 of each year. In performing tests for goodwill impairment, we are first permitted to perform a qualitative assessment about the likelihood of the carrying value ofa reporting unit exceeding its fair value. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carryingamount based on the qualitative assessment, we are required to perform the two-step goodwill impairment test described below to identify the potentialgoodwill impairment and measure the amount of the goodwill impairment loss, if any, to be recognized for that reporting unit. However, if we concludeotherwise based on the qualitative assessment, the two-step goodwill impairment test is not required. The option to perform the qualitative assessment isnot an accounting policy election and can be utilized at our discretion. Further, the qualitative assessment need not be applied to all reporting units in agiven goodwill impairment test. For an individual reporting unit, if we elect not to perform the qualitative assessment, or if the qualitative assessmentindicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we must perform the two-step goodwillimpairment test for the reporting unit. If the implied fair value of goodwill is less than the carrying value, then an impairment charge would be recorded. In performing the annual goodwill impairment test, we bypassed the option to perform a qualitative assessment and proceeded directly toperforming the first step of the two-step goodwill impairment test. We completed our required annual impairment test for goodwill in the fourth quarterof 2012, 2011 and 2010 and determined that at each of those periods the carrying amount of goodwill was not impaired. In each year, our fair value,which includes goodwill, was substantially in excess of our carrying value. In addition, as a result of the continued supply challenges with BVL, we performed an interim impairment test for goodwill as of December 31,2011. The interim impairment test did not indicate that there was any impairment as of December 31, 2011. There were no events at December 31, 2012that triggered an interim impairment test. We calculate the fair value of our reporting units using the income approach, which utilizes discounted forecasted future cash flows and the marketapproach which utilizes fair value multiples of comparable publicly traded companies. The discounted cash flows are based on our most recent long-term financial projections and are discounted using a risk adjusted rate of return, which is determined using estimates of market participant risk-adjustedweighted average costs of capital and reflects the risks associated with achieving future cash flows. The market approach is calculated using theguideline company method, where we use market multiples derived from stock prices of companies engaged in the same or similar lines of business.There is not a quoted market price for our reporting units or the company as a whole, therefore, a combination of the two methods is utilized to derivethe fair value of the business. We evaluate and weigh the results of these approaches as well as ensure we understand the basis of the results of thesetwo methodologies. We believe the use of these two methodologies ensures a consistent and supportable method of determining our fair value that isconsistent with the objective of measuring fair value. If the fair value were to decline, then we may be required to incur material charges relating to theimpairment of those assets.83Table of Contents We test intangible and long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an assetor group of assets may not be recoverable. We measure the recoverability of assets to be held and used by comparing the carrying amount of the asset tofuture undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment equals the amountby which the carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded as permanent reductions in the carryingamount of the assets. In the first quarter of 2012, we reviewed the estimated useful life of one of our trademarks as a result of a triggering event.Utilizing the most recent forecasted revenue data, we revised the estimate of the remaining useful life of one of our trademarks to five years. We alsotested intangible and certain long-lived assets for recoverability as of December 31, 2012 and 2011, which included the most recently available forecast.The analysis indicated that there was no impairment as of December 31, 2012 and 2011. We also evaluated the remaining useful lives of intangible andlong-lived assets that were tested for recoverability at December 31, 2012 and determined no revisions were required to the remaining periods ofamortization.Accounting for Stock-Based Compensation Our employees are eligible to receive awards from our 2008 Equity Plan (as defined below). Our stock-based compensation cost is measured at thegrant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vestingperiod, and includes an estimate of the awards that will be forfeited. We use the Black Scholes valuation model for estimating the fair value on the dateof grant of stock options. The fair value of stock option awards is affected by the valuation assumptions, including the volatility of market participants,expected term of the option, risk-free interest rate and expected dividends as well as the estimated fair value of our common stock. The fair value of ourcommon stock is determined quarterly and each award is approved by our Board of Directors at the fair value in effect as of such award date. Anymaterial change to the assumptions used in estimating the fair value of the options could have a material impact on our results of operations. When acontingent cash settlement of vested options becomes probable, we reclassify the vested awards to a liability and account for any incrementalcompensation cost in the period in which the settlement becomes probable.Income Taxes The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. The provision forincome taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result fromdifferences between the financial and tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using the currently enactedtax rates that apply to taxable income in effect for the years in which those tax attributes are expected to be recovered or paid, and are adjusted forchanges in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Theassessment of whether or not a valuation allowance is required involves the weighing of both positive and negative evidence concerning both historicaland prospective information with greater weight given to evidence that is objectively verifiable. A history of recent losses is negative evidence that isdifficult to overcome with positive evidence. In evaluating prospective information there are four sources of taxable income: reversals of taxabletemporary differences, items that can be carried back to prior tax years (such as net operating losses), pre-tax income and tax planning strategies. Anytax planning strategies that are considered must be prudent and feasible, and would only be undertaken in order to avoid losing an operating losscarryforward. Adjustments to the deferred tax valuation allowances are made in the period when such assessments are made.84Table of Contents We have a tax indemnification agreement with BMS related to certain contingent tax obligations arising prior to the acquisition of the businessfrom BMS. The tax obligations are recognized in liabilities and the tax indemnification receivable is recognized within other noncurrent assets. Thechanges in the tax indemnification asset are recognized within other income, net in the statement of income, and the changes in the related liabilities arerecorded within the tax provision. Accordingly, as these reserves change, adjustments are included in the tax provision while the offsetting adjustment isincluded in other income. Assuming that the receivable from BMS continues to be considered recoverable by us, there is no net effect on earningsrelated to these liabilities and no net cash outflows. The calculation of our tax liabilities involves certain estimates, assumptions and the application of complex tax regulations in numerousjurisdictions worldwide. Any material change in our estimates or assumptions, or the tax regulations, may have a material impact on our results ofoperations.Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk from changes in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments toreduce these risks or for trading purposes.Interest Rate Risk We are subject to interest rate risk in connection with the Facility, which is variable rate indebtedness. Interest rate changes could increase theamount of our interest payments and thus negatively impact our future earnings and cash flows. As of December 31, 2012, there was no amountoutstanding under the Facility, other than an $8.8 million unfunded Standby Letter of Credit, which reduces availability to $33.7 million. Any increasein the interest rate under the Facility may have a negative impact on our future earnings to the extent we have outstanding borrowings under the Facility.Foreign Currency Risk We face exposure to movements in foreign currency exchange rates whenever we, or any of our subsidiaries, enter into transactions with thirdparties that are denominated in currencies other than our, or its, functional currency. Intercompany transactions between entities that use differentfunctional currencies also expose us to foreign currency risk. During 2012, 2011 and 2010, the net impact of foreign currency changes on transactionswas a loss of $579,000, $156,000 and $209,000, respectively. Historically, we have not used derivative financial instruments or other financialinstruments to hedge such economic exposures. Gross margins of products we manufacture at our U.S. plants and sell in currencies other than the U.S. Dollar are also affected by foreign currencyexchange rate movements. Our gross margin on total revenue was 26.1%, 26.7% and 42.4% during the years ended December 31, 2012, 2011 and2010, respectively. If the U.S. Dollar had been stronger by 1%, 5% or 10%, compared to the actual rates during 2012, our gross margin on total netproduct sales would have been 26.1%, 26.3% and 26.4%, respectively. If the U.S. Dollar had been stronger by 1%, 5% or 10%, compared to the actualrates during 2011, our gross margin on total net product sales would have been 26.7%, 26.9% and 27.0%, respectively. If the U.S. Dollar had beenstronger by 1%, 5% or 10%, compared to the actual rates during 2010, our gross margin on total net product sales would have been 42.4%, 42.6% and42.9%, respectively. In addition, a portion of our earnings is generated by our foreign subsidiaries, whose functional currencies are other than the U.S. Dollar. Ourearnings could be materially impacted by movements in foreign currency exchange rates upon the translation of the earnings of such subsidiaries intothe U.S. Dollar.85Table of Contents If the U.S. Dollar had been uniformly stronger by 1%, 5% or 10%, compared to the actual average exchange rates used to translate the financialresults of our foreign subsidiaries, our net product sales and net income for 2012 would have been impacted by approximately the following amounts: If the U.S. Dollar had been uniformly stronger by 1%, 5% or 10%, compared to the actual average exchange rates used to translate the financialresults of our foreign subsidiaries, our net product sales and net income for 2011 would have been impacted by approximately the following amounts: If the U.S. Dollar had been uniformly stronger by 1%, 5% or 10%, compared to the actual average exchange rates used to translate the financialresults of our foreign subsidiaries, our net product sales and net income for 2010 would have been impacted by approximately the following amounts:86 ApproximateChange inNet Revenue ApproximateChange inNet Income (dollars in thousands) 1% $(519)$3 5% (2,593) 17 10% (5,187) 34 ApproximateChange inNet Revenue ApproximateChange inNet Income (dollars in thousands) 1% $(608)$(24)5% (3,041) (118)10% (6,082) (236) ApproximateChange inNet Revenue ApproximateChange inNet Income (dollars in thousands) 1% $(632)$(18)5% (3,160) (92)10% (6,320) (183)Table of ContentsItem 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder ofLantheus MI Intermediate, Inc.North Billerica, Massachusetts We have audited the accompanying consolidated balance sheets of Lantheus MI Intermediate, Inc. and subsidiaries (the "Company") as ofDecember 31, 2012 and 2011, and the related consolidated statements of comprehensive (loss) income, stockholder's (deficit) equity, and cash flows foreach of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits includedconsideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no suchopinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiariesas of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31,2012, in conformity with accounting principles generally accepted in the United States of America./s/ DELOITTE & TOUCHE LLPBoston, MassachusettsMarch 28, 201387Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesConsolidated Balance Sheets See notes to consolidated financial statements.88(in thousands except share data) December 31,2012 December 31,2011 Assets Current assets Cash and cash equivalents $31,595 $40,607 Accounts receivable, net 41,380 40,000 Inventory 18,048 14,765 Income tax receivable 736 — Deferred tax assets 115 93 Other current assets 2,943 2,662 Total current assets 94,817 98,127 Property, plant and equipment, net 109,573 112,452 Capitalized software development costs, net 2,234 3,582 Intangibles, net 66,802 82,749 Goodwill 15,714 15,714 Deferred financing costs 11,372 13,141 Due from parent — 1,286 Other long-term assets 22,414 31,753 Total assets $322,926 $358,804 Liabilities and Stockholder's Deficit Current liabilities Accounts payable 18,945 22,010 Accrued expenses 29,689 20,949 Income tax payable — 1,482 Deferred revenue 7,320 3,918 Total current liabilities 55,954 48,359 Asset retirement obligations 5,416 4,868 Long-term debt, net 398,822 398,629 Deferred tax liability 435 931 Other long-term liabilities 36,652 39,220 Total liabilities 497,279 492,007 Commitments and contingencies (see Notes 14 and 16) Stockholder's deficit Common stock ($0.001 par value, 10,000 shares authorized; 1 share issued andoutstanding) — — Due from parent (1,353) — Additional paid-in capital 2,325 1,085 Accumulated deficit (176,660) (134,659)Accumulated other comprehensive income 1,335 371 Total stockholder's deficit (174,353) (133,203) Total liabilities and stockholder's deficit $322,926 $358,804 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesConsolidated Statements of Comprehensive (Loss) Income See notes to consolidated financial statements.89 Year Ended December 31, (in thousands) 2012 2011 2010 Revenues Net product revenues $277,354 $345,762 $345,747 License and other revenues 10,751 10,530 8,209 Total revenues 288,105 356,292 353,956 Cost of goods sold 211,049 255,466 204,006 Loss on firm purchase commitment 1,859 5,610 — Total cost of goods sold 212,908 261,076 204,006 Gross profit 75,197 95,216 149,950 Operating expenses General and administrative expenses 32,520 32,057 30,042 Sales and marketing expenses 37,437 38,689 45,384 Research and development expenses 40,604 40,945 45,130 Proceeds from manufacturer (34,614) — — Total operating expenses 75,947 111,691 120,556 Operating (loss) income (750) (16,475) 29,394 Interest expense (42,014) (37,658) (20,395)Loss on early extinguishment of debt — — (3,057)Interest income 252 333 179 Other (expense) income, net (44) 1,429 1,314 (Loss) income before income taxes (42,556) (52,371) 7,435 Provision (benefit) for income taxes (555) 84,098 2,465 Net (loss) income (42,001) (136,469) 4,970 Foreign currency translation, net of taxes 964 (337) 1,150 Total comprehensive (loss) income $(41,037)$(136,806)$6,120 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesConsolidated Statements of Stockholder's (Deficit) Equity See notes to consolidated financial statements.90 Common Stock (AccumulatedDeficit)RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TotalStockholder's(Deficit)Equity DuefromParent AdditionalPaid-InCapital (in thousands, except share data) Shares Amount Balance at January 1, 2010 1 $— $— $247,883 $63,138 $(442)$310,579 Dividend paid to LMIHoldings (see Note 10) — — — (98,078) (65,698) — (163,776)Net income — — — — 4,970 — 4,970 Foreign currencytranslation — — — — — 1,150 1,150 Stock-based compensation — — — 511 — — 511 Balance at December 31,2010 1 — — 150,316 2,410 708 153,434 Dividend paid to LMIHoldings (see Note 10) — — — (149,400) (600) — (150,000)Net loss — — — — (136,469) — (136,469)Foreign currencytranslation — — — — — (337) (337)Stock-based compensation — — — 169 — — 169 Balance at December 31,2011 1 — — 1,085 (134,659) 371 (133,203)Net loss — — — — (42,001) — (42,001)Due from parent (seeNote 17) — — (1,353) — — — (1,353)Foreign currencytranslation — — — — — 964 964 Stock-based compensation — — — 1,240 — — 1,240 Balance at December 31,2012 1 $— $(1,353)$2,325 $(176,660)$1,335 $(174,353) Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesConsolidated Statements of Cash Flows See notes to consolidated financial statements.91 Year ended December 31, (in thousands) 2012 2011 2010 Cash flow from operating activities Net (loss) income $(42,001)$(136,469)$4,970 Adjustments to reconcile net (loss) income to cash flow from operating activities Depreciation 9,722 12,915 11,377 Amortization 17,680 19,847 23,824 Impairment of intangible asset — 23,474 — Amortization of debt related costs 2,403 1,554 1,812 Write-off of deferred financing costs — — 2,278 Provision for bad debt (117) 301 — Provision for excess and obsolete inventory 12,809 29,432 13,814 Stock-based compensation 1,240 (969) 1,634 Deferred income taxes (428) 81,330 (1,549)Accretion of asset retirement obligations 553 496 435 Loss on disposal of long-lived assets 285 54 270 Loss on firm purchase commitment 1,859 5,610 — Long-term income tax receivable 299 (1,122) 1,519 Long-term income tax payable and other long-term liabilities 139 1,533 556 Increase (decrease) in cash from operating assets and liabilities Accounts receivable, net (1,442) 9,466 (7,564)Prepaid expenses and other current assets 1,304 626 (237)Inventory (6,903) (22,293) (27,209)Due from parent — (614) — Deferred revenue 5,349 (5,995) (151)Accounts payable (2,204) (1,002) 3,227 Income tax payable (2,217) 1,353 (1,325)Accrued expenses and other liabilities 2,193 2,893 (1,364) Cash provided by operating activities 523 22,420 26,317 Cash flows from investing activities Capital expenditures (7,920) (7,694) (8,335)Purchase of certificate of deposit (225) — — Acquisition of intangibles — — (215) Cash used in investing activities (8,145) (7,694) (8,550) Cash flows from financing activities Proceeds from issuance of debt — 152,250 250,000 Consent solicitation fee — (3,750) — Payment of term loan — — (93,649)Payments on note payable (1,530) — — Deferred financing costs (442) (5,491) (10,125)Due from parent (67) — — Proceeds from line of credit — 10,000 — Payments on line of credit — (10,000) — Payment of dividend — (150,000) (163,776) Cash used in financing activities (2,039) (6,991) (17,550) Effect of foreign exchange rate on cash 649 (134) 1,309 (Decrease) Increase in cash and cash equivalents (9,012) 7,601 1,526 Cash and cash equivalents, beginning of year 40,607 33,006 31,480 Cash and cash equivalents, end of year $31,595 $40,607 $33,006 Supplemental disclosure of cash flow information Interest paid $39,020 $33,958 $15,246 Income taxes paid / (refunded), net $1,146 $(233)$1,854 Noncash investing and financing activities Property, plant and equipment included in accounts payable and accrued expenses $963 $1,641 $3,163 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements Unless the context requires otherwise, references to the "Company," "Lantheus," "our company," "we," "us" and "our" refer to Lantheus MIIntermediate, Inc. and its direct and indirect subsidiaries, references to "Lantheus Intermediate" refer to only Lantheus MI Intermediate, Inc., the parentof Lantheus Medical Imaging, Inc., references to "Holdings" refer to Lantheus MI Holdings, Inc., the parent of Lantheus Intermediate and references to"LMI" refer to Lantheus Medical Imaging, Inc., the subsidiary of Lantheus Intermediate. Solely for convenience, we refer to trademarks, service marksand trade names without the TM, SM and ® symbols. Such references are not intended to indicate, in any way, that we will not assert, to the fullestextent permitted under applicable law, our rights to our trademarks, service marks and trade names.1. Description of BusinessOverview The Company manufactures, markets, sells and distributes medical imaging products globally with operations in the United States (U.S.), PuertoRico, Canada and Australia and distribution relationships in Europe, Asia Pacific and Latin America. The Company provides medical imaging products,primarily focused on cardiovascular diagnostic imaging, to nuclear physicians, cardiologists, radiologists, internal medicine physicians, independentdelivery networks, group purchasing organizations and technologists/sonographers working in a variety of clinical settings. The Company's principal products include:•DEFINITY—an ultrasound contrast agent; •TechneLite—a generator that provides the radioisotope used to radiolabel Cardiolite and other radiopharmaceuticals; •Cardiolite—a myocardial perfusion imaging agent; and •Xenon—a radiopharmaceutical inhaled gas to assess pulmonary function and evaluate blood flow, particularly in the brain. In the U.S., the Company's nuclear imaging products are primarily distributed through radiopharmacy chains, with a small portion of the sales ofthese products also made through the Company's direct sales force to hospitals and clinics that maintain their own in-house radiopharmacies. In theU.S., sales of the Company's contrast agents are made through a direct sales force. Outside of the U.S., the Company owns five radiopharmacies inCanada and two radiopharmacies in each of Puerto Rico and Australia. The Company also maintains a direct sales force in each of these countries. Inthe rest of the world, the Company relies on third-party distributors to sell both nuclear imaging and contrast agent products.2. Summary of Significant Accounting PoliciesBasis of Consolidation and Presentation The financial statements have been prepared in United States dollars, in accordance with accounting principles generally accepted in the UnitedStates of America ("U.S. GAAP"). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Allintercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and thedischarge of liabilities in the normal course of business.92Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)The Company incurred a net loss of $42.0 million and an operating loss of $0.8 million during the year ended December 31, 2012. The Companycurrently relies on Ben Venue Laboratories ("BVL") as one of two manufacturers of DEFINITY and Cardiolite products and its sole sourcemanufacturer of Neurolite. In July 2010, BVL temporarily shut down the facility in which it manufactures products for a number of customers,including the Company, in order to upgrade the facility to meet certain regulatory requirements. In anticipation of this outage, BVL manufactured for theCompany additional inventory of these products to meet the Company's expected needs during the outage period, which was initially anticipated to endin March 2011. Because the outage and restart activities took substantially longer than anticipated by either BVL or the Company, the Company couldnot meet all of the demand for certain products during the second half of 2011 and the first three quarters of 2012, resulting in an overall revenue declinein comparison to the prior periods. BVL resumed manufacturing DEFINITY in the second quarter of 2012 and released product to the Company at theend of the second quarter of 2012. BVL has also resumed manufacturing Cardiolite products. The Company currently believes that Neurolite will againbecome available from BVL in the latter half of 2013. The Company continues to expedite a number of its technology transfer programs to secure and qualify production of its BVL-manufacturedproducts with alternate contract manufacturer sites. In February 2013, the FDA informed the Company that the Jubilant HollisterStier ("JHS") facilitywas approved to manufacture DEFINITY, and the Company is now shipping JHS-manufactured DEFINITY to customers. The Company also has on-going technology transfer activities at JHS for its Cardiolite product supply and Neurolite but can give no assurances as to when that technologytransfer will be completed and when the Company will actually receive supply of Cardiolite products and Neurolite from JHS. In the meantime, theCompany also has an alternate manufacturer for a portion of its Cardiolite sales demand. The Company is also pursuing new manufacturingrelationships to establish and secure additional long-term or alternative suppliers of its key products but is uncertain of the timing as to when any othersupply arrangements would provide meaningful quantities of products to the Company. During the first quarter of 2012, the Company received $30.0 million from BVL to compensate the Company for its business losses, and BVL andLMI terminated their original manufacturing agreement and entered into (i) the Settlement and Mutual Release Agreement, (ii) the Transition ServicesAgreement, and (iii) the Manufacturing and Service Contract.•In the Settlement Agreement, LMI and BVL agreed to a broad mutual waiver and release for all matters that occurred prior to the date ofthe Settlement Agreement, a covenant not to sue and a payment in the amount of $30.0 million from BVL to compensate LMI forbusiness losses. •Under the Transition Services Agreement, BVL has manufactured for LMI an initial supply of DEFINITY, Cardiolite, Neurolite andcertain TechneLite accessories, and made weekly payments to LMI, in the aggregate of amount of $5.0 million as further compensationfor business losses until an agreed-upon supply of LMI's products has been restored. •Under the Manufacturing and Service Contract, BVL will manufacture for LMI certain amounts of DEFINITY, Cardiolite, Neuroliteand certain TechneLite accessories following the initial supply provided under the Transition Services Agreement. The agreement expireson December 31, 2013.93Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued) The $30.0 million received upon termination of the Company's original manufacturing agreement and the $5.0 million of weekly payments receivedfor additional delays under the Transition Services Agreement in the year ended December 31, 2012, are compensation to the Company for businesslosses associated with the lack of product supply. As the Company has no remaining obligations associated with the original manufacturing agreementand the price to be paid upon delivery of product under the Transition Services Agreement and Manufacturing and Service Contract are at prices theCompany believes are at market prices, the Company has recognized the proceeds as gains within the Company's results of operations. These paymentsare included within operating income as proceeds from manufacturer. The net proceeds totaled $34.6 million in the statement of comprehensive (loss)income for the year ended December 31, 2012. To remain competitive in the marketplace, the Company has historically made substantial investments in new product development. The Companyhas developed plans and taken steps that it believes will enable it to strengthen its operations and meet its operating and financing requirements. InMarch 2013, the Company began to implement a strategic shift in how it will fund its important R&D programs. The Company will reduce over time itsinternal R&D resources while at the same time we seek to engage strategic partners to assist it in the further development and commercialization of itsimportant development candidates, including flurpiridaz F 18, 18F LMI 1195 and LMI 1174. The Company will complete its 301 trial for flurpiridazF 18 with internal funding while seeking to engage strategic partners to assist it with the further development and possible commercialization of theagent. For its other two important development candidates, 18F LMI 1195 and LMI 1174, the Company will also seek to engage strategic partners toassist it with the on-going development activities relating to these agents. The Company expects to internally fund expenses over the next several yearsfor the clinical development of these product candidates as it works with its strategic partners. In February 2013, the FDA informed the Company that the JHS facility was approved to manufacture DEFINITY, and the Company is nowshipping JHS-manufactured DEFINITY to customers. If JHS and BVL are not able to continue to manufacture and release adequate product supply on a timely and consistent basis, the Company is notsuccessful with the remainder of its JHS technology transfer programs for Cardiolite product and Neurolite and cannot obtain adequate supply fromJHS, or the Company is unable to continue to grow DEFINITY sales, then the Company will need to implement additional expense reductions, such asa delay or elimination of discretionary spending, in all functional areas as well as other operating and strategic initiatives.Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts ofrevenues and expenses during the reporting period. The more significant estimates reflected in the Company's consolidated financial statements includecertain judgments regarding revenue recognition, goodwill and intangible asset valuation, inventory valuation and potential losses on purchasecommitments, asset retirement obligations, income tax liabilities, deferred tax assets and liabilities, accrued expenses and stock-based compensation.Actual results could materially differ from those estimates or assumptions.94Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)Revenue Recognition The Company recognizes revenue when evidence of an arrangement exists, title has passed, the risks and rewards of ownership have transferred tothe customer, the selling price is fixed or determinable, and collectability is reasonably assured. For transactions for which revenue recognition criteriahave not yet been met, the respective amounts are recorded as deferred revenue until such point in time the criteria are met and revenue can berecognized. Revenue is recognized net of reserves, which consist of allowances for returns and rebates. Revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether thedelivered element has stand-alone value to the customer. Supply or service transactions may involve the charge of a nonrefundable initial fee withsubsequent periodic payments for future products or services. The up-front fees, even if nonrefundable, are earned (and revenue is recognized) as theproducts and/or services are delivered and performed over the term of the arrangement. On January 1, 2009, LMI executed an amendment to a license and supply agreement (the "Agreement") with one of its customers, granting non-exclusive U.S. license and supply rights to the customer for the period from January 1, 2009 through December 31, 2012. Under the terms of theAgreement, the customer paid LMI $10.0 million in license fees; $8.0 million of which was received upon execution of the Agreement and $2.0 millionof which was received in June 2009 upon delivery of a special license as defined in the Agreement. The Company's product sales under the Agreementare recognized in the same manner as its normal product sales. The Company is recognizing the license fees as revenue on a straight-line basis over theterm of the four-year Agreement. The Company recognized $2.5 million in fiscal years 2012, 2011, and 2010 in license fee revenue pursuant to theAgreement. In February 2012, the Company entered in to the first amendment to the Agreement. The amendment contained obligations for the Company todeliver a specified number of product unit shipments at various prices. Revenue under this arrangement is being recognized at an average selling price asthe units are shipped. The Company recognized $12.8 million in revenue pursuant to the first amendment during the year ended December 31, 2012 andat December 31, 2012, had deferred revenue of $5.6 million attributable to units to be shipped. The deferred revenue related to this amendment will berecognized as revenue in the first quarter of 2013 as the remaining units are shipped. On December 27, 2012, the Company entered into the second amendment to the Agreement, which extended the term from December 31, 2012 toDecember 31, 2014 and established new pricing and purchase requirements over the extended term. The second amendment also provided for thesupply of TechneLite generators containing molybdenum-99 sourced from LEU targets. The agreement includes a $3.0 million upfront payment by thecustomer to the Company and potential future milestone payments. During 2012, the Company received the $3.0 million upfront payment, of which$1.5 million is included in deferred revenue as a current liability and $1.5 million is included in other long-term liabilities at December 31, 2012 in theaccompanying consolidated balance sheets. The Company is recognizing the upfront payment as revenue on a straight-line basis over the term of thetwo year agreement. The milestone payments are contingent upon LMI continuing to supply the customer with certain product.95Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued) In addition, the Company had other revenue of $8.3 million, $8.0 million and $5.7 million in fiscal years 2012, 2011 and 2010, respectively. Otherrevenue primarily represents contract manufacturing services related to one of the Company's products for one customer. The related costs are includedin cost of goods sold. In January 2010, the Company launched a new medical imaging product, Ablavar, which was acquired by the Company in April 2009. Becausethe Company has not determined that the price is fixed and determinable and due to the inability to reasonably estimate product returns, the Companydeferred recognition of $0.1 million and $1.0 million of revenue at December 31, 2012 and 2011, respectively, relating to Ablavar shipments, associatedwith a distributor arrangement. The corresponding cost has been recorded as inventory as of December 31, 2012 and 2011. The Company isrecognizing revenue and the related costs associated with this arrangement on the sell-through method.Product Returns The Company provides a reserve for its estimate of sales recorded for which the related products are expected to be returned. The Company doesnot typically accept product returns unless an over shipment or non-conforming shipment was provided to the customer, or if the product was defective.The Company adjusts its estimate of product returns if it becomes aware of other factors that it believes could significantly impact its expected returns,including product recalls. These factors include its estimate of actual and historical return rates for non-conforming product and open return requests.Historically, the Company's estimates of returns have reasonably approximated actual returns.Distributor Relationships Revenue for product sold to distributors is recognized at shipment, unless revenue recognition criteria have not been met. In such instances wherecollectability cannot be determined or the selling price cannot be reasonably estimated until the distributor has sold through the goods, the Companydefers such revenue until such time as the goods have been sold through to the end-user customer, or the selling price can be reasonably estimated basedon history of transactions with such distributor.Rebates and Allowances Estimates for rebates and allowances represent the Company's estimated obligations under contractual arrangements with third parties. Rebateaccruals and allowances are recorded in the same period the related revenue is recognized, resulting in a reduction to product revenue and theestablishment of a liability which is included in accrued expenses in the accompanying consolidated balance sheets. These rebates result fromperformance-based offers that are primarily based on attaining contractually specified sales volumes and growth, Medicaid rebate programs for certainproducts, administration fees of group purchasing organizations and certain distributor related commissions. The calculation of the accrual for theserebates 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. The accrual for rebates and allowances was approximately $1.5 million and $1.4 million at December 31, 2012 and 2011, respectively. Rebate andallowance charges against gross revenues totaled $2.8 million, $3.6 million and $3.1 million for the years ended December 31, 2012, 2011 and 2010,respectively.96Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)Income Taxes The Company accounts for income taxes using an asset and liability approach. The provision for income taxes represents income taxes paid orpayable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basesof the Company's assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable incomein effect for the years in which those tax attributes are expected to be recovered or paid, and are adjusted for changes in tax rates and tax laws whenchanges are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Theassessment of whether or not a valuation allowance is required involves the weighing of both positive and negative evidence concerning both historicaland prospective information with greater weight given to evidence that is objectively verifiable. A history of recent losses is negative evidence that isdifficult to overcome with positive evidence. In evaluating prospective information there are four sources of taxable income: reversals of taxabletemporary differences, items that can be carried back to prior tax years (such as net operating losses), pre-tax income, and tax planning strategies. Anytax planning strategies that are considered must be prudent and feasible, and would only be undertaken in order to avoid losing an operating losscarryforward. Adjustments to the deferred tax valuation allowances are made in the period when such assessments are made. The Company accounts for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognitionand measurement of a tax position taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amountsrecognized in the financial statements are recorded as adjustments to income taxes payable or receivable, or adjustments to deferred taxes, or both. TheCompany provides disclosure at the end of each annual reporting period on a tabular reconciliation of unrecognized tax benefits. The Companyclassifies interest and penalties within the provision for income taxes.Cash and Cash Equivalents Cash and cash equivalents include savings deposits, certificates of deposit and money market funds that have maturities of three months or lesswhen purchased.Accounts Receivable Accounts receivable consist of amounts billed and currently due from customers. The Company maintains an allowance for doubtful accounts forestimated losses. In determining the allowance, consideration includes the probability of recoverability based on past experience and general economicfactors. Certain accounts receivable may be fully reserved when specific collection issues are known to exist, such as pending bankruptcy. As ofDecember 31, 2012 and 2011, the Company had allowances for doubtful accounts of approximately $0.3 million and $0.5 million, respectively. Also included in accounts receivable are miscellaneous receivables of approximately $1.7 million and $2.2 million as of December 31, 2012 and2011, respectively.97Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)Concentration of Risks and Limited Suppliers Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable. TheCompany periodically reviews its accounts receivable for collectability and provides for an allowance for doubtful accounts to the extent that amountsare not expected to be collected. The Company sells primarily to large national distributors, which in turn, may resell the Company's products. Therewere three customers that represented greater than 10% of the total net accounts receivable balance and net revenue, the majority of which is included inthe U.S. segment. The Company's cash and cash equivalents are maintained with various financial institutions. The Company relies on certain materials used in its development and manufacturing processes, some of which are procured from only one or a fewsources. The failure of one of these suppliers to deliver on schedule could delay or interrupt the manufacturing or commercialization process and therebyadversely affect the Company's operating results. In addition, a disruption in the commercial supply of, or a significant increase in, the cost of one of theCompany's materials from these sources could have a material adverse effect on the Company's business, financial position and results of operations. InMay 2009 until August 2010, Nordion, the Company's largest supplier of molybdenum-99 ("Moly"), a key raw material in the Company's TechneLiteproduct, was affected by a nuclear reactor shutdown. The Company was not fully able to replace all of the quantity of supply it previously received fromNordion, which had a negative impact on the Company's results of operations. As part of the conditions for the relicensing of the NRU reactor throughOctober 2016, the Canadian government has asked Atomic Energy of Canada Limited, or AECL, to shut down the reactor for at least four weeks atleast once a year for inspection and maintenance. The scheduled 2012 shutdown period ran from mid-April 2012 until mid-May 2012, and during suchperiod, some of LMI's customers diverted a small amount of business to LMI's competitor, which correspondingly reduced our aggregate orders duringthe shutdown period. With this diversion, LMI was able to fulfill all customer demand for Moly from other suppliers during the shutdown period. OnOctober 19, 2012 and October 30, 2012, the Company executed amendments to agreements with Nordion and NTP, the Company's Moly suppliers,which extended the contract terms of those agreements to December 31, 2015 and December 31, 2017, respectively. The Company relies on BVL, one of its two manufacturers of DEFINITY and Cardiolite products and its sole source manufacturer of Neurolite.In July 2010, BVL temporarily shut down the facility in which it manufactures products for a number of customers, including the Company, to upgradethe facility to meet certain regulatory requirements. In anticipation of this shutdown, BVL manufactured for the Company additional inventory of theseproducts to meet the Company's expected needs during the shutdown period which was anticipated to end in March 2011. Because the shutdown andrestart98 AccountsReceivableas ofDecember 31, Revenue for the yearended December 31, 2012 2011 2012 2011 2010 Company A 30.7% 16.1% 27.4% 26.5% 26.6%Company B 8.8% 8.6% 8.4% 8.5% 14.8%Company C 7.0% 10.0% 11.5% 11.1% 11.6%Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)activities took substantially longer than anticipated by either BVL or the Company, the Company could not meet all of the demand for certain productsduring the second half of 2011 and the first three quarters of 2012, resulting in overall revenue decline in comparison to the prior periods. BVL resumedmanufacturing DEFINITY in the second quarter of 2012 and released product to the Company at the end of the second quarter of 2012. BVL has alsoresumed manufacturing Cardiolite products. The Company currently believes that Neurolite will again become available from BVL in the latter half of2013. The Company has expedited a number of technology transfer programs to secure and qualify production of the Company's BVL-manufacturedproducts to alternate contract manufacturing sites. In February 2013, the FDA informed the Company that the JHS facility was approved to manufactureDEFINITY, and the Company is now shipping JHS-manufactured DEFINITY to customers. The Company also has on-going technology transferactivities at JHS for its Cardiolite product supply and Neurolite but can give no assurances as to when that technology transfer will be completed and theCompany will actually receive supply of Cardiolite products and Neurolite from JHS. In the meantime, the Company also has an alternate manufacturerfor Cardiolite. The Company is also pursuing new manufacturing relationships to establish and secure additional long-term or alternative suppliers of itskey products, but is uncertain of the timing as to when any other supply arrangements would provide meaningful quantities of product to the Company.There can be no assurance that the Company will be successful in these efforts. The following table sets forth net product revenues for the Company's products that represented greater than 10% of total net product revenue forthe years ended December 31, 2012, 2011 and 2010.Inventory Inventory includes material, direct labor and related manufacturing overhead, and is stated at the lower of cost or market on a first-in, first-outbasis. The Company does have consignment arrangements with certain customers where the Company retains title and the risk of ownership of theinventory, which is included in the Company's inventory balance. The Company assesses the recoverability of inventory to determine whether adjustments for excess and obsolete inventory are required. Inventorythat is in excess of future requirements is written down to its estimated net realizable value based upon forecasted demand for its products. If actualdemand is less favorable than what has been forecasted by management, additional inventory write-down may be required. Inventory costs associated with product that has not yet received regulatory approval are capitalized if the Company believes there is probablefuture commercial use of the product and future economic benefit of the asset. If future commercial use of the product is not probable, then inventory99 Year EndedDecember 31, 2012 2011 2010 DEFINITY 18.6% 19.8% 17.3%TechneLite 41.2% 38.0% 35.3%Cardiolite 12.6% 19.1% 22.4%Xenon 10.8% 7.7% 5.8%Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)costs associated with such product are expensed during the period the costs are incurred. At December 31, 2012, we had $1.5 million of such productcosts included in inventories relating to DEFINITY that was manufactured by JHS. At December 31, 2011, we had no such inventories. In February2013, the FDA informed the Company that the JHS facility was approved to manufacture DEFINITY, and the Company is now shipping JHS-manufactured DEFINITY to customers.Property, Plant and Equipment Property, plant and equipment are stated at cost. Replacements of major units of property are capitalized, and replaced properties are retired.Replacements of minor components of property and repair and maintenance costs are charged to expense as incurred. Depreciation is computed on astraight-line method based on the estimated useful lives of the related assets. The estimated useful lives of the major classes of depreciable assets are asfollows: Upon retirement or other disposal of property, plant and equipment, the cost and related amount of accumulated depreciation are removed from theasset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds is included incomprehensive (loss) income.Capitalized Software Development Costs Certain costs to obtain internal use software for significant systems projects are capitalized and amortized over the estimated useful life of thesoftware, which ranges from 3 to 5 years. Costs to obtain software for projects that are not significant are expensed as incurred. Capitalized softwaredevelopment costs, net of accumulated amortization, were $2.2 million and $3.6 million at December 31, 2012 and 2011, respectively. Approximately$0.2 million and $1.1 million of software development costs were capitalized in the years ended December 31, 2012 and 2011, respectively.Amortization expense related to the capitalized software was $1.5 million, $1.4 million and $1.3 million for the years ended December 31, 2012, 2011and 2010, respectively.Goodwill, Intangibles and Long-Lived Assets Goodwill is not amortized, but is instead tested for impairment at least annually and whenever events or circumstances indicate that it is more likelythan not that they may be impaired. The Company has elected to perform the annual test for indications of goodwill impairment as of October 31 of eachyear. In performing tests for goodwill impairment, the Company is first permitted to perform a qualitative assessment about the likelihood of the carryingvalue of a reporting unit exceeding its fair value. If the Company determines that it is more likely than not that the fair value of a reporting unit is lessthan its carrying amount based on the qualitative assessment, it is required to perform the two-step goodwill impairment test described below to identifythe potential goodwill impairment and100Buildings 50 yearsLand improvements 40 yearsMachinery and equipment 3 - 20 yearsFurniture and fixtures 15 yearsLeasehold improvements Lesser of lease term or 15 yearsTable of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)measure the amount of the goodwill impairment loss, if any, to be recognized for that reporting unit. However, if the Company concludes otherwisebased on the qualitative assessment, the two-step goodwill impairment test is not required. The option to perform the qualitative assessment is not anaccounting policy election and can be utilized at the Company's discretion. Further, the qualitative assessment need not be applied to all reporting units ina given goodwill impairment test. For an individual reporting unit, if the Company elects not to perform the qualitative assessment, or if the qualitativeassessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company must performthe two- step goodwill impairment test for the reporting unit. If the implied fair value of goodwill is less than the carrying value, then an impairmentcharge would be recorded. In performing the annual goodwill impairment test in 2012, the Company bypassed the option to perform a qualitative assessment and proceededdirectly to performing the first step of the two-step goodwill impairment test. The Company calculates the fair value of its reporting units using the income approach which utilizes discounted forecasted future cash flows andthe market approach which utilizes fair value multiples of comparable publicly traded companies. The discounted cash flows are based on theCompany's most recent long-term financial projections and are discounted using a risk adjusted rate of return which is determined using estimates ofmarket participant risk-adjusted weighted-average costs of capital and reflects the risks associated with achieving future cash flows. The marketapproach is calculated using the guideline company method, where the Company uses market multiples derived from stock prices of companies engagedin the same or similar lines of business. A combination of the two methods is utilized to derive the fair value of the business in order to decrease theinherent risk associated with each model if used independently. If the fair value were to decline, the Company may be required to incur material chargesrelating to the impairment of goodwill. The Company did not identify any impairment in goodwill in 2012, 2011 or 2010. Goodwill is not deductible fortax purposes. In addition, as a result of the continued supply challenges with BVL, the Company performed an interim impairment test of goodwill as ofDecember 31, 2011. The analyses utilized the most recently available forecast information, which considered the potential impact of the continuedsupply challenges in 2011. The interim impairment test did not indicate that there was any impairment as of December 31, 2011. There were no eventsbetween October 31, 2012 and December 31, 2012 that triggered an interim impairment test. The Company tests intangible and long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying valueof an asset or group of assets may not be recoverable. The Company measures the recoverability of assets to be held and used by comparing thecarrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired,the impairment equals the amount by which the carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded aspermanent reductions in the carrying amount of the assets. In the first quarter of 2012, the Company reviewed the estimated useful life of one theCompany's trademarks as a result of a triggering event. Utilizing the most recent forecasted revenue data, the Company revised the estimate of theremaining useful life of one of the Company's trademarks to five years. The Company also tested intangible and certain long-lived assets forrecoverability as of December 31, 2012 and 2011, which included the most recently available information as to BVL's return to service date and thetechnology transfer schedule for a101Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)certain product. The analyses indicated that there was no impairment as of December 31, 2012 and 2011. The Company also evaluated the remaininguseful lives of intangible and long-lived assets that were tested for recoverability at December 31, 2012 and determined no revisions were required tothe remaining periods of amortization. Intangible assets, consisting of patents, trademarks and customer relationships related to the Company's products are amortized in a methodequivalent to the estimated utilization of the economic benefit of the asset. Trademarks and patents are amortized on a straight-line basis and customerrelationships are amortized on an accelerated basis.Deferred Financing Costs Deferred financing costs are capitalized and amortized to interest expense using the effective interest method. As of December 31, 2012 and 2011,the unamortized deferred financing costs were $11.4 million and $13.1 million, respectively. The expense associated with the amortization of deferredfinancing costs was $2.2 million, $1.4 million and $1.8 million for the years ended December 31, 2012, 2011 and 2010, respectively, and was includedin interest expense. In connection with the Company's refinancing in the second quarter of 2010, a write-off of existing deferred financing costs of$2.3 million was recorded. These charges were also included in interest expense.Contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business,that cover a wide range of matters, including, among others, product and environmental liability. The Company records accruals for such losscontingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company does not recognizegain contingencies until realized.Fair Value of Financial Instruments The estimated fair values of the Company's financial instruments, including its cash and cash equivalents, receivables, accounts payable andaccrued expenses approximate the carrying values of these instruments due to their short term nature. The estimated fair value of the debt, atDecember 31, 2012, based on Level 2 inputs of recent market activity available to the Company was $380.0 million compared to the face value of$400.0 million. At December 31, 2011, the estimated fair value of the debt based on borrowing rates available to the Company for similar debt was$320.0 million compared to the face value of $400.0 million.Shipping and Handling Revenues and Costs The Company typically does not charge customers for shipping and handling costs. Shipping and handling costs are included in cost of goods soldand were $20.4 million, $20.3 million and $16.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.102Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred and totaled $3.2 million, $4.1 million and $4.2 million for the years ended December 31,2012, 2011 and 2010, respectively, and are included in sales and marketing expenses.Research and Development Research and development costs are expensed as incurred and relate primarily to the development of new products to add to the Company'sportfolio and costs related to its medical affairs and medical information functions. Nonrefundable advance payments for goods or services that will beused or rendered for future research and development activities are deferred and recognized as an expense as the goods are delivered or the relatedservices are performed.Foreign Currency Translation The consolidated statements of comprehensive (loss) income of the Company's foreign subsidiaries are translated into U.S. Dollars using averageexchange rates. The net assets of the Company's foreign subsidiaries are translated into U.S. Dollars using the end of period exchange rates. The impactfrom translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which isincluded in consolidated accumulated other comprehensive income (loss). For the years ended December 31, 2012, 2011 and 2010, losses arising from foreign currency transactions totaled approximately $0.6 million,$0.2 million and $0.2 million, respectively. Transaction gains and losses are reported as a component of other income, net.Accounting for Stock-Based Compensation The Company's stock-based compensation cost is measured at the grant date of the stock-based award based on the fair value of the award and isrecognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of the awards that willbe forfeited. The Company uses the Black-Scholes valuation model for estimating the fair value of stock options. The fair value of stock option awardsis affected by the valuation assumptions, including the expected volatility based on comparable market participants, expected term of the option, risk-freeinterest rate and expected dividends. When a contingent cash settlement of vested options becomes probable, the Company reclassifies its vested awardsto a liability and accounts for any incremental compensation cost in the period in which the settlement becomes probable.Accumulated Other Comprehensive (Loss) Income Comprehensive (loss) income is comprised of net (loss) income, plus all changes in equity of a business enterprise during a period fromtransactions and other events and circumstances from non-owner sources, including any foreign currency translation adjustments. These changes inequity are recorded as adjustments to accumulated other comprehensive (loss) income in the Company's consolidated balance sheet. The components ofaccumulated other comprehensive income (loss) consist of foreign currency translation adjustments.103Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)2. Summary of Significant Accounting Policies (Continued)Asset Retirement Obligations The Company's compliance with federal, state, local and foreign environmental laws and regulations may require it to remove or mitigate the effectsof the disposal or release of chemical substances in jurisdictions where it does business or maintains properties. The Company establishes accrualswhen such costs are probable and can be reasonably estimated. Accrual amounts are estimated based on currently available information, regulatoryrequirements, remediation strategies, historical experience, the relative shares of the total remediation costs and a relevant discount rate, when the timeperiods of estimated costs can be reasonably predicted. Changes in these assumptions could impact the Company's future reported results. The amountsrecorded for asset retirement obligations in the accompanying balance sheets at December 31, 2012 and 2011 were $5.4 million and $4.9 million,respectively.Self Insurance Reserves The Company's consolidated balance sheet at December 31, 2012 and 2011 includes approximately $0.5 million and $0.6 million, respectively, ofaccrued liabilities associated with employee medical costs that are retained by the Company. The Company estimates the required liability of such claimson an undiscounted basis based upon various assumptions which include, but are not limited to, the Company's historical loss experience and projectedloss development factors. The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes inthe number of incidents (frequency) and change in the ultimate cost per incident (severity). The Company also maintains a separate cash account to fundthese medical claims and must maintain a minimum balance as determined by the plan administrator. The balance of this restricted cash account wasapproximately $27,000 and $0.1 million at December 31, 2012 and 2011, respectively, and is included in other current assets.3. 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 marketparticipants at the measurement date. In order to increase consistency and comparability in fair value measurements, financial instruments are categorizedbased 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 atthe measurement date. Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets orliabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yieldcurves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (marketcorroborated inputs). Level 3—Unobservable inputs that reflect a Company's estimates about the assumptions that market participants would use in pricing theasset or liability. The Company develops these inputs based on the best information available, including its own data. At December 31, 2012 and 2011, the Company's financial assets that are measured at fair value on a recurring basis are comprised of moneymarket securities and are classified as cash equivalents. The104Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)3. Fair Value of Financial Instruments (Continued)Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents on theconsolidated balance sheet using quoted prices in active markets for identical assets (Level 1). The tables below present information about the Company's assets and liabilities that are measured at fair value on a recurring basis as ofDecember 31, 2012 and 2011: In the first quarter of 2012, the Company invested $0.2 million in a certificate of deposit in which the Company's use of such cash is restricted andis included in the line item "Certificates of deposit—restricted" above. This investment is classified in other current assets on the consolidated balancesheet. The remaining $0.1 million represents a certificate of deposit that is collateral for a long-term lease and is included in other long-term assets on theconsolidated balance sheet. Certificates of deposit are classified within Level 2 of the fair value hierarchy as these are not traded on the open market. At December 31, 2012, the Company had total cash and cash equivalents of $31.6 million, which included approximately $2.0 million of moneymarket funds and $29.6 million of cash on-hand. At December 31, 2011, the Company had total cash and cash equivalents of $40.6 million, whichincluded approximately $6.0 million of money market funds and $34.6 million of cash on-hand. The estimated fair values of the Company's financial instruments, including its cash and cash equivalents, receivables, accounts payable andaccrued expenses approximate the carrying values of these instruments due to their short term nature. The estimated fair value of the debt, atDecember 31, 2012, based on Level 2 inputs of recent market activity available to the Company was $380.0 million compared to the face value of$400.0 million. At December 31, 2011, the estimated fair value of the debt based on borrowing rates available to the company for similar debt was$320.0 million compared to the face value of $400.0 million.105(in thousands) Total fairvalue atDecember 31,2012 Quoted pricesin activemarkets(Level 1) Significant otherobservableinputs(Level 2) Significantunobservableinputs(Level 3) Money market $2,004 $2,004 $— $— Certificates of deposit—restricted 328 — 328 — $2,332 $2,004 $328 $— (in thousands) Total fairvalue atDecember 31,2011 Quoted pricesin activemarkets(Level 1) Significant otherobservableinputs(Level 2) Significantunobservableinputs(Level 3) Money market $6,024 $6,024 $— $— $6,024 $6,024 $— $— Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)4. Income Taxes The components of (loss) income before income taxes for the years ended December 31 were: The provision (benefit) for income taxes as of December 31 was: The Company's provision (benefit) for income taxes in the years ended December 31, 2012, 2011 and 2010 was different from the amountcomputed by applying the statutory U.S. Federal income tax rate to (loss) income from operations before income taxes, as a result of the following:106(in thousands) 2012 2011 2010 United States $(43,868)$(55,658)$2,316 International 1,312 3,287 5,119 $(42,556)$(52,371)$7,435 (in thousands) 2012 2011 2010 Current Federal $(3,508)$(41)$768 State 2,763 2,607 1,649 International 618 202 1,602 $(127)$2,768 $4,019 Deferred Federal $200 $75,939 $(184)State — 6,326 (1,270)International (628) (935) (100) (428) 81,330 (1,554) $(555)$84,098 $2,465 (in thousands) 2012 2011 2010 U.S. statutory rate $(14,895) 35.0%$(18,331) 35.0%$2,602 35.0%Permanent items and foreign taxcredits (1,200) 2.8% (363) 0.7% 277 3.7%Uncertain tax positions (1,404) 3.3% 1,148 (2.2)% 2,685 36.1%Research credits — — (910) 1.7% (666) (9.0)%State and local taxes (1,821) 4.3% (1,815) 3.5% 53 0.7%Impact of rate change on deferred taxes (974) 2.3% (393) 0.7% (308) (4.1)%Utilization of net operating losses — — — — (339) (4.6)%True-up of prior year tax (49) 0.1% 33 (0.1)% (1,311) (17.6)%Foreign tax rate differential (455) 1.1% (584) 1.1% (528) (7.1)%Valuation allowance 20,243 (47.6)% 102,692 (196.1)% — — Tax on repatriation — — 2,600 (5.0)% — — Other — — 21 —% — — $(555) 1.3%$84,098 (160.7)%$2,465 33.1% Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)4. Income Taxes (Continued) The components of deferred income tax assets (liabilities) at December 31 were: The Company files separate federal income tax returns for Lantheus MI Intermediate, Inc. and Lantheus Medical Imaging, Inc. For state taxpurposes, the Company files combined tax returns with Lantheus MI Holdings, Inc. For income tax provision purposes, the Company uses the separatereturn method in calculating its state tax provision. As of December 31, 2012 and December 31, 2011, the Company reflects an amount payable toLantheus MI Holdings of $85,000, respectively, for the tax benefit of losses incurred by Lantheus MI Holdings, which is included in due from parenton the consolidated balance sheets. The Company is currently under audit in the state of Florida for corporate income taxes. Tax years 2009-2012 remain open in the US and are openfrom 2008-2012 for all other jurisdictions. During the fourth quarter of 2012, the Company was contacted by several state tax jurisdictions relating totax matters that would be subject to the Bristol-Myers Squibb Company ("BMS") indemnification agreement. It is not certain as to how these matterswill be resolved. The effect on the Company's financial statements should be neutral as any changes to the Company's income tax provision will beoffset by other income or expense as described below. As of December 31, 2012 and 2011, total liabilities for tax obligations and associated interest and penalties were $34.7 million and $34.6 million,respectively, consisting of income tax provisions for uncertain tax benefits of $15.4 million and $17.0 million, interest accruals of $16.5 million and107(in thousands) 2012 2011 Deferred Tax Assets Federal benefit of state taxes payable $10,926 $10,311 Reserves, accruals and other 33,977 29,019 Capitalized research and development 22,320 9,536 Amortization of intangibles other than goodwill 61,131 74,744 Net operating loss carryforwards 7,851 1,381 Deferred tax assets 136,205 124,991 Deferred Tax Liabilities Reserves, accruals and other (1,125) (6,457)Customer relationships (10,274) (12,935)Depreciation (2,191) (3,745) Deferred tax liability (13,590) (23,137)Less: Valuation allowance (122,935) (102,692) $(320)$(838) 2012 2011 Recorded in the accompanying consolidated balance sheet as: Current deferred tax assets $115 $93 Noncurrent deferred tax liability (435) (931) Net deferred tax liabilities $(320)$(838) Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)4. Income Taxes (Continued)$14.4 million and penalty accruals of $2.8 million and $3.2 million, respectively, which were included in other long-term liabilities on the consolidatedbalance sheets with the offsetting asset in other long-term assets. The total noncurrent asset related to the indemnification was $18.5 million and$18.8 million as of December 31, 2012 and 2011, respectively. Included in the 2012, 2011 and 2010 tax provision is $2.6 million, $2.4 million and$2.4 million, respectively, relating to current year interest expense, with an offsetting amount included in other income due to the indemnification relatedto these obligations. A reconciliation of the Company's changes in uncertain tax positions for 2012, 2011 and 2010 is as follows: As of December 31, 2012 and 2011, the total amount of unrecognized tax benefits was $13.9 million and $15.4 million, respectively, all of whichwould affect the effective tax rate, if recognized. These amounts are primarily associated with domestic state tax issues, such as the allocation of incomeamong various state tax jurisdictions, transfer pricing and U.S. federal R&D credits. Since the Company operates in a number of countries in which ithas income tax treaties, it believes that it is more-likely-than-not that the Company should be able to receive competent authority relief for potentialadjustments in those countries. Included in the Company's uncertain tax positions for transfer pricing exposures are $2.7 million, which is reflectedwithin other long-term liabilities, and an offset of $1.5 million, which is reflected in other long-term assets. The tabular rollforward reflected above is netof the $1.5 million of competent authority relief. The statute of limitations for the 2008 U.S. tax return expired during 2012. As a result, the Company has recognized the benefit associated with thereversal of uncertain tax positions of $1.6 million and taxes payable of $2.3 million. Included in other expense is $1.3 million relating to the reduction inthe indemnification receivable from BMS. Within the next twelve months, unrecognized tax benefits of $1.4 million associated with transfer pricing maybe recognized due to the closing of the statute of limitations. In accordance with the Company's acquisition of the medical imaging business from BMS in 2008, the Company obtained a tax indemnificationagreement with BMS related to certain tax obligations arising prior to the acquisition of the Company, for which the Company has the primary legal108(in thousands) Beginning balance of uncertain tax positions as of January 1, 2010 $18,816 Additions related to current year tax positions 1,194 Reductions related to prior year tax positions (3,951) Balance of uncertain tax positions as of December 31, 2010 16,059 Additions related to current year tax positions 195 Reductions related to prior year tax positions (876) Balance of uncertain tax positions as of December 31, 2011 15,378 Additions related to current year tax positions 301 Reductions related to prior year tax positions — Settlements (651)Lapse of statute of limitations (1,122) Balance of uncertain tax positions as of December 31, 2012 $13,906 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)4. Income Taxes (Continued)obligation. The tax indemnification receivable is recognized within other noncurrent assets. The changes in the tax indemnification asset are recognizedwithin other income, net in the consolidated statement of comprehensive (loss) income. In accordance with the Company's accounting policy, the changein the tax liability and penalties and interest associated with these obligations (net of any offsetting federal or state benefit) is recognized within the taxprovision. Accordingly, as these reserves change, adjustments are included in the tax provision while the offsetting adjustment is included in otherincome. Assuming that the receivable from BMS continues to be considered recoverable by the Company, there is no net effect on earnings related tothese liabilities and no net cash outflows. During the years ended December 31, 2012 and 2011, BMS, on behalf of the Company, made payments totaling $0.7 million and $0.3 million,respectively, to a number of states in connection with prior year state income tax filings. As a result of these payments, the amount due from BMS,included within other long-term assets, and the related income tax liability included within other long-term liabilities, decreased by $0.7 million and$0.5 million, respectively, which represents the total cash payments of $0.7 million and $0.3 million, in 2012 and 2011, respectively, and a reduction inthe reserve of $0 and $0.2 million, respectively, representing the difference between amounts paid and amounts originally estimated. Undistributed earnings of the foreign subsidiaries, Australia, Canada and Puerto Rico, aggregated to $2.5 million and $13.0 million atDecember 31, 2012 and 2011, respectively. At December 31, 2012 and 2011, the Company has recorded a deferred tax liability of $1.1 million and$2.6 million, respectively, relating to the additional tax that would be due in the U.S. upon repatriation of these earnings. Due to anticipated tax losses,the estimated current tax cost is expected to be $0.1 million associated with foreign withholding taxes. The Company has generated domestic pre-tax losses for the past two years. This loss history demonstrates negative evidence concerning theCompany's ability to utilize its domestic gross deferred tax assets. In order to overcome the presumption of recording a valuation allowance against thedeferred tax assets, the Company must have sufficient positive evidence that it can generate sufficient taxable income to utilize these deferred tax assetswithin the carryover or forecast period. Although the Company has no history of expiring net operating losses or other tax attributes, based on thecumulative loss incurred over the three-year period ended December 31, 2012, management determined that the net U.S. deferred tax assets are more-likely-than-not recoverable. As a result of this analysis, the Company continues to maintain a full valuation allowance against its net US deferred taxassets in the amount of $122.9 million and $102.7 million at December 31, 2012 and 2011, respectively.109Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)4. Income Taxes (Continued) The following is a reconciliation of the Company's valuation allowance for the years ending December 31, 2012, 2011, and 2010. At December 31, 2012, the Company has federal and state net operating loss carryovers of $14.9 million, which begin to expire in 2031. TheCompany has $1.3 million of federal research credits, which begin to expire in 2029. The Company has foreign tax credits of approximately$4.7 million that will begin to expire in 2020. The Company has state research credits of $1.4 million, which will expire between 2023 and 2026. TheCompany has Massachusetts investment tax credits of approximately $0.4 million, which have no expiration date. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act. This law extended, retroactively, various tax provisionsincluding the research credit. Since this law was enacted after the end of the 2012 tax year, the provisions of this law are not reflected in our 2012income tax provision. The total amount of the 2012 federal research credit is approximately $0.6 million. The effect of this credit will be reflected in theconsolidated financial statements in the period the law was enacted. In 2010, the Company was granted a tax holiday from the Commonwealth of Puerto Rico, which expires on January 1, 2024. This grant providesfor a 4% tax rate on activities relating to the operations of the Company's radiopharmacies. This grant is conditioned upon the Company meeting certainemployment and investment thresholds. The impact of this tax holiday was to decrease foreign tax by approximately $0.3 million, $0.2 million and$0.2 million in 2012, 2011 and 2010, respectively.5. Inventory The Company includes within current assets the amount of inventory that is estimated to be utilized within twelve months. Inventory that will beutilized after twelve months is classified within other long-term assets.110Balance at January 1, 2010 $339 Charged to provision for income taxes — Deductions (use of net operating loss) (339) Balance at December 31, 2010 — Charged to provision for income taxes 102,692 Deductions — Balance at December 31, 2011 102,692 Charged to provision for income taxes 20,243 Deductions — Balance at December 31, 2012 $122,935 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)5. Inventory (Continued) Inventory, classified in inventory or other long-term assets, consisted of the following: At December 31, 2012, inventories reported as other long-term assets included $1.5 million of raw materials and $0.6 million of finished goods.At December 31, 2011, other long-term assets included $10.7 million of raw materials and $0.5 million of finished goods. The Company's Ablavar product was commercially launched in January 2010. The revenues for this product through December 31, 2012 have notbeen significant. At December 31, 2012 and 2011, the balances of inventory on-hand reflect approximately $2.8 million and $12.2 million, respectively,of finished products and raw materials related to Ablavar. At December 31, 2012 and 2011, approximately $2.1 million and $11.2 million, respectively,of Ablavar inventory were included in long-term assets. LMI entered into an agreement with a supplier to provide Active Pharmaceutical Ingredient("API") and finished products for Ablavar under which LMI is required to purchase future minimum quantities. The supply agreement was amendedduring October 2011 to extend the term of the agreement from September 30, 2012 until September 30, 2014, reduce the amount of API LMI isobligated to purchase over the term of the agreement, and increase the amount of finished drug product LMI is obligated to purchase over the term of theagreement. At December 31, 2012, the remaining purchase commitment under the amended agreement was approximately $9.4 million. The Companyhas recorded a contract loss of $7.5 million associated with this future purchase commitment at December 31, 2012. The Company records theinventory when it takes delivery, at which time the Company assumes title and risk of loss. Prior to the issuance of the June 30, 2011 and December 31, 2011 financial statements, the Company performed an analysis of its expected futuresales of its Ablavar product and recorded an inventory write-down to cost of goods sold of $13.5 million and $12.3 million in the second and fourthquarters of 2011, respectively, which represented the cost of Ablavar finished good product and API that the Company does not believe it will be ableto sell prior to its expiration. The Company completed updated sales forecasts for Ablavar based on actual sales through June 30, 2011 andDecember 31, 2011 in consideration of its supply agreement for API. Based on the updated sales forecasts, coupled with the aggregate six-year shelflife of API and finished goods, the Company recorded in cost of goods sold a loss of $1.9 million and $3.7 million in the second and fourth quarters of2011, respectively, for the loss associated with the portion of the committed purchases of Ablavar product that the Company did not believe it would beable to sell prior to its expiration. Additionally, the Company determined that its write-down of Ablavar inventory during the six months ended June 30,2011 represented an event that warranted assessment of the intellectual property associated with Ablavar for its recoverability and concluded that theintellectual property was not recoverable and111(in thousands) December 31,2012 December 31,2011 Raw materials $7,573 $7,755 Work in process 5,019 2,615 Finished goods 5,456 4,395 Inventory 18,048 14,765 Other long-term assets 2,090 11,249 Total $20,138 $26,014 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)5. Inventory (Continued)in the second quarter of 2011, recorded in cost of goods sold an impairment of this intangible asset of $23.5 million. See Note 8, "Intangibles, net." Prior to the issuance of the September 30, 2012 financial statements, the Company implemented a reduction in the sales force dedicated to Ablavar.The Company performed an analysis of expected future sales of its Ablavar product, based on an updated sales forecast reflecting the reduction in salesforce personnel dedicated to Ablavar, and recorded in the third quarter of 2012, to cost of goods sold, an inventory write-down of $10.6 million and areserve of $1.9 million associated with the portion of the committed purchases of Ablavar product that the Company does not believe it will sell prior toexpiry. If the Company does not meet its current sales goals or cannot sell the product it has committed to purchase prior to its expiration, the Companycould incur additional inventory write-downs and/or losses on its purchase commitments.6. Property, Plant and Equipment, net Property, plant and equipment consisted of the following at December 31: Depreciation expense related to property, plant and equipment was $9.7 million, $12.9 million and $11.4 million for the years ended December 31,2012, 2011 and 2010, respectively. Included within machinery, equipment and fixtures are spare parts of approximately $2.7 million and $2.8 million as of December 31, 2012 and2011, respectively. Spare parts include replacement parts relating to plant and equipment and are either recognized as an expense when consumed or re-classified and capitalized as part of the related plant and equipment and depreciated over a time period not exceeding the useful life of the related asset.7. Asset Retirement Obligations The Company considers the legal obligation to remediate its facilities upon a decommissioning of its radioactive related operations as an assetretirement obligation. The operations of the Company have radioactive production facilities at its North Billerica, Massachusetts and San Juan, PuertoRico sites. The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. The liability is measured atthe present value of the obligation when incurred and is adjusted in subsequent periods as accretion expense is recorded. The corresponding assetretirement costs are capitalized as part of the carrying value of the related long-lived assets and depreciated over the asset's useful life.112(in thousands) 2012 2011 Land $22,450 $22,450 Buildings 64,649 64,029 Machinery, equipment and fixtures 63,503 65,648 Construction in progress 7,331 4,383 Accumulated depreciation (48,360) (44,058) Property, plant and equipment, net $109,573 $112,452 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)7. Asset Retirement Obligations (Continued) The following is a reconciliation of the Company's asset retirement obligations for the years ended December 31, 2012, 2011 and 2010:8. Intangibles, net Intangibles, net consisted of the following: On April 6, 2009, the Company acquired the U.S., Canadian and Australian territory rights to a Gadolinium-based blood pool contrast agent,Ablavar (formerly known as Vasovist), from EPIX Pharmaceuticals for an aggregate purchase price of $32.6 million, including drug product and activepharmaceutical ingredient inventory. Ablavar was approved by the U.S. Food and Drug Administration ("FDA") in December 2008 and commerciallylaunched by the Company in early January 2010 after final FDA approval of its product label. In June 2010, the Company acquired the remaining world113(in thousands) Balance at January 1, 2010 $3,746 Capitalization 191 Accretion expense 435 Balance at December 31, 2010 4,372 Capitalization — Accretion expense 496 Balance at December 31, 2011 4,868 Capitalization — Net decrease due to changes in estimated future cash flows (5)Accretion expense 553 Balance at December 31, 2012 $5,416 December 31, 2012(in thousands) Cost Accumulatedamortization Net WeightedAverageUseful Life AmortizationMethodTrademarks $53,390 $20,743 $32,647 8 years Straight-lineCustomer relationships 114,000 83,385 30,615 19 years AcceleratedOther patents 42,780 39,240 3,540 2 years Straight-line $210,170 $143,368 $66,802 December 31, 2011(in thousands) Cost Accumulatedamortization Net WeightedAverageUseful Life AmortizationMethodTrademarks $53,390 $13,779 $39,611 16 years Straight-lineCustomer relationships 113,480 74,575 38,905 19 years AcceleratedOther patents 42,780 38,547 4,233 2 years Straight-line $209,650 $126,901 $82,749 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)8. Intangibles, net (Continued)rights to Ablavar. The Company determined that the write-down of Ablavar inventory in the fourth quarter of 2010 represented an event that warrantedassessment of the $24.6 million Ablavar patent portfolio for its recoverability. See Note 5, "Inventory." Based on the Company's estimate of futureundiscounted cash flows associated with the Ablavar product as of December 31, 2010, the Company concluded the patent portfolio was recoverable bya narrow margin. During the interim periods subsequent to December 31, 2010, the Company monitored the recoverability of the Ablavar patentportfolio. Prior to the issuance of the Company's June 30, 2011 financial statements, the Company completed an update of its sales forecast based onactual sales results through June 30, 2011 and its forecasted Ablavar sales activity. The Company, using its revised sales forecast, conducted animpairment analysis as of June 30, 2011 and concluded that the estimate of future undiscounted cash flows associated with the Ablavar product did notexceed the carrying amount of the asset and therefore, the asset would need to be written down to its fair value. In order to calculate the fair value of theAblavar patent portfolio asset, the Company estimated the future discounted cash flows associated with the Ablavar product and as a result of thisanalysis, recorded an impairment charge of $23.5 million to adjust the carrying value to its fair value of zero. This expense was recorded within cost ofgoods sold in the accompanying consolidated statement of comprehensive (loss) income. In the first quarter of 2012, the Company reviewed the estimated useful life of certain of its trademarks. As a result of utilizing the most recentforecasted data, the Company revised its estimate of the remaining useful life of one of its trademarks from eleven to five years, which increased theamortization expense by $3.5 million during the year ended December 31, 2012. The Company recorded amortization expense for its intangible assets of $16.1 million, $18.5 million and $22.5 million for the years endedDecember 31, 2012, 2011 and 2010, respectively. Expected future amortization expense related to the intangible assets is as follows (in thousands):114Years ended December 31, 2013 $14,471 2014 13,183 2015 11,506 2016 10,749 2017 3,731 2018 and thereafter 13,162 $66,802 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)9. Accrued Expenses Accrued expenses are comprised of the following at December 31: As of December 31, 2012 and 2011, the Company accrued a contract loss of $7.5 million and $5.6 million, respectively, associated with theportion of the committed purchases of Ablavar product from the Company's supplier that the Company did not believe it would sell prior to expiry. AtDecember 31, 2012, $7.5 million was included in accrued expenses. At December 31, 2011, $1.0 million was included in accrued expenses and$4.6 million was included in other long-term liabilities. On March 1, 2012, the Company took action to reduce its workforce in an effort to reduce costs and increase operating efficiency, which resultedin approximately $0.5 million charge to the consolidated statement of comprehensive (loss) income during the first quarter of 2012. All amounts forseverance and other associated costs have been paid as of December 31, 2012. During October 2012, the Company implemented a reduction in the sales force dedicated to Ablavar, which resulted in a $0.2 million charge to theconsolidated statement of comprehensive (loss) income during the fourth quarter of 2012. At December 31, 2012, the amount included in accruedcompensation and benefits totaled $48,000.10. Financing Arrangements On March 21, 2011, LMI issued $150.0 million of New Restricted Notes. The New Restricted Notes were issued at a price of 101.50% and wereissued as additional debt securities under the Indenture pursuant to which LMI previously issued $250.0 million in aggregate principal amount of9.750% Senior Notes due 2017. The New Restricted Notes were issued with the same terms and conditions as the Senior Notes, except that the NewRestricted Notes were subject to a separate registration rights agreement. The New Notes and the Senior Notes, or together, the Notes, vote as one classunder the Indenture. As a result of the issuance of the New Restricted Notes, LMI has $400.0 million in aggregate principal amount of Notesoutstanding. The Notes bear interest at a rate of 9.750% per year, payable on May 15 and November 15 of each year, beginning May 15, 2011 withrespect to the New Restricted Notes. Interest on the Senior Notes accrued from November 15, 2010. The Notes mature on May 15, 2017. The netproceeds of the Senior Notes were used to repay $77.9 million due under LMI's then outstanding credit agreement and to pay a $163.8 million dividendto Holdings to repay a $75.0 million demand note it issued and for Holdings to repurchase $90.0 million of its Series A Preferred Stock at the accretedvalue. The net proceeds of the New115(in thousands) 2012 2011 Compensation and benefits $5,351 $5,501 Accrued interest 5,040 4,886 Accrued professional fees 1,628 1,927 Research and development services 3,205 2,100 Freight, distribution and operations 3,633 2,462 Accrued loss on firm purchase commitment 7,469 954 Marketing expense 1,168 1,104 Accrued rebates, discounts and chargebacks 1,542 1,356 Other 653 659 $29,689 $20,949 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)10. Financing Arrangements (Continued)Restricted Notes were used to pay a $150.0 million dividend to Holdings, which it used to fully redeem the balance of its Series A Preferred Stock atthe accreted value of $44.0 million and to pay a $106.0 million dividend to the holders of its common securities and stock options. In conjunction withthe issuance of the New Restricted Notes, LMI also made a cash payment of $3.75 million to the Holders of the Senior Notes in exchange for theHolders of the Senior Notes consent to amend the Indenture to modify the restricted payments covenant to provide for additional restricted paymentcapacity in order to accommodate the dividend payment. The premium of $2.25 million and the consent fee of $3.75 million were capitalized and arebeing amortized over the term of the Notes as an adjustment to interest expense. All of the Notes have been registered with the Securities and ExchangeCommission.Redemption LMI can redeem the Notes at 100% of the principal amount on May 15, 2016 or thereafter. LMI may also redeem the Notes prior to May 15, 2016depending on the timing of the redemption during the twelve month period beginning May 15 of each of the years indicated below: In addition, at any time prior to May 15, 2013, LMI may, at its option, redeem up to 35% of the aggregate principal amount of Notes issued at109.750% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date, subject to the right ofholders of record on such date to receive any interest due, using proceeds of an equity offering, provided that at least 65% of the aggregate principalamount of the Notes remains outstanding immediately after such redemption and that such redemption occurs within 90 days of each equity offering (asdefined in the Indenture). At any time prior to May 15, 2014, LMI may also redeem all or any part of the Notes, with notice, at a redemption price equal to 100% of theprincipal amount thereof of the Notes redeemed plus the applicable premium (as defined in the Indenture) as of, and accrued and unpaid interest andadditional interest (as defined in the Indenture), if any, to, but not including, the redemption date, subject to the rights of holders of record on therelevant record date to receive interest due on the relevant interest payment date. Upon a change of control (as defined in the Indenture), LMI will be required to make an offer to purchase each holder's Note at a price of 101% ofthe principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. If LMI or its subsidiaries engage in asset sales (as defined in the Indenture), they generally must either invest the net cash proceeds from such salesin such business within a specified period of time, prepay certain indebtedness or make an offer to purchase a principal amount of the Notes equal to theexcess net cash proceeds (as defined in the Indenture), subject to certain exceptions. The Notes are unsecured and are equal in right of payment to all of the existing and future senior debt, including borrowings under its securedcredit facilities, subject to the security interest thereof.116Year Percentage 2014 104.875%2015 102.438%2016 100.000%Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)10. Financing Arrangements (Continued)LMI's obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured senior basis by LantheusIntermediate and by certain of LMI's subsidiaries, and the obligations of such guarantors under their guarantees are equal in right of payment to all oftheir existing and future senior debt.Revolving Line of Credit In connection with the issuance of the New Restricted Notes and subsequently thereafter, certain covenants and interest rates under LMI's original$42.5 million revolving facility (the "Facility") were modified as disclosed below, including as of March 25, 2013 a reduction of committed availabilityfor total borrowings under the Facility to $35 million. The Facility contains an unused line of credit fee of 0.75%, which is payable quarterly. TheFacility expires on May 10, 2014, at which time all outstanding borrowings are due and payable. At December 31, 2012 and 2011, there was no outstanding balance under the Facility, other than the $8.8 million unfunded Standby Letter ofCredit, and the aggregate borrowing capacity at the time was $33.7 million and $42.5 million, respectively. On February 3, 2012, the Company entered into an unfunded Standby Letter of Credit for up to $4.4 million. On April 11, 2012, the unfundedStandby Letter of Credit was increased to $8.8 million, which decreased the borrowing availability under the Facility to an aggregate of $33.7 million.The unfunded Standby Letter of Credit bears interest at an annual rate of 4.00%, which is payable quarterly, and is automatically renewed for a one yearperiod at each anniversary date, unless the Company elects not to renew in writing within 60 days prior to such expiration. The unfunded Standby Letterof Credit will expire on February 2, 2014.Covenants The Notes and the Facility each contain separate affirmative and negative covenants, as well as restrictions on the ability of Lantheus Intermediate(in the case of the Facility), LMI and LMI's subsidiaries (in the case of the Notes and the Facility), to: (i) incur additional indebtedness or issuepreferred stock; (ii) repay subordinated indebtedness prior to its stated maturity; (iii) pay dividends on, repurchase or make distributions in respect of itscapital stock or make other restricted payments; (iv) make certain investments; (v) sell certain assets; (vi) create liens; (vii) consolidate, merge, sell orotherwise dispose of all or substantially all of the Company's assets; and (viii) enter into certain transactions with the Company's affiliates. The Notescontain customary events of default provisions, including payment default and cross-acceleration for non-payment of any outstanding indebtedness,where such indebtedness exceeds $10.0 million. The Facility also contains customary default provisions and the Company is required to comply withfinancial covenants in the Facility including a total leverage ratio and interest coverage ratio, beginning with the quarter ended September 30, 2010, aswell as limitations on the amount of capital expenditures. The financial ratios are driven by the Company's earnings before interest, taxes, depreciationand amortization ("EBITDA") and other adjustments as defined in the Facility ("Facility EBITDA"). On January 26, 2012 and October 11, 2012, theCompany executed amendments to the Facility which revised the financial covenants, certain definitions used to calculate compliance with thosecovenants and the definition of annualized EBITDA from a trailing twelve month basis to an annualized basis beginning in the first quarter of 2013. OnMarch 25, 2013, the Company executed an additional amendment to the Facility which, (i) reduced the117Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)10. Financing Arrangements (Continued)committed availability for total borrowings under the Facility from $42.5 million to $35 million, (ii) set the interest rate at LIBOR plus 4.75% or theReference Rate (as defined in the agreement) plus 3.75%, and (iii) further modified the financial covenants and certain definitions used to calculatecompliance with those covenants. The revised financial covenants, as amended, are set forth in the table below.Revolving Credit Facility Financial Covenants Financing Costs LMI incurred and capitalized approximately $15.6 million in direct financing fees including $5.2 million associated with the New Restricted Notesissued in March 2011, consisting primarily of underwriting fees and expenses, consent solicitation fee, legal fees, accounting fees and printing costs inconnection with the issuance of the New Restricted Notes, the Existing Notes and the Facility. Deferred financing costs are being amortized over the lifeof the Notes and the Facility, as appropriate, using the effective interest method and are included in interest expense in the accompanying consolidatedstatements of comprehensive (loss) income. In connection with the January 26, 2012 and October 11, 2012 amendments to the Facility, LMI incurred approximately $0.2 million in fees andexpenses associated with each amendment, and in connection with the March 25, 2013 amendments, LMI incurred approximately $0.1 million in feesand expenses associated with the amendment. These fees are being amortized over the remaining life of the Facility using the straight-line method andare included in interest expense in the accompanying consolidated statements of comprehensive (loss) income.11. Stockholder's Equity As of December 31, 2012 and 2011, the authorized capital stock of the Company consisted of 10,000 shares of voting common stock with a parvalue of $0.001 per share and 1 share outstanding.118Period TotalLeverage Ratio InterestCoverage Ratio Q3 2012 7.25 to 1.00 1.20 to 1.00 Q4 2012 8.00 to 1.00 1.20 to 1.00 Q1 2013 8.80 to 1.00 1.10 to 1.00 Q2 2013 10.0 to 1.00 1.00 to 1.00 Q3 2013 8.20 to 1.00 1.25 to 1.00 Q4 2013 7.50 to 1.00 1.40 to 1.00 Q1 2014 7.00 to 1.00 1.45 to 1.00 Thereafter 7.00 to 1.00 1.45 to 1.00 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)12. Stock-Based Compensation The Company's employees are eligible to receive awards from Holdings' 2008 Equity Incentive Plan (the "2008 Plan"). The 2008 Plan isadministered by the Holdings Board of Directors. The 2008 Plan permits the granting of nonqualified stock options, stock appreciation rights (orSARs), restricted stock and restricted stock units to employees, officers, directors and consultants of Holdings or any subsidiary of Holdings (includingIntermediate and LMI). The maximum number of shares that may be issued pursuant to awards under the 2008 Plan at December 31, 2012 is4,974,230. Option awards are granted with an exercise price equal to the fair value of Holdings' stock at the date of grant, as determined by the Board ofDirectors of Holdings. Time based option awards vest based on time, either four or five years, and performance based option awards vest based on theperformance criteria specified in the grant. All option awards have a ten year contractual term. The Company recognizes compensation costs for its timebased awards on a straight-line basis equal to the vesting period. The compensation cost for performance based awards is recognized on a gradedvesting basis, based on the probability of achieving the performance targets over the requisite service period for the entire award. The fair value of eachoption award is estimated on the date of grant using a Black-Scholes valuation model that uses the assumptions noted in the following table. Expectedvolatilities are based on the historic volatility of a selected peer group. Expected dividends represent the dividends expected to be issued at the date ofgrant. The expected term of options represents the period of time that options granted are expected to be outstanding. The risk-free interest rateassumption is the seven-year U.S. Treasury rate at the date of the grant which most closely resembles the expected life of the options. The Company uses the following Black-Scholes inputs to determine the fair value of new stock option grants.119 Years Ended December 31, 2012 2011 2010 Expected volatility 36 - 41% 33 - 40% 36 - 39%Expected dividends — — — Expected life (in years) 5.5 - 6.5 6.5 6.5 Risk-free interest rate 0.7 - 1.4% 1.9 - 2.9% 2.2 - 3.3%Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)12. Stock-Based Compensation (Continued) A summary of option activity for 2012 is presented below: The weighted average grant-date fair value of options granted during the years ended December 31, 2012, 2011 and 2010 was $3.29, $4.05 and$4.48, respectively. During the years ended December 31, 2012, 2011 and 2010, 710,139, 362,300 and 465,370 options vested, respectively, with anaggregate fair value of approximately $1.0 million, $0.4 million and $0.5 million, respectively. During the years ended December 31, 2012, 2011 and 2010, 21,220, 14,650 and 15,000 stock options, respectively, were exercised on a cashlessbasis for which 9,085, 4,629 and 12,076 shares of common stock, respectively, were issued. The intrinsic value for the options exercised during theyears ended December 31, 2012, 2011 and 2010, was approximately $75,000, $46,000 and $0.1 million, respectively. Stock-based compensation expense (income) for both time based and performance based awards was recognized in the consolidated statements ofcomprehensive (loss) income as follows: Time Based PerformanceBased Shares WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm AggregateIntrinsicValue Outstanding atJanuary 1,2012 2,287,600 1,307,538 3,595,138 $2.90 6.4 $22,787,000 Options granted 185,500 140,500 326,000 8.10 Optionscancelled (56,900) (18,169) (75,069) 5.15 Optionsexercised (16,500) (4,720) (21,220) 4.69 Optionsforfeited andexpired (73,350) (422,201) (495,551) 4.54 Outstanding atDecember 31,2012 2,326,350 1,002,948 3,329,298 $3.11 5.6 $15,336,000 Vested andexpected tovest atDecember 31,2012 2,313,439 988,999 3,302,438 $3.06 5.6 $15,333,000 Exercisable atDecember 31,2012 1,919,950 815,449 2,735,399 $2.20 5.1 $14,629,000 Years Ended December 31, (in thousands) 2012 2011 2010 Cost of goods sold $79 $2 $37 General and administrative 982 58 253 Sales and marketing 111 (1,064) 1,114 Research and development 68 35 230 Total stock-based compensation (income) expense $1,240 $(969)$1,634 Stock-based compensation expense (income) recognized in the consolidated statement of comprehensive (loss) income for the years endedDecember 31, 2012, 2011, and 2010 are based on awards ultimately expected to vest as well as any changes in the probability of achieving certainperformance features as required. During the year ended December 31, 2012, the Company recognized120Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)12. Stock-Based Compensation (Continued)approximately $0.6 million of stock-based compensation expense associated with the modification of three option agreements, two of which wereeffectuated in the first quarter of 2012 and one of which was effectuated in the third quarter of 2012. The modifications of these awards affected thevesting terms of the awards, allowing vesting to continue beyond the last day of employment, so long as the option holders, whom are no longeremployees, continue to provide services to the Company or Avista Capital Partners, the majority stockholder of the Company's ultimate parent, asapplicable. The Company will remeasure the fair value of these options at each reporting period until the services are completed. The Company used the following Black-Scholes inputs to determine the fair value of stock options that were modified during the quarter endedMarch 31, 2012 and the quarter ended September 30, 2012. There were no stock option modifications during the quarters ended June 30, 2012 andDecember 31, 2012 or during the year ended December 31, 2011. The Company used the following Black-Scholes inputs to remeasure the fair value of stock options that were modified during 2012 as ofDecember 31, 2012. Upon termination of employee services, the Company has the right to call shares held by employees that were purchased or acquired throughoption exercise. As a result of this right, upon termination of service, vested stock-based awards are reclassified to liability based awards until the periodof probable exercise has lapsed. There were no stock-based liabilities as of December 31, 2012 and 2011. There were no liability awards paid outduring the years ended December 31, 2012 and 2011. The total of all stock-based liability awards paid out during 2010 was approximately $84,000.The Company recorded a benefit of approximately $1.0 million in the three month period ended March 31, 2011 related to 2010 liability awards whichexpired during the period. The Company did not recognize an income tax benefit for the years ended December 31, 2012 and 2011. For the year ended December 31, 2010,the Company recognized an income tax benefit of $46,000. As of December 31, 2012, there was approximately $1.1 million of total unrecognizedcompensation costs related to non-vested stock options granted under the 2008 Plan. These costs are expected to be recognized over a weighted-averageremaining period of 0.5 years. In addition, performance based awards contain certain contingent features, such as change in control provisions, whichallow for the vesting of previously forfeited and unvested awards. As of December 31, 2012, there was approximately $1.2 million of unrecognizedcompensation expense relating to these features, which could be recognized through 2018 or longer.121 Three MonthsEndedMarch 31, 2012 Three MonthsEndedSeptember 30, 2012 Expected volatility 30 - 36% 31%Expected dividends — — Expected term (in years) 0.3 - 3.5 3.3 Risk-free interest rate 0.3 - 0.8% 0.3%Expected volatility 30.0%Expected dividends — Expected term (in years) 2.5 Risk-free interest rate 0.3%Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)13. Other (Expense) Income, net Other income, net consisted of the following:14. Commitments The Company leases certain buildings, hardware and office space under operating leases. In addition, the Company has entered into purchasingarrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. Minimum lease and purchase commitments under noncancelable arrangements are as follows (in thousands): Lease expense was $1.0 million, $1.0 million and $0.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. The Company has an agreement with a supplier to provide API and finished products for Ablavar under which LMI is required to purchase futureminimum quantities through September 30, 2014. Annual purchases under this supply agreement were $1.7 million, $24.8 million and $15.0 million forthe years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, there were no unpaid purchases under thisagreement that were included in accounts payable and accrued expenses. As described in Note 9, "Accrued Expenses", the Company had accrued acontract loss of $7.5 million and $5.6 million at December 31, 2012 and 2011, respectively, associated with the portion of the committed purchases ofAblavar product under this agreement that the Company does not believe it would sell prior to expiry. On October 19, 2012, the Company entered into Amendment No. 2, effective as of October 15, 2012, to the Nordion Molybdenum-99 Purchaseand Supply Agreement, dated April 1, 2010. Beginning November 1, 2012, LMI is committed to purchasing a supply of Moly based upon a volumepercentage of LMI's total requirement through December 2015 at a fixed and determinable price. The Company has excluded these future purchasecommitments from the table above since there are no minimum122 Years Ended December 31, (in thousands) 2012 2011 2010 Foreign currency (losses) $(579)$(156)$(209)Tax indemnification income 346 1,380 1,250 Other income 189 205 273 Total other (expense) income, net $(44)$1,429 $1,314 Years ended December 31, OperatingLeases Other Total 2013 $990 $9,450 $10,440 2014 965 — 965 2015 588 — 588 2016 379 — 379 2017 289 — 289 2018 and thereafter 514 — 514 $3,725 $9,450 $13,175 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)14. Commitments (Continued)purchase commitments or payments under this agreement. Annual purchases under this agreement were $49.7 million, $59.4 million and $30.2 millionfor the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, $4.0 million and $6.8 million, respectively, ofpurchases were included in accounts payable and accrued expenses. On October 1, 2012, the Company entered into Amendment No. 3, effective as of October 1, 2012, to the NTP Sales Agreement, dated April 1,2009. Beginning October 1, 2012, LMI is committed to purchasing a supply of Moly based upon a volume percentage of LMI's total requirementthrough December 2017 at a fixed and determinable price. The Company has excluded these future purchase commitments from the table above sincethere are no minimum purchase commitments or payments under this agreement. Annual purchases under this agreement were $16.5 million,$15.0 million and $35.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, $1.4 millionand $1.8 million, respectively, of purchases were included in accounts payable and accrued expenses. On November 30, 2012, the Company entered into an Amended and Restated Manufacture and Supply Agreement, effective as of January 1, 2012for the purchase of lead casing mainly for TechneLite generators. Beginning January 1, 2012, LMI is committed to purchasing a supply of lead productbased upon a volume percentage of LMI's total requirement through December 2014 at a variable price. The Company has excluded these futurepurchase commitments from the table above since there are no minimum purchase commitments or payments under this agreement. Purchases under thisagreement were $4.2 million for the year ended December 31, 2012. At December 31, 2012, $0.2 million of purchases were included in accountspayable and accrued expenses. During 2012, the Company entered into manufacturing and supply agreements with JHS for the manufacture of DEFINITY, Cardiolite andNeurolite. When JHS has been approved by the FDA to manufacture a specific product (for example, in February 2013, the FDA informed theCompany that the JHS facility was approved to manufacture DEFINITY), the Company then becomes subject to percentage volume commitmentsbased on LMI's total requirement for each of the products. There are no minimum purchase commitments or payments under these agreements. Themanufacturing and supply agreements with JHS currently expire in 2017. The percentage volume purchase commitments were not yet effective atDecember 31, 2012.15. 401(k) Plan The Company maintains a qualified 401(k) plan (the "401(k) Plan") for its U.S. employees. The 401(k) Plan covers U.S. employees who meetcertain eligibility requirements. Under the terms of the 401(k) Plan, the employees may elect to make tax-deferred contributions through payrolldeductions within statutory and plan limits, and the Company may elect to make non-elective discretionary contributions. During the years endedDecember 31, 2011 and 2010, the Company matched employee contributions up to 4.5% of eligible compensation and did not contribute an additionalnon-elective discretionary match. Effective April 2012, the employer match was suspended and was subsequently reinstated in January 2013. TheCompany did not contribute any additional non-elective discretionary match during the year ended December 31, 2012. The Company may also makeoptional contributions to the 401(k) Plan for any plan year at its discretion. Expense recognized by the Company for matching contributions related tothe 401(k) Plan was $0.4 million, $1.9 million and $1.8 million for the years ended December 31, 2012, 2011 and 2010, respectively.123Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)16. Legal Proceedings 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 inthe past been, and may in the future be, subject to investigations by 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 outcome of litigation,regulatory or other proceedings cannot be predicted with certainty, and some lawsuits, claims, actions or proceedings may be disposed of unfavorably tothe Company. In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, could materiallyand adversely affect its financial condition or results of operations. On December 16, 2010, LMI filed suit against one of its insurance carriers seeking to recover business interruption losses associated with theNRU reactor shutdown and the ensuing global Moly supply shortage. The claim is the result of the shutdown of the NRU reactor in Chalk River,Ontario. The NRU reactor was off-line from May 2009 until August 2010 due to a "heavy water" leak in the reactor vessel. The defendant answered thecomplaint on January 21, 2011, denying substantially all of the allegations, presenting certain defenses and requesting dismissal of the case with costsand disbursements. On April 4, 2011, the parties had their first pre-trial conference in United States District Court for the Southern District of NewYork, and discovery has commenced and is continuing. The Company cannot be certain what amount, if any, or when, if ever, it will be able to recoverfor business interruption losses related to this matter.17. Related Party Transactions At December 31, 2011, LMI had an outstanding receivable from Holdings in the amount of $1.3 million, which was included in due from parent.In the third quarter of 2012, LMI reclassified the then outstanding receivable from Holdings of $1.2 million to stockholder's deficit since Holdings didnot and continues to not have assets sufficient to repay amounts due to LMI. The outstanding receivable from Holdings at December 31, 2012 was$1.4 million. In the third quarter of 2012, the Company entered into a Master Contract Research Organization Services Agreement with INC Research, LLC("INC") to provide clinical development services in connection with the flurpiridaz F 18 Phase 3 program. Avista Capital Partners and certain affiliatesare principal owners of both INC and the Company. The agreement has a term of five years, and the Company incurred costs associated with thisagreement of approximately $0.9 million during the year ended December 31, 2012. At December 31, 2012, $0.5 million was included in accountspayable and accrued expenses. Avista, the majority shareholder of LMI Holdings, provides certain advisory services to the Company pursuant to an advisory services andmonitoring agreement. The Company is required to pay an annual fee of $1.0 million and other reasonable and customary advisory fees, as applicable,paid on a quarterly basis. The initial term of the agreement is seven years. Upon termination, all remaining amounts owed under the agreement shallbecome due immediately. During the years ended December 31, 2012, 2011 and 2010, the Company incurred costs associated with this agreementtotaling $1.0 million, $1.0 million and $1.1 million, respectively. At December 31, 2012, $20,000 was included in accounts payable and accruedexpenses. At December 31, 2011, there were no outstanding amounts owed.124Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)17. Related Party Transactions (Continued) Effective as of June 30, 2009, the Company entered into a Master Services Agreement with Quintiles Commercial US, Inc. ("Quintiles") (formerlyknown as Innovex Inc.) to provide a contract sales force in connection with the launch and promotion of Ablavar. The Company incurred costsassociated with this contract of approximately $3.3 million for the year ended December 31, 2010. The Master Services Agreement was extended onJune 11, 2010 and was terminated as of December 31, 2010. A son of the Company's former Chairman of the Board was a Director of BusinessDevelopment for Quintiles during part of the term of the agreement. He left Quintiles in June 2010 prior to the contract extension and renegotiation. In March 2010, the Company engaged a tax and financial services consulting firm to advise the Company on compliance requirements under theSarbanes-Oxley Act. During the years ended December 31, 2012, 2011 and 2010, the Company incurred costs associated with this engagement ofapproximately $69,000, $0.1 million and $0.2 million, respectively. A son of the Company's former Chief Financial Officer is a partner of theconsulting firm. As of December 31, 2012, this firm is no longer a related party to the Company. The Company purchases inventory supplies from VWR Scientific ("VWR"). Avista Capital Partners and certain affiliates are principal owners ofboth VWR and the Company. The Company made purchases of approximately $0.3 million during each of the years ended December 31, 2012, 2011and 2010. At December 31, 2012 and 2011, $19,000 and $49,000, respectively, was included in accounts payable and accrued expenses. At December 31, 2012, the Company had $0.1 million due from an officer of the Company included in accounts receivable, net. These amountsrepresent federal and state tax withholdings paid by the Company on behalf of the officer.18. Segment Information The Company reports two operating segments, U.S. and International, based on geographic customer base. The results of these operating segmentsare regularly reviewed by our chief operating decision maker, the President and Chief Executive Officer. The Company's segments derive revenuesthrough the manufacturing, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascular diagnostic imaging.The U.S. segment comprises 72.9%, 75.3% and 74.8% of consolidated revenues in 2012, 2011 and 2010, respectively, and 86.7% and 85.5% ofconsolidated assets at December 31, 2012 and 2011, respectively. All goodwill has been allocated to the U.S. operating segment. Included in Cardiolite revenues are branded Cardiolite and generic sestamibi revenues, some of which is produced by the Company and some ofwhich is procured from time to time from third parties. Reflected in the 2011 table below, is the reclassification of $0.8 million of generic sestamibirevenues from "Other" revenues to "Cardiolite" revenues to conform with the current period presentation. In addition, in 2011 the Company incorrectlyincluded $102.0 million of intangible assets within the December 31, 2011 "Long-lived assets" segment disclosure below. The Company has restatedthe December 31, 2011 "Long-lived assets" segment disclosure to remove these intangible assets to conform with the current period presentation.125Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)18. Segment Information (Continued) Selected information for each business segment are as follows (in thousands):(in thousands) 2012 2011 2010 Revenues U.S. $229,926 $291,344 $295,352 International 78,094 87,927 89,210 Total revenue, including inter-segment 308,020 379,271 384,562 Inter-segment revenue (19,915) (22,979) (30,606) $288,105 $356,292 $353,956 Revenues from external customers U.S. $210,011 $268,365 $264,746 International 78,094 87,927 89,210 $288,105 $356,292 $353,956 Revenues by product DEFINITY $51,431 $68,503 $59,968 TechneLite 114,249 131,241 122,044 Cardiolite 34,995 66,127 77,422 Xenon 30,075 26,761 19,931 Other 57,355 63,660 74,591 $288,105 $356,292 $353,956 Geographical revenue U.S. $210,011 $268,365 $264,746 Canada 37,017 42,366 42,225 All other 41,077 45,561 46,985 $288,105 $356,292 $353,956 Operating income/(loss) U.S. $(11,104)$(25,881)$16,953 International 9,820 12,767 12,952 Total operating income, including inter-segment (1,284) (13,114) 29,905 Inter-segment operating income (loss) 534 (3,361) (511) Operating (loss) income (750) (16,475) 29,394 Interest expense (42,014) (37,658) (20,395)Loss on early extinguishment of debt — — (3,057)Interest income 252 333 179 Other (expense) income, net (44) 1,429 1,314 (Loss) income before income taxes $(42,556)$(52,371)$7,435 Depreciation and amortization U.S. $23,918 $28,912 $30,767 International 3,484 3,850 4,434 $27,402 $32,762 $35,201 Capital expenditures U.S. $7,353 $7,100 $7,005 International 567 594 1,330 126 $7,920 $7,694 $8,335 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)18. Segment Information (Continued) 19. Valuation and Qualifying Accounts Amounts charged to deductions from reserves represent the write-off of uncollectible balances.20. Guarantor Financial Information The Notes are guaranteed by Lantheus Intermediate and Lantheus MI Real Estate, LLC, one of Lantheus Intermediate's consolidated subsidiaries(the "Guarantor Subsidiary"). The guarantees are full and unconditional and joint and several. The following supplemental financial information setsforth, on a condensed consolidating basis, balance sheet information as of December 31, 2012 and 2011, and comprehensive (loss) income and cashflow information for the years ended December 31, 2012, 2011 and 2010 for Lantheus Intermediate, LMI, the Guarantor Subsidiary and LantheusIntermediate's other subsidiaries (the "Non-Guarantor Subsidiaries"). The supplemental financial information reflects the investments of LantheusIntermediate in LMI and Lantheus Intermediate's investment in the Guarantor Subsidiary and Non-Guarantor Subsidiaries using the equity method ofaccounting.127 2012 2011 Assets U.S. $279,808 $306,615 International 43,118 52,189 $322,926 $358,804 2012 2011 Long-lived assets U.S. $101,773 $103,500 International 7,800 8,952 $109,573 $112,452 (in thousands) Balance atBeginning ofFiscal Year Charge to CostsandExpenses(Recovery ofwrite-offs) DeductionsFromReserves Balance at Endof Fiscal Year Year ended December 31, 2012: Allowance for doubtful accounts $462 $(117)$(44)$301 Year ended December 31, 2011: Allowance for doubtful accounts $796 $301 $(635)$462 Year ended December 31, 2010: Allowance for doubtful accounts $738 $394 $(336)$796 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Consolidating Balance Sheet InformationDecember 31, 2012 (in thousands) LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Assets: Current assets Cash and cashequivalents $— $17,635 $— $13,960 $— $31,595 Accountsreceivable,net — 30,218 — 11,162 — 41,380 Intercompanyaccountsreceivable — 1,992 — — (1,992) — Inventory — 15,417 — 2,631 — 18,048 Income taxreceivable — 291 — 445 — 736 Deferred taxassets — — — 115 — 115 Other currentassets — 2,596 — 347 — 2,943 Total currentassets — 68,149 — 28,660 (1,992) 94,817 Property, plant andequipment, net — 78,578 23,195 7,800 — 109,573 Capitalizedsoftwaredevelopmentcosts, net — 2,230 — 4 — 2,234 Intangibles, net — 60,370 — 6,432 — 66,802 Goodwill — 15,714 — — — 15,714 Deferred financingcosts — 11,372 — — — 11,372 Investment insubsidiaries (174,353) 58,166 — — 116,187 — Other long-termassets — 22,192 — 222 — 22,414 Total assets $(174,353)$316,771 $23,195 $43,118 $114,195 $322,926 Liabilities and(deficit) equity: Currentliabilities Accountspayable $— $16,835 $— $2,110 $— $18,945 Intercompanyaccounts128payable — — — 1,992 (1,992) — Accruedexpenses — 26,592 — 3,097 — 29,689 Deferredrevenue — 7,229 — 91 — 7,320 Total currentliabilities — 50,656 — 7,290 (1,992) 55,954 Asset retirementobligations — 5,268 — 148 — 5,416 Long-term debt,net — 398,822 — — — 398,822 Deferred taxliability — — — 435 — 435 Other long-termliabilities — 36,378 — 274 — 36,652 Totalliabilities — 491,124 — 8,147 (1,992) 497,279 (Deficit) equity (174,353) (174,353) 23,195 34,971 116,187 (174,353) Totalliabilitiesand(deficit)equity $(174,353)$316,771 $23,195 $43,118 $114,195 $322,926 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Consolidating Balance Sheet InformationDecember 31, 2011 (in thousands) LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Assets: Current assets Cash and cashequivalents $— $20,474 $— $20,133 $— $40,607 Accountsreceivable,net — 27,872 — 12,128 — 40,000 Intercompanyaccountsreceivable — 1,414 — — (1,414) — Inventory — 12,269 — 2,496 — 14,765 Deferred taxassets — — — 93 — 93 Other currentassets — 2,349 — 313 — 2,662 Total currentassets — 64,378 — 35,163 (1,414) 98,127 Property, plant andequipment, net — 80,225 23,275 8,952 — 112,452 Capitalizedsoftwaredevelopmentcosts, net — 3,575 — 7 — 3,582 Intangibles, net — 74,775 — 7,974 — 82,749 Goodwill — 15,714 — — — 15,714 Deferred tax assets — — — — — — Deferred financingcosts — 13,141 — — — 13,141 Investment insubsidiaries (133,203) 66,983 — — 66,220 — Due from parent — 1,286 — — — 1,286 Other long-termassets — 31,659 — 94 — 31,753 Total assets $(133,203)$351,736 $23,275 $52,190 $64,806 $358,804 Liabilities and(deficit) equity: Currentliabilities Accountspayable $— $19,738 $— $2,272 $— $22,010 Intercompany129accountspayable — — — 1,414 (1,414) — Accruedexpenses — 17,780 — 3,169 — 20,949 Income taxpayable — 1,595 — (113) — 1,482 Deferred taxliability — — — — — — Deferredrevenue — 3,712 — 206 — 3,918 Total currentliabilities — 42,825 — 6,948 (1,414) 48,359 Asset retirementobligations — 4,737 — 131 — 4,868 Long-term debt,net — 398,629 — — — 398,629 Deferred taxliability — — — 931 — 931 Other long-termliabilities — 38,748 — 472 — 39,220 Totalliabilities — 484,939 — 8,482 (1,414) 492,007 (Deficit) equity (133,203) (133,203) 23,275 43,708 66,220 (133,203) Totalliabilitiesand(deficit)equity $(133,203)$351,736 $23,275 $52,190 $64,806 $358,804 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Consolidating Comprehensive (Loss) Income InformationYear Ended December 31, 2012 (in thousands) LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Revenues Net productrevenues $— $230,655 $— $66,614 $(19,915)$277,354 License and otherrevenues — 10,751 — — — 10,751 Total revenues — 241,406 — 66,614 (19,915) 288,105 Cost of goods sold — 171,257 — 59,707 (19,915) 211,049 Loss on firm purchasecommitment — 1,859 — — — 1,859 Total cost ofgoods sold — 173,116 — 59,707 (19,915) 212,908 Gross profit — 68,290 — 6,907 — 75,197 Operating expenses General andadministrativeexpenses — 30,112 80 2,328 — 32,520 Sales and marketingexpenses — 34,220 — 3,217 — 37,437 Research anddevelopmentexpenses — 40,457 — 147 — 40,604 Proceeds frommanufacturer — (34,614) — — — (34,614) Operatingincome(loss) — (1,885) (80) 1,215 — (750)Interest expense — (42,014) — — — (42,014)Interest income — 1 — 251 — 252 Other income(expense) — 110 — (154) — (44)Equity in earnings(losses) of affiliates (42,001) 1,242 — — 40,759 — (Loss) incomebefore incometaxes (42,001) (42,546) (80) 1,312 40,759 (42,556)Provision (benefit) forincome taxes — (545) — (10) — (555) Net (loss)income (42,001) (42,001) (80) 1,322 40,759 (42,001) Foreign currency130translation, net oftaxes — 200 — 764 — 964 Equity in othercomprehensiveincome (loss) ofsubsidiaries 964 764 — — (1,728) — Total othercomprehensive(loss) income $(41,037)$(41,037)$(80)$2,086 $39,031 $(41,037) Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Consolidating Comprehensive (Loss) Income InformationYear Ended December 31, 2011 (in thousands) LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Revenues Net productrevenues $— $293,775 $— $74,966 $(22,979)$345,762 License and otherrevenues — 10,530 — — — 10,530 Total revenues — 304,305 — 74,966 (22,979) 356,292 Cost of goods sold — 213,121 — 65,324 (22,979) 255,466 Loss on firmpurchasecommitment — 5,610 — — — 5,610 Total cost ofgoods sold — 218,731 — 65,324 (22,979) 261,076 Gross profit — 85,574 — 9,642 — 95,216 Operating expenses General andadministrativeexpenses — 29,335 80 2,642 — 32,057 Sales andmarketingexpenses — 34,665 — 4,024 — 38,689 Research anddevelopmentexpenses — 40,387 — 558 — 40,945 Operatingincome(loss) — (18,813) (80) 2,418 — (16,475)Interest expense — (37,658) — — — (37,658)Interest income — 1 — 332 — 333 Other income(expense) — 1,573 — (144) — 1,429 Equity in earnings(losses) of affiliates (136,469) 3,288 — — 133,181 — (Loss) incomebefore incometaxes (136,469) (51,609) (80) 2,606 133,181 (52,371)Provision (benefit)for income taxes — 84,860 (28) (734) — 84,098 Net (loss)income (136,469) (136,469) (52) 3,340 133,181 (136,469) Foreign currencytranslation — — — (104) — (104)131Income tax expenserelated to items ofothercomprehensive(loss) income — (233) — — — (233) Total othercomprehensive(loss) income $(136,469)$(136,702)$(52)$3,236 $133,181 $(136,806) Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Consolidating Comprehensive (Loss) Income InformationDecember 31, 2010 (in thousands) LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Revenues Net productrevenues $— $300,084 $— $76,269 $(30,606)$345,747 License and otherrevenues — 8,209 — — — 8,209 Total revenues — 308,293 — 76,269 (30,606) 353,956 Cost of goods sold — 171,061 — 63,551 (30,606) 204,006 Gross profit — 137,232 — 12,718 — 149,950 Operating expenses General andadministrativeexpenses — 27,113 80 2,849 — 30,042 Sales andmarketingexpenses — 41,234 — 4,150 — 45,384 Research anddevelopmentexpenses — 44,638 — 492 — 45,130 Operatingincome(loss) — 24,247 (80) 5,227 — 29,394 Interest expense — (20,395) — — — (20,395)Interest income — 2 — 177 — 179 Loss on earlyextinguishment ofdebt — (3,057) — — — (3,057)Other income(expense) — 1,599 — (285) — 1,314 Equity in losses(earnings) ofaffiliates 4,970 3,565 — — (8,535) — Income (loss)before incometaxes 4,970 5,961 (80) 5,119 (8,535) 7,435 Provision (benefit)for income taxes — 991 (28) 1,502 — 2,465 Net income(loss) 4,970 4,970 (52) 3,617 (8,535) 4,970 Foreign currencytranslation — — — 1,150 — 1,150 132Income tax expenserelated to items ofothercomprehensive(loss) income — — — — — — Total othercomprehensive(loss) income $4,970 $4,970 $(52)$4,767 $(8,535)$6,120 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Condensed Consolidating Cash Flow InformationYear Ended December 31, 2012 LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Cashprovidedbyoperatingactivities $— $3,829 $— $4,568 $(7,874)$523 Cash flowsfrominvestingactivities Capitalexpenditures — (7,353) — (567) — (7,920)Purchase ofcertificate ofdeposit — (225) — — — (225)Proceeds fromdividend — 2,949 — — (2,949) — Cashprovidedby (usedin)investingactivities — (4,629) — (567) (2,949) (8,145) Cash flowsfromfinancingactivities Payments onnote payable — (1,530) — — — (1,530)Payments ofdeferredfinancingcosts — (442) — — — (442)Due fromparent — (67) — — — (67)Payment ofdividend — — — (10,823) 10,823 — Cash usedinfinancingactivities — (2,039) — (10,823) 10,823 (2,039) 133Effect offoreignexchangerate on cash — — — 649 — 649 Decrease incash andcashequivalents — (2,839) — (6,173) — (9,012)Cash and cashequivalents,beginning ofyear — 20,474 — 20,133 — 40,607 Cash and cashequivalents,end of year $— $17,635 $— $13,960 $— $31,595 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Condensed Consolidating Cash Flow InformationYear Ended December 31, 2011 LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Cashprovidedbyoperatingactivities $600 $15,409 $— $7,011 $(600)$22,420 Cash flowsfrominvestingactivities Capitalexpenditures — (7,023) — (671) — (7,694)Proceeds fromdividend 149,400 — — — (149,400) — Cashprovidedby (usedin)investingactivities 149,400 (7,023) — (671) (149,400) (7,694) Cash flowsfromfinancingactivities Proceeds fromissuance ofdebt — 152,250 — — — 152,250 Consentsolicitationfee — (3,750) — — — (3,750)Payments ofdeferredfinancingcosts — (5,491) — — — (5,491)Proceeds fromline of credit — 10,000 — — — 10,000 Payments online of credit — (10,000) — — — (10,000)Payment ofdividend (150,000) (150,000) — — 150,000 (150,000) Cash used134infinancingactivities (150,000) (6,991) — — 150,000 (6,991) Effect offoreignexchangerate on cash — — — (134) — (134) Increase incash andcashequivalents — 1,395 — 6,206 — 7,601 Cash and cashequivalents,beginning ofyear — 19,079 — 13,927 — 33,006 Cash and cashequivalents,end of year $— $20,474 $— $20,133 $— $40,607 Table of ContentsLantheus MI Intermediate, Inc. and subsidiariesNotes to Consolidated Financial Statements (Continued)20. Guarantor Financial Information (Continued)Condensed Consolidating Cash Flow InformationDecember 31, 2010 LantheusIntermediate LMI GuarantorSubsidiary Non-GuarantorSubsidiaries Eliminations Total Cash provided byoperatingactivities $65,698 $22,344 $— $6,055 $(67,780)$26,317 Cash flows frominvestingactivities Capital expenditures — (7,005) — (1,330) — (8,335)Proceeds fromdividend 98,078 — — — (98,078) — Acquisition ofintangibles — (215) — — — (215) Cash provided by(used in)investingactivities 98,078 (7,220) — (1,330) (98,078) (8,550) Cash flows fromfinancingactivities Proceeds fromissuance of debt — 250,000 — — — 250,000 Payment of termloan — (93,649) — — — (93,649)Payments ofdeferred financingcosts — (10,125) — — — (10,125)Payment of dividend (163,776) (163,776) — (2,082) 165,858 (163,776) Cash used infinancingactivities (163,776) (17,550) — (2,082) 165,858 (17,550) Effect of foreignexchange rate oncash — — — 1,309 — 1,309 (Decrease)Increasein cash and cashequivalents — (2,426) — 3,952 — 1,526 Cash and cashequivalents,beginning of year — 21,505 — 9,975 — 31,480 Cash and cash21. Subsequent Events On January 23, 2013, Jeffrey Bailey was appointed as President and Chief Executive Officer of LMI, and as a director of LMI, LantheusIntermediate and Holdings, replacing Donald R. Kiepert who had served in the same positions. The Company and Mr. Bailey are currently finalizing theterms of his employment agreement with the Company. In March 2013, the Company entered into an agreement with Institute for Radioelements ("IRE") (the "IRE Agreement"), which containsincreasing percentage volume purchase requirements for Moly. IRE previously supplied the Company with Moly as a subcontractor under the NTPagreement. Under the terms of the five year IRE Agreement, which expires on December 31, 2017, IRE is expected to provide certain increasedquantities of Moly during periods of supply shortage or failure. The IRE Agreement also provides for an increased supply of Moly derived from LEUtargets upon IRE's completion of its ongoing conversion program to modify its facilities and processes in accordance with Belgian nuclear securitycommitments. The IRE Agreement allows for termination upon the occurrence of certain events, including failure by IRE to provide our requiredamount of Moly, material breach of any provision by either party, bankruptcy of either party and force majeure events.135equivalents, end ofyear $— $19,079 $— $13,927 $— $33,006 Table of ContentsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.Item 9A. Controls and Procedures Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under theExchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls andprocedures were effective as of the end of the period covered by this report.Management's Annual Report on Internal Control Over Financial Reporting Our management, with the participation of our principal executive officer and principal financial officer, is responsible for establishing andmaintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, asamended (the "Exchange Act"). Our internal control system is designed to provide reasonable assurance to our management and Board of Directorsregarding the preparation and fair presentation of published financial statements. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making its assessment ofinternal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the TreadwayCommission in Internal Control—Integrated Framework. Based on this assessment, management concluded that, as of December 31, 2012, ourinternal control over financial reporting is effective. We do not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting inthis annual report. Our report was not subject to attestation by the Company's independent registered public accounting firm pursuant to the Dodd-FrankWall Street Reform and Consumer Protection Act signed into law on July 21, 2010 ("Dodd-Frank"). Dodd-Frank provides a permanent exemptionfrom the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 for those entities that are neither large accelerated filers nor acceleratedfilers. As a result, we were not required to have our independent registered public accounting firm attest to, and report on, internal controls overfinancial reporting.Changes in Internal Control Over Financial Reporting There have been no changes during the quarter ended December 31, 2012 in our internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.Item 9B. Other Information None.136Table of ContentsPART III All information contained in Part III is included in this annual report and not incorporated by reference because we do not have any public equitythat requires us to file a definitive proxy statement.Item 10. Directors, Executive Officers and Corporate Governance The following table sets forth the names, ages and positions of the executive officers and directors of Holdings and other key employees ofLantheus, as of March 28, 2013. Holdings is our ultimate parent company, and the Board of Directors of Holdings is the primary board that takes actionwith respect to our business and strategic planning. Set forth below is a description of the business experience of the foregoing persons. Brian. A. Markison is the Non-Executive Chairman of the Board of Directors of Holdings, Lantheus Intermediate and LMI. Mr. Markison joinedthe Board of Holdings in September 2012 and was elevated to Chairman in January 2013. Brian Markison joined Avista as a Healthcare IndustryExecutive in September 2012. Mr. Markison is a seasoned executive with more than 30 years of operational, marketing, commercial development andsales experience with international pharmaceutical companies. He most recently held the position of President and Chief Executive Officer and memberof the Board of Directors of Fougera Pharmaceuticals Inc., a specialty pharmaceutical company in dermatology, prior to its sale to Sandoz, the genericsdivision of Novartis AG. Before leading Fougera, Mr. Markison was Chairman and Chief Executive Officer of King Pharmaceuticals, which he joinedas Chief Operating Officer in March 2004, and was promoted to President and CEO later that year, and elected Chairman in 2007. Prior to joining King,Mr. Markison held various senior leadership positions at Bristol-Myers Squibb, including President of Oncology, Virology and Oncology TherapeuticsNetwork; President of Neuroscience, Infectious Disease and Dermatology; and Senior Vice President, Operational Excellence and Productivity.Mr. Markison also serves on the Board of Directors of Immunomedics, Inc., PharmAthene, Inc. and Rosetta Genomics, Ltd., where he also serves asBoard Chairman. He is also a Director of the Komen Foundation for South / Central New Jersey, the College of New Jersey and the PenningtonSchool. Mr. Markison holds a BS degree from Iona College. Mr. Markison was chosen as a Director because of his strong commercial and operationalmanagement background and extensive experience in the pharmaceutical industry. Jeffrey Bailey became our new President and Chief Executive Officer effective January 23, 2013 and is a director of Holdings, LantheusIntermediate and LMI. Mr. Bailey has more than 26 years of137Name Age PositionBrian Markison 52 Director and Non-Executive Chairman of the BoardJeffrey Bailey 50 Director, President and Chief Executive OfficerJeffrey E. Young 40 Chief Financial Officer and TreasurerWilliam Dawes 41 Vice President, Manufacturing and OperationsMichael Duffy 52 Vice President, General Counsel and SecretaryMichael Heslop 53 Vice President, InternationalPhilip Lockwood 64 Vice President, Human ResourcesCesare Orlandi 63 Chief Medical OfficerSimon Robinson 53 Vice President, Research and Pharmaceutical DevelopmentCyrille Villeneuve 61 Chief Commercial OfficerNigel Williams 53 Vice President, QualityDavid Burgstahler 44 DirectorSamuel Leno 67 DirectorPatrick O'Neill 63 DirectorSriram Venkataraman 40 DirectorTable of Contentsdiverse pharmaceutical leadership experience across multiple functions, including sales, marketing, manufacturing, supply chain and operations. Prior tojoining Lantheus, Mr. Bailey served from July 2011 to August 2012 as Chief Operating Officer and a member of the Executive Committee of FougeraPharmaceuticals, Inc. prior to its sale to Sandoz. Before joining Fougera, from April 2010 to June 2011, Mr. Bailey served as the Chief CommercialOfficer of King-Pfizer Pharmaceuticals. From January 2008 to April 2010, he worked with Novartis Pharmaceuticals as President and GeneralManager of the Northwest Operating Unit, and from June 1984 to June 2006 he served in many roles with increasing responsibilities acrossmanufacturing operations, commercial operations and general management at the Johnson & Johnson Family of Companies. Mr. Bailey holds aBachelor of Arts in Business from Rutgers University. Mr. Bailey was chosen to serve as a Director because of his extensive experience in thehealthcare industry in senior commercial and operating positions. As our President and Chief Executive Officer and the only management representativeon our Board of Directors, Mr. Bailey has significant knowledge of the pharmaceutical industry and provides valuable insight into a variety of businessissues and challenges we face. Jeffrey E. Young was promoted to the role of Chief Financial Officer effective January 3, 2012 to succeed Robert Gaffey. Mr. Young waspreviously our Vice President—Finance, Chief Accounting Officer and Assistant Treasurer in 2011. Prior to becoming a Vice President in 2011, heserved as our Global Controller and Assistant Treasurer since November 2008. Prior to joining us, Mr. Young held various positions at CriticalTherapeutics, Inc., a biopharmaceutical company, from 2005 to 2008, most recently as Chief Accounting Officer, Vice President of Finance andTreasurer. Mr. Young also held positions of increasing responsibility at PerkinElmer Inc. from 2003 to 2005 and at PricewaterhouseCoopers LLP from1998 to 2002. Mr. Young is a certified public accountant and holds a Bachelor of Science in Business Administration from Georgetown University. William Dawes is our Vice President, Manufacturing and Operations since November 2010. Mr. Dawes held the position of Vice President,Manufacturing & Supply Chain from January 2008 to November 2010. From 2005 to 2008, Mr. Dawes served as General Manager, Medical ImagingTechnical Operations, Interim General Manager, Medical Imaging Technical Operations, and Director, Engineering and Maintenance for BMSMI.Mr. Dawes began his career with DuPont Merck Pharmaceuticals. He holds a bachelor's degree in Engineering from Hofstra University. Michael Duffy is our Vice President, General Counsel and Secretary, a position he has held since January 2008. From 2002 to 2008, he served asSenior Vice President, General Counsel and Secretary of Point Therapeutics, Inc., a Boston-based biopharmaceutical company. Between 1999 and2001, Mr. Duffy served as Senior Vice President, General Counsel and Secretary of Digital Broadband Communications, Inc., a competitive localexchange carrier which filed for protection under Chapter 11 of the United States Bankruptcy Code in December 2000. After the filing, Mr. Duffyserved as the court-appointed liquidating trustee of the bankruptcy estate. From 1996 to 1999, Mr. Duffy served as Senior Vice President, GeneralCounsel and Secretary of ETC w/tci, a sub-portfolio of TCI Ventures, Inc./Liberty Media Corporation. Mr. Duffy began his legal career with the lawfirm Ropes & Gray and holds law degrees from the University of Pennsylvania and Oxford University and a bachelor's degree in History of Sciencefrom Harvard College. Mr. Duffy is also the current Chairman of the Board of Directors of CORAR, the Council on Radionuclides andRadiopharmaceuticals, a national trade association for the radiopharmaceutical industry. Michael Heslop joined Lantheus in June 2012 as our Vice President, International. Mr. Heslop possesses more than 25 years of generalmanagement and commercial experience. Prior to joining Lantheus, Mr. Heslop was General Manager and Senior Vice President, BiosurgicalSpecialties at Genzyme Corporation from 2009 to 2011. While at Genzyme, Mr. Heslop also held the positions of General Manager and Senior VicePresident, Endocrinology from 2003 to 2009, and Vice President, Global Marketing, PGH Business from 2000 to 2003. Previously Mr. Heslop heldthe positions of Vice President, Business Development at Sciptgen Pharmaceuticals from 1998 to 2000 and Director,138Table of ContentsMarketing Anti-Infectives at Glaxo Welcome USA from 1996 to 1998. Mr. Heslop received a B.S. degree in Biology from McGill University and anM.B.A. from Concordia University. Philip Lockwood is our Vice President, Human Resources, a position he has held since February 2008. Prior to that, he served as Vice President,HR, for Indevus Pharmaceuticals, Inc. and from 2003 through 2007, he held a senior HR position at EMD Serono and its predecessor, Serono Inc.Mr. Lockwood holds a Bachelor of Arts from Siena College. Dr. Cesare Orlandi joined Lantheus in March 2013 as Chief Medical Officer. Dr. Orlandi brings more than 20 years of diverse pharmaceuticalindustry experience. Prior to joining Lantheus, Dr. Orlandi served from January 2012 until February 2013 as Senior Vice President and Chief MedicalOfficer of TransTech Pharma, Inc., a clinical stage pharmaceutical company focused on discovery and development of human therapeutics. From 2007until 2011, Dr. Orlandi served as Senior Vice President and Chief Medical Officer of Cardiokine, Inc., a specialty pharmaceutical company developinghospital products for cardiovascular indications. From 1998 until 2007, Dr. Orlandi served, in among other positions, as Vice President, Global ClinicalDevelopment of Otsuka Pharmaceuticals, a large Japanese pharmaceutical company. Earlier in his career, Dr. Orlandi served in increasing roles ofclinical research responsibility at Medco Research, Inc. and the Radiopharmaceutical Division of The Du Pont Merck Pharmaceutical Company, apredecessor organization to Lantheus, and The Upjohn Company. Dr. Orlandi received his medical degree from the University of Pavia Medical Schoolin Pavia, Italy. He is currently an Adjunct Assistant Professor of Medicine at Tufts University School of Medicine in Boston, Massachusetts, and he isa founding member of the American Society of Nuclear Cardiology, and a Fellow of the American College of Cardiology, the European Society ofCardiology and the American College of Angiology. Dr. Simon Robinson is our Vice President, Research and Pharmaceutical Development, a position he has held since February 2010. Dr. Robinsonwas our Senior Director Discovery Research from 2008 to 2010 and our Director Discovery Biology and Veterinary Sciences from 2001 to 2008. Priorto joining us, he held research positions at BMS, Sphinx Pharmaceuticals, BASF and Dupont Pharmaceuticals. He holds a Ph.D. and B.Sc. inPharmacology from the University of Leeds, England and did post-doctoral training at the University of Wisconsin Clinical Cancer Center. Nigel Williams joined Lantheus Medical Imaging in April 2012 as Vice President, Quality. Mr. Williams brings more than 30 years of industryexperience in manufacturing, quality and supply of a wide range of healthcare and diagnostic products. Prior to joining Lantheus, Mr. Williams servedas Head of Quality for Merck KGaA Chemicals Operations from 2001- 2012, Vice President, Quality Management at EMD Millipore from 2009 - 2011 and Director of Manufacturing for Millipore Corporation from 2006 to 2009. He held the roles of Site General Manager from 2005 to 2006 andDirector of operations from 2004 to 2005 for Celliance Limited. Mr. Williams received a B.S. honors degree in Applied Biology from BrunelUniversity. Cyrille Villeneuve was promoted to the role of Chief Commercial Officer in October 2011, responsible for global sales and marketing. PreviouslyMr. Villeneuve was our Vice President and General Manager, International, a position he held since November 2008. Prior to joining us in 1985,Mr. Villeneuve held positions at the Montreal Heart Institute and Hospital Hotel-Dieu Montreal. He holds a Bachelor of Arts from Montreal Universityand a Master of Public Administration from the Ecole Nationale Administration Publique. David Burgstahler is a Director of Holdings, Lantheus Intermediate and LMI and the Chairman of our Compensation Committee, serving on ourBoard of Directors of each entity since January 2008. He is a founding partner of Avista since 2005 and since 2009, has been President of Avista. Priorto forming Avista, he was a partner of DLJMB. He was at DLJ Investment Banking from 1995 to 1997 and at DLJMB from 1997 through 2005. Priorto that, he worked at Andersen Consulting (now known as Accenture) and McDonnell Douglas (now known as Boeing). He holds a Bachelor ofScience in139Table of ContentsAerospace Engineering from the University of Kansas and a Master of Business Administration from Harvard Business School. He currently serves asa Director of AngioDynamics Inc. (NASDAQ: ANGO), Armored AutoGroup Inc., ConvaTec Inc., INC Research Holdings, Inc., StrategicPartners, Inc., Visant Corporation and WideOpenWest, LLC. He previously served as a Director of Warner Chilcott plc (NASDAQ: WCRX) andBioReliance Holdings, Inc. Mr. Burgstahler was chosen as a Director because of his strong finance and management background, with over 18 years inbanking and private equity finance. He has extensive experience serving as a director for a diverse group of private and public companies. Samuel Leno is a Director of Holdings, Lantheus Intermediate and LMI and the Chairman of our Audit Committee, serving on the Board ofDirectors of Holdings since May 2012. Mr. Leno, is a strategic executive with more than 40 years of experience with complex multinational companies.He most recently held the positions of Executive Vice President and Chief Operations Officer at Boston Scientific. He previously served as ExecutiveVice President, Finance and Information Systems and Chief Financial Officer. He retired from Boston Scientific in December 2011. Prior to joiningBoston Scientific, Mr. Leno served as Executive Vice President, Finance and Corporate Services and Chief Financial Officer at Zimmer Holdings, Inc.and Chief Financial Officer positions at Arrow Electronics, Inc., Corporate Express, Inc. and Coram Healthcare. Previously, he held a variety of seniorfinancial positions at Baxter International, Inc. and American Hospital Supply Corporation. He is a member of the Board of Directors and the AuditCommittee of Omnicare and is a member of the Advisory Board of the Harvard Business School Healthcare Initiative. He previously served on theBoard and Audit Committee of Tomotherapy, Inc. Mr. Leno served as a Lieutenant in the United States Navy and is a Vietnam veteran. He holds aBachelor of Science in Accounting from Northern Illinois University and an MBA from Roosevelt University. Mr. Leno was chosen as a Directorbecause of his finance expertise and industry background. Dr. Patrick O'Neill is a Director of Holdings, Lantheus Intermediate and LMI, serving on the Board of Directors of Holdings since February2008. He is also an industry advisor for Avista, a position he has held since 2008. Prior to joining Avista, he was at Johnson & Johnson from 1976 to2006, holding Research and Development and New Business Development leadership positions in Johnson & Johnson's pharmaceutical business, theirMedical Devices and Diagnostics Group, and the surgical and interventional cardiology/radiology business units until he retired in February 2006. Heserved as Executive in Residence at New Enterprise Associates from March 2006 through 2007. He holds a Bachelor of Science in Pharmacy andPh.D. in Pharmacology from The Ohio State University. He currently serves as Director of Navilyst Medical, Inc. and OptiNose US Inc. Dr. O'Neillwas chosen as a Director because of his experience in the pharmaceutical industry. He has participated directly in the development of pharmaceuticalproducts for other companies, which provides valuable insight into strategic business decisions. Sriram Venkataraman is a Director of Holdings, Lantheus Intermediate and LMI, serving on the Board of Directors of Holdings since November2010. He is also a Partner of Avista, having joined in May 2007. Prior to joining Avista, Mr. Venkataraman was a Vice President in the HealthcareInvestment Banking group at Credit Suisse Group AG from 2001 to 2007. Previously, he worked at GE Healthcare (formerly known as GE MedicalSystems) from 1996 to 1999. Mr. Venkataraman holds a Master of Science in Electrical Engineering from the University of Illinois, Urbana-Champaign and a Master of Business Administration with Honors from The Wharton School. He currently serves as a Director ofAngioDynamics, Inc. (Nasdaq: ANGO) and OptiNose Inc. Mr. Venkataraman was chosen as a Director because of his experience in the healthcareindustry and his strong finance and management background. He also has experience serving as a director of private and public companies.140Table of ContentsFormer Executives included in our Named Executive Officers Don Kiepert was our President and Chief Executive Officer, a position he held from January 2008 to January 2013. He was also a Director ofHoldings, Lantheus Intermediate and LMI, serving from January 2008 to January 2013. Mr. Kiepert ceased being our President and Chief ExecutiveOfficer effective January 23, 2013 (see "Item 11—Executive Compensation—Potential Payment Upon Termination or Change of Control—Employment Agreements and Arrangements" for additional details). Robert Gaffey ceased being our Chief Financial Officer effective January 3, 2012 (see "Item 11—Executive Compensation—Potential PaymentUpon Termination or Change of Control—Employment Agreements and Arrangements" for additional details).Board of Directors The Board of Directors is responsible for the management of our business. The Board of Directors is comprised of six directors. Directors whoare elected annually serve in their position until their next election and until their successors are elected and qualified. Pursuant to the management andemployee Shareholders Agreements described in "Item 13—Certain Relationships and Related Transactions, and Director Independence—Transactionswith Related Persons—Shareholders Agreement," Avista has designation rights with respect to the composition of the Holdings board of directors andAvista is entitled to majority representation on any committee that the board creates. Messrs. Pickering, Kiepert, Burgstahler, O'Neill and Venkataramanwere appointed pursuant to these agreements. Mr. Larry Pickering, our former Chairman retired from the Board in September 2012. Mr. DonaldKiepert, our former President & CEO, resigned from the Board in January 2013. Messrs. Markison and Leno were appointed to the Board inSeptember 2012 and May 2012, respectively. Although not formally considered by the Board of Directors of Holdings because our securities are not registered or traded on any nationalsecurities exchange, we believe that Mr. Markison and Mr. Leno would be considered independent for our Board of Directors and that Mr. Leno wouldbe considered independent for our Audit Committee and that Mr. Markison would be considered independent for our Compensation Committee basedupon the listing standards of the New York Stock Exchange.Board Committees The Audit Committee of Holdings is composed of Messrs. Leno and Venkataraman. Mr. Leno, the Chairman of the Audit Committee, has beendesignated by the Board of Directors of Holdings as our "audit committee financial expert." The Compensation Committee of Holdings is composed ofMessrs. Burgstahler and Markison. Additionally, because we are a closely-held company with no public trading market for our common stock, theBoard of Directors has not deemed it necessary for us to have a standing nominating committee or committee performing a similar function. Presently,all directors participate in the consideration of director nominees.Code of Ethics We have a code of conduct and ethics for all of our employees, including our principal executive, financial and accounting officers and ourcontroller, or persons performing similar functions, and each of the non-employee directors on our Board of Directors. Our Company Code of Conductis currently available on our website, www.lantheus.com. The information on our web site is not part of, and is not incorporated into, this annual report.We intend to provide any required disclosure of any amendment to or waiver from such code that applies to our principal executive officer, principalfinancial officer, principal accounting officer or controller, or persons performing similar functions, in a Current Report on Form 8-K filed with theCommission.141Table of ContentsItem 11. Executive Compensation Compensation Discussion and Analysis The Compensation Committee is generally charged with the oversight of our executive compensation program. The Compensation Committee iscomposed of Messrs. Burgstahler and Markison. Responsibilities of the Compensation Committee include the review and approval of the followingitems:•executive compensation strategy and philosophy; •compensation arrangements for executive management; •design and administration of the annual incentive plan; •design and administration of our equity incentive plans; •executive benefits; and •any other compensation or benefits related items deemed appropriate by the Compensation Committee. In addition, the Compensation Committee considers the proper alignment of executive pay with our values and strategy by overseeing executivecompensation policies, measuring and assessing corporate performance and taking into account our Chief Executive Officer's performance assessmentof the Company. The Compensation Committee engaged the services of an independent compensation consultant, Pearl Meyers & Partners, to assist in the strategicreview of programs and arrangements relating to executive compensation and performance. The following executive compensation discussion and analysis describes the principles underlying our executive compensation policies anddecisions including material elements of compensation for our named executive officers. Our named executive officers for 2012 were:•Donald Kiepert, (former) President and Chief Executive Officer; •Jeffrey Young, Chief Financial Officer and Treasurer; •Cyrille Villeneuve, Chief Commercial Officer; •William Dawes, Vice President, Manufacturing & Operations; •Nigel Williams, Vice President, Quality; and •Robert Gaffey, (former) Chief Financial Officer and Treasurer. As discussed in more detail below, the material elements and structure of our executive compensation program were negotiated and determined inconnection with the Acquisition.Compensation Philosophy and Objectives The core philosophy of our executive compensation program is to support our primary objective of providing innovative medical imaging solutionsto improve the treatment of human disease while enhancing our long-term value to our stockholders. Specifically, the Compensation Committee believes the most effective executive compensation program for all executives, including namedexecutive officers:•reinforces our strategic initiatives; •aligns the economic interests of our executives with those of our stockholders; and142Table of Contents•encourages attraction and long-term retention of key contributors. The Compensation Committee considers the following factors when determining compensation for our executive officers, including our namedexecutive officers:•the executive's individual performance during the year; •his or her projected role and responsibilities for the coming year; •his or her actual and potential impact on the successful execution of our strategy; •recommendations from our President and Chief Executive Officer and any independent compensation consultants, if used; •an officer's prior compensation, experience, and professional status; •the requirements of any applicable employment agreements; •relative pay among the executive officers; and •employment market conditions and compensation practices within our peer group. The weighting of these and other relevant factors is determined on an individual basis for each executive upon consideration of the relevant factsand circumstances. The Compensation Committee is committed to a strong, positive link between our objectives and our compensation practices. Our compensationphilosophy also allows for flexibility in establishing executive compensation based on an evaluation of information prepared by management or otheradvisors and other objective and subjective considerations deemed appropriate by the Compensation Committee, subject to any contractual agreementswith our executives. This flexibility is important to ensure our compensation programs are competitive and that our compensation decisionsappropriately reflect the unique contributions and characteristics of the Company executive officers.Compensation Benchmarking The Compensation Committee ensures executives' pay levels are materially consistent with our compensation philosophy and objectives describedabove by conducting annual assessments of competitive executive compensation. We utilize data from publicly traded, similarly-sized pharmaceutical,biopharmaceutical and other life science companies as our primary source for competitive pay levels. However, the Compensation Committee does notsupport rigid adherence to benchmarks or compensatory formulas and strives to make compensation decisions which effectively support ourcompensation objectives and reflect the unique attributes of the Company and each executive. For 2012 compensation for our executive officers, including our named executive officers, the Compensation Committee reviewed executivecompensation data provided by Radford Life Sciences Survey, a nationally recognized survey source. The Compensation Committee looked atcompensation data for life sciences companies, which most closely approximated our size, and, to the extent possible, had comparable position matchesand compensation components. For 2012 compensation for our President and Chief Executive Officer, data were also collected from a review of the following industry peers: Acorda Therapeutics, Analogic, Angiodynamics, Arthrocare, Auxilium Pharmaceuticals, Greatbatch, Hi Tech Pharmaceuticals, ICU Medical,Impax Laboratories, Integra Lifesciences, Masimo, The Medicines Company, Merit Medical Systems, Myriad Genetics, Nordion, Nuvasive, SymmetryMedical, Thoratec, Viropharma and Volcano. The data used was from the most recent proxy available as of July 2012. This peer group had meanrevenue of $409 million and a mean enterprise value of143Table of Contents$953 million. This peer group selection included 20 life science and specialty pharmaceutical companies. It was selected to best reflect similar sizedcompanies in our industry with mature products, and full field sales operations.Employment Agreements In connection with the Acquisition, we entered into an employment agreement with Mr. Kiepert. We are currently finalizing the terms of ouremployment agreement with Mr. Bailey. Our other named executive officers are not subject to employment agreements. Among other things, these agreements set the executives' compensation terms, their rights upon a termination of employment and restrictivecovenants relating to non-competition, non-solicitation, and confidentiality. See "—Potential Payment Upon Termination or Change of Control—Employment Agreements and Arrangements."Mr. Bailey's Compensation Package As of January 23, 2013, Mr. Bailey succeeded Mr. Kiepert as our President & CEO. As such, Mr. Bailey's compensation is not reported in the2012 compensation tables. While we are still finalizing the terms of our employment agreement with Mr. Bailey, we are currently paying him a salary atan annualized amount of $450,000.Elements of Compensation Our compensation program is heavily weighted towards performance based compensation, reflecting our philosophy of increasing our long-termvalue and supporting strategic imperatives, as discussed above. Total compensation and other benefits consist of the following elements:•base salary; •annual non-equity incentive compensation; and •long-term equity incentives in the form of stock options. We do not offer a defined benefit pension plan. The Compensation Committee supports a competitive employee benefit package, but does notsupport executive perquisites or other supplemental programs targeted to executives.Base Salary Base salaries are intended to provide reasonable and competitive fixed compensation for regular job duties. In response to the impact of the supplychain challenges on the financial earnings in 2012, the Compensation Committee did not approve any merit increases to salaries from 2011 to 2012. Our general practice with respect to cash compensation is that executive base salaries and annual cash incentive compensation values shouldgenerally position total annual cash compensation at or below market median of similarly-sized life science companies. See "—CompensationDiscussion and Analysis—Compensation Benchmarking." Cash compensation is generally below the median for those who were awarded larger optionawards and more competitively aligned for recent hires. The salaries of all but one of our named executive officers were in the lowest quartile relative toour benchmarks.144Table of Contents As of December 31, 2012, the base salaries of Messrs. Kiepert, Young, Villeneuve, Dawes and Williams were as follows:Annual Cash Incentive Compensation Our 2012 Executive Leadership Team Incentive Bonus Plan (the "Bonus Plan") was intended to reward executive officers, including our namedexecutive officers, for annual financial performance, performance of other corporate goals that may be long-term in nature and meeting or exceedingcertain short-term objectives. Cash incentive compensation under the Bonus Plan is subject to the achievement of a certain EBITDA target. For purposes of the Bonus Plan, weutilize management EBITDA, see "Item 6—Selected Financial Data—Non-GAAP Financial Measures" for the calculation of EBITDA as defined in theaward agreements. The Bonus Plan provides for adjustments to the EBITDA targets by the Compensation Committee for extraordinary and unforeseenevents. The Compensation Committee chose to structure annual incentives on EBITDA for a number of reasons:•it effectively measures our overall performance; •it can be considered an important surrogate for cash flow, a critical metric related to servicing our outstanding debt; •it is a key metric driving our valuation, consistent with the valuation approach used by industry analysts; and •it is consistent with the metric used for the vesting of the financial performance portion of our option grants. These EBITDA targets should not be understood as management's predictions of future performance or other guidance, and investors should notapply these in any other context. EBITDA targets were linked to our short-term and long-term business objectives to ensure incentives are provided forappropriate performance. The Compensation Committee believes our cash incentive compensation structure is consistent with competitive practice.145Name Base Salary Don Kiepert (former President & CEO) $426,420 Jeffrey Young $264,000 Cyrille Villeneuve $300,060 William Dawes $242,413 Nigel Williams $275,000 Robert Gaffey (former CFO) $— Table of Contents The potential bonus payouts under various scenarios in 2012 for our named executive officers were as follows: For Mr. Kiepert, pursuant to his employment agreement, payout of the target level bonus was tied to the achievement of the EBITDA target andother corporate performance goals established by the Compensation Committee within the first three months of a given year. Pursuant to the BonusPlan, for our other named executive officers with the exception of Mr. Williams, payout of the target level bonus was tied to the achievement of theEBITDA target and the achievement of certain department performance and individual performance goals. The achievement of the EBITDA targetaccounts for 50% of the total bonus award; while the achievement of department performance and individual performance goals accounts for 30% and20%, respectively. Department performance goals are recommended and approved by our Chief Executive Officer at the start of each year. Achievementof individual performance goals are assessed by our Chief Executive Officer at the end of each year. These targets were intended to provide ameaningful incentive for executives to achieve or exceed performance goals. If we did not meet the EBITDA target, but we met a level equal to at least 90% of the EBITDA target, then pursuant to the Bonus Plan, theCompensation Committee has discretion to award any percentage of the target bonus, calculated relative to the achievement of the named executiveofficer's performance goals, including department, individual and corporate performance goals. For example, if we did meet 90% of the EBITDA targetand the executive achieved his or her department and individual performance goals, the executive would receive a threshold bonus equal to 50% of hisor her bonus target. If we did not meet at least 90% of the EBITDA target, then no bonus is awarded. If our EBITDA is above the EBITDA target, the Bonus Plan specifies a formula that would create a pool, or the Bonus Pool, not to exceed$2.0 million for discretionary allocation among the participants of the Bonus Plan, including our named executive officers. The Bonus Pool amount isset at approximately 4.5% of our incremental EBITDA for such year in excess of the EBITDA target. The maximum potential payout from the BonusPool for each participant, including our named executive officers, is 100% of their respective target bonus amount. As such, total maximum bonusawarded for above EBITDA target achievement would be double the target bonus amount of each participant, including our named executive officers. As Mr. Williams joined us during 2012 while our profitability was impacted by the supply chain issues, the Compensation Committee structuredhis incentives with 100% weighting on achieving his department goals, without regard to the EBITDA target. Our EBITDA target relative to the Bonus Plan for the fiscal year ended December 31, 2012 was established at $96 million. In the fiscal year endedDecember 31, 2012, our Adjusted EBITDA was approximately $59.1 million. For Mr. Kiepert in 2012, performance goals included, in addition to our146Named Executive Officer Threshold Bonus(1)(as % of Base Salary) Target Bonus(as % of Base Salary) Above Target Bonus(as % of Base Salary) Don Kiepert 50% 100% 200%Jeffrey Young 15% 30% 60%Cyrille Villeneuve 15% 30% 60%William Dawes 15% 30% 60%Nigel Williams 15% 30% 60%Robert Gaffey(2) 0% 0% 0%(1)Assuming that named executive achieved his/her department and individual performance goals. (2)Mr. Gaffey retired effective January 3, 2012 and was not eligible for a bonus in 2012.Table of ContentsEBITDA goal: revenue goals for select products; responding to the supply challenge presented by the prolonged shutdown of the BVL facilities;dependent on market conditions and our performance, achieving certain financial goals; advancing flupiridaz F 18 in Phase 3 clinical trials; achievingand maintaining global regulatory, financial and safety compliance; expanding the International business including licensing agreements in China;completing business development goals including selecting partners to advance flurpiridaz F 18's global development and other pipeline products; andcertain organizational objectives regarding succession, employee engagement, development and retention. For Mr. Young, performance goals included: achieving the EBITDA target; developing contingency plans and employing expense controls withinthe business; successfully completing the 2011 audit; ensuring timely quarterly filings; meeting all debt requirements; leading a potential capitalrestructuring; increasing the efficiency and effectiveness of the treasury and tax functions; improving cash flow reporting; optimizing the financial closeperformance; enhancing organizational capabilities in financial and strategic planning and analysis; managing risk; ensuring SOX compliance; andsupporting any additional financing initiatives. For Mr. Villeneuve, performance goals included: achieving revenue goals for select products and markets; integrating the marketing plans toimprove effectiveness and efficiencies; driving distribution partner agreements; implementing market research and sales analysis objectives;strengthening the competencies and skills of the marketing and sales organization; and fueling growth through business development includingimplementing a DEFINITY agreement in China. For Mr. Dawes, performance goals included: responding to the supply challenge presented by the prolonged shutdown of the BVL facilities toavoid product supply interruptions; driving aggressive technology transfer programs; leading continuous operational improvement efforts and otherquality initiatives to ensure compliance and patient safety; ensuring commercial readiness for flurpiridaz F 18; leveraging the Billerica site as a strategicasset; supporting cost recovery efforts with certain suppliers; and achieving defined operational performance metrics. For Mr. Williams, performance goals included: improving quality, compliance and safety standards; support in resolving product issues withcontract manufacturing organizations; driving quality aspects with technology transfer programs; ensuring quality compliance of PET manufacturingfacilities; executing the manufacturing commercialization strategy for flurpiridaz F 18; enhancing organizational capabilities; and developing long termquality initiatives. While the Compensation Committee reviewed each executive's performance relative to the non-EBITDA goals set forth above and recognizedsignificant achievements and attainment of most individual objectives, the Compensation Committee concluded that no bonuses should be paid toMessrs. Kiepert, Young, Villeneuve and Dawes because we did not meet our EBITDA target. Mr. Williams achieved his bonus, which is based on hisindividual objectives on a weighted basis and consistent with his employment offer for his initial year, and is included as an incentive payment asreported in the 2012 Grant of Plan-Based Awards table.Long-Term Equity Incentive Awards In connection with the Acquisition, the Board of Directors approved and adopted the Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan, orthe 2008 Equity Plan, which allows grants of equity awards and options for shares of Holdings. The purpose of the 2008 Equity Plan is to:•promote our long-term financial interests and growth by attracting and retaining management and other personnel and key serviceproviders with the training, experience and abilities to enable them to make substantial contributions to the success of our business; •motivate management personnel by means of growth-related incentives to achieve long range goals; and147Table of Contents•further the alignment of interests of participants with those of our stockholders through opportunities for increased stock or stock-basedownership in us. Although we look at competitive long-term equity incentive award values when assessing our compensation programs, as described above under "—Compensation Discussion and Analysis—Compensation Benchmarking," we do not make annual executive option grants because, following theAcquisition, we issued large upfront stock option grants that vest over time and with the achievement of certain performance goals in lieu of annualgrants. The Compensation Committee believes these stock option grants establish performance objectives and incentives and help align our executives'interests with the interests of the stockholders in fostering long-term value. They also motivate sustained increases in our financial performance and helpensure that the investors have received an appropriate return on their invested capital before executive officers receive significant value from theseoptions. In 2008, the Compensation Committee approved grants of options to Messrs. Kiepert, Young, Villeneuve, Dawes and Gaffey under the 2008Equity Plan. The terms of these grants were consistent with the grants granted after the Acquisition. During 2012, the Committee approved a grant toMr. Young in connection with his promotion to CFO, a supplemental grant of options to Mr. Villeneuve in recognition of his first year performance asChief Commercial Officer and a new hire grant to Mr. Williams. The options have an exercise price equal to fair market value on the date of grant. Since our common stock is not currently traded on a nationalsecurities exchange, fair market value is determined reasonably and in good faith by the Board of Directors. These options have a ten-year term and are generally issued either as time based options, or the Time Vesting Options or EBITDA-basedperformance options, or the Performance Vesting Options. The combination of time and performance based vesting of these awards is designed tocompensate our executive officers, including our named executive officers, for their long-term commitment to us. They are also designed to motivatesustained increases in our financial performance and help ensure that the investors have received an appropriate return on their invested capital beforeexecutive officers receive significant value from these options. EBITDA is defined in the award agreements as the sum of net income (or loss) of the business or entity for such period; plus interest expense,income taxes, depreciation expenses, amortization expenses, all fees paid by us or any of our subsidiaries pursuant to the Advisory ServicesAgreements with Avista, dated as of January 8, 2008, non-recurring expenses for executive severance, relocation, recruiting and one-timecompensation, the aggregate amount of all other non-cash charges reducing net income including stock-based compensation expense, retention bonusespaid in fiscal year 2008; all extraordinary losses; less all extraordinary gains in each case determined in accordance with GAAP. See "Item 6—SelectedFinancial Data—Non-GAAP Financial Measures" for the calculation of EBITDA as defined in the award agreements. The Time Vesting Options are granted to aid in retention. Consistent with this goal, the Time Vesting Options granted to Messrs. Kiepert, Young,Villeneuve, Dawes and Gaffey in 2008 and subsequent grant to Messrs. Young, Villeneuve and Williams vest ratably on the grant date over thefollowing five years. The Performance Vesting Options are intended to motivate financial performance in line with investors' outlook for performance during our firstfive years. We chose EBITDA as the performance metric since it is a key driver of our valuation and for the reasons described above in "Annual CashIncentive Compensation." The Performance Vesting Options granted to Messrs. Kiepert, Young, Villeneuve, Dawes, Williams and Gaffey are eligibleto vest ratably in five equal installments if certain annual EBITDA targets are achieved. The EBITDA targets were established at the time of the148Table of ContentsAcquisition and can be adjusted by the Board of Directors in consultation with our Chief Executive Officer as described below. Due to the number of events that can occur within our industry in any given year that are beyond the control of management but may significantlyimpact EBITDA and our financial performance, such as significant fluctuations in the cost of raw materials and unit sales volume, and regulatory andreimbursement changes, we have incorporated certain vesting provisions into each stock option grant agreement that allow such Performance VestingOptions to vest later than the date specified. Performance Vesting Options that were eligible to vest but failed to vest due to our failure to achieve anEBITDA target in any given year may vest if we exceed the annual EBITDA target in a subsequent year. Consistent with the EBITDA targets under the Bonus Plan, pursuant to the terms of the 2008 Equity Plan and the individual Stock OptionAgreements governing each option grant, the Board of Directors, in consultation with our Chief Executive Officer, has the ability to adjust the EBITDAtargets for significant events, changes in accounting rules and other customary adjustment events. We believe these adjustments may be necessary inorder to effectuate the intents and purposes of our compensation plans and to avoid unintended consequences that are inconsistent with these intents andpurposes. If our EBITDA is below the EBITDA target but is equal to at least 90% of the EBITDA target, then a percentage of the Performance VestingOptions vests in that year, calculated as follows: Our EBITDA target relative to performance vesting of options in 2012 exceeded our actual Adjusted EBITDA for the fiscal year endedDecember 31, 2012 of approximately $59.1 million. As a result, none of the Performance Vesting Options vested in 2012 out of a possible 20%. We set our future EBITDA targets to reflect our initial outlook for annual EBITDA which progressively increased as we approached the then-expected launch dates of pipeline products. For additional information concerning the options awarded in 2010, 2011 and 2012, see "—2012 Grants of Plan-Based Awards" and "—Outstanding Equity Awards at 2012 Fiscal Year-End."Dividend Equivalent Rights (DERs) In March of 2011, we completed a capital restructuring with an additional offering of New Restricted Notes. The net proceeds were used to fund adividend to Holdings, which Holdings utilized to repurchase all of Holdings outstanding Series A Preferred Stock. The Holdings' Board of Directorsalso declared a dividend of approximately $1.93 per common share, substantially similar to each shareholders' initial investment. Given the potentialimpact of this capital restructuring on the underlying share value of stock options, the Holdings' Board of Directors also awarded a dividend equivalentright (DER) on all outstanding stock options. All option holders, including certain of our named executive officers, were paid a cash dividend ofapproximately $1.93 for each vested option. In recognition of management's efforts in 2012, the Compensation Committee determined to distribute thebalance of the DERs to each employee who was actively employed by us at the time of such award.149(10% of possiblevested PerformanceVesting Options) × (Incremental EBITDA over90% of EBITDA target)(EBITDA target—90% ofEBITDA target) + (90% of possiblevested PerformanceVesting Options)Table of ContentsThe values of the DER cash payments paid in 2012 for Messrs Kiepert, Young, Villeneuve, Dawes and Gaffey were as follows: Mr. Williams joined Lantheus in 2012 and thus was not employed by us when the DERs were initially awarded. Holdings continues to hold$274,831 in escrow associated with Mr. Gaffey's DER, pending potential future vesting of his unvested Lantheus stock options.Other BenefitsRetirement Plans We offer a 401(k) qualified defined contribution retirement plan for U.S.-based employees, including named executive officers, with a 4.5%company match of the contributor's base salary. The company match was temporarily suspending from April 2012 to December 2012 and reinstated inJanuary 2013. Mr. Villeneuve participates in deferred profit sharing plan (DPSP) plan in Canada which was funded with a contribution of 2.5% ofeligible pay for 2012.Personal Benefits Except as otherwise discussed herein, other welfare and employee-benefit programs are the same for all of our eligible employees, including ournamed executive officers. Our other named executive officers do not receive additional benefits outside of those offered to our other employees.Ownership Guidelines In the event of exercise of an option grant, the resulting shares are subject to the provisions of the Employee Shareholder Agreement whichrestricts transfer and voting rights to ensure alignment with the initial investors. For example, Employee Shareholders (as defined in the EmployeeShareholder Agreement) are restricted from transferring any of our securities, subject to certain exceptions outlined in the Employee ShareholderAgreement. We do not maintain formal ownership guidelines.Severance and Change in Control Benefits As noted above, Mr. Kiepert had entered into an employment agreement which details, among other things, his rights upon a termination ofemployment in exchange for non-competition, non-solicitation and confidentiality covenants. See "—Potential Payment Upon Termination or Change inControl." Messrs. Young, Villeneuve, Dawes and Williams are covered under Lantheus' Severance Plan or the terms of their employment offer for sixmonths of salary continuation if involuntarily terminated by us other than for cause. Mr. Gaffey elected to retire as of January 3, 2012 with noseverance. However, the options granted to Mr. Gaffey under the 2008 Equity Plan will continue to vest for so long as he continues to serve as aconsultant of ours in good standing through the vesting period. We believe that reasonable severance benefits are appropriate in order to be competitive in our executive retention efforts. These benefits reflect thefact that it may be difficult for such executives to150Name DERCash Payments Don Kiepert $1,224,660 Jeffrey Young $106,788 Cyrille Villeneuve $102,929 William Dawes $317,903 Robert Gaffey $67,526 Table of Contentsfind comparable employment within a short period of time. We also believe formalized severance arrangements are at times a competitive requirement toattract the required talent for the role.Tax and Accounting Implications We were not subject to Section 162(m) of the Internal Revenue Code, as amended in 2011. For 2012 and beyond, the Compensation Committeewill consider the impact of Section 162(m) in the design of its compensation strategies. Under Section 162(m), compensation paid to executive officersin excess of $1,000,000 cannot be taken by us as a tax deduction unless the compensation qualifies as performance-based compensation. We havedetermined, however, that we will not necessarily seek to limit executive compensation to amounts deductible under Section 162(m) if such limitation isnot in the best interests of our stockholders. While considering the tax implications of its compensation decisions, the Compensation Committee believesits primary focus should be to attract, retain and motivate executives and to align the executives' interests with those of our stockholders. The Compensation Committee operates its compensation programs with the good faith intention of complying with Section 409A of the InternalRevenue Code. We account for stock based payments with respect to our long-term equity incentive award programs in accordance with therequirements of ASC 718.Compensation Risk Assessment In consultation with the Compensation Committee, members of Human Resources, Legal and Finance groups conducted an annual assessment ofwhether our compensation policies and practices encourage excessive or inappropriate risk taking by our employees, including employees other than ournamed executive officers. This assessment included a review of the risk characteristics of our business and the design of our incentive plans andpolicies. Although a significant portion of our executive compensation program is performance-based, the Compensation Committee has focused onaligning our compensation policies with our long-term interests and avoiding rewards or incentive structures that could create unnecessary risks to us. Management reported its findings to the Compensation Committee, which agreed with management's assessment that our plans and policies do notencourage excessive or inappropriate risk taking and determined such policies or practices are not reasonably likely to have a material adverse effect onus.151Table of ContentsSummary Compensation Table The following table sets forth certain information with respect to compensation for the years ended December 31, 2012, 2011 and 2010 earned byor paid to our named executive officers.Name and Principal Position Year Salary($) Bonus($)(1) OptionAwards($)(2)(3) Non-EquityIncentive PlanCompensation($)(4) All OtherCompensation($)(5)(6)(7) Total($) Donald Kiepert 2012 $406,739 $— $— $— $1,229,866 $1,636,605 (Former) President &CEO 2011 $422,538 $— $— $— $1,206,074 $1,628,612 2010 $401,308 $— $— $— $15,049 $416,357 Jeffrey Young 2012 $251,354 $— $59,850 $— $109,774 $420,978 Chief Financial Officer 2011 $243,083 $40,550 $142,450 $— $48,850 $474,933 2010 $221,711 $43,533 $— $— $9,977 $275,221 Cyrille Villeneuve 2012 $285,755(8)$— $86,750 $— $237,565(8)$610,070 Chief CommercialOfficer 2011 $274,685 $— $100,250 $— $117,499 $492,434 2010 $245,569 $— $— $— $33,905 $279,474 William Dawes 2012 $231,224 $— $— $— $321,817 $553,041 VP, Manufacturing &Ops 2011 $240,821 $— $— $— $319,543 $560,364 2010 $226,990 $— $— $— $10,215 $237,205 Nigel Williams 2012 $179,808 $— $264,000 $82,500 $806 $527,114 VP, Quality 2011 (New hire in 2012) 2010 Robert Gaffey 2012 $20,600 $— $— $— $193,940(9)$214,540 (Former) ChiefFinancial 2011 $265,700 $— $— $— $343,934 $609,634 Officer 2010 $252,692 $— $— $— $11,039 $263,731 (1)Mr. Young was granted bonuses for his individual contributions to the business in 2011 and 2010 prior be promoted to the roleof Chief Financial Officer. (2)Mr. Williams received an initial stock option grant in conjunction with his employment offer in 2012. In January 2012,Mr. Young was granted a supplemental grant of stock options in connection with his promotion to CFO. In May 2012,Mr. Villeneuve was granted additional stock options in recognition of his first year performance as Chief Commercial Officerand to increase his alignment with shareholder's interests. (3)Includes the grant date fair value of the stock option awards granted during the fiscal years ended December 31, 2012, 2011 and2010, in accordance with ASC 718 with respect to options to purchase shares of our common stock awarded to the namedexecutive officers in 2012, 2011 and 2010 under our 2008 Equity Plan. See "Item 7—Management's Discussion and Analysis ofFinancial Condition and Results of Operations—Critical Accounting Policies and Estimates—Accounting for Stock-BasedCompensation." (4)For 2012, 2011 and 2010, Messrs. Kiepert, Villeneuve, Dawes and Gaffey did not earn bonuses under the Bonus Plan. For2012, the first year he would be eligible to participate under the Bonus Plan, Mr. Young did not earn a bonus under the BonusPlan. Mr. Williams earned an incentive payment under the Bonus Plan based on achievement of his department goals. 152(5)Effective March 21, 2011, the Board of Directors declared a dividend of approximately $1.93 per common share and awarded adividend equivalent right on all outstanding stock options. All option holders, including our named executive officers employedat the time, were paid a cash dividend of approximately $1.93 for each vested option. DERs on all unvested options as ofMarch 21, 2011 were placed in escrow and were subject to forfeiture. In recognition of management's efforts in 2012, theCompensation Committee determined to distribute the balance of the DERs to each eligible active executive. Included in the AllOther Compensation column above is the value of DERs distributed to Messrs. Kiepert, Young, Villeneuve, Dawes, and Gaffeywere $1,224,660, $106,788, $102,929, $317,903 and $67,526, respectively, during 2012. The value of DERs distributed toMessrs. Kiepert, Young, Villeneuve, Dawes and Gaffey were $1,190,844, $37,911, $41,770, $309,125 and $332,904,respectively, during 2011.Table of Contents153(6)For Messrs. Kiepert, Young and Villeneuve, Dawes and Gaffey, the amounts reflect matching contributions to our definedcontribution retirement plans in 2012 of $3,896, $1,676, $7,132, $2,657 and $927, respectively. For Messrs. Kiepert, Young,Villeneuve, Dawes and Gaffey, the amounts reflect matching contributions to our defined contribution retirement plans in 2011of $15,230, $10,939, $16,398, $10,418 and $11,030, respectively. For Messrs. Kiepert, Young, Villeneuve, Dawes and Gaffey,the amounts reflect matching contributions to our defined contribution retirement plans in 2010 of $15,049, $9,977, $18,744,$10,215 and $11,039, respectively. (7)For Messrs. Kiepert, Young, Dawes, Williams and Gaffey, the amounts reflect employer contributions to our long term disabilityinsurance premiums in 2012 of $1,310, $1,310, $1,257, $806 and $50, respectively. Prior to 2012, the employees wereresponsible for long term disability insurance premiums. (8)Mr. Villeneuve serves LMI through our Canadian operations. As such, his salary and benefits are paid in Canadian dollars andare reflected in U.S. dollars in the table above using the average exchange rates of 1.0002, 1.0122, and 0.9704 for 2012, 2011and 2010, respectively. Included in his "All Other Compensation", in addition to his DER distributions and retirementcontributions detailed above, is $63,399 for housing, $42,708 for tax equalization payments, $15,627 for auto allowance and$5,770 for vacation distribution in 2012; $23,780 for housing, $14,761 for tax equalization payments, $15,815 for autoallowance and $4,975 for vacation distribution in 2011; and $15,161 for auto allowance in 2010. Mr. Villeneuve is a Canadian citizen and is paid through our Canadian operations. Due to the extent of his activities in the UnitedStates, the Company is required to withhold taxes on his compensation in both Canada and the United States, and he is requiredto file personal tax returns in both the United States and Canada. In the United States, we deposit federal and state withholdingtaxes on his behalf which is excluded from the table above. Since these taxes are available for credit against his Canadian tax,these deposits are returned to us after Mr. Villeneuve receives his Canadian tax refund.(9)Relative to Mr. Gaffey, included in his "All Other Compensation" in addition to his DER distributions and retirementcontributions detailed above is $125,437 which was paid to him for consulting services he provided to us as an independentconsultant (post employment) in 2012 to facilitate the transition.Table of Contents2012 Grants of Plan-Based Awards The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2012 with respectto the named executive officers.154 All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions(#) Estimated Future PayoutsUnder Non-Equity IncentivePlan Awards Estimated Future PayoutsUnder Equity IncentivePlan Awards Exerciseor BasePrice ofOptionAwards($/Sh) Name GrantDate Threshold($)(1) Target($)(2) Maximum($)(3) Threshold(#) Target(#) Maximum(#) DonaldKiepert — $213,210 $426,420 $852,840 — — — — — JeffreyYoung — $39,600 $79,200 $158,400 — — — — — 01/03/12(4) 1,350 7,500 7,500 7,500 $9.28 CyrilleVilleneuve $45,009 $90,018 $180,036 05/08/12(5) 2,250 12,500 12,500 12,500 $8.20 WilliamDawes — $36,362 $72,724 $145,448 — — — — — NigelWilliams $41,250 $82,500 $165,000 04/24/12(6) 6,750 37,500 37,500 37,500 $8.20 RobertGaffey — — — — — — — — — (1)The amounts shown in the "Threshold" column reflect the threshold payment, which is 50% of the amount shown in the "Target" column. See "—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Compensation." (2)The amount show in the "Target" column is the potential cash incentive award given to our named executive officers if the EBITDA target is hit in 2012. ForMr. Kiepert that amount is 100% of his respective 2012 base salary. For Messrs. Young, Dawes and Williams, that amount is 30% of their respective 2012 basesalaries. See "—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Compensation." As a result of his retirement,Mr. Gaffey was not eligible for an award in 2012. (3)The amount shown in the "Maximum" column is 200% of the amount shown in the "Target" column. Pursuant to the Bonus Plan, if we achieve an EBITDAlevel that is greater than the EBITDA target, the Bonus Plan specifies a formula that would create a pool not to exceed $2.0 million in the aggregate fordiscretionary allocation among the eligible participants of the Bonus Plan. The maximum payment from the Bonus Pool for Mr. Kiepert is 200% of his basesalary. The maximum for all other participants, including our other named executive officers, is 60% of their respective base salaries. See "—CompensationDiscussion and Analysis—Elements of Compensation—Annual Cash Incentive Compensation." (4)Mr. Young was granted a supplemental grant of 15,000 stock options with a ten-year term in recognition of his promotion to CFO. 7,500 of these options areTime Vesting Options and 7,500 are Performance Vesting Options. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-TermEquity Incentive Awards." (5)Mr. Villeneuve was granted a supplemental grant of 25,000 stock options with a ten-year term in recognition of his first year performance as Chief CommercialOfficer. 12,500 of these options are Time Vesting Options and 12,500 are Performance Vesting Options. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Equity Incentive Awards." (6)Mr. Williams was granted 75,000 stock options with a ten-year term in connection with his offer of employment. 37,500 of these options are Time VestingOptions and 37,500 are Performance Vesting Options. See "—Compensation Discussion and Analysis—Elements of Compensation—Long-Term EquityIncentive Awards."Table of ContentsOutstanding Equity Awards at 2012 Fiscal Year-End The following table includes certain information with respect to options held by the named executive officers as of December 31, 2012.155 Option Awards Name Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable Equity IncentivePlan Awards:Securities ofUnderlyingUnexercisedUnearnedOptions (#) OptionExercisePrice ($) OptionExpirationDate Don Kiepert (formerPresident & CEO): Stock Options(1) 742,436 125,200 384,364 $2.00 02/24/18 Jeffrey Young: Stock Options(1) 29,650 5,000 15,350 $2.00 09/21/18 Stock Options(2) 2,500 10,000 12,500 $10.26 01/04/21 Stock Options(3) 1,000 4,000 5,000 $10.00 07/17/21 Stock Options(4) — 7,500 7,500 $9.28 01/02/22 Cyrille Villeneuve: Stock Options(1) 23,720 4,000 12,280 $2.00 04/03/18 Stock Options(5) 3,930 2,000 4,070 $6.84 04/07/19 Stock Options(6) 2,500 10,000 12,500 $10.26 01/04/21 Stock Options(3) — 12,500 12,500 $8.20 05/07/22 William Dawes: Stock Options(1) 192,725 32,500 99,775 $2.00 04/3/18 Nigel Williams: Stock Options(4) — 37,500 37,500 $8.20 04/22/22 Robert Gaffey (formerCFO): Stock Options(1)(6) 207,550 35,000 107,450 $2.00 04/3/18 (1)80% of the Time Vesting Options were vested as of December 31, 2012 with 20% vesting in each of January 2009, 2010, 2011and 2012. Upon the Compensation Committee's determination that we achieved the EBITDA performance targets, 20% of thePerformance Vesting Options vested on April 16, 2009 and 18.6% vested in April 2010. The remaining shares subject to theTime Vesting Options vested in full in January 2013. We did not meet our EBITDA targets in 2010, 2011 or 2012, and as such,none of the Performance Vesting Options vested for those years. As EBITDA targets were not met for 2012, these options willremain unvested, subject to other vesting opportunities under the 2008 Equity Plan. (2)20% of the Time Vesting Options vested on January 5, 2012. The remaining shares subject to the Time Vesting Options will vestratably over the next four years and will vest in full as of January 5, 2016 for Messrs. Young and Villeneuve, respectively. Thefirst 20% tranche of performance did not vest on schedule as the EBITDA target for 2011 was not attained. (3)20% of the Time Vesting Options vested on July 18, 2012. The remaining shares subject to the Time Vesting Options will vestratably over the next four years and will vest in full as of July 18, 2016 for Mr. Young. The first 20% tranche of performance didnot vest on schedule as the EBITDA target for 2011 was not attained. (4)The shares subject to the Time Vesting Options will vest ratably over the next five years and will vest in full as of January 3,2017, May 7, 2017 and April 24, 2017 for Messrs. Young, Villeneuve and Williams, respectivelyTable of ContentsOption Exercises and Stock Vested in 2012 The named executive officers did not exercise any options during 2012. We do not offer any stock awards, other than stock options, from whichvesting would occur.2012 Pension Benefits We do not offer our executives or others a pension plan. Retirement benefits are limited to participation in our 401(k) plan with a 4.5% employermatch of the contributor's salary and a corresponding international plan. In 2012, the employer match was suspended from April through December andreinstated in January 2013.Potential Payment Upon Termination or Change in Control The information below describes and quantifies certain compensation that would become payable under certain named executive officer'semployment agreements if, as of December 31, 2012, his employment had terminated or there was a change in control. Due to the number of factors thataffect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factorsthat could affect these amounts include the timing during the year of any such event.Employment Agreements and Arrangements The only named executive officer for which we have or had an employment agreement with is Mr. Kiepert. We included below Mr. Kiepert'sseverance agreement with us which became effective February 19, 2013 and Mr. Gaffey's retirement agreement with us which became effectiveJanuary 3, 2012.Don Kiepert On February 19, 2013, we entered into a separation agreement with Don Kiepert, our former President and Chief Executive Officer. Pursuant tohis employment agreement, Mr. Kiepert will receive 12 months of severance payments totaling $426,000, continuation of life insurance and subsidizedCOBRA health benefits at the active employee rate for 12 months totaling $12,305. To effect a smooth leadership transition, Mr. Kiepert has also agreedto a consulting arrangement with us at a rate of $10,000 per month for 12 months. Mr. Kiepert will be paid a pro rata bonus for 2013 in the amount of$26,844 in early 2014.156(5)60% of the Time Vesting Options were vested as of December 31, 2012 having 20% in each of April 2010, 2011 and 2012.Upon the Compensation Committee's determination that we achieved the EBITDA performance targets, 18.6% of thePerformance Vesting Options vested in April 2010. An additional 20% of the Time Vesting Options vested in January 2013. Wedid not meet our EBITDA targets in 2010, 2011 or 2012, and as such, none of the Performance Vesting Options vested for thoseyears. As EBITDA targets were not met for 2012, these options will remain unvested, subject to other vesting opportunitiesunder the 2008 Equity Plan. (6)Mr. Gaffey's option awards were amended as part of his retirement agreement with us effective January 3, 2012. Under the termsof the agreement, Mr. Gaffey's existing stock options were modified to allow for continued vesting and exercisability of hisexisting options for up to the full original term, or until 2018.Table of ContentsRobert Gaffey On January 3, 2012, we entered into a retirement agreement with Mr. Gaffey in conjunction with his retirement. Mr. Gaffey had providedLantheus and its predecessors with 37 years of service. Under the terms of the agreement, Mr. Gaffey continued to provide limited consulting servicesat a rate of $200 per hour for up to 24 hours per week through March 30, 2012. After March 31, 2012, Mr. Gaffey was paid at an hourly rate of $150per hour on an independent consultant basis as required by us. Mr. Gaffey's existing stock options were modified to allow for continued vesting,continued eligibility for payment of DERs and exercisability of his existing options for up to the full original term expiring in 2018. Mr. Gaffey is noteligible for any company benefits or other severance payments. Mr. Gaffey had not previously entered into an employment agreement with us. During2012, Mr. Gaffey's fees for his post-employment independent consulting to us totaled $125,437.2008 Equity Plan The 2008 Equity Plan and each individual Stock Option Agreement provides for accelerated vesting of both Time Vesting Options andPerformance Vesting Options granted under the 2008 Equity Plan upon a change of control if net cumulative cash proceeds received by our investorsexceed certain multiples of their initial investment. If such a change in control occurred on December 31, 2012, each named executive officer's unvestedTime Vesting Options and Performance Vesting Options would immediately vest and become exercisable. The aggregate dollar value of unvested stockoptions held by such named executive officer on December 31, 2012 as listed below.157Name Aggregate DollarValue of Options(1) Don Kiepert (former President & CEO) $2,812,793 Jeffrey Young $112,332 Cyrille Villeneuve $93,993 William Dawes $730,158 Nigel Williams $— Robert Gaffey (former CFO) $786,324 (1)The aggregate dollar value is the difference between the fair market value of shares of common stock on December 31,2012 based upon an internal valuation model and the per share exercise price of each option, multiplied by the number ofshares subject to the unvested option.Table of ContentsDirector Compensation The compensation paid to Mr. Kiepert, our former President & CEO and Director, is reported in the Summary Plan Compensation Table as he waspaid only as named executive officer. We do not compensate our board members with per meeting fees. Our directors are reimbursed for any expensesincurred in connection with their services and as detailed in the table and notes below.158Name Fees Earned orPaid in Cash($) All OtherCompensation($) Total($) Brian Markison(1) $15,897 $38,250 $54,147 David Burgstahler(2) $— $— $— Samuel Leno(3) $40,178 $37,500 $77,678 Dr. Patrick O'Neill(4) $50,000 $38,586 $88,586 Sriram Venkataraman(2) $— $— $— Larry Pickering(5) (former Chairman) $133,654 $493,169 $626,823 (1)In 2012, Brian Markison was compensated with an annual retainer for his services on the Board of Directors of $50,000,paid in quarterly increments. In addition, Mr. Markison received $10,000, paid in quarterly increments for his service onthe Compensation Committee. Mr. Markison received a grant of 12,500 stock options in Holdings in 2012. These optionshave a ten-year term and are Time Vesting Options vesting in full on the first anniversary of grant. On January 23, 2013,Mr. Markison was appointed Non-Executive Chairman of the Board of Holdings, Lantheus Intermediate and LMI. Inconnection with that appointment, (i) his director compensation was increased to $100,000 effective as of January 23,2013, (ii) 4,760 shares of his previous 12,500 option grant were deemed to be vested with the balance of 7,740 sharesterminated as forfeitures, (iii) he received a new grant of 26,596 option shares, vesting monthly over a 12-month basis,and (iv) on each anniversary date of his appointment, in consideration of his services as Chairman and for so long as heserves in that capacity, he will be granted a stock option to purchase $200,000 worth of common stock of Holdings,calculated as the multiple of the then fair market value times the number of shares necessary to equal $200,000. (2)Messrs. Burgstahler and Venkataraman are Principals of Avista and do not receive any direct compensation for theirservices as Directors. We pay Avista a management fee of $1,000,000 annually pursuant to the Advisory Services andManagement Agreement, dated as of January 8, 2008. See "Item 13—Certain Relationships and Related PartyTransactions, and Director Independence—Transactions with Related Persons—Advisory and Monitoring ServicesAgreement." (3)Samuel Leno is compensated with an annual retainer for his services on the Board of Director of $50,000, paid inquarterly increments. In addition, Mr. Leno receives $15,000, paid in quarterly increments for his role as Chairman of theAudit Committee. Mr. Leno received a grant of 12,500 stock options in Holdings in 2012. These options have a ten-yearterm and are Time Vesting Options vesting in full on the first anniversary of grant. (4)Dr. Patrick O'Neill is compensated with an annual retainer for his services on the Board of Director of $50,000, paid inquarterly increments. Dr. O'Neill received a grant of 50,000 stock options in Holdings in 2008. These options have a ten-year term and are Time Vesting Options. 20% of the shares subject to the Time Vesting Options vested on eachanniversary of the grant in 2008 - 2012. The remaining shares subject to the Time Vesting Options will be vested in fullon January 8, 2013.Table of ContentsCompensation Committee Interlocks and Insider Participation During 2012, the members of our Compensation Committee were Messrs. Burgstahler and Pickering, then Messrs. Burgstahler, Pickering andMarkison, then Messrs. Burgstahler and Markinson. Mr. Burgstahler is the President of Avista. Mr. Pickering is a Partner of Avista and used to be ourExecutive Chairman, a role he relinquished effective January 8, 2010. Mr. Markison is a Healthcare Industry Executive with Avista. Avista provides uswith advisory services pursuant to the Advisory Services and Monitoring Agreement (as defined below) and has entered into other transactions with us.See "Item 13—Certain Relationships and Related Person Transactions, and Director Independence—Transactions with Related Persons—Advisory andMonitoring Services Agreement."Compensation Committee Report Our Compensation Committee has reviewed and discussed the "Item 11—Executive Compensation—Compensation Discussion and Analysis"section with our management. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the"Item 11—Executive Compensation—Compensation Discussion and Analysis" section be included in this Annual Report on Form 10-K for the fiscalyear ended December 31, 2012. Respectfully submitted by the Compensation Committee of the Board of Directors.David BurgstahlerBrian Markison159In March of 2011, in the same manner as all other stock option holders at the time, Dr. O'Neill received a dividendequivalent right of approximately $1.93 per option on his outstanding options of which $57,880 was paid in cash on hisvested options. Payments for the balance of his dividend equivalent rights were authorized by the CompensationCommittee in 2012 resulting in an additional distribution of $38,586.(5)Mr. Pickering retired from the Board of Director effective September 30, 2012. He initially served as our ExecutiveChairman from January 2008 to January 2010 and functioned as an officer of the Company with direct oversight ofResearch & Development activities. On March 4, 2008, we entered into an employment agreement with Mr. Pickering,which was subsequently amended on October 19, 2008 and effective as of January 1, 2009, and also amended onJanuary 4, 2010. Pursuant to the terms of his amended agreement, under which he is no longer an executive officer,Mr. Pickering received $133,654 in compensation during 2012. Mr. Pickering was not eligible for bonus, benefits orother perquisites. On March 4, 2008 in recognition of Mr. Pickering's role with Avista in leading the Acquisition, Mr. Pickering wasgranted 751,200 stock options. These options vest 40% on the first year and ratably on the grant date over the followingthree years. 50% of these options are Time Vesting Options and 50% of these options are Performance Vesting Options.On April 20, 2009, Mr. Pickering received a supplemental grant of 50,000 options to purchase shares of Holdings inrecognition of his contributions in connection with the Acquisition, pursuing an extension of the marketing exclusivity ofCardiolite and exceeding the EBITDA targets established for 2008. Anticipating Mr. Pickering's then-current executiverole evolving into a non-employee director role in the future, Mr. Pickering's second award was granted as 100% TimeVesting Options, vesting ratably in four equal annual installments. As of April 2013, these options will be fully vested.In March of 2011, in the same manner as all other stock option holders at the time, Mr. Pickering received a dividendequivalent right of approximately $1.93 per option on his outstanding options, of which $1,052,600 was paid in cash onhis vested options. Payments for the balance of his dividend equivalent rights were authorized by the CompensationCommittee in 2012 resulting in an additional distribution of $493,169.Effective as of September 30, 2012, Mr. Pickering retired from the Board of Directors and under the terms of hisseverance arrangements his stock options were modified to allow for continued vesting and exercisability of his existingoptions for up to the full original ten-year term.Table of Contents The information contained in the foregoing report shall not be deemed to be "filed" or to be "soliciting material" with the Commission, nor shallsuch information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent that wespecifically incorporate it by reference in a filing.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Principal Stockholders Holdings indirectly owns all of our issued and outstanding capital stock through its direct subsidiary and our direct parent, Lantheus Intermediate.Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P. and ACP-Lantern Co-Invest, LLC, or, together, the Avista Entities, collectivelyown approximately 99.5% of Holdings' issued and outstanding capital stock. Avista Capital Partners GP, LLC ultimately exercises voting anddispositive power over the shares held by Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P. and ACP-Lantern Co-Invest, LLC.Voting and disposition decisions at Avista Capital Partners GP, LLC with respect to such shares are made by an investment committee, the members ofwhich are Thompson Dean, Steven Webster, David Burgstahler, David Durkin, OhSang Kwon, Robert Cabes and Newton Aguiar. In connection withthe Acquisition, certain members of management purchased shares of Holdings' common stock equaling approximately 0.5% of Holdings' issued andoutstanding capital stock.Securities Authorized for Issuance Under Equity Compensation Plans The following table gives information as of December 31, 2012 about the common stock that may be issued under all of our existing equitycompensation plans.Item 13. Certain Relationships and Related Transactions, and Director Independence The Board of Directors has the responsibility to review and approve all transactions or series of related financial transactions, arrangements orrelationships between us and any related party if the amount involved exceeds $120,000. We do not otherwise have any policies or procedures for thereview, approval or ratification of such transactions.Transactions with Related PersonsShareholders Agreements In connection with the Acquisition, Holdings entered into (i) a Shareholders Agreement with the Avista Entities and Don Kiepert, as ManagementShareholder, dated January 8, 2008 and subsequently amended on February 26, 2008, or the Management Shareholders Agreement and (ii) anEmployee160Plan Category Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights Weighted AverageExercise Price ofOutstanding Options,Warrants and Rights Number of SecuritiesRemaining Available forFuture Issuance UnderEquity CompensationPlans (Excluding SecuritiesReflected in Column (a)) Equity compensation plansapproved by securityholders 4,507,700 $2.95 466,530 Equity compensation plansnot approved by securityholders(1) — — — Total 4,507,700 $2.95 466,530 (1)Represents the 2008 Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan.Table of ContentsShareholders Agreement with the Avista Entities and certain employee shareholders named therein, dated as of May 30, 2008, or the EmployeeShareholders Agreement and, collectively with the Management Shareholders Agreement, the Shareholders Agreements. The Shareholders Agreementsgovern the parties' respective rights, duties and obligations with respect to the ownership of Holdings securities. Pursuant to the ShareholdersAgreements, Avista has designation rights with respect to the composition of the Holdings board of directors and Avista is entitled to majorityrepresentation on any committee that the board creates. In addition, the Management Shareholder and the employee shareholders must vote their sharesin such a manner that is consistent with the composition of the board designed by the Avista Entities.Advisory and Monitoring Services Agreement In connection with the closing of the Acquisition, we entered into an advisory services and monitoring agreement with Avista CapitalHoldings, L.P., or Avista Capital Holdings, dated as of January 8, 2008, or the Advisory Services and Monitoring Agreement, pursuant to which ACPLantern Acquisition, Inc. (a corporation which was merged into us as part of the Acquisition), paid Avista Capital Holdings a one-time fee equal to$10 million for the consulting and advisory and monitoring services to us, our subsidiaries and our parent companies, in connection with theAcquisition. In addition, the agreement provides for the payment of an annual fee equal to $1 million as consideration for ongoing advisory services. Tothe extent of any future transaction entered into by us or our affiliates, Avista Capital Holdings will receive an additional fee that is reasonable andcustomary for the services it provides in connection with such future transaction. In addition, we will pay directly, or reimburse Avista Capital Holdingsfor, its out-of-pocket expenses in connection with its performance of services under the Advisory Services and Monitoring Agreement.INC Research Master Services Agreement In the third quarter of 2012, we entered into a Master Contract Research Organization Services Agreement with INC Research, LLC ("INC") toprovide clinical development services in connection with the flurpiridaz F 18 Phase 3 program. The agreement has a term of five years, and we incurredcosts associated with this agreement of approximately $0.9 million in the year ended December 31, 2012. Avista Capital Partners and its affiliates areprincipal owners of both INC and the Company.Quintiles Master Services Agreement Effective as of June 30, 2009, we entered into a Master Services Agreement with Quintiles Commercial US, Inc., or Quintiles, (formerly known asInnovex Inc.) to provide a contract sales force in connection with the launch and promotion of Ablavar. As of December 31, 2010, we have incurredcosts associated with this contract of approximately $4.3 million. The Statement of Work under the Master Services Agreement relating to the contractsales force was extended on June 11, 2010 and terminated on December 31, 2010. John Pickering, a son of Larry Pickering, our former Chairman ofthe Board, was a Director of Business Development for Quintiles during part of the term of the agreement. He left Quintiles in June 2010 prior to theStatement of Work extension.McGladrey Engagement In March 2010, we engaged RSM McGladrey, Inc., or McGladrey, (formerly known as Caturano & Company), a tax and financial servicesconsulting firm, to advise us about compliance requirements under the Sarbanes-Oxley Act. As of December 31, 2012, 2011 and 2010, we haveincurred costs associated with this engagement of approximately $69,000, $117,000 and $176,000, respectively. Dan Gaffey, a son of Robert Gaffey,our former Chief Financial Officer, is a partner of McGladrey but has no other relationship with us and will not be working on the engagement in anycapacity.161Table of ContentsVWR Scientific Purchases We purchase inventory supplies from VWR Scientific, VWR . Avista Capital Partners and certain affiliates are principal owners of both VWR andus. We made purchases of approximately $0.3 million during each of the years ended December 31, 2012, 2011 and 2010.Director Independence As disclosed in "Item 10—Directors, Executive Officers and Corporate Governance," although not formally considered by the Board of Directorsof Holdings because our securities are not registered or traded on any national securities exchange, we believe that Mr. Markison and Mr. Leno wouldbe considered independent for our Boards of Directors, that Mr. Leno would be considered independent for our Audit Committee and thatMr. Markison would be considered independent for our Compensation Committee, based upon the listing standards of the New York Stock Exchange.Item 14. Principal Accountant Fees and Services Deloitte & Touche LLP, or Deloitte, serves as our independent registered public accounting firm. The following table presents fees paid for theaudit of our annual consolidated financial statements and all other professional services rendered by Deloitte for the years ended December 31, 2012 and2011:Audit Fees These are fees related to professional services rendered in connection with the audit of our annual financial statements, the reviews of the interimfinancial statements included in each of our quarterly reports on Form 10-Q, and other professional services provided by our independent registeredpublic accounting firm in connection with statutory or regulatory filings or engagements. All other fees consist primarily of the reimbursement ofexpenses associated with completion of services noted above.Audit-Related Fees These are fees for assurance and related services that are reasonably related to performance of the audit and review of our financial statements, andwhich are not reported under "Audit Fees." These services consisted primarily of attestation services for such matters as required for consents related tofinancings, registration statements and other filings with the Commission.Tax Fees These are fees billed for professional services for tax compliance, tax advice and tax planning services.Pre-Approval Policies The services provided by Deloitte were pre-approved by the Audit Committee. The Audit Committee has considered whether the provision of theabove-noted services is compatible with maintaining the independence of the independent registered public accounting firm and has determined that theprovision of such services has not adversely affected Deloitte's independence. The Audit Committee approved 100% of the services covered by audit-related fees, tax fees and all other similar fees.162 Year Ended December 31, 2012 2011 Audit Fees $1,443,412 $1,213,810 Audit-Related Fees 52,400 722,200 Tax Fees 31,750 8,414 Total Fees $1,527,562 $1,944,424 Table of ContentsPART IVItem 15. Exhibits and Financial Statement Schedules (a)(1) Financial Statements Included in Part II of this annual report:(a)(2) Schedules None.163 PageReport of Independent Registered Public Accounting Firm 87Consolidated Balance Sheets as of December 31, 2012 and 2011 88Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2012, 2011 and2010 89Consolidated Statements of Stockholder's (Deficit) Equity for the Years Ended December 31, 2012, 2011 and2010 90Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010 91Notes to Consolidated Financial Statements as of and for the Years Ended December 31, 2012, 2011 and 2010 92Table of Contents(a)(3) Exhibits164Exhibit Description 3.1 Certificate of Incorporation of Lantheus Medical Imaging, Inc., as amended (incorporated by reference toExhibit 3.1 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 3.2 Second Amended and Restated By-Laws of Lantheus Medical Imaging, Inc (incorporated by reference toExhibit 3.2 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 4.1 Indenture, dated as of May 10, 2010, among Lantheus Medical Imaging, Inc., Lantheus MIIntermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington Trust FSB, as trustee(incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 4.2 First Supplemental Indenture, dated as of March 14, 2011, among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington TrustFSB, as trustee (incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s CurrentReport on Form 8-K filed with the Commission on March 16, 2011 (file number 333-169785)). 4.3 Second Supplemental Indenture, dated as of March 21, 2011, among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington TrustFSB, as trustee (incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s CurrentReport on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)). 4.4 Registration Rights Agreement, dated May 10, 2010, by and among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, as guarantors, and Jefferies &Company, Inc. (incorporated by reference to Exhibit 4.2 to Lantheus Medical Imaging, Inc.'s RegistrationStatement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 4.3 Registration Rights Agreement, dated March 21, 2011, by and among Lantheus Medical Imaging, Inc.,Jefferies & Company, Inc., as representative of the initial purchasers and the guarantors party thereto(incorporated by reference to Exhibit 4.2 to Lantheus Medical Imaging, Inc.'s Current Report on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)). 4.5 Form of 9.750% Senior Notes due 2017 (included in Exhibit 4.1). 10.1 Credit Agreement, dated May 10, 2010, by and among Lantheus Medical Imaging, Inc., Lantheus MIIntermediate, Inc., Lantheus MI Real Estate LLC, the lenders from time to time party hereto, Harris N.A.,as collateral agent, Bank of Montreal, as administrative agent, Bank of Montreal and NATIXIS as jointbookrunners, Bank of Montreal and NATIXIS as joint lead arrangers, NATIXIS as syndication agent andJefferies Finance LLC as documentation agent (incorporated by reference to Exhibit 10.1 to LantheusMedical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6,2010 (file number 333-169785)).Table of Contents165Exhibit Description 10.2 Amendment No. 1 to Credit Agreement, dated as of March 21, 2011, by and among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)). 10.3 Pledge and Security Agreement, dated as of May 10, 2010, by and among Lantheus MedicalImaging, Inc., Lantheus MI Intermediate, Inc., Lantheus MI Real Estate, LLC and Harris N.A. ascollateral agent (incorporated by reference to Exhibit 10.2 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.4 Advisory Services and Monitoring Agreement, dated January 8, 2007, by and between ACP LanternAcquisition, Inc. (now known as Lantheus Medical Imaging, Inc.) and Avista Capital Holdings, L.P.(incorporated by reference to Exhibit 10.3 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.5 Amended and Restated Shareholders Agreement, dated as of February 26, 2008 among Lantheus MIHoldings, Inc., Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certain management shareholders named therein (incorporated by reference toExhibit 10.4 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.6 Employee Shareholders Agreement, dated as of May 8, 2008, among Lantheus MI Holdings, Inc., AvistaCapital Partners, L.P., Avista Capital Partners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certainemployee shareholders named therein (incorporated by reference to Exhibit 10.5 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6, 2010 (filenumber 333-169785)). 10.7 Employment Agreement, dated January 8, 2008 by and between ACP Lantern Acquisition Inc. (nowknown as Lantheus Medical Imaging, Inc.) and Donald Kiepert (incorporated by reference to Exhibit 10.6to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.8 Employment Agreement, dated March 4, 2008 by and between Lantheus Medical Imaging, Inc. and LarryPickering (incorporated by reference to Exhibit 10.7 to Lantheus Medical Imaging, Inc.'s RegistrationStatement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.9 Letter Amendment to Employment Agreement, dated January 4, 2010 by and between Lantheus MedicalImaging, Inc. and Larry Pickering (incorporated by reference to Exhibit 10.8 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 1, 2010 (filenumber 333-169785)). 10.10†Sales Agreement, dated as of April 1, 2009, between Lantheus Medical Imaging, Inc. and NTPRadioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.9 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on December 23, 2010 (file number 333-169785)).Table of Contents166Exhibit Description 10.11†Amendment No. 1 to Sales Agreement, dated as of January 1, 2010, between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.10 to LantheusMedical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 1,2010 (file number 333-169785)). 10.12†Amendment No. 2 to Sales Agreement, dated as of January 1, 2010, between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.1 to LantheusMedical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011(file number 333-169785)). 10.13†Purchase and Supply Agreement, dated as of April 1, 2010, between Lantheus Medical Imaging, Inc. andNordion (Canada) Inc. (formerly known as MDS Nordion, a division of MDS (Canada) Inc.)(incorporated by reference to Exhibit 10.12 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 23, 2010 (file number 333-169785)). 10.14†Amendment No. 1 to the Purchase and Supply Agreement, dated as of December 1, 2010, betweenLantheus Medical Imaging, Inc. and Nordion (Canada) Inc. (incorporated by reference to Exhibit 10.13 toLantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31,2010 (file number 333-169785)). 10.15†Amended and Restated Cardiolite License and Supply Agreement, dated January 1, 2004, by and betweenLantheus Medical Imaging, Inc. and Cardinal Health 414, LLC (incorporated by reference toExhibit 10.13 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.16†Amendment No. 1 to the Amended and Restated Supply Agreement (Thallium and Generators), dated asof December 29, 2009 between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC(incorporated by reference to Exhibit 10.26 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.17†Amended and Restated Supply Agreement (Thallium and Generators), dated October 1, 2004, by andbetween Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC (incorporated by reference toExhibit 10.14 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.18†Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing and Rebates, dated as ofFebruary 1, 2008, by and between Lantheus Medical Imaging, Inc. and UPPI (incorporated by referenceto Exhibit 10.15 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 29, 2010 (file number 333-169785)). 10.19†Amendment No. 1 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of April 1, 2008 (incorporated by reference to Exhibit 10.29 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)). 10.20†Amendment No. 2 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of August 1, 2008 (incorporated by reference to Exhibit 10.30 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)).Table of Contents167Exhibit Description 10.21†Amendment No. 3 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of May 1, 2009 (incorporated by reference to Exhibit 10.31 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)). 10.22†Amendment No. 4 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of April 1, 2011 (incorporated by reference to Exhibit 10.2 to Lantheus MedicalImaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (filenumber 333-169785)). 10.23†Extension to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of January 1, 2011, between Lantheus Medical Imaging, Inc. and UPPI (incorporatedby reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for thefiscal year ended December 31, 2010 (file number 333-169785)). 10.24†Amendment No. 5 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of December 14, 2011 (incorporated by reference to Exhibit 10.25 to Lantheus MedicalImaging, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (file number333-169785)). 10.25†Distribution Agreement, dated as of October 31, 2001, by and between Bristol-Myers Squibb PharmaCompany (now known as Lantheus Medical Imaging, Inc.) and Medi-Physics Inc., doing business asAmersham Health (incorporated by reference to Exhibit 10.16 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on December 29, 2010 (file number 333-169785)). 10.26†First Amendment to Distribution Agreement, dated as of January 1, 2005, by and between Bristol-MyersSquibb Medical Imaging, Inc. (formerly known as Bristol-Myers Squibb Pharma Company and nowknown as Lantheus Medical Imaging, Inc.) and Medi-Physics Inc., doing business as G.E. Healthcare(incorporated by reference to Exhibit 10.17 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.27†Manufacturing and Supply Agreement, dated as of April 6, 2009, by and between Lantheus MedicalImaging, Inc., and Mallinckrodt Inc. (a subsidiary of Covidien PLC) (incorporated by reference toExhibit 10.27 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.28†Amendment No. 1 to the Manufacturing and Supply Agreement, dated as of August 2, 2010, by andbetween Lantheus Medical Imaging, Inc. and Mallinckrodt Inc. (a subsidiary of Covidien PLC)(incorporated by reference to Exhibit 10.28 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.29†Amendment No. 2 to the Manufacturing and Supply Agreement, dated as of August 2, 2010, by andbetween Lantheus Medical Imaging, Inc. and Mallinckrodt Inc. (a subsidiary of Covidien PLC)(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended September 30, 2011 (file number 333-169785)).Table of Contents168Exhibit Description 10.30 Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.18 toLantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.31 Amendment No. 1 to Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by referenceto Exhibit 10.19 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.32 Amendment No. 2 to Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by referenceto Exhibit 10.20 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.33 Form of Option Grant Award Agreement (incorporated by reference to Exhibit 10.21 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6, 2010 (filenumber 333-169785)). 10.34 Lantheus Medical Imaging, Inc. Employee Bonus Plan—2009 (incorporated by reference to Exhibit 10.22to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.35 Lantheus Medical Imaging, Inc. 2010 Executive Leadership Team Incentive Bonus Plan (incorporated byreference to Exhibit 10.31 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the fiscalyear ended December 31, 2010 (file number 333-169785)). 10.36 Lantheus Medical Imaging, Inc. Severance Plan Policy (incorporated by reference to Exhibit 10.24 toLantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.37 Letter Amendment to Employment Agreement, dated October 19, 2008 and effective as of January 1,2009 by and between Lantheus Medical Imaging, Inc. and Larry Pickering (incorporated by reference toExhibit 10.25 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 1, 2010 (file number 333-169785)). 10.38 Employment Agreement, dated March 10, 2008, by and between Lantheus Medical Imaging, Inc. andMichael Duffy (incorporated by reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s AnnualReport on Form 10 K for the fiscal year ended December 31, 2011 (file number 333-169785)). 10.39 Retirement Agreement, dated January 3, 2012, by and between Lantheus Medical Imaging, Inc. andRobert Gaffey (incorporated by reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s AnnualReport on Form 10 K for the fiscal year ended December 31, 2011 (file number 333-169785)). 10.40 Amendment No. 2 to Credit Agreement, dated as of January 26, 2012, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on January 30, 2012 (file number 333-169785)).Table of Contents169Exhibit Description 10.41†Second Amendment, effective as of January 1, 2012, to the Distribution Agreement, dated as ofOctober 31, 2001, by and between Lantheus Medical Imaging, Inc., formerly known as Bristol-MyersSquibb Medical Imaging, Inc., and Medi-Physics, Inc., doing business as G.E. Healthcare Inc.(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2012 (file number 333-169785)). 10.42†Manufacturing and Supply Agreement, dated as of February 1, 2012, for the manufacture ofDEFINITY® by and between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC(incorporated by reference to Exhibit 10.2 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2012 (file number 333-169785)). 10.43†Amendment No. 1, effective as of February 9, 2012, to the Amended and Restated Cardiolite License andSupply Agreement by and between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLCentered into as of January 1, 2009 and effective as of January 1, 2004 (incorporated by reference toExhibit 10.3 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly periodended March 31, 2012 (file number 333-169785)). 10.44†Settlement and Mutual Release Agreement, effective as of March 20, 2012, by and between Ben VenueLaboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference to Exhibit 10.4 toLantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2012 (file number 333-169785)). 10.45†Transition Services Agreement, effective as of March 20, 2012, by and between Ben VenueLaboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference to Exhibit 10.5 toLantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2012 (file number 333-169785)). 10.46†Manufacturing and Service Contract for Commercial Products, entered into as of March 20, 2012, by andbetween Ben Venue Laboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference toExhibit 10.6 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly periodended March 31, 2012 (file number 333-169785)). 10.47†First Amendment to Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufactureof DEFINITY® by and between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended June 30, 2012 (file number 333-169785)). 10.48†Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufacture of Cardiolite® byand between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC (incorporated by referenceto Exhibit 10.2 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterlyperiod ended June 30, 2012 (file number 333-169785)). 10.49†Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufacture of Neurolite® byand between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC (incorporated by referenceto Exhibit 10.3 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterlyperiod ended June 30, 2012 (file number 333-169785)).Table of ContentsExhibit Description 10.50†Amendment No. 6 to the Agreement Concerning Cardiolite® and TechneLite® Generator Supply, Pricingand Rebates, effective as of April 1, 2012, by and between Lantheus Medical Imaging, Inc. and UnitedPharmacy Partners, Inc. (incorporated by reference to Exhibit 10.4 to Lantheus Medical Imaging, Inc.'sQuarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (file number 333-169785)). 10.51 Amendment No. 3 to Credit Agreement, dated as of October 11, 2012, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on October 16, 2012 (file number 333-169785)). 10.52*†Amendment No. 2, dated as of October 15, 2012, to the Purchase and Supply Agreement betweenLantheus Medical Imaging, Inc. and Nordion (Canada) Inc. 10.53*†Amendment No. 3, effective as of October 1, 2012, to Sales Agreement between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. 10.54*†Amendment No. 2, effective as of December 27, 2012, to the Amended and Restated Supply Agreement(Thallium and Generators) between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC. 10.55*†Amendment No. 2, effective as of December 27, 2012, to the Amended and Restated Cardiolite® Licenseand Supply Agreement by and between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC. 10.56*†License and Distribution Agreement, effective as of January 1, 2013, by and between Lantheus MedicalImaging, Inc. and FUJIFILM RI Pharma Co., Ltd. 10.57*Separation Agreement, dated February 19, 2013, by and between Lantheus Medical Imaging, Inc. andDon Kiepert. 10.58*Amendment No. 5 to Credit Agreement, dated as of March 25, 2013, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto. 12.1*Statements re: Computation of Ratio of Earnings to Fixed Charges. 14.1 Lantheus Medical Imaging, Inc. Company Code of Conduct and Ethics (incorporated by reference toExhibit 14.1 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the year endedDecember 31, 2010 (file number 333-169785)). 14.2 Lantheus Medical Imaging, Inc. Compliance Code. (incorporated by reference to Exhibit 14.2 to LantheusMedical Imaging, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (filenumber 333-169785)). 21.1 Subsidiaries of Lantheus MI Intermediate, Inc. and Lantheus Medical Imaging, Inc. (incorporated byreference to Exhibit 21.1 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the yearended December 31, 2010 (file number 333-169785)). 24.1*Power of Attorney (included as part of the signature page hereto). 31.1*Certification of Chief Executive Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a)and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002.170Table of Contents171Exhibit Description 31.2*Certification of Chief Financial Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a)and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002. 32.1**Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350,as adopted by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS*XBRL Instance 101.SCH*XBRL Taxonomy Extension Schema 101.CAL*XBRL Taxonomy Extension Calculation 101.DEF*XBRL Taxonomy Extension Definition 101.LAB*XBRL Taxonomy Extension Labels 101.PRE*XBRL Taxonomy Extension Presentation*Filed herewith. **Furnished herewith. †Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities andExchange Commission.Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized. We, the undersigned directors and officers of Lantheus Medical Imaging, Inc., hereby severally constitute and appoint Jeffrey Bailey, Jeffrey E.Young and Michael P. Duffy, and each of them individually, with full powers of substitution and resubstitution, our true and lawful attorneys, with fullpowers to them and each of them to sign for us, in our names and in the capacities indicated below, any and all amendments to this Annual Report onForm 10-K filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power andauthority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents andpurposes as he might or could do in person, hereby ratifying and confirming that any such attorney-in-fact and agent, or his substitute or substitutes,may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. LANTHEUS MEDICAL IMAGING, INC. By: /s/ JEFFREY BAILEY Name: Jeffrey Bailey Title: President and Chief Executive Officer Date: March 28, 2013Signature Title Date /s/ JEFFREY BAILEYJeffrey Bailey President, Chief Executive Officer andDirector (Principal Executive Officer) March 28, 2013/s/ JEFFREY E. YOUNGJeffrey E. Young Chief Financial Officer and Treasurer(Principal Financial Officer) March 28, 2013/s/ BRIAN MARKISONBrian Markison Chairman of the Board of Directors March 28, 2013/s/ DAVID BURGSTAHLERDavid Burgstahler Director March 28, 2013/s/ SAMUEL R. LENOSam R. Leno Director March 28, 2013/s/ PATRICK J. O'NEILLPatrick J. O'Neill Director March 28, 2013/s/ SRIRAM VENKATARAMANSriram Venkataraman Director March 28, 2013Table of ContentsEXHIBIT INDEX Exhibit Description 3.1 Certificate of Incorporation of Lantheus Medical Imaging, Inc., as amended (incorporated by reference toExhibit 3.1 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 3.2 Second Amended and Restated By-Laws of Lantheus Medical Imaging, Inc (incorporated by reference toExhibit 3.2 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 4.1 Indenture, dated as of May 10, 2010, among Lantheus Medical Imaging, Inc., Lantheus MIIntermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington Trust FSB, as trustee(incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 4.2 First Supplemental Indenture, dated as of March 14, 2011, among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington TrustFSB, as trustee (incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s CurrentReport on Form 8-K filed with the Commission on March 16, 2011 (file number 333-169785)). 4.3 Second Supplemental Indenture, dated as of March 21, 2011, among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors, and Wilmington TrustFSB, as trustee (incorporated by reference to Exhibit 4.1 to Lantheus Medical Imaging, Inc.'s CurrentReport on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)). 4.4 Registration Rights Agreement, dated May 10, 2010, by and among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, as guarantors, and Jefferies &Company, Inc. (incorporated by reference to Exhibit 4.2 to Lantheus Medical Imaging, Inc.'s RegistrationStatement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 4.3 Registration Rights Agreement, dated March 21, 2011, by and among Lantheus Medical Imaging, Inc.,Jefferies & Company, Inc., as representative of the initial purchasers and the guarantors party thereto(incorporated by reference to Exhibit 4.2 to Lantheus Medical Imaging, Inc.'s Current Report on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)). 4.5 Form of 9.750% Senior Notes due 2017 (included in Exhibit 4.1). 10.1 Credit Agreement, dated May 10, 2010, by and among Lantheus Medical Imaging, Inc., Lantheus MIIntermediate, Inc., Lantheus MI Real Estate LLC, the lenders from time to time party hereto, Harris N.A.,as collateral agent, Bank of Montreal, as administrative agent, Bank of Montreal and NATIXIS as jointbookrunners, Bank of Montreal and NATIXIS as joint lead arrangers, NATIXIS as syndication agent andJefferies Finance LLC as documentation agent (incorporated by reference to Exhibit 10.1 to LantheusMedical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6,2010 (file number 333-169785)). 10.2 Amendment No. 1 to Credit Agreement, dated as of March 21, 2011, by and among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on March 21, 2011 (file number 333-169785)).Table of ContentsExhibit Description 10.3 Pledge and Security Agreement, dated as of May 10, 2010, by and among Lantheus MedicalImaging, Inc., Lantheus MI Intermediate, Inc., Lantheus MI Real Estate, LLC and Harris N.A. ascollateral agent (incorporated by reference to Exhibit 10.2 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.4 Advisory Services and Monitoring Agreement, dated January 8, 2007, by and between ACP LanternAcquisition, Inc. (now known as Lantheus Medical Imaging, Inc.) and Avista Capital Holdings, L.P.(incorporated by reference to Exhibit 10.3 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.5 Amended and Restated Shareholders Agreement, dated as of February 26, 2008 among Lantheus MIHoldings, Inc., Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certain management shareholders named therein (incorporated by reference toExhibit 10.4 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.6 Employee Shareholders Agreement, dated as of May 8, 2008, among Lantheus MI Holdings, Inc., AvistaCapital Partners, L.P., Avista Capital Partners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certainemployee shareholders named therein (incorporated by reference to Exhibit 10.5 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6, 2010 (filenumber 333-169785)). 10.7 Employment Agreement, dated January 8, 2008 by and between ACP Lantern Acquisition Inc. (nowknown as Lantheus Medical Imaging, Inc.) and Donald Kiepert (incorporated by reference to Exhibit 10.6to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.8 Employment Agreement, dated March 4, 2008 by and between Lantheus Medical Imaging, Inc. and LarryPickering (incorporated by reference to Exhibit 10.7 to Lantheus Medical Imaging, Inc.'s RegistrationStatement on Form S-4 filed with the Commission on October 6, 2010 (file number 333-169785)). 10.9 Letter Amendment to Employment Agreement, dated January 4, 2010 by and between Lantheus MedicalImaging, Inc. and Larry Pickering (incorporated by reference to Exhibit 10.8 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 1, 2010 (filenumber 333-169785)). 10.10†Sales Agreement, dated as of April 1, 2009, between Lantheus Medical Imaging, Inc. and NTPRadioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.9 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on December 23, 2010 (file number 333-169785)). 10.11†Amendment No. 1 to Sales Agreement, dated as of January 1, 2010, between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.10 to LantheusMedical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 1,2010 (file number 333-169785)). 10.12†Amendment No. 2 to Sales Agreement, dated as of January 1, 2010, between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. (incorporated by reference to Exhibit 10.1 to LantheusMedical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011(file number 333-169785)).Table of ContentsExhibit Description 10.13†Purchase and Supply Agreement, dated as of April 1, 2010, between Lantheus Medical Imaging, Inc. andNordion (Canada) Inc. (formerly known as MDS Nordion, a division of MDS (Canada) Inc.)(incorporated by reference to Exhibit 10.12 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 23, 2010 (file number 333-169785)). 10.14†Amendment No. 1 to the Purchase and Supply Agreement, dated as of December 1, 2010, betweenLantheus Medical Imaging, Inc. and Nordion (Canada) Inc. (incorporated by reference to Exhibit 10.13 toLantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31,2010 (file number 333-169785)). 10.15†Amended and Restated Cardiolite License and Supply Agreement, dated January 1, 2004, by and betweenLantheus Medical Imaging, Inc. and Cardinal Health 414, LLC (incorporated by reference toExhibit 10.13 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.16†Amendment No. 1 to the Amended and Restated Supply Agreement (Thallium and Generators), dated asof December 29, 2009 between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC(incorporated by reference to Exhibit 10.26 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.17†Amended and Restated Supply Agreement (Thallium and Generators), dated October 1, 2004, by andbetween Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC (incorporated by reference toExhibit 10.14 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.18†Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing and Rebates, dated as ofFebruary 1, 2008, by and between Lantheus Medical Imaging, Inc. and UPPI (incorporated by referenceto Exhibit 10.15 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 29, 2010 (file number 333-169785)). 10.19†Amendment No. 1 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of April 1, 2008 (incorporated by reference to Exhibit 10.29 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)). 10.20†Amendment No. 2 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of August 1, 2008 (incorporated by reference to Exhibit 10.30 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)). 10.21†Amendment No. 3 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of May 1, 2009 (incorporated by reference to Exhibit 10.31 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on December 23, 2010(file number 333-169785)). 10.22†Amendment No. 4 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of April 1, 2011 (incorporated by reference to Exhibit 10.2 to Lantheus MedicalImaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 (filenumber 333-169785)).Table of ContentsExhibit Description 10.23†Extension to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of January 1, 2011, between Lantheus Medical Imaging, Inc. and UPPI (incorporatedby reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for thefiscal year ended December 31, 2010 (file number 333-169785)). 10.24†Amendment No. 5 to the Agreement Concerning Cardiolite and TechneLite Generator Supply, Pricing andRebates, dated as of December 14, 2011 (incorporated by reference to Exhibit 10.25 to Lantheus MedicalImaging, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (file number333-169785)). 10.25†Distribution Agreement, dated as of October 31, 2001, by and between Bristol-Myers Squibb PharmaCompany (now known as Lantheus Medical Imaging, Inc.) and Medi-Physics Inc., doing business asAmersham Health (incorporated by reference to Exhibit 10.16 to Lantheus Medical Imaging, Inc.'sRegistration Statement on Form S-4 filed with the Commission on December 29, 2010 (file number 333-169785)). 10.26†First Amendment to Distribution Agreement, dated as of January 1, 2005, by and between Bristol-MyersSquibb Medical Imaging, Inc. (formerly known as Bristol-Myers Squibb Pharma Company and nowknown as Lantheus Medical Imaging, Inc.) and Medi-Physics Inc., doing business as G.E. Healthcare(incorporated by reference to Exhibit 10.17 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.27†Manufacturing and Supply Agreement, dated as of April 6, 2009, by and between Lantheus MedicalImaging, Inc., and Mallinckrodt Inc. (a subsidiary of Covidien PLC) (incorporated by reference toExhibit 10.27 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 23, 2010 (file number 333-169785)). 10.28†Amendment No. 1 to the Manufacturing and Supply Agreement, dated as of August 2, 2010, by andbetween Lantheus Medical Imaging, Inc. and Mallinckrodt Inc. (a subsidiary of Covidien PLC)(incorporated by reference to Exhibit 10.28 to Lantheus Medical Imaging, Inc.'s Registration Statement onForm S-4 filed with the Commission on December 1, 2010 (file number 333-169785)). 10.29†Amendment No. 2 to the Manufacturing and Supply Agreement, dated as of August 2, 2010, by andbetween Lantheus Medical Imaging, Inc. and Mallinckrodt Inc. (a subsidiary of Covidien PLC)(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended September 30, 2011 (file number 333-169785)). 10.30 Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.18 toLantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.31 Amendment No. 1 to Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by referenceto Exhibit 10.19 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.32 Amendment No. 2 to Lantheus MI Holdings, Inc. 2008 Equity Incentive Plan (incorporated by referenceto Exhibit 10.20 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on October 6, 2010 (file number 333-169785)). 10.33 Form of Option Grant Award Agreement (incorporated by reference to Exhibit 10.21 to Lantheus MedicalImaging, Inc.'s Registration Statement on Form S-4 filed with the Commission on October 6, 2010 (filenumber 333-169785)).Table of ContentsExhibit Description 10.34 Lantheus Medical Imaging, Inc. Employee Bonus Plan—2009 (incorporated by reference to Exhibit 10.22to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.35 Lantheus Medical Imaging, Inc. 2010 Executive Leadership Team Incentive Bonus Plan (incorporated byreference to Exhibit 10.31 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the fiscalyear ended December 31, 2010 (file number 333-169785)). 10.36 Lantheus Medical Imaging, Inc. Severance Plan Policy (incorporated by reference to Exhibit 10.24 toLantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with the Commission onOctober 6, 2010 (file number 333-169785)). 10.37 Letter Amendment to Employment Agreement, dated October 19, 2008 and effective as of January 1,2009 by and between Lantheus Medical Imaging, Inc. and Larry Pickering (incorporated by reference toExhibit 10.25 to Lantheus Medical Imaging, Inc.'s Registration Statement on Form S-4 filed with theCommission on December 1, 2010 (file number 333-169785)). 10.38 Employment Agreement, dated March 10, 2008, by and between Lantheus Medical Imaging, Inc. andMichael Duffy (incorporated by reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s AnnualReport on Form 10 K for the fiscal year ended December 31, 2011 (file number 333-169785)). 10.39 Retirement Agreement, dated January 3, 2012, by and between Lantheus Medical Imaging, Inc. andRobert Gaffey (incorporated by reference to Exhibit 10.21 to Lantheus Medical Imaging, Inc.'s AnnualReport on Form 10 K for the fiscal year ended December 31, 2011 (file number 333-169785)). 10.40 Amendment No. 2 to Credit Agreement, dated as of January 26, 2012, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on January 30, 2012 (file number 333-169785)). 10.41†Second Amendment, effective as of January 1, 2012, to the Distribution Agreement, dated as ofOctober 31, 2001, by and between Lantheus Medical Imaging, Inc., formerly known as Bristol-MyersSquibb Medical Imaging, Inc., and Medi-Physics, Inc., doing business as G.E. Healthcare Inc.(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2012 (file number 333-169785)). 10.42†Manufacturing and Supply Agreement, dated as of February 1, 2012, for the manufacture ofDEFINITY® by and between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC(incorporated by reference to Exhibit 10.2 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2012 (file number 333-169785)). 10.43†Amendment No. 1, effective as of February 9, 2012, to the Amended and Restated Cardiolite License andSupply Agreement by and between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLCentered into as of January 1, 2009 and effective as of January 1, 2004 (incorporated by reference toExhibit 10.3 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly periodended March 31, 2012 (file number 333-169785)).Table of ContentsExhibit Description 10.44†Settlement and Mutual Release Agreement, effective as of March 20, 2012, by and between Ben VenueLaboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference to Exhibit 10.4 toLantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2012 (file number 333-169785)). 10.45†Transition Services Agreement, effective as of March 20, 2012, by and between Ben VenueLaboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference to Exhibit 10.5 toLantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2012 (file number 333-169785)). 10.46†Manufacturing and Service Contract for Commercial Products, entered into as of March 20, 2012, by andbetween Ben Venue Laboratories, Inc. and Lantheus Medical Imaging, Inc. (incorporated by reference toExhibit 10.6 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterly periodended March 31, 2012 (file number 333-169785)). 10.47†First Amendment to Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufactureof DEFINITY® by and between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC(incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'s Quarterly Report onForm 10-Q for the quarterly period ended June 30, 2012 (file number 333-169785)). 10.48†Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufacture of Cardiolite® byand between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC (incorporated by referenceto Exhibit 10.2 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterlyperiod ended June 30, 2012 (file number 333-169785)). 10.49†Manufacturing and Supply Agreement, dated as of May 3, 2012, for the manufacture of Neurolite® byand between Lantheus Medical Imaging, Inc. and Jubilant HollisterStier LLC (incorporated by referenceto Exhibit 10.3 to Lantheus Medical Imaging, Inc.'s Quarterly Report on Form 10-Q for the quarterlyperiod ended June 30, 2012 (file number 333-169785)). 10.50†Amendment No. 6 to the Agreement Concerning Cardiolite® and TechneLite® Generator Supply, Pricingand Rebates, effective as of April 1, 2012, by and between Lantheus Medical Imaging, Inc. and UnitedPharmacy Partners, Inc. (incorporated by reference to Exhibit 10.4 to Lantheus Medical Imaging, Inc.'sQuarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (file number 333-169785)). 10.51 Amendment No. 3 to Credit Agreement, dated as of October 11, 2012, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto (incorporated by reference to Exhibit 10.1 to Lantheus Medical Imaging, Inc.'sCurrent Report on Form 8-K filed with the Commission on October 16, 2012 (file number 333-169785)). 10.52*†Amendment No. 2, dated as of October 15, 2012, to the Purchase and Supply Agreement betweenLantheus Medical Imaging, Inc. and Nordion (Canada) Inc. 10.53*†Amendment No. 3, effective as of October 1, 2012, to Sales Agreement between Lantheus MedicalImaging, Inc. and NTP Radioisotopes (Pty) Ltd. 10.54*†Amendment No. 2, effective as of December 27, 2012, to the Amended and Restated Supply Agreement(Thallium and Generators) between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC. 10.55*†Amendment No. 2, effective as of December 27, 2012, to the Amended and Restated Cardiolite® Licenseand Supply Agreement by and between Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC.Table of ContentsExhibit Description 10.56*†License and Distribution Agreement, effective as of January 1, 2013, by and between Lantheus MedicalImaging, Inc. and FUJIFILM RI Pharma Co., Ltd. 10.57*Separation Agreement, dated February 19, 2013, by and between Lantheus Medical Imaging, Inc. andDon Kiepert. 10.58*Amendment No. 5 to Credit Agreement, dated as of March 25, 2013, among Lantheus MedicalImaging, Inc., as borrower, Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC, asguarantors, Bank of Montreal, as administrative agent, Harris N.A., as collateral agent and the otherlenders party thereto. 12.1*Statements re: Computation of Ratio of Earnings to Fixed Charges. 14.1 Lantheus Medical Imaging, Inc. Company Code of Conduct and Ethics (incorporated by reference toExhibit 14.1 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the year endedDecember 31, 2010 (file number 333-169785)). 14.2 Lantheus Medical Imaging, Inc. Compliance Code. (incorporated by reference to Exhibit 14.2 to LantheusMedical Imaging, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (filenumber 333-169785)). 21.1 Subsidiaries of Lantheus MI Intermediate, Inc. and Lantheus Medical Imaging, Inc. (incorporated byreference to Exhibit 21.1 to Lantheus Medical Imaging, Inc.'s Annual Report on Form 10-K for the yearended December 31, 2010 (file number 333-169785)). 24.1*Power of Attorney (included as part of the signature page hereto). 31.1*Certification of Chief Executive Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a)and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002. 31.2*Certification of Chief Financial Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a)and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002. 32.1**Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350,as adopted by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS*XBRL Instance 101.SCH*XBRL Taxonomy Extension Schema 101.CAL*XBRL Taxonomy Extension Calculation 101.DEF*XBRL Taxonomy Extension Definition 101.LAB*XBRL Taxonomy Extension Labels 101.PRE*XBRL Taxonomy Extension Presentation*Filed herewith. **Furnished herewith. †Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities andExchange Commission.Exhibit 10.52 CONFIDENTIAL TREATMENT REQUESTED INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND NOTED WITH “****”. ANUNREDACTED VERSION OF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES AND EXCHANGECOMMISSION. October 15, 2012 Nordion447 March RoadP.O. Box 13500Ottawa, Ontario, K2K 1X8Attention: Vice President, Global Sales Re: Amendment No. 2 to Molybdenum-99 Purchase & Supply Agreement Ladies and Gentlemen: Reference is made to a Molybdenum-99 Purchase & Supply Agreement dated as of April 1, 2010 (as amended by Amendment No. 1, effective as ofDecember 1, 2010, collectively, the “Agreement”) between Lantheus Medical Imaging, Inc. and Nordion (Canada) Inc. (formerly MDS (Canada) Inc.). Termsdefined in the Agreement and not otherwise defined herein are used herein with the meanings so defined. IN CONSIDERATION of the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the sufficiency ofwhich is hereby acknowledged, the parties hereby agree to enter into this Amendment No. 2 to the Agreement (the “Amendment”) as of October 15, 2012 (the“Amendment Effective Date”) as follows: 1. Amendments. 1.1. Section 1.1.6 of the Agreement is hereby amended effective as of the Amendment Effective Date by deleting in its entirety saidSection 1.1.6 and replacing therewith the following: “1.1.6 “Contract Term” means the term of this Agreement, which shall commence as of the Effective Date and terminate as ofDecember 31, 2015 unless otherwise extended or terminated pursuant to this Agreement.” 1.2. Section 3.4 of the Agreement is hereby amended effective as of the Amendment Effective Date by deleting in its entirety said Section 3.4 andreplacing therewith the following: “3.4 Purchase Volumes. The purchase volume obligations set forth in this Section 3.4 are subject to the terms of this Agreement,including, but not limited to, Sections 4.4, 4.7 and 6.2, and subject to Nordion’s ability to supply Product to LMI meeting therequirements of this Agreement and acceptance by Nordion of LMI’s Firm Orders sufficient to meet LMI’s purchase volumecommitments in this Section 3.4. 3.4.1. During the portion of the Contract Term from and after **** until ****, LMI hereby commits to purchase from Nordionan average Calendar Week volume of **** Ci of Product (such determination shall be based on the calibration as set forth inSchedule C) as averaged over each separate but successive period of **** Calendar Weeks (each a “****-Week Period”) (with apro-rata adjustment as applicable for any portion of a ****-Week Period occurring as at ****). Compliance with LMI’s averagepurchase volume commitments will be calculated by the parties as of the end of each aforementioned successive ****-WeekPeriod. Nordion shall invoice LMI for any necessary true-up payments within **** (****) days of the end of each successive****-Week Period. 3.4.2. In addition, commencing as of **** and continuing through ****, LMI shall place additional Product orders withNordion corresponding to at least **** of LMI’s “incremental volume” requirements of Molybdenum-99 in each successive****-Week Period (with a pro-rata adjustment as applicable for any portion of a ****Week Period occurring as at ****), andNordion shall fill such incremental volume orders, provided that such purchase obligation shall only apply in those CalendarWeeks to the extent to which Nordion is able to satisfy such additional LMI purchase volume obligations. For purposes of clarity,“incremental volume” shall mean any and all of LMI’s Calendar Week requirements for Molybdenum-99 in excess of the sum of(i) LMI’s minimum purchase volume commitment of **** Ci per Calendar Week of Product from Nordion (such determinationshall be based on the calibration as set forth in Schedule C) plus (ii) LMI’s Calendar Week purchase volume contractualcommitments in writing for Molybdenum-99 from its other suppliers which existed on **** (such determination shall be basedon the calibration as set forth in Schedule C). Such purchase volume contractual commitments shall remain fixed for purposes ofcalculating LMI’s allocation of “incremental volume” from and after ****. 3.4.3. (i) Commencing as of **** and continuing through ****, LMI shall place Product orders with Nordion corresponding toat least **** percent (****%) of LMI’s total requirements for Product (such determination shall be based on the calibration as setforth in Schedule C) in such period, and Nordion shall fill such orders, provided that such purchase obligation shall only applyin those Calendar Weeks in which Nordion is able to satisfy such LMI purchase volume obligations. 2 (ii) Commencing as of **** and continuing through ****, LMI shall place Product orders with Nordion in accordance with theminimum percentage of LMI’s total requirements during each respective time period, as set out in the chart below, in each separatebut successive calendar quarter (and for the purposes of smooth order management and supply during periods of normal supply,LMI will make a good faith effort to place routine weekly orders, for the quantity of Product set forth in each Forecast), andNordion shall fill such orders, provided that such LMI purchase volume obligation shall only apply to the extent to whichNordion is able to satisfy such LMI purchase volume obligations. Time PeriodMinimum percentage of LMI’s total requirementsfor Molybdenum-99 in each ******** — ******** percent (****%)**** — ******** percent (****%) Such purchase amount shall be calculated based on the Product calibration as set forth in Schedule C. To the extent that Nordionis unable to supply the quantities of Product described herein, the parties acknowledge and agree that LMI shall have the right topurchase Product from any third party supplier of Product during the period of such Nordion inability to supply (which, forpurposes of a planned outage, shall be a period not less than the period reasonably forecasted by Nordion for such outage prior tothe shutdown), and to such extent and for the duration of such third party purchases, LMI shall not be in violation of thepurchase volume obligations set forth herein and shall to such extent be correspondingly relieved of such purchase volumeobligation. 3.4.4. At any time reasonably requested by Nordion (but no more frequently than **** per calendar year) during the ContractTerm, LMI will furnish to Nordion, within ten (10) days after the date on which it receives a written request to do so, a certificate,executed by the chief executive officer of LMI, certifying that such officer has reviewed LMI’s records with respect to LMI’s ordersfor LMI’s “incremental volume” of Product from **** through ****, if any, or LMI’s orders for Molybdenum-99 from ****through ****, as applicable, during the preceding **** (****) month period (or such shorter time as may have elapsed since thedate of the last certificate), and that LMI has complied or failed to comply with its obligations set forth in Sections 3.4.2 or 3.4.3,as applicable. If LMI has failed to comply with its obligations set forth in Sections 3.4.2 or 3.4.3, as applicable, then LMI shallhave the right to elect a Cure Election under Section 3.4.5. 3.4.5. In the event that LMI’s certification indicates that LMI has failed to comply with the applicable purchase commitmentsunder Section 3.4.2 or 3.4.3, LMI shall elect, such election to be exercised by LMI by notice in writing received by Nordion withinten (10) days after the date on which LMI would otherwise have been required to deliver such officer certification, to either (i) In addition to meeting its ongoing purchase commitments, purchase from Nordion within and, from time to time,during the period of **** (****) days following receipt by Nordion of LMI’s notice of election, such quantities ofProduct as should have otherwise been purchased from 3 Nordion had LMI satisfied its applicable purchase volume obligations under Sections 3.4.2 or 3.4.3, as applicable, toNordion, or (ii) In addition to meeting its ongoing purchase commitments, pay to Nordion within **** days following receipt byNordion of LMI’s notice of election, the balance of the amount corresponding to the purchase volume obligations thatwould have otherwise been due and payable had LMI satisfied its applicable purchase volume obligations underSections 3.4.2 or 3.4.3, as applicable (the action elected under clause (i) or (ii) of this Section 3.4.5, a “Cure Election”). In the event that LMI fails to elect and/or notify Nordion of a Cure Election within the specified time period or, if it makes a CureElection but does not comply with and satisfy its obligations under a Cure Election, then, in addition to and notwithstanding anyother remedies set forth in this Agreement or available to Nordion in law or equity, Nordion may upon written notice to LMIimmediately suspend further supply of any Product to LMI until such obligations are satisfied in full. For the sake of clarity, theparties acknowledge and agree that, to the extent Nordion exercises its right to suspend further supply of Product to LMI pursuantto this Agreement, LMI shall have no obligation to purchase the aforementioned purchase volume commitments during the periodof suspended supply of Product or make any payments with respect thereto. In addition, if LMI elects the Cure Election inSection 3.4.5(i) and Nordion fails to supply Product under such election or fully perform thereunder, then LMI’s underlyingobligation and commitments in connection with such portion of that Cure Election shall be subject to a corresponding reduction inthe quantity of Product LMI is otherwise obligated to purchase from Nordion under Section 3.4.5(i). If there is less than ****(****) days left in the Contract Term at the time of a Cure Election, then LMI’s election shall be limited to the Cure Election underSection 3.4.5(ii). Notwithstanding the foregoing, LMI shall have the right to provide Nordion with one or more officercertifications under Section 3.4.4 during the last **** (****) months of the Contract Term. Such self-certifications shall limit theavailable period of time covered by any officer certification subsequently requested by Nordion under Section 3.4.4.” 1.3 Section 5.1 of the Agreement is hereby amended effective as of the Amendment Effective Date by adding the following at the endof Section 5.1. “Except as follows, the Product Fee for orders of Product described in Section 3.4 shall be in accordance with the provisions ofthis Section 5.1. If at any time during the Contract Term after **** (such period referred to herein as the “Fee Change Period”)there is or will be in effect a sustained increase to Nordion’s cost of Molybdenum-99 supplied by the NRU Reactor for use in theproduction of Product that exceeds **** percent (****%) of the cost charged to Nordion for Molybdenum-99 as determinedusing Nordion’s cost calculation in effect as at the Amendment Effective Date (“Cost Threshold”), Nordion, at its option mayeither: (i) upon at least **** (****) days prior written notice to LMI at any time increase the Product Fee to LMI applicable in the FeeChange Period in an 4 amount corresponding to **** (****) of the increase in cost incurred by Nordion in effect on the effective date of such notice forthe purchase of Molybdenum-99 supplied by the NRU reactor in excess of the Cost Threshold as calculated on a per curie basisfor such purchases (provided that for greater certainty, such increase in the Product Fees shall only apply to Molybdenum-99supplied from the NRU Reactor), or (ii) terminate this Agreement in accordance with Section 6.4. Nordion shall include with any notice to LMI with respect to section 5.1 subparagraph (i) above, a certificate issued by its ChiefFinancial Officer certifying that the increase in the cost to Nordion in the cost of Molybdenum-99 exceeds the Cost Threshold andthat any Product Fee increase has been determined in accordance with Section 5.1 subparagraph (i).” The following example shall serve for illustrative purposes only: Example: If the Product Fee to LMI is $****/curie and the cost of Molybdenum-99 supplied by the NRU reactor was $****/curie (as atthe Amendment Effective Date) and Nordion is subject to a cost increase of $****/curie the Product Fee to LMI with respect toMolybdenum-99 supplied by the NRU Reactor will be determined as follows: Price increase: ****% x ($**** — (****% x $****)) = $****/curie New Product Fee: $****/curie plus $****/curie = $****/curie” 1.4 Section 6 of the Agreement is hereby amended effective as of the Amendment Effective Date by adding the following Sections 6.4and 6.5. “6.4 Nordion Right of Termination. Nordion shall be entitled to terminate this Agreement in the circumstances set out inSection 5.1 sub paragraph (ii). In such event, Nordion shall provide at least **** (****) days prior written notice of terminationto LMI, provided that any such termination shall not in any event be effective earlier than October 1, 2014. In such event,Nordion shall include with any written termination notice a certificate issued by Nordion’s Chief Financial Officer certifying thatthe increase in the cost to Nordion in the cost of Molybdenum-99 exceeds the Cost Threshold.” “6.5 LMI Right of Termination. In the event that that the Product Fee increase by Nordion during the Fee Change Period pursuantto Section 5.1(i) exceeds **** percent (****%) of the applicable Product Fee charged by Nordion to LMI during the Fee ChangePeriod as set out in Schedule D, LMI shall be entitled to terminate this Agreement by providing to Nordion at least **** (****)days prior written notice of termination.” 5 1.5 Schedule C is hereby amended effective as of the Amendment Effective Date by deleting the illustrations entitled “Incremental VolumeIllustration” and “Requirements Illustration” in their entirety. 1.6 Section 16.5 of the Agreement is hereby amended by adding the following language after the first sentence: “Nordion shall be required to provide LMI at least **** (****) days prior written notice of any transaction or series of relatedtransactions, which, after giving effect to such transaction or transactions, would result in the sale, lease, transfer or otherdisposition by Nordion of all or any substantial part of the assets or business of Nordion to which this Agreement relates. In theevent of such transaction Nordion will be responsible for the fulfillment of its obligations to supply Product under this Agreement,or in the event Nordion assigns this Agreement, Nordion shall ensure that as a condition of such transaction or transactions, suchacquirer, successor or transferee, as the case may be, agrees to be bound by all of the obligations of Nordion (or the applicableportion thereof) arising from and after the date of such assignment under this Agreement and LMI shall correspondingly be boundto such assignee for its obligations for such period. LMI and Nordion otherwise shall remain responsible to each other hereunderfor their respective obligations prior to such period.” 1.7 Schedule D is hereby amended effective as of the Amendment Effective Date by deleting it in its entirety and replacing therewith thefollowing: “Product Fee for Product ordered for delivery during **** through **** (the “**** Period”): Curies of Product (****-dayprecal) ordered fordelivery by LMIper successive ****-Week PeriodProduct FeeProduct ordered for deliveryby LMIfrom ****until ****Up to **** Ci/****-WkUS$****/CiEach Ci > **** Ci/****-WkUS$****/Ci LMI shall pay all undisputed invoices for Product outstanding as of **** (including, pursuant to Section 3.4.1, any true-up payments dueand payable for the portion of the 4-Week Period ending on ****) within **** (****) days of such date. In addition, to the extent thatNordion is unable to supply quantities of Product required to be purchased by LMI during the **** Period for any reason the Product Feefor LMI’s orders in the first period following the **** Period during which Nordion is able to perform hereunder, will be **** to theapplicable price set forth above for the **** Period for the volume of Product LMI is required to purchase for the then-current period untilsuch time as the quantity of such purchases of Product for such period equal the quantity of Product that LMI would have otherwise beenrequired to purchase during the **** Period if Nordion had been able to supply such quantities of Product hereunder. 6 Product Fee for Product ordered for delivery during **** through **** (the “**** Period”): US$****/Ci (****-day precal) To the extent that Nordion is unable to supply quantities of Product required to be purchased by LMI during the **** Period for anyreason, the Product Fee for LMI’s orders in the first period following the **** Period during which Nordion is able to perform hereunderwill be **** to US$****/Ci (i.e., corresponding to the price set forth above for the **** Period) for the volume of Product LMI is requiredto purchase for the then-current period until such time as the quantity of such purchases of Product for such period equal the quantity ofProduct that LMI would have otherwise been required to purchase during the **** Period if Nordion had been able to supply suchquantities of Product hereunder. Product Fee for Product ordered for delivery during **** through **** (the “****”): US$****/Ci (****-day precal) for Product ordered for delivery during the ****Period from **** — ****. US$****/Ci (****-day precal) for Product ordered for delivery during the **** Period from **** — ****. US$****/Ci (****-day precal) for Product ordered for delivery during the **** Period from **** — ****. Notwithstanding the foregoing provisions, if at any point during the **** Period the total invoiced amount for Product exceeds **** (the“****Threshold Amount”) for such period, then the Product Fee shall be automatically reduced to US$****/Ci (****-day precal) forany amounts above the **** Threshold Amount for such period. Product Fee for Product ordered for delivery during **** through ****: Product FeeProduct ordered for delivery by LMIfrom ****until ****Product FeeProduct ordered for delivery by LMIfrom ****until ****US$****/Ci (****-day precal)US$****/Ci (****-day precal) x CPI On ****, the Product Fee shall be ****by an amount equal to the change in the ****, if any, for the ****. Such changes in the ProductFee shall be communicated in writing by Nordion to LMI no later than on or about **** (or so soon thereafter as the ****is published). For purposes of this Agreement, “****” means the ****, as published in the ****. In the event that publication of the **** isdiscontinued, the parties will agree on an appropriate substitute index that is substantially similar in substantive coverage. In addition, beginning on ****, in the event there are any applicable government charges that specifically and expressly apply to the use ofMolybdenum-99 derived from highly 7 enriched uranium (including tariffs, duties, excises, taxes, reimbursement penalties or other governmental charges) that negatively impactLMI, both parties agree to discuss and negotiate, in good faith, modifications to this Agreement to moderate and otherwise reduce suchnegative impact.” 2. Effective Date. This Amendment shall be deemed to be effective as of the Amendment Effective Date. 3. General. Except as specifically amended hereby, the Agreement remains in full force and effect and otherwise unamended hereby, and any reference in theAmendment to “this Agreement”, “the Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Agreement asamended by this Amendment. This Amendment constitutes a final written expression of the terms hereof and is a complete and exclusive statement of thoseterms. This Amendment may be executed in two or more counterparts, each of which, when executed, shall be deemed to be an original but all of which whentaken together shall constitute one and the same agreement. Signatures hereto may be delivered by facsimile, by electronic mail (e.g., a “pdf” file) or by anyother electronic means that is intended to preserve the original appearance of the document, and such delivery will have the same effect as the delivery of thepaper document bearing the actual handwritten signatures. If the foregoing is in accordance with your understanding of our agreement, please sign this Amendment in the place indicated below. Thank you. Sincerely, LANTHEUS MEDICAL IMAGING, INC. By:/s/ William C. Dawes, Jr.Name and Title: VP, Manufacturing and OpearationsDate: 10-17-2012 Acknowledged and agreed: Nordion (Canada) Inc. By:/s/ Steve WestName and Title: S.M. West, CEODate:10-19-2012 Copy: Nordion447 March RoadP.O. Box 13500Ottawa, Ontario K2K 1X8Attn: Associate General Counsel 8Exhibit 10.53 CONFIDENTIAL TREATMENT REQUESTED INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND NOTED WITH “****”. ANUNREDACTED VERSION OF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES AND EXCHANGECOMMISSION. Execution VersionCONFIDENTIAL Amendment No. 3 to Sales Agreement THIS AMENDMENT NO. 3 TO SALES AGREEMENT (this “Amendment”) is made effective as of October 1, 2012 by and between NTP Radioisotopes(Pty) Ltd., a commercial company registered and existing under the laws of the Republic of South Africa, having its registered office at Building 1700,Pelindaba, Church Street West Extension, Brits District, North West Province of South Africa (“NTP”), and Lantheus Medical Imaging, Inc., a corporationorganized and existing under the laws of Delaware with a place of business at 331 Treble Cove Road, North Billerica, Massachusetts, United States ofAmerica 01862 (“Lantheus”). WHEREAS: 1. Lantheus and NTP, on behalf of itself and its Subcontractor, IRE, entered into a Sales Agreement effective as of April 1, 2009 (the “SalesAgreement”); 2. Lantheus and NTP, on behalf of itself and its Subcontractor, IRE, entered into Amendment No. 1 to the Sales Agreement effective as of January 1,2010 (“Amendment No.1”); 3. Lantheus and NTP, on behalf of itself and its Subcontractors, IRE and ANSTO, entered into Amendment No. 2 to the Sales Agreement effective asof April 1, 2011 (together with the Sales Agreement and Amendment No. 1, collectively, the “Agreement”); 4. In support of international objectives to eliminate the use of highly enriched uranium (“HEU”) in civil nuclear applications, Lantheus, NTP and itsSubcontractors have made a significant, diligent and cooperative effort to develop a more robust supply of Products for Lantheus derived from lowenriched uranium (“LEU”), which resulted in Lantheus having the first Technetium-99m generators utilizing LEU-based Product qualified andapproved by the United States Food and Drug Administration; 5. In connection with these efforts, NTP and its Subcontractors have agreed to increase their production of LEU-based Product made available toLantheus; and 6. NTP, on behalf of itself and its Subcontractors, and Lantheus wish to further amend the Agreement to extend its term and specify pricing andvolume levels for the supply of Product from October 1, 2012 through December 31, 2017 by restating certain existing provisions of the Agreementand further amending or supplementing such provisions to give effect to such amendments effective as of the date hereof. NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the receiptand sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. Terms defined in the Agreement and not otherwise defined herein are used herein with the meanings so defined. 2. Amendments. 2.1 Section 2.1 of the Agreement is hereby amended by deleting in its entirety said Section 2.1 and replacing therewith the following: 2.1 Subject to the terms of this Agreement, the parties hereby agree as follows: (a) [Intentionally left blank.] (b) Commencing as of **** and continuing through ****, Lantheus shall commit to place minimum routine Product orders withNTP on a regular weekly basis as follows: Time PeriodPercentage of Lantheus’ totalrequirements of Product as measured on atrailing **** basis**** — ******** percent (****%)**** — ******** percent (****%)**** — ******** percent (****%)**** — ******** percent (****%)**** — ******** percent (****%) NTP shall supply such orders placed by Lantheus, provided that, as set forth in Section 2.1(c), such obligation shall only apply in thoseweeks in which NTP and its Subcontractors are able to satisfy, and NTP and its Subcontractors do satisfy, such obligations. Inaddition, to the extent that NTP is unable to supply the quantities of Product requested by Lantheus hereunder, the parties acknowledgeand agree that Lantheus shall have the right to purchase Product from any third party supplier of Product during the period of suchunavailability and for a reasonable period of time before or after such period, and to the extent and for the duration of such third partypurchases Lantheus shall not be in violation of the purchase commitment set forth herein and shall be relieved of its purchase volumeobligations for such period. Lantheus will continue to provide NTP with a good faith, non binding Forecast on the **** day of each****. Lantheus will also continue 2 to provide NTP with firm orders for Product at least **** (****) days in advance of the required date of Product shipment. TheParties hereby agree to meet no later than **** to discuss in good faith the terms of a supply agreement beyond the term of thisAgreement. (c) Such Product shall be supplied and delivered to John F. Kennedy International Airport, Jamaica, New York (“JFK”) orLogan International Airport, Boston, Massachusetts (“BOS”) (or other mutually agreed upon delivery location) on a mutually agreedschedule with follow-on trucking delivery to the Lantheus facility in North Billerica, Massachusetts. Lantheus shall provide NTP withnotice of its intention to change such location at least forty-five (45) days in advance of the required inception date of such changes. NTP shall be responsible to ensure that the full **** quota of Mo-99 is delivered to Lantheus other than during scheduled outages forroutine maintenance and unscheduled outages or failures of the production lines of NTP and its Subcontractors (i.e., under conditionsof normal operations prevailing at NTP and its Subcontractors’ facilities). Subject to the terms set forth herein (including, but notlimited to, the requirements relating to LEU-based Product set forth below), at the discretion of the Account Manager at NTP(“Account Manager”), such material shall be supplied by NTP or its Subcontractors. Lantheus shall be advised in a timely way of themanner in which supply obligations hereunder will be allocated among NTP and its Subcontractors. NTP will schedule deliveries toLantheus so as to compensate for scheduled outages at either facility in such a way that the full amount of Product ordered by Lantheus(including, subject to the provisions of Section 2.1(d), any specific quantities of LEU-based Product) will be maintained under suchcircumstances. (d) For any supply of Product by NTP and its Subcontractors during the Term, NTP and its Subcontractors will increaseproduction levels of LEU-based Product so as to make available to Lantheus LEU-based Product, unless otherwise directed byLantheus, as follows: Time PeriodAverage curies per week of LEU-based Product,with a **** (****) day reference, as measured ona quarterly basis**** — ****At least **** curies per ******** — ****At least **** curies per ******** — ******** percent (****%) of Lantheus’ demand for Product Lantheus will include the amount of HEU and LEU-based Product that it expects to order from NTP and its Subcontractors in eachForecast. In addition, notwithstanding the production levels set forth above (which shall not be construed as limits on Lantheus’orders for LEU- based Product), for each **** during the period from **** through ****, the average weekly 3 volume of LEU-based Product that Lantheus reasonably expects to order from NTP and its Subcontractors in such **** (as measuredon a **** basis during such ****, the “LEU Demand”) will be communicated by Lantheus to NTP no later than **** of theimmediately preceding **** (e.g., the LEU Demand for each **** during the period from **** through **** will be communicated toNTP no later than ****). It is understood and agreed that the LEU Demand is only an estimate and not a binding forecast for anyrelevant period, provided, however, that both Parties acting in good faith will use commercially reasonable efforts to achieve thecommon goal described herein relating to the development of a more robust supply of LEU-based Product by NTP and itsSubcontractors and an associated increase in demand from Lantheus. The accuracy of the LEU Demand for the then-current calendarquarter will be reviewed on a **** basis and where appropriate modified by Lantheus’ Forecast and NTP’s ability to supply. To theextent that the total volume of LEU-based Product available for sale by NTP and its Subcontractors is not sufficient to meet all customerorders for any reason, NTP and its Subcontractors shall supply Lantheus’ orders **** (referred to herein as a “****”) with LEU-based Product, provided that, during periods of normal supply from **** through ****, the amount of LEU-based Product availableto Lantheus on a **** will be limited to the LEU Demand for such period (as modified by Lantheus’ Forecasts). For purposes ofclarity, the parties acknowledge and agree that, in the event of an outage or supply shortage affecting Lantheus’ supply of Product, anyamounts of Product ordered by Lantheus hereunder on a weekly basis (including any amounts of Product in excess of the purchasevolume commitments set forth in Section 2.1(b) or the LEU Demand for such period) shall be filled by NTP and its Subcontractors withLEU-based Product on a ****. The parties further acknowledge and agree that NTP’s and its Subcontractors’ supply of LEU-basedProduct to Lantheus on a **** and the purchase volume commitments set forth in Section 2.1(b) are essential to the purpose of thisAgreement (including, but not limited to, the extended term set forth herein). NTP and its Subcontractors shall use their best efforts tosupply any amounts of LEU-based Product ordered by Lantheus, with the understanding that NTP’s or its Subcontractors’ ability tosupply such LEU-based Product may be affected by their scheduled outages for routine maintenance or unscheduled outages orfailures of production lines. The parties will work together in good faith to establish supply schedules for the production and supply ofLEU-based Product from NTP and its Subcontractors based on the market demand for the manufacture and supply of Lantheus’Technetium-99m generators. NTP and its Subcontractors will also ensure the segregation of HEU and LEU-based Product when amix of such Product is delivered to Lantheus in one aggregate shipment. The parties acknowledge and agree that the levels of LEU-based Product set forth in this Section 2.1(d) shall not be construed as a “take-or-pay” or minimum volume requirement that otherwisemodifies Section 2.1(a) hereof. 4 (e) In the case of scheduled or unscheduled outages or production line failures for whatever reason (and for Events of ForceMajeure (as hereinafter defined)) affecting NTP or its Subcontractors, Lantheus will receive, in addition to any available supply ofLEU-based Product, a share of HEU-based Product available that is not **** than that which is **** its average share of the ****purchasing (averaged over the preceding ****) from NTP and its Subcontractors. NTP and its Subcontractors will also use their bestefforts to make available any additional volumes of Product requested by Lantheus and, provided that Lantheus has satisfied itspurchase volume commitments set forth in Section 2.1(b) for the immediately preceding **** period and Lantheus is **** during suchperiod (as calculated consistent with calibrations as set out in Section 2.5), shall provide Lantheus with a right to purchase any Productavailable for sale by NTP or its Subcontractors on a ****. For clarity and as an example: If NTP or its Subcontractors experiences a production line failure affecting the supply of Product hereunder, and NTP and itsSubcontractors sold an average **** volume of **** curies of Product, and Lantheus purchased from NTP an average ****volume of**** curies of Product, in the preceding **** (each as measured using the calibration as set forth in Section 2.5), then, in addition toany available supply of LEU-based Product, Lantheus would be entitled to receive at least **** percent (****%) of the volume of HEU-based Product available for sale by NTP and its Subcontractors. (f) In situations where (i) a global supply shortage arises due to the planned or unplanned shutdown of a reactor or Mo-99processing facility controlled by third party suppliers other than NTP or its Subcontractors or (ii) Lantheus’ supply of Molybdenum-99from third party suppliers other than NTP or its Subcontractors is adversely affected for whatever reason (including, but not limited to,scheduled or unscheduled reactor outages that result in shortages from such third party suppliers), NTP and its Subcontractors willsupply routine orders for Product placed by Lantheus. NTP and its Subcontractors will also use their best efforts to make availableany additional volumes of Product requested by Lantheus and, provided that, in each case, Lantheus has satisfied its purchase volumecommitments set forth in Section 2.1(b) for the immediately preceding **** period, shall provide Lantheus with a **** any Productavailable for sale by NTP or its Subcontractors ****. (g) The NRU Reactor located in Chalk River, Ontario is required by the Canadian Nuclear Safety Commission within theterms of the operating license extension granted through October 31, 2016 to undergo extended 5 shut-downs of at least one month in duration on an annual basis for inspection and maintenance. NTP and its Subcontractors sharethe objective of providing Lantheus with **** of Product during the NRU Reactor’s currently scheduled shutdown period in 2013,provided that Lantheus has satisfied its purchase volume commitments for the immediately preceding **** period, and NTP and itsSubcontractors will use their best efforts to provide Lantheus with **** of Product during any NRU Reactor’s shutdown periods ineach year thereafter, provided that, in each case, Lantheus has satisfied its purchase volume commitments set forth in Section 2.1(b) forthe immediately preceding ****. In support of these efforts, the parties will work together in good faith to identify strategies to increaseNTP’s or its Subcontractors’ available production capacity for Product ordered by Lantheus during the NRU Reactor’s scheduledshutdown periods commencing in **** (or any similar outages or supply shortages), including, but not limited to, facilityenhancements or improvements to be made by NTP or its Subcontractors, provided that, in each case, Lantheus has satisfied itspurchase volume commitments set forth in Section 2.1(b) for the immediately preceding **** period. (h) NTP and its Subcontractors will enter into a back-up supply agreement with IRE to support the obligations of NTP and itsSubcontractors to Lantheus hereunder. Such agreement is expected to be in place by **** and in a form reasonably acceptable toLantheus. In addition, NTP has established and shall maintain relationships with air carriers for the Lantheus route such that theprobability of a Lantheus shipment being refused by the carrier shall be highly improbable. NTP shall liaise (via the Account Managerat NTP) with its Subcontractors, taking into account the reactor production and maintenance schedules of each facility, and supplyLantheus **** (****) days in advance of the first delivery of a month, the supply schedule for the following ****detailing clearly whichsupplier (NTP or a Subcontractor) will supply such delivery. For clarity and as an example, NTP will provide Lantheus the ****supply schedule on ****. This supply schedule will be binding on NTP and its Subcontractors and will be used by Lantheus to registereach shipment with applicable U.S. governmental authorities as dictated by U.S. regulations. If the airport of delivery is JFK, thenProduct will be available for pick-up by Lantheus no later than ****. If the airport of delivery is BOS, then Product will be availablefor pick-up by Lantheus no later than ****. Pick-up time for any other delivery location will be mutually agreed upon. (i) Notwithstanding the foregoing, NTP and its Subcontractors hereby acknowledge and agree that the diversification of supplyprovided by NTP through its supply and back-up supply arrangements with its Subcontractors is essential to the purpose of thisAgreement. NTP and its Subcontractors hereby agree to use their best efforts to avoid any supply disruptions through an increasedcooperation with respect to planned inspection and 6 maintenance activities or any other activities within the control of NTP or its Subcontractors that are reasonably likely to result in anoutage or supply shortage for Lantheus (e.g., the planned shutdown of two reactors or processing facilities at any one time). Inaddition, NTP and its Subcontractors shall give Lantheus prompt notice of any impending or threatened events that could reasonablyresult in a supply shortage or failure and shall cooperate fully with Lantheus regarding any plans to avoid or mitigate any disruption inthe supply of Product to Lantheus. Without limiting the rights of Lantheus elsewhere in this Agreement, if at any time during the term ofthis Agreement the consortium of supply partners changes or NTP or its Subcontractors does not or cannot deliver the quantitiesspecified in this Section 2.1 on a **** basis in a reliable manner, the parties will make a good faith effort to renegotiate the terms of thisAgreement. In the event the parties are unable to agree on modification of this Agreement within a reasonable period of time (not toexceed **** (****) days), in addition to any other remedies that it might have, Lantheus shall have the sole right, after giving NTP**** (****) days prior written notice, to terminate this Agreement. 2.2 Section 5.1 of the Agreement is hereby amended by deleting in its entirety said Section 5.1 and replacing therewith the following: 5.1 The price payable by Lantheus for Product shall be as follows: (a) Commencing **** and continuing through ****, the unit price of Product shall be **** fixed US dollars (US$****)per Curie at calibrated date and time for the first **** (****) curies delivered per ****and **** fixed US dollars (US$****)per Curie at calibrated date and time for all curies in excess of the first **** (****) curies delivered per ****. The calibrationdate and time shall be in accordance with Section 2.5. (b) Commencing **** and continuing through ****, the unit price of Product shall be as follows: (i) The unit price of Product for the period from **** through **** shall be US$**** per Curie; (ii) The unit price of Product for the period from **** through **** shall be US$**** per Curie; (iii) The unit price of Product for the period from **** through **** shall be **** from the prior year’s pricing byan amount equal to the lesser of (i) **** percent (****%) and (ii) **** of the annual percentage increase, if any, for the mostrecent twelve-month period for which figures are available in the **** published by 7 **** or, if the same is no longer published, the successor index that is most similar thereto (the “PPI”); (iv) The unit price of Product for the period from **** through **** shall be **** from the prior year’s pricing byan amount equal to the lesser of (i) **** percent (****%) and (ii) **** of the annual percentage increase, if any, for the mostrecent twelve-month period for which figures are available in the PPI; and (v) The unit price of Product for the period from **** through **** shall be **** from the prior year’s pricing byan amount equal to the lesser of (i) **** percent (****%) and (ii) **** of the annual percentage increase, if any, for the mostrecent twelve-month period for which figures are available in the PPI. Pricing for the period from **** through **** and each year thereafter will be communicated to Lantheus by NTP no laterthan **** of the previous ****. The calibration date and time shall be in accordance with Section 2.5. (c) The parties will negotiate in good faith a commercially reasonable adjustment to the then-current pricing in the eventthere are material, substantial and sustained changes to ****, in each case for a period of at least ****. In addition, in theevent ****, then, subject to NTP and its Subcontractors providing the certifications and documentation for such Productrequired by the applicable laws and regulations, Lantheus and NTP will negotiate in good faith a commercially reasonableadjustment to the then-current pricing in light of such ****. (d) For so long as Lantheus has satisfied its purchase volume commitments set forth in Section 2.1(b) as measured withreference to the average volume of curies purchased over the immediately preceding **** period and Lantheus is **** asmeasured during such period (as calculated consistent with calibrations as set out in Section 2.5), the prices payable byLantheus for Product shall not be higher than the purchase price (as calculated consistent with calibration as set out inSection 2.5) paid by any other purchaser of Product from NTP or its Subcontractors for delivery into or use in ****, regardlessof whether such delivery or use is direct or indirect. In addition, for so long as Lantheus purchases more than ****curies per****, as measured with reference to the average volume of curies purchased in the immediately preceding **** period (ascalculated consistent with calibration as set out in Section 2.5), the prices payable by Lantheus for Product shall not be higherthan the purchase price (as calculated consistent with calibration as set out in Section 2.5) paid by any other 8 purchaser of Product from NTP or its Subcontractors for ****, as measured on a **** basis. For purposes of calculating thepurchase price paid by other purchasers of Product in order to determine if any price adjustment shall be made hereunder, theparties agree that the purchase price paid by each purchaser will be calculated after giving effect to all rebates, discounts, andsimilar pricing concessions or incentives available to such purchasers (but excluding governmental purchases or purchases forother non-commercial purposes), and, if such purchase price is paid in a currency different from the United States dollarpursuant to a written contract or spot order, such purchase price shall be determined using the exchange rate of the UnitedStates dollar against such different currency applicable to such purchases as of ****. In addition, noncompliance with theforegoing provisions will result in a reduction to the price payable by Lantheus for Product hereunder only during the period inwhich the purchase price of product sold to other purchasers was lower than the then-current price set forth herein. Compliance with requirements of this Section 5.1(d) will be confirmed at the end of each calendar year, at which time NTP willfurnish to Lantheus a certificate, executed by a duly authorized officer of NTP stating that such officer has reviewed the sales ofsuch Product during such period and that NTP and its Subcontractors have complied with this Section 5.1(d). To the extent it isdetermined that NTP is not in compliance with this Section 5.1(d), NTP will adjust the pricing payable by Lantheus and creditLantheus with the difference between the price paid by Lantheus and the amount otherwise contemplated by this Section 5.1(d). (e) NTP shall invoice Lantheus at the end of each **** for all Product supplied by NTP or its Subcontractors in that****. Invoicing shall be in respect of the price applicable to Product upon delivery of such conforming Product to Lantheus onan ****basis, and in respect of container charges as the same become payable under this Agreement. Lantheus shall pay allinvoices for shipments of conforming Product in any given **** (as reduced by any outstanding credits for nonconformingProduct) by the end of the following **** to NTP. 2.3 Section 11.1 of the Agreement is hereby amended by deleting the reference to the “31st day of December 2013” and replacing it with the “31stDay of December 2017.” 2.4 Exhibit B of the Agreement is hereby amended by removing “****” as of the effective date of this Amendment. For purposes of clarity, theparties acknowledge that all references to “its Subcontractor” or “its Subcontractors” in the Agreement immediately after the effective date of thisAmendment shall mean ****. 9 3. Waiver. Each party hereby waives any non-compliance with the terms and provisions of the Agreement relating to the purchase volume requirementsas in effect immediately prior to the amendment thereof by this Agreement. 4. General. Except as specifically amended hereby, the Agreement remains in full force and effect and otherwise unamended hereby. This Amendmentconstitutes a final written expression of the terms hereof and is a complete and exclusive statement of those terms. This Amendment shall be governed by andconstrued in accordance with the laws of England, without reference to the choice of laws rules of any jurisdiction. 10 IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first written above. For and on behalf of NTP: /s/ Don RobertsonName and Title: Don Robertson, MD For and on behalf of Lantheus: /s/ Donald R. KiepertName and Title: Don Kiepert, CEO For and on behalf of ANSTO: /s/ Doug CubbinName and Title: Doug Cubbin, GM BD&C 11Exhibit 10.54 CONFIDENTIAL TREATMENT REQUESTED INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND NOTED WITH “****”. ANUNREDACTED VERSION OF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES AND EXCHANGECOMMISSION. AMENDMENT NO. 2 TO AMENDED AND RESTATED SUPPLY AGREEMENT(Thallium and Generators) This Amendment No. 2 to Amended and Restated Supply Agreement (Thallium and Generators) (this “Amendment”) is made effective as ofDecember 27, 2012 (the “Amendment Date”) by and between Lantheus Medical Imaging, Inc. (“Supplier”) and Cardinal Health 414, LLC (“Cardinal”). WHEREAS, Supplier and Cardinal entered into an Amended and Restated Supply Agreement (Thallium and Generators) as of January 1, 2009 andeffective as of January 1, 2004 (the “Original Agreement”); WHEREAS, Supplier and Cardinal entered into an Amendment No. 1 to Amended and Restated Supply Agreement (Thallium and Generators) as ofDecember 29, 2009 (together with the Original Agreement, collectively, the “Agreement”); and WHEREAS, Supplier and Cardinal wish to further amend the Agreement to extend its term and specify pricing and volume requirements for thecontinued supply of Products as set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto hereby agree asfollows: 1. Definitions. The definition of “Products” in Section 1.1 of the Agreement is hereby amended by replacing the reference to “Thallium andGenerators” with “gallium citrate (Ga 67) (“Gallium”), xenon (Xe-133) (“Xenon”), NEUROLITE® Kit for the Preparation of Technetium Tc99mBicisate for Injection (“Neurolite”), Thallium and Generators” as of the Amendment Date. All other terms defined in the Agreement and not otherwisedefined or modified in this Amendment are used herein with the meanings ascribed to them in the Agreement, except that the defined term “Affiliate” has themeaning given to it in the Amended and Restated Cardiolite® License and Supply Agreement entered into by the Parties as of January 1, 2009 and effective asof January 1, 2004. 2. Purchase and Sale of Products. All of the references to “Thallium” in the Agreement (except for the definition of “Thallium”) shall beamended to mean “Gallium, Xenon, Neurolite and Thallium” as of the Amendment Date. Except for sales to Cardinal’s end-user customers, in no event shallCardinal sell, loan, transfer, give or otherwise supply Products to any third party without Supplier’s prior written approval. Cardinal shall be permitted tosell Products, on a drop ship basis through Supplier, to ****; provided that, Cardinal may supply Product to **** on a drop ship basis through Supplierupon ****. 3. LEU Generators. Section 3.1 of the Agreement is hereby amended by adding the following language after the last sentence as of theAmendment Date: “In addition, Cardinal shall be entitled to order up to a **** share of the LEU Generators made available for sale by Supplier,provided, however, that Cardinal shall be entitled to order up to ****curies of LEU Generators per week during periods of normalproduction and supply of LEU-based molybdenum-99 by all suppliers to Supplier if Cardinal has placed a firm order for suchincreased volumes of LEU Generators at least **** (****) days prior to the shipping date. For purposes of this Agreement, “LEUGenerators” shall mean Generators containing molybdenum-99 sourced from at least ninety-five percent (95%) low enricheduranium targets (“LEU”). A “**** share” shall mean a share of Supplier’s LEU Generators equal to **** percent (****%) of****. Cardinal’s orders for LEU Generators shall be subject to the terms for Generators set forth in this Agreement, including, butnot limited to, Supplier’s customary ordering requirements and lead times described in Article 4.” 4. Purchase Price. Section 3.2 of the Agreement is hereby amended by deleting the second sentence in its entirety and replacing it with thefollowing as of the Amendment Date: “The pricing for Generators set forth in Exhibit B shall remain firm through ****. Calculations of applicable “Share” (as definedunder Exhibit B) amounts for purposes of determining the pricing set forth in Exhibit B for each **** Period (as defined inExhibit B) shall be based upon Cardinal’s ****reports in the form set forth on Exhibit C (“****Report”). In the event of anydiscrepancy in Share amounts applied to invoices for any **** Period and the actual Share amount reflected in Cardinal’s ****Report for such period, Supplier shall invoice Cardinal for any necessary true-up payments or credits to adjust for anyoverpayments or underpayments with respect to the pricing for Generator purchases made by Cardinal to Supplier as a result ofsuch Share discrepancy”. 5. Minimum Purchase Obligation. Section 3.4 of the Agreement is hereby amended by deleting it in its entirety and replacing it with thefollowing as of the Amendment Date: “3.4 Minimum Purchase Obligation. Cardinal guarantees, subject to Supplier’s ability to supply, a minimum purchase ofProduct as set forth in this Section 3.4. 2 (a) Cardinal shall purchase from Supplier or its Affiliates on a regular **** basis reasonably **** (as reportedunder Section 5.3(b)) at least the Minimum Quantities (as hereinafter defined) of Product. Compliance with suchMinimum Quantities will be determined as of **** and at the end of each **** thereafter. In any **** in whichCardinal does not purchase at least the applicable Minimum Quantities of Product from Supplier, Cardinal willpromptly pay to Supplier the Minimum Payment (as hereinafter defined). “Minimum Quantities” means the following minimum quantities of Product, on a **** basis, as purchased by Cardinaland its Affiliates from Supplier (as measured using calibration equivalent to the calibration set forth in Exhibits A and B): (i) **** percent (****%) of all technetium Tc 99m generator curies purchased by Cardinal and its Affiliates in each ****during the period from **** through ****; (ii) **** percent (****%) of all Gallium purchased by Cardinal and its Affiliates in each **** during the period from ****through ****; (iii) **** percent (****%) of all Thallium curies purchased by Cardinal and its Affiliates in each **** during the periodfrom **** through ****; (iv) **** percent (****%) of all Xenon purchased by Cardinal and its Affiliates in each **** during the period from ****through ****; and (v) **** percent (****%) of all Neurolite purchased by Cardinal and its Affiliates in each **** during the period from**** through ****. For purposes of clarity, the Minimum Quantities shall include all of the Products (including ****) purchased by Cardinal and itsAffiliates for ****; provided that LMI or, with respect to the supply of Products outside of the United States, its Affiliates shall supplyProducts to all radiopharmacy locations controlled by Cardinal or its Affiliates in such geographic territories. Neither Cardinal norany of its Affiliates shall be restricted by Supplier from selling any Product ****, provided that the Product is approved and properlylabeled for sale in such geographic territory under all applicable laws and regulations. In addition, if Cardinal or its Affiliates electto purchase a Product in ****, Cardinal or its Affiliates, as applicable, shall use their best efforts to establish regular standingorders to purchase at least a reasonable portion of Product 3 requirements for applicable locations on a regular **** basis for the radiopharmacy locations controlled by Cardinal or itsAffiliates in ****. For all such purchases in ****, Supplier’s Affiliate will invoice such radiopharmacies in **** at the **** for theimmediately preceding ****. “Minimum Payments” means, as of an applicable date, the payment calculated on such date pursuant to the terms of thisAgreement (and, in the case of Generators, based on the average ****price of such Generators purchased hereunder over theprior **** (****) **** period; provided, that for the **** in ****, such calculation shall be based on the average **** price ofGenerators purchased hereunder during ****) for any remaining portion of the applicable Minimum Quantities for which purchaseorders were not received by Supplier prior to such date.” 6. Delays in Delivery. Section 4.2 of the Agreement is hereby amended by adding the following language after the last sentence: “In the event that delivery of a Generator is delayed more than **** (****) **** past the agreed upon local delivery time, Supplierwill ****. The foregoing shall not apply to delays caused by events of Force Majeure, such as weather conditions effectingtransportation of Generators, for which there will be no ****.” 7. Initial Minimum Quantities. The definition of “Initial Minimum Quantities” in Section 4.1 of the Agreement is hereby amended bydeleting it in its entirety and replacing it with the following as of the Amendment Date: “Initial Minimum Quantities” means **** (****) **** for each Product.” 8. Term. Section 5.1 of the Agreement is hereby amended such that the date “December 31, 2012” appearing in the first sentence thereofshall be deleted and replaced with “December 31, 2014” as of the Amendment Date. 9. Reporting. Section 5.3(b) of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following as of theAmendment Date: “(b) Cardinal will provide Supplier reports, in substantially the form of Exhibit C, promptly at the end of each **** forProducts other than Generators, and at the end of each **** for Generators. For Generators, reports shall list (i) Cardinal’s totalrequirements for all technetium Tc 99m generators for the most recent ****Period(s) (as defined in Exhibit B) immediatelypreceding the applicable report and (ii) the portion of such technetium Tc 99m generator volumes purchased from Supplier duringsuch ****Period(s). For all Products other than Generators, **** 4 reports shall list (i) Cardinal’s total **** requirements for each Product on a weekly basis and (ii) the portion of such Productvolumes purchased from Supplier.” 10. Amendment to Exhibit A. Exhibit A of the Agreement is hereby amended by deleting it in its entirety and replacing it with Exhibit Aattached hereto as of the Amendment Date. 11. Amendment to Exhibit B. Exhibit B of the Agreement is hereby amended by deleting it in its entirety and replacing it with Exhibit Battached hereto as of the Amendment Date. 12. Amendment to Exhibit C. Exhibit C of the Agreement is hereby amended by deleting it in its entirety and replacing it with Exhibit Cattached hereto as of the Amendment Date. 13. **** Payment. In exchange for Supplier making commercially available to Cardinal **** hereunder and for providing assurances toCardinal with respect to Supplier’s ability to supply ****, Cardinal shall pay Supplier **** US dollars (US$****) in the following irrevocable and non-refundable amounts in accordance with the following schedule, subject to the conditions set forth below: (a) $**** on or before ****; provided that Supplier provides written certification to Cardinal on or before **** that Supplier isready and able starting in **** to supply Cardinal with **** in the amounts required hereunder. (b) $**** on **** (the “**** Payment”); provided that (a) Supplier complies with its obligations to supply **** hereunder from**** to ****, and (b) as of ****, Supplier delivers to Cardinal a written certification that Supplier has complied with theapplicable terms of the Agreement relating to the supply of **** and has no reasonable basis to believe that it cannot continue tocomply with such obligations. (c) $**** on **** (the “**** Payment”); provided that (a) Supplier complies with its obligations to supply **** hereunder from**** to ****, and (b) as of ****, Supplier delivers to Cardinal a written certification that Supplier has complied with theapplicable terms of the Agreement relating to the supply of **** and has no reasonable basis to believe that it cannot continue tocomply with such obligations. In no event will Cardinal be obligated to make the **** Payment or the **** Payment under this Section 13, unless Supplier provides Cardinal withsuch written 5 certification on the applicable date that Supplier has complied with the applicable terms of the Agreement relating to the supply of ****, or if at the time suchpayment would otherwise be payable, Cardinal has a reasonable good faith belief, which can be reasonably substantiated with the appropriate written evidencethat the conditions set forth for such payment in the proviso of paragraph (b) or (c) above, as applicable, have not been satisfied. 14. No Further Changes. Except as specifically amended hereby, the Agreement shall remain in full force and effect and otherwiseunmodified. All amendments in Sections 1 through 13 of this Amendment shall be deemed made as of the Amendment Date, and the Agreement shall not bedeemed to have been modified until the Amendment Date. 15. General. This Amendment may be executed in two or more counterparts, each of which when executed shall be deemed to be an originalbut all of which when taken together shall constitute one and the same agreement. Signatures hereto may be delivered by facsimile or a “pdf” file throughelectronic mail, and such delivery will have the same effect as the delivery of the paper document bearing the actual handwritten signatures. This Amendmentshall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws provisions thereof. Supplier and Cardinal understand and agree that each and every term and condition of this Amendment, have or has been mutually negotiated, prepared anddrafted, and in connection with the interpretation or construction of such term or condition or this Amendment, no consideration will be given to the issue ofwhich of Supplier or Cardinal prepared, drafted or requested any term or condition of this Amendment. [Signature page follows.] 6 IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Amendment Date. Signed for and on behalf of Cardinal Health 414, LLC Signature:/s/ Thomas J. Rafferty By:Thomas J. Rafferty Title:Vice President, Sourcing Signed for and on behalf of Lantheus Medical Imaging, Inc. Signature:/s/ Michael P. Duffy By:Michael P. Duffy Title:Vice President and Secretary 7 EXHIBIT A INITIAL PRODUCT PRICES; ADJUSTMENTS GALLIUM The unit prices for Gallium for the period from **** through **** shall be as follows: SKUDescriptionUOMPrice per Unit********Vial$************Vial$************Vial$************Vial$**** The unit prices of Gallium for the period from **** through **** shall be increased from the prior ****’s pricing by an amount equal to the **** of(i) **** percent (****%) and (ii) the annual percentage increase, if any, for the most recent **** period for which figures are available in the **** (the “PPI”)published by the U.S. Bureau of Labor Statistics (the “BLS”) or, if the same is no longer published, the successor index published by the BLS that is mostsimilar thereto. If the PPI is discontinued and not replaced with a corresponding or similar index, then the Parties shall, in good faith, agree upon areplacement PPI (item (ii) is hereinafter referred to as the “Annual PPI Increase”). XENON The unit prices for Xenon for the period from **** through **** shall be as follows: SKUDescriptionUOMPrice per Unit********Kit$************Kit$************Kit$************Kit$**** Supplier shall have the right to increase the unit prices of Xenon for the period from **** through **** by an amount not to exceed ****percent (****%) ofthe prior ****’s pricing. THALLIUM The unit price for Thallium for the period from **** through **** shall be $****. The unit price of such Product for the period from **** through ****shall be $****. NEUROLITE The unit price for Neurolite for the period from **** through **** shall be as follows: SKUDescriptionUOMPrice per Unit********Kit$**** Supplier shall have the right to increase the unit price of Neurolite for the period from **** through **** by an amount not to exceed the Annual PPI Increase. EXHIBIT B GENERATOR PURCHASE PRICE; ADJUSTMENTS 2013 and 2014 Generator pricing Up to ****% ShareMore than ****% ShareStandard GeneratorLEU GeneratorStandard GeneratorLEU GeneratorSizeDescriptionUOMPrice per UnitPrice per UnitPrice per UnitPrice per Unit****TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit********************TechneLite®Unit**************** For purposes of this Exhibit, “Share” shall be calculated for each separate but consecutive **** (****) ****period from and after **** during the Term ofthe Agreement (each a “**** Period”) (with a pro-rata adjustment as applicable for any portion of a **** Period occurring as of the expiration or termination ofthe Agreement) based on Supplier’s share of **** for such **** Period. The pricing set forth in this Exhibit shall remain fixed for ****. Except for the pricechanges based upon changes in Share amounts as described in this Exhibit B, no surcharge or premiums shall apply to the Generators ordered by Cardinal inexcess of the Minimum Quantities. EXHIBIT C SHARE CALCULATION REPORTS CardinalVolume and Share Certification Beginning (Sunday)Through (Saturday)For the **** Period(s)****through**** e.g. Sunday, ****e.g. Saturday, **** ****1234TotalTotal Technetium Curies Purchased0.00Total Technetium Curies Purchased from Lantheus0.00Lantheus Share0.00%0.00%0.00%0.00%0.00% Cardinal hereby certifies that the information contained herein is true and complete. Name: Signature: Date: CardinalVolume and Share Certification Beginning (Sunday)Through (Saturday)For the **** period****through**** e.g. Sunday, ****e.g. Saturday, **** ****12345678910111213TotalTotal Gallium **** Purchased0.00Total Gallium **** Purchased fromLantheus0.00Lantheus Share0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00% Total Xenon **** Purchased0.00Total Xenon **** Purchased fromLantheus0.00Lantheus Share0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00% Total **** Curies Purchased0.00Total Thalllium **** Purchased fromLantheus0.00Lantheus Share0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00% Cardinal hereby certifies that the information contained herein is true and complete. Name: Signature: Date: Exhibit 10.55 CONFIDENTIAL TREATMENT REQUESTED INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND NOTED WITH “****”. ANUNREDACTED VERSION OF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES AND EXCHANGECOMMISSION. AMENDMENT NO. 2 TO AMENDED AND RESTATED CARDIOLITE® LICENSE AND SUPPLY AGREEMENT This Amendment No. 2 to Amended and Restated Cardiolite® License and Supply Agreement (this “Amendment”) is made effective as ofDecember 27, 2012 (the “Amendment Date”) by and between Lantheus Medical Imaging, Inc. (“LMI”) and Cardinal Health 414, LLC (“Licensee”). WHEREAS, LMI and Licensee entered into an Amended and Restated Cardiolite® License and Supply Agreement as of January 1, 2009 andeffective as of January 1, 2004 (the “Original Agreement”); WHEREAS, LMI and Licensee entered into an Amendment No. 1 to Amended and Restated Cardiolite® License and Supply Agreement as ofFebruary 9, 2012 (referred to herein as “Amendment No. 1” and, together with the Original Agreement, collectively, the “Agreement”); and WHEREAS, LMI and Licensee wish to further amend the Agreement to extend its term and specify pricing and volume requirements for thecontinued supply of Sestamibi Products as set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto hereby agree asfollows: 1. Definitions. Terms defined in the Agreement and not otherwise defined or modified in this Amendment are used herein with the meaningsascribed to them in the Agreement. 2. Minimum Purchase Obligation. The Parties agree that, unless otherwise agreed to by the Parties in writing, Licensee shall purchase fromLMI at least **** of Sestamibi Product in the **** of each **** and ****during the term of the Agreement (as amended hereby) (the “Minimum Quantity”)at a price of $****, provided that, pursuant to the terms of the Agreement, Licensee or its Affiliates in **** shall be permitted to order reasonable quantities ofSestamibi Product from LMI’s Affiliates in **** for the radiopharmacy locations controlled by Licensee or its Affiliates in **** on a **** basis and suchquantities of Sestamibi Product will be included in the calculation of the Minimum Quantity for such ****. Licensee shall provide LMI with at least ****(****) days written notice prior to any change to such standing orders for Sestamibi Product placed by Licensee or its Affiliates for ****. Compliance withsuch Minimum Quantity will be determined as of **** and at the end of each **** thereafter (each a “Compliance Period”). In any Compliance Period inwhich Licensee does not purchase at least the applicable Minimum Quantity of Sestamibi Product from LMI, Licensee will promptly pay to LMI any remaining portion of the applicable Minimum Quantity not invoiced prior to the end of such Compliance Period (each a “ShortfallPayment”). In addition, within **** (****) weeks prior to the end of any Compliance Period, Licensee shall (i) make a good faith estimate of additionalamounts of Sestamibi Product necessary for Licensee to purchase to be in compliance with the Minimum Quantity for such Compliance Period, and (ii) usecommercially reasonable efforts to place purchase orders for such additional amounts. For purposes of clarity, the Parties acknowledge and agree thatLicensee’s purchase obligations set forth in Amendment No. 1 (including, but not limited to, the purchase obligations under Section 2.3) shall remain in effectand unmodified by this Amendment, and any such purchases made by Licensee pursuant to Amendment No. 1 shall not count towards, and not be includedin the calculation of, any Minimum Quantity hereunder. The Parties further acknowledge and agree that any Shortfall Payment made by Licensee pursuant tothis Amendment shall not count towards, and not be included in the calculation of, any Minimum Quantity for the next succeeding Compliance Periodhereunder, and the requirements set forth in Section 7 of Amendment No. 1 shall not apply to the purchase of Sestamibi Product pursuant to thisAmendment. With the exception of Sestamibi Product purchased for **** (which shall not be subject to the Product Dating requirements set forth herein),without limitation to any other provision in the Agreement, LMI shall use commercially reasonable efforts to deliver Sestamibi Products to Licensee under thisAmendment with useful life prior to product expiration (“Product Dating”) of at least **** percent (****%) of the maximum Product Dating for such lots ofSestamibi Product based on the applicable regulatory approvals. In addition, with respect to the Minimum Quantity of Sestamibi Product purchased for****, without limitation to any other rights or remedies available to Licensee in connection with the foregoing provision, Licensee may at its option reject anySestamibi Product delivered to Licensee with less than the following amounts of Product Dating: (i) **** (****) **** of Product Dating if such Sestamibi Product was produced by one of LMI’s third party manufacturers of SestamibiProduct approved by the FDA to supply commercial quantities of Sestamibi Product to LMI as of the Amendment Date; and (ii) **** (****) **** of Product Dating if such Sestamibi Product was produced by one of LMI’s third party manufacturers of SestamibiProduct approved by the FDA to supply commercial quantities of Sestamibi Product to LMI after the Amendment Date. Upon any such rejection, if LMI fails to replace such rejected Sestamibi Product within **** (****) days following the date of the rejection, such rejectedSestamibi Product shall be counted towards Licensee’s satisfaction of the Minimum Quantity obligation hereunder. 3. No Restriction on Sales of Sestamibi Products. Section 2.27 of the Agreement is hereby amended by deleting it in its entirety as of theAmendment Date. 2 4. Canada and Puerto Rico. Notwithstanding anything in the Agreement to the contrary, LMI hereby agrees that all rights of Licensee todispense and sell Sestamibi Products in the United States shall apply equally to Canada and Puerto Rico for any radiopharmacy locations controlled byLicensee or its Affiliates in such geographic locations, and LMI or, with respect to the supply of Sestamibi Product to Canada, its Affiliates shall supplySestamibi Products to such Canada and Puerto Rico radiopharmacy locations pursuant to the terms and conditions of the Agreement, provided that theSestamibi Product is approved and properly labeled for sale in such geographic territory under all applicable laws and regulations. 5. Term and Termination. Section 3.01 of the Agreement is hereby amended such that the date “December 31, 2012” appearing in the firstsentence thereof shall be deleted and replaced with “December 31, 2014” as of the Amendment Date. 6. No Further Changes. Except as specifically amended hereby, the Agreement shall remain in full force and effect and otherwiseunmodified. All amendments in Sections 2 and 3 of this Amendment shall be deemed made as of the Amendment Date, and the Agreement shall not be deemedto have been modified until the Amendment Date. 7. General. This Amendment may be executed in two or more counterparts, each of which when executed shall be deemed to be an originalbut all of which when taken together shall constitute one and the same agreement. Signatures hereto may be delivered by facsimile or a “pdf” file throughelectronic mail, and such delivery will have the same effect as the delivery of the paper document bearing the actual handwritten signatures. This Amendmentshall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws provisions thereof. LMIand Licensee understand and agree that each and every term and condition of this Amendment, have or has been mutually negotiated, prepared and drafted,and in connection with the interpretation or construction of such term or condition or this Amendment, no consideration will be given to the issue of which ofLMI or Licensee prepared, drafted or requested any term or condition of this Amendment. [Signature page follows.] 3 IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Amendment Date. Signed for and on behalf of Cardinal Health 414, LLC Signature:/s/ Thomas J. Rafferty By:Thomas J. Rafferty Title:Vice President, Sourcing Signed for and on behalf of Lantheus Medical Imaging, Inc. Signature:/s/ Michael P. Duffy By:Michael P. Duffy Title:Vice President and Secretary 4Exhibit 10.56 CONFIDENTIAL TREATMENT REQUESTED INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEENREQUESTED IS OMITTED AND NOTED WITH “****”. AN UNREDACTED VERSIONOF THIS DOCUMENT HAS ALSO BEEN PROVIDED TO THE SECURITIES ANDEXCHANGE COMMISSION. Execution VersionCONFIDENTIAL LICENSE AND DISTRIBUTION AGREEMENT THIS AGREEMENT FOR LICENSE AND DISTRIBUTION OF CARDIOLITE AND NEUROLITE is effective as of the 1st day of January,2013 by and between Lantheus Medical Imaging, Inc., a Delaware corporation, with its principal place of business at 331 Treble Cove Road, North Billerica,Massachusetts 01862, U.S.A. (formerly known as Bristol-Myers Squibb Medical Imaging, Inc., hereafter referred to as “LMI”), and FUJIFILM RI PharmaCo., Ltd., a corporation of Japan, with its principal place of business at 14-1, Kyobashi 2-chome, Chuo-ku, Tokyo 104-0031 Japan (formerly known asDaiichi Radioisotope Laboratories, Ltd., hereinafter referred to as “FRI”). WITNESSETH: WHEREAS, the parties entered into a License and Distribution Agreement effective as of January 1, 2003 (as amended by the parties, hereinafterreferred to as the “Prior Agreement”), which is scheduled to expire on December 31, 2012. WHEREAS, the parties desire to continue the marketing and sale of Cardiolite® and Neurolite® products after the Prior Agreement has expired. WHEREAS, as a result of mutual consultation, LMI and FRI have decided to conclude a new agreement under the terms and conditions set forth inthis Agreement with regard to the products. NOW, THEREFORE, the parties agree as follows: 1 Article 1. (Definitions) As used in this Agreement: 1.1 “Adverse Experience” or “AE” shall have the meaning set forth in the Safety Data Exchange Agreement (“SDEA”) attached hereto asAttachment 1. 1.2 “Affiliate” shall mean any person, firm or corporation which controls, is controlled by or is under common control with LMI or FRI as thecase may be, with “control” to mean ownership, directly or indirectly of 50% or more of voting stock of the subject entity. 1.3 “Cold Kit Product” means a a pharmaceutical product for the Preparation of either technetium Tc-99m sestamibi for injection (“CardioliteKit”) or technetium Tc-99m bicisate for injection (“Neurolite Kit”) manufactured according to the marketing approval granted to FRI by the MHLW and theQuality Agreement for the Cardiolite Kit or Neurolite Kit, respectively. 1.4 “ECD Ligand” means ****, a raw material to manufacture “Neurolite PFS Injection” which FRI has obtained marketing approval by theMHLW. 1.5 “Defect” or “Defective” means Products that do not meet specifications for such Product, as stipulated on the Quality Agreement. 1.6 “Effective Date” means January 1, 2013. 1.7 “Know-How” means any and all **** information relating to the Products and PFS Products developed by LMI and delivered to FRIpursuant to the Prior Agreement between the same parties (and their predecessors), including such information relating to the **** of the Products and PFSProducts, and further including but not limited to **** of the Products and PFS Products ****, and such other information as FRI determines is needed forFRI to succeed in the marketing, sale and distribution of the Finished Products. For the avoidance of doubt, the parties acknowledge and understand that FRIhas developed certain **** information relating to the Products and PFS Products which is FRI’s know how and confidential information and subject to theconfidentiality provisions set forth in this Agreement. The parties further acknowledge and 2 understand that information available in the public domain is excluded from both Know-How and FRI’s Confidential Information, as described inSection 13.1 of this Agreement. 1.8 “Ligand” means MIBI Ligand and ECD Ligand, collectively. 1.9 “MHLW” means the Ministry of Health Labor and Welfare. 1.10 “MIBI Ligand” means ****, a raw material to manufacture “Cardiolite PFS Injection” which FRI has obtained marketing approval by theMHLW. 1.11 “Net Sales” shall mean sales revenue of FRI for all PFS Products and/or all Cold Kit Products sold during the term of this Agreement in theTerritory by FRI, less, where appropriate: (i) discounts, rebates and/or credits ****; and (ii) value-added taxes and other taxes of a similar nature that are included in the gross invoice price paid to FRI. 1.12 “PFS Products” means a sterile solution of MIBI Ligand or ECD Ligand complexed with technetium Tc-99m for sale in unit dose syringes,referred to herein as “Cardiolite PFS Injection” and “Neurolite PFS Injection” respectively. 1.13 “Product or Products” shall mean Cold Kit Product and Ligands, collectively. 1.14 “Product Registration or Product Registrations” means the import and marketing authorizations for Cold Kit Product, the importauthorizations for Ligand, and the manufacturing and marketing authorizations for PFS Products, issued by the MHLW. 1.15 “Quality Agreement” means the separate written agreement between the parties regarding Good Manufacturing Control and Quality Control ofthe Products in accordance with the Good Quality Practice regulation of the Pharmaceutical Affairs Law in Japan defining the pharmaceutical and certainoperational responsibilities of each party with respect to the quality and Manufacturing of the Products. In the event of any express conflict or inconsistencybetween this Agreement and the Quality Agreement regarding the relationship between the quality organizations of the parties, the terms of the QualityAgreement will control. 3 1.16 “Safety Data Exchange Agreement” or “SDEA” means the separate written agreement between the parties regarding the guidelines andprocedures for the provision of medical information; the receipt, recordation, exchange, communication, and submission of safety information associated withthe use of the Products; and the receipt, recordation, exchange, communication, investigation and submission of product quality complaints agreed separatelybetween the parties. In the event of any express conflict or inconsistency between this Agreement and the SDEA regarding the guidelines and procedures forsuch safety data, the terms of the SDEA will control. The form of SDEA as of the Effective Date is provided hereunder in Attachment 1. 1.17 “Serious Adverse Experience” or “Serious AE” shall have the meaning set forth in the SDEA. 1.18 “Territory” means Japan. 1.19 “Trademarks” means the trademarks Cardiolite® and Neurolite® and their literal transliteration in the Japanese language, and the trademarkapplications and registrations thereof in Japan as listed in Schedule 1 attached hereto. Article 2. (Grant of Distribution Right) 2.1 LMI hereby grants to FRI, an exclusive, non-transferable and royalty-bearing right to market, sell, and distribute the Cold Kit Productssupplied by LMI and the PFS Products, which are manufactured by FRI from Ligand supplied by LMI (collectively referred to hereafter as the “FinishedProducts”) in the Territory under the licenses set forth in Section 3.1 hereunder. FRI hereby accepts such grant and agrees to use commercially reasonableefforts to market, sell, and distribute the Finished Products in the Territory in a manner consistent with its efforts under the previous agreements between theparties and their predecessors (e.g., using generally the same commercial channels and methods and exercising the same degree of effort and diligence),reasonably taking into consideration any significant changes to the market conditions for the Finished Products in the Territory including, but not limited to,****. 4 2.2 FRI shall purchase from LMI **** percent (****%) of FRI’s requirements for the Products for sale in the Territory. LMI agrees to usecommercially reasonable efforts to fill all orders received from FRI pursuant to this Agreement subject to its ability to obtain sufficient quantities of theProducts as provided hereunder in Section 5.6. 2.3 Each Product supplied by LMI to FRI hereunder will meet the specifications set forth in the Quality Agreement. All Finished Productsmanufactured by FRI hereunder shall conform to the applicable product specifications set forth in the Quality Agreement. Article 3. (Grant of Right to Use Know-How) 3.1 LMI hereby grants to FRI, ****, an exclusive, non-transferable, and royalty-bearing license to practice LMI Know-How in the Territory, (i) to import and sell Cold Kit Product supplied by LMI, (ii) to use Ligand supplied by LMI to make PFS Products, and (iii) to make, use and sell Finished Products, including PFS Products which uses or otherwise incorporates the Know-How. 3.2 Nothing herein shall be construed to grant any right or license in the Know-How to FRI other than those rights specifically set forth herein. FRI understands that the rights granted herein in no way affect LMI’s ownership of the Know-How and that upon termination of this Agreement, FRI’s right touse the Know-How shall cease. FRI further acknowledges and agrees that the rights granted herein are valuable and that FRI shall not, ****, dispute orcontest, directly or indirectly, LMI’s right and title to such intellectual property or the validity thereof. 5 Article 4. (Grant of Right to Use Trademarks) 4.1 LMI hereby grants to FRI a non-transferable, exclusive and **** license in the Territory to use the Trademarks in connection with the sale ofthe Finished Products. LMI shall use commercially reasonable efforts to maintain the Trademarks in good standing. In the event that either party shouldbecome aware of any potential or alleged infringement or action for infringement, the party concerned shall notify the other party, and LMI shall decide andimplement a strategy to protect the Trademarks, if necessary, at LMI’s reasonable expense. Nothing herein shall authorize the use by FRI of the Trademarksin countries outside the Territory where the Trademarks have not been licensed to FRI. 4.2 FRI agrees that, subject to the terms of this Agreement, it shall use the Trademarks only upon and in connection with the sale of the FinishedProducts. FRI further agrees to keep effective control over such manufacturing procedure and the nature and quality of Finished Products covered by theTrademarks. 4.3 FRI will only market the Finished Products using the Trademarks during the term of the license granted hereunder. The license of theTrademarks granted hereunder shall terminate upon termination of this Agreement as set forth in Article 15 hereof or at such time as LMI discontinues the saleto FRI of any Products. Upon the termination of each such license, FRI will cease all use of the Trademarks. 4.4 FRI agrees that at all times the Trademarks shall be used in accordance with good trademark practice, consistent with the standards usedunder the Prior Agreement, including notation of the fact that the Trademarks are registered trademarks of LMI and use of the appropriate notice ofregistration, legend, or symbol wherever permitted or required by the applicable local law. The parties agree that LMI shall be able to monitor good trademarkpractices using its inspection rights under Article 10. 4.5 FRI shall not make any use or take any action with respect to the Trademarks to prejudice or infringe LMI’s rights thereto and shallforthwith, upon objection by LMI, desist from any use thereof or action therewith which is in violation of this Agreement or which is to the detriment of theTrademarks. 6 4.6 In the event of any claim or litigation by a third party alleging that any Trademark imitates or infringes a trademark or trade name of suchthird party or is invalid, FRI shall promptly give notice of such claim or litigation to LMI which shall assume responsibility for any cost and control of thehandling, defense or settlement thereof, and FRI shall assist in such handling and defense as requested by LMI. 4.7 All FRI advertising, sales promotion material, labeling, and container labels displaying the Trademarks shall display an appropriate legendclearly designating FRI as the manufacturer of PFS Products so advertised or sold. In addition, all such material, labeling and packaging for FinishedProducts shall include the LMI logo and “licensed by Lantheus Medical Imaging, Inc.” in both Japanese and English, to the extent legally permissible andapplicable. 4.8 Nothing herein shall be construed to grant any right or license to FRI to use any other LMI trademarks or trade names, other than theTrademarks. 4.9 The rights granted to FRI under this Agreement to use the Trademarks shall in no way affect LMI’s ownership of such Trademarks. Upontermination of this Agreement, the right of FRI to use the Trademarks shall cease. 4.10 After the Effective Date of this Agreement, FRI will use the Trademarks in strict accordance with the instructions given by LMI, and shallrefrain from making any changes in connection therewith without first obtaining LMI’s written consent. Article 5. (Selling Price and Supply of Products) 5.1 Subject to the terms and conditions of this Agreement, FRI shall purchase from LMI, and LMI shall sell to FRI, the Products, at the sellingprices which are set forth in Schedule 2 attached hereto, provided that, in the event of any considerable change in ****, the parties will negotiate in good faitha change to the then-current selling prices, ****. For purposes of this Agreement, “considerable change” shall include any **** change(s) exceeding ****percent (****%). 7 5.2 LMI will use commercially reasonable efforts to supply FRI quantities of the Products as follows: FRI will provide LMI with an initialvolume forecast setting forth FRI’s anticipated quantity and delivery requirements for the forthcoming **** (****) **** on ****, and with updated volumeforecasts on a **** basis thereafter. FRI will submit firm written purchase orders to LMI not less than **** (****) days in advance of the desired date ofshipment; provided, however, that the quantities provided in any forecast by FRI within **** (****) days of delivery will be considered firm orders fromFRI. No order shall be binding upon LMI unless such order is (i) consistent with the most recent forecast within **** (****) days of delivery and(ii) accepted in writing by LMI, with LMI’s confirmation of the expected delivery dates. For the avoidance of doubt, LMI shall use commercially reasonableefforts to accept FRI’s Firm Order with its full quantity if it is consistent with the forecast within **** (****) days of delivery. FRI can increase or decreaseits firm order quantities only with LMI’s prior agreement and LMI may adjust its shipping quantities with FRI’s prior agreement. Both parties shallaccommodate reasonable change requests from the other. 5.3 Products will be shipped **** (INCOTERMS 2010), with title passing to FRI at ****. FRI will import the Products and pay any ****. FRI will be responsible for all **** incurred after arrival of the Products at the ****. 5.4 Products sold and paid for under this Agreement shall not be returnable in any event, unless the Products have been found to be Defective. 5.5 LMI will use commercially reasonable efforts to supply FRI with the quantity of **** reasonably required by FRI **** for regulatory andcompliance testing purposes, provided, however, the number of **** will be subject to renegotiation if there is a change in the applicable regulatoryrequirements. In addition, notwithstanding the foregoing, LMI shall supply FRI with **** reasonably required by FRI **** for the purpose of validation orverification of a new manufacturing site or a change of manufacturing procedure and/or test procedures, the cost of which shall otherwise be ****responsibility. For the purpose of this provision, the Products reasonably required by FRI for regulatory and compliance testing purposes means the Productsthat FRI is required by the applicable regulatory authorities in Japan and/or FRI voluntary plans 8 to test for quality and regulatory compliance purposes only. Such Product will not be used for commercial sales. FRI will make available the results of suchtesting to LMI promptly after completion, upon LMI’s written request. 5.6 The parties acknowledge and agree that LMI’s obligations under this Agreement to supply Product are conditioned on LMI’s ability, usingcommercially reasonable efforts, to be supplied with Product and components thereof from third parties. If LMI fails to supply FRI with the Product set forthin a Firm Order for any reason, the parties shall discuss in good faith commercially reasonable options to resolve the supply failure and/or to minimize theimpact of the supply failure****. FRI has a right to ****. Article 6. (Payment for Products) FRI shall pay LMI for Products by ****. All invoices and payments shall be in **** and all such payments shall be made by wire transfer inimmediately available funds to an account designated by LMI. Article 7. (Payment of Royalties for Grant of Licenses and Reports) 7.1 Subject to the exception under Section 7.4, commencing as of the Effective Date, FRI shall pay to LMI royalties on the Net Sales of theFinished Products in the Territory, at the royalty rates provided in Schedule 3. 7.2 For the purpose of calculating such royalty payments, FRI’s Net Sales shall be cumulated for each **** period ended on ****, respectively(each **** referred to herein as a “Royalty Period”); provided, however, that FRI hereby agrees to provide to LMI a timely and accurate monthly report thatsets forth the Net Sales for each calendar month not later than **** (****) days after the end of each **** in the Royalty Period. 9 7.3 FRI shall pay the royalties for each applicable Royalty Period by **** of such applicable Royalty Period. All payments shall be in **** andall such payments shall be made by wire transfer in immediately available funds to an account designated by LMI. 7.4 Notwithstanding the foregoing, the parties acknowledge and agree that Products in FRI’s inventory as of **** shall remain subject to theterms of the Prior Agreement (i.e., such Product will remain subject to the then-current **** unit prices). The parties acknowledge that the Finished Productsmanufactured from the Products in FRI’s inventory as of **** shall be **** under this Agreement. Such inventory will be sold by FRI using a **** method. Article 8. (Withholding of Taxes, Etc. on License Fee) Any income and other taxes which may be imposed upon any of the payments to be made by FRI to LMI under this Agreement by virtue of theapplicable taxation laws of Japan shall be for the account of ****; provided, however, that any such taxes as shall be paid by **** on behalf of **** to thepertinent tax authorities shall be evidenced by an appropriate certificate or other evidence issued by such authorities. ****will cooperate with ****to executeprocedures for LMI to file the application form of income tax convention with Japan National Tax Agency. Article 9. (Reports) 9.1 Subject to any other provision of this Agreement, each party will provide the other with all information relevant to the promotion of theFinished Products within a reasonable time after such information becomes known to the party or has been requested by the other party, provided that suchinformation is not received from any independent third party under a secrecy obligation. 9.2 Each party shall comply with the requirements set forth in the SDEA reporting requirements concerning Adverse Experiences and SeriousAdverse Experiences. 10 9.3 Each party shall comply with the requirements set forth in the Quality Agreement reporting requirements concerning discontinuation ofmanufacturing, selling, recall, disposal and other actions taken by the parties to prevent the onset or spread of risk to public health and hygiene. Article 10. (Inspections) 10.1 LMI will have the right, at reasonable intervals and on prior notice, to inspect FRI’s facilities used in the manufacturing, packaging, storage,testing, shipping or receiving of the Products and Finished Products. Representatives of LMI will have access during audits to all documents, records,reports, data, procedures, facilities, regulatory submissions and all other information solely related to the Products and Finished Products and required to bemaintained by applicable government regulations. LMI shall have the right to observe from time to time the manufacture, packaging and quality controltesting of the Products by FRI. In addition, LMI shall have the right to audit data, reports and all other information with regard to FRI’s sales of the FinishedProducts. The information LMI obtains through such inspection may be FRI’s Confidential Information (as defined below) and subject to LMI’sconfidentiality obligation set forth herein. 10.2 FRI will have the right, at reasonable intervals and on prior notice, to inspect facilities set forth in the Quality Agreement. Representatives ofFRI will have access during audits to all documents, records, reports, data, procedures, facilities, regulatory submissions and all other information solelyrelated to the Products and required to be maintained by applicable government regulations (including, but not limited to, ****) in accordance with the QualityAgreement. The information FRI obtains through such inspection may be LMI’s Confidential Information (as defined below) and subject to FRI’sconfidentiality obligation set forth herein. Article 11. (LMI and FRI Responsibilities) 11.1 The parties agree that they will optimize the distribution and sale of the Finished Products in connection with the commercial activitiesdescribed below: 11 (a) LMI and FRI shall activate the prior formed joint **** committee (“****”). The **** will consist of equal numbers of representatives ofeach party and will meet from time to time, at mutually agreeable times and locations, to discuss **** of the Finished Products in Japan,as well as **** response in the **** and other matters of mutual interest. Additional representatives of each party or the parties, inaddition to members of the JMC, may attend such meetings at the invitation of either party. (b) From time to time, the **** shall develop and formulate **** plans for specified periods which shall set forth **** relating to theFinished Products. (c) Neither party shall have any responsibility for the hiring, firing, or compensation of the other party’s employees or for any employeebenefits. No employee or representative of a party shall have any authority to bind or obligate the other party to this Agreement for any sumor in any matter whatsoever, or to create or impose any contractual or other liability on the other party without said party’s authorizedwritten approval. (d) LMI shall have the right to comment upon and make recommendations to FRI regarding****, which recommendations FRI shallthoroughly evaluate and consider. (e) Each party shall bear its own costs associated with its participation in the ****. (f) FRI shall comply with all laws, rules, regulations, reporting requirements and guidelines for good distribution practices in the Territory,including, but not limited to, those covering the importation, sale, advertising and promotion of, and the payment for, the Products. Inaddition, FRI acknowledges that LMI is a U.S. corporation and it is the policy of LMI and its Affiliates to comply at all times with theForeign Corrupt Practices Act of 1977, as amended, U.S. export control 12 regulations, and any other applicable laws and regulations of similar effect. FRI agrees to abide by such laws and regulations and to certifysuch compliance to LMI in writing as reasonably requested by LMI. (g) LMI shall comply with all laws, rules, regulations, reporting requirements and guidelines for good manufacturing practices in the UnitedStates, as specified by the U.S. Food and Drug Administration. (h) The parties acknowledge that it is the obligation of both LMI and FRI to maintain a stable supply of the marketing authorizedpharmaceuticals to be covered by the National Health Insurance System in the Territory. 11.2 FRI will visually inspect all delivered Products and perform all other required and necessary quality tests of the delivered Products afterarrival at its production facility. Except as otherwise provided in this Agreement or the Quality Agreement, LMI and FRI shall have the joint right andresponsibility to take such actions with respect to Finished Products as would normally be done in accordance with accepted business practices and legalrequirements to obtain and maintain the authorization and/or ability to market a major pharmaceutical product in the Territory, including, without limitation,the following: (a) maintaining a stable supply of the Finished Products; (b) responding to product complaints and medical information relating Finished Products; (c) handling all returns of Finished Products; (d) handling all recalls of Finished Products; (e) communicating with any governmental agencies and satisfying their requirements regarding the authorization and/or continuedauthorization to market Finished Products in commercial quantities in the Territory; and 13 (f) entering into a separate Quality Agreement in compliance with governmental requirements for the importation of the Products. 11.3 LMI and FRI agree to reciprocally inform each other of any AE or Serious AE or product quality complaint associated with the Products or theFinished Products promptly pursuant to the terms of the Safety Data Exchange Agreement or Quality Agreement, as applicable. Article 12. (Warranties and Indemnification) 12.1 Each party warrants and represents to the other party that it has the full right and authority to enter into this Agreement, and that it is notaware of any impediment that would inhibit its ability to perform its obligations under this Agreement. 12.2 LMI warrants that the Products shall conform to the specifications provided in the Quality Agreement for such products and shall be freefrom Defects for **** (****) days from the date of sale to FRI. If any such Defects are detected within **** (****) days from the date of sale, as FRI’sexclusive remedy for such breach of warranty, LMI shall use commercially reasonable efforts to promptly replace of the Defective Products. Subject to theProvisions of Article 12 hereof, LMI MAKES NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, WITH REGARD TO THE PRODUCTS. LMIEXPRESSLY AND SPECIFICALLY DISCLAIMS ANY WARRANTY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NEITHER PARTY SHALL BE LIABLE FOR SPECIAL OR INCIDENTAL DAMAGES. 12.3 LMI shall indemnify and hold FRI, its parent companies, affiliates and subsidiaries, and the officers, directors and employees of each ofthem, harmless from any and all liability, including liability for death or personal injury, and costs, losses and expenses, including reasonable attorneys’fees, that stem from any acts or omissions of LMI in connection with its duties and obligations hereunder, including as they relate to the manufacture of theProducts, or from LMI’s breach of any provision of this Agreement. 14 12.4 FRI shall indemnify and hold LMI, its parent companies, affiliates and subsidiaries, and the officers, directors and employees of each ofthem, harmless from any and all liability, including liability for death or personal injury, and costs, losses and expenses, including reasonable attorneys’fees, that stem from any acts or omissions of FRI in connection with its duties and obligations hereunder, including as they relate to the distribution,promotion and/or secondary manufacture of the Finished Products, or from FRI’s breach of any provision of this Agreement. Article 13. (Confidentiality) 13.1 All Confidential Information, as defined hereinafter, disclosed by or on behalf of a party (the “Disclosing Party”) and received by the otherparty (the “Receiving Party”) shall be held in confidence by the Receiving Party. From and after the Effective Date of this Agreement, subject to Section 13.2and except as otherwise contemplated by this Agreement, the Receiving Party shall not, and shall cause its Affiliates and its and their respective directors,managers, employees, independent contractors, subcontractors, agents, lender or consultants (“Representatives”) not to, directly or indirectly, disclose, reveal,divulge or communicate the Confidential Information (as hereinafter defined) of the Disclosing Party to any third party other than Representatives of theReceiving Party or of its Affiliates who reasonably need to know such information in the performance of their responsibilities under this Agreement. TheReceiving Party shall not use the Confidential Information for any purpose other than in connection with exercising its rights and fulfilling its obligationshereunder. The Receiving Party and its Affiliates and Representatives shall use the same degree of care to prevent and restrain the unauthorized use ordisclosure of the Confidential Information of the Disclosing Party as they currently use for their own confidential information of a like nature, but in no eventless than a reasonable standard of care. “Confidential Information” means, with regard to a Disclosing Party, any confidential information, data, material ordocuments of such party and its Affiliates relating to this Agreement or the transactions contemplated hereunder, irrespective of the form of communication,and all notes, analyses, compilations, data, translations, studies, memoranda, operating procedures or other documents prepared by the Receiving Party or itsAffiliates or their Representatives that contain or otherwise reflect such information, data, material or documents; 15 provided, however, that “Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information, data, material ordocuments that (i) are or become generally available to the public, other than as a result of a disclosure by the Receiving Party and its Affiliates andRepresentatives not otherwise permissible hereunder, (ii) the Receiving Party can demonstrate was or became available to the Receiving Party from a sourceother than the Disclosing Party and its respective Affiliates, or (iii) are developed independently by the Receiving Party and its Affiliates and Representativeswithout reference to the Confidential Information of the Disclosing Party; provided, however, that, in the case of clause (ii), the source of such information,data, material or documents was not known by the Receiving Party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciaryobligation of confidentiality to, the Disclosing Party and its Affiliates and Representatives with respect to such information, data, material or documents. Confidential Information shall not be deemed within the foregoing exceptions if (i) specific information is merely embraced by more general information in thepublic domain or the Receiving Party’s possession, or (ii) it constitutes a combination which can be reconstructed from multiple sources in the public domainor the Receiving Party’s possession, none of which shows the whole combination of the Confidential Information. The obligations of this paragraph shallsurvive **** (****) years following the term of this Agreement. 13.2 If the Receiving Party or its Affiliates are requested or required (by oral question, interrogatories, requests for information or documents,subpoena, civil investigative demand or similar process) by any court of competent jurisdiction or by a judicial, administrative, legislative or regulatory bodyor committee to disclose or provide any Confidential Information of the Disclosing Party, the Receiving Party shall use all reasonable efforts to provide theDisclosing Party with written notice of such request or demand as promptly as practicable under the circumstances so that the Disclosing Party shall have anopportunity to seek an appropriate protective order. The Disclosing Party receiving such request or demand agrees to take, and cause its Representatives totake, at the requesting party’s expense, all other reasonable steps necessary to obtain confidential treatment or to resist or narrow such request. Subject to theforegoing, the Receiving Party may thereafter disclose or provide any such Confidential Information, as the case may be, to the extent required by applicablelaw (as so advised by 16 counsel); it being understood that LMI shall have the right to file this Agreement with the U.S. Securities and Exchange Commission to the extent it reasonablydetermines such filing is required under applicable laws or regulations, and that LMI shall use commercially reasonable efforts to seek confidential treatmentof pricing and other competitively sensitive information. 13.3 Title and rights to, and emanating from, the ownership of all Confidential Information disclosed under this Agreement shall remain vested inthe Disclosing Party. Upon written request of the Disclosing Party, except as otherwise contemplated by this Agreement, the Receiving Party shall returnpromptly to the Disclosing Party or, with the prior written consent of the Disclosing Party, destroy all written materials and documents in their possessions,made available or supplied by the Disclosing Party to the Receiving Party that contains Confidential Information together with any copies thereof. 13.4 The parties further acknowledges and agrees that the disclosure of the Disclosing Party’s Confidential Information without the express writtenconsent of the Disclosing Party may cause irreparable harm to the Disclosing Party, and that any breach or threatened breach of this Agreement by theReceiving Party will entitle the Disclosing Party to seek injunctive relief, in addition to any other legal remedies available to it, in any court of competentjurisdiction. Article 14. (Product Liability) 14.1 Both parties shall make best efforts to obtain safety information regarding Finished Products as well as products similar to FinishedProducts, and shall provide such information to the other party in accordance with the SDEA and Quality Agreement. 14.2 In the event that either party becomes aware of any harm, including death, sickness or adverse social consequences, caused by or attributableto a Finished Product (hereinafter called “Damage”) or has any good reason to believe that Damage may have occurred or is likely to occur, such party shallgive prompt written notice thereof to the other party. Thereupon, the parties shall mutually cooperate in the taking of prompt and appropriate measures to limitthe 17 actual or potential Damage to a minimum in order to control or prevent the expansion of such Damage, and shall further cooperate in the investigation of thecause of such Damage. 14.3 LMI shall provide FRI with sufficient, precise and state-of-the-art information in the English language that will be necessary for FRI to prepareappropriate package inserts including, but not limited to, instructions and warnings, in the Japanese language that satisfy the requirements of the applicablelaws of the Territory. 14.4 In the event of the occurrence of any Damage to users caused by any safety problem regarding a Product arising from LMI’s manufacturethereof, or any inadequate instructions or warnings from LMI (limited to such instructions or warnings originating from LMI) regarding the use of a FinishedProduct except as otherwise set forth herein, LMI shall be solely responsible for any claim from such Damage, and shall be liable for the entire compensationpayable therefor. If for any reason whatsoever FRI makes payment for such compensation on behalf of LMI, or incurs any cost for preventative measurestaken under Section 14.2 above, or for damage control measures, LMI shall promptly indemnify FRI in full for such payments and costs. 14.5 As between the parties, FRI shall be solely liable for any Damage arising from storage, transportation, or manufacture by FRI in the Territoryof any Product or Finished Product, and shall hold LMI harmless and indemnified in that respect at all times. In the event that FRI is found to becontributorily liable for causing Damage to the user of any Finished Product, FRI shall be liable jointly with LMI, for payment of the compensation and thecosts set forth above in proportion to FRI’s share of that liability. If for any reason whatsoever LMI makes payment for such compensation on behalf of FRI,or incurs any cost for preventative measures taken under Section 14.2 above, or for damage control measures, FRI shall promptly indemnify LMI in full forsuch payments and costs. 14.6 In the event that any suit is filed by any user of a Finished Product against FRI and/or LMI on the basis of any Damage sustained by suchuser, both parties shall mutually cooperate to defend such suit through the use of any appropriate means including, but not limited to, intervention in the suit. With regard to the bearing of the costs and expenses incurred in 18 connection therewith including, but not limited to, reasonable attorney’s fees, the provisions of Sections 14.4 and 14.5 above shall apply mutatis mutandis. Article 15. (Term and Termination) 15.1 This Agreement shall be for a term of ten (10) years from Effective Date unless terminated earlier under this Agreement, provided that, unlesseither party gives to the other party a notice of termination at least **** (****) days prior to the expiration of this Agreement, it shall be automatically renewedfor **** (****) **** periods, and the same shall apply thereafter. 15.2 Either party may terminate this Agreement as follows: (a) In the event that any stipulation or provision of this Agreement is breached by one party, the other party may, upon **** (****) days’written notice to the breaching party terminate this Agreement. However, if such breach is corrected within the **** (****) day period, andthere are not unreimbursed damages resulting from the breach, this Agreement shall continue in force. (b) Should one party (1) become insolvent or unable to pay its debts as they mature, or (2) make an assignment for the benefit of creditors, or(3) permit or procure the appointment of a receiver for its assets, or (4) become the subject of any bankruptcy, insolvency or similarproceeding, then the other party may, at any time thereafter, on written notice to the first party, effective immediately, terminate thisAgreement. (c) Upon agreement of the parties to early terminate this Agreement. 15.3 Termination of this Agreement shall not relieve FRI of any obligation to make payment of any sum due to LMI pursuant to Articles 6 and 7herein, and shall not relieve the Receiving Party of any liability for damages to the Disclosing Party resulting from the unauthorized disclosure or use of anyKnow How, Confidential Information or Trademarks. Termination of this Agreement shall not terminate each parties rights and obligations under Articles 6,7, 8, 9, 10, 12, 13, 14 and 15. 19 15.4 Should this Agreement terminate then, pursuant to Section 13.1, for a period not to exceed **** (****) years following the term of thisAgreement, neither party shall use nor disclose any Confidential Information to any third party. The Receiving Party shall return promptly to the DisclosingParty or, with the prior written consent of the Disclosing Party, destroy all written Confidential Information including Know-How transmitted to the ReceivingParty pursuant to this Agreement, together with all copies or reproductions thereof or parts thereof. 15.5 In the event that this Agreement is terminated for any reason, FRI shall cease all importation of the Products and sales, distribution andmanufacturing of the Finished Products, provided that FRI shall have the right to sell in accordance with the terms of this Agreement all unsold inventories ofthe Finished Products in FRI’s possession unless LMI shall exercise the option, by written notice to FRI on or before the effective date of such termination, torepurchase all of FRI’s remaining non-expired inventory of the Products at the original import price for such inventory purchased by FRI from LMI andrequest FRI to destroy at FRI’s costs such non-expired inventories of the Products in FRI’s possession and provide LMI with a certificate of destruction. 15.6 In the event of termination due to FRI’s breach, FRI agrees to transfer at a price agreed upon by both parties to LMI or its designee all Product**** and other **** or **** held by FRI necessary for continuous sale of Finished Products in the Territory. Article 16. (General Provisions) 16.1 Force Majeure Neither party shall be responsible for failure or delay in performance of any obligation under this Agreement due to events or circumstances beyondits reasonable control (other than the payment of money) including but not limited to fire, flood, explosion, lightning, windstorm, earthquake, subsidence ofsoil, failure of machinery or equipment or supply of power due to other than any intentionally wrongful or grossly negligent act or omission by a party, courtorder or 20 governmental interference, civil commotion, riot, war, strikes, labor disturbances, transportation difficulties, Act of God or any other cause similar theretowhich is beyond the control of the parties, provided, such party promptly gives to the other party hereto written notice claiming force majeure and usesreasonable commercial efforts to eliminate the effect of such force majeure, insofar as is possible and with all reasonable dispatch. Performance of any suchobligation shall be suspended until events or circumstances constituting Force Majeure cease. 16.2 Notices Except as otherwise set forth in this Agreement, all notices and other communications required or permitted shall be sent by facsimile or electronicmail (which have been designated by the parties in writing for such purpose) and confirmed by registered mail addressed to: If to LMI: Lantheus Medical Imaging, Inc.331 Treble Cove RoadNorth Billerica, Massachusetts 01862, U.S.A.Attn: Vice President, International With a copy to: Lantheus Medical Imaging, Inc.331 Treble Cove RoadNorth Billerica, Massachusetts 01862, U.S.A.Attn: General Counsel If to FRI: FUJIFILM RI Pharma Co., Ltd.14-1, Kyobashi 2-chomeChuo-ku, Tokyo 104-0031 JapanAttn : Vice President, R&D With a copy to: FUJIFILM RI Pharma Co., Ltd.14-1, Kyobashi 2-chomeChuo-ku, Tokyo 104-0031 Japan 21 Attn: General Manager, R&D Planning and Licensing or such other person or address as each party may furnish to the other in writing. 16.3 Assignability Neither this Agreement nor the rights or licenses herein granted to FRI shall be assignable or otherwise transferable by a party (directly or indirectly,including by operation of law) to any third party (other than a third party assignee (i) at least ****% of which assignee is owned (and maintained), directly orindirectly, by the assigning party, and (ii) which assignee is capable of performing under, and agrees to be bound by, all of the terms and conditions of thisAgreement as if an initial party thereto) without the prior written consent of the other party, except this Agreement shall be assignable to LMI’s successor-in-interest in connection with LMI’s merger, acquisition, sale of the business, sale of the business line related to the Products, reorganization, recapitalization orother change of control, provided that any successor-in -interest agrees to be bound by all of the terms and conditions of this Agreement as if an initial partythereto. 16.4 Governing Law This Agreement shall be construed in accordance with the laws of Japan. 16.5 Dispute Resolution 16.5.1 Should any dispute arise hereunder, or in connection with herewith, the parties agree to consult each other in order to reach an amicablesettlement. 16.5.2 In the event that any dispute between the parties cannot be resolved amicably, such dispute shall be finally solved by arbitration pursuant tothe Japan-American Trade Arbitration Agreement of September 16, 1952. The place of arbitration shall be Boston, Massachusetts, United States in case thearbitration is invoked by FRI, and Tokyo, Japan in case the arbitration is invoked by LMI. The arbitration award shall be final and binding, and can beenforced by the enforcement judgment of the court of jurisdiction. 22 16.6 Entire Agreement This Agreement, including all Schedules and Attachments referred to herein which form a part hereof, embody the entire Agreement andunderstanding of the parties in respect of the subject matter contained herein. There are no restrictions, promises, warranties, covenants or undertakingsother than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respectto such subject matter. No amendment of this Agreement shall be valid unless in writing and signed by both parties. 16.7 Waiver Failure of either party to object to a breach of nonperformance of any term of this Agreement shall not constitute a waiver of the party’s right to requirea remedy of a subsequent or continuing breach of such term or to enforce the balance of this Agreement. 16.8 Risk of Loss Risk of loss, damages, deterioration of the Products shall be at the responsibility of FRI upon ****. 16.9 Relationship between Parties It is expressly agreed that the relationship between the parties established under this Agreement is solely that of licensor/licensee and buyer/seller. It isunderstood that nothing in this Agreement constitutes FRI as the agent or legal representative of LMI or its affiliates for any purpose whatsoever. FRI is notauthorized to assume or create any obligation or responsibility, expressed or implied, on behalf of or in the name of LMI or its affiliates, or to bind LMI or itsaffiliates in any manner. 23 16.10 LMI’s Trademarks Any LMI-owned trademarks used on the Products are and shall be the exclusive property of LMI or, as the case may be, an affiliate of LMI, and FRIshall not use or register any such trademark without prior written approval of the owner. 16.11 **** Products During the Term of this Agreement, FRI agrees it shall not during the term of this Agreement, sell, directly or indirectly, any **** without firstobtaining the express written consent of LMI. For purposes of this Agreement, a “****” of **** shall include any product **** (including, but not limitedto, any product which is categorized as **** for a marketing authorization application with **** in accordance with Japanese Pharmaceutical Affairs Law);provided, however, **** which have been authorized by MHLW and pre-approved for sale by the parties hereunder will not be restricted by the foregoingprovision so long as the sale of such products remains subject to the terms of this Agreement (including, but not limited to, the royalties and purchaserequirements set forth herein). Article 17. (Miscellaneous Provisions) 17.1 No license or right is granted by implication or otherwise with respect to any patent application or patent or Know-How except as specificallyset forth herein. 17.2 LMI shall not be required to grant any right with respect to any patent application or patent or Know-How or furnish information as to whichLMI shall incur financial or other liability to a third party, and no information shall be required to be furnished over governmental prohibition or objection. 24 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized representatives in duplicate on the date shownbelow but effective as of the Effective Date first written above. LANTHEUS MEDICAL IMAGING, INC. By:/s/ Donald R. KiepertName:Donald R. KiepertTitle:President and CEODate:12/28/12 FUJIFILM RI PHARMA CO., LTD. By:/s/ Yoshiro KumanoName:Yoshiro KumanoTitle:President & CEODate:18 December, 2012 25 Schedule 1 Trademarks TrademarkRegistration No.(Appln. No.)Registration Date(Filing Date)CARDIOLITE2212950(87/57085)February 23, 1990(May 25, 1987)CARDIOLITEIn Katakana letters2266312(87/95714)September 21, 1990(August 25, 1987)NEUROLITEWith its Katakanaletters2286501(88/36541)November 30, 1990(April 1, 1988) 26 Schedule 2 Selling Prices Selling Prices for the Products are calculated in accordance with the unit price in the following table and are subject to the provisions in Article 5, 6 and 8. ************/kit************/kit************/g************/g 27 Schedule 3 Royalty Royalties from FRI to LMI are calculated in accordance with the following table based on the Net Sales and are subject to provisions in Article 7 and 8. ************************ products****%****%****%****%**** products****%****%****%****% 28 Attachment 1 Safety Data Exchange Agreement between Lantheus Medical Imaging and FUJIFILM RI PHARMA, CO., LTD Regarding The Product(s) set forth in Appendix I Revision Date: December 2012 I. General Provisions A. Background Lantheus Medical Imaging, Inc., having a business office at 331 Treble Cove Road, N. Billerica, MA 01862, and FUJIFILM RI Pharma Co., Ltd., having abusiness office at 14-1, Kyobashi 2-chome, Chuo-ku, Tokyo 104-0031 Japan (“MAH”), have entered into a business relationship related to theproduct(s) listed on Appendix I (hereinafter, collectively, referred to as the “Product(s)”). LMI and the MAH have agreed to and hereby enter into this Safety Data Exchange Agreement (this “SDEA”) as of the date of the last signature hereto (the“Effective Date”) to set forth guidelines and procedures for (i) the provision of medical information, (ii) the receipt, recordation, exchange, communication,and submission of safety information associated with the use of the Product(s) (“Safety Data”), and (iii) the receipt, recordation, exchange, communication,investigation and submission of Product Quality Complaints (as defined below). LANTHEUS and the MAH may hereinafter be collectively referred to as the“Parties”. B. Definitions and Terminology For this document, ICH definitions are used. Various terms are used by the Regulatory Agencies when referring to adverse events (AE), including adverse effect, adverse experience and unanticipatedproblems. For the purpose of this SDEA the term Adverse Events will be used. “Adverse Event” (AE) is defined as any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical productregardless of any causal relationship with the product, including, but not limited to, the following: an adverse event occurring in the course of the use of a drugproduct. An AE may be a new unintended or unfavorable sign or symptom, a laboratory abnormality, or a worsening in severity or frequency of a pre-existingmedical condition. An AE may arise from use of the product within the terms of the marketing authorization, outside the terms of the marketing authorizationor during occupational exposure. In addition to AEs, the following types of safety reports (“Special Situations” or “SS”) are subject to the same terms as AEs within this SDEA, regardless ofwhether an AE actually occurred: · Use of product during pregnancy; · Adverse reactions in an infant during breastfeeding; · Reports on compassionate use/named patient use; · Lack of efficacy or effect; · Report of suspected transmission of infectious disease; · Reports of overdose (accidental or intentional), abuse, misuse or medication error; or · Occupational exposure. “Awareness Date” is the date that MAH personnel first becomes aware of information on an AE associated with the use of a Product and determines that itmeets the minimum criteria. For the 2 avoidance of doubt, the date will be determined according to the time zone of the location of such personnel at that moment. The Awareness Date shall becounted as day zero for Safety Data exchange and regulatory reporting purposes. “Minimum Criteria” are the four criteria that are required to record an AE in the safety database: · Identifiable patient (i.e., a reporter has confirmed the patient exists); patient identifiers are not required; · Identifiable reporter (at least the reporter type should be known, e.g., consumer or physician); · Adverse event (including events to be treated in the same manner, e.g., overdose, abuse, misuse, medication errors, occupational exposure,pregnancy, breastfeeding, or transmission of infectious agents); and · Identifiable drug (i.e., LMI brand name or active pharmaceutical ingredient where a brand name is not available). “Product Quality Complaint” (PQC) is defined as an oral or written report, originating from an external or internal source, stating that a commercial productmarketed by LMI is not meeting the customer’s expectations in relation to identity, quality, effectiveness or performance of the product. Examples include anon-functioning device, a generator unable to elute, cracked or broken needles, a cracked vial, leakage of product into packaging prior to dosing, a piece ofstopper in the vial, non-visualization of a target organ, or a product that arrives in damaged condition. “Serious Adverse Event” (SAE) is an AE that is fatal, life-threatening, requires hospitalization or prolongs an existing hospitalization, results in- persistent orsignificant disability, is a congenital anomaly/birth defect or is medically significant. Examples include hospitalization due to a heart attack, stroke, or a life-threatening allergic reaction. Transmission of an infectious agent is always considered serious. “Territory” shall mean the country of Japan, which is/are the country(ies) governed by this SDEA. C. Summary of Responsibilities MAH shall be responsible for providing a medical information service; receipt, documentation and follow-up of AEs; receipt, documentation and follow-up ofPQCs; for forwarding all AEs, PQCs, Special Situations, and other safety or quality related information to LMI to the contact points designated by LMI, formaintaining their own safety and quality databases, for trend analysis and issue management within the Territory and for reporting of such events per countryor territory regulations. MAH shall ensure that all of its distribution or marketing partners comply with the terms and conditions set forth herein. LMI is responsible for forwarding international AEs and Special Situations to the MAH, and for maintaining the global safety database for the Products. D. Market Authorization Holder The Marketing Authorization Holder (“MAH”) has the attendant accountabilities described in this SDEA. 3 E. Communications The communications under the terms of this SDEA shall occur between the medical information, pharmacovigilance (PV) and/or quality systems andcompliance offices of each Party, or the equivalents thereof, as set forth in Appendix II. The Parties hereby agree that all communications shall be inEnglish. English translations of Safety Data and Product Quality Complaints within the scope of this SDEA shall be the responsibility of the Party that issending such information. F. Confidentiality of Information/Privacy Laws The Parties shall implement all reasonable physical, technical and administrative safeguards to protect medical information, Safety Data and PQCinformation governed by this SDEA from loss, misuse, and unauthorized access, disclosure, alteration or destruction and shall otherwise afford suchinformation at least the same level of confidentiality treatment as the confidential information protected under the business agreements between the parties. Inaddition, each Party shall collect, use and disclose Safety Data and PQC information governed by this SDEA solely for purposes as described in applicablelegislation, and in compliance with all applicable privacy and data protection laws, rules, and regulations. The Parties shall notify each other promptly of anyunauthorized uses or disclosures of such information. G. Training MAH agrees to ensure that all relevant personnel, including, but not limited to, relevant personnel of its affiliates and marketing partners, are sufficientlyinformed and trained on the terms and procedures outlined within this SDEA, including without limitation, the process for the receipt, recordation, exchange,communication and submission of Safety Data, PQC and medical information for the Product(s) and all relevant regulations and laws thereto. This trainingmust include any sales representatives contracted by the MAH, as well as those responsible for providing medical information, pharmacovigilance andproduct quality complaint services. MAH also agrees to document the aforementioned training activities, including the training material(s) used and makethese documents reasonably accessible to LMI upon request. LMI shall ensure that all relevant LMI personnel, including the Global Pharmacovigilance Agent, are trained in respect of this SDEA. II. Individual Case Safety Reports (ICSRs) Exchange A. General Guidelines As defined in section 1B, for the purpose of this SDEA, ICSRs shall include, but are not limited to, the following types of reports: adverse events; adverseevents associated with a product quality complaint; serious adverse events, or Special Situations (See Section 1 B). ICSRs may originate from any source, such as healthcare professionals, regulatory authorities, consumers, patients, lawyers, and medical/scientificliterature. They may also be solicited reports such as those that are derived from organized data collection systems, such as clinical trials, registries, non-clinical studies (e.g., toxicological studies), post-approval named patient use programs, other support and disease management programs, surveys of patientsor healthcare providers, or information gathering on efficacy or patient compliance. MAH should attempt to obtain medical confirmation of ICSRs originatingfrom non-healthcare professionals. 4 The MAH shall use every effort to ensure that all ICSR reports meet the minimum criteria for a valid safety report. Such reports shall conform to allapplicable regulatory requirements and shall, at a minimum, include the following information: an identifiable reporter, the patient identifier/subject number,the adverse event(s), and the product(s) involved, as described in section 1B. However, cases should be transmitted for processing even when the patientand/or the reporter have not been identified. Each Party shall use every effort to obtain comprehensive information for all ICSR reports, including a causalassessment from the reporter. Solicited reports should be clearly marked as being of solicited origin and must have an appropriate causality assessment by ahealthcare professional. LMI may seek additional queries for follow-up information on ICSRs (serious and non-serious), as necessary. MAH shall be responsible for obtaining suchfollow-up information from within the Territory and shall document all attempts (including those that were unsuccessful) for the attainment of such requestedfollow-up information. B. Literature Screening LMI shall be responsible for actively screening scientific and medical literature worldwide and will forward any ICSRs that are identified to the MAH.However, this action shall not limit the responsibility of the MAH to report to LMI, in accordance with the timeframes stipulated in Section III C, ICSRs,Special Situations and general safety information discovered by the review of local literature. If Territory regulations require the reporting of ICSRs from themedical literature, the MAH will do so within the required reporting timelines. LMI’s literature screening activities do not replace the MAH’s accountability forsuch activities as MAH in the Territory. C. Reporting AEs, SAEs, ICSRs and SS The MAH will forward to LMI’s GPV Agent original source documents for Adverse Events, Serious Adverse Events, Individual Case Safety Reports (ICSRs),Special Situations and other safety-related information within five (5) calendar days. MAH is responsible for providing an English translation for any sourcedocuments that are in another language. If the MAH is responsible for preparing the CIOMS, it will also forward the completed CIOMS to LMI within 5 calendar days. The following contactinformation should be used (or such other address, contact person, telephone number, facsimile number or e mail address as may subsequently be specifiedby LMI): (i) If MAH has access to the toll-free 800 number, reports shall be made using the following contact information: IssuePhoneFaxEmailAE, SAE, ICSR or SS800-343-7851866-880-9343lantheussafety@i3global.com 5 (ii) If MAH does not have access to the toll-free 800 number, reports shall be made using following contact information (with the appropriatecountry code): IssuePhoneFaxEmailAE, SAE, ICSR or SS1-978-667-95311-734-929-6688lantheussafety@i3global.com The Awareness Date and the MAH’s report reference number must be recorded on each report sent to LMI by MAH. In the case of a follow-up report, the dateof receipt of the follow-up information must be recorded in a similar manner. If an ICSR is received after the close of business, and it is not discovered until the next business day, the awareness date is considered to be the next businessday. D. Reconciliation/Late Case Reporting On a semi-annual basis, or at an alternate frequency determined by LMI; LMI shall provide to MAH all ICSRs that were received from MAH for theProduct(s) during the preceding period from the date of the last report. These ICSRs shall be used by MAH to confirm LMI receipt of reports sent by MAH. MAH shall provide prompt written confirmation of such reconciliation to LMI, In accordance with internal company procedure, MAH shall promptly review this report, and take appropriate action to ensure compliance with the timelyforwarding of future reports to LMI. III. Regulatory Reporting Responsibilities A. Global Safety Database LMI shall maintain the global safety database for the collection and maintenance of all ICSR data for the Product(s). MAH will retain original sourcedocuments for each ICSRs reported, and will forward information on cases to LMI as per Section II C. B. General Guidelines MAH shall be responsible submitting Individual Case Safety Reports (ICSRs) and aggregate safety reports to the applicable regulatory health authority(s) inthe Territory. C. Regulatory Authority Inquiries MAH shall notify LMI promptly if they become aware of any other adverse safety signal received from any source. LMI and MAH shall agree an action plan for investigation and management of any of the above situations, if applicable. The MAH shall notify LMI as soon as is practical but no later than three (3) business days after it receives any communication relating to pharmacovigilanceor risk management activities (e.g., an inspection) from any regulatory authority in the Territory concerning the Product(s). LMI shall have the opportunity toreview and comment on any communications with the regulatory 6 authority in the Territory relating to the Product(s), which comments will be considered and incorporated in good faith by the MAH. IV. Aggregate Safety Reports LMI shall be responsible for the preparation of all aggregate safety reports for the Product(s). Such aggregate safety reports shall be prepared in accordancewith applicable regulatory requirements, and shall include without limitation the Periodic Safety Update Report (PSUR) and the Periodic Adverse DrugExperience Report (PADER). MAH shall provide, in a timely manner, all necessary data (e.g., regulatory status and safety actions that have occurred in theTerritory(s), status of MAH-sponsored clinical trials for the Product(s), if applicable, Product sales data within the Territory) and any other assistancereasonably requested by LMI in connection with the preparation of aggregate safety reports. The MAH will be responsible for submitting such reports per theregulatory requirements in the Territory. V. Product Quality Complaint Reporting The reports for Product Quality Complaints should include the following information: · Name and contact information of reporter· Product/material name or description· Lot number· Number of defective units· Potency (for radioactive products only)· Number of complaint samples available for return· Indication of whether a patient was dosed· Description of the complaint condition MAH also will provide any follow up information requested by LMI or its agent for purposes of conducting an investigation All Product Quality Complaints or defects which come to the attention of MAH shall be forwarded to LMI, through its agent for global pharmacovigilance, inEnglish or translated to English by a qualified translation service within one (1) business day (or to such other address, contact person, telephone number,facsimile number or e-mail address as may be specified by LMI). LMI will investigate such PQCs as per Quality SOPs. (i) If MAH has access to the toll-free 800 number, reports shall be made using the following contact information: IssuePhoneFaxEmailPQC800-343-7851866-880-9343lantheussafety@i3global.com (ii) If MAH does not have access to the toll-free 800 number, reports shall be made using following contact information (with the appropriatecountry code): IssuePhoneFaxEmailPQC1-978-667-95311-734-929-6688lantheussafety@i3global.com 7 VI. Medical Information MAH shall answer and maintain a record of all medical information queries with respect to the Products in the Territory. MAH is responsible for provision ofa medical information service in accordance with applicable legislation and guidance in the Territory, which may require provision of a 24/7 service in someTerritories. MAH shall ensure that the contact information for the medical information service is published in usual literature appropriate to the Territory. VII. Additional Provisions A. Written Procedures Each Party shall keep on file in their own manner, and in accordance with regulatory requirements, written SOPs, work practices, and all correspondence,documents, and any other information pertaining to the safety of the Product(s). Further, in case the other Party makes any request concerning saidinformation, each Party shall cooperate with and assist the other Party, within reason, by complying with the request. B. Audits LMI has the right to request access to, with reasonable notification, all files, Standard Operating Procedures (SOPs), work practices, training material,training files and other documents of MAH pertaining to its obligations under this SDEA, and any pharmacovigilance activities performed for the Product(s). Upon reasonable notification, LMI is entitled to conduct on-site audits in order to review MAH’s pharmacovigilance procedures and guidelines that require on-site evaluation. On-site audits shall be limited to audit items pertaining to the Product(s) and procedures and responsibilities described and approved by theParties in this SDEA. C. Measures Taken to Protect Public Health MAH shall immediately inform LMI of any newly identified safety issue or signal, or any circumstance arising for the Product(s) in the Territory where anaction may be required to protect public health. Similarly, LMI will inform the MAH of any newly identified safety issue or signal, and action that may berequired to protect public health in the Territory, even if such signal did not originate from the specific MAH. D. Record Keeping/Retention Policy MAH shall maintain for an indefinite period of time, records of all Safety Data, including source data (if applicable) and any correspondence relating thereto. MAH agrees to maintain records of all ICSRs submitted to LMI for processing and reporting to regulatory authorities. Such records shall include sourcedocuments for each ICSR; the date the report was received by MAH; the date the report was submitted to LMI and the regulatory health authority, ifapplicable; the reference number and code of the report. In the event that one of the Parties intends to destroy any such documentation, such Party shall notify the other Party reasonably in advance thereof. 8 VIII. Terms of this SDEA This SDEA supersedes any previous safety data exchange agreements and any amendments thereto between the Parties related to the Product(s) in theTerritory. Each Party, and its or their successors and assigns, is bound by its terms, and it is in effect unless and until both Parties agree to terminate thisSDEA. In the event that this SDEA or the Agreement is terminated, the Parties agree to implement the necessary procedures and practices to ensure that anyoutstanding pharmacovigilance or Product reporting obligations are fulfilled. The Parties agree that in the event of a conflict between the terms of the business relationship between the parties and this SDEA, this SDEA shall control andgovern with respect to the provision of medical information services, receipt, recordation, exchange, communication and/or submission of Safety Data for theProduct(s), pharmacovigilance responsibilities related to the Product(s) or Product Quality Complaints. Neither Party shall be required to adhere to any requirement set forth in this SDEA, or take or refrain from taking any action whatsoever that is inconsistentwith any applicable national or international regulatory requirement. The Parties agree to review this SDEA whenever the roles and responsibilities of the Parties change or at a minimum of every five (5) years. In the event that awritten renewal is necessary, it shall be considered complete when LMI and MAH have mutually agreed to a revised SDEA or addendum, and upon documentsigning by both Parties. There can be no use of any information covered by this SDEA for any purpose not contemplated by this SDEA. 9 IX. Signatories IN WITNESS WHEREOF, the Parties have executed this SDEA, made effective as of the Effective Date, by their duly authorized representatives as of thedate last written below. LMIMAH By:By: Print Name:Alex KutaPrint Name:Ryoji Adachi Title:VP, Global Regulatory AffairsTitle:General Manager Date:Date: 10 APPENDIX I Product(s) CARDIOLITE® (Kit for the Preparation of Technetium Tc99m Sestamibi for Injection)NEUROLITE® (Kit for the Preparation of Technetium Tc99m Bicisate for Injection) 11 APPENDIX II Contact Information If MAH has access to the toll-free 800 number, reports shall be made using the following contact information: IssuePhoneFaxEmailAE, SAE, ICSR, SS or PQC800-343-7851866-880-9343lantheussafety@i3global.com If MAH does not have access to the toll-free 800 number, reports shall be made using following contact information (with the appropriate country code): IssuePhoneFaxEmailAE, SAE, ICSR, SS or PQC1-978-667-95311-734-929-6688lantheussafety@i3global.com REPONSIBLE INDIVIDUALS LMIMAH Medical Director, Global PharmacovigilanceRyoji Adachi, General ManagerLantheus Medical Imaging, Inc.FUJIFILM RI PHARMA, CO., LTD331 Treble Cove Road14-1 Kyobashi, 2-ChomeNorth Billerica, MA 01862 USAChuo-KuTokyo, 104-0031, Japan Please use the contact information for LMIset forth above. MAH is responsible for promptly notifying LMI in writing of changes in contact information for its responsible individual (provided, however, such changesin contact information do not require an update of the SDEA). The PV responsible contact person of MAH shall have a back-up procedure in place in case ofhis/her absence. 12Exhibit 10.57 PRIVILEGED AND CONFIDENTIAL CONFIDENTIAL SEPARATION AND CONSULTING AGREEMENT AND GENERAL RELEASE THIS CONFIDENTIAL SEPARATION AND CONSULTING AGREEMENT AND GENERAL RELEASE (“Agreement”), dated as ofFebruary 19, 2013, is made and entered into by and between Donald Kiepert (“Executive,” “You” or “Your”) and Lantheus Medical Imaging, Inc. (definedherein to include its affiliates, subsidiaries, parents, predecessors, successors and assigns, and hereinafter referred to as “Lantheus” or the “Company”)(together, the “Parties”). RECITALS WHEREAS, Your last date of employment with the Company was January 23, 2013 (the “Separation Date”); WHEREAS, You and the Company are parties to an Employment Agreement, dated January 8, 2008 (the “Employment Agreement”); WHEREAS, You and the Company wish to confirm the terms of Your separation from employment and to settle, release and discharge, withprejudice, any and all claims You have or may have against the Released Parties (defined in Section 4(a) below), including but not limited to those pertaining toor arising out of Your employment and/or Your separation from employment with the Company; WHEREAS, the Company wishes and You agree to provide consulting services to the Company following Your separation from employment; and WHEREAS, You and the Company have read this Agreement and have had the opportunity to review it with their respective legal counsel. NOW, THEREFORE, in consideration of the promises and covenants contained herein, You and the Company understand and agree as follows: 1. Separation of Employment. Your employment with the Company and Your membership on any and all Lantheus boards of directors, boards of trustees and/or executive ormanagement committees ended as of Your Separation Date. 2. Acknowledgment of Receipt of Accrued and Vested Pay and Benefits. (a) You acknowledge, upon signing this Agreement, that the Company has paid You, no later than the first regularly scheduled payroll datefollowing Your Separation Date, (i) all accrued and unpaid Base Salary (as defined in the Employment Agreement) as of Your Separation Date, (ii) allreasonable business expenses reimbursable under Section 7 of the Employment Agreement, subject to satisfaction of any other requirements under applicableCompany policies and (iii) any amount required under the Company’s vacation policy with respect to Your accrued and unused vacation days as of YourSeparation Date. You acknowledge that You did not earn any Annual Bonus (as defined in the Employment Agreement) pursuant to Section 4 of theEmployment Agreement with respect to the fiscal year ending December 31, 2012 and that You are not entitled to be paid any bonus amount with respect tosuch fiscal year. (b) You acknowledge, upon signing this Agreement, that You shall be entitled to any accrued and vested health and fringe benefits due to Youin accordance with the Company’s benefit plans (other than severance). 3. Payments and Other Benefits to be Provided to You in Exchange for the Release and Your Obligations Under this Agreement (a) In exchange for and in consideration of Your covenants and promises set forth in this Agreement, contingent upon Your complying withand fulfilling each and every one of Your obligations under this Agreement (including, but not limited to (i) the Company’s receipt from You of a signed,effective and irrevocable original of this Agreement and (ii) the Company’s receipt from You of hard-copy proof confirming the reconciliation of YourCompany-issued American Express account to a zero dollar ($0.00) balance), all of which are conditions precedent to any payment or other obligation on thepart of the Company under this Section 3, Lantheus agrees to provide You with the following payments and other benefits on behalf of all Released Parties(defined in Section 4(a) below): (i) The Company shall pay You an amount in cash equal to Your Base Salary as of the Separation Date ($426,000), which shall bepaid, in substantially equal installments at the same time Your Base Salary would be paid over the 12-month period following the Separation Date (the“Severance Period”) if You had remained employed with the Company; provided that, the first installment shall be paid on the next regularly scheduledpayroll date following the thirty-fifth (35th) day after the date hereof and shall include payment of any amounts that would otherwise be due prior thereto;provided further that, each installment is intended to constitute a separate payment within the meaning of Section 409A of the Internal Revenue Code of 1986,as amended, and the regulations and guidance promulgated thereunder to the extent applicable (collectively “Code Section 409A”); (ii) The Company shall (A) provide You with continued life insurance benefits upon the same terms as provided to senior executiveofficers of the Company and at the same coverage levels as in effect for active employees and (B) pay You an amount in cash equal to a portion of Yourpremiums for continuing medical coverage under the Consolidated Omnibus Budget Reconciliation Act so that Your premiums for such coverage are no greaterthan the premiums that would be charged to a senior executive officer of the Company for the same level of coverage under the Company’s group medical plan(the benefits and payments described in clauses (A) and (B) collectively, the “Health Benefits”); provided that, the amount described in clause (B) shall bepaid in installments on the same schedule as set forth in Section 3(a)(i); provided further that, Your Health Benefits shall cease upon the earlier of (x) the endof the Severance Period and (y) Your becoming employed by another employer and eligible for life insurance and/or medical coverage, as applicable, with suchother employer; (iii) The Company shall pay You a Pro Rata Bonus for 2013, in an amount equal to $26,843.84, to be paid to You when bonuseswith respect to fiscal year 2013 would otherwise be payable to senior executives of the Company, which is expected to be no earlier than March 1, 2014 and nolater than April 1, 2014; and (iv) the Company shall retain Your services as a consultant, on an as needed basis, following Your Separation Date (the “ConsultingPeriod”). The Consulting Period shall continue for one year after the Separation Date. You shall be compensated at a rate of $10,000 per month during theConsulting Period (the “Consulting Pay”), with payments made at the same time the Company makes its regular payroll payments and with the first paymentmade on the next scheduled payroll date following the 35th day after the date hereof. During the Consulting Period, You shall make Yourself available toparticipate, whenever and for however long as reasonably requested by the Company, in the orderly transition of Your responsibilities. You acknowledge andagree that, during the Consulting Period, (i) 2 You will be an independent contractor, and not an employee of the Company within the meaning of all federal, state and local laws and regulations governingemployment relationships, including insurance, workers’ compensation, industrial accident, labor and taxes, as the economic reality of your relationship withthe Company is one of an independent contractor rather than an employee; (ii) except as expressly authorized by the Company, You shall not have any right toact for, represent or otherwise bind the Company or any of its subsidiaries in any manner; (iii) in Your capacity as a consultant and subject to Section 3(a)(ii),You shall not be entitled to participate in any employee benefit plans or arrangements of the Company and shall not be provided with health and welfarebenefits, including, without limitation, medical and dental coverage; (iv) You shall be solely responsible for any workers’ compensation, unemployment ordisability insurance payments, or any social security, income tax or other withholdings, deductions or payments (including self-employment taxes) that maybe required by federal, state or local law with respect to any sums paid to You in Your capacity as a consultant; (v) You shall be required to pay and shalltimely remit all self-employment taxes to the Internal Revenue Service and any other required governmental agencies; and (vi) the Company shall pay You in amanner consistent with your status as an independent contractor, including issuing You a Form 1099. 4. Release of Claims. (a) In exchange for Lantheus providing You with the payments and other benefits set forth in Section 3, You, individually and on behalf ofYour heirs, executors, personal representatives, administrators, agents and assigns, forever waive, release, give up and discharge all waivable claims, real orperceived, whether now known or unknown, against the Company, its parent, subsidiaries, and other related and affiliated companies, their employee benefitplans and trustees, fiduciaries, administrators, sponsors and parties-in-interest of those plans, and all of their past and present employees, managers,directors, officers, administrators, shareholders, members, agents, attorneys, insurers, re-insurers and contractors acting in any capacity whatsoever, and allof their respective predecessors, heirs, personal representatives, successors and assigns (collectively, the “Released Parties” as used throughout thisAgreement), arising out of and in any way concerning Your employment with the Company, any terms, conditions or privileges related to Your employmentwith the Company, the termination of Your employment by the Company, and all alleged violations of federal, state or local fair employment practices or lawsby any of the Released Parties for any reason and under any legal theory including, but not limited to, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000(e), et seq. (“Title VII”), the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq. (“ADA”), the Age Discrimination in Employment Act, 29U.S.C. § 621, et seq. (“ADEA”), the Older Worker Benefits Protection Act, 29 U.S.C. § 626(f), et seq. (“OWBPA”), the Employee Retirement IncomeSecurity Act of 1974, as amended, 29 U.S.C. 1001, et seq. (“ERISA”), the Civil Rights Act of 1991, 42 U.S.C. §§ 1981, 1983, 1985, 1986 and 1988,the Family and Medical Leave Act, 29 U.S.C. § 2601, et seq. (“FMLA”), the Equal Pay Act of 1963, 29 U.S.C. § 206, et seq. (“EPA”), the Lilly LedbetterFair Pay Act of 2009, H.R. 11 (“Fair Pay Act”), the Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161, et seq. (“COBRA”), theOccupational Safety and Health Act, 29 U.S.C. 651 et seq. (“OSHA”), the New York State Civil Rights Law, N.Y. Exec. Law § 291, et seq., the New YorkState Human Rights Law, N.Y. Exec. Law § 296(1)(a), et seq., the New York City Civil Rights Law, N.Y.C. Admin. Code § 8-102(5), et seq., the NewYork State Wage Payment Law, N.Y. Lab. Law § 190(1), et seq., the New York State Whistleblower Law, N.Y. Lab. Law § 740, et seq., the MassachusettsFair Employment Practices Act, Mass. Gen. Laws ch. 151B, §§ 1 to 10; the common law of the States of Massachusetts and New York; and all other federalor state or local laws, regulations, rules, ordinances, or orders, as they may be amended. You also forever waive, release, discharge and give up all claims,real or perceived and now known or unknown, for breach of implied or express contract, including but not limited to breach of promise, breach of thecovenant of good faith and fair dealing, misrepresentation, negligence, fraud, estoppel, defamation, libel, misrepresentation, intentional infliction of emotionaldistress, violation of public policy, wrongful, retaliatory or constructive discharge, assault, battery, false imprisonment, 3 negligence, and all other claims or torts arising under any federal, state, or local law, regulation, ordinance or judicial decision, or under the United States,New York and Massachusetts Constitutions. You have agreed to and do waive any and all claims You may have for employment or reinstatement by theCompany or any of the Released Parties and have agreed not to seek such employment or reemployment by the Company or any of the Released Parties in thefuture. (b) The Company and You acknowledge and agree that the release contained in Section 4(a) does not, and shall not be construed to, release orlimit the scope of any existing obligation of the Company and/or any of its subsidiaries or affiliates to (i) indemnify You for Your acts as an officer or directorof the Company in accordance with the bylaws of the Company or the law or (ii) You and Your eligible, participating dependents or beneficiaries under anyexisting group welfare (excluding severance), equity, or retirement plan of the Company in which You and/or such dependents are participants. (c) Notwithstanding the release contained in Section 4(a) above, You do not waive: (i) Your right to bring an action to enforce the terms of thisAgreement; (ii) Your rights with respect to the capital stock of Lantheus MI Holdings, Inc., the indirect parent entity of the Company (“Holdings”), that Youown and all rights with respect thereto under the Amended and Restated Shareholders Agreement, dated as of February 26, 2008, among Holdings and certainother parties thereto (as amended, the “Shareholders Agreement”); (iii) Your rights with respect to the options granted under the Option Grant Award Agreement,made as of February 26, 2008, between Holdings and You ( ; or (iv) Your right to file a charge with the EEOC or participate in an investigation conducted bythe EEOC; however, You expressly waive Your right to monetary or other relief should any administrative agency, including but not limited to the EEOC,pursue any claim on Your behalf. 5. Covenant Not to Sue. You warrant that You do not have any complaint, charge or grievance against any Released Party pending before any federal, state or local court oradministrative or arbitral agency, and You further agree and covenant not to sue, file a lawsuit, or commence any other proceeding, arbitral, administrative orjudicial, against any of the Released Parties in any court of law or equity, or before any arbitral body or administrative agency, with respect to any matterreleased in Section 4(a) above, provided, however, that this covenant not to sue does not affect Your rights to enforce appropriately the terms of this Agreementin a court of competent jurisdiction and does not affect Your right to file a charge with the EEOC or participate in an investigation conducted by the EEOC;however, You expressly waive Your right to monetary or other relief should any administrative agency, including but not limited to the EEOC, pursue anyclaim on Your behalf. Should You file a lawsuit with any court or arbitration panel concerning any claim, demand, issue, or cause of action waived throughthis Agreement, You agree that You will be responsible to pay the legal fees and costs that the Released Parties incur defending that lawsuit. Further, You agreethat nothing in this Agreement shall limit the right of a court to determine, in its sole discretion, that the Released Parties are entitled to restitution, recoupmentor set off of any monies paid should the release of any claims under this Agreement subsequently be found to be invalid. 6. Non-Admission of Liability. You agree that this Agreement shall not in any way be construed as an admission that any of the Released Parties owe You any money or have actedwrongfully, unlawfully, or unfairly in any way towards You. In fact, You understand that the Released Parties specifically deny that they have violated anyfederal, state or local law or ordinance or any right or obligation that they owe or might have owed to You at any time, and maintain that they have at all timestreated You in a fair, non-discriminatory and non-retaliatory manner. Further, you affirm that you are not aware of any wrongdoing, regulatory 4 violations or corporate fraud committed by the Company or its employees that has not otherwise been previously reported to the Company in writing. 7. Reference-Related Communications. You agree that, should You or any prospective employer for You desire that Lantheus engage in any reference-related communications, You will directsuch inquiries exclusively to Michael Duffy, the General Counsel of the Company, for confirmation only of Your: (a) dates of employment; (b) employmentposition; (c) base salary; and (d) as applicable, bonuses or incentive compensation pay. You also agree that, except for the Company’s verbal confirmation ofdates of employment, position title, base salary and, as applicable, bonuses or incentive compensation pay as expressly set forth above, the Released Partieswill have no obligation to engage in any reference-related communications whatsoever with Your past, existing or prospective employers unless compelled by acourt order or other legal process and that You expressly covenant not to sue or otherwise initiate any action or proceeding pertaining to or arising out of anyreference-related communications by the Company. 8. Confidentiality of this Agreement. You agree to keep the terms of this Agreement, to the extent permitted by law, completely confidential and to not disclose information about thisAgreement to anyone other than Your spouse or domestic partner, attorneys and licensed tax and/or professional investment advisors (hereafter referred to as“Your Confidants”), all of whom You will inform of and obtain their advance agreement to be bound by this confidentiality provision. Neither You nor YourConfidants shall disclose the terms of this Agreement to anyone including, but not limited to, any representative of any print, radio or television media; anypast, present or prospective employee of or applicant for employment with the Company; any employee of any company in the pharmaceutical business; anyexecutive recruiter or “headhunter”; any counsel for any current or former employee of the Company; any other counsel or third party; or the public at large. You agree that, should any of Your Confidants disclose information about this Agreement, the disclosure will be treated as a breach of the Agreement by You. 9. Cooperation. (a) In accordance with Section 12(l) of the Employment Agreement, You agree to cooperate reasonably and in good faith with the Company asmay be necessary to respond to any inquiries that may arise with respect to matters that You were responsible for or involved with during Your employmentwith Lantheus. (b) You agree to cooperate fully and in good faith with the Company and its legal counsel in connection with any defense, prosecution orinvestigation of any and all actual, threatened, potential or pending court or administrative proceedings or other legal matters in which You may be involved asa party and/or in which the Company determines, in its sole discretion, that You are a relevant witness and/or possess relevant information. In connectionwith such matters, You agree to notify, communicate and be represented by counsel of the Company’s choosing (at the Company’s expense), to fully cooperateand work with such counsel with respect to, and in preparation for, any depositions, interviews, responses, appearances, or other legal matters, and to testifyhonestly with respect to all matters. Should the Company seek Your cooperation under this Paragraph, it shall do so only to the extent reasonable, and shallreimburse You for any reasonable out of pocket expenses You incur in connection with such cooperation, provided that You timely submit valid receipts forreimbursement to the Company. (c) You agree to cooperate fully and in good faith with the Company and its legal counsel in connection with any and all legal matters relatingto the Company or any other Released Party in which 5 You may be called as an involuntary witness (by subpoena or other compulsory process) served by any third-party. Your cooperation will include providingLantheus with written notice of any subpoena or other compulsory process served upon You within forty-eight (48) hours of its occurrence, meeting with theCompany’s attorneys, providing the attorneys with requested information, and working with the attorneys in preparation for Your involuntary appearance. Inconnection with such matters, You agree to be represented by the Company’s counsel (at the Company’s expense), to fully cooperate and work with suchcounsel with respect to, and in preparation for, any response to a subpoena or other compulsory process served upon You, and to testify honestly with respectto all matters. (d) Notwithstanding any other provision of this Agreement, You are entitled to appoint, at Your own expense, Your own legal counsel inaddition to the Company’s counsel in connection with any legal matters covered by Section 9 of this Agreement; provided, however, that, if You decide toappoint Your own counsel because there is an actual conflict that prevents the Company’s counsel from representing both the Company and You, theCompany will reimburse You for the reasonable fees and costs of Your chosen counsel, provided that such conflict is a result of Your being a party orthreatened to be made a party to, or Your conduct being the subject of, any such threatened, pending or completed action, suit or proceeding, whether civil,criminal, administrative or investigative (other than an action by or in the right of the Company), and You acted in good faith and in a manner You reasonablybelieved to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, there is no reasonable basis tobelieve Your conduct was unlawful. The selection by You of Your own counsel shall in no way detract from or interfere with any of the obligations You haveto cooperate with the Company as agreed to herein. In no event shall the Company have any obligation to provide counsel to You in connection with any legalmatters or litigation which may arise between You and the Company, if any. 10. Non-Disparagement You represent that You will not make, now or ever in the future, publicly or privately, verbally or in writing, any false, disparaging, derogatory orotherwise inflammatory remarks about any of the Released Parties and/or the conduct, operations or financial condition or business practices, policies orprocedures of the Released Parties to any third party, and, to the best of Your knowledge, You have not made or solicited, and You will not make or solicit,any comments, statements or the like to the media or to others that may be considered derogatory or detrimental to the good name and business reputation ofany of the Released Parties; provided, however, that nothing in this paragraph is intended to prohibit You from providing truthful information to anygovernment entity, arbitrator, or court, or to otherwise testify truthfully under oath, as required by law. The Company and Holdings Boards of Directors will not make, now or ever in the future, publicly or privately, verbally or in writing, any false,disparaging, derogatory or otherwise inflammatory remarks about You in connection with your employment with the Company, or make or solicit anycomments, statements, or the like to the media or to others that may be considered derogatory or detrimental to Your good name and business reputation;provided, however, that nothing in this paragraph is intended to prohibit the Company or Holdings or the members of their Boards or Directors fromproviding truthful information to any government entity, arbitrator, or court, or to otherwise testify truthfully under oath, as required by law. For the purposes of this Section 10, any comments or remarks made during or regarding any discussions or negotiations of the ongoing treatment ofExecutive’s equity interests in the Company, or as to Holdings’ exercise or non-exercise of its rights with respect to such equity interests under the ShareholdersAgreement or the Option Grant Award Agreement, including any characterizations of such discussions or negotiations or the action taken or that will not betaken by Holdings, shall not, in and of 6 themselves, be considered false, disparaging, derogatory or inflammatory remarks that fall within this Section 10. 11. Non Disclosure of Confidential Information and Return of Company Property (a) You acknowledge Your continuing obligations with regard to Confidential Information in accordance with Section 10 of the EmploymentAgreement, You affirm that You have complied with this provision, and You agree that You will continue to abide by the terms and conditions of Section 10 ofthe Employment Agreement. (b) In accordance with Section 10(a)(iv) of the Employment Agreement, You represent and warrant that You have, as of the date of Yoursigning this Agreement, returned all originals and copies of all documents and records made or compiled by You and/or made available to You during theperiod of Your employment with the Company that contain confidential, proprietary, trade secret or other business information belonging to the Companyand/or any of the Released Parties, whether printed, typed, handwritten, videotaped, transmitted or transcribed on data files or on any other type of media andwhether or not labeled or identified as confidential, proprietary or trade secret. You further represent and warrant that You have not, and will not, directly orindirectly, at any time, now or ever in the future, download, print, copy, electronically transmit, disclose, release or retain any such information for personaluse or any other purposes for Your own benefit or the benefit of any third party. (c) In addition to having returned all originals and copies (in whatever format) of all Confidential Information and other business informationbelonging to the Company and the Released Parties, You warrant that You have returned all other written information regarding the Company and all Lantheusproperty and materials including, but not limited to, credit cards, calling cards, keys, keyfobs, identification badges, files, records, samples, computerdisks, laptop computers, printers, personal digital assistants, and any other electronic equipment You were furnished by the Company. 12. Restrictive Covenant Agreements You acknowledge and agree that You will be subject to and will abide by the terms and conditions of the restrictive covenant agreements inSection 9 of the Employment Agreement, including, among other covenants, the covenant against competition, the covenant against solicitation of employees,and the covenant against solicitation of clients and prospective clients. It is understood and acknowledged that the Restricted Period shall have commenced asof the Separation Date. 13. No Tax Advice Provided. You agree that You have not been provided any advice by any of the Released Parties regarding the tax or withholding consequences of the paymentsand other benefits provided to You under this Agreement under any federal, state or local tax or withholding laws or regulations. You also agree that You willbe solely responsible for the tax liabilities and consequences arising under any federal, state or withholding laws or regulations that may result from thepayments of the Severance Pay, Consulting Pay, Health Benefits or other payments or benefits referenced in this Agreement, and hold the Released Partiesharmless from and indemnify them for any costs, fines, interest or penalties owed by You under such laws or regulations. Additionally, You agree that theReleased Parties will not be required to pay any further sum to You, even if such tax or withholding consequences are not foreseeable at the time You sign thisAgreement or are ultimately assessed in a manner which You do not anticipate at the time You sign this Agreement. 7 14. Successors and Assigns. This Agreement shall not be assignable by You, but shall be binding upon You and upon Your heirs, administrators, representatives, executors, andsuccessors. This Agreement shall be freely assignable by Lantheus without restriction and shall be deemed automatically assigned by the Company with Yourconsent in the event of any sale, merger, share exchange, consolidation or other business reorganization. This Agreement shall be binding upon, and shallinure to the benefit of, the Company’s successors and assigns. 15. Consultation with Counsel; Reasonable Time to Consider Agreement During Review Period; Voluntary Acceptance of this Agreement;Right and Time to Revoke; Effective Date. (a) You acknowledge that, through this writing, Lantheus has recommended that You consult with an attorney and tax advisor of Your ownchoosing before signing this Agreement, that sufficient time has been made available to You to consult with an attorney or tax advisor, and that You have, infact, consulted Your attorney and tax advisor or knowingly waived the right to consult Your attorney and tax advisor. (b) You understand that You have a period of twenty-one (21) days after Your receipt of this Agreement to review and consider the Agreementbefore signing it, except that if the last date of that period falls on a Saturday, Sunday or holiday observed by the Company, You will have until the close ofbusiness on the next immediate business day (the “Review Period”). You also understand that You may use as much of the Review Period as You wish beforesigning this Agreement. You agree that any material or immaterial changes to this Agreement will not restart the running of the Review Period. (c) You may elect to accept this Agreement by sending a signed, dated and notarized original to Michael Duffy, the General Counsel of theCompany, postmarked no later than the close of business on the last day of the Review Period. To the extent that You sign this Agreement and return it to theCompany prior to the expiration of the Review Period, You warrant that You have voluntarily and knowingly waived the remainder of the Review Period. (d) By signing this Agreement, You warrant that You have carefully read and fully understand all of the terms of this Agreement, You arecompetent and of sound mind to execute this Agreement, and that You are knowingly and voluntarily signing this Agreement of Your own free will, act anddeed. You further warrant that You have made such investigation of the facts pertaining to this Agreement and all matters contained herein as You deemnecessary, desirable and appropriate, and agree that the Release provided for herein shall remain in all respects effective and enforceable and not subject totermination or rescission by reason of any later discovery of new, different or additional facts. (e) You understand that, following Your execution of the Agreement, You will have a period of seven (7) calendar days to revoke Youracceptance of this Agreement by delivering written notification of any such revocation to Michael Duffy, the General Counsel of the Company , no later thanthe seventh (7) calendar day after You sign it (the “Revocation Period”). Written notification of revocation may be delivered by facsimile transmission toMichael Duffy, the General Counsel of the Company by first class U.S. mail sent to Michael Duffy, the General Counsel of the Company, or by hand-delivery or overnight mail to Michael Duffy, the General Counsel of the Company, provided that such written notification of revocation must be received bythe Company no later than the close of business on the last day of the Revocation Period to be effective. If You timely revoke this Agreement during theRevocation Period, the Agreement will not be effective and enforceable and You will not receive the benefits and other payments described in Section 3 and itssubparagraphs above. 8th (f) For purposes of this Agreement, the “Effective Date” as used throughout this Agreement shall mean the first (1) calendar day after theRevocation Period expires, provided that a notice of revocation has not been timely served upon the Company by You prior to that date. 16. Governing Law and Venue. This Agreement shall be subject to, and governed by, the laws of the State of New York applicable to contracts made and to be performed therein,without regard to conflict of law principles. With respect to any dispute arising out of or related to this Agreement, the Executive hereby consents to theexclusive jurisdiction of the of the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, NewYork County, and expressly agrees not to challenge venue or forum in the event of any litigation. 17. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but ifany provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition orinvalidity and severed from this Agreement, without invalidating the remainder of such provision or remaining provisions of this Agreement. 18. Proper Construction. (a) The language of this Agreement shall be construed within the context of the whole Agreement and according to its fair meaning, and notstrictly for or against any of the Parties. (b) The paragraph headings used in this Agreement are intended solely for convenience of reference and shall not in any manner amplify,limit, modify or otherwise be used in the interpretation of any of the provisions hereof. 19. Amendments. This Agreement may be modified, altered or terminated only by an express written agreement between the Company and You, which agreement mustbe signed by both Parties or their duly authorized agents, and expressly reference and attach a copy of this Agreement to be effective. 20. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 21. Withholding. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to You hereunder any federal, state, local or foreignwithholding, FICA contributions or other taxes, charges or deductions which it is from time to time required to withhold. 22. Code Section 409A. (a) The Parties agree that this Agreement shall be interpreted to comply with or be exempt from Code Section 409A, and all provisions of thisAgreement shall be construed in a manner consistent with 9st the requirements for avoiding taxes or penalties under Code Section 409A. In no event whatsoever will the Company be liable for any additional tax, interest orpenalties that may be imposed on You under Code Section 409A or any damages for failing to comply with Code Section 409A. (b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for thepayment of any amounts or benefits considered “nonqualified deferred compensation” under Code Section 409A upon or following a termination ofemployment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision ofthis Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service. With regard to any provisionherein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement orin-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits,provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits, to be provided in any other taxable year,provided, that, this clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Internal Revenue CodeSection 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on orbefore the last day of Your taxable year following the taxable year in which the expense occurred. Whenever a payment under this Agreement specifies apayment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date ofpayment within the specified period shall be within the sole discretion of the Company. 23. Entire Agreement. This Agreement constitutes the entire understanding of the Parties, supersedes all prior oral or written agreements (except as expressly stated in thisAgreement) (including, but not limited to, the Employment Agreement), and cannot be modified except by an express writing signed by both Parties inaccordance with Section 19 above. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have beenmade by any party which are not set forth expressly in this Agreement. The Released Parties are express third party beneficiaries hereof. Notwithstanding theforegoing, this Agreement shall not be construed as altering, modifying, and supplanting or in any way changing or affecting the continued enforceability ofSections 8(e), 9, 10, 11, 12(f), 12(g) and 12(l) of the Employment Agreement, which shall continue to survive and be in effect. [Remainder of Page Intentionally Left Blank] 10 IN WITNESS WHEREOF, intending to be forever legally bound hereby, the parties have executed this Agreement. Lantheus Medical Imaging, Inc. By:/s/ Michael P. DuffyName:Michael P. DuffyTitle:Vice President and Secretary Accepted and Agreed: /s/ Donald KiepertDonald Kiepert Date: February 19, 2013 11Exhibit 10.58 AMENDMENT NO. 5 TO CREDIT AGREEMENT AMENDMENT NO. 5, dated as of March 25, 2013 (this “Amendment”), to the Credit Agreement dated as of May 10, 2010 (as amendedpursuant to that certain Amendment No. 1 to Credit Agreement, dated as of March 21, 2011, that certain Amendment No. 2 to Credit Agreement, dated as ofJanuary 26, 2012, that certain Amendment No. 3 to Credit Agreement, dated as of October 11, 2012, that certain Amendment No. 4 to Credit Agreement,dated as of February 28, 2013, and as the same may be further amended, restated, supplemented or otherwise modified from time to time, the “CreditAgreement”) by and among LANTHEUS MEDICAL IMAGING, INC., a Delaware corporation (“Borrower”), LANTHEUS MI INTERMEDIATE, INC. (“Lantheus MI”) and LANTHEUS MI REAL ESTATE, LLC (“Lantheus Real Estate” and together with Lantheus MI, the “Guarantors”), BANK OFMONTREAL, as administrative agent (in such capacity, the “Administrative Agent”), HARRIS N.A., as collateral agent (in such capacity, the “CollateralAgent”), the Lenders from time to time party thereto and the other parties thereto. WITNESSETH: WHEREAS, the Loan Parties, the Lenders, the Collateral Agent and the Administrative Agent wish to make certain amendments to theCredit Agreement on the terms and subject to the conditions herein provided; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties heretoagree as follows: SECTION 1. DEFINITIONS Capitalized terms used but not defined in this Amendment shall have the meanings that are set forth in the Credit Agreement. SECTION 2. AMENDMENTS Effective as of the Fifth Amendment Effective Date (as defined below) and subject to the satisfaction (or due waiver) of the conditions setforth in Section 4 of this Amendment, the Credit Agreement is hereby amended as follows: (a) The first sentence of the Recitals to the Credit Agreement is hereby amended and restated in its entirety to read as follows: “The Borrower has asked the Lenders to extend credit to the Borrower, consisting of a revolving credit facility in an aggregateprincipal amount not to exceed $35,000,000 at any time outstanding, which will include a subfacility for the issuance of letters of credit.” (b) Subsection (a) of the definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended andrestated in its entirety to read as follows: “(a) the Consolidated Net Income of such Person and its Subsidiaries for such period, (i) plus without duplication, the sum of thefollowing amounts of such Person and its Subsidiaries for such period and to the extent deducted in determining Consolidated Net Incomeof such Person for such period: (A) Consolidated Net Interest Expense and, to the extent not included therein, agency fees paid to theAdministrative Agent or the Collateral Agent, (B) taxes based on income or profits, (C) depreciation expense (excluding depreciation ofprepaid cash expenses that were paid in a prior period and added back), (D) amortization expense (excluding amortization of prepaid cashexpenses that were paid in a prior period and added back), (E) up to $4,000,000 (as such amount may be increased from time to time by theAdministrative Agent in its sole discretion) of legal costs incurred by the Borrower in any trailing twelve month period in connection withthe Borrower making a claim under its policy of business interruption insurance, (F) to the extent actually paid during such period, anyreasonable, non-recurring, out-of-pocket expenses or charges incurred in connection with any issuance (or proposed issuance) of debt orequity or any refinancing transaction (or proposed refinancing transaction) or any amendment or other modification (or proposedamendment or modification) of any debt instrument, in each case to the extent such transaction is permitted under this Agreement, (G) to theextent actually paid upon or prior to the consummation of an investment pursuant to Section 7.02(e)(xi) hereof or a Permitted Acquisition,any reasonable, non-recurring out-of-pocket fees and expenses directly related to such investment or Permitted Acquisition, but excludingconsideration paid for the Capital Stock or other assets acquired in any such investment or Permitted Acquisition, (H) to the extent actuallypaid during such period, the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Sponsorpursuant to the Management Services Agreement as in effect on the date hereof, to the extent permitted to be paid by this Agreement, (I) anyimpairment charge or asset write-off pursuant to Financial Accounting Standards Board Statement No. 142 or No. 144 and anyamortization of intangibles arising pursuant to such Statement No. 141, (J) any non-cash tax losses attributable to the early extinguishmentof any Indebtedness or other derivative instruments of the Borrower or any of its Subsidiaries, (K) the aggregate amount of all other non-cash charges reducing Consolidated Net Income, including stock-based compensation expense (excluding any such non-cash charge to theextent that it represents an accrual or reserve for potential cash items in any future period) for such period, (L) nonrecurring, reasonable,out-of-pocket expenses for the retirement, severance or recruitment of employees or directors of the Parent and its Subsidiaries so long as theaggregate amount of all such expenses described in this clause (L) (except with respect to all such expenses contemplated in the FinancialUpdate for Lenders dated as of March 19, 2013 in an aggregate amount not to exceed $4,760,000) does not exceed $7,500,000 (as suchamount may be increased from time to time by the Administrative Agent in its sole discretion) during any measurement period, and (M)internal and external costs and expenses 2 incurred to relocate, establish, qualify or commence manufacturing, supply or distribution operations for Borrower’s approved productsand clinical candidates at third party manufacturers, suppliers and distributors, up to an aggregate amount that does not exceed (I)$15,000,000 during any measurement period through and including the measurement period ending September 30, 2012 or (II)$17,500,000 during any measurement period thereafter, (ii) plus the amount of “run-rate” cost savings, operating expense reductions,restructuring charges and expenses and cost-saving synergies projected by the Borrower in good faith to be realized as a result of actionstaken or expected to be taken during such period (calculated on a pro forma basis as though such cost savings, operating expensereductions, restructuring charges and expenses and cost-saving synergies had been realized on the first day of such period), net of theamount of actual benefits realized during such period from such actions; provided that (A) such cost savings, operating expensereductions, restructuring charges and expenses and cost-saving synergies are reasonably identifiable and factually supportable, (B) suchcost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies are commenced within twelve (12)months of the date thereof in connection with such actions, (C) no cost savings, operating expense reductions, restructuring charges andexpenses and cost-saving synergies may be added pursuant to this clause (ii) to the extent duplicative of any expenses or charges relatingthereto that are either excluded in computing Consolidated Net Income or included (i.e., added back) in computing Consolidated EBITDAfor such period, and (D) the aggregate amount of cost savings, operating expense reductions, restructuring charges and expenses and cost-saving synergies added pursuant to this clause (ii) (except with respect to the cost savings, operating expense reductions, restructuringcharges and expenses and cost saving synergies contemplated in the Financial Update for Lenders dated as of March 19, 2013 in anaggregate amount not to exceed $29,200,000) shall not exceed 15.0% of Consolidated EBITDA for such period (calculated on a pro formabasis), and (iii) minus (without duplication) (A) to the extent included in Consolidated Net Income, all interest income, (B) to the extent notdeducted as an expense in the calculation of Consolidated Net Income, the aggregate amount paid as dividends pursuant to Section7.02(h)(A), and (C) the aggregate amount of all other non-cash items increasing Consolidated Net Income (other than (I) the accrual ofrevenue or recording of receivables in the ordinary course of business and (II) any non-cash item to the extent it represents the reversal of anaccrual or reserve for a potential cash item in any prior period) for such period.” (c) Section 2.04(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “(a) Reference Rate Loans. Each Reference Rate Loan shall bear interest on the principal amount thereof from time to time outstanding,from the date of such Revolving Loan until such principal amount becomes due, at a rate per annum equal to the Reference Rate plus3.75%.” 3 (d) Section 2.04(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “(b) LIBOR Rate Loans. Each LIBOR Rate Loan shall bear interest on the principal amount thereof from time to time outstanding,from the date of such Revolving Loan until such principal amount becomes due, at a rate per annum equal to the LIBOR Rate plus 4.75%.” (e) Section 7.03(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total Leverage Ratio of the Parent and its Subsidiaries as of the lastday of each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries to be greater than the applicable ratio set forthbelow: Fiscal Quarter EndConsolidated Total LeverageRatio The end of the last fiscal quarter in Fiscal Year 20115.00:1.00 The end of the first fiscal quarter in Fiscal Year 20126.80:1.00 The end of the second fiscal quarter in Fiscal Year 20127.55:1.00 The end of the third fiscal quarter in Fiscal Year 20127.25:1.00 The end of the last fiscal quarter in Fiscal Year 20128.00:1.00 The end of the first fiscal quarter in Fiscal Year 20138.80:1.00 The end of the second fiscal quarter in Fiscal Year 201310.00:1.00 The end of the third fiscal quarter in Fiscal Year 20138.20:1.00 The end of the last fiscal quarter in Fiscal Year 20137.50:1.00 The end of the first fiscal quarter in Fiscal Year 2014 and the end ofeach fiscal quarter thereafter7.00:1.00” (f) Section 7.03(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 4 “(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio of the Parent and its Subsidiaries as of thelast day of each period of four (4) consecutive fiscal quarters of the Parent and its Subsidiaries to be less than the applicable ratio set forthbelow: Fiscal Quarter EndConsolidated InterestCoverage Ratio The end of the last fiscal quarter in Fiscal Year 20112.00:1.00 The end of the first fiscal quarter in Fiscal Year 20121.40:1.00 The end of the second fiscal quarter in Fiscal Year 20121.30:1.00 The end of the third and last fiscal quarters in Fiscal Year 20121.20:1.00 The end of the first fiscal quarter in Fiscal Year 20131.10:1.00 The end of the second fiscal quarter in Fiscal Year 20131.00:1.00 The end of the third fiscal quarter in Fiscal Year 20131.25:1.00 The end of the last fiscal quarter in Fiscal Year 20131.40:1:00 The end of the first fiscal quarter in Fiscal Year 2014 and the end ofeach fiscal quarter thereafter1.45:1.00” (g) Schedule 1.01(A) of the Credit Agreement is hereby amended and restated in its entirety as set forth on Schedule 1.01(A) attachedhereto. SECTION 3. REDUCTION OF TOTAL REVOLVING CREDIT COMMITMENT Effective as of the Fifth Amendment Effective Date, and subject to the satisfaction (or due waiver) of the conditions set forth in Section 4 of thisAmendment, the Total Revolving Credit Commitment shall, without premium or penalty, be reduced by $7,500,000, in accordance with Section 2.05(a) of theCredit Agreement; provided that the Lenders agree that notwithstanding anything contrary thereto in the Credit Agreement, the Borrower shall not be required toprovide written notice thereof to the Administrative Agent. 5 SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS The amendments set forth in Section 2 and the reduction of the Total Revolving Credit Commitment referred to in Section 3 shall become effective asof the date hereof (the “Fifth Amendment Effective Date”) when the following conditions precedent have been satisfied: (a) The Administrative Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Guarantors, theAdministrative Agent, the Collateral Agent and the Required Lenders; (b) The Administrative Agent and Lenders shall have received all fees, costs and expenses due and payable under the CreditAgreement and the other Loan Documents (including without limitation the fees and out-of-pocket expenses of legal counsel to the Administrative Agent); (c) The Administrative Agent shall have received the amendment fee set forth in Section 6 below; and (d) The representations and warranties contained in Section 5 of this Amendment shall be true and correct in all material respects asof the Fifth Amendment Effective Date. SECTION 5. REPRESENTATIONS AND WARRANTIES On and as of the Fifth Amendment Effective Date, after giving effect to this Amendment and the transactions contemplated hereby, eachLoan Party party hereto represents and warrants to the Administrative Agent, the Collateral Agent and the Lenders as follows: 5.1 Corporate Power and Authority. Each Loan Party party hereto has all requisite power and authority to enter into this Amendment andto consummate the transactions contemplated hereby. 5.2 Authorization of Agreements. The execution, delivery and performance of this Amendment have been duly authorized by all necessaryaction on the part of each Loan Party party hereto. 5.3 Incorporation of Representations and Warranties from the Credit Agreement. The representations and warranties contained inARTICLE VI of the Credit Agreement are true and correct in all material respects (except that such materiality qualifier shall not be applicable to anyrepresentations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representationsand warranties shall be true and correct in all respects subject to such qualification) on and as of the date hereof with the same effect as though made on and asof such date except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation orwarranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties thatalready are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true andcorrect in all respects subject to such qualification) on and as of such earlier date). 6 5.4 Absence of Default. Immediately after giving effect to this Amendment and the transactions contemplated hereby, no Default or Event ofDefault has occurred and is continuing or will result therefrom. SECTION 6. AMENDMENT FEE The Borrower hereby agrees to pay to Administrative Agent, for the benefit of the Lenders who execute this Amendment, an aggregateamendment fee equal to the amount derived by multiplying 0.1% by the aggregate amount of the Revolving Credit Commitments of all of the Lenders signatoryhereto after giving effect to the reduction of the Total Revolving Credit Commitment pursuant to Section 3 hereof. The amendment fee shall be fully earned andpayable on the date hereof, nonrefundable when paid, and shared pro rata by the Lenders signatory to this Amendment in accordance with their Pro RataShares. SECTION 7. MISCELLANEOUS 7.1 References to Credit Agreement. On and after the Fifth Amendment Effective Date, each reference in the Credit Agreement to “thisAgreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the“Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement asamended by this Amendment. 7.2 Effect on Credit Agreement. Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documentsshall remain in full force and effect and are hereby ratified and confirmed. 7.3 Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for anyother purpose or be given any substantive effect. 7.4 APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDERSHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATEOF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. 7.5 Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall bedeemed an original, but all such counterparts together shall constitute but one and the same instrument. Signature pages may be detached from multipleseparate counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed signature pageof this Amendment by facsimile transmission or electronic mail shall be as effective as delivery of a manually executed counterpart hereof. 7.6 Loan Document. This Amendment is a Loan Document. 7 7.7 Costs and Expenses. The Borrower agrees to pay on demand, regardless of whether the transactions contemplated by this Amendmentare consummated: all reasonable out-of-pocket costs and expenses incurred by or on behalf of each Agent, including, without limitation, reasonable fees, costs,client charges and expenses of one primary counsel for the Agents in connection with the preparation, negotiation, execution or delivery of this Amendment andany agreements contemplated hereby. [SIGNATURE PAGES FOLLOW] 8 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officersthereunto duly authorized as of the date first written above. BORROWER: LANTHEUS MEDICAL IMAGING, INC. By:/s/ Michael P. DuffyName: Michael P. DuffyTitle: Secretary GUARANTORS: LANTHEUS MI INTERMEDIATE, INC. By:/s/ Michael P. DuffyName: Michael P. DuffyTitle: Secretary LANTHEUS MI REAL ESTATE, LLC By:/s/ Michael P. DuffyName: Michael P. DuffyTitle: Secretary [SIGNATURE PAGE TO AMENDMENT NO. 5 TO CREDIT AGREEMENT] COLLATERAL AGENT: HARRIS N.A. By:/s/ Andrew J. PlutaName:Andrew J. PlutaTitle:Director ADMINISTRATIVE AGENT: BANK OF MONTREAL By:/s/ Andrew J. PlutaName:Andrew J. PlutaTitle:Director LENDER: BANK OF MONTREAL By:/s/ Andrew J. PlutaName:Andrew J. PlutaTitle:Director NATIXIS By:/s/ Alvin MassyName:Alvin MassyTitle:Vice President By:/s/ Tefta GhilagaName:Tefta GhilagaTitle:Executive Director JEFFERIES FINANCE LLC By:/s/ J. Paul McDonnellName:J. Paul McDonnellTitle:Managing Director [SIGNATURE PAGE TO AMENDMENT NO. 5 TO CREDIT AGREEMENT] Schedule 1.01(A) Revolving Credit Commitments LenderRevolving Credit CommitmentBank of Montreal$20,588,235.00Natixis$10,294,118.00Jefferies Finance LLC$4,117,647.00Total$35,000,000.00 QuickLinks -- Click here to rapidly navigate through this documentExhibit 12.1 STATEMENTS RE: COMPUTATION OF RATIO OFEARNINGS TO FIXED CHARGES Year-Ended December 31, (in thousands) 2012 2011 2010 2009 2008 Earnings Income (loss) from continuing operations $(42,556)$(52,371)$7,435 $42,304 $91,392 Fixed charges 42,111 37,753 22,767 13,539 31,113 Total earnings $(445)$(14,618)$30,202 $55,843 $122,505 Fixed Charges Interest Expense $42,014 $37,658 $20,395 $13,458 $31,038 Estimated interest portion within rental expense 97 95 94 81 75 Write-off of deferred financing costs — — 2,278 — — Total fixed charges $42,111 $37,753 $22,767 $13,539 $31,113 Ratio of earnings to fixed charges(1) — — 1.3x 4.1x 3.9x (1)Earnings were insufficient to cover fixed charges by $42.6 million and $52.4 million, for the years ended December 31, 2012 and2011, respectively.QuickLinksExhibit 12.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TOSECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTEDPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Jeffrey Bailey, certify that:1.I have reviewed this yearly report on Form 10-K of Lantheus Medical Imaging, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: March 28, 2013 /s/ JEFFREY BAILEY Name: Jeffrey Bailey Title: President and Chief Executive OfficerQuickLinksExhibit 31.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TOSECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTEDPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Jeffrey E. Young, certify that:1.I have reviewed this yearly report on Form 10-K of Lantheus Medical Imaging, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Dated: March 28, 2013 /s/ JEFFREY E. YOUNG Name: Jeffrey E. Young Title: Chief Financial OfficerQuickLinksExhibit 31.2QuickLinks -- Click here to rapidly navigate through this documentExhibit 32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTEDBY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Each of the undersigned hereby certifies that to his knowledge the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 ofLantheus Medical Imaging, Inc. (the "Company") filed with the Securities and Exchange Commission on the date hereof fully complies with therequirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in allmaterial respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.Dated: March 28, 2013 /s/ JEFFREY BAILEY Name: Jeffrey Bailey Title: President and Chief Executive OfficerDated: March 28, 2013 /s/ JEFFREY E. YOUNG Name: Jeffrey E. Young Title: Chief Financial OfficerQuickLinksExhibit 32.1

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