Lantheus
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549_______________________________________________________________FORM 10-K_______________________________________________________________(Mark One)þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-36569_______________________________________________________________LANTHEUS HOLDINGS, INC.(Exact name of registrant as specified in its charter)_______________________________________________________________Delaware 35-2318913(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 331 Treble Cove Road, North Billerica, MA 01862(Address of principal executive offices) (Zip Code)Registrant’s telephone number, including area code: (978) 671-8001Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value per share NASDAQ Global MarketSecurities 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 ☐ No þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No þIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes þ No ☐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’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K þIndicate 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 “largeaccelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ☐ Accelerated filer þ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company þIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. þIndicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act) Yes ☐ No þThe aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on June 30, 2017 was approximately $541.6 million based on the lastreported sale price of the registrant’s common stock on the NASDAQ Global Market on June 30, 2017 of $17.65 per share.As of February 22, 2018 the registrant had 37,860,711 shares of common stock, $0.01 par value, issued and outstanding.Table of ContentsDOCUMENTS INCORPORATED BY REFERENCEListed hereunder are the documents, portions of which are incorporated by reference, and the parts of this Form 10-K into which such portions are incorporated:The Registrant’s Definitive Proxy Statement for use in connection with the Annual Meeting of Stockholders to be held on April 26, 2018, portions of which are incorporated byreference into Parts II and III of this Form 10-K. The 2018 Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after the close of ouryear ended December 31, 2017. Table of ContentsLANTHEUS HOLDINGS, INC.ANNUAL REPORT ON FORM 10-KTABLE OF CONTENTS PagePART I Item 1.Business3Item 1A.Risk Factors23Item 1B.Unresolved Staff Comments42Item 2.Properties42Item 3.Legal Proceedings42Item 4.Mine Safety Disclosures42PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities43Item 6.Selected Financial Data46Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations50Item 7A.Quantitative and Qualitative Disclosures About Market Risk66Item 8.Financial Statements and Supplementary Data68Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure101Item 9A.Controls and Procedures101Item 9B.Other Information101PART III Item 10.Directors, Executive Officers and Corporate Governance102Item 11.Executive Compensation102Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters102Item 13.Certain Relationships and Related Transactions, and Director Independence102Item 14.Principal Accountant Fees and Services102PART IV Item 15.Exhibits and Financial Statement Schedules103Item 16.Form 10-K Summary106SIGNATURES107Table of ContentsCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSUnless the context requires otherwise, references to “Lantheus,” “the Company,” “our company,” “we,” “us” and “our” refer to Lantheus Holdings,Inc. and, as the context requires, its direct and indirect subsidiaries, references to “Lantheus Holdings” refer to Lantheus Holdings, Inc. and references to“LMI” refer to Lantheus Medical Imaging, Inc., our wholly-owned subsidiary.Some of the statements contained in this Annual Report on Form 10-K are forward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-lookingstatements, including, in particular, statements about our plans, strategies, prospects and industry estimates are subject to risks and uncertainties. Thesestatements identify prospective information and include words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,”“should,” “could,” “predicts,” “hopes” and similar expressions. Examples of forward-looking statements include, but are not limited to, statements we makeregarding: (i) our outlook and expectations including, without limitation, in connection with continued market expansion and penetration for ourcommercial products, particularly DEFINITY in the face of increased segment competition and potential generic competition as a result of future patent andregulatory exclusivity expirations; (ii) our outlook and expectations in connection with future performance of Xenon in the face of increased competition;and (iii) our outlook and expectations related to products manufactured at Jubilant HollisterStier (“JHS”) and global isotope supply. Forward-lookingstatements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-lookingstatements relate to the future, such statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actualresults may differ materially from those contemplated by the forward-looking statements. Such statements are neither statements of historical fact norguarantees or assurances of future performance. The matters referred to in the forward-looking statements contained in this Annual Report on Form 10-K maynot in fact occur. We caution you therefore, against relying on any of these forward-looking statements. Important factors that could cause actual results todiffer materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market andregulatory conditions and the following:•Our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of increased segment competitionfrom other echocardiography contrast agents, including Optison from GE Healthcare Limited (“GE Healthcare”) and Lumason from BraccoDiagnostics Inc. (“Bracco”), and potential generic competition as a result of future patent and regulatory exclusivity expirations;•Risks associated with revenues and unit volumes for Xenon in pulmonary studies as a result of competition from Curium and potentially others;•Our dependence on key customers for our medical imaging products, and our ability to maintain and profitably renew our contracts with thosekey customers, including Cardinal Health (“Cardinal”), United Pharmacy Partners (“UPPI”), GE Healthcare and Jubilant Drax ImageRadiopharmaceuticals (“JDI”) d/b/a Triad Isotopes, Inc. (“Triad”);•Our dependence upon third parties for the manufacture and supply of a substantial portion of our products, including DEFINITY at JHS;•Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, includingan alternative microbubble formulation at Samsung BioLogics (“SBL”) in South Korea;•The instability of the global Molybdenum-99 (“Moly”) supply, including recent regulatory issues at the NTP Radioisotopes (“NTP”) processingfacility in South Africa, resulting in our inability to fill all of the demand for our TechneLite generators on certain manufacturing days;•Risks associated with our lead agent in development, flurpiridaz F 18, including:◦The ability of GE Healthcare to successfully complete the Phase 3 development program;◦The ability to obtain Food and Drug Administration (“FDA”) approval; and◦The ability to gain post-approval market acceptance and adequate reimbursement;•Risks associated with our two new internal clinical development programs - DEFINITY for an ejection fraction indication and LMI 1195 forheart failure patient risk stratification;•Risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto;•Risks associated with our investment in additional specialized manufacturing capabilities at our North Billerica, Massachusetts facility;•The dependence of certain of our customers upon third-party healthcare payors and the uncertainty of third-party coverage and reimbursementrates;1Table of Contents•Uncertainties regarding the impact of ongoing U.S. healthcare reform proposals on our business, including related reimbursements for ourcurrent and potential future products;•Our being subject to extensive government regulation and our potential inability to comply with those regulations;•Potential liability associated with our marketing and sales practices;•The occurrence of any serious or unanticipated side effects with our products;•Our exposure to potential product liability claims and environmental liability;•The extensive costs, time and uncertainty associated with new product development, including further product development relying on externaldevelopment partners or potentially developed internally;•Our inability to introduce new products and adapt to an evolving technology and diagnostic landscape;•Our inability to identify and in-license or acquire additional products to grow our business;•Our inability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others;•Risks associated with prevailing economic or political conditions and events and financial, business and other factors beyond our control;•Risks associated with our international operations;•Our inability to adequately protect our facilities, equipment and technology infrastructure;•Our inability to hire or retain skilled employees and key personnel;•Our inability to utilize, or limitations in our ability to utilize, net operating loss carryforwards to reduce our future tax liability;•Risks related to our outstanding indebtedness and our ability to satisfy those obligations;•Costs and other risks associated with the Sarbanes-Oxley Act and the Dodd-Frank Act, including in connection with potentially becoming alarge accelerated filer;•Risks related to the ownership of our common stock; and•Other factors that are described in Part I, Item 1A. “Risk Factors,” of this Annual Report on Form 10-K.Factors that could cause or contribute to such differences include, but are not limited to, those that are discussed in other documents we file with theSecurities and Exchange Commission (“SEC”). Any forward-looking statement made by us in this Annual Report on Form 10-K report speaks only as of thedate on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict allof them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments orotherwise, except as may be required by law.TrademarksWe own or have the rights to various trademarks, service marks and trade names, including, among others, the following: DEFINITY®, TechneLite®,Cardiolite®, Neurolite®, Vialmix®, Quadramet® (U.S. only), Luminity®, Miraluma® and Lantheus Medical Imaging® referred to in this Annual Report onForm 10-K. Solely for convenience, we refer to trademarks, service marks and trade names in this Annual Report on Form 10-K without the TM, SM and ®symbols. Those references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights toour trademarks, service marks and trade names. Each trademark, trade name or service mark of any other company appearing in this Annual Report on Form10-K, such as Lumason®, Myoview®, Optison® and SonoVue® are, to our knowledge, owned by that other company.2Table of ContentsPART IItem 1. BusinessOverviewWe are a global leader in the development, manufacture and commercialization of innovative diagnostic medical imaging agents and products thatassist clinicians in the diagnosis and treatment of cardiovascular and other diseases. Clinicians use our imaging agents and products across a range ofimaging modalities, including echocardiography and nuclear imaging. We believe that the resulting improved diagnostic information enables healthcareproviders to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overallcosts for payers and the entire healthcare system. Our commercial products are used by cardiologists, nuclear physicians, radiologists, internal medicinephysicians, technologists and sonographers working in a variety of clinical settings.We sell our products globally and operate our business in two reportable segments, which are further described below:•U.S. Segment produces and markets our medical imaging agents and products throughout the U.S. In the U.S., we primarily sell our products toradiopharmacies, integrated delivery networks, hospitals, clinics and group practices.•International Segment operations consist of production and distribution activities in Puerto Rico and direct distribution activities in Canada.Additionally, within our International Segment, we have established and maintain third-party distribution relationships under which ourproducts are marketed and sold in Europe, Canada, Australia, Asia-Pacific and Latin America.During the year ended December 31, 2016, we sold certain business units that were part of our International Segment. In January 2016, we entered intoan asset purchase agreement pursuant to which we sold substantially all of our Canadian radiopharmacy business and Gludef manufacturing and distributionbusiness. In August 2016, we entered into a share purchase agreement pursuant to which we sold all of the stock of our Australian radiopharmacy servicingsubsidiary. See Note 5, “Sales of Certain International Segment Assets” included in the consolidated financial statements located elsewhere in this AnnualReport on Form 10-K.Our Product PortfolioOur portfolio of nine commercial products is diversified across a range of imaging modalities. Our products include an ultrasound contrast agent andmedical radiopharmaceuticals (including Technetium generators).•Ultrasound contrast agents are compounds that are used in diagnostic procedures, such as cardiac ultrasounds or echocardiograms, that are usedby physicians to improve the clarity of the diagnostic image.•Medical radiopharmaceuticals are radioactive pharmaceuticals used by clinicians to perform nuclear imaging procedures.•In certain circumstances, a radioactive element, or radioisotope, is attached to a chemical compound to form the radiopharmaceutical.This act of attaching the radioisotope to the chemical compound is called radiolabeling, or labeling.•In other circumstances, a radioisotope can be used as a radiopharmaceutical without attaching any additional chemical compound.•Radioisotopes are most commonly manufactured in a nuclear research reactor, where a target is bombarded with subatomic particles, orin a cyclotron, which is a type of particle accelerator that also creates radioisotopes.•Two common forms of nuclear imaging procedures are single-photon emission computed tomography (“SPECT”) which measuresgamma rays emitted by a SPECT radiopharmaceutical, and positron emission tomography (“PET”) which measures positrons emittedby a PET radiopharmaceutical.As an example of the procedures in which our products may be used, in the diagnosis of cardiovascular disease, a typical diagnostic progression couldinclude an electrocardiogram, followed by an echocardiogram (possibly using our agent DEFINITY), and then a nuclear myocardial perfusion imaging(“MPI”) study using either SPECT or PET imaging (possibly using our Technetium generator and our SPECT-based MPI agent). An MPI study assesses bloodflow distribution to the heart. MPI is also used for diagnosing the presence of coronary artery disease.DEFINITY and Our Microbubble Franchise StrategyDEFINITY is the leading ultrasound contrast imaging agent based on revenue and usage in the U.S., and is indicated for use in patients with suboptimalechocardiograms. Numerous patient conditions can decrease the quality of images of the left ventricle, the primary pumping chamber of the heart.3Table of ContentsThere were approximately 33.1 million echocardiograms performed in the U.S. in 2017 according to a third party source. Assuming 20% ofechocardiograms produce suboptimal images, as stated in the clinical literature, we estimate that approximately 6.6 million echocardiograms in 2017produced suboptimal images. The use of DEFINITY during echocardiography allows physicians to significantly improve their assessment of the function ofthe left ventricle.DEFINITY is a clear, colorless, sterile liquid, which, upon activation in a Vialmix apparatus, a medical device specifically designed for DEFINITY,becomes a homogenous, 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 left ventricle allows clinicians to make more informed decisions about disease status.As part of our microbubble franchise strategy, we also plan to initiate two new clinical trials for DEFINITY in the second half of 2018. These trials willbe designed to prove superior accuracy and improved reproducibility of DEFINITY-enhanced echocardiography over unenhanced echocardiography tomeasure left ventricular ejection fraction (“EF”). EF measures the percentage of blood leaving the left ventricle with each contraction and is an importantmeasurement of heart function. If the trials are successful, we plan on filing a supplemental New Drug Application (“NDA”) in pursuit of an EF indication forDEFINITY, which, if approved, would provide us three years of regulatory exclusivity for DEFINITY in the EF indication. We believe that the EF indication,if granted, could drive further contrast penetration into and beyond the suboptimal echocardiography segment. However, we can give no assurances thatthese clinical trials will be successful or that there will be an increase in unit sales of DEFINITY as a result of an EF indication.DEFINITY offers flexible dosing and administration through an IV bolus or diluted bolus injection or continuous IV infusion. We believe DEFINITY’ssynthetic lipid-cased coating gives the agent a distinct competitive advantage, because it provides a strong ultrasound signal and is the only perflutren-basedecho contrast agent made without albumin. As a result, we believe DEFINITY will be a key driver of the future growth of our business, both in the U.S. and ininternational markets as we continue to grow contrast penetration through sales and marketing efforts focused on the appropriate use of contrast and maintainour leading position.Since its launch in 2001, DEFINITY has been used in imaging procedures in more than 9.6 million patients throughout the world. We estimate thatDEFINITY had over 80% share of the U.S. segment for contrast agents in echocardiography procedures as of December 2017. DEFINITY currently competeswith Optison, a GE Healthcare product, Lumason, a Bracco product (known as SonoVue outside the U.S.) as well as other non-echocardiography imagingmodalities. DEFINITY, Optison and Lumason all carry an FDA-required boxed warning, which has been modified over time, to notify physicians and patientsabout potentially serious safety concerns or risks posed by the products. See Part I, Item 1A. “Risk Factors—Ultrasound contrast agents may cause side effectswhich could limit our ability to sell DEFINITY.”DEFINITY is currently patent protected in the U.S. with an Orange Book-listed composition of matter patent expiring in 2019, a manufacturing patentexpiring in 2021, a new Orange Book-listed method of use patent expiring in 2037 and an allowed manufacturing patent application that, when granted, willexpire in 2037. In addition, DEFINITY is protected in numerous foreign jurisdictions with patent or regulatory protection until 2019. As part of ourmicrobubble franchise strategy, we continue to actively pursue additional patents in connection with DEFINITY, alternative microbubble formulations, andrelated technology. DEFINITY generated revenues of $157.3 million, $131.6 million and $111.9 million for the years ended December 31, 2017, 2016 and2015, respectively. DEFINITY represented approximately 48%, 44% and 38% of our revenues in 2017, 2016 and 2015, respectively.TechneLiteTechneLite is a self-contained system or generator of Technetium (“Tc99m”), a radioactive isotope with a six hour half-life, used by radiopharmacies toprepare various nuclear imaging agents. Technetium results from the radioactive decay of Moly itself a radioisotope with a 66-hour half-life produced innuclear research reactors around the world from enriched uranium. The TechneLite generator is a little larger than a coffee can in size, and the self-containedsystem houses a vertical glass column at its core that contains Moly. During our manufacturing process, Moly is added to the column within the generatorwhere it is adsorbed onto alumina powder. The column is sterilized, enclosed in a lead shield and further sealed in a cylindrical plastic container, which isthen immediately shipped to our radiopharmacy customers. Because of the short half-lives of Moly and Technetium, radiopharmacies typically purchaseTechneLite generators on a weekly basis pursuant to standing orders.4Table of ContentsThe Technetium produced by our TechneLite generator is the medical radioisotope that can be attached to a number of imaging agents, including ourown Cardiolite products and Neurolite, during the radiolabeling process. To radiolabel a Technetium-based radiopharmaceutical, a vial of sterile saline and avacuum vial are each affixed to the top of a TechneLite generator. The sterile saline is pulled through the generator where it attracts Technetium resultingfrom the radioactive decay of Moly within the generator column. The Technetium-containing radioactive saline is then pulled into the vacuum vial andsubsequently combined by a radiopharmacist with the applicable imaging agent, and individual patient-specific radiolabeled imaging agent doses are thenprepared. When administered, the imaging agent binds to specific tissues or organs for a period of time, enabling the Technetium to illustrate the functionalhealth of the imaged tissues or organs in a diagnostic image. Our ability to produce and market TechneLite is highly dependent on our supply of Moly. See“Raw Materials and Supply Relationships—Molybdenum-99” below.TechneLite is produced in 13 sizes and is currently marketed primarily in North America and Latin America, largely to radiopharmacies that prepareunit doses of radiopharmaceutical imaging agents and ship these preparations directly to hospitals for administration to patients. In the U.S., we have supplycontracts with the significant radiopharmacy groups, including Cardinal, UPPI, GE Healthcare and Triad. We also supply generators on a purchase order basisto other customers. We estimate that TechneLite had over 40% share of the U.S. generator market as of December 31, 2017, competing primarily withTechnetium-based generators produced by Curium. In Puerto Rico, we also supply TechneLite to our wholly-owned radiopharmacy to prepareradiopharmaceutical imaging agent unit doses.In Canada, where we sold our radiopharmacies in January 2016, we have a supply agreement with Isologic Innovative Radiopharmaceuticals Ltd.(“Isologic”), the buyer of those radiopharmacies (the “Isologic Supply Agreement”). Under the Isologic Supply Agreement, we supply Isologic with certain ofour products on commercial terms, including certain product purchase commitments by Isologic. The agreement expires in January 2021 and may beterminated upon the occurrence of specified events, including a material breach by the other party, bankruptcy by either party or certain force majeure events.In Australia, where we sold our radiopharmacy servicing business in August 2016, we have a supply agreement with Global Medical Solutions (“GMS”), thebuyer of that business (the “GMS Supply Agreement”). Under the GMS Supply Agreement, we supply GMS with certain of our products on commercial terms,including certain minimum product purchase commitments by GMS. The agreement expires in August 2020 and may be terminated in whole or in part on aproduct-by-product basis upon the occurrence of specified events, including a material breach by the other party, bankruptcy by either party or certain forcemajeure events.The Moly used in our TechneLite generators can be produced using targets made of either highly-enriched uranium (“HEU”) or low-enriched uranium(“LEU”). LEU consists of uranium that contains less than 20% of the uranium-235 isotope. HEU is often considered weapons grade material, with 20% ormore of uranium-235. The American Medical Isotopes Production Act of 2012 (“AMIPA”) encourages the domestic production of LEU Moly and providesfor the eventual prohibition of the export of HEU from the U.S. Although Medicare generally does not provide separate payment to hospitals for the use ofdiagnostic radiopharmaceuticals administered in an outpatient setting, since 2013, the Centers for Medicare and Medicaid Services (“CMS”), the federalagency responsible for administering the Medicare program, has provided an add-on payment under the hospital outpatient prospective payment system forevery Technetium diagnostic dose produced from non-HEU sourced Moly, to cover the marginal cost for radioisotopes produced from non-HEU sources. OurLEU TechneLite generator satisfies the reimbursement requirements under the applicable CMS rules.TechneLite has patent protection in the U.S. and various foreign countries on certain component technology currently expiring in 2029. In addition,given the significant know-how and trade secrets associated with the methods of manufacturing and assembling the TechneLite generator, we believe wehave a substantial amount of valuable and defensible proprietary intellectual property associated with the product. We believe that our substantial capitalinvestments in our highly automated TechneLite production line and our extensive experience in complying with the stringent regulatory requirements forthe handling of nuclear materials create significant and sustainable competitive advantages for us in generator manufacturing and distribution. TechneLitegenerated revenues of $104.6 million, $99.2 million and $72.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. TechneLiterepresented approximately 32%, 33% and 25% of our revenues in 2017, 2016 and 2015, respectively.XenonXenon Xe 133 Gas (“Xenon”) is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also to image cerebral blood flow.Our Xenon is manufactured by a third party as a bi-product of Moly production and is processed and finished by us. We are currently the leading provider ofXenon in the U.S. During the years ended December 31, 2017, 2016 and 2015, Xenon represented approximately 10%, 10% and 17% of our revenues,respectively.5Table of ContentsOther Commercial ProductsIn addition to the products listed above, our portfolio of commercial products also includes important imaging agents in specific segments, whichprovide a stable base of recurring revenue. Most of these products have a favorable industry position as a result of our substantial infrastructure investment,specialized workforce, technical know-how and supplier and customer relationships.•Neurolite is an injectable, Technetium-labeled imaging agent used with SPECT technology to identify the area within the brain where blood flowhas been blocked or reduced due to stroke. We launched Neurolite in 1995.•Cardiolite, also known by its generic name sestamibi, is an injectable, Technetium-labeled imaging agent used in MPI procedures to assess bloodflow to the muscle of the heart using SPECT. Cardiolite was approved by the FDA in 1990 and its market exclusivity expired in July 2008. Includedin Cardiolite revenues are branded Cardiolite and generic sestamibi revenues.•Thallium TI 201 is an injectable radiopharmaceutical imaging agent used in MPI studies to detect cardiovascular disease. We have marketedThallium since 1977 and manufacture the agent using cyclotron technology.•FDG is an injectable, fluorine-18-radiolabeled imaging agent used with PET technology to identify and characterize tumors in patients undergoingoncologic diagnostic procedures. We manufacture and distribute FDG from our Puerto Rico radiopharmacy.•Gallium (Ga 67) is an injectable radiopharmaceutical imaging agent used to detect certain infections and cancerous tumors, especially lymphoma.We manufacture Gallium using cyclotron technology.•Quadramet, our only therapeutic product, is an injectable radiopharmaceutical used to treat severe bone pain associated with metastatic bonelesions. We serve as the direct manufacturer and supplier of Quadramet in the U.S.For consolidated revenues and other consolidated financial information for our U.S. and International Segments, see Note 17, “Segment Information” toour accompanying consolidated financial statements.Distribution, Marketing and SalesThe following table sets forth certain key market information for each of our commercial products:ProductCurrently MarketedRegulatory Approval,but Not Currently MarketedDEFINITYUnited States, Canada,Australia, South Korea, New Zealand,United Kingdom, Netherlands, Germany, Austria,TaiwanEurope(1), Israel, India, Singapore, MexicoTechneLiteUnited States, Canada, Colombia,Costa Rica, Taiwan, Australia, Panama,Dominican Republic, New Zealand, Venezuela,South KoreaNoneXenonUnited StatesCanadaCardioliteUnited States, Canada, Cost Rica, Israel, Japan,South Korea, Taiwan, AustraliaThailand, New Zealand, Hong Kong,Panama, PhilippinesNeuroliteUnited States, Canada, Costa Rica, Japan, Hong Kong, Australia, Taiwan, Europe(2),South KoreaThailand, Philippines, New Zealand,Austria, Czech Republic, Denmark,Finland, Norway, SwedenThallium Tl 201United States, Canada, Australia,South Korea, Pakistan, Panama, Taiwan, ColombiaNew ZealandGallium Ga 67United States, Canada, Colombia, Australia,South Korea, Panama, TaiwanCosta Rica, Mexico, New Zealand, PakistanFDGPuerto RicoNoneQuadrametUnited StatesNone________________________________(1)Other than the United Kingdom, Netherlands, Germany and Austria.(2)Excluding Austria, Czech Republic, Denmark, Finland, Norway and Sweden.In the U.S. and Canada, we have a sales team of approximately 80 employees that call on healthcare providers in the echocardiography space, as well asradiopharmacy chains, group purchasing organizations and integrated delivery networks.6Table of ContentsOur radiopharmaceutical products are sold in the U.S. through a subset of our sales team, primarily to radiopharmacies. We sell a majority of ourradiopharmaceutical products in the U.S. to four radiopharmacy groups—namely Cardinal, UPPI, GE Healthcare and Triad. Our contractual distribution andother arrangements with these radiopharmacy groups are as follows:•Cardinal maintains approximately 130 radiopharmacies that are typically located in large, densely populated urban areas in the U.S. Weestimate that Cardinal’s radiopharmacies distributed approximately 40% of the aggregate U.S. SPECT doses sold in the first half of 2017 (thelatest information currently available to us). Our written supply agreement with Cardinal relating to TechneLite, Xenon, Neurolite and otherproducts expires on December 31, 2018. The agreement specifies pricing levels and requirements to purchase minimum percentages of certainproducts during certain periods. The agreement may be terminated upon the occurrence of specified events, including a material breach by theother party and certain force majeure events.•UPPI is a cooperative purchasing group (roughly analogous to a group purchasing organization) of approximately 75 independently owned orsmaller chain radiopharmacies located in the U.S. UPPI’s radiopharmacies are typically broadly dispersed geographically, with some urbanpresence and a substantial number of radiopharmacies located in suburban and rural areas of the country. We estimate that these independentradiopharmacies, together with approximately 30 unaffiliated, independent radiopharmacies, distributed approximately 29% of the aggregateU.S. SPECT doses sold in the first half of 2017. We currently have an agreement with UPPI for the distribution of TechneLite, Xenon and certainother products to radiopharmacies or families of radiopharmacies within the UPPI cooperative purchasing group. The agreement containsspecified pricing levels based upon specified purchase amounts for UPPI. We are entitled to terminate the UPPI agreement upon 60 days writtennotice. The UPPI agreement expires on December 31, 2019.•GE Healthcare maintains approximately 30 radiopharmacies in the U.S. that purchase our TechneLite generators. We estimate that GEHealthcare distributed approximately 18% of the aggregate U.S. SPECT doses sold in the first half of 2017. We currently have an agreementwith GE Healthcare for the distribution of TechneLite, Xenon and other products. The agreement provides that GE Healthcare will purchase aminimum percentage of TechneLite generators as well as certain other products from us. Our agreement, which expires on December 31, 2020,may be terminated by either party upon the occurrence of specified events including a material breach by either party, bankruptcy by eitherparty, certain irresolvable regulatory changes or economic circumstances, or force majeure events.•Triad maintains approximately 55 radiopharmacies in the U.S. that purchase a range of our products. We estimate that Triad distributedapproximately 10% of the aggregate U.S. SPECT doses sold in the first half of 2017. We currently have an agreement with Triad for thedistribution of TechneLite, Xenon, Neurolite and other products. The agreement specifies pricing levels and percentage purchase requirements.The agreement will expire on December 31, 2020 and may be terminated upon the occurrence of specified events, including a material breachby the other party and certain force majeure events.In addition to the distribution arrangements for our radiopharmaceutical products described above, we also sell certain of our radiopharmaceuticalproducts to independent radiopharmacies and directly to hospitals and clinics that maintain in-house radiopharmaceutical capabilities and operations. In thelatter case, this represents a small percentage of overall sales because the majority of hospitals and clinics do not maintain these in-house capabilities.In Puerto Rico, we own and operate one of the two radiopharmacies on the island, where we sell our own products as well as products of third parties toend-users.In Europe, Australia, Asia-Pacific and Latin America, we utilize third party distributor relationships to market, sell and distribute our products, either ona country-by-country basis or on a multi-country regional basis.In March 2012, we entered into a development and distribution arrangement for DEFINITY in China, Hong Kong and Macau with Double-CranePharmaceutical Company (“Double-Crane”). With Double-Crane’s support, we are currently pursuing the Chinese regulatory approval required tocommercialize DEFINITY. In July 2013, we submitted a clinical trial application to the Chinese Food and Drug Administration (“CFDA”) seeking an ImportDrug License. After a very extensive waiting period caused by a large number of drugs seeking CFDA regulatory approval, in February 2016, the CFDAapproved our clinical trial application. Double-Crane is now conducting on our behalf three confirmatory clinical trials in pursuit of cardiac, liver and kidneyimaging indications, as well as one small pharmacokinetic study. If the clinical trials are successful, we currently estimate submitting an application for anImport Drug License to the CFDA in the second half of 2018 for subsequent approval.We believe that international markets, particularly China, represent significant growth opportunities for our products. The Double-Crane distributionagreement did not have a meaningful impact on our revenues during the years ended December 31, 2017, 2016 and 2015.7Table of ContentsSeasonalityOur business has modest seasonality as patients may seek to schedule non-urgent diagnostic imaging procedures less frequently during the summervacation months and over the year-end holidays.CustomersCustomers accounting for 10% or more of our consolidated revenues are as follows: Year EndedDecember 31, 2017 2016 2015Cardinal12.0% 10.3% 11.3%UPPI Radiopharmacies10.4% 11.4% 11.9%GE Healthcare10.3% *** ***________________________________*** Amount represented less than 10% for the reporting period.BacklogOur backlog consists of orders for which a delivery schedule within the next twelve months has been specified. Orders included in backlog may becanceled or rescheduled by customers at any time with the exception of TechneLite orders. For TechneLite, customers must provide us with four weeksadvanced notice to cancel an order. We do not believe that our backlog at any particular time is meaningful because it has historically been immaterialrelative to our consolidated revenues and is not necessarily indicative of future revenues for any given period.CompetitionWe believe that our key product characteristics, such as proven efficacy, reliability and safety, coupled with our core competencies, such as our efficientmanufacturing processes, our established distribution network, our experienced field sales organization and our customer service focus, are important factorsthat 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 that have substantial financial, manufacturing, sales and marketing,distribution and other resources. These competitors currently include Curium, GE Healthcare, Bracco and JDI, an affiliate of JHS, as well as other competitors,including NorthStar Medical Radioisotopes. We cannot anticipate their competitive actions in the same or competing diagnostic modalities, such assignificant price reductions on products that are comparable to our own, development of new products that are more cost-effective or have superiorperformance than our current products or the introduction of generic versions after our proprietary products lose their current patent protection. In addition,distributors of our products could attempt to shift end-users to competing diagnostic modalities and products, or bundle the sale of a portfolio of products tothe detriment of our specific products. Our current or future products could be rendered obsolete or uneconomical as a result of these activities.Raw Materials and Supply RelationshipsWe rely on certain raw materials and supplies to produce our products. Due to the specialized nature of our products and the limited, and sometimesintermittent, supply of raw materials available in the market, we have established relationships with several key suppliers. For the year ended December 31,2017, our largest suppliers of raw materials and supplies were NTP, acting for itself and on behalf of its subcontractor ANSTO, and Institute for Radioelements(“IRE”), which, in the aggregate, accounted for approximately 32% of our total purchases.Molybdenum-99Our TechneLite, Cardiolite and Neurolite products all rely on Moly, the radioisotope which is produced by bombarding uranium with neutrons inresearch reactors. With a 66-hour half-life, Moly decays into, among other things, Technetium-99m (Tc-99m), another radioisotope with a half-life of sixhours. Tc-99m is the isotope that is attached to radiopharmaceuticals, including our own Cardiolite and Neurolite, during the labeling process and is the mostcommon radioisotope used for medical diagnostic imaging purposes.We currently purchase finished Moly from three of the four main processing sites in the world, namely, NTP in South Africa; ANSTO in Australia; andIRE in Belgium. These processing sites provide us Moly from five of the six main Moly-producing reactors in the world, namely, SAFARI in South Africa;OPAL in Australia; BR2 in Belgium; LVR-15 in the Czech Republic; and High Flux Reactor (“HFR”) in The Netherlands.8Table of ContentsHistorically, our largest supplier of Moly was Nordion, which relied on the National Research Universal (“NRU”) reactor in Canada for its supply ofMoly. As a result of a decision by the Government of Canada, the NRU reactor exited the medical isotope business in November 2016.Our agreement with NTP (the “NTP Agreement”), with NTP acting for itself and on behalf of its subcontractor ANSTO, specifies LMI’s percentagepurchase requirements and unit pricing, and provides for the supply of Moly derived from LEU targets from NTP and ANSTO. ANSTO significantly increasedits Moly production capacity from its existing facility in August 2016 and has a new Moly processing facility under construction, in cooperation with NTP,that ANSTO believes will expand its production capacity up to approximately 3,500 six-day Curies/week, which is expected to be in commercial operationin the second half of 2018. The NTP Agreement allows for termination upon the occurrence of certain events, including failure by NTP to provide ourrequired amount of Moly, material breach of any provision by either party, bankruptcy by either party or force majeure events. The NTP Agreement expireson December 31, 2020.Similar to the NTP Agreement, our agreement with IRE (the “IRE Agreement”) contains minimum percentage volume requirements and unit pricing.The IRE Agreement also requires IRE to provide certain favorable allocations of Moly during periods of supply shortage or failure. The IRE Agreement alsoprovides for 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. The IRE Agreement allows for termination upon the occurrence of certain events,including failure by IRE to provide our required amount of Moly, material breach of any provision by either party, bankruptcy by either party or forcemajeure events. The IRE Agreement expires on December 31, 2018, and is renewable by LMI on a year-to-year basis thereafter.In 2016, IRE received approval from its regulator to expand its production capability by up to 50% of its former capacity. The combined ANSTO andIRE production capacity is expected to replace the NRU’s historical routine production levels.To further augment and diversify our current supply, we are pursuing additional sources of Moly from potential new producers around the world thatseek to produce Moly with existing or new reactors or technologies. For example, in November 2014, we entered into a strategic agreement with SHINEMedical Technologies, Inc. (“SHINE”), a Wisconsin-based company, for the future supply of Moly. Under the terms of the supply agreement, SHINE willprovide Moly produced using its proprietary LEU-solution technology for use in our TechneLite generators once SHINE’s facility becomes operational andreceives all necessary regulatory approvals, which SHINE now estimates will occur in 2020. See Part I, Item 1A. “Risk Factors—The global supply of Moly isfragile and not stable. Our dependence on a limited number of third party suppliers for Moly could prevent us from delivering some of our products to ourcustomers in the required quantities, within the required timeframe, or at all, which could result in order cancellations and decreased revenues.”XenonXenon is a by-product of the Moly production process. Historically, Nordion was our sole supplier and captured Xenon from the NRU reactor. As aresult of a decision by the Government of Canada, the NRU reactor exited the medical isotope business in November 2016. In January 2015, we entered into astrategic agreement with IRE for the future supply of Xenon. We now receive bulk unprocessed Xenon from IRE, which we process and finish for ourcustomers at our North Billerica, Massachusetts manufacturing facility. Until we can qualify an additional source of bulk unprocessed Xenon, we will rely onIRE as a sole source provider. See Part I, Item 1A. “Risk Factors—Our dependence upon third parties for the manufacture and supply of a substantial portionof our products could prevent us from delivering our products to our customers in the required quantities, within the required timeframes, or at all, whichcould result in order cancellations and decreased revenues.”Other MaterialsWe have additional supply arrangements for active pharmaceutical ingredients, excipients, packaging materials and other materials and components,none of which are exclusive, but a number of which are sole source, and all of which we currently believe are either in good standing or replaceable withoutany material disruption to our business.9Table of ContentsManufacturingWe maintain manufacturing operations at our North Billerica, Massachusetts facility. We manufacture TechneLite on a highly automated productionline and Thallium and Gallium using our cyclotron technology, and we process and finish Xenon and Quadramet using our hot cell infrastructure. We alsomaintain manufacturing operations at our San Juan, Puerto Rico radiopharmacy and PET manufacturing facility where we manufacture FDG using cyclotrontechnology. We manufacture, finish and distribute our radiopharmaceutical products on a just-in-time basis, and supply our customers with these productseither by next day delivery services or by either ground or air custom logistics. We believe that our substantial capital investments in our highly automatedgenerator production line, our cyclotrons and our extensive experience in complying with the stringent regulatory requirements for the handling of nuclearmaterials and operations in the FDA regulated environment create significant and sustainable competitive advantages for us.In addition to our in-house manufacturing capabilities, a substantial portion of our products are manufactured by third party contract manufacturingorganizations, and in certain instances, we rely on them for sole source manufacturing. To ensure the quality of the products that are manufactured by thirdparties, the key raw materials used in those products are first sent to our North Billerica, Massachusetts facility, where we test them prior to the third partymanufacturing of the final product. After the final products are manufactured, they are sent back to us for final quality control testing and then we ship themto our customers. We have expertise in the design, development and validation of complex manufacturing systems and processes, and our strong executionand quality control culture supports the just-in-time manufacturing model at our North Billerica, Massachusetts facility.Manufacturing and Supply ArrangementsWe currently have the following technology transfer and manufacturing and supply agreements in place for some of our major products:•DEFINITY—In February 2012, we entered into a Manufacturing and Supply Agreement with JHS, for the manufacture of DEFINITY. Under theagreement, JHS manufactured DEFINITY for us for an initial term of five years. In September 2016, we extended the agreement through January2022. The agreement contains automatic renewals for additional one-year periods thereafter. The agreement allows for termination upon theoccurrence of certain events such as a material breach or default by either party, or bankruptcy by either party. The agreement also requires us toplace orders for a minimum percentage of our requirements for DEFINITY with JHS. Based on our current projections, we believe that we willhave sufficient supply of DEFINITY from JHS to meet expected demand.On May 3, 2016, we entered into a Manufacturing and Supply Agreement with SBL to perform technology transfer andprocess development services to manufacture and supply an alternative microbubble formulation. There are no minimum purchase requirementsunder this agreement, which has an initial term of five years from the date of first commercial sale and is renewable at our option for anadditional five years. This agreement allows for termination upon the occurrence of certain events, including material breach or bankruptcy ofeither party. We cannot give any assurances as to when those technology transfer activities will be completed and when we will begin to receivesupply of an alternative microbubble formulation from SBL.•Cardiolite—In May 2012, we entered into a Manufacturing and Supply Agreement with JHS for the manufacture of Cardiolite products. In thethird quarter of 2016, we completed the technology transfer process and received FDA approval to manufacture Cardiolite at JHS. Under theagreement, JHS has agreed to manufacture products for an initial term of five years from the effective date. On November 9, 2017, we extendedthe term until December 31, 2020, and the agreement can be further extended for three additional one-year periods thereafter so long as theparties, using good faith, reasonable efforts, agree to new pricing for the upcoming additional term. The agreement allows for termination uponthe occurrence of specified events, including material breach or bankruptcy by either party. The agreement requires us to place orders for 100%of our requirements for Cardiolite products with JHS during such term. Based on our current projections, we believe that we will have sufficientsupply of Cardiolite products from JHS to meet expected demand.•Neurolite—In May 2012, we entered into a Manufacturing and Supply Agreement with JHS for the manufacture of Neurolite, and in January2015, the FDA granted approval to manufacture Neurolite at JHS. Under the agreement, JHS agreed to manufacture Neurolite for an initial termof five years from the effective date. On November 9, 2017, we extended the term of the agreement until December 31, 2020, and the agreementcan be further extended for three additional one-year periods thereafter so long as the parties, using good faith, reasonable efforts, agree to newpricing for the upcoming additional term. The agreement allows for termination upon the occurrence of specified events, including materialbreach or bankruptcy by either party. The agreement also requires us to place orders for 100% of our requirements for Neurolite during suchterm. Based on our current projections, we believe that we will have sufficient supply of Neurolite from JHS to meet expected demand.10Table of ContentsAlthough we are pursuing additional third party manufacturing relationships to establish and secure additional long-term or alternative suppliers asdescribed above, we are uncertain of the timing as to when these arrangements could provide meaningful quantities of our products. We have alsocommenced an extensive, multi-year effort to add specialized manufacturing capabilities at our North Billerica, Massachusetts facility. This project is part ofa larger corporate growth strategy to create a competitive advantage in specialized manufacturing. This project should not only deliver cost savings andsupply chain redundancy for our current portfolio but also should afford us increased flexibility as we consider external opportunities. However, we can giveno assurance that we will be successful in these efforts or that we will be able to successfully manufacture any additional commercial products at our NorthBillerica, Massachusetts facility. See Part I, Item 1A. “Risk Factors—Our dependence upon third parties for the manufacture and supply of a substantialportion of our products could prevent us from delivering our products to our customers in the required quantities, within the required timeframes, or at all,which could result in order cancellations and decreased revenues,” Part I, Item 1A. “Risk Factors—Challenges with product quality or product performance,including defects, caused by us or our suppliers could result in a decrease in customers and revenues, unexpected expenses and loss of market share,” and PartI, Item 1A. “Risk Factors—Our business and industry are subject to complex and costly regulations. If government regulations are interpreted or enforced in amanner adverse to us or our business, we may be subject to enforcement actions, penalties, exclusion and other material limitations on our operations.”Campus StrategyWe continually evaluate our extensive physical assets on our North Billerica, Massachusetts campus to optimize the carrying costs and use of theseassets. In 2013, we sold approximately 100 acres of undeveloped land that we owned behind our manufacturing facilities. In February 2018, we sold anadditional approximately six-acre parcel of undeveloped land adjacent to our manufacturing facilities and certain of our administrative offices. Later in 2018,we plan to raze an uneconomical and underutilized building on our North Billerica, Massachusetts campus. To house our proposed new, specializedmanufacturing capabilities, we plan to retrofit a currently underutilized manufacturing and storage building.Research and DevelopmentFor the years ended December 31, 2017, 2016 and 2015, we invested $18.1 million, $12.2 million and $14.4 million in research and development(“R&D”), respectively. Our R&D team includes our Medical Affairs and Medical Information functions, which educate physicians on the scientific aspects ofour commercial products and the approved indications, labeling and the receipt of reports relating to product quality or adverse events. We have developed apipeline of three potential cardiovascular imaging agents which were discovered and developed in-house and which are protected by patents and patentapplications we own in the U.S. and numerous foreign jurisdictions. See Part I, Item 1A. “Risk Factors—The process of developing new drugs and obtainingregulatory approval is complex, time-consuming and costly, and the outcome is not certain.”DEFINITY - New Clinical Trials for Additional Indication - EFAs part of our microbubble franchise strategy, we plan to initiate two new clinical trials for DEFINITY in echocardiography in the second half of 2018.These trials will be designed to prove superior accuracy and improved reproducibility of DEFINITY contrast enhanced echocardiography over unenhancedechocardiography to measure left ventricular EF in a broad population not limited to suboptimal echocardiograms.EF measures the percentage of blood leaving the left ventricle with each contraction and is an important measurement of heart function. EF maydecrease if there is weakness in the heart muscle as a result of a heart attack, a genetic predisposition, heart valve or other disease, or long-standing,uncontrolled hypertension. We believe that accurate EF measurements are critical to clinical decision-making and patient management in a number ofcontexts, including monitoring patients treated with cardiotoxin drugs (for example, certain chemotherapeutic regimens) and considering whether torecommend an implantable cardiac defibrillator (“ICD”) or a cardiac resynchronization therapy device. Although unenhanced echocardiography is the mostfrequently used modality to determine EF in clinical practice, it has been hampered by its poor accuracy and reproducibility. We believe that DEFINITY-enhanced echocardiography could produce EF measurements that are superior to unenhanced echocardiography, potentially providing a clinician greaterconfidence in diagnosing and treating patients.We currently anticipate that a total of approximately 300 patients will be enrolled in these clinical trials and that the truth standard for these trials willbe cardiac magnetic resonance imaging. We intend to seek a special protocol assessment (“SPA”) for these trials from the FDA. If the trials are successful, weplan on filing a supplemental NDA in pursuit of an EF indication for DEFINITY, which, if approved, would provide us three years of regulatory exclusivityfor DEFINITY in the EF indication. We believe that the EF indication, if granted, could drive further contrast penetration in a broader echocardiogramsegment. However, we can give no assurances that these clinical trials will be successful or that there will be an increase in unit sales of DEFINITY as a resultof an EF indication.11Table of ContentsFlurpiridaz F 18—PET Myocardial PerfusionWe have developed flurpiridaz F 18, an internally discovered small molecule radiolabeled with fluorine-18, as an imaging agent used in PET MPI toassess blood flow to the heart.Today, most MPI procedures use SPECT technology. Although SPECT imaging used in conjunction with a radiopharmaceutical imaging agent, such asCardiolite, is most commonly used for MPI studies, PET imaging has gained considerable support in the field of cardiovascular imaging as it offers manyadvantages to SPECT imaging, including: higher image quality, increased diagnostic certainty, more accurate risk stratification and reduced patient radiationexposure. PET imaging has demonstrated broad utility for diagnosis, prognosis, disease staging and therapeutic response. When used in combination with anappropriate radiopharmaceutical imaging agent, PET imaging can provide important insights into physiologic and metabolic processes in the body and beuseful in evaluating a variety of conditions including heart disease, neurological disease and cancer. In addition, PET MPI imaging could be particularlyuseful in difficult-to-image patients, including women and obese patients. The use of PET technology in MPI tests represents a broad emerging applicationfor a technology more commonly associated with oncology and neurology. We anticipate that the adoption of PET technology in MPI tests will increasesignificantly in the future.Flurpiridaz F 18 Clinical Overview and Phase 3 ProgramWe submitted an Investigational New Drug Application (“IND”) for flurpiridaz F 18 to the FDA in August 2006. Our clinical program to date hasconsisted of three Phase 1 studies, a Phase 2 clinical trial, conducted from 2007 to 2010, involving 176 subjects who received PET MPI performed withflurpiridaz F 18 and completed the trial, and a Phase 3 clinical trial (“301 Trial”) conducted from 2011 to 2013.The 301 Trial was an open-label, multicenter, international study with 755 subjects with known or suspected coronary artery disease (“CAD”) andscheduled for coronary angiography and SPECT imaging who completed the trial and were included in the efficacy analysis. Subjects underwent flurpiridazF 18 PET MPI and SPECT MPI studies with coronary angiography used as the truth standard for each. The study then compared MPI imaging usingflurpiridaz F 18 versus SPECT imaging with primary endpoints of superiority for sensitivity (identifying disease) and non-inferiority for specificity (rulingout disease).In the fourth quarter of 2013, we announced preliminary results from the 301 Trial, and in May 2015, after a re-read of the 301 Trial results, weannounced the complete results from the 301 Trial. Flurpiridaz F 18 appeared to be well-tolerated from a safety perspective, and PET MPI with flurpiridaz F18 consistently showed a balanced performance in sensitivity and specificity, when compared to coronary angiography, while SPECT imaging results wereskewed with low sensitivity and high specificity when compared to coronary angiography. When results were compared to one another, flurpiridaz F 18imaging substantially outperformed SPECT imaging in sensitivity but did not meet the non-inferiority endpoint in specificity, implying a substantial andunexpected under-diagnosis of CAD with SPECT imaging in the trial.In subgroup analyses, the risk-benefit profile of flurpiridaz F 18 appeared to be favorable in women, obese patients, patients with multi-vessel diseaseand diabetics. A significantly higher percentage of images were rated as either excellent or good with flurpiridaz F 18 imaging as compared to SPECTimaging, leading to a greater diagnostic certainty of interpretation. Importantly, radiation exposure associated with flurpiridaz F 18 imaging was reduced toapproximately 50% of SPECT imaging. In addition, no drug-related serious adverse events were observed.GE Healthcare CollaborationIn April 2017, we announced that we entered into a definitive, exclusive Collaboration and License Agreement (the “License Agreement”) with GEHealthcare for the continued Phase 3 development and worldwide commercialization of flurpiridaz F 18. Under the License Agreement, GE Healthcare willcomplete the worldwide development of flurpiridaz F 18, pursue worldwide regulatory approvals and, if successful, lead a worldwide launch andcommercialization of the agent, with us collaborating on both development and commercialization through a joint steering committee.For the second Phase 3 clinical trial for flurpiridaz F 18, technology transfer and preparatory activities, including discussions with RegulatoryAuthorities, have been completed. We expect patient recruitment for the second Phase 3 trial to begin in the first half of 2018. The prospective, open-label,international, multi-center trial of flurpiridaz F 18 for PET MPI in patients referred for invasive coronary angiography because of suspected coronary arterydisease (“CAD”) will enroll up to 650 participants, with a target completion date in the second half of 2020. The primary outcome measure for the trial is thediagnostic efficacy of flurpiridaz F 18 PET MPI in the detection of significant CAD, with secondary outcome measures of diagnostic efficacy of flurpiridaz F18 PET MPI compared with SPECT MPI in the detection of CAD in all patients. Secondary analysis will be performed in patients of special clinical interest,such as female, obese and diabetic patients, where current SPECT MPI technologies have shown certain limitations in the diagnostic performance.12Table of ContentsLMI 1195—Cardiac Neuronal Imaging AgentWe have developed LMI 1195, an internally discovered small molecule that we believe may be a first-in-class fluorine-18-based PETradiopharmaceutical imaging agent designed to assess cardiac sympathetic nerve function. We believe LMI 1195 could become a useful tool in thediagnostic assessment of ischemic heart failure patients who may be at risk of sudden cardiac death.Heart failure (“HF”) is a major public health challenge because of high morbidity and mortality, frequent hospitalizations, and its financial burden onthe community. Heart failure affects 6.5 million people in the U.S. today, and approximately 2 million patients may be eligible for evaluation for ICDimplantation. The cost of HF continues to rise, placing financial burden on the U.S. economy and healthcare system. Overall HF costs were estimated to beapproximately $31 billion in 2012. ICDs have been show to effectively reduce mortality rates.HF is associated with changes in the cardiac sympathetic nerve function. These changes appear early in the development of HF. The cardiac neuronalnorepinephrine transporter (“NET”) has been shown to be a useful target for the non-invasive monitoring of the cardiac sympathetic status and the assessmentof the likelihood of an HF patient to develop fatal arrhythmias. Nuclear cardiac imaging provides a unique tool to measure the molecular changes in theheart, including cardiac function of NET, in a non-invasive and repeatable manner. We developed LMI 1195 to target the NET and are encouraged by initialresults that have been obtained in a variety of conditions.In our LMI 1195 clinical development program, we have completed a safety and dosimetry Phase 1 study in healthy volunteers. Excellent qualitywhole-body images were obtained, and the radiation dose to the subjects was found to be well within acceptable limits. Blood radioactivity cleared quicklyand lung activity was low throughout the study. The agent also appeared to have a favorable safety profile.Collaborations with academic centers in the U.S., Canada and Europe have yielded clinical data that have been deemed adequate by the FDA to supportadvancing into a single Phase 3 clinical trial to support an NDA submission. We anticipate initiating this trial by the end of 2018. The trial will targetpatients with ischemic heart failure that are scheduled to undergo ICD implantation because of their risk of sudden cardiac death. Our trial is designed todemonstrate that LMI 1195 improves the risk stratification of these patients. If our trial is successful, we anticipate filing an NDA for this agent by 2021.Ongoing academic collaborations focusing on establishing the potential use of the agent for the diagnosis and treatment follow-up of neuroendocrinetumors, such as pheochromocytomas and paragangliomas, have also produced initial proof of concept data that is being pursued further.LMI 1174—Vascular Remodeling Imaging AgentWe have developed LMI 1174, an internally discovered gadolinium-based magnetic resonance imaging (“MRI”) agent targeted to elastin in the arterialwalls and atherosclerotic plaque. We believe that this agent could allow assessment of plaque location, burden, type of arterial wall remodeling and, as aresult, the potential for a vascular event, which, in turn, could lead to heart attack or stroke.Atherosclerosis is the leading cause of heart attacks, strokes and peripheral vascular disease. Elastin plays a key role in the structure of the arterial walland in biological signaling functions. Several pathological stimuli may be responsible for triggering elastogenesis in atherosclerosis, leading to a markedincrease in elastin content during plaque development. In addition to the increase in elastin seen in autopsy samples from patients with carotidatherosclerosis, there is also an increase of elastin in aortic aneurysm samples. As a result, an elastin-specific imaging agent may facilitate detection ofremodeling of the arterial walls.The majority of the assessments of atherosclerosis are currently obtained using angiography or MPI. MRI using LMI 1174 could allow for theidentification, on a minimally-invasive basis without radiation exposure, of the presence and characteristics of atherosclerosis, potentially improving clinicaldecision-making to reduce the risks of 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. Our leadmolecule, LMI 1174, has been used to demonstrate utility in a number of different animal models. We are currently working closely with investigators in theU.S. and Europe to develop additional preclinical data which may allow us to enter into clinical trials.13Table of ContentsIntellectual PropertyPatents, trademarks and other intellectual property rights, both in the U.S. and foreign countries, are very important to our business. We also rely ontrade secrets, manufacturing know-how, technological innovations, licensing agreements and confidentiality agreements to maintain and improve ourcompetitive position. We review third party proprietary rights, including patents and patent applications, as available, in an effort to develop an effectiveintellectual property strategy, avoid infringement of third party proprietary rights, identify licensing opportunities and monitor the intellectual propertyowned by others. Our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the U.S., which could make iteasier for competitors to capture market position in those countries by utilizing technologies that are similar to those developed or licensed by us.Competitors also may harm our sales by designing products that mirror the capabilities of our products or technology without infringing our intellectualproperty rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights,our competitiveness could be impaired, which would limit our growth and future revenue. See Part I, Item 1A. “Risk Factors—If we are unable to protect ourintellectual property, our competitors could develop and market products with features similar to our products, and demand for our products may decline.”Trademarks, Service Marks and Trade NamesWe own various trademarks, service marks and trade names, including DEFINITY, TechneLite, Cardiolite, Neurolite, Vialmix, Quadramet (U.S. only),Luminity, Miraluma and Lantheus Medical Imaging. We have registered these trademarks, as well as others, in the U.S. and numerous foreign jurisdictions.PatentsWe 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 patent protection inthe U.S., we file patent applications in numerous foreign countries in order to further protect the inventions that we consider important to the development ofour international business. We also rely upon trade secrets and contracts to protect our proprietary information. As of January 31, 2018, our patent portfolioincluded a total of 35 issued U.S. patents, 242 issued foreign patents, 25 pending patent applications in the U.S. and 154 pending foreign applications. Thesepatents and patent applications include claims covering the composition of matter and methods of use for all of our preclinical and clinical stage agents.Our patents cover many of our commercial products, and our current patent protection is generally in the U.S., Canada, Mexico, most of WesternEurope, various markets in Asia, and Brazil. For DEFINITY, we hold a number of different compositions of matter, use, formulation and manufacturingpatents. In the U.S., we have an Orange Book-listed composition of matter patent expiring in 2019, a manufacturing patent expiring in 2021, a new OrangeBook-listed method of use patent expiring in 2037 and an allowed manufacturing patent application that, when granted, will expire in 2037. Outside of theU.S., we have patent or regulatory extension protection in Canada, Europe and parts of Asia until 2019. As part of our microbubble franchise strategy, wecontinue to actively pursue additional patents in connection with DEFINITY, alternative microbubble formulations, and related technology. TechneLitecurrently has patent protection in the U.S. and various foreign countries on certain component technology expiring in 2029. In addition, given the significantknow-how and trade secrets associated with the methods of manufacturing and assembling the TechneLite generator, we believe we have a substantialamount of valuable and defensible proprietary intellectual property associated with the product. Neither Cardiolite nor Neurolite is covered any longer bypatent protection in either the U.S. or the rest of the world. Xenon, Thallium and Gallium have no patent protection; however, we are pursuing patentprotections for an improved container for Xenon.We have numerous patents and patent applications relating to our clinical development pipeline. We have patents and patent applications in numerousjurisdictions covering composition, use, formulation and manufacturing of flurpiridaz F 18, including in the U.S. a composition patent expiring in 2026, amethod of use patent expiring in 2028 and a method of manufacturing patent expiring in 2031, in each case, in the absence of any regulatory extension, andvarious patent applications, one of which, if granted, will expire in 2033. We also have patents and patent applications in numerous jurisdictions coveringcomposition, use, and manufacture of LMI 1195, our cardiac neuronal imaging agent, including in the U.S. a composition patent expiring in 2030 in theabsence of any regulatory extension, and patent applications which, if granted, will expire in 2027 and in 2031 in the absence of any patent term adjustmentor regulatory extensions. Additionally, we have patents and patent applications in numerous jurisdictions covering composition, use and manufacture of LMI1174, our vascular remodeling imaging agent, including in the U.S. a composition and method of use patent expiring in 2031 in the absence of anyregulatory extension, and patent applications which, if granted, will expire in 2029 and 2030 in the absence of any patent term adjustment or regulatoryextensions.14Table of ContentsIn addition to patents, we rely where necessary upon unpatented trade secrets and know-how, proprietary information and continuing technologicalinnovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements withour collaborators, employees, consultants and other third parties and invention assignment agreements with our employees. These confidentiality agreementsmay not prevent unauthorized disclosure of trade secrets and other proprietary information, and we cannot provide assurances that an employee or an outsideparty will not make an unauthorized disclosure of our trade secrets, other technical know-how or proprietary information. We may not have adequatemonitoring abilities to discover, or adequate remedies for, any unauthorized disclosure. This might happen intentionally or inadvertently. It is possible that acompetitor will make use of such information, and that our competitive position will be compromised, in spite of any legal action we might take againstpersons making such unauthorized disclosures. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.To the extent 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 elements ofour drug discovery and development efforts. These licenses are not material to our business, and the technologies can be obtained from multiple sources. Weare currently party to separate royalty-free, non-exclusive, cross-licenses with each of Bracco, GE Healthcare and Imcor Pharmaceutical Company. Thesecross-licenses give us freedom to operate in connection with contrast enhanced ultrasound imaging technology.Regulatory MattersFood and Drug LawsThe development, manufacture and commercialization of our agents and products are subject to comprehensive governmental regulation both withinand outside the U.S. 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, marketing, sampling, distribution, import and export, record keeping and storage and disposalpractices, together with various post-marketing requirements. Governmental regulatory actions can result in the seizure or recall of products, suspension orrevocation of the authority necessary for their production and sale as well as other civil or criminal sanctions.Our activities related to the development, manufacture, packaging or repackaging of our pharmaceutical and medical device products subject us to awide variety of laws and regulations. We are required to register for permits and/or licenses with, seek approvals from and comply with operating and securitystandards of the FDA, the U.S. Nuclear Regulatory Commission (“NRC”), the U.S. Department of Health and Human Services (“HHS”), Health Canada, theEuropean Medicines Agency (“EMA”), the U.K. Medicines and Healthcare Products Regulatory Agency (“MHRA”), the CFDA and various state andprovincial boards of pharmacy, state and provincial controlled substance agencies, state and provincial health departments and/or comparable state andprovincial agencies, as well as foreign agencies, and certain accrediting 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 U.S. Prior to marketing apharmaceutical product, we must first receive FDA approval. In the U.S., the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”)and implementing regulations. The process of obtaining regulatory approvals and compliance with appropriate federal, state, local, and foreign statutes andregulations requires the expenditure of substantial time and financial resources. Currently, the process required by the FDA before a drug product may bemarketed in the U.S. 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, to establishthe safety and efficacy of the proposed drug product for its intended use;•Submission to the FDA of an 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 (“cGMPs”) regulations; and•FDA review and approval of the NDA.15Table of ContentsThe testing and approval process requires substantial time, effort, and financial resources, and we cannot be certain that any approvals for our agents indevelopment will be granted on a timely basis, if at all. Once a pharmaceutical agent is identified for development, it enters the preclinical testing stage.Preclinical tests include laboratory evaluations of product chemistry, toxicity, formulation, and stability, as well as animal studies to assess its potentialsafety and efficacy. This testing culminates in the submission of the IND to the FDA.Once the IND becomes effective, the clinical trial program may begin. Each new clinical trial protocol must be submitted to the FDA before the studymay begin. Human clinical studies are typically conducted in three sequential phases that may overlap or be combined:•Phase 1. The agent 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 agent may be too inherentlytoxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients with those diseases.•Phase 2. Involves studies in a limited patient population to identify possible adverse effects and safety risks, to evaluate preliminarily theefficacy of the agent 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 NDAfor FDA approval.Clinical trial sponsors may request an SPA from the FDA. The FDA’s SPA process creates a written agreement between the sponsoring company and theFDA regarding the clinical trial design and other clinical trial issues that can be used to support approval of an agent. The SPA is intended to provideassurance that, if the agreed-upon clinical trial protocols are followed and the trial endpoints are achieved, then the data may serve as the primary basis for anefficacy claim in support of an NDA. However, the SPA agreement is not a guarantee of an approval of an agent or any permissible claims about the agent. Inparticular, the SPA is not binding on the FDA if public health concerns become evident that are unrecognized at the time that the SPA agreement is enteredinto, other new scientific concerns regarding product safety or efficacy arise, or if the clinical trial sponsor fails to comply with the agreed upon clinical trialprotocols.Progress reports detailing the results of the clinical studies must be submitted at least annually to the FDA and safety reports must be submitted to theFDA and the investigators for serious and unexpected adverse events. Submissions must also be made to inform the FDA of certain changes to the clinicaltrial protocol. Federal law also requires the sponsor to register the trials on public databases when they are initiated, and to disclose the results of the trials onpublic databases upon completion. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, if at all. The FDA orthe clinical trial sponsor may suspend or terminate a clinical study at any time on various grounds, including a finding that the research subjects or patientsare being exposed to an unacceptable health risk. Similarly, any institutional review board (“IRB”), serving any of the institutions participating in theclinical trial can suspend or terminate approval of a clinical study at a relevant institution if the clinical study is not being conducted in accordance with theIRB’s requirements or if the agent has been associated with unexpected serious harm to patients. Failure to register a clinical trial or disclose study resultswithin the required time periods could result in penalties, 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 with cGMPrequirements. The manufacturing process must be capable of consistently producing quality batches of the agent and, among other things, the manufacturermust develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected andtested and stability studies must be conducted to demonstrate that the agent does not undergo unacceptable deterioration over its shelf life.16Table of ContentsThe 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, requestingapproval to market the agent. The submission of an NDA is subject to the payment of a substantial user fee, pursuant to the Prescription Drug User Fee Act(“PDUFA”), which was first enacted in 1992 to provide the FDA with additional resources to speed the review of important new medicines. A waiver of thatfee may be obtained under certain limited circumstances. PDUFA expires every five years and must be reauthorized by Congress. The current version ofPDUFA, the sixth reauthorization (“PDUFA VI”), was renewed as part of the FDA Reauthorization Act (“FDARA”) in 2017 and is scheduled to expire in 2022.PDUFA VI focuses on expanding the role for patient input into the drug development process, continuing to devote resources to the review of breakthroughproducts to treat serious and life-threatening diseases as well as to treat rare diseases, and exploring opportunities to include real-world evidence in theregulatory review process. In December 2016, Congress enacted and President Obama signed the 21st Century Cures bill into law. That law contains anumber of provisions that may change regulatory requirements for drugs and medical devices. Given the bill’s relatively recent enactment, the FDA is still inthe process of taking steps to implement the various provisions of the 21st Century Cures law. Therefore, it is still uncertain whether or to what extent anychanges or additions to regulatory requirements authorized by the new law will have an impact on the regulation of drugs or medical devices.The approval process is lengthy and difficult and the FDA may refuse to approve an NDA if the applicable regulatory criteria are not satisfied. The FDAhas substantial discretion in the product approval process, and it is impossible to predict with any certainty whether and when the FDA will grant marketingapproval. The FDA may on occasion require the sponsor of an NDA to conduct additional clinical studies or to provide other scientific or technicalinformation about the product, and these additional requirements may lead to unanticipated delay or expense. Even if such data and information aresubmitted, 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 further assess adrug product’s safety and effectiveness after NDA approval. The FDA also may impose a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure thatthe benefits of a product outweigh its risks. A REMS could add training requirements for healthcare professionals, safety communications efforts and limitson channels of distribution, among other things. The sponsor would be required to evaluate and monitor the various REMS activities and adjust them if needbe. Whether a REMS would be imposed on any of 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-keepingrequirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling anddistribution requirements, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertisingrequirements. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. Drugsmay be promoted only for the approved indications and in accordance with the provisions of the approved label and promotional claims must beappropriately balanced with important safety information and otherwise be adequately substantiated. Further, manufacturers of drugs must continue tocomply with cGMP requirements, which are extensive and require considerable time, resources and ongoing investment to ensure compliance. In addition,changes to the manufacturing process generally require prior FDA approval before being implemented, and other types of changes to the approved product,such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.Drug product manufacturers and other entities involved in the manufacturing and distribution of approved drugs products are required to register theirestablishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain other agencies forcompliance with cGMP and other laws. The cGMP requirements apply to all stages of the manufacturing process, including the production, processing,sterilization, packaging, labeling, storage and shipment of the drug product. Manufacturers must establish validated systems to ensure that products meetspecifications and regulatory standards, and test each product batch or lot prior to its release. In addition, manufacturers of commercial PET products,including radiopharmacies, hospitals and academic medical centers, are required to submit either an NDA or Abbreviated New Drug Application (“ANDA”) inorder to produce PET drugs for clinical use, or produce the drugs under an IND.The FDA also regulates the preclinical and clinical testing, design, manufacture, safety, efficacy, labeling, storage, record keeping, sales anddistribution, post-market 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 of certainmedical devices. The FDA can also impose restrictions on the sale, distribution or use of medical devices at the time of their clearance or approval, orsubsequent to marketing. Currently, two medical devices, both of which are manufactured by third parties that hold the product clearances, comprise only asmall portion of our revenues.17Table of ContentsThe FDA may withdraw marketing authorization for a pharmaceutical or medical device product if compliance with regulatory standards is notmaintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result inrestrictions on the product or even complete withdrawal of the product from the market. Further, the failure to maintain compliance with regulatoryrequirements may result in administrative or judicial actions, such as fines, civil monetary penalties, warning letters, holds on clinical studies, product recallsor seizures, product detention or refusal to permit the import or export of pharmaceuticals or medical device products, refusal to approve pendingapplications or supplements, restrictions on marketing or manufacturing, injunctions, or civil or criminal penalties.Because our operations include the manufacture and distribution of medical radioisotopes and other medical products, we are subject to regulation bythe NRC and the departments of health of each state in which we operate and the applicable state boards of pharmacy. In addition, the FDA is also involvedin the regulation of cyclotron facilities where PET products are produced in compliance with cGMP requirements and U.S. Pharmacopeia requirements forPET 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 adverse events,are components of most of these regulatory systems. Most of our business is subject to varying degrees of governmental regulation in the countries in whichwe operate, and the general trend is toward increasingly stringent regulation. The exercise of broad regulatory powers by the FDA continues to result inincreases in the amount of testing and documentation required for approval or clearance of new drugs and devices, all of which add to the expense of productintroduction. Similar trends 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, the NRC and other state, federal and foreign regulatory requirements, we regularly review ourquality systems to assess their effectiveness and identify areas for improvement. As part of our quality review, we perform assessments of our suppliers of theraw materials that are incorporated into products and conduct quality management reviews designed to inform management of key issues that may affect thequality of our products. From time to time, we may determine that products we manufactured or marketed do not meet our specifications, published standards,such as those issued by the International Standards Organization, or regulatory requirements. When a quality or regulatory issue is identified, we investigatethe issue and take appropriate corrective action, such as withdrawal of the product from the market, correction of the product at the customer location, noticeto the customer of revised labeling and other actions.Hatch-Waxman ActThe Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, added two pathways for FDA drug approval.First, the Hatch-Waxman Act permits the FDA to approve ANDAs for generic versions of drugs if the ANDA applicant demonstrates, among other things, thatits product is bioequivalent to the innovator product and provides relevant chemistry, manufacturing and product data. Second, the Hatch-Waxman Actcreated what is known as a Section 505(b)(2) NDA, which requires the same information as a full NDA (known as a Section 505(b)(1) NDA), including fullreports of clinical and preclinical studies but allows some of the information from the reports required for marketing approval to come from studies which theapplicant does not own or have a legal right of reference. A Section 505(b)(2) NDA permits a manufacturer to obtain marketing approval for a drug withoutneeding to conduct or obtain a right of reference for all of the required studies. The Hatch-Waxman Act also provides for: (1) restoration of a portion of aproduct’s patent term that was lost during clinical development and application review by the FDA; and (2) statutory protection, known as exclusivity,against the FDA’s acceptance or approval of certain competitor applications.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 the submissiondate 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 amaximum extension of five years, and the patent term extension cannot extend the remaining term of a patent beyond a total of 14 years. The application forpatent term extension is subject to approval by the U.S. Patent and Trademark Office in conjunction with the FDA.18Table of ContentsThe Hatch-Waxman Act also provides for a period of statutory protection for new drugs that receive NDA approval from the FDA. If the FDA approves aSection 505(b)(1) NDA for a new drug that is a new chemical entity, meaning that the FDA has not previously approved any other new drug containing anysame active moiety, then the Hatch-Waxman Act prohibits the submission or approval of an ANDA or a Section 505(b)(2) NDA for a period of five years fromthe date of approval of the NDA, except that the FDA may accept an application for review after four years under certain circumstances. The Hatch-WaxmanAct will not prevent the filing or approval of a full NDA, as opposed to an ANDA or Section 505(b)(2) NDA, for any drug, but the competitor would berequired to conduct its own clinical trials, and any use of the drug for which marketing approval is sought could not violate another NDA holder’s patentclaims. The Hatch-Waxman Act provides for a three-year period of exclusivity for an NDA for a new drug containing an active moiety that was previouslyapproved by the FDA, but also includes new clinical data (other than bioavailability and bioequivalence studies) to support an innovation over thepreviously approved drug and those studies were conducted or sponsored by the applicant and were essential to approval of the application. This three-yearexclusivity period does not prohibit the FDA from accepting an application from a third party for a drug with that same innovation, but it does prohibit theFDA from approving that application for the three-year period. The three-year exclusivity does not prohibit the FDA, with limited exceptions, from approvinggeneric drugs containing the same active ingredient but without the new innovation.Healthcare Reform and Other Laws Affecting PaymentWe operate in a highly-regulated industry. The U.S. and state governments continue to propose and pass legislation that may affect the availability andcost of healthcare. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, orcollectively, the Healthcare Reform Act, substantially changes the way in which healthcare is financed by both governmental and private insurers and has asignificant impact on the pharmaceutical industry. The Healthcare Reform Act contains a number of provisions that affect coverage, reimbursement and/ordelivery of drug products and the medical imaging procedures in which our drug products are used. Key provisions include the following:•increasing the presumed utilization rate for imaging equipment costing $1 million or more in the physician office and free-standing imagingfacility setting which reduces the Medicare per procedure medical imaging reimbursement; subsequent legislation further increased thepresumed utilization rate effective January 1, 2014;•increasing drug rebates paid to state Medicaid programs under the Medicaid Drug Rebate Program for brand name prescription drugs andextending those rebates to Medicaid managed care organizations;•imposing a non-deductible annual fee on pharmaceutical manufacturers or importers who sell brand name prescription drugs to specified federalgovernment programs;•imposing an excise tax on the sale of taxable medical devices, to be paid by the entity that manufactures or imports the device: (which taxapplied to applicable sales made from January 1, 2013 through December 31, 2015, but is currently suspended for 2016 through 2019); and•amending the federal self-referral laws to require referring physicians ordering certain diagnostic imaging services to inform patients undercertain circumstances that the patients may obtain the services from other local and unaffiliated suppliers (which may affect the setting in whicha patient obtains services).The Healthcare Reform Act also establishes an Independent Payment Advisory Board (“IPAB”) to reduce the per capita rate of growth in Medicarespending by proposing changes to Medicare payments if expenditures exceed certain targets. A proposal made by the IPAB must be implemented by CMS,unless Congress adopts a proposal that achieves the necessary savings. IPAB proposals may impact payments for physician and free-standing imagingservices beginning in 2015 and for hospital services beginning in 2020. The threshold for triggering IPAB proposals has not been reached through 2017, sono adjustments will be made under the IPAB until 2020 (at the earliest).The Healthcare Reform Act also amended the federal self-referral laws, requiring referring physicians to inform patients under certain circumstances thatthe patients may obtain services, including MRI, computed tomography (“CT”), PET and certain other diagnostic imaging services, from a provider otherthan that physician, another physician in his or her group practice, or another individual under 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 those services in the area in which thepatient resides. These new requirements could have the effect of shifting where certain diagnostic medical imaging procedures are performed.The Healthcare Reform Act has been subject to political and judicial challenges. In 2012, the U.S. Supreme Court considered the constitutionality ofcertain provisions of the law. The U.S. Supreme Court upheld as constitutional the mandate for individuals to obtain health insurance, but held the provisionallowing the federal government to withhold certain Medicaid funds to states that do not expand state Medicaid programs unconstitutional. Therefore, not allstates have expanded their Medicaid programs under the Healthcare Reform Act. Political and judicial challenges to the law have continued in the wake ofthe Court’s ruling.19Table of ContentsModification to or repeal of all or certain provisions of the Healthcare Reform Act are expected as a result of the outcome of the recent presidentialelection and Republicans maintaining control of Congress, consistent with statements made by President Donald Trump and members of Congress during thepresidential campaign and following the election. Notably, Congress enacted legislation in 2017 that eliminates the Healthcare Reform Act’s “individualmandate” beginning in 2019, which may significantly impact the number of covered lives participating in exchange plans. We cannot predict the ultimatecontent, timing or effect of any changes to the Healthcare Reform Act or other federal and state reform efforts. There is no assurance that federal or state healthcare reform will not adversely affect our future business and financial results, and we cannot predict how future federal or state legislative, judicial oradministrative changes relating to healthcare reform will affect our business.Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost ofpharmaceuticals. Efforts by government officials or legislators to implement measures to regulate prices or payment for pharmaceutical products could limitour flexibility in establishing prices for our products or otherwise adversely affect our business if implemented. Changes could occur at the federal level orstate level and may be adopted by statute, rule, or sub-regulatory policies. Recent state legislative efforts seek to address drug costs and generally havefocused on increasing transparency around drug costs or limiting drug prices.General legislative cost control measures may also affect reimbursement for our products. The Budget Control Act, as amended, resulted in theimposition of 2% reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through 2025 unless additionalCongressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs thatmay be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our business results of operations,financial condition and cash flows.Healthcare Fraud and Abuse LawsWe are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claimslaws. Violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties, and/or exclusionfrom federal health care programs (including Medicare and Medicaid). Federal and state authorities are paying increased attention to enforcement of theselaws within the pharmaceutical industry, and private individuals have been active in alleging violations of the laws and bringing suits on behalf of thegovernment under the federal False Claims Act (“FCA”). Violations of international fraud and abuse laws could result in similar penalties, includingexclusion from participation in health programs outside the U.S. If we were subject to allegations concerning, or were convicted of violating, these laws, ourbusiness could be harmed.The federal Anti-Kickback Statute generally prohibits, among other things, a pharmaceutical manufacturer from directly or indirectly soliciting,offering, receiving, or paying any remuneration in cash or in kind where one purpose is either to induce the referral of an individual for, or the purchase orprescription of a particular drug that is payable by a federal health care program, including Medicare or Medicaid. The Healthcare Reform Act clarifies theintent requirements of the federal Anti-Kickback Statute, providing that a person or entity does not need to have actual knowledge of the statute or a specificintent to violate the statute. Violations of the federal Anti-Kickback Statute can result in exclusion from Medicare, Medicaid or other governmental programsas well as civil and criminal fines and penalties of up to $50,000 per violation and three times the amount of the unlawful remuneration. In addition, theHealthcare Reform Act revised the FCA to provide that a claim arising from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulentclaim for purposes of the FCA. The majority of states also have anti-kickback, false claims, and similar fraud and abuse laws and although the specificprovisions of these laws vary, their scope is generally broad, and there may not be regulations, guidance or court decisions that apply the laws to particularindustry practices. There is therefore a possibility that our practices might be challenged under the anti-kickback statutes or similar laws.Federal and state false claims laws generally prohibit anyone from knowingly and willfully, among other activities, presenting, or causing to bepresented for payment to third party payors (including Medicare and Medicaid) claims for drugs or services that are false or fraudulent (which may includeclaims for services not provided as claimed or claims for medically unnecessary services). A claim arising from a violation of the Federal Anti-KickbackStatute constitutes a false or fraudulent claim for purposes of the FCA. False or fraudulent claims for purposes of the FCA carry fines and civil penalties forviolations ranging from $11,181 to $22,363 for each false claim, plus up to three times the amount of damages sustained by the federal government and, mostcritically, may provide the basis for exclusion from federally funded healthcare programs. There is also a criminal FCA statute by which individuals orentities that submit false claims can face criminal penalties. In addition, under the federal Civil Monetary Penalty Law, the Department of Health and HumanServices Office of Inspector General has the authority to exclude from participation in federal health care programs or to impose civil penalties against anyperson who, among other things, knowingly presents, or causes to be presented, certain false or otherwise improper claims. Our activities relating to the saleand marketing of our products may be subject to scrutiny under these laws.20Table of ContentsLaws and regulations have also 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; requirepharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidancepromulgated by the U.S. federal government; and/or require disclosure to the government and/or public of financial interactions (so-called “sunshine laws”).The Healthcare Reform Act requires manufacturers to submit information to the FDA on the identity and quantity of drug samples requested and distributedby a manufacturer during each year. Many of these laws and regulations contain ambiguous requirements or require administrative guidance forimplementation. Given the lack of clarity in laws and their implementation, our activities could be subject to the penalty provisions of the pertinent federaland state laws and regulations.Other Healthcare LawsOur operations may be affected by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) as amended by the Health InformationTechnology for Economic and Clinical Health Act and its implementing regulations (“HITECH”) which impose obligations on certain “covered entities”(healthcare providers, health plans and healthcare clearinghouses) and certain of their “business associate” contractors with respect to safeguarding theprivacy, security and transmission of individually identifiable health information. Although we believe that we are neither a “covered entity” nor a “businessassociate” under the legislation, a business associate relationship may be imputed from facts and circumstances even in the absence of an actual businessassociate agreement. In addition, HIPAA and HITECH may affect our interactions with customers who are covered entities or their business associates.Antitrust and Competition LawsThe federal government and most states have enacted antitrust laws that prohibit specific types of anti-competitive conduct, including price fixing,wage fixing, concerted refusals to deal, price discrimination and tying arrangements, as well as monopolization and acquisitions of competitors that have, ormay have, a substantial adverse effect on competition. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civilpenalties. We believe we are in compliance with such federal and state laws, but courts or regulatory authorities may reach a determination in the future thatcould adversely affect our business, results of operations, financial condition and cash flows. In addition, we are subject to similar antitrust and anti-competition laws in foreign countries. We believe we are in compliance with such laws, however, any violation could create a substantial liability for us andalso cause a loss of reputation in both foreign and domestic markets. Laws Relating to Foreign TradeWe are subject to various federal and foreign laws that govern our international business practices with respect to payments to government officials.Those laws include the Foreign Corrupt Practices Act (“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, political party, or politicalcandidate for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity.In many countries, the healthcare professionals we regularly interact with may meet the FCPA’s definition of a foreign government official. The FCPA alsorequires public companies to make and keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequatesystem of internal accounting controls.Those laws also include the U.K. Bribery Act (“Bribery Act”) which proscribes giving and receiving bribes in the public and private sectors, bribing aforeign public official, and failing to have adequate procedures to prevent employees and other agents from giving bribes. U.S. companies that conductbusiness in the United Kingdom generally will be subject to the Bribery Act. Penalties under the Bribery Act include potentially unlimited fines forcompanies 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. Despite ourtraining and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by ouremployees or agents.We are also subject to trade control regulations and trade sanctions laws that restrict the movement of certain goods, currency, products, materials,services and technology to, and certain operations in, various countries or with certain persons. Our ability to transfer people and products among certaincountries may be subjected to these laws and regulations.Health and Safety LawsWe are also subject to various federal, state and local laws, regulations and recommendations, both in the U.S. and abroad, relating to safe workingconditions, laboratory and manufacturing practices and the use, transportation and disposal of hazardous or potentially hazardous substances.21Table of ContentsEnvironmental MattersWe are subject to various federal, state and local laws and regulations relating to the protection of the environment, human health and safety in the U.S.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 materials and wastes. If we violatethese laws and regulations, we could be fined, criminally charged or otherwise sanctioned by regulators. We believe that our operations currently comply inall material respects with applicable environmental laws and regulations. See Part I, Item 1A. “Risk Factors—We use hazardous materials in our business andmust comply with environmental laws and regulations, which can be expensive.”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 those 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 personal injury,property damage or other claims due to the presence of, or exposure to, hazardous materials or wastes. We currently are not party to any claims or anyobligations to investigate or remediate any material contamination at any of our facilities.We are required to maintain a number of environmental permits and nuclear licenses for our North Billerica, Massachusetts facility, which is our primarymanufacturing, packaging and distribution facility. In particular, we must maintain a nuclear byproducts materials license issued by the Commonwealth ofMassachusetts. This license requires that we provide financial assurance demonstrating our ability to cover the cost of decommissioning anddecontaminating (“D&D”) the Billerica site at the end of its use as a nuclear facility. In addition, we have a radioactive production facility in San Juan, PuertoRico, where we must also maintain a number of environmental permits and nuclear licenses. As of December 31, 2017, we currently estimate the D&D cost tobe approximately $26.9 million. As of December 31, 2017 and 2016, we have a liability recorded associated with the fair value of the asset retirementobligations of $10.4 million and $9.4 million, respectively. We currently provide this financial assurance in the form of surety bonds. We generally contractwith third parties for the disposal of wastes generated by our operations. Prior to disposal, we store any low level radioactive waste at our facilities until thematerials are below regulatory limits, 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 with current orfuture environmental protection, health and safety laws and regulations will not exceed our estimates or adversely affect our results of operations andfinancial condition. Further, we cannot assure you that we will not be subject to additional environmental claims for personal injury or cleanup in the futurebased on our past, present or future business activities. While it is not feasible to predict the future costs of ongoing environmental compliance, it is possiblethat there will be a need for future provisions for environmental costs that, in management’s opinion, are not likely to have a material effect on our financialcondition, but could be material to the results of operations in any one accounting period.EmployeesAs of December 31, 2017, we had 483 employees, of which 439 were located in the U.S. and 44 were located internationally, and 75 contractors. Noneof our employees are represented by a collective bargaining agreement, and we believe that our relationship with our employees is good.Corporate HistoryFounded in 1956 as New England Nuclear Corporation, our medical imaging diagnostic business was purchased by E.I. du Pont de Nemours andCompany (“DuPont”) in 1981. Bristol Myers Squibb (“BMS”) subsequently acquired our diagnostic medical imaging business as part of its acquisition ofDuPont Pharmaceuticals in 2001. In January 2008, Avista Capital Partners, L.P., Avista Capital Partners (Offshore), L.P. and ACP-Lantern Co-Invest, LLC(collectively “Avista”) formed Lantheus Holdings and its subsidiary, Lantheus MI Intermediate, Inc. (“Lantheus Intermediate”), and, through LantheusIntermediate, acquired our medical imaging business from BMS. On June 30, 2015, we completed an initial public offering (“IPO”) of our common stock.Immediately prior to the consummation of our IPO, Lantheus Intermediate merged with and into Lantheus Holdings, which was the survivor of the merger.Our common stock is traded on the NASDAQ Global Market under the symbol “LNTH”.22Table of ContentsAvailable InformationOur global Internet site is www.lantheus.com. We routinely make available important information, including copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of theSecurities Exchange Act of 1934, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC, free of charge onour website at www.investor.lantheus.com. We recognize our website as a key channel of distribution to reach public investors and as a means of disclosingmaterial non-public information to comply with our disclosure obligations under SEC Regulation FD. Information contained on our website shall not bedeemed incorporated into, or to be part of this Annual Report on Form 10-K, and any website references are not intended to be made through activehyperlinks.The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our reports filed with, orfurnished to, the SEC are also available on the SEC’s website at www.sec.gov, and for Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, inan XBRL (Extensible Business Reporting Language) format. XBRL is an electronic coding language used to create interactive financial statement data overthe Internet. The information on our website is neither part of nor incorporated by reference in this Annual Report on Form 10-K.Item 1A. Risk FactorsYou should carefully consider the following risks. These risks could materially affect our business, results of operations or financial condition, causethe trading price of our outstanding common stock 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. See “Cautionary Note Regarding Forward-Looking Statements” and the risks ofour businesses described elsewhere in this Annual Report on Form 10‑K.Risks Related to Our ProductsThe growth of our business is substantially dependent on our ability to continue to grow the appropriate use of DEFINITY in suboptimalechocardiograms in the face of increased segment competition from other existing echocardiography agents and potential generic competitors as a resultof future patent and regulatory exclusivity expirations.The growth of our business is substantially dependent on our ability to continue to grow the appropriate use of DEFINITY in suboptimalechocardiograms. There were approximately 33.1 million echocardiograms in 2017 according to a third-party source. Assuming 20% of echocardiogramsproduce suboptimal images, as stated in the clinical literature, we estimate that approximately 6.6 million echocardiograms in 2017 produced suboptimalimages. We estimate that DEFINITY held over 80% of the U.S. market for contrast agents in echocardiography procedures as of December 2017. DEFINITYcurrently competes with Optison, a GE Healthcare product, Lumason, a Bracco product (known as SonoVue outside the U.S.), as well as other non-echocardiography agents.We launched DEFINITY in 2001, and in the U.S., an Orange Book-listed composition of matter patent will expire in 2019, a manufacturing patent willexpire in 2021, a new Orange Book-listed method of use patent will expire in 2037 and an allowed manufacturing patent application that, when granted, willexpire in 2037. In numerous foreign jurisdictions, patent protection or regulatory exclusivity will currently expire in 2019. As part of our microbubblefranchise strategy, we continue to actively pursue additional patents in connection with DEFINITY, alternative microbubble formulations, and relatedtechnology. We also plan to initiate additional clinical trials with DEFINITY to pursue expansion of the current DEFINITY indication to include EF.However, we can give no assurance that our microbubble franchise strategy will be successful or that new patents or approvals will protect the agent or bedefensible in the face of potential generic competition.We have on-going development and technology transfer activities for an alternative microbubble formulation with SBL located in Songdo, SouthKorea, approximately 20 miles southwest of Seoul, but can give no assurances as to when those technology transfer activities will be completed and when wewill begin to receive a supply of an alternative microbubble formulation from SBL. In addition, those activities could be adversely affected by on-goingpolitical and military tensions on the Korean peninsula.If we are not able to continue to grow DEFINITY sales, we may not be able to continue to grow the revenue and cash flow of the business, which couldhave a negative effect on our business, results of operations and financial condition.23Table of ContentsWe face revenue and unit volume risk for Xenon in pulmonary studies as a result of competition from Curium and potentially others.Historically, several companies, including Curium, sold packaged Xenon as a pulmonary imaging agent in the U.S., but from 2010 through the firstquarter of 2016 we were the only supplier of this imaging agent in the U.S. In March 2016, Curium received regulatory approval from the FDA to again sellpackaged Xenon in the U.S. and began to do so. Depending upon the pricing, extent of availability and market penetration of Curium’s offering, we believewe are at risk for volume loss and price erosion from those customers that are not subject to price or volume commitments with us.Xenon is frequently administered as part of a ventilation scan to evaluate pulmonary function prior to a perfusion scan with microaggregated albumin(“MAA”), a Technetium-based radiopharmaceutical used to evaluate blood flow to the lungs. Currently, JDI is the sole supplier of MAA on a global basis.Since 2014, JDI has instituted multiple and substantial price increases for MAA. The increased price of MAA, or difficulties in obtaining MAA, coulddecrease the frequency in which MAA is used for lung perfusion evaluation, in turn, decreasing the frequency that Xenon is used for pulmonary functionevaluation, resulting in a negative effect on our business, results of operations, financial condition and cash flows.In addition to competition from Curium, other imaging agents and modalities could potentially compete with, or displace, packaged Xenon inpulmonary studies. For example, in December 2017, JDI received FDA approval for the use of DTPA (Kit for the Preparation of Technetium Tc99M PentetateInjection) (“DTPA”) in lung ventilation assessments. If there is an increase in the use of DTPA or other imaging agents or modalities in place of packagedXenon, our current sales volumes would decrease, which could have a negative effect on our business, results of operations, financial condition and cashflows.In the U.S., we are heavily dependent on a few large customers and group purchasing organization arrangements to generate a majority of ourrevenues for our nuclear medical imaging products and our other products. Outside of the U.S., we rely primarily on distributors to generate a substantialportion of our revenue.In the U.S., we have historically relied on a limited number of radiopharmacy customers, primarily Cardinal, UPPI, GE Healthcare and Triad, todistribute our current largest volume nuclear imaging products and generate a majority of our revenues. Three customers accounted for approximately 33% ofour revenues in the year ended December 31, 2017, with Cardinal, UPPI and GE Healthcare accounting for approximately 12%, 10% and 10%, respectively.Among the existing radiopharmacies in the U.S., continued consolidations, divestitures and reorganizations may have a negative effect on our business,results of operations, financial condition and cash flows. We generally have distribution arrangements with our major radiopharmacy customers pursuant tomulti-year contracts, each of which is subject to renewal. If these contracts are terminated prior to expiration of their term, or are not renewed, or are renewedon terms that are less favorable to us, then such an event could have a material adverse effect on our business, results of operations, financial condition andcash flows.For all of our medical imaging products, we continue to experience significant pricing pressures from our competitors, large customers and grouppurchasing organizations, and any significant, additional pricing pressures could lead to a reduction in revenue which could have a material adverse effect onour business, results of operations, financial condition and cash flows.Outside of the U.S., Canada and Puerto Rico, we have no sales force and, consequently, rely on third-party distributors, either on a country-by-countrybasis or on a multi-country, regional basis, to market, sell and distribute our products. In Canada, we maintain our own direct sales force to sell DEFINITY.We formerly owned or operated radiopharmacies and we now sell radiopharmaceutical products under the Isologic Supply Agreement. In Australia, we alsoformerly owned or operated radiopharmacies, and we now sell DEFINITY and radiopharmaceutical products under the GMS Supply Agreement. Distributorsaccounted for approximately 45%, 34% and 15% of International segment revenues for the years ended December 31, 2017, 2016 and 2015, respectively. Incertain circumstances, distributors may also sell competing products to our own or products for competing diagnostic modalities and may have incentives toshift sales towards those competing products. As a result, we cannot assure you that our international distributors will increase or maintain current levels ofunit sales or that we will be able to increase or maintain our current unit pricing, which, in turn, could have a material adverse effect on our business, results ofoperations, financial condition and cash flows.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 timeframes, or at all, which could result in order cancellations and decreasedrevenues.We obtain a substantial portion of our products from third party manufacturers and suppliers. We rely on JHS as our sole source manufacturer ofDEFINITY, Neurolite, Cardiolite and evacuation vials. We currently have additional on-going technology transfer activities for an alternative microbubbleformulation with SBL, but we cannot give any assurances as to when that technology transfer will be completed and when we will actually receive supply ofan alternative microbubble formulation from SBL. Currently, our DEFINITY, Neurolite, Cardiolite, evacuation vial and saline product supplies are approvedfor manufacture by a single manufacturer.24Table of ContentsBased on our current estimates, we believe that we will have sufficient supply of DEFINITY, Neurolite, Cardiolite and evacuation vials from JHS, andsufficient supply of saline from our sole manufacturer, to meet expected demand. However, we can give no assurances that JHS or our other manufacturingpartner will be able to manufacture and distribute our products in a high quality and timely manner and in sufficient quantities to allow us to avoid productstock-outs and shortfalls. Currently, regulatory authorities in certain countries have not yet approved JHS as a manufacturer of certain of our products.Accordingly, until those regulatory approvals have been obtained, our business, results of operations, financial condition and cash flows will continue to beadversely affected.Xenon is captured as a by-product of the Moly production process. Historically, Nordion was our sole supplier of Xenon, from Moly generated at theNRU reactor in Canada. As a result of a decision by the Government of Canada, the NRU reactor exited the medical isotope business in November 2016. Wenow receive bulk unprocessed Xenon from IRE resulting from HEU Moly production, which we process and finish for our customers. We do not yet receiveXenon resulting from LEU Moly production at IRE and can give no assurances as to the timing of the availability of LEU Xenon. We believe we will have asufficient supply of HEU and LEU Xenon to meet our customers’ needs. However, until IRE converts to LEU Xenon production or we can qualify anadditional source of bulk unprocessed Xenon, we will rely on IRE as a sole source provider of HEU Xenon. For the year ended December 31, 2017, Xenonrepresented approximately 10% of our revenues.In addition to the products described above, for reasons of quality assurance or cost-effectiveness, we purchase certain components and raw materialsfrom sole suppliers (including, for example, the lead casing for our TechneLite generators and the lipid blend material used in the processing of DEFINITY).Because we do not control the actual production of many of the products we sell and many of the raw materials and components that make up the products wesell, we may be subject to delays caused by interruption in production based on events and 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 oldercyclotron technology and Xenon and Quadramet using our hot cell infrastructure. As with all manufacturing facilities, equipment and infrastructure age andbecome subject to increasing maintenance and repair. If we or one of our manufacturing partners experiences an event, including a labor dispute, naturaldisaster, fire, power outage, machinery breakdown, security problem, failure to meet regulatory requirements, product quality issue, technology transfer issueor other issue, we may be unable to manufacture the relevant products at previous levels or on the forecasted schedule, if at all. Due to the stringentregulations and requirements of the governing regulatory authorities regarding the manufacture of our products, we may not be able to quickly restartmanufacturing at a third party or our own facility or establish additional or replacement sources for certain products, components or materials.In addition to our existing manufacturing relationships, we are also pursuing new manufacturing relationships to establish and secure additional oralternative suppliers for our commercial products. We currently have additional on-going technology transfer activities for an alternative microbubbleformulation with SBL. We have also commenced an extensive, multi-year effort to add specialized manufacturing capabilities at our North Billerica,Massachusetts facility. This project is part of a larger corporate growth strategy to create a competitive advantage in specialized manufacturing. This projectshould not only deliver cost savings and supply chain redundancy for our current portfolio but also should afford us increased flexibility as we considerexternal opportunities. However, we cannot assure you that these activities or any of our additional supply activities will be successful or that we will be ableto avoid or mitigate interim supply shortages before new sources of product are fully functional and qualified. In addition, we cannot assure you that ourexisting manufacturers or suppliers or any new manufacturers or suppliers can adequately maintain either their financial health or regulatory compliance toallow continued production and supply. A reduction or interruption in manufacturing, or an inability to secure alternative sources of raw materials orcomponents, could eventually have a material adverse effect on our business, results of operations, financial condition and cash flows.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 is Moly. We currently purchase finished Moly from three of the four main processing sites in the world, namely NTPin South Africa; ANSTO in Australia; and IRE in Belgium. These processing sites provide us Moly from five of the six main Moly-producing reactors in theworld, namely, OPAL in Australia; BR2 in Belgium; LVR-15 in the Czech Republic; HFR in The Netherlands; and SAFARI in South Africa.Historically, our largest supplier of Moly was Nordion, which has relied on the NRU reactor owned by Atomic Energy of Canada Limited, a Crowncorporation of the Government of Canada, located in Chalk River, Ontario. As a result of a decision by the Government of Canada, the NRU reactor exited themedical isotope business in November 2016.25Table of ContentsANSTO has under construction, in cooperation with NTP, a new Moly processing facility that ANSTO believes will nearly double its productioncapacity by approximately 2.5 times, with commercial production planned to start in the second half of 2018. In addition, IRE received approval from itsregulator to expand its production capability by up to 50% of its former capacity. This new ANSTO and IRE production capacity is expected to replace theNRU’s most recent routine production. While we believe this additional Moly supply will give us the most balanced and diversified Moly supply chain inthe industry, a prolonged disruption of service from only one of our Moly suppliers could have a material adverse effect on our business, results of operations,financial condition and cash flows. For example, due to regulatory issues, the NTP processing facility was off-line from late November 2017 until midFebruary 2018, and we were forced to rely on Moly supply from only ANSTO and IRE during this period, resulting in our inability to fill all of the demandfor our TechneLite generators on certain manufacturing days and consequently decreasing revenue and cash flow from this product line during this period ascompared to prior periods. A longer term outage from one of our three Moly suppliers could have a substantial negative effect on our business, results ofoperations, financial condition and cash flows.We are also pursuing additional sources of Moly from potential new producers around the world to further augment our current supply. In November2014, we entered into a strategic agreement with SHINE for the future supply of Moly. Under the terms of the supply agreement, SHINE will provide Molyproduced using its proprietary LEU-solution technology for use in our TechneLite generators once SHINE’s facility becomes operational and receives allnecessary regulatory approvals, which SHINE now estimates will occur in 2020. However, we cannot assure you that SHINE or any other possible additionalsources of Moly will result in commercial quantities of Moly for our business, or that these new suppliers together with our current suppliers will be able todeliver 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, we cannot say when, or if, the Moly produced from these projects will become available. Asa result, there is a limited amount of Moly available which could limit the quantity of TechneLite that we could manufacture, sell and distribute, resulting ina further substantial negative effect on our business, results of operations, financial condition and cash flows.Most of the global suppliers of Moly rely on Framatone-CERCA in France to fabricate uranium targets and in some cases fuel for research reactors fromwhich Moly is produced. Absent a new supplier, a supply disruption relating to uranium targets or fuel could have a substantial negative effect on ourbusiness, results of operations, financial condition and cash flows.The instability of the global supply of Moly, including supply shortages, resulted in increases in the cost of Moly, which has negatively affected ourmargins, and more restrictive agreements with suppliers, which could further increase our costs.With the general instability in the global supply of Moly, including supply shortages during 2009 and 2010, we have faced substantial increases in thecost of Moly in comparison to historical costs. We expect these cost increases to continue in the future as the Moly suppliers move closer to a full costrecovery business model. The Organization of Economic Cooperation and Development (“OECD”) defines full cost recovery as the identification of all of thecosts of production and recovering these costs from the market. While we are generally able to pass Moly cost increases on to our customers in our customercontracts, if we are not able to do so in the future, our margins may decline further with respect to our TechneLite generators, which could have a materialadverse effect on our business, results of operations, financial condition and cash flows.Our just-in-time manufacturing of radiopharmaceutical products relies on the timely receipt of radioactive raw materials and the timely shipment offinished 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, then we will generally ship finished generators to customersby the end of that same 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.26Table of ContentsChallenges with product quality or product performance, including defects, caused by us or our suppliers could result in a decrease in customers andrevenues, 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 be identified or arise during manufacturing quality review, packaging or shipment for a variety ofreasons including equipment malfunction, failure to 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 inan unsafe condition or the injury or death of a patient. Those events could lead to a recall of, or issuance of a safety alert relating to, our products. We alsomay undertake voluntarily to recall products or temporarily shut down 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 to customerrelationships, time and expense spent investigating the cause and costs of any possible settlements or judgments related thereto and potentially cause similarlosses with respect to other products. These challenges could also divert the attention of our management and employees from operational, commercial orother business efforts. If we deliver products with defects, or if there is a perception that our products or the processes related to our products 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. In somecircumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay ofregulatory reviews of our applications for new product approvals. These challenges 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 more diversifiedthan ours, such as GE Healthcare, Bracco, Curium and Jubilant Life Sciences, as well as other competitors, including NorthStar Medical Radioisotopes. Wecannot anticipate their actions in the same or competing diagnostic modalities, such as significant price reductions on products that are comparable to ourown, development or introduction of new products that are more cost-effective or have superior performance than our current products, the introduction ofgeneric versions when our proprietary products lose their patent protection or the new entry into a generic market in which we are already a participant. Inaddition, distributors of our products could attempt to shift end-users to competing diagnostic modalities and products. Our current or future products couldbe rendered obsolete or uneconomical as a result of these activities. Our failure to compete effectively could cause us to lose market share to our competitorsand have a material adverse effect on our business, results of operations, financial condition and cash flows.27Table of ContentsRisks Related to Reimbursement and RegulationCertain of our customers are highly dependent on payments from third party payors, including government sponsored programs, particularlyMedicare, in the U.S. and other countries in which we operate, and reductions in third party coverage and reimbursement rates for our products (orservices provided with 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 reimbursed bythird party payors, including Medicare, Medicaid, other U.S. government sponsored programs, non-U.S. governmental payors and private payors. These thirdparty payors exercise significant control over patient access and increasingly use their enhanced bargaining power to secure discounted rates and imposeother requirements that may reduce demand for our products. Our potential customers’ ability to obtain appropriate reimbursement for products and servicesfrom these third party payors affects the selection of products they purchase and the prices they are willing to pay. For example, certain radiopharmaceuticals,when used for non-invasive imaging of the perfusion of the heart for the diagnosis and management of patients with known or suspected coronary arterydisease, are currently subject to a Medicare National Coverage Determination (“NCD”). The NCD permits the coverage of such radiopharmaceuticals onlywhen certain criteria are met. Our pipeline products, including flurpiridaz F 18, if approved, may become subject to this NCD, and may not be covered at all.If Medicare and other third party payors do not provide appropriate reimbursement for the costs of our products (or services provided using our products),deny the coverage of the products (or those services), or reduce current levels of reimbursement, healthcare professionals may not prescribe our products andproviders and suppliers may not purchase our products. In addition, demand for new products may be limited unless we obtain favorable reimbursementpolicies (including coverage, coding and payment) from governmental and private third party payors at the time of the product’s introduction, which willdepend, in part, on our ability to demonstrate that a new agent has a positive impact on clinical outcomes. Third party payors continually review theircoverage policies for existing and new therapies and can deny coverage for treatments that include the use of our products or revise payment policies suchthat payments do not adequately cover the cost of our products. Even if third party payors make coverage and reimbursement available, that reimbursementmay not be adequate or these payors’ reimbursement policies may have an adverse effect on our business, results of operations, financial condition and cashflows.Over the past several years, Medicare has implemented numerous changes to payment policies for imaging procedures in both the hospital setting andnon-hospital settings (which include physician offices and freestanding imaging facilities). Some of these changes have had a negative impact on utilizationof imaging services. Examples of these changes include:•Limiting payments for imaging services in physician offices and free-standing imaging facility settings based upon rates paid to hospitaloutpatient departments;•Reducing payments for certain imaging procedures when performed together with other imaging procedures in the same family of procedures onthe same patient on the same day in the physician office and free-standing imaging facility setting;•Making significant revisions to the methodology for determining the practice expense component of the Medicare payment applicable to thephysician office and free-standing imaging facility setting which results in a reduction in payment; and•Revising payment policies and reducing payment amounts for imaging procedures performed in the hospital outpatient setting.In the physician office and free-standing imaging facility setting, services provided using our products are reimbursed under the Medicare physician feeschedule. Since 2015, payments under the Medicare physician fee schedule have been subject to specific annual updates: a 0.5% update through 2019; noupdates from 2020 to 2025; and, beginning in 2026, differential updates based on whether the physician participates in alternative payment models (with0.75% updates for participants and 0.25% updates for non-participants). The legislation also adjusts the fee schedule payments, beginning in 2019, forcertain physicians based on their performance under a consolidated measurement system (that measures performance with respect to quality, resourceutilization, meaningful use of certified electronic health records technology, and clinical practice improvement activities). Also beginning in 2019,physicians may be eligible for a bonus based on the use of certain alternative payment models designated as “advanced” by CMS. The ongoing and futureimpact of these changes cannot be determined at this time.28Table of ContentsWe believe that Medicare changes to payment policies for imaging procedures applicable to non-hospital settings will continue to result in certainphysician practices ceasing to provide these services and a further shifting of where certain medical imaging procedures are performed, from the physicianoffice and free-standing imaging facility settings to the hospital outpatient setting. Changes applicable to Medicare payment in the hospital outpatientsetting could also influence the decisions by hospital outpatient physicians to perform procedures that involve our products. Within the hospital outpatientsetting, CMS payment policy is such that the use of many of our products are not separately payable by Medicare, although certain new drug products areeligible for separate payment for the first three years after approval. Specifically, since 2013, although Medicare generally does not provide separate paymentto hospitals for the use of diagnostic radiopharmaceuticals administered in an outpatient setting, CMS has had a policy to make a nominal additionalpayment ($10) to hospitals that utilize products with non-HEU, meaning the product is 95% derived from non-HEU sources. This payment policy continuesin 2018. Although some of our TechneLite generators are manufactured using non-HEU, not all of our TechneLite generators currently meet CMS’sdefinition of non-HEU, and therefore this payment is not available for doses produced by the latter category of TechneLite generators used by our customers.Changes to the Medicare hospital outpatient prospective payment system payment rates, including reductions implemented for certain hospital outpatientsites, could influence the decisions by hospital outpatient physicians to perform procedures that involve our products.We also believe that all these changes and their resulting pressures may incrementally reduce the overall number of diagnostic medical imagingprocedures performed. These changes overall 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 or preclinicaldevelopment. We expect that there will continue to be proposals to reduce or limit Medicare and Medicaid payment for diagnostic services.We also expect increased regulation and oversight of advanced diagnostic testing in which our products are used. Federal legislation requires CMS todevelop appropriate use criteria (“AUC”) that professionals must consult when ordering advanced diagnostic imaging services (which include MRI, CT,nuclear medicine (including PET) and other advanced diagnostic imaging services that the Secretary of HHS, may specify). Beginning in 2020, the orderingprofessional will be required to consult a qualified clinical decision support mechanism, as identified by HHS, as to whether the ordered service adheres tothe applicable AUC. Reimbursement penalties will apply in 2021 if this requirement is not met (and documented on the claim). To the extent that these typesof changes have the effect of reducing the aggregate number of diagnostic medical imaging procedures performed in the U.S., our business, results ofoperations, financial condition and cash flows would be adversely affected. See Part I, Item I. “Business—Regulatory Matters.”Reforms to the U.S. 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 regulated andsubject to frequent and substantial changes. The Healthcare Reform Act substantially changed the way healthcare is financed by both governmental andprivate insurers. The law contains a number of provisions that affect coverage and reimbursement of drug products and medical imaging procedures in whichour drug products are used and/or that could potentially reduce the aggregate number of diagnostic medical imaging procedures performed in the U.S. SeePart I, Item 1. “Business—Regulatory Matters—Healthcare Reform and Other Laws Affecting Payment.” Subsequently, the Medicare Access and CHIPReauthorization Act of 2015 significantly revised the methodology for updating the Medicare physician fee schedule. And more recently, Congress enactedlegislation in 2017 that eliminates the Healthcare Reform Act’s “individual mandate” beginning in 2019, which may significantly impact the number ofcovered lives participating in exchange plans. Congress continues to consider other healthcare reform legislation. There is no assurance that the HealthcareReform Act, as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict how futurefederal or state legislative, judicial 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. The Budget Control Act of 2011and subsequent Congressional actions includes provisions to reduce the federal deficit. These provisions have resulted in the imposition of 2% reductions inMedicare payments to providers, which went into effect on April 1, 2013 and will remain in effect through 2024, and a 4% reduction in payment to providersduring the first half of 2025 unless additional Congressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or otherpublicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us, as part of anybroader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our business, results of operations,financial condition and cash flows.29Table of ContentsFurther, changes in payor mix and reimbursement by private third party payors may also affect our business. Rates paid by some private third partypayors are based, in part, on established physician, clinic and hospital charges and are generally higher than Medicare payment rates. Reductions in theamount of reimbursement paid for diagnostic medical imaging procedures and changes in the mix of our patients between non-governmental payors andgovernment sponsored healthcare programs and among different types of non-government payor sources, could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows.The full impact on our business of healthcare reforms and other new laws, or changes in existing laws, is uncertain. Nor is it clear whether additionallegislative changes will be adopted or how those changes would affect our industry in general or our ability to successfully commercialize our products ordevelop new products.Our business and industry are subject to complex and costly regulations. If government regulations are interpreted or enforced in a manner adverseto 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 agents in development, we, our products, development agents, operations, facilities, suppliers,distributors, contract manufacturers, contract research organizations and contract testing laboratories are subject to extensive and, in certain circumstances,expanding regulation by federal, state and local government agencies in the U.S. as well as non-U.S. and transnational laws and regulations, with regulationsdiffering from country to country, including, among other things, anti-trust and competition laws and regulations. In the U.S., the FDA regulates, among otherthings, 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 to register our business for permits and/or licenses with, and complywith the stringent requirements of the FDA, the NRC, the HHS, Health Canada, the EMA, the MHRA, the CFDA, state and provincial boards of pharmacy,state and provincial health departments and other federal, state and provincial agencies.Under U.S. law, for example, we are required to report certain adverse events and production problems, if any, to the FDA. We also have similar adverseevent and production reporting obligations outside of the U.S., including to the EMA and MHRA. Additionally, we must comply with requirementsconcerning advertising and promotion for our products, including the prohibition on the promotion of our products for indications that have not beenapproved by the FDA or a so-called “off-label use.” If the FDA determines that our promotional materials constitute the unlawful promotion of an off-labeluse, it could request that we modify our promotional materials or subject us to regulatory or enforcement actions. Also, quality control and manufacturingprocedures at our own facility and at third party suppliers must conform to cGMP regulations and other applicable law after approval, and the FDAperiodically inspects manufacturing facilities to assess compliance with cGMPs and other applicable law, and, from time to time, makes those cGMPs morestringent. Accordingly, we and others with whom we work must expend time, money, and effort in all areas of regulatory compliance, includingmanufacturing, production and quality control. If in the future issues arise at a third party manufacturer, the FDA could take regulatory action which couldlimit or suspend the ability of that third party to manufacture our products or have any additional products approved at the relevant facility for manufactureuntil the issues are resolved and remediated. Such a limitation or suspension could have a material adverse effect on our business, results of operations,financial condition and cash flows.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 and other fraud and abuse laws andregulations. For example, in 2010, we entered into a Medicaid Drug Rebate Agreement with the federal government for some but not all of our products, andin 2016 entered into a separate Medicaid Drug Rebate Agreement for the balance of our products. These agreements require us to report certain priceinformation to the federal government that could subject us to potential liability under the FCA, civil monetary penalties or liability under other laws andregulations in connection with the covered products as well as the products not at the time covered by the agreements. Determination of the rebate amountthat we pay to state Medicaid programs for our products, as well as determination of payment amounts for some of our products under Medicare and certainother third party payers, including government payers, depends upon information reported by us to the government. If we provide customers or governmentofficials with inaccurate information about the products’ pricing or eligibility for coverage, or the products fail to satisfy coverage requirements, we could beterminated from the rebate program, be excluded from participation in government healthcare programs, or be subject to potential liability under the FalseClaims Act or other laws and regulations. See Part I, Item 1. “Business—Regulatory Matters—Healthcare Fraud and Abuse Laws.”Failure to comply with other requirements and restrictions placed upon us or our third party manufacturers or suppliers by laws and regulations canresult in fines, civil and criminal penalties, exclusion from federal healthcare programs and debarment. Possible consequences of those actions could include:•Substantial modifications to our business practices and operations;30Table of Contents•Significantly reduced demand for our products (if products become ineligible for reimbursement under federal and state healthcare programs);•A total or partial shutdown of production in one or more of the facilities where our products are produced while the alleged violation is beingremediated;•Delays in or the inability to obtain future pre-market clearances or approvals; and•Withdrawals or suspensions of our 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.Our marketing and sales practices may contain risks that could result in significant liability, require us to change our business practices and restrictour operations in the future.We are subject to numerous domestic (federal, state and local) and foreign laws addressing fraud and abuse in the healthcare industry, including theFCA and Federal Anti-Kickback Statute, self-referral laws, the FCPA, the Bribery Act, FDA promotional restrictions, the federal disclosure (sunshine) law andstate marketing and disclosure (sunshine) laws. Violations of these laws are punishable by criminal or civil sanctions, including substantial fines,imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid as well as health programs outside the U.S., and evenalleged violations can result in the imposition of corporate integrity agreements that could severely restrict or limit our business practices. See Part I, Item 1.“Business-Regulatory Matters-Healthcare Fraud and Abuse Laws and Laws Relating to Foreign Trade.” These laws and regulations are complex and subjectto changing interpretation and application, which could restrict our sales or marketing practices. Even minor and inadvertent irregularities could potentiallygive rise to a charge that the law has been violated. Although we believe we maintain an appropriate compliance program, we cannot be certain that theprogram will adequately detect or prevent violations and/or the relevant regulatory authorities may disagree with our interpretation. Additionally, if there is achange in law, regulation or administrative or judicial interpretations, we may have to change one or more of our business practices to be in compliance withthese laws. Required changes could be costly and time consuming.If our operations are found to be in violation of these laws or any other government regulations that apply to us, we may be subject to penalties,including, without limitation, civil and criminal penalties, damages, fines, imprisonment, the curtailment or restructuring of our operations, or exclusion fromstate and federal healthcare programs including Medicare and Medicaid, any of which could have a material adverse effect on our business, results ofoperations, financial condition and cash flows.As an Emerging Growth Company (“EGC”) under the JOBS Act, we have not been required to evaluate our internal control over financial reportingas required by Section 404 of the Sarbanes-Oxley Act. If we transition from being an EGC to being a “large accelerated filer,” we will be required toimplement the necessary procedures and practices related to internal control over financial reporting, and we may identify deficiencies that we may not beable to remediate in time to meet the necessary deadline.Since our IPO in June 2015, we have been considered an EGC under the JOBS Act and have not been required to evaluate our internal controls overfinancial reporting as required by Section 404 of the Sarbanes-Oxley Act. Section 404 requires annual management assessments of the effectiveness of ourinternal control over financial reporting and a report by our independent registered public accounting firm on the effectiveness of those internal controls,starting with the year we cease being an EGC and become a “large accelerated filer.” That year could be as soon as 2018 if our market capitalization is at least$700 million on June 29, 2018. Once we are no longer an EGC, our independent registered public accounting firm will be required to attest to theeffectiveness of our internal control over financial reporting on an annual basis. The rules governing the standards that must be met for our management toassess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation of our existingcontrols and the incurrence of significant additional expenditures.In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identifydeficiencies that we may not be able to remediate in time to meet the necessary deadline. In addition, we may encounter problems or delays in completing theimplementation of any requested improvements and receiving a favorable attestation in connection with the attestation provided by our independentregistered public accounting firm. We will be unable to issue securities in the public markets through the use of a shelf registration statement if we are not incompliance with Section 404. Furthermore, failure to achieve and maintain an effective internal control environment could limit our ability to report ourfinancial results accurately and timely and have a material adverse effect on our business, results of operations, financial condition and cash flows.31Table of ContentsRisks Related to SafetyUltrasound 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 reported deathswere caused by cardiac arrest occurring either during or within 30 minutes following the administration of the contrast agent; most of the 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, which distributes Optison, acompetitor to DEFINITY, add a boxed warning to these products emphasizing the risk for serious cardiopulmonary reactions and that the use of theseproducts was contraindicated in certain patients. In a strong reaction by the cardiology community to the FDA’s new position, a letter was sent to the FDA,signed by 161 doctors, stating that the benefit of these ultrasound contrast agents outweighed the risks and urging that the boxed warning be removed. InMay 2008, the FDA substantially modified the boxed warning. On May 2, 2011, the FDA held an advisory committee meeting to consider the status ofultrasound micro-bubble contrast agents and the boxed warning. In October 2011, we received FDA approval of further 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 withexercise stress or pharmacologic stress testing have not been established” (previously added in October 2007 in connection with the imposition of the boxwarning); and including summary data from the post-approval CaRES (Contrast echocardiography Registry for Safety Surveillance) safety registry and thepost-approval pulmonary hypertension study. Further, in January 2017, the FDA approved an additional modification to the DEFINITY label, removing thecontraindication statement related to use in patients with a known or suspected cardiac shunt. Bracco’s ultrasound contrast agent, Lumason, has substantiallysimilar safety labeling as DEFINITY and Optison. If additional safety issues arise, this may result in unfavorable changes in labeling or result in restrictionson the approval of our product, including removal of the product from the market. Lingering safety concerns about DEFINITY among some healthcareproviders or future unanticipated side effects or safety concerns associated with DEFINITY could limit expanded use of DEFINITY and have a materialadverse effect on the unit sales of this product and our financial condition and results of operations.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 January 2012,CMS required the accreditation of facilities providing the technical component of advanced imaging services, including CT, MRI, PET and nuclearmedicine, in non-hospital freestanding settings. In August 2011, The Joint Commission (an independent, not-for-profit organization that accredits andcertifies more than 20,500 healthcare organizations and programs in the U.S.) issued an alert on the radiation risks of diagnostic imaging and recommendedspecific actions for providing “the right test and the right dose through effective processes, safe technology and a culture of safety.” Revised accreditationstandards issued by The Joint Commission for diagnostic imaging took effect in July 2015.Heightened regulatory focus on risks caused by the radiation exposure received by diagnostic imaging patients could lead to increased regulation ofradiopharmaceutical manufacturers or healthcare providers who perform procedures that use our imaging agents, which could make the procedures morecostly, reduce the number of providers who perform procedures and/or decrease the demand for our products. In addition, heightened public focus on or fearof radiation exposure could lead to decreased demand for our products by patients or by healthcare providers who order the procedures in which our agentsare used. Although we believe that our diagnostic imaging agents when properly used do not expose patients and healthcare providers to unsafe levels ofradiation, any of the foregoing risks could have an adverse effect on our business, results of operations, financial condition and cash flows.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 time consuming and costly to defend and could result in an increase ofour insurance premiums. Although we have not had any such claims to date, claims that could be brought against us might not be covered by our insurancepolicies. Furthermore, although we currently have product liability insurance coverage with policy limits that we believe are customary for pharmaceuticalcompanies in the diagnostic medical imaging industry and adequate to provide us with insurance coverage for foreseeable risks, even where the claim iscovered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount of any settlement or judgment that is in excessof our policy limits. 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 to obtain.Our failure to maintain adequate insurance coverage or successfully defend against product liability claims could have a material adverse effect on ourbusiness, results of operations, financial condition and cash flows.32Table of ContentsWe 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, change frequentlyand have become more stringent over time. We are required to obtain, maintain and renew various environmental permits and nuclear licenses. Although webelieve that our safety procedures for transporting, using, handling, storing and disposing of, and limiting exposure to, these materials and wastes comply inall material respects with the standards prescribed by applicable laws and regulations, the risk of accidental contamination or injury cannot be eliminated. Weplace a high priority on these safety procedures and seek to limit any inherent risks. We generally contract with third parties for the disposal of wastesgenerated by our operations. Prior to disposal, we store any low level radioactive waste at our facilities to decay until the materials are no longer consideredradioactive. Although we believe we have complied in all material respects with all applicable environmental, health and safety laws and regulations, wecannot 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 orotherwise sanctioned by regulators. We may be required to incur further costs to comply with current or future environmental and safety laws and regulations.In addition, in the event of accidental contamination or injury from these materials, we could be held liable for any damages that result and any such liabilitycould exceed our resources.While we have budgeted for current and future capital and operating expenditures to maintain compliance with these laws and regulations, we cannotassure you that our costs of complying with current or future environmental, health and safety laws and regulations will not exceed our estimates or adverselyaffect our results of operations and financial condition. Further, we cannot assure you that we will not be subject to additional environmental claims forpersonal injury, investigation or cleanup in the future based on our past, present or future business activities.Risks Related to Our BusinessOur 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. Thesuccess of new product development depends on many factors, including our ability to fund development of new agents, anticipate and satisfy customerneeds, obtain regulatory approval on a timely basis based on performance of our agents in development versus their clinical study comparators, develop andmanufacture products in a cost-effective and timely manner, maintain advantageous positions with respect to intellectual property and differentiate ourproducts from our competitors. To compete successfully in the marketplace, we must make substantial investments in new product development whetherinternally or externally through licensing or acquisitions. Our failure to introduce new and innovative products in a timely manner would have an adverseeffect 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 depend uponmarket 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;•The timing of our market entry;•Our ability to market and distribute our products effectively;•Market acceptance of our products; and•Our ability to obtain adequate reimbursement.33Table of ContentsThe 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 developed thatprovide 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. In addition, new or revised appropriate use criteria developed by professional societies, to assist physiciansand other health care providers in making appropriate imaging decisions for specific clinical conditions, can and have reduced the frequency of and demandfor certain imaging modalities and imaging agents. To the extent there is technological obsolescence in any of our products that we manufacture, resulting inlower unit sales or decreased unit sales prices, we will have increased unit overhead allocable to the remaining market share, which could have a materialadverse effect on our business, results of operations, financial condition and cash flows.The process of developing new drugs and obtaining regulatory approval is complex, time-consuming and costly, and the outcome is not certain.We currently have three agents in development, two of which (flurpiridaz F 18 and LMI 1195) are currently in clinical development, while a third (LMI1174) is in pre-clinical development. To obtain regulatory approval for these agents, we must conduct extensive human tests, which are referred to as clinicaltrials, as well as meet other rigorous regulatory requirements, as further described in Part I, Item 1. “Business—Regulatory Matters.” Satisfaction of allregulatory requirements typically takes many years and requires the expenditure of substantial resources. A number of other factors may cause significantdelays in the completion of our clinical trials, including unexpected delays in the initiation of clinical sites, slower than projected enrollment, competitionwith ongoing clinical trials and scheduling conflicts with participating clinicians, regulatory requirements, limits on manufacturing capacity and failure of anagent to meet required standards for administration to humans. In addition, it may take longer than we project to achieve study endpoints and complete dataanalysis for a trial or we may decide to slow down the enrollment in a trial in order to conserve financial resources.Our agents in development are also subject 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, agents thathave shown promising results in early clinical trials have subsequently suffered significant setbacks in later clinical trials. Agents in later stage clinical trialsmay fail to show desired safety and efficacy traits, despite having progressed through initial clinical testing. In addition, the data collected from clinical trialsof our agents in development may not be sufficient to support regulatory approval, or regulators could interpret the data differently and less favorably thanwe do. Further, the design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial maynot become apparent until the clinical trial is well advanced. Clinical trials of potential products often reveal that it is not practical or feasible to continuedevelopment efforts. Regulatory authorities may require us or our partners to conduct additional clinical testing, in which case we would have to expendadditional time and resources. The approval process may also be delayed by changes in government regulation, future legislation or administrative action orchanges in regulatory policy that occur prior to or during regulatory review. The failure to provide clinical and preclinical data that are adequate todemonstrate to the satisfaction of the regulatory authorities that our agents in development are safe and effective for their proposed use will delay or precludeapproval and will prevent us from marketing those products.We are not permitted to market our agents in development in the U.S. or other countries until we have received requisite regulatory approvals. Forexample, securing FDA approval for a new drug requires the submission of an NDA to the FDA for our agents in development. The NDA must includeextensive nonclinical and clinical data and supporting information to establish the agent’s safety and effectiveness for each indication. The NDA must alsoinclude significant information regarding the chemistry, manufacturing and controls for the product. The FDA review process can take many years tocomplete, and approval is never guaranteed. If a product is approved, the FDA may limit the indications for which the product may be marketed, requireextensive warnings 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 the agent.Markets outside of the U.S. also have requirements for approval of agents with which we must comply prior to marketing. Obtaining regulatory approval formarketing of an agent in one country does not ensure we will be able to obtain regulatory approval in other countries, but a failure or delay in obtainingregulatory approval in one country may have a negative effect on the regulatory process in other countries. Also, any regulatory approval of any of ourproducts or agents in development, once obtained, may be withdrawn. Approvals might not be granted on a timely basis, if at all.In our flurpiridaz F 18 Phase 3 program, in May 2015, we announced complete results from the 301 trial. Although flurpiridaz F 18 appeared to be well-tolerated from a safety perspective and outperformed SPECT in a highly statistically significant manner in the co-primary endpoint of sensitivity and in thesecondary endpoints of image quality and diagnostic certainty, the agent did not meet its other co-primary endpoint of non-inferiority for identifyingsubjects without disease. In April 2017, we entered into the License34Table of ContentsAgreement with GE Healthcare for the continued Phase 3 development and worldwide commercialization of flurpiridaz F 18. Under the License Agreement,GE Healthcare will, among other things, complete the worldwide development of flurpiridaz F 18 by conducting a second Phase 3 trial and pursue worldwideregulatory approvals. We cannot assure any particular outcome from GE Healthcare’s continued Phase 3 development of the agent or from regulatory reviewof either our or their Phase 3 study of the agent, that any of the data generated in either our or their sponsored Phase 3 study will be sufficient to support anNDA approval, that GE Healthcare will only have to conduct the one additional Phase 3 clinical study prior to filing an NDA, or that flurpiridaz F 18 willever be approved as a PET MPI imaging agent by the FDA. Similarly, we can give no assurance that we will be successful in either of our two new internalclinical development programs - DEFINITY for an EF indication and LMI 1195 for heart failure patient risk stratification. See Part I, Item 1. “Business-Regulatory Matters-Food and Drug Laws.” Any failure or significant delay in completing clinical trials for our product candidates or in receiving regulatoryapproval for the sale of our product candidates may severely harm our business and delay or prevent us from being able to generate revenue from productsales.Even if our agents in development proceed successfully through clinical trials and receive regulatory approval, there is no guarantee that an approvedproduct can be manufactured in commercial quantities at a reasonable cost or that such a product will be successfully marketed or distributed. The burdenassociated with the marketing and distribution of products like ours is substantial. For example, rather than being manufactured at our own facilities, bothflurpiridaz F 18 and LMI 1195 would require the creation of a complex, field-based network involving PET cyclotrons located at radiopharmacies where theagent would need to be manufactured and distributed rapidly to end-users, given the agent’s 110-minute half-life. In addition, in the case of both flurpiridaz F18 and LMI 1195, obtaining adequate reimbursement is critical, including not only coverage from Medicare, Medicaid, other government payors as well asprivate payors but also appropriate payment levels which adequately cover the substantially higher manufacturing and distribution costs associated with aPET agent in comparison to a Technetium-based agent. We can give no assurance even if either flurpiridaz F 18 or LMI 1195 obtains regulatory approval thata network of PET cyclotrons can be established or that adequate reimbursement can be secured to allow the approved agent or agents to becomecommercially successful.Our future growth may depend on our ability to identify and in-license or acquire additional products, and if we do not successfully do so, orotherwise fail to integrate any new products into our operations, we may have limited growth opportunities and it could materially adversely affect ourrelationships with customers and/or result in significant impairment charges.We are continuing to seek to acquire or in-license products, businesses or technologies that we believe are a strategic fit with our business strategy.Future in-licenses or acquisitions, however, may entail numerous operational and financial risks, including:•Exposure to unknown liabilities;•Disruption of our business, customer base and diversion of our management’s time and attention to develop acquired products or technologies;•A reduction of our current financial resources;•Difficulty or inability to secure financing to fund development activities for those acquired or in-licensed technologies;•Incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions; and•Higher than expected acquisition and integration costs.We may not have sufficient resources to identify and execute the acquisition or in-licensing of third party products, businesses and technologies andintegrate them into our current infrastructure. In particular, we may compete with larger pharmaceutical companies and other competitors in our efforts toestablish new collaborations and in-licensing opportunities. These competitors likely will have access to greater financial resources than we do and may havegreater expertise in identifying and evaluating new opportunities. Furthermore, there may be overlap between our products or customers and the companieswhich we acquire that may create conflicts in relationships or other commitments detrimental to the integrated businesses. Additionally, the time between ourexpenditures to in-license or acquire new products, technologies or businesses and the subsequent generation of revenues from those acquired products,technologies or businesses (or the timing of revenue recognition related to licensing agreements and/or strategic collaborations) could cause fluctuations inour financial performance from period to period. Finally, if we devote resources to potential acquisitions or in-licensing opportunities that are nevercompleted, or if we fail to realize the anticipated benefits of those efforts, we could incur significant impairment charges or other adverse financialconsequences.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 commercial products andtechnologies and agents in development as well as successfully defending these patents and trade secrets against third party challenges, both in the U.S. andin foreign countries. We will only be able to protect our intellectual property from unauthorized use by third parties to the extent that we maintain the secrecyof our trade secrets and can enforce our valid patents and trademarks.35Table of ContentsThe 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 U.S. or othercountries may diminish the value of our intellectual property and we may not receive the same degree of protection in every jurisdiction. Accordingly, wecannot predict the breadth of claims that may be allowed or enforced 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 we couldlose 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, andwe 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 use of ourintellectual 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, ex-parte re-examinations, inter-partes reviewor similar administrative proceedings;•While we generally apply for patents in those countries where we intend to make, have made, use or sell patented products, we may not be ableto accurately predict all of the countries where patent protection will ultimately be desirable and may be precluded from doing so at a later date;•We may choose not to seek patent protection in certain countries where the actual cost outweighs the perceived benefit at a certain time;•Patents issued in foreign jurisdictions may have different scopes of coverage as our U.S. patents and so our products may not receive the samedegree of protection in foreign countries as they would in the U.S.;•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 of apatent even after its issuance by the U.S. Patent and Trademark Office or the applicable foreign patent office. It is also uncertain how much protection, if any,will be afforded by our patents if 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 to challenge the validity of a patent.The defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings are costly, timeconsuming to pursue and result in diversion of resources. The outcome of these proceedings is uncertain and could significantly harm our business. If we arenot able to defend the patents of our technologies and products, then we will not be able to exclude competitors from marketing products that directlycompete 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 and other know-how and proprietary information to protect our technology, especially where we do not believe patentprotection is appropriate or obtainable. However, trade secrets are difficult to protect. We use reasonable efforts to protect our trade secrets, but ouremployees, consultants, contractors, outside scientific partners and other advisors may unintentionally or willfully disclose our confidential information tocompetitors 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 is unpredictable. In addition, courts outside the U.S. are sometimes less willing to protect trade secrets. Moreover, our competitors mayindependently develop equivalent knowledge, methods and know-how. We 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 and proprietaryinformation concerning our business. These confidentiality agreements may not prevent unauthorized disclosure of trade secrets and other know-how andproprietary information, and there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our trade secrets,other technical know-how or proprietary information, or that we can detect such an unauthorized disclosure. We may not have adequate remedies for anyunauthorized disclosure. This might happen intentionally or inadvertently. It is possible that a competitor will make use of that information, and that ourcompetitive position will be compromised, in spite of any legal action we might take against persons making those unauthorized disclosures, which couldhave a material adverse effect on our business, results of operations, financial condition and cash flows.36Table of ContentsWe 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, Neurolite, Quadramet, Luminity, Miraluma and Lantheus MedicalImaging. We cannot assure you that any pending trademark applications will be approved. Third parties may also oppose our trademark applications, orotherwise challenge our use of the trademarks. If our trademarks are successfully challenged, we could be forced to re-brand our products, which could resultin loss 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 of these claims is uncertain and any unfavorable result could adversely affect our business, financial condition and results ofoperations.We may be subject to claims by third parties that we have infringed, misappropriated or otherwise violated their intellectual property rights. While webelieve that the products that we currently manufacture using our proprietary technology do not infringe upon or otherwise violate proprietary rights of otherparties or that meritorious defenses would exist with respect to any assertions to the contrary, we cannot assure you that we would not be found to infringe onor 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 costly andtime consuming and could divert management’s attention and resources, generate significant expenses, damage payments (potentially including trebledamages) or restrictions or prohibitions on our use of our technology, which could adversely affect our business, results of operations, financial condition andcash flows. In addition, if we are found to be infringing on proprietary rights of others, we may be required to develop non-infringing technology, obtain alicense (which may not be available on reasonable terms, or at all), make substantial one-time or ongoing royalty payments, or cease making, using and/orselling the infringing products, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.We may be adversely affected by prevailing economic conditions and financial, business and other factors beyond our control.Our ability to attract and retain customers, invest in and grow our business and meet our financial obligations depends on our operating and financialperformance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyondour control, such as the rate of unemployment, the number of uninsured persons in the U.S. and inflationary pressures. We cannot anticipate all the ways inwhich the current or future economic climate and financial market conditions could adversely impact our business. We are exposed to risks associated withreduced profitability and the potential financial instability of our customers, many of which may be adversely affected by volatile conditions in the financialmarkets. For example, unemployment and underemployment, and the resultant loss of insurance, may decrease the demand for healthcare services andpharmaceuticals. If fewer patients are seeking medical care because they do not have insurance coverage, our customers may experience reductions inrevenues, profitability and/or cash flow that could lead them to modify, delay or cancel orders for our products. If customers are not successful in generatingsufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us.This, in turn, could adversely affect our financial condition and liquidity. To the extent prevailing economic conditions result in fewer procedures beingperformed, 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 financial position.For the years ended December 31, 2017, 2016 and 2015, we derived approximately 13%, 15% and 20% of our revenues from outside the fifty UnitedStates, respectively. Accordingly, our business is subject to risks associated with doing business internationally, including:•Less stable political and economic environments and changes in a specific country’s or region’s political or economic conditions, including on-going political and military tensions on the Korean peninsula which could adversely affect our alternative microbubble formulation program atSBL;•Entering into or renewing commercial agreements with international governments or provincial authorities or entities directly or indirectlycontrolled by such governments or authorities, such as our Chinese partner Double-Crane Pharmaceutical Company;•International customers which are agencies or institutions of foreign governments;•Local business practices which may be in conflict with the U.S. Foreign Corrupt Practices Act and U.K. Bribery Act;•Currency fluctuations;37Table of Contents•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 potential for intellectual property piracy;•Greater difficulties in managing and staffing non-U.S. operations;•The need to ensure compliance with the numerous in-country and international regulatory and legal requirements applicable to our business ineach of these jurisdictions 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.These factors are beyond our control. The realization of any of these or other risks associated with operating outside the fifty United States could have amaterial adverse effect on our business, results of operations, financial condition and cash flows. As our international exposure increases and as we executeour strategy of international expansion, these risks may intensify.We face currency and other risks associated with international sales.We generate revenue from export sales, as well as from operations conducted outside the fifty United States. During the years ended December 31, 2017,2016 and 2015, the net impact of foreign currency changes on transactions was a gain of $0.3 million and losses of $0.9 million and $1.8 million,respectively. Operations outside the U.S. expose us to risks including fluctuations in currency values, trade restrictions, tariff and trade regulations, U.S.export controls, non‑U.S. tax laws, shipping delays and economic and political instability. For example, violations of U.S. export controls, including thoseadministered by the U.S. Treasury Department’s Office of Foreign Assets Control, could result in fines, other civil or criminal penalties and the suspension orloss of export privileges which could have a material adverse effect on our business, results of operations, financial conditions and cash flows.With the exception of our United Kingdom subsidiary, the functional currencies of our International Segment subsidiaries are the respective localcurrencies of each entity. Exchange rates between some of these currencies and the U.S. Dollar have fluctuated significantly in recent years and may do so inthe future. Historically, we have not used derivative financial instruments or other financial instruments to hedge against economic exposures related toforeign currencies.Many of our customer relationships outside of the U.S. are, either directly or indirectly, with governmental entities, and we could be adverselyaffected by violations of the FCPA and similar worldwide anti-bribery laws outside the U.S.The FCPA, the Bribery Act and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediaries frommaking 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 the predominance ofgovernment-sponsored healthcare systems around the world, many of our customer relationships outside of the U.S. are, either directly or indirectly, withgovernmental entities and are therefore subject to the FCPA and similar anti-bribery laws in non-U.S. jurisdictions. In addition, the provisions of the BriberyAct extend beyond bribery of foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-exemption of facilitation payments and penalties.Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption tosome degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training andcompliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees oragents. Violations of these laws, or allegations of those violations, could disrupt our business and result in a material adverse effect on our results ofoperations, financial condition and cash flows.38Table of ContentsOur business depends on the continued effectiveness and availability of our information technology infrastructure, and failures of this infrastructurecould 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 large streams of data in compliance with applicable regulatory requirements. We relyextensively on technology, some of which is managed by third-party service providers, to allow the concurrent conduct of work sharing around the world. Aswith all information technology, our equipment and infrastructure age and become subject to increasing maintenance and repair and our systems generallyare vulnerable to potential damage or interruptions from fires, natural disasters, power outages, blackouts, machinery breakdown, telecommunications failuresand other unexpected events, as well as to break-ins, sabotage, increasingly sophisticated intentional acts of vandalism or cyber threats which, due to thenature of such attacks, may remain undetected for a period of time. As these threats continue to evolve, we may be required to expend additional resources toenhance our information security measures or to investigate and remediate any information security vulnerabilities. Given the extensive reliance of ourbusiness on technology, any substantial disruption or resulting loss of data that is not avoided or corrected by our backup measures could harm our business,reputation, operations and financial condition.We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability.As of December 31, 2017, we had federal income tax loss carryforwards of $233.5 million, which will begin to expire in 2030 and will completelyexpire in 2037. We may be limited in our ability to use these tax loss carryforwards to reduce our future U.S. federal income tax liabilities if we were toexperience another “ownership change” as specified in Section 382 of the Internal Revenue Code including if we were to issue a certain amount of equitysecurities, certain of our stockholders were to sell shares of our common stock, or we were to enter into certain strategic transactions.We may not be able to hire or retain the number of qualified personnel, particularly scientific, medical and sales personnel, required for our business,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. Although we have not had any material difficulty inthe past in hiring or retaining qualified personnel, if we are unable to retain our existing personnel, or attract and train additional qualified personnel, eitherbecause of competition in our industry for these personnel or because of insufficient financial resources, then our growth may be limited and it could have amaterial 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 and seniormanagement team. Mary Anne Heino, our Chief Executive Officer and President, and other members of our executive leadership and senior management teamplay a significant role in generating new business and retaining existing customers. We have an employment agreement with Ms. Heino and a limited numberof other individuals on our executive leadership team, although we cannot prevent them from terminating their employment with us. We do not maintain keyperson life insurance policies on any of our executive officers. While we have experienced both voluntary and involuntary turnover on our executiveleadership team, to date we have been able to attract new, qualified individuals to lead our company and key functional areas. Our inability to retain ourexisting executive leadership and senior management team, maintain an appropriate internal succession program or attract and retain additional qualifiedpersonnel could have a material adverse effect on our business.Risks Related to Our Capital StructureWe 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, 2017, we had approximately $272.9 million of total principal indebtedness remaining under our five‑year secured term loanfacility, which matures on June 30, 2022 (the “2017 Term Facility”) and availability under our Revolving Facility (the “2017 Revolving Facility” and,together with the 2017 Term Facility, the “2017 Facility”) of $75.0 million. 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 our outstanding indebtedness, namely the payment ofinterest and principal;•Make it more difficult to refinance the outstanding indebtedness;•Subject us to increased sensitivity to interest rate increases;39Table of Contents•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•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 will depend on our future financialperformance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control. If we do not generatesufficient cash flow from operations to satisfy our debt obligations, including interest and principal payments, our credit ratings could be downgraded, andwe may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, entering into additional corporatecollaborations or licensing arrangements for one or more of our products or agents in development, reducing or delaying capital investments or seeking toraise additional capital. We cannot assure you that any refinancing would be possible, that any assets could be sold, licensed or partnered, or, if sold, licensedor partnered, of the timing of the transactions and the amount of proceeds realized from those transactions, that additional financing could be obtained onacceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Furthermore, ourability to refinance would depend upon the condition of the financial and credit markets. Our inability to generate sufficient cash flow to satisfy our debtobligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would have an adverse effect on our business, results ofoperations and financial condition.Despite 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 2017 Facility. Although these agreements restrict us and our restricted subsidiaries from incurring additional indebtedness,these restrictions are subject to important exceptions and qualifications. For example, we are generally permitted to incur certain indebtedness, includingindebtedness arising in the ordinary course of business, indebtedness among restricted subsidiaries and us and indebtedness relating to hedging obligations.See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—ExternalSources of Liquidity.” If we or our subsidiaries incur additional debt, the risks that we and they now face as a result of our high leverage could intensify. Inaddition, 2017 Facility will not prevent us from incurring obligations that do not constitute indebtedness under the agreements.Our 2017 Facility contains restrictions that will limit our flexibility in operating our business.Our 2017 Facility contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and ourrestricted subsidiaries’ ability to, among other things:•Maintain net leverage above certain specified levels;•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.A breach of any of these covenants could result in a default under the 2017 Facility. We may also be unable to take advantage of business opportunitiesthat arise because of the limitations imposed on us by the restrictive covenants under our indebtedness.40Table of ContentsU.S. credit markets may impact our ability to obtain financing or increase the cost of future financing, including interest rate fluctuations based onmacroeconomic conditions that are beyond our control.During periods of volatility and disruption in the U.S., European, or global credit markets, obtaining additional or replacement financing may be moredifficult and the cost of issuing new debt or replacing our 2017 Facility could be higher than under our current 2017 Facility. Higher cost of new debt maylimit our ability to have cash on hand for working capital, capital expenditures and acquisitions on terms that are acceptable to us. Additionally, our 2017Facility has variable interest rates. By its nature, a variable interest rate will move up or down based on changes in the economy and other factors, all of whichare beyond our control. If interest rates increase, our interest expense could increase, affecting earnings and reducing cash flows available for working capital,capital expenditures and acquisitions.Our stock price could fluctuate significantly, which could cause the value of your investment to decline, and you may not be able to resell your sharesat or above your purchase price.Securities markets worldwide have experienced, and may continue to experience, significant price and volume fluctuations. This market volatility, aswell as general economic, market or political conditions, could reduce the market price of our common stock regardless of our operating performance. Thetrading price of our common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including:•Market conditions in the broader stock market;•Actual or anticipated fluctuations in our quarterly financial and operating results;•Issuance of new or changed securities analysts’ reports or recommendations;•Investor perceptions of us and the medical technology and pharmaceutical industries;•Sales, or anticipated sales, of large blocks of our stock;•Acquisitions or introductions of new products or services by us or our competitors;•Additions or departures of key personnel;•Regulatory or political developments;•Loss of intellectual property protections;•Litigation and governmental investigations; and•Changing economic conditions.These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investorsfrom readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when themarket price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued thestock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the timeand attention of our management from our business, which could significantly harm our profitability and reputation.If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding ourstock or if our results of operations do not meet their expectations, our stock price and trading volume could decline.The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or ourbusiness. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financialmarkets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock,or if our results of operations do not meet their expectations, our stock price could also decline.We do not anticipate paying any cash dividends for the foreseeable future.We currently intend to retain our future earnings, if any, for the foreseeable future, to repay indebtedness and to fund the development and growth of ourbusiness. We do not intend to pay any dividends to holders of our common stock and the agreements governing our senior secured credit facilities limit ourability to pay dividends. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in ourcommon stock. See Part II, Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy”.41Table of ContentsItem 1B. Unresolved Staff CommentsNone.Item 2. PropertiesThe following table summarizes information regarding our significant leased and owned properties, as of December 31, 2017:Location Purpose Segment SquareFootage Ownership Lease TermEndU.S. North Billerica,Massachusetts Corporate Headquarters, Manufacturing, Laboratory, MixedUse and Other Office Space U.S. Segment 578,000 Owned N/ACanada Quebec Mixed Use and Office Space International Segment 1,202 Leased April 2019Quebec Distribution Center and Office Space International Segment 1,433 Leased May 2019Puerto Rico San Juan Manufacturing, Laboratory, Mixed Use and Office Space International Segment 9,550 Leased October 2024We believe all of these facilities are well-maintained and suitable for the office, radiopharmacy, manufacturing or warehouse operations conducted inthem and provide adequate capacity for current and foreseeable future needs.Item 3. Legal ProceedingsFrom 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, and mayin the future be, subject to investigations by governmental and regulatory authorities which expose us to greater risks associated with litigation, regulatory orother proceedings, 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, intellectual propertydisputes often have a risk of injunctive relief which, if imposed against us, could materially and adversely affect our financial condition or results ofoperations.As of December 31, 2017, we had no material ongoing litigation in which we were a party or any material ongoing regulatory or other proceeding andhad no knowledge of any investigations by governmental or regulatory authorities in which we are a target that could have a material adverse effect on ourcurrent business.We are currently in arbitration with Pharmalucence in connection with a Manufacturing and Supply Agreement dated November 12, 2013, under whichPharmalucence agreed to manufacture and supply DEFINITY for us. The commercial arrangement contemplated by that agreement was repeatedly delayedand ultimately never successfully realized. After extended settlement discussions between Sun Pharma, the ultimate parent of Pharmalucence, and us, whichdid not lead to a mutually acceptable outcome, on November 10, 2017, we filed an arbitration demand (and later an amended arbitration demand) with theAmerican Arbitration Association (“AAA”) against Pharmalucence, alleging breach of contract, breach of the covenant of good faith and fair dealing, tortiousmisrepresentation and violation of the Massachusetts Consumer Protection Law, also known as Chapter 93A. We cannot predict the outcome of this disputeresolution proceeding and whether we will be able to obtain any financial recovery as a result of this proceeding.Item 4. Mine Safety DisclosuresNot applicable42Table of ContentsPART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationThe Company’s common stock began trading on the NASDAQ Global Market under the symbol “LNTH” on June 25, 2015. Prior to that time, there wasno established public trading market for our common stock. The following table sets forth the high and low intra-day sale prices per share of our commonstock, as reported on the NASDAQ Global Market, for the quarterly periods indicated: High LowYear ended December 31, 2016 First Quarter $3.38 $1.76Second Quarter $4.37 $1.82Third Quarter $10.10 $3.46Fourth Quarter $10.85 $7.61Year ended December 31, 2017 First Quarter $14.25 $7.95Second Quarter $17.85 $10.65Third Quarter $20.45 $15.05Fourth Quarter $24.10 $17.15Holders of RecordOn February 22, 2018, there were approximately 12 stockholders of record of our common stock. This number does not include stockholders for whomshares are held in “nominee” or “street” name.43Table of ContentsPerformance GraphThe performance graph set forth below shall not be deemed “soliciting material” or to be “filed” with the SEC. This graph will not be deemed“incorporated by reference” into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the“Exchange Act”), whether such filing occurs before or after the date hereof, except to the extent that the Company explicitly incorporates it by referenceinto in such filing.The following graph provides a comparison of the cumulative total shareholder return on our common shares with that of the cumulative totalshareholder return on the (i) Russell 2000 Index and (ii) the NASDAQ US Small Cap Index, commencing on June 25, 2015 and ending December 31, 2017.The graph assumes a hypothetical $100 investment in our common stock and in each of the comparative indices on June 25, 2015. Our historic share priceperformance is not necessarily indicative of future share price performance.________________________________* Assumes hypothetical investment of $100 in our common stock and each of the indices on June 25, 2015, the date of our IPO, including reinvestment of dividends.44Table of ContentsPerformance Graph DataThe following table sets forth the cumulative total shareholder return on the hypothetical $100 investment in the Company’s common stock and eachof the comparative indices on June 25, 2015:Date Lantheus Holdings, Inc.(“LNTH”) Russell 2000 Index(“^RUT”) NASDAQ US Small CapIndex (“^NQUSS”)06/25/15 $100.00 $100.00 $100.0006/30/15 $91.43 $97.43 $97.7609/30/15 $63.52 $85.53 $85.3112/31/15 $49.93 $88.26 $88.2403/31/16 $27.92 $86.56 $87.6906/30/16 $54.21 $89.51 $90.6009/30/16 $122.30 $97.26 $99.2012/31/16 $127.03 $105.45 $107.6703/31/17 $184.64 $107.69 $109.7106/30/17 $260.71 $109.98 $112.6009/30/17 $262.92 $115.84 $118.9612/31/17 $302.07 $119.31 $122.28Issuer Purchase of Equity SecuritiesNone.Dividend PolicyWe did not declare or pay any dividends and we do not currently intend to pay dividends in the foreseeable future. We currently expect to retain futureearnings, if any, for the foreseeable future, to finance the growth and development of our business and to repay indebtedness. Our ability to pay dividends arerestricted by our financing arrangements. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—External Sources of Liquidity” for further information.Recent Sales of Unregistered SecuritiesNone.RepurchasesThe following table presents information with respect to purchases of common stock we made during the quarter ended December 31, 2017. TheCompany does not currently have a share repurchase program in effect. The 2015 Equity Incentive Plan, adopted by the Company on June 24, 2015, asfurther amended April 27, 2017 (the “2015 Plan”), provides for the withholding of shares to satisfy minimum statutory tax withholding obligations. It doesnot specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy minimum tax withholdingobligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item 5.Period Total Number ofShares Purchased Average Price Paid PerShare Total Number of SharesPurchased as Part ofPublicly AnnouncedPrograms Approximate DollarValue of Shares thatMay Yet Be PurchasedUnder the ProgramOctober 2017 ** 1,291 $18.50 * *November 2017 ** 6,722 $22.26 * *December 2017 ** — $— * * 8,013 * ________________________________* These amounts are not applicable as the Company does not have a share repurchase program in effect.**Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the receipt of stock whichresulted from the exercise of vesting of equity awards.45Table of ContentsSecurities Authorized for Issuance Under Equity Compensations PlansThe information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 Annual Meeting ofStockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.Item 6. Selected Financial DataBasis of Financial InformationThe consolidated financial statements have been prepared in U.S. Dollars, in accordance with accounting principles generally accepted in the UnitedStates of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Lantheus Holdings, Inc. and its wholly-owned subsidiaries.All intercompany accounts and transactions have been eliminated in consolidation.Non-GAAP Financial MeasuresAdjusted EBITDA and EBITDA as used in our equity incentive plans, collectively, our Non-GAAP Measures, as presented in this Annual Report onForm 10-K, are supplemental measures of our performance that are not required by, or presented in accordance with U.S. GAAP. They are not measurements ofour financial performance under U.S. GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived inaccordance with U.S. GAAP or as alternatives to cash flow from operating activities as measures of our liquidity.Our presentation of our Non-GAAP Measures may not be comparable to similarly titled measures of other companies. We have included informationconcerning our Non-GAAP Measures in this Annual Report on Form 10-K because we believe that this information is used by certain investors as measures ofa company’s historical performance.Our Non-GAAP Measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of ouroperating results or cash flows as reported under U.S. GAAP. Some of these limitations include:•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 our debt;•Although depreciation is a non-cash charge, the assets being depreciated will often have to be replaced in the future, and our Non-GAAPMeasures do not reflect any cash requirements for those 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 Non-GAAP 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 U.S. GAAP results and using our Non-GAAP Measures only forsupplemental purposes.46Table of ContentsSelected Financial DataIn the table below, we provide you with our selected consolidated financial data for the periods presented. We have prepared this information using ouraudited consolidated financial statements for the years ended December 31, 2017, 2016, 2015, 2014 and 2013.The following selected consolidated financial information should be read in conjunction with our consolidated financial statements, the related notesand Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report onForm 10-K. The results indicated below and elsewhere in this Annual Report on Form 10-K are not necessarily indicative of results to be expected for anyfuture period. Year EndedDecember 31, 2017 2016 2015 2014 2013Statements of Operations(in thousands, except per share data)Revenues$331,378 $301,853 $293,461 $301,600 $283,672Cost of goods sold169,243 164,073 157,939 176,081 206,311Sales and marketing42,315 36,542 34,740 35,116 35,227General and administrative(a)49,842 38,832 43,894 37,313 39,442Research and development18,125 12,203 14,358 13,673 30,459Proceeds from manufacturer— — — — (8,876)Gain on sales of assets— 6,385 — — —Operating income (loss)51,853 56,588 42,530 39,417 (18,891)Interest expense18,410 26,618 38,715 42,288 42,915Debt retirement costs— 1,896 — — —Loss on extinguishment of debt2,442 — 15,528 — —Other (income) expense(8,638) (220) 65 505 (1,265)Income (loss) before income taxes39,639 28,294 (11,778) (2,366) (60,541)Income tax (benefit) provision(b)(83,746) 1,532 2,968 1,195 1,014Net income (loss)$123,385 $26,762 $(14,746) $(3,561) $(61,555)Net income (loss) per common share: Basic$3.31 $0.84 $(0.60) $(0.20) $(3.42)Diluted$3.17 $0.82 $(0.60) $(0.20) $(3.42)Weighted-average common shares: Basic37,276 32,044 24,440 18,081 18,032Diluted38,892 32,656 24,440 18,081 18,032 _______________________________(a)In 2017 and 2013, general and administrative expense includes losses on impairment of land of $0.9 million and $6.4 million, respectively.(b)The 2017 amount reflects the release of our valuation allowance of $141.1 million against its deferred tax assets offset by a provision of $45.1 million forremeasuring the Company’s deferred tax assets for the change in tax rates enacted under the Tax Cuts and Jobs Act of 2017. Year EndedDecember 31, 2017 2016 2015 2014 2013Statements of Cash Flows Data(in thousands)Net cash provided by (used in): Operating activities$54,777 $49,642 $21,762 $11,590 $(15,572)Investing activities$(16,309) $3,281 $(13,151) $(7,682) $(3,483)Financing activities$(13,450) $(30,217) $999 $(2,297) $5,61247Table of Contents December 31, 2017 2016 2015 2014 2013Balance Sheet Data(in thousands)Cash and cash equivalents$76,290 $51,178 $28,596 $19,739 $18,578Total assets$383,858 $255,898 $242,379 $243,153 $252,682Long-term debt, net$265,393 $274,460 $349,858 $392,863 $390,408Total liabilities$360,567 $362,414 $427,668 $482,423 $488,199Total stockholders’ equity (deficit)$23,291 $(106,516) $(185,289) $(239,270) $(235,517) Year EndedDecember 31, 2017 2016 2015 2014 2013Other Financial Data(in thousands)EBITDA(a)$68,895 $72,100 $44,910 $58,165 $6,912Adjusted EBITDA(a)$94,050 $78,289 $76,329 $70,755 $38,483Capital expenditures$17,543 $7,398 $13,151 $8,137 $5,010________________________________(a)EBITDA is defined as net income (loss) plus interest expense (net), income taxes, depreciation, amortization and accretion. EBITDA is a measure used bymanagement to measure operating performance. Adjusted EBITDA is defined as EBITDA, further adjusted to exclude certain items and other adjustments requiredor permitted in calculating Adjusted EBITDA under the agreements governing our long-term debt facilities. Adjusted EBITDA is also used by management tomeasure operating performance and by investors to measure a company’s ability to service its debt. Management believes that the inclusion of the adjustments toEBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about the Company’s performance acrossreporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. See “—Non-GAAP FinancialMeasures.”The following table provides a reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA for the periods presented: Year EndedDecember 31, 2017 2016 2015 2014 2013 (in thousands)Net income (loss) $123,385 $26,762 $(14,746) $(3,561) $(61,555)Interest expense, net 18,391 26,598 38,691 42,261 42,811Income tax (benefit) provision(a) (92,113) 477 1,314 441 (127)Depreciation 12,485 9,915 11,813 9,901 9,336Amortization of intangible assets 6,747 8,348 7,838 9,123 16,447EBITDA 68,895 72,100 44,910 58,165 6,912Stock and incentive plan compensation 6,769 3,527 2,002 1,031 578Asset write-off(b) 3,430 1,906 1,468 1,257 28,349Severance and recruiting costs(c) 1,715 2,090 1,360 818 5,239Offering and other costs(d) 576 126 7,412 4,525 2,117Campus consolidation costs 1,152 — — — —Debt refinancing costs 2,557 — — — —Extinguishment of debt and debt retirementcosts 2,442 1,896 15,528 — —Gain on sales of assets — (6,385) — — —New manufacturer costs(e) 4,304 3,029 3,649 4,959 4,164Proceeds from manufacturer — — — — (8,876)One-time contract and termination costs 2,210 — — — —Adjusted EBITDA $94,050 $78,289 $76,329 $70,755 $38,483________________________________(a)Represents income tax (benefit) provision, less tax indemnification income associated with BMS. In 2017, this amount includes the release of our valuationallowance against our deferred tax assets and changes enacted under the Tax Cuts and Jobs Act of 2017.(b)Represents non-cash losses incurred associated with the write-down of land, intangible assets, inventory and other write-offs of long-lived assets. In 2017, theamount includes an impairment of land of $0.9 million. The 2013 amount consists primarily of a $6.4 million impairment of land, a $15.4 million impairmentcharge on the Cardiolite trademark intangible asset, a $1.7 million impairment charge on a customer relationship intangible asset and a $1.6 million inventorywrite-down related to Ablavar.48Table of Contents(c)The amounts consist of severance and recruitment costs related to employees, executives and directors.(d)Represents offering costs incurred on behalf of certain stockholders pursuant to a registration rights agreement and other non-recurring costs. Other significantcomponents include:i.one-time charge recorded in connection with the termination of our advisory services and monitoring agreement with our former sponsor of$6.5 million during 2015;ii.legal fees and disbursements incurred in connection with our business interruption claim associated with the NRU reactor shutdown during 2009 to 2010of $1.1 million and $0.7 million in 2014 and 2013, respectively;iii.write-offs of IPO costs of $0.2 million and $2.4 million in 2015 and 2014, respectively; andiv.certain non-recurring charges related to a customer relationship in 2013.(e)Represents internal and external costs associated with establishing new manufacturing sources for our commercial and clinical candidate products.49Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis of our financial condition and results of operations should be read together with Item 6, “Selected FinancialData” and the consolidated financial statements and the related notes included in Item 8 of this Annual Report on Form 10-K. This discussion containsforward-looking statements related to future events and our future financial performance that are based on current expectations and subject to risks anduncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, includingthose set forth in Part I—Item 1A. “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements.” included in this Annual Report on Form10-K.OverviewOur BusinessWe are a global leader in the development, manufacture and commercialization of innovative diagnostic medical imaging agents and products thatassist clinicians in the diagnosis and treatment of cardiovascular and other diseases. Clinicians use our imaging agents and products across a range ofimaging modalities, including echocardiography and nuclear imaging. We believe that the resulting improved diagnostic information enables healthcareproviders to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overallcosts for payers and the entire healthcare system.Our commercial products are used by cardiologists, nuclear physicians, radiologists, internal medicine physicians, technologists and sonographersworking in a variety of clinical settings. We sell our products to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.We sell our products globally and have operations in the U.S., Puerto Rico and Canada and third-party distribution relationships in Europe, Canada,Australia, Asia-Pacific and Latin America.Our Product PortfolioOur product portfolio includes an ultrasound contrast agent and nuclear imaging 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 U.S. 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 in the U.S.,an Orange Book-listed composition of matter patent will expire in 2019, a manufacturing patent will expire in 2021, a new Orange Book-listedmethod of use patent will expire in 2037 and an allowed manufacturing patent application that, when granted, will expire in 2037. In numerousforeign jurisdictions, patent protection or regulatory exclusivity will currently expire in 2019.•TechneLite is a Technetium generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neuroliteand other Technetium-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses Moly as its active ingredient.•Xenon is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also for imaging cerebral blood flow. Xenon ismanufactured by a third-party and is processed and finished by us.Sales of our contrast agent, DEFINITY, are made in the U.S. and Canada through a DEFINITY direct sales team of 72 employees. In the U.S., our nuclearimaging products, including TechneLite, Xenon, Neurolite and Cardiolite, are primarily distributed through commercial radiopharmacies, the majority ofwhich are controlled by or associated with Cardinal, UPPI, GE Healthcare and Triad. A small portion of our nuclear imaging product sales in the U.S. are madethrough our direct sales force to hospitals and clinics that maintain their own in-house radiopharmaceutical capabilities. Outside the U.S., we own oneradiopharmacy in Puerto Rico, where we sell our own products as well as products of third-parties to end-users.In January 2016, we sold our Canadian radiopharmacies to Isologic and entered into a supply agreement under which we supply Isologic with certain ofour products on commercial terms, including certain product purchase commitments by Isologic. In August 2016, we sold our Australian radiopharmacyservicing business to GMS, and entered into a supply agreement under which we supply GMS with certain of our products on commercial terms, includingcertain minimum product purchase commitments by GMS.We also maintain our own direct sales force in Canada so that we can control the importation, marketing, distribution and sale of our imaging agents inCanada. In Europe, Australia, Asia-Pacific and Latin America, we rely on third-party distributors to market, sell and distribute our nuclear imaging andcontrast agent products, either on a country-by-country basis or on a multi-country regional basis.50Table of ContentsThe following table sets forth our revenues derived from our principal products: Year EndedDecember 31,(in thousands)2017 % ofRevenues 2016 % ofRevenues 2015 % ofRevenuesDEFINITY$157,268 47.5% $131,612 43.6% $111,859 38.1%TechneLite104,644 31.6% 99,217 32.9% 72,562 24.7%Xenon31,377 9.5% 29,086 9.6% 48,898 16.7%Other38,089 11.4% 41,938 13.9% 60,142 20.5%Total revenues$331,378 100.0% $301,853 100.0% $293,461 100.0%Key Factors Affecting Our ResultsOur business and financial performance have been, and continue to be, affected by the following:Growth of DEFINITY and Our Microbubble Franchise StrategyWe believe the market opportunity for our contrast agent, DEFINITY, remains significant. DEFINITY is currently our fastest growing and highestmargin commercial product. We believe that DEFINITY sales will continue to grow and that DEFINITY will constitute a greater share of our overall productmix. As we better educate the physician and healthcare provider community about the benefits and risks of this product, we believe we will be able tocontinue to grow the appropriate use of DEFINITY in suboptimal echocardiograms.There are three echocardiography contrast agents approved by the FDA for sale in the U.S.—DEFINITY which we estimated as having over 80% of theU.S. market for contrast agents in echocardiography procedures as of December 31, 2017, Optison from GE Healthcare and Lumason from Bracco. As part ofour microbubble franchise strategy, we continue to actively pursue additional patents in connection with DEFINITY, alternative microbubble formulations,and related technology. We also plan to initiate additional clinical trials with DEFINITY in the second half of 2018 to pursue expansion of the currentDEFINITY indication to include EF. However, we can give no assurance that our microbubble franchise strategy will be successful or that new patents orapprovals will protect the agent or be defensible in the face of potential generic competition. See Part I, Item 1A. “Risk Factors—The growth of our businessis substantially dependent on our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of increasedsegment competition from other existing echocardiography agents and potential generic competitors as a result of future patent and regulatory exclusivityexpirations.”Competition for XenonXenon gas for lung ventilation diagnosis is our third largest product by revenues. In order to increase the predictability of our Xenon business, we haveentered into Xenon supply agreements with customers at committed volumes and reduced prices. These steps have resulted in more predictable Xenon unitvolumes. Historically, several companies, including Curium, sold packaged Xenon as a pulmonary imaging agent in the U.S., but from 2010 through the firstquarter of 2016, we were the only supplier of this imaging agent in the U.S. In March 2016, Curium received regulatory approval from the FDA to again sellpackaged Xenon in the U.S. and began to do so. Depending upon the pricing, extent of availability and market penetration of Curium’s offering, we believewe are at risk for volume loss and price erosion from those customers which are not subject to price or volume commitments with us. In addition tocompetition from Curium, other imaging agents and modalities could potentially compete with, or displace, packaged Xenon in pulmonary studies. If there isan increase in the use of other imaging agents or modalities in place of packaged Xenon, our current sales volumes would decrease, which could have anegative effect on our business, results of operations, financial condition and cash flows. See Part I, Item 1A. “Risk Factors—We face revenue and unitvolume risk for Xenon in pulmonary studies as a result of competition from Curium and potentially others.”Inventory SupplyWe obtain a substantial portion of our imaging agents from third-party suppliers. JHS is currently our sole source manufacturer of DEFINITY, Neurolite,Cardiolite and evacuation vials, the latter being an ancillary component for our TechneLite generators. We are currently seeking approval from certainforeign regulatory authorities for JHS to manufacture certain of our products. Until we receive these approvals, we will face continued limitations on wherewe can sell those products outside of the U.S.51Table of ContentsIn addition to JHS, we are also currently working to secure additional alternative suppliers for our key products as part of our ongoing supply chaindiversification strategy. We have ongoing development and technology transfer activities for an alternative microbubble formulation with SBL, which islocated in South Korea, but we cannot give any assurances as to if and when those technology transfer activities will be completed and when we will begin toreceive supply of an alternative microbubble formulation from SBL. We have also commenced an extensive, multi-year effort to add specializedmanufacturing capabilities at our North Billerica, Massachusetts facility. This project is part of a larger strategy to create a competitive advantage inspecialized manufacturing which will also allow us to optimize our costs and reduce our supply chain risk. We plan to retrofit an underutilized manufacturingand storage building to house our proposed manufacturing facility. We can give no assurance that we will be successful in these efforts or that we will be ableto successfully manufacture any additional commercial products at our North Billerica, Massachusetts facility. See Part I, 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 to ourcustomers in the required quantities, within the required timeframes, or at all, which could result in order cancellations and decreased revenues.”Radiopharmaceuticals are decaying radioisotopes with half-lives ranging from a few hours to several days. These products cannot be kept in inventorybecause of their limited shelf lives and are subject to just-in-time manufacturing, processing and distribution, which takes place at our North Billerica,Massachusetts facility.Global Isotope SupplyWe currently have Moly supply agreements with NTP of South Africa, for itself and on behalf of its subcontractor ANSTO of Australia, running throughDecember 31, 2020, and with IRE, running through December 31, 2018, renewable by us on a year-to-year basis thereafter. We also have a Xenon supplyagreement with IRE which runs through June 30, 2019, also subject to extensions.Historically, our largest supplier of Moly was Nordion, which relied on the NRU reactor in Canada for its supply of Moly. As a result of a decision bythe Government of Canada, the NRU reactor exited the medical isotope business in November 2016. ANSTO has already significantly increased its Molyproduction capacity from its existing facility in August 2016 and has under construction, in cooperation with NTP, a new Moly processing facility thatANSTO believes will expand its production capacity, which is expected to be in commercial operation in the second half of 2018. In addition, IRE receivedapproval from its regulator to expand its production capability by up to 50% of its former capacity. The combined ANSTO and IRE production capacity isexpected to replace what was the NRU’s most recent routine production.We believe we are generally well-positioned with ANSTO, IRE and NTP to have a secure supply of Moly, including low-enriched uranium-based Molyproduced from targets containing less than 20% of Uranium-235 (“LEU Moly”). However, we still have challenges from to time to time in our Moly supplychain. For example, due to regulatory issues, the NTP processing facility was off-line from late November 2017 until mid February 2018, and we were forcedto rely on Moly supply from only ANSTO and IRE during this period, resulting in our inability to fill all of the demand for our TechneLite generators oncertain manufacturing days and consequently decreasing revenue and cash flow from this product line during this period as compared to prior periods.We are receiving bulk unprocessed Xenon from IRE, which we are processing and finishing for our customers. We believe we are well-positioned tosupply Xenon to our customers. See Part I, Item 1A. “Risk Factors—The global supply of Moly is fragile and not stable. Our dependence on a limited numberof third party suppliers for Moly could prevent us from delivering some of our products to our customers in the required quantities, within the requiredtimeframe, or at all, which could result in order cancellations and decreased revenues” and “—Our dependence upon third parties for the manufacture andsupply of a substantial portion of our products could prevent us from delivering our products to our customers in the required quantities, within the requiredtimeframes, or at all, which could result in order cancellations and decreased revenues.”Research and Development ExpensesTo remain a leader 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 our historical results and success. On April 25, 2017,we announced entering into a definitive, exclusive Collaboration and License Agreement with GE Healthcare for the continued Phase 3 development andworldwide commercialization of flurpiridaz F 18. As part of our microbubble franchise strategy, in the second half of 2018, we plan to initiate additionalclinical trials with DEFINITY to pursue expansion of the current DEFINITY indication to include EF. In addition, by year end 2018, we plan to enter into asingle Phase 3 clinical trial for LMI 1195 to demonstrate improved risk stratification of ischemic heart failure patients. Our investments in these additionalclinical activities will increase our operating expenses and impact our results of operations and cash flow.SegmentsWe report our results of operations in two operating segments: U.S. and International. We generate a greater proportion of our revenues and net income(loss) in the U.S. segment, which consists of all regions of the U.S. with the exception of Puerto Rico.52Table of ContentsExecutive OverviewOur results for the year ended December 31, 2017 as compared to the prior year reflect the following:•the release of our valuation allowance against our deferred tax assets and changes enacted under the Tax Cuts and Jobs Act of 2017;•increased revenues for DEFINITY in the suboptimal echocardiogram segment as a result of our continued focused sales efforts;•increased revenues for TechneLite, mainly the result of higher unit volumes and unit pricing;•increased revenues of $5.0 million from GE Healthcare for the continued Phase 3 development and worldwide commercialization of flurpiridazF 18;•lower international revenues and cost of goods sold primarily as a result of the sale of our Australian radiopharmacies in 2016;•increased depreciation expense as a result of the scheduled decommissioning of certain long-lived assets;•general and administrative expense of $2.6 million incurred in connection with the refinancing and subsequent repricing of our debt, as well asa related $2.4 million loss on the extinguishment of debt; and•decreased interest expense of $8.2 million due to the refinancing, and subsequent repricing, of our debt which resulted in comparatively lowercarrying amounts of outstanding debt principal and lower effective interest rates throughout the year ended December 31, 2017.Results of OperationsThe following is a summary of our consolidated results of operations: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%Revenues$331,378 $301,853 $293,461 $29,525 9.8 % $8,392 2.9 %Cost of goods sold169,243 164,073 157,939 5,170 3.2 % 6,134 3.9 %Gross profit162,135 137,780 135,522 24,355 17.7 % 2,258 1.7 %Operating expenses Sales and marketing42,315 36,542 34,740 5,773 15.8 % 1,802 5.2 %General and administrative49,842 38,832 43,894 11,010 28.4 % (5,062) (11.5)%Research and development18,125 12,203 14,358 5,922 48.5 % (2,155) (15.0)%Total operating expenses110,282 87,577 92,992 22,705 25.9 % (5,415) (5.8)%Gain on sales of assets— 6,385 — (6,385) (100.0)% 6,385 100.0 %Operating income51,853 56,588 42,530 (4,735) (8.4)% 14,058 33.1 %Interest expense18,410 26,618 38,715 (8,208) (30.8)% (12,097) (31.2)%Debt retirement costs— 1,896 — (1,896) (100.0)% 1,896 100.0 %Loss on extinguishment of debt2,442 — 15,528 2,442 100.0 % (15,528) (100.0)%Other (income) expense(8,638) (220) 65 (8,418) 3,826.4 % (285) (438.5)%Income (loss) before income taxes39,639 28,294 (11,778) 11,345 40.1 % 40,072 (340.2)%Income tax (benefit) provision(83,746) 1,532 2,968 (85,278) (5,566.4)% (1,436) (48.4)%Net income (loss)$123,385 $26,762 $(14,746) $96,623 361.0 % $41,508 (281.5)%53Table of ContentsComparison of the Periods Ended December 31, 2017, 2016 and 2015RevenuesSegment revenues are summarized by product as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S. DEFINITY$153,581 $128,677 $109,656 $24,904 19.4 % $19,021 17.3 %TechneLite90,489 85,412 62,034 5,077 5.9 % 23,378 37.7 %Xenon31,373 29,078 48,868 2,295 7.9 % (19,790) (40.5)%Other14,559 14,253 15,266 306 2.1 % (1,013) (6.6)%Total U.S. Revenues290,002 257,420 235,824 32,582 12.7 % 21,596 9.2 %International DEFINITY3,687 2,935 2,203 752 25.6 % 732 33.2 %TechneLite14,155 13,805 10,528 350 2.5 % 3,277 31.1 %Xenon4 8 30 (4) (50.0)% (22) (73.3)%Other23,530 27,685 44,876 (4,155) (15.0)% (17,191) (38.3)%Total International Revenues41,376 44,433 57,637 (3,057) (6.9)% (13,204) (22.9)%Total Revenues$331,378 $301,853 $293,461 $29,525 9.8 % $8,392 2.9 %2017 vs. 2016The increase in U.S. segment revenues during the year ended December 31, 2017, as compared to the prior year is primarily due to increases inDEFINITY revenues of $24.9 million and Xenon revenues of $2.3 million as a result of higher unit volumes compared to the prior year. TechneLite revenuesincreased by $5.1 million as a result of higher unit volumes and unit pricing as compared to the prior year. Additionally, there was an increase of $5.0 millionin Other revenues associated with the up-front license fee recognized related to the License Agreement with GE Healthcare for the continued Phase 3development and worldwide commercialization of flurpiridaz F 18. Offsetting these increases was a $2.8 million decrease in Other revenues driven by rebateand allowance provisions, as well as a $1.6 million decrease in Ablavar revenues as the product is no longer sold.The decrease in International segment revenues during the year ended December 31, 2017, as compared to the prior year, is primarily attributable to thesale of the Australian radiopharmacy business during 2016.2016 vs. 2015The increase in U.S. segment revenues during the year ended December 31, 2016, as compared to the prior year is primarily due to a $23.4 millionincrease in TechneLite revenues as a result of contracts with customers that increased unit volumes and a $19.0 million increase in DEFINITY revenues as aresult of higher unit volumes. Offsetting these increases was a $19.8 million decrease in Xenon revenues primarily as a result of contracts with significantcustomers that reduced unit pricing in exchange for committed volume purchases and a $1.7 million decrease in Ablavar as the product is no longer sold.The decrease in the International segment revenues during the year ended December 31, 2016, as compared to the prior year is primarily the result of thedecreases in revenues in Canada and Australia attributable to the sale of our radiopharmacy businesses. In addition, foreign currency provided unfavorabilityof approximately $0.9 million for the year ended December 31, 2016 compared to the prior year period.Rebates and AllowancesEstimates 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 Other revenue and the establishment of a liabilitywhich is included in accrued expenses. These rebates and allowances result from performance-based offers that are primarily based on attaining contractuallyspecified sales volumes and growth, Medicaid rebate programs for our products, administrative fees of group purchasing organizations, royalties and certaindistributor related commissions. The calculation of the accrual for these rebates and allowances is based on an estimate of the third-party’s buying patternsand the resulting applicable contractual rebate or commission rate(s) to be earned over a contractual period.54Table of ContentsAn analysis of the amount of, and change in, reserves is summarized as follows:(in thousands)Rebates andAllowancesBalance, January 1, 2015$2,164Current provisions relating to revenues in current year6,413Adjustments relating to prior years’ estimate(84)Payments/credits relating to revenues(6,190)Balance, December 31, 20152,303Current provisions relating to revenues in current year7,255Adjustments relating to prior years’ estimate(452)Payments/credits relating to revenues(6,809)Balance, December 31, 20162,297Current provisions relating to revenues in current year9,568Adjustments relating to prior years’ estimate(654)Payments/credits relating to revenues(8,351)Balance, December 31, 2017$2,860Cost of Goods SoldCost of goods sold consists of manufacturing, distribution, intangible asset amortization, write-offs of excess and obsolete inventory and other costsrelated to our commercial products.Cost of goods sold is summarized by segment as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S.$135,331 $129,070 $106,982 $6,261 4.9 % $22,088 20.6 %International33,912 35,003 50,957 (1,091) (3.1)% (15,954) (31.3)%Total Cost of goods sold$169,243 $164,073 $157,939 $5,170 3.2 % $6,134 3.9 %2017 vs. 2016The increase in U.S. segment cost of goods sold for the year ended December 31, 2017, as compared to the prior year is primarily attributable to costsassociated with the increase in sales volumes as discussed above. We also incurred increased technology transfer expenses compared to the prior year, whichwas offset by lower amortization expense as a result of a fully amortized intangible asset.The decrease in International segment cost of goods sold for the year ended December 31, 2017, as compared to the prior year is primarily attributableto lower manufacturing costs as a result of the sale of our Australian radiopharmacy business during 2016, partially offset by higher manufacturing costs forcertain products due to higher sales volume and higher material costs for certain products.2016 vs. 2015The increase in the U.S. segment cost of goods sold for the year ended December 31, 2016, as compared to the prior year is primarily due to unitvolumes noted in the revenue discussion above. Offsetting these increases was a $0.7 million decrease in technology transfer expenses.The decrease in the International segment cost of goods sold during the year ended December 31, 2016, as compared to the prior year is primarily due tolower manufacturing costs for certain products as a result of the sale of our Canadian and Australian radiopharmacy businesses.55Table of ContentsGross ProfitGross profit is summarized by segment as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S.$154,671 $128,350 $128,842 $26,321 20.5 % $(492) (0.4)%International7,464 9,430 6,680 (1,966) (20.8)% 2,750 41.2 %Total Gross profit$162,135 $137,780 $135,522 $24,355 17.7 % $2,258 1.7 %2017 vs. 2016The increase in U.S. segment gross profit for the year ended December 31, 2017, as compared to the prior year is primarily attributable to higherDEFINITY and Xenon unit sales volumes and the recognition of $5.0 million in Other revenues associated with the License Agreement with GE Healthcarefor the continued Phase 3 development and worldwide commercialization of flurpiridaz F 18 without any associated cost of goods sold.The decrease in International segment gross profit for the year ended December 31, 2017, as compared to the prior year is primarily attributable tohigher manufacturing and material costs for certain products.2016 vs. 2015The decrease in the U.S. segment gross profit for the year ended December 31, 2016, as compared to the prior year is primarily due to lower Xenon unitvolumes and lower selling price. Offsetting these decreases were increases in DEFINITY and TechneLite gross profit due to higher unit volumes.The increase in the International segment gross profit during the year ended December 31, 2016, as compared to the prior year is primarily due to lowerThallium cost of goods per unit, lower manufacturing costs for certain products as a result of the sale of our Canadian radiopharmacies and increasedoperational efficiencies as a result of the shutdown of one of our Puerto Rican radiopharmacies in the third quarter of 2015. These increases were partiallyoffset by a $0.4 million unfavorable foreign exchange.Sales and MarketingSales and marketing expenses consist primarily of salaries and other related costs for personnel in field sales, marketing, business development andcustomer service functions. Other costs in sales and marketing expenses include the development and printing of advertising and promotional material,professional services, market research and sales meetings.Sales and marketing expense is summarized by segment as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S.$39,471 $32,919 $31,130 $6,552 19.9 % $1,789 5.7%International2,844 3,623 3,610 (779) (21.5)% $13 0.4%Total Sales and marketing$42,315 $36,542 $34,740 $5,773 15.8 % $1,802 5.2%2017 vs. 2016The increase in U.S. segment sales and marketing expense for the year ended December 31, 2017, as compared to the prior year is primarily attributableto employee-related expenses and promotional program expenses.The decrease in International segment sales and marketing expense for the year ended December 31, 2017, as compared to the prior year is primarilyattributable to lower employee headcount.2016 vs. 2015The increase in the U.S. segment sales and marketing expenses for the year ended December 31, 2016, as compared to the prior year is primarily due toemployee related expenses, travel, promotional program expenses, as well as credit card fees, as a result of increased revenues.56Table of ContentsThe International segment sales and marketing expenses for the year ended December 31, 2016 were in line with the prior year period.General and AdministrativeGeneral and administrative expenses consist of salaries and other related costs for personnel in executive, finance, legal, information technology andhuman resource functions. Other costs included in general and administrative expenses are professional fees for information technology services, externallegal fees, consulting and accounting services as well as bad debt expense, certain facility and insurance costs, including director and officer liabilityinsurance.General and administrative expense is summarized by segment as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S.$49,269 $37,389 $42,091 $11,880 31.8 % $(4,702) (11.2)%International573 1,443 1,803 (870) (60.3)% (360) (20.0)%Total General and administrative$49,842 $38,832 $43,894 $11,010 28.4 % $(5,062) (11.5)%2017 vs. 2016The increase in U.S. segment general and administrative expense for the year ended December 31, 2017, as compared to the prior year is primarilyattributable to higher employee-related expenses, $2.6 million of debt refinancing costs, campus consolidation costs, certain contract termination charges todrive cost efficiencies and a $0.9 million land impairment charge.The decrease in International segment general and administrative expenses for the year ended December 31, 2017, as compared to the prior year isprimarily attributable to lower employee headcount and related expenses.2016 vs. 2015The decrease in the U.S. segment general and administrative expenses for the year ended December 31, 2016, as compared to the prior year is primarilydue to the $6.5 million termination fee paid to terminate the advisory services and monitoring agreement with Avista in the prior year and lower bad debtexpense. This was partially offset by higher amortization of capitalized software, increased employee related incentive costs, increased insurance costs andhigher legal fees.The decrease in the International segment general and administrative expenses for the year ended December 31, 2016, as compared to the prior year isprimarily due to lower employee headcount and related expenses.Research and DevelopmentResearch and development expenses relate primarily to the development of new products to add to our portfolio and costs related to our medical affairs,medical information and regulatory functions. We do not allocate research and development expenses incurred in the U.S. to our International segment. Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%U.S.$16,692 $11,574 $13,613 $5,118 44.2% $(2,039) (15.0)%International1,433 629 745 804 127.8% (116) (15.6)%Total Research and development$18,125 $12,203 $14,358 $5,922 48.5% $(2,155) (15.0)%2017 vs. 2016The increase in U.S. segment research and development expenses for the year ended December 31, 2017, as compared to the prior year is primarilyattributable to an increase in depreciation expense and other charges resulting from the scheduled decommissioning of certain long-lived assets associatedwith research and development operations as well as higher employee-related expenses.The increase in research and development expenses for International segment for the year ended December 31, 2017, as compared to the prior year isprimarily attributable to expenses incurred for a European Phase 4 study for one of our products.57Table of Contents2016 vs. 2015The decrease in the U.S. segment research and development expenses for the year ended December 31, 2016, as compared to the prior year is primarilydue to a reduction in depreciation expense as a result of a change in planned decommissioning of certain long-lived assets in the first quarter of 2015associated with research and development operations, partially offset by higher employee related expenses.The decrease in research and development expenses for the International segment for the year ended December 31, 2016, as compared to the prior yearis primarily due to lower expenses in Canada, as a result of the sale of our Canadian radiopharmacies.Gain on Sales of AssetsEffective January 7, 2016, our Canadian subsidiary entered into an asset purchase agreement, pursuant to which it would sell substantially all of theassets of our Canadian radiopharmacies and Gludef manufacturing and distribution business to one of our existing Canadian radiopharmacy customers. Thepurchase price for the asset sale was $9.0 million in cash and also included a working capital adjustment of $0.5 million, resulting in a pre-tax gain of$5.9 million recorded within operating income during the year ended December 31, 2016.Effective August 11, 2016, we entered into a share purchase agreement, pursuant to which we sold 100% of the stock of our Australian subsidiary to oneof our existing radiopharmacy customers. This sale included the radiopharmacy business as well as all the direct/bulk business. The sale price for the sharesale was AUD $2.0 million (approximately $1.5 million) in cash and also included a working capital receivable adjustment of approximately AUD$2.0 million (approximately $1.5 million), resulting in a pre-tax gain of $0.6 million, which was recorded within operating income during the year endedDecember 31, 2016.Interest ExpenseInterest expense for the year ended December 31, 2017 decreased $8.2 million from the prior year as a result of a comparatively lower outstandingprincipal balance on our long-term debt throughout the year resulting from voluntary prepayments on our 2015 Term Facility of $55.0 million and$20.0 million in the third and fourth quarters of 2016 and the subsequent refinancing of our 2015 Facility at the end of the first quarter of 2017.Interest expense for the year ended December 31, 2016 decreased $12.1 million from the prior year as a result of the refinancing of long-term debt at theend of the second quarter of 2015. The year ended December 31, 2016 reflects a full year at the reduced interest rate as a result of the refinancing.Furthermore, our voluntary prepayments of $55.0 million and $20.0 million in the third and fourth quarters of 2016, respectively, also contributed to thereduction in interest expense for the year ended December 31, 2016.Debt Retirement CostsFor the year ended December 31, 2016 we incurred $1.9 million in debt retirement costs related to the $75.0 million voluntary prepayments of principalon our Term Facility.Loss on Extinguishment of DebtDuring the year ended December 31, 2017, we incurred $2.4 million of losses on extinguishment of debt related to the refinancing and subsequentrepricing of our long-term debt. For the year ended December 31, 2015, we incurred a $15.5 million loss on extinguishment of debt related to the redemptionof LMI’s Notes.Other (Income) ExpenseOther (income) expense increased $8.4 million from the prior year due to an increase of $1.1 million in foreign currency gains driven by favorableforeign exchange rates relative to the prior year and a $7.3 million increase in tax indemnification income as a result of the impact of the reduction in the U.S.federal corporate tax rate pursuant to the Tax Cuts and Jobs Act enacted on December 22, 2017.For the year ended December 31, 2016, as compared to the same period in 2015, other (income) expense increased $0.3 million primarily due to a$0.9 million reduction in foreign currency losses, which was partially offset by a $0.6 million decrease in tax indemnification income.58Table of ContentsIncome Tax (Benefit) ProvisionIncome tax (benefit) provision is summarized as follows: Year EndedDecember 31, 2017 vs. 2016 2016 vs. 2015(in thousands)2017 2016 2015 Change$ Change% Change$ Change%Income tax (benefit) provision$(83,746) $1,532 $2,968 $(85,278) < (1,000)% $(1,436) (48.4)%Our benefit for income taxes in 2017 results primarily from releasing the valuation allowance previously recorded against U.S. deferred tax assets. Theoverall tax benefit in 2017 is reduced by a provision charge pertaining to the reduced U.S. federal tax rate effective January 1, 2018, which reduces ourdeferred tax asset balances at December 31, 2017. The tax benefit for 2017 is also reduced by tax expenses arising from the accrual of interest on uncertaintax positions, and small amounts of U.S. state and foreign taxes. The tax provisions recorded in 2016 and 2015 were primarily comprised of the accrual ofinterest associated with uncertain tax positions, offset by reversals of those positions as statutes lapsed or as such positions were settled during those years, aswell as taxes due in certain foreign jurisdictions where we generate taxable income.The $85.3 million increase in tax benefit for the year ended December 31, 2017 primarily reflects the current year benefit of the release of the valuationallowance against U.S. deferred tax assets offset by a current year provision reflecting the reduction in value of those assets recorded upon the enactment ofthe Tax Cuts and Jobs Act of 2017. The $1.4 million decrease in the tax provision for the year ended December 31, 2016 when compared to the prior year,primarily reflected an increase in the amount of statute lapses and consequent contingent tax liability releases in 2016.We regularly assess our ability to realize our deferred tax assets, and that assessment requires significant management judgment. In determining whetherour deferred tax assets are more-likely-than-not realizable, we evaluated all available positive and negative evidence, and weighed that evidence on itsobjective verifiability and expected impact. Historically, we considered our history of net operating losses, customer concentration and contractual risk,DEFINITY supplier risks, the risk of Moly supply availability and cost, and certain product development risk, which resulted in our recording of a fullvaluation allowance against our domestic net deferred tax assets beginning in the year ended December 31, 2011, and each year thereafter through the yearended December 31, 2016. We were profitable on a cumulative basis for the three-year period ended December 31, 2017, but all of that profitability wasachieved during 2017 and 2016.During the fourth quarter of 2017, we determined based on our consideration of the weight of positive and negative evidence that there was sufficientpositive evidence that our federal and state deferred tax assets are more-likely-than-not realizable as of December 31, 2017. Our conclusion was primarilydriven by the achievement of a sustained level of profitability, the expectation of sustained future profitability, and mitigating factors related to externalsupplier and customer risk sufficient to outweigh the available negative evidence. Accordingly, we released the valuation allowance previously recordedagainst our domestic net deferred tax assets resulting in an income tax benefit of $141.1 million. We will continue to assess the level of the valuationallowance required and if the weight of negative evidence exists in future periods to again support the recording of a partial or full valuation allowanceagainst our U.S. deferred tax assets, that would likely have a material negative impact on our results of operations in that future period.We continue to maintain a valuation allowance of $5.4 million on the portion of our foreign net deferred tax assets generated in jurisdictions with aninsufficient history of cumulative profitability.Our effective tax rate for each reporting period is presented as follows: Year EndedDecember 31, 2017 2016 2015Effective tax rate(211.3)% 5.4% (25.2)%Liquidity and Capital Resources59Table of ContentsCash FlowsThe following table provides information regarding our cash flows: Year EndedDecember 31,(in thousands) 2017 2016 2015Net cash provided by operating activities $54,777 $49,642 $21,762Net cash (used in) provided by investing activities $(16,309) $3,281 $(13,151)Net cash (used in) provided by financing activities $(13,450) $(30,217) $999Net Cash Provided by Operating ActivitiesCash provided by operating activities of $54.8 million for the year ended December 31, 2017 was driven primarily by net income of $123.4 millionplus $19.2 million of depreciation, amortization and accretion expense, $5.9 million of stock-based compensation expense, offset by deferred taxes of$86.9 million related to the release of our valuation on our domestic net deferred tax assets during the year. In addition, we had an increase in our taxindemnification receivable of $8.4 million resulting primarily from the impact of recent U.S. federal tax legislation. These net sources of cash were offset by anet decrease of $8.3 million related to movements in our working capital accounts during the period. The overall decreases in cash from our working capitalaccounts were primarily driven by higher accounts receivable related to increases in revenues to certain major customers and the timing of inventorypurchases during the period offset by increases in accrued expenses primarily due to the timing of payments.Cash provided by operating activities of $49.6 million for the year ended December 31, 2016 was driven primarily by net income of $26.8 million plus$18.3 million of depreciation, amortization and accretion expense and $1.9 million of debt retirement costs offset by the gain on sale of assets of $6.4million. In addition, our increase in cash from working capital during the year ended December 31, 2016, was driven primarily by an increase of $5.7 millionin accounts payable due to the timing of payment runs and a $1.3 million increase in accrued expenses primarily due to an increase in accrued bonus, offsetby a $3.6 million increase in inventory due to the timing of inventory receipts and a $1.1 million increase in accounts receivable due to increased sales.Cash provided by operating activities of $21.8 million for the year ended December 31, 2015 was primarily driven by a net loss of $14.7 million, whichwas offset by $19.7 million of depreciation, amortization, and accretion expense and $15.5 million loss on extinguishment of debt. These net sources of cashwere offset by a decrease in cash from working capital. Our working capital decrease was driven primarily by a $4.0 million decrease in accrued expenses as aresult of less interest following the debt refinancing in June 2015, a $1.7 million decrease in accounts payable due to the timing of payment runs and a$2.6 million increase in inventory due to timing of production and receipt of inventory.Net Cash (Used in) Provided By Investing ActivitiesNet cash used in investing activities during the year ended December 31, 2017 is primarily attributable to capital expenditures of $17.5 million offsetby the cash proceeds of $1.2 million received from the sale of assets from our Australian radiopharmacy business during the third quarter of 2016.Net cash provided by investing activities during the year ended December 31, 2016 was primarily due to cash proceeds of $10.6 million received fromthe sales of our Canadian and Australian radiopharmacy businesses, offset by capital expenditures of $7.4 million.Net cash used in investing activities during the year ended December 31, 2015 reflects capital expenditures during the year of $13.2 million.Net Cash (Used in) Provided by Financing ActivitiesNet cash used in financing activities during the year ended December 31, 2017 is primarily attributable to the net cash outflow of $11.9 million inconnection with our refinancing of our previous $365 million seven-year term loan agreement with a new five-year $275 million term loan facility.Net cash used in financing activities during the year ended December 31, 2016 was primarily used to repay $55.0 million of the outstanding principalbalance of our $365 million Term Facility with net proceeds of $39.9 million associated with the completion of a follow-on underwritten primary offering,and $15.1 million from cash on hand.60Table of ContentsDuring the year ended December 31, 2015, we generated $421.3 million from the net proceeds of the Term Facility together with the net proceeds fromthe initial public offering. The net proceeds generated from the Term Facility and the initial public offering were used to repay in full the aggregate principalamount of the $400 million Notes, pay related premiums and expenses and pay down the $8.0 million of outstanding borrowings under the RevolvingFacility, which totaled $417.8 million.External Sources of LiquidityOn June 30, 2015, we completed our initial public offering, entered into a $365 million seven-year term facility (the “2015 Term Facility”) andamended and restated our revolving facility (the “2015 Revolving Facility”) that had a borrowing capacity of $50.0 million.In September 2016, we completed a follow-on underwritten offering of 5,200,000 shares of common stock and utilized the net proceeds to us from thisoffering, combined with cash on hand, to prepay $55.0 million of the principal balance of our Term Facility. In November 2016, we completed a secondfollow-on underwritten offering that included 1,000,000 shares of common stock offered by us and utilized the net proceeds to us from this offering,combined with cash on hand, to prepay $20.0 million of the principal balance of our 2015 Term Facility.In March 2017, we refinanced the 2015 Term Facility with a new five-year $275.0 million term loan facility (the “2017 Term Facility” and the loansthereunder, the “Term Loans”). In addition, we replaced our 2015 Revolving Facility with a new $75.0 million five-year revolving credit facility (the “2017Revolving Facility” and, together with the 2017 Term Facility, the “2017 Facility”). The terms of the 2017 Facility are set forth in that certain Amended andRestated Credit Agreement, dated as of March 30, 2017 (the “Credit Agreement”), by and among us, the lenders from time to time party thereto and JPMorganChase Bank, N.A., as administrative agent and collateral agent. The 2017 Term Facility was issued net of a $0.7 million discount. We have the right torequest an increase to the 2017 Term Facility or request the establishment of one or more new incremental term loan facilities, in an aggregate principalamount of up to $75.0 million, plus additional amounts, in certain circumstances.We used the net proceeds of the 2017 Term Facility, together with approximately $15.3 million of cash on hand, to refinance in full the aggregateremaining principal amount of the loans outstanding under the 2015 Term Facility and pay related interest, transaction fees and expenses. No amounts wereoutstanding under the 2015 Revolving Facility at that time.On November 29, 2017, we entered into Amendment No. 1 (the “Repricing Amendment”) to the 2017 Facility to, among other things, (i) reduce theapplicable interest rate margins with respect to the LIBOR and Base Rate Term Loans (as defined in the Credit Agreement) and (ii) reduce the applicableinterest rate margins with respect to the LIBOR and Base Rate Revolving Loans (as defined in the Credit Agreement).The Term Loans under the 2017 Term Facility bear interest, with pricing based from time to time at our election at (i) LIBOR plus a spread of 3.75% or(ii) the Base Rate plus a spread of 2.75%. Interest is payable (i) with respect to LIBOR Term Loans, at the end of each Interest Period (as defined in the CreditAgreement) and (ii) with respect to Base Rate Term Loans, at the end of each quarter. At December 31, 2017, our interest rate under the 2017 Term Facilitywas 5.3%. As of December 31, 2017, the principal balance outstanding on our 2017 Term Facility was $272.9 million.We are permitted to voluntarily prepay the Term Loans, in whole or in part. The 2017 Term Facility requires us to make mandatory prepayments of theoutstanding Term Loans in certain circumstances. The 2017 Term Facility amortizes at 1.00% per year until its June 30, 2022 maturity date.Under the terms of the 2017 Revolving Facility, the lenders thereunder agreed to extend credit to us from time to time until March 30, 2022 (the“Revolving Termination Date”) consisting of revolving loans (the “Revolving Loans” and, together with the Term Loans, the “Loans”) in an aggregateprincipal amount not to exceed $75.0 million (the “Revolving Commitment”) at any time outstanding. The 2017 Revolving Facility includes a$20.0 million sub-facility for the issuance of letters of credit (the “Letters of Credit”). The Letters of Credit and the borrowings under the 2017 RevolvingFacility are expected to be used for working capital and other general corporate purposes.The Revolving Loans under the 2017 Revolving Facility bear interest, with pricing based from time to time at our election at (i) LIBOR plus a spread of3.00% or (ii) the Base Rate (as defined in the Credit Agreement) plus a spread of 2.00%. The 2017 Revolving Facility also includes an unused line fee, whichis set at 0.375% while our secured leverage ratio (as defined in the Credit Agreement) is greater than 3.00 to 1.00 and 0.25% when our secured leverage ratiois less than or equal to 3.00 to 1.00.61Table of ContentsWe are permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in each case,without premium or penalty. On any business day on which the total amount of outstanding Revolving Loans and Letters of Credit exceeds the totalRevolving Commitment, we must prepay the Revolving Loans in an amount equal to such excess. The 2017 Facility contains a number of affirmative,negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. The 2017 Facility requires us to be inquarterly compliance, measured on a trailing four quarter basis, with a financial covenant. The maximum consolidated leverage ratio permitted by thefinancial covenant is displayed in the table below:2017 Facility Financial CovenantsPeriodConsolidatedLeverage RatioQ4 2017 through Q1 20185.00 to 1.00Q2 2018 through Q1 20194.75 to 1.00Thereafter4.50 to 1.00The 2017 Facility contains usual and customary restrictions on our ability and that of our subsidiaries to: (i) incur additional indebtedness (ii) createliens; (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; (iv) sell certain assets; (v) pay dividends on, repurchase or makedistributions in respect of capital stock or make other restricted payments; (vi) make certain investments; (vii) repay subordinated indebtedness prior to statedmaturity; and (viii) enter into certain transactions with its affiliates.Upon an event of default, the administrative agent under the Credit Agreement will have the right to declare the Loans and other obligationsoutstanding immediately due and payable and all commitments immediately terminated or reduced.The 2017 Facility is guaranteed by Lantheus Holdings and Lantheus MI Real Estate, LLC (“LMI-RE”), and obligations under the 2017 Facility aregenerally secured by first priority liens over substantially all of the assets of each of LMI, Lantheus Holdings and LMI-RE (subject to customary exclusionsset forth in the transaction documents) owned as of March 30, 2017 or thereafter acquired.Our ability to fund our future capital needs will be affected by our ability to continue to generate cash from operations and may be affected by ourability to access the capital markets, money markets, or other sources of funding, as well as the capacity and terms of our financing arrangements.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. Theseactions may include prepayments of our term loans or other retirements or refinancing of outstanding debt, privately negotiated transactions or otherwise.The amount of debt that may be retired, if any, would be decided at the sole discretion of our Board of Directors and will depend on market conditions, ourcash position and other considerations.Funding RequirementsOur future capital requirements will depend on many factors, including:•The pricing environment and the level of product sales of our currently marketed products, particularly DEFINITY and any additional productsthat we may market in the future;•Revenue mix shifts and associated volume and selling price changes that could result from contractual status changes with key customers andadditional competition;•Our investment in the further clinical development and commercialization of existing products and development candidates;•The costs of investing in our facilities, equipment and technology infrastructure;•The extent to which we acquire or invest in new products, businesses and technologies;•The costs and timing of establishing manufacturing and supply arrangements for commercial supplies of our products;•Our ability to have product manufactured and released from JHS and other manufacturing sites in a timely manner in the future;•The costs of further commercialization of our existing products, particularly in international markets, including product marketing, sales anddistribution and whether we obtain local partners to help share such commercialization costs;•The extent to which we choose to establish collaboration, co-promotion, distribution or other similar arrangements for our marketed products;62Table of Contents•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; and•The cost of interest on any additional borrowings which we may incur under our financing arrangements.Until we successfully become dual sourced for our principal products, we are vulnerable to future supply shortages. Disruption in the financialperformance could also occur if we experience significant adverse changes in product or customer mix, broad economic downturns, adverse industry orcompany conditions or catastrophic external events, including natural disasters and political or military conflict. If we experience one or more of these eventsin the future, we may be required to implement additional expense reductions, such as a delay or elimination of discretionary spending in all functional areas,as well as scaling back select operating and strategic initiatives.If our capital resources become insufficient to meet our future capital requirements, we would need to finance our cash needs through public or privateequity offerings, assets securitizations, debt financings, sale-leasebacks or other financing or strategic alternatives, to the extent such transactions arepermissible under the covenants of our Credit Agreement. Additional equity or debt financing, or other transactions, may not be available on acceptableterms, if at all. If any of these transactions require an amendment or waiver under the covenants in our Credit Agreement, which could result in additionalexpenses associated with obtaining the amendment or waiver, we will seek to obtain such a waiver to remain in compliance with those covenants. However,we cannot be assured that such an amendment or waiver would be granted, or that additional capital will be available on acceptable terms, if at all.At December 31, 2017, our only current committed external source of funds is our borrowing availability under our 2017 Revolving Facility. We had$76.3 million of cash and cash equivalents at December 31, 2017. Our 2017 Facility contains a number of affirmative, negative, reporting and financialcovenants, in each case subject to certain exceptions and materiality thresholds. Incremental borrowings under the 2017 Revolving Facility may affect ourability to comply with the covenants in the 2017 Facility, including the financial covenant restricting total net leverage. Accordingly, we may be limited inutilizing the full amount of our 2017 Revolving Facility as a source of liquidity.Based on our current operating plans, we believe that our existing cash and cash equivalents, results of operations and availability under our 2017Revolving Facility will be sufficient to continue to fund our liquidity requirements for the foreseeable future.63Table of ContentsContractual ObligationsContractual 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 following tablesummarizes our contractual obligations as of December 31, 2017: Payments Due by Period(in thousands)Total Less than1 Year 1 - 3 Years 3 -5 Years More than5 YearsDebt obligations (principal)$272,937 $2,750 $5,500 $264,687 $—Interest on debt obligations(a)63,588 14,651 28,896 20,041 —Operating lease obligations(b)1,928 422 624 470 412Purchase obligations(c)5,250 3,500 1,750 — —Capital lease obligations269 124 145 — —Other long-term liabilities(d)— — — — —Asset retirement obligations(e)— — — — —Total contractual obligations$343,972 $21,447 $36,915 $285,198 $412________________________________(a)Amount relates to the minimum interest under our 2017 Term Facility.(b)Operating leases include minimum payments under leases for our facilities and certain equipment.(c)Excludes purchase orders for inventory in the normal course of business.(d)Our other long-term liabilities in the consolidated balance sheet include unrecognized tax benefits and related interest and penalties. As ofDecember 31, 2017, we had unrecognized tax benefits of $36.3 million, which included interest and penalties, classified as noncurrent liabilities. Atthis time, we are unable to make a reasonably reliable estimate of the timing of payments in individual years in connection with these tax liabilities;therefore, such amounts are not included in the above contractual obligation table.(e)We have excluded asset retirement obligations from the table above due to the uncertainty of the timing of the future cash outflows related to thedecommissioning of our radioactive operations. As of December 31, 2017, the liability, which was approximately $10.4 million, was measured at thepresent value of the obligation expected to be incurred of approximately $26.9 million.Off-Balance Sheet ArrangementsWe are required to provide the NRC and Massachusetts Department of Public Health financial assurance demonstrating our ability to fund thedecommissioning of our North Billerica, Massachusetts production facility upon closure, though we do not intend to close the facility. We have providedthis financial assurance in the form of a $28.2 million surety bond.Since inception, we have not engaged in any other off-balance sheet arrangements, including structured finance, special purpose entities or variableinterest entities.Effects of InflationWe 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 those items will not materially affectour operations. However, the rate of inflation affects our expenses, such as those for employee compensation and contract services, which could increase ourlevel of expenses and the rate at which we use our resources. While we generally believe that we will be able to offset the effect of price-level changes byadjusting our product prices and implementing operating efficiencies, any material unfavorable changes in price levels could have a material adverse effecton our financial condition, results of operations and cash flows.Recent Accounting StandardsRefer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying consolidated financial statements located under Item 8 of thisAnnual Report on Form 10-K for information regarding recently issued accounting standards that may have a significant impact on our business.64Table of ContentsCritical Accounting Policies and EstimatesThe discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have beenprepared in accordance with U.S. GAAP. These financial statements require us to make estimates and judgments that affect our reported assets and liabilities,revenues and expenses, and other financial information. Actual results may differ materially from these estimates under different assumptions and conditions.In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.We believe the following represent our critical accounting policies and estimates used in the preparation of our financial statements.Revenue RecognitionOur revenue is generated from the sales of our diagnostic imaging agents to distributors, radiopharmacies and directly to hospitals and clinics. Werecognize revenue when evidence of an arrangement exists, title has passed, substantially all the risks and rewards of ownership have transferred to thecustomer, the selling price is fixed and determinable and collectability is reasonably assured. For transactions for which revenue recognition criteria have notyet been met, the respective amounts are recorded as deferred revenue until that point in time when criteria are met and revenue can be recognized. Revenueis recognized net of reserves, which consist of allowances for returns and rebates. The estimates of these allowances are based on historical sales volumes andmix and require assumptions and judgments to be made in order to make those estimates. In the event that the sales mix is different from our estimates, wemay be required to pay higher or lower returns and sales rebates than we previously estimated. Any changes to these estimates are recorded in the currentperiod. During the years ended December 31, 2017, 2016 and 2015 changes in estimates of these allowances were not material.InventoryInventory includes 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 title to the product. We assess the recoverability of inventory to determine whether adjustments for impairmentare required. Inventory that is in excess of future requirements is written down to its estimated net realizable value-based upon estimates of forecasted demandfor our products. The estimates of demand require assumptions to be made of future operating performance and customer demand. If actual demand is lessthan what has been forecasted by management, additional inventory write downs may be required.Goodwill, Intangibles and Long-Lived AssetsGoodwill 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 it may be impaired. We have elected to perform the annual test of goodwill impairment as of October 31 of each year. All goodwill has beenallocated to the U.S. reporting unit.In performing our annual assessment, we are permitted to first perform a qualitative test and if necessary, perform a quantitative test. To conduct thequantitative impairment test of goodwill, we compare the fair value of a reporting unit to its carrying value. If the reporting unit’s carrying value exceeds itsfair value, we would record an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. We estimate the fair value ofour reporting unit using discounted cash flow or other valuation models, such as comparative transactions and market multiples.In performing the annual goodwill impairment assessment in the fourth quarter of 2017, we assessed qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting units were less than their carrying values. We determined that the fair value of the reporting unit wassignificantly in excess of the carrying value, accordingly, we did not perform a two-step goodwill impairment test. We did not recognize any goodwillimpairment charges during the years ended December 31, 2017, 2016 and 2015.We test intangible and long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset orgroup 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 to futureundiscounted net cash flows expected to be generated by the asset. If those assets are considered to be impaired, the impairment equals the amount by whichthe carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded as permanent reductions in the carrying amount of theassets. Long-lived assets, other than goodwill and other intangible assets, which are held for sale, are recorded at the lower of the carrying value or the fairmarket value less the estimated cost to sell.Intangible assets, consisting of patents, trademarks and customer relationships related to our products are amortized in a method equivalent to theestimated utilization of the economic benefit of the asset. Trademarks and patents are amortized on a straight-line basis, and customer relationships areamortized on an accelerated basis.65Table of ContentsIncome TaxesThe provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. The provision for incometaxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differencesbetween the financial and tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates thatapply to taxable income in effect for the years in which those tax attributes are expected to be recovered or paid, and are adjusted for changes in tax rates andtax laws when such changes are enacted.On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act of 2017 (the “Act”). The Act is significant and has wide-ranging effects.We are still studying all of the ramifications of the Act, but we believe the primary material impact to the Company will be on our ending net U.S. deferredtax assets, which are reduced as a result of the reduction in U.S. corporate tax rates from 35% to 21% for years beginning on or after January 1, 2018. Werecorded tax expense of $45.1 million during the year ended December 31, 2017, to reflect the impact of the Act on our ending net deferred tax assetscarrying value. We reviewed recent guidance issued by the U.S. Treasury concerning the repatriation transition tax. The repatriation transition tax is expectedto impact U.S. entities with accumulated yet unrepatriated or 'untaxed' foreign earnings. As of December 31, 2017, we had no accumulated unrepatriatedforeign earnings, and therefore anticipate no significant impact from the new provisions of the Act concerning the repatriation transition tax.We regularly assess our ability to realize our deferred tax assets, and that assessment requires significant management judgment. In determining whetherour deferred tax assets are more-likely-than-not realizable, we evaluated all available positive and negative evidence, and weighed that evidence on itsobjective verifiability and expected impact. Historically, we considered our history of net operating losses, customer concentration and contractual risk,DEFINITY supplier risks, the risk of Moly supply availability and cost, and certain product development risk, which resulted in our recording of a fullvaluation allowance against our domestic net deferred tax assets beginning in the year ended December 31, 2011, and each year thereafter through the yearended December 31, 2016. We were profitable on a cumulative basis for the three-year period ended December 31, 2017, but all of that profitability wasachieved during 2017 and 2016.During the fourth quarter of 2017, we determined based on our consideration of the weight of positive and negative evidence that there was sufficientpositive evidence that our federal and state deferred tax assets are more-likely-than-not realizable as of December 31, 2017. Our conclusion was primarilydriven by the achievement of a sustained level of profitability, the expectation of sustained future profitability, and mitigating factors related to externalsupplier and customer risk sufficient to outweigh the available negative evidence. Accordingly, we released the valuation allowance previously recordedagainst our domestic net deferred tax assets resulting in an income tax benefit of $141.1 million. We will continue to assess the level of the valuationallowance required and if the weight of negative evidence exists in future periods to again support the recording of a partial or full valuation allowanceagainst our U.S. deferred tax assets, that would likely have a material negative impact on our results of operations in that future period.We continue to maintain a valuation allowance of $5.4 million on the portion of our foreign net deferred tax assets generated in jurisdictions with aninsufficient history of cumulative profitability.We account for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amounts recognized inthe financial statements are recorded as adjustments to income taxes payable or receivable, or adjustments to deferred taxes, or both. We record relatedinterest and penalties to income tax (benefit) provision.We have a tax indemnification agreement with BMS related to certain contingent tax obligations arising prior to the acquisition of the business fromBMS. The tax obligations are recognized in liabilities and the tax indemnification receivable is recognized within other noncurrent assets. The changes inthe tax indemnification asset are recognized within other income in the statements of operations, and the changes in the related liabilities are recorded withinthe tax provision. 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 us, there is no net effect on earnings related to these liabilitiesand no net cash outflows.The calculation of our tax liabilities involves certain estimates, assumptions and the application of complex tax regulations in numerous jurisdictionsworldwide. Any material change in our estimates or assumptions, or the tax regulations, may have a material impact on our results of operations.Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe 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 and have not historically used derivative financial instruments or other financial instruments to hedge theseeconomic exposures.66Table of ContentsInterest Rate RiskUnder our 2017 Facility, we have substantial variable rate debt. Fluctuations in interest rates may affect our business, financial condition, results ofoperations and cash flows. As of December 31, 2017, we had $272.9 million outstanding principal under our 2017 Term Facility with variable interest rates.Furthermore, we are subject to interest rate risk in connection with our 2017 Revolving Facility, which is variable rate indebtedness. Interest ratechanges could increase the amount of our interest payments and thus negatively impact our future earnings and cash flows. As of December 31, 2017, therewas availability of $75.0 million on the 2017 Revolving Facility. Any increase in the interest rate under the 2017 Revolving Facility may have a negativeimpact on our future earnings to the extent we have outstanding borrowings under the 2017 Revolving Facility. The effect of a 100 basis points adversechange in market interest rates on our 2017 Term Facility, in excess of applicable minimum floors, on our interest expense would be approximately $2.8million.Historically, we have not used derivative financial instruments or other financial instruments to hedge such economic exposures.Foreign Currency RiskWe face exposure to movements in foreign currency exchange rates whenever we, or any of our subsidiaries, enter into transactions with third partiesthat are denominated in currencies other than ours, or that subsidiary’s, functional currency. Intercompany transactions between entities that use differentfunctional currencies also expose us to foreign currency risk.During the years ended December 31, 2017, 2016 and 2015, the net impact of foreign currency changes on transactions was a gain of $0.3 million andlosses of $0.9 million and $1.8 million, respectively. Historically, we have not used derivative financial instruments or other financial instruments to hedgethese economic exposures.The Canadian dollar presents the primary currency risk on our earnings. At December 31, 2017, a hypothetical 10% change in value of the U.S. dollarrelative to the Canadian dollar would not have materially affected our financial instruments.67Table of ContentsItem 8. Financial Statements and Supplementary DataLANTHEUS HOLDINGS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm69Consolidated Balance Sheets as of December 31, 2017 and 201670Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 201571Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017, 2016 and 201572Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2017, 2016 and 201573Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 201574Notes to Consolidated Financial Statements7668Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofLantheus Holdings, Inc.North Billerica, MassachusettsOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Lantheus Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2017and 2016, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of thethree years in the period ended December 31, 2017, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operationsand its cash flows for each of the three years in the period ended December 31, 2017, in conformity with the accounting principles generally accepted in theUnited States of America.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control overfinancial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Deloitte & Touche LLPBoston, MassachusettsFebruary 26, 2018We have served as the Company’s auditor since 2007.69Table of ContentsLantheus Holdings, Inc.Consolidated Balance Sheets(in thousands, except par value) December 31, 2017 2016Assets Current assets Cash and cash equivalents$76,290 $51,178Accounts receivable, net40,259 36,818Inventory26,080 17,640Other current assets5,221 5,183Total current assets147,850 110,819Property, plant & equipment, net92,999 94,187Intangibles, net11,798 15,118Goodwill15,714 15,714Deferred tax assets, net87,010 65Other long-term assets28,487 19,995Total assets$383,858 $255,898Liabilities and stockholders’ equity (deficit) Current liabilities Current portion of long-term debt$2,750 $3,650Revolving line of credit— —Accounts payable17,464 18,940Accrued expenses and other liabilities26,536 21,249Total current liabilities46,750 43,839Asset retirement obligations10,412 9,370Long-term debt, net265,393 274,460Other long-term liabilities38,012 34,745Total liabilities360,567 362,414Commitments and contingencies (see Note 14) Stockholders’ equity (deficit) Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued andoutstanding)— —Common stock ($0.01 par value, 250,000 shares authorized; 37,765 and 36,756shares issued and outstanding, respectively)378 367Additional paid-in capital232,960 226,462Accumulated deficit(209,013) (332,398)Accumulated other comprehensive loss(1,034) (947)Total stockholders’ equity (deficit)23,291 (106,516)Total liabilities and stockholders’ equity (deficit)$383,858 $255,898The accompanying notes are an integral part of these consolidated financial statements.70Table of ContentsLantheus Holdings, Inc.Consolidated Statements of Operations(in thousands, except per share data) Year EndedDecember 31, 2017 2016 2015Revenues$331,378 $301,853 $293,461Cost of goods sold169,243 164,073 157,939Gross profit162,135 137,780 135,522Operating expenses Sales and marketing42,315 36,542 34,740General and administrative49,842 38,832 43,894Research and development18,125 12,203 14,358Total operating expenses110,282 87,577 92,992Gain on sales of assets— 6,385 —Operating income51,853 56,588 42,530Interest expense18,410 26,618 38,715Debt retirement costs— 1,896 —Loss on extinguishment of debt2,442 — 15,528Other (income) expense(8,638) (220) 65Income (loss) before income taxes39,639 28,294 (11,778)Income tax (benefit) provision(83,746) 1,532 2,968Net income (loss)$123,385 $26,762 $(14,746)Net income (loss) per common share: Basic$3.31 $0.84 $(0.60)Diluted$3.17 $0.82 $(0.60)Weighted-average common shares outstanding: Basic37,276 32,044 24,440Diluted38,892 32,656 24,440The accompanying notes are an integral part of these consolidated financial statements.71Table of ContentsLantheus Holdings, Inc.Consolidated Statements of Comprehensive Income (Loss)(in thousands) Year EndedDecember 31, 2017 2016 2015Net income (loss)$123,385 $26,762 $(14,746)Other comprehensive (loss) income: Reclassification adjustment for gains on sales of assets included in netincome— 435 —Foreign currency translation(87) 603 (355)Total other comprehensive (loss) income(87) 1,038 (355)Comprehensive income (loss)$123,298 $27,800 $(15,101)The accompanying notes are an integral part of these consolidated financial statements.72Table of ContentsLantheus Holdings, Inc.Consolidated Statements of Changes in Stockholders’ Equity (Deficit)(in thousands) Common Stock TreasuryStock AdditionalPaid-InCapital AccumulatedDeficit AccumulatedOtherComprehensiveLoss TotalStockholders’Equity(Deficit) Shares Amount Shares Amount Balance, January 1, 2015 18,081 $181 (5) $(106) $106,699 $(344,414) $(1,630) $(239,270)Issuance of common stock from initial publicoffering, net of $6,362 issuance costs 12,257 122 — — 67,055 — — 67,177Treasury stock retired — — 5 106 (106) — — —Net loss — — — — — (14,746) — (14,746)Other comprehensive loss — — — — — — (355) (355)Issuance of common stock 40 — — — — — — —Shares withheld to cover taxes (13) — — — (97) — — (97)Stock-based compensation — — — — 2,002 — — 2,002Balance, December 31, 2015 30,365 303 — — 175,553 (359,160) (1,985) (185,289)Issuance of common stock, net of $2,080issuance costs 6,200 62 — — 48,758 — — 48,820Net income — — — — — 26,762 — 26,762Other comprehensive income — — — — — — 1,038 1,038Stock option exercises 41 1 — — 230 — — 231Vesting of restricted stock awards 214 2 — — (2) — — —Shares withheld to cover taxes (64) (1) — — (601) — — (602)Stock-based compensation — — — — 2,524 — — 2,524Balance, December 31, 2016 36,756 367 — — 226,462 (332,398) (947) (106,516)Net income — — — — — 123,385 — 123,385Other comprehensive loss — — — — — — (87) (87)Stock option exercises and employee stockplan purchases 478 5 — — 3,429 — — 3,434Vesting of restricted stock awards 744 8 — — (8) — — —Shares withheld to cover taxes (214) (2) — — (2,851) — — (2,853)Stock-based compensation — — — — 5,928 — — 5,928Balance, December 31, 2017 37,765 $378 — $— $232,960 $(209,013) $(1,034) $23,291The accompanying notes are an integral part of these consolidated financial statements.73Table of ContentsLantheus Holdings, Inc.Consolidated Statements of Cash Flows(in thousands) Year EndedDecember 31, 2017 2016 2015Operating activities Net income (loss)$123,385 $26,762 $(14,746)Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation, amortization and accretion19,231 18,263 19,651Amortization of debt related costs1,361 1,603 2,431Write-off of deferred offering and financing costs— — 236Provision for bad debt136 53 773Provision for excess and obsolete inventory1,215 1,342 1,359Stock-based compensation5,928 2,524 2,002Gain on sales of assets— (6,385) —Loss on impairment of land912 — —Loss on extinguishment of debt and debt retirement costs2,442 1,896 15,528Deferred taxes(86,946) (155) 99Long-term income tax receivable(8,413) (200) 230Long-term income tax payable and other long-term liabilities2,793 565 638Other1,049 1,284 1,795Increases (decreases) in cash from operating assets and liabilities: Accounts receivable(3,407) (1,059) (14)Inventory(9,620) (3,626) (2,609)Other current assets(388) (155) (132)Accounts payable604 5,700 (1,680)Income taxes(30) (112) 187Accrued expenses and other liabilities4,525 1,342 (3,986)Net cash provided by operating activities54,777 49,642 21,762Investing activities Capital expenditures(17,543) (7,398) (13,151)Proceeds from sale of assets1,234 10,605 —Other— 74 —Net cash (used in) provided by investing activities(16,309) 3,281 (13,151)Financing activities Proceeds from issuance of common stock187 50,900 73,539Payments for public offering costs(74) (2,006) (6,925)Proceeds from issuance of long-term debt274,313 — 360,438Payments on long-term debt(286,694) (78,729) (1,900)Payments on senior notes— — (400,000)Payment for call premium on senior notes— — (9,752)Deferred financing costs(1,576) (11) (6,304)Net movement in line of credit— — (8,000)Proceeds from stock option exercises3,247 231 —Payments for minimum statutory tax withholding related to net share settlement of equity awards(2,853) (602) (97)Net cash (used in) provided by financing activities(13,450) (30,217) 999Effect of foreign exchange rates on cash and cash equivalents94 (124) (753)Net increase in cash and cash equivalents25,112 22,582 8,857Cash and cash equivalents, beginning of year51,178 28,596 19,739Cash and cash equivalents, end of year$76,290 $51,178 $28,59674Table of Contents Year EndedDecember 31, 2017 2016 2015Supplemental disclosure of cash flow information Cash paid during the period for: Interest$16,653 $24,441 $40,788Income taxes, net of refunds of $17, $82 and $363, respectively$106 $265 $174Schedule of non-cash investing and financing activities Additions of property, plant & equipment included in liabilities$2,738 $4,990 $1,125Receivable in connection with sale of Australian subsidiary$— $1,479 $—The accompanying notes are an integral part of these consolidated financial statements.75Table of ContentsLantheus Holdings, Inc.Notes to Consolidated Financial Statements1. Description of BusinessLantheus Holdings, Inc., a Delaware corporation, is the parent company of Lantheus Medical Imaging, Inc. (“LMI”), also a Delaware corporation.The Company develops, manufactures and commercializes innovative diagnostic medical imaging agents and other products that assist clinicians inthe diagnosis and treatment of cardiovascular and other diseases. The Company’s commercial products are used by cardiologists, nuclear physicians,radiologists, internal medicine physicians, sonographers and technologists working in a variety of clinical settings. The Company sells its products toradiopharmacies, integrated delivery networks, hospitals, clinics and group practices. The Company sells its products globally and has operations in the U.S.,Puerto Rico and Canada and third-party distribution relationships in Europe, Canada, Australia, Asia-Pacific and Latin America.The Company has a portfolio of nine commercial products, which are diversified across a range of imaging modalities. The Company’s imaging agentsinclude an ultrasound contrast agent and medical radiopharmaceuticals (including Technetium generators), including the following:•DEFINITY is the leading ultrasound contrast imaging agent used by cardiologists and sonographers during cardiac ultrasound, or echocardiography,exams based on revenue and usage. DEFINITY is an injectable agent that, in the U.S., is indicated for use in patients with suboptimalechocardiograms to assist in the visualization of the left ventricle, the main pumping chamber of the heart. The use of DEFINITY inechocardiography allows physicians to significantly improve their assessment of the function of the left ventricle.•TechneLite is a self-contained system, or generator, of Technetium (Tc99m), a radioisotope with a six hour half-life, used by radiopharmacies toprepare various nuclear imaging agents.•Xenon Xe 133 Gas (“Xenon”) is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also cerebral blood flow.•Neurolite is an injectable, Technetium-labeled imaging agent used with Single Photon Emission Computed Tomography (“SPECT”) technology toidentify the area within the brain where blood flow has been blocked or reduced due to stroke.•Cardiolite is an injectable, Technetium-labeled imaging agent, also known by its generic name sestamibi, used with SPECT technology inmyocardial perfusion imaging (“MPI”) procedures that assess blood flow distribution to the heart.In the U.S., the Company sells DEFINITY through its direct sales team that calls on healthcare providers in the echocardiography space, as well as grouppurchasing organizations and integrated delivery networks. The Company’s radiopharmaceutical products are primarily distributed through third-partycommercial radiopharmacies.The Company’s International operations consist of sales directly to end users through its wholly-owned radiopharmacy in Puerto Rico and salesthrough the Company’s distributors in Europe, Canada, Australia, Asia-Pacific and Latin America.2. Summary of Significant Accounting PoliciesBasis of Presentation and Principles of ConsolidationThe accompanying consolidated financial statements have been prepared 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 direct and indirect wholly-ownedsubsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.ReclassificationsCertain immaterial reclassifications have been made to conform the prior year consolidated financial statements and notes to the current yearpresentation.76Table of ContentsUse of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptionsthat affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues andexpenses during the reporting period. The more significant estimates reflected in the Company’s consolidated financial statements include, but are notlimited to, certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirementobligations, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities and accrued expenses. Actual results couldmaterially differ from those estimates or assumptions.Revenue RecognitionThe Company recognizes revenue when evidence of an arrangement exists, title has passed, the risks and rewards of ownership have transferred to thecustomer, the selling price is fixed and determinable, and collectability is reasonably assured. For transactions for which all revenue recognition criteria havenot yet been met, the respective amounts are recorded as deferred revenue until such point in time all criteria have been met and revenue can be recognized.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 the deliveredelement has stand-alone value to the customer. The arrangement’s consideration is then allocated to each separate unit of accounting based on the relativeselling price of each deliverable. The estimated selling price of each deliverable is determined using the following hierarchy of values: (i) vendor-specificobjective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price. The best estimate of selling price reflects theCompany’s best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis. The considerationallocated to each unit of accounting is then recognized as the related goods or services are delivered, limited to the consideration that is not contingent uponfuture deliverables. Supply or service transactions may involve the charge of a nonrefundable initial fee with subsequent periodic payments for futureproducts or services. The up-front fees, even if nonrefundable, are recognized as revenue as the products and/or services are delivered and performed over theterm of the arrangement.Collaboration and License Agreement with GE Healthcare LimitedOn April 25, 2017, the Company announced that it entered into a definitive, exclusive Collaboration and License Agreement (the “LicenseAgreement”) with GE Healthcare Limited (“GE Healthcare”) for the continued Phase 3 development and worldwide commercialization of flurpiridaz F 18, aninvestigational positron emission tomography myocardial perfusion imaging agent that may improve the diagnosis of coronary artery disease. Under theLicense Agreement, GE Healthcare will complete the worldwide development of flurpiridaz F 18, pursue worldwide regulatory approvals and, if successful,lead a worldwide launch and commercialization of the agent, with LMI collaborating on both development and commercialization through a joint steeringcommittee. LMI has an option to co-promote the agent in the U.S. GE Healthcare’s development plan will initially focus on obtaining regulatory approval forflurpiridaz F 18 in the U.S., Japan, Europe and Canada.Under the terms of the License Agreement, the Company received an up-front payment of $5.0 million. In addition, the Company is eligible to receive,from GE Healthcare, up to $60 million in regulatory and sales-based milestones and tiered double-digit royalties on U.S. sales and mid-single digit royaltieson sales outside the U.S. The Company has concluded that there was only one significant deliverable under the License Agreement, the license of theproduct, which was considered delivered upon the signing of the License Agreement. The Company recognized revenue of $5.0 million associated withentering into the license during the year ended December 31, 2017. In addition, because the Company concluded that the regulatory and sales-basedmilestones are solely dependent on GE Healthcare’s performance and that there are no continuing performance obligations from the Company, alldevelopment and sales milestones under the License Agreement are considered non-substantive. As of December 31, 2017, the Company has not recognizedrevenue for those milestones under the License Agreement and will recognize such revenue in the periods in which the milestones are achieved. Similarly, theCompany will recognize royalty revenues in the periods of the sale of the related products, provided that the reported sales are reliably measurable,collectability is reasonably assured and the Company has no further performance obligations.Product ReturnsThe Company provides a reserve for its estimate of sales recorded for which the related products are expected to be returned. The Company does nottypically accept product returns unless an over‑shipment, non‑conforming shipment or shipment of defective goods has been provided to the customer. TheCompany adjusts its estimate of product returns if it becomes aware of other factors that could significantly impact its expected returns, including productrecalls. These factors include its estimate of actual and historical return rates for non-conforming product and open return requests. Historically, theCompany’s estimates of returns have approximated actual returns.77Table of ContentsShipping and Handling Revenues and CostsThe Company typically does not charge customers for shipping and handling costs, but any shipping and handling costs charged to customers areincluded in revenues. Shipping and handling costs are included in cost of goods sold and were $14.3 million, $13.6 million and $17.4 million for the yearsended December 31, 2017, 2016 and 2015, respectively.Accounts ReceivableAccounts 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 the Company becomes aware of any specific collection issues.Also included in accounts receivable are miscellaneous receivables of $0.8 million and $0.7 million as of December 31, 2017 and 2016, respectively.Rebates and AllowancesEstimates for rebates and allowances represent the Company’s estimated obligations under contractual arrangements with third parties. Rebate accrualsand allowances are recorded in the same period the related revenue is recognized, resulting in a reduction to revenues and the establishment of a liabilitywhich is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. These rebates result from performance-basedoffers that are primarily based on attaining contractually specified sales volumes and growth, Medicaid rebate programs for certain products, administrationfees of group purchasing organizations and certain distributor related commissions. The calculation of the accrual for these rebates and allowances is basedon an estimate of the third-party’s buying patterns and the resulting applicable contractual rebate or commission rate(s) to be earned over a contractualperiod.Income TaxesThe Company accounts for income taxes using an asset and liability approach. The income tax (benefit) provision 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 bases of theCompany’s assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effectfor 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 when such changes areenacted.Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. The assessment ofwhether or not a valuation allowance is required involves the weighing of both positive and negative evidence concerning both historical and prospectiveinformation with greater weight given to evidence that is objectively verifiable. A history of recent losses is negative evidence that is difficult to overcomewith positive evidence. In evaluating prospective information there are four sources of taxable income: reversals of taxable temporary differences, items thatcan be carried back to prior tax years (such as net operating losses), pre-tax income, and prudent and feasible tax planning strategies. Adjustments to thedeferred tax valuation allowances are made in the period when those assessments are made.The Company accounts for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. Differences between tax positions taken in a tax return and amounts recognized inthe financial statements are recorded as adjustments to other long-term assets and liabilities, or adjustments to deferred taxes, or both. The Company classifiesinterest and penalties within the income tax (benefit) provision.Net Income (Loss) per Common ShareBasic earnings per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstandingduring the period. Diluted earnings per common share is computed by dividing net income by the weighted-average number of shares of common stockoutstanding during the period, plus the potential dilutive effect of other securities if those securities were converted or exercised. During periods in which theCompany incurs net losses, both basic and diluted loss per common share is calculated by dividing the net loss by the weighted-average shares of commonstock outstanding and potentially dilutive securities are excluded from the calculation because their effect would be antidilutive.Cash and Cash EquivalentsCash and cash equivalents include savings deposits, certificates of deposit and money market funds that have original maturities of three months or lesswhen purchased.78Table of ContentsConcentration of Risks and Limited SuppliersFinancial 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 amounts arenot expected to be collected. The Company sells primarily to large national distributors, which in turn, may resell the Company’s products.The following table sets forth customers representing 10% or more of accounts receivable and 10% or more of revenues: Accounts ReceivableDecember 31, RevenuesYear Ended December 31, 2017 2016 2017 2016 2015Company A*** *** 12.0% 10.3% 11.3%Company B14.5% 13.1% 10.4% 11.4% 11.9%Company C*** 10.5% 10.3% *** ***________________________________*** Amount represented less than 10% for the reporting period.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 wouldadversely 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.Historically, an important supplier of Moly and Xenon was Nordion, which relied on the NRU reactor in Chalk River, Ontario. As a result of a decisionby the Government of Canada, the NRU reactor exited the medical isotope business in November 2016. The Company currently has Moly supply agreementswith NTP Radioisotopes (“NTP”) of South Africa, for itself and on behalf of its subcontractor ANSTO of Australia, running through December 31, 2020, andwith Institute for Radioelements (“IRE”) of Belgium, running through December 31, 2018 and renewable by us on a year-to-year basis thereafter. TheCompany also has a Xenon supply agreement with IRE which runs through June 30, 2019, also subject to extensions. The Company currently relies on IREas the sole supplier of bulk-unprocessed Xenon which the Company processes and finishes for its customers. The Company currently relies on JHS as its solesource manufacturer of DEFINITY, Neurolite, Cardiolite and evacuation vials for TechneLite. The Company currently has no other active supplier ofDEFINITY, Neurolite or Cardiolite.The following table sets forth revenues for each of the Company’s products representing 10% or more of revenues: Year EndedDecember 31, 2017 2016 2015DEFINITY47.5% 43.6% 38.1%TechneLite31.6% 32.9% 24.7%Xenon*** *** 16.7%________________________________*** Amount represented less than 10% of revenues for the reporting periodInventoryInventory includes material, direct labor and related manufacturing overhead and is stated at the lower of cost or market on a first-in, first-out basis.The Company assesses the recoverability of inventory to determine whether adjustments for excess and obsolete inventory are required. Inventory thatis in excess of future requirements is written down to its estimated net realizable value based on product shelf life, forecasted demand and other factors.Inventory costs associated with product that has not yet received regulatory approval are capitalized if the Company believes there is probable futurecommercial use of the product and future economic benefits of the asset. If future commercial use of the product is not probable, then inventory costsassociated with such product are expensed as incurred. At December 31, 2017 and 2016, the Company had no capitalized inventories associated with productthat did not have regulatory approval.79Table of ContentsProperty, Plant & EquipmentProperty, plant & 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. Certain costs to obtain or developcomputer software are capitalized and amortized over the estimated useful life of the software. Depreciation and amortization is computed on a straight-linebasis over the estimated useful lives of the related assets. The estimated useful lives of the major classes of depreciable assets are as follows:Class Range of Estimated Useful LivesBuildings 10 - 50 yearsLand improvements 15 - 40 yearsMachinery and equipment 3 - 15 yearsFurniture and fixtures 15 yearsLeasehold improvements Lesser of lease term or 15 yearsComputer software 3 - 5 yearsUpon retirement or other disposal of property, plant & equipment, the cost and related amount of accumulated depreciation are removed from the assetand accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds is included in operating income.Included within machinery, equipment and fixtures are spare parts. Spare parts include replacement parts relating to plant & equipment and are eitherrecognized as an expense when consumed or reclassified and capitalized as part of the related asset and depreciated over the remaining useful life of therelated asset.GoodwillGoodwill is not amortized but is instead tested for impairment at least annually and whenever events or circumstances indicate that it is more likely-than-not that they may be impaired. The Company has elected to perform the annual test for goodwill impairment as of October 31 of each year. All goodwillhas been allocated to the U.S. reporting unit.In performing the Company’s annual assessment, the Company is permitted to first perform a qualitative test and if necessary, perform a quantitativetest. To conduct the quantitative impairment test of goodwill, the Company compares the fair value of a reporting unit to its carrying value. If the reportingunit’s carrying value exceeds its fair value, the Company would record an impairment loss to the extent that the carrying value of goodwill exceeds itsimplied fair value. The Company estimates the fair value of its reporting unit using discounted cash flow or other valuation models, such as comparativetransactions and market multiples. The Company did not recognize any goodwill impairment charges during the years ended December 31, 2017, 2016 or2015.Intangible and Long-Lived AssetsThe Company tests intangible and long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value ofan asset or group of assets may not be recoverable. The Company measures the recoverability of assets to be held and used by comparing the carrying amountof the asset to future undiscounted net cash flows expected to be generated by the asset. If those assets are considered to be impaired, the impairment equalsthe amount by which the carrying amount of the assets exceeds the fair value of the assets. Any impairments are recorded as permanent reductions in thecarrying amount of the assets. Long-lived assets, other than goodwill and other intangible assets that are held for sale are recorded at the lower of the carryingvalue or the fair market value less the estimated cost to sell.Intangible assets, consisting of patents, trademarks and customer relationships related to the Company’s products are amortized in a method equivalentto the estimated utilization of the economic benefit of the asset.ContingenciesIn the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, thatcover a wide range of matters, including, among others, product and environmental liability. The Company records accruals for those loss contingencieswhen it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. The Company does not recognize gain contingenciesuntil realized.80Table of ContentsFair Values of Financial InstrumentsThe estimated fair values of the Company’s financial instruments, including its cash and cash equivalents, accounts receivable, accounts payable andaccrued expenses approximate the carrying values of these instruments due to their short term nature. The estimated fair value of the Company’s long termdebt approximates its carrying values as the applicable interest rates are subject to change with market interest rates.Advertising and Promotion CostsAdvertising and promotion costs are expensed as incurred. During the years ended December 31, 2017, 2016 and 2015, the Company incurred$4.4 million, $3.6 million and $3.1 million, respectively in advertising and promotion costs, which are included in sales and marketing in the consolidatedstatements of operations.Research and DevelopmentResearch and development costs are expensed as incurred and relate primarily to the development of new products to add to the Company’s portfolioand costs related to its medical affairs and medical information functions. Nonrefundable advance payments for goods or services that will be used orrendered for future research and development activities are deferred and recognized as an expense as the goods are delivered or the related services areperformed.Foreign CurrencyThe consolidated statements of operations of the Company’s foreign subsidiaries are translated into U.S. Dollars using weighted-average exchangerates. The net assets of the Company’s foreign subsidiaries are translated into U.S. Dollars using the end of period exchange rates. The impact from translatingthe net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which is included in accumulatedother comprehensive loss in the consolidated balance sheets.Remeasurement of the Company’s foreign currency denominated transactions are included in net income. Transaction gains and losses are reported as acomponent of other (income) expense, in the consolidated statements of operations.Stock-Based CompensationThe 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 will beforfeited. The Company uses the Black-Scholes valuation model for estimating the fair value of stock options. The fair value of stock option awards isaffected 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 awards to aliability and accounts for any incremental compensation cost in the period in which the settlement becomes probable.Expense for performance restricted stock awards is recognized based upon the fair value of the awards on the date of grant and the number of sharesexpected to vest based on the terms of the underlying award agreement and the requisite service period(s).Other (Income) ExpenseOther (income) expense consisted of the following: Years EndedDecember 31,(in thousands)2017 2016 2015Foreign currency (gains) losses$(253) $853 $1,752Tax indemnification income(8,367) (1,055) (1,655)Other income(18) (18) (32)Total other (income) expense$(8,638) $(220) $65Comprehensive Income (Loss)Comprehensive income (loss) consists of net income and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded fromnet income. For the Company, comprehensive income (loss) consists of foreign currency translation gains and losses. The accumulated other comprehensiveloss balance consists entirely of foreign currency translation gains and losses.81Table of ContentsAsset Retirement ObligationsThe Company’s compliance with federal, state, local and foreign environmental laws and regulations may require it to remove or mitigate the effects ofthe disposal or release of chemical substances in jurisdictions where it does business or maintains properties. The Company establishes accruals when thosecosts are legally obligated and 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 Company hasidentified conditional asset retirement obligations related to the future removal and disposal of asbestos contained in certain of the buildings located on theCompany’s North Billerica, Massachusetts campus. The asbestos is appropriately contained, and the Company believes it is compliant with all applicableenvironmental regulations. If these properties undergo major renovations or are demolished, certain environmental regulations are in place, which specify themanner in which asbestos must be handled and disposed. The Company is required to record the fair value of these conditional liabilities if they can bereasonably estimated. As of December 31, 2017 and 2016, sufficient information was not available to estimate a liability for such conditional asset retirementobligations as the obligations to remove the asbestos from these properties have indeterminable settlement dates. As such, no liability for conditional assetretirement obligations has been recorded in the accompanying consolidated balance sheets as of December 31, 2017 and 2016.Self-Insurance ReservesThe Company’s consolidated balance sheets at December 31, 2017 and 2016 include $0.5 million and $0.4 million of accrued liabilities associatedwith employee medical costs that are retained by the Company. The Company estimates the required liability of those claims on an undiscounted basis basedupon various assumptions which include, but are not limited to, the Company’s historical loss experience and projected loss development factors. Therequired liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents(frequency) and change in the ultimate cost per incident (severity). The Company also maintains a separate cash account to fund these medical claims andmust maintain a minimum balance as determined by the plan administrator. The balance of this restricted cash account was approximately $0.1 million atboth December 31, 2017 and 2016, and is included in other current assets.82Table of ContentsRecent Accounting StandardsThe following table provides a description of recent accounting pronouncements that could have a material effect on the Company’s consolidatedfinancial statements:StandardDescriptionEffective Datefor CompanyEffect on theConsolidated FinancialStatementsRecently Issued Accounting Standards Not Yet AdoptedASU 2017-09, Compensation—Stock Compensation (Topic 718):Scope of Modification AccountingThis ASU clarifies when to account for a change to the terms orconditions of a share–based payment award as a modification. Underthe new guidance, modification accounting is required only if the fairvalue, vesting conditions or classification of the award (as equity orliability) changes as a result of the change in terms or conditions.The new guidance will be applied prospectively to awards modified onor after the adoption date. The guidance is effective for annual periods,and interim periods within those annual periods, beginning afterDecember 15, 2017 for all entities. Early adoption is permitted,including adoption in any interim period for which financial statementshave not yet been issued or made available for issuance.January 1, 2018The Company does not expect that theadoption of this standard will have a materialimpact on the Company’s consolidatedfinancial statements.ASU 2014-09, Revenue fromContracts with Customers (Topic606) and related additionalamendments ASU 2015-14, ASU2016-08, ASU 2016-10, ASU2016-11, ASU 2016-12, ASU2016-20, ASU 2017-05, ASU2017-10This ASU and related amendments affect any entity that either entersinto contracts with customers to transfer goods or services or enters intocontracts for the transfer of nonfinancial assets, unless those contractsare within the scope of other standards. The guidance in this ASUsupersedes the revenue recognition requirements in Topic 605, RevenueRecognition and most industry-specific guidance. The core principle ofthe guidance is that an entity should recognize revenue upon thetransfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled inexchange for those goods or services. The new guidance also includes aset of disclosure requirements that will provide users of financialstatements with comprehensive information about the nature, amount,timing, and uncertainty of revenue and cash flows arising from areporting organization’s contracts with customers. In August 2015, theFinancial Accounting Standards Board issued ASU No. 2015-14,“Revenue from Contracts with Customers (Topic 606): Deferral of theEffective Date,” which defers the effective date of ASU 2014-09 by oneyear. The standard is effective for annual reporting periods beginning afterDecember 15, 2017, and interim periods therein, using either of thefollowing transition methods: • A full retrospective approach reflecting the application of thestandard in each prior reporting period with the option to elect certainpractical expedients, or • A modified retrospective approach with the cumulative effect ofinitially adopting ASU 2014-09 recognized at the date of adoption(which includes additional footnote disclosures).January 1, 2018The Company has completed its assessment ofthe impact of the standards on its contractportfolio by reviewing the Company’s currentaccounting policies and practices andidentifying differences that will result fromapplying the requirements of the new standardto its revenue contracts. The Companycategorized its customers into multiplecustomer types and assessed significantcustomer arrangements within those customertypes. The Company concluded that uponadoption of the new standard there will not bea significant impact to its revenue. TheCompany, in part due to the limited impact,will utilize the modified retrospective approachof adopting the ASU. The Company hasidentified and implemented appropriatechanges to its business processes and controlsto support recognition and disclosure underthe new standard. Although the Company doesnot expect that the adoption of the newstandard will have a material impact to itsrevenues, the Company will significantlyexpand its disclosures in future filings relatedto the qualitative and quantitative aspects of itsrevenue streams.ASU 2016-02, Leases (Topic 842)This ASU supersedes existing guidance on accounting for leases in“Leases (Topic 840)” and generally requires all leases to be recognizedin the statement of financial position. The provisions of ASU 2016-02are effective for annual reporting periods beginning after December 15,2018; early adoption is permitted. The provisions of this ASU are to beapplied using a modified retrospective approach.January 1, 2019The Company is currently assessing the impactthat this standard will have on its consolidatedfinancial statements.83Table of ContentsStandardDescriptionEffective Datefor CompanyEffect on theConsolidated FinancialStatementsAccounting Standards Adopted During the Year Ended December 31, 2017ASU 2016-09, Compensation -Stock Compensation (Topic 718):Improvements to Employee Share-Based Payment AccountingASU 2016-09 simplifies several aspects of the stock compensationguidance in Topic 718 and other related guidance providing thefollowing amendments: • Accounting for income taxes upon vesting or exercise of share-basedpayments and related EPS effects • Classification of excess tax benefits on the statement of cash flows • Accounting for forfeitures • Liability classification exception for statutory tax withholdingrequirements • Cash flow presentation of employee taxes paid when an employerwithholds shares for tax-withholding purposes • Elimination of the indefinite deferral in Topic 718January 1, 2017The adoption of this standard did not have amaterial impact on the Company’sconsolidated financial statements.3. Fair Value of Financial InstrumentsFair 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 of 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 at themeasurement date.•Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities inmarkets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) andinputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).•Level 3 — Unobservable inputs that reflect a Company’s estimates about the assumptions that market participants would use in pricing the asset orliability. The Company develops these inputs based on the best information available, including its own data.The Company’s financial assets measured at fair value on a recurring basis consist of money market funds. The Company invests excess cash from itsoperating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the consolidated balance sheets at fair valueusing quoted prices in active markets for identical assets.The tables below present information about the Company’s assets and liabilities measured at fair value on a recurring basis: December 31, 2017(in thousands)Total FairValue Level 1 Level 2 Level 3Money market$8,700 $8,700 $— $—Total$8,700 $8,700 $— $— December 31, 2016(in thousands)Total FairValue Level 1 Level 2 Level 3Money market$3,565 $3,565 $— $—Total$3,565 $3,565 $— $—Nonrecurring Fair Value MeasurementsAs of December 31, 2017, the Company wrote down the value of land held for sale in the U.S. segment to its fair value, less estimated costs to sell, usingLevel 3 inputs. See Note 7 for further discussion regarding land held for sale.84Table of Contents4. Income TaxesThe components of income (loss) before income taxes is summarized as follows: Year EndedDecember 31,(in thousands)2017 2016 2015U.S.$39,559 $23,736 $(2,670)International80 4,558 (9,108)Income (loss) before income taxes$39,639 $28,294 $(11,778)The income tax (benefit) provision is summarized as follows: Year EndedDecember 31,(in thousands)2017 2016 2015Current Federal$(58) $(91) $265State3,242 1,689 2,386International16 (49) 218 3,200 1,549 2,869Deferred Federal(71,742) — —State(15,220) — —International16 (17) 99 (86,946) (17) 99Income tax (benefit) provision$(83,746) $1,532 $2,968A reconciliation of the income tax (benefit) provision with amounts determined by applying the U.S. federal income tax rate to income (loss) beforeincome taxes is as follows: Year EndedDecember 31,(in thousands)2017 2016 2015U.S. statutory rate$13,873 $9,903 $(4,122)Permanent items(1,916) (570) (782)Write-off of foreign tax and research credits— 7,125 —Foreign tax credits— (319) 306Uncertain tax positions3,128 1,529 2,523Other tax credits(175) 90 (120)State and local taxes1,252 433 478Impact of rate change on deferred taxes45,129 (383) 749True-up of prior year tax7 (2,751) 1,191Foreign tax rate differential97 (242) 46Valuation allowance(141,094) (13,292) 2,704Benefit of windfall related to stock compensation(2,723) — —Increase in indemnification deferred tax asset(1,055) — —Other(269) 9 (5)Income tax (benefit) provision$(83,746) $1,532 $2,96885Table of ContentsThe components of deferred income tax assets (liabilities) are as follows: December 31,(in thousands)2017 2016Deferred Tax Assets Federal benefit of state tax liabilities$7,510 $11,420Reserves, accruals and other9,251 10,906Inventory obsolescence239 14,138Capitalized research and development9,941 18,861Amortization of intangibles other than goodwill3,903 8,040Net operating loss carryforwards63,202 80,808Depreciation972 492Deferred tax assets95,018 144,665Deferred Tax Liabilities Reserves, accruals and other(1,346) (287)Customer relationships(1,294) (3,398)Depreciation— —Deferred tax liability(2,640) (3,685)Less: valuation allowance(5,368) (140,915) $87,010 $65Recorded in the accompanying consolidated balance sheets as: Noncurrent deferred tax assets$87,010 $65On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act of 2017 (the “Act”). The Act is significant and has wide-ranging effects.The Company is still studying all of the ramifications of the Act, but expects the primary material impact will be on the Company’s ending net U.S. deferredtax assets, which have been reduced as a result of the reduction in U.S. corporate tax rates from 35% to 21% for years beginning on or after January 1, 2018.The Company recorded tax expense of $45.1 million during the year ended December 31, 2017, to reflect the impact of the Act on its ending net deferred taxassets carrying value. The Company has reviewed recent guidance issued by the U.S. Treasury concerning the repatriation transition tax. The repatriationtransition tax is expected to impact U.S. entities with accumulated yet unrepatriated foreign earnings. As of December 31, 2017, the Company has noaccumulated unrepatriated foreign earnings, and therefore has recorded no liability for the repatriation transition tax.The Company regularly assesses its ability to realize its deferred tax assets, and that assessment requires significant management judgment. Indetermining whether its deferred tax assets are more-likely-than-not realizable, the Company evaluated all available positive and negative evidence, andweighed that evidence on its objective verifiability and expected impact. Historically, the Company considered its history of net operating losses, customerconcentration and contractual risk, DEFINITY supplier risk, the risk of Moly supply availability and cost, and certain product development risks, whichresulted in the Company recording a full valuation allowance against its domestic net deferred tax assets beginning in the year ended December 31, 2011,and each year thereafter through the year ended December 31, 2016. The Company was profitable on a cumulative basis for the three-year period endedDecember 31, 2017, but all of that profitability was achieved during 2017 and 2016.During the fourth quarter of 2017, the Company determined based on its consideration of the weight of positive and negative evidence that there wassufficient positive evidence that its federal and state deferred tax assets are more-likely-than-not realizable as of December 31, 2017. The Company’sconclusion was primarily driven by the Company achieving a sustained level of profitability, the expectation of sustained future profitability, and mitigatingfactors related to external supplier and customer risk sufficient to outweigh the available negative evidence. Accordingly, the Company released thevaluation allowance previously recorded against its domestic net deferred tax assets, resulting in an income tax benefit of $141.1 million. The Company willcontinue to assess the level of the valuation allowance required and if the weight of negative evidence exists in future periods to again support the recordingof a partial or full valuation allowance against the Company’s U.S. deferred tax assets, that would likely have a material negative impact on the Company’sresults of operations in that future period.The Company continues to maintain a valuation allowance of $5.4 million on the portion of its foreign net deferred tax assets generated in jurisdictionswith an insufficient history of cumulative profitability.86Table of ContentsA summary of the changes in the Company’s valuation allowance is summarized below:(in thousands)AmountBalance, January 1, 2015$152,138Charged to income tax (benefit) provision2,704Foreign currency(590)Deductions—Balance, December 31, 2015154,252Charged to income tax (benefit) provision(13,292)Foreign currency(45)Deductions—Balance, December 31, 2016140,915Charged to income tax (benefit) provision2,305Adoption of ASU 2016-092,929Foreign currency313Deductions—Release valuation allowance(141,094)Balance, December 31, 2017$5,368The Company’s U.S. federal income tax returns are subject to examination for three years. The state and foreign income tax returns are subject toexamination for periods varying from three to four years depending on the specific jurisdictions’ statutes of limitation.At December 31, 2017, the Company has U.S. federal net operating loss carryovers of $233.5 million, which will begin to expire in 2030 and fullyexpire in 2037. The Company has Massachusetts state research credit carryforward of $2.6 million, which will expire between 2024 and 2032. The Companyhas Massachusetts investment tax credit carryforwards of approximately $1.1 million, of which $0.4 million have no expiration date, and the remainder ofwhich will begin to expire in 2029 and fully expire in 2032.The Company has concluded that an ownership change, as defined under Section 382 of the Internal Revenue Code, occurred during the year endedDecember 31, 2016. A Section 382 limitation now applies to the Company’s pre-change U.S. federal net operating loss carryforwards and other U.S. taxattributes. The limitation was computed based on the value of the Company just prior to the ownership change. It is the Company’s view that its ability toutilize U.S. federal net operating losses within the carryforward period is not reduced by the limitation imposed by this ownership change. However, theCompany’s U.S. research credit carryforwards and U.S. foreign tax credit carryforwards will not be utilizable and as such these credits totaling $7.1 millionwere removed from the gross deferred tax asset balances as of December 31, 2016.87Table of ContentsA reconciliation of the Company’s changes in uncertain tax positions for 2017, 2016 and 2015 is as follows:(in thousands)AmountBalance of uncertain tax positions as of January 1, 2015$12,144Additions related to current year tax positions—Reductions related to prior year tax positions—Settlements(694)Lapse of statute of limitations—Balance of uncertain tax positions as of December 31, 201511,450Additions related to current year tax positions—Reductions related to prior year tax positions—Settlements(593)Lapse of statute of limitations(416)Balance of uncertain tax positions as of December 31, 201610,441Additions related to current year tax positions—Reductions related to prior year tax positions(506)Settlements—Lapse of statute of limitations(69)Balance of uncertain tax positions as of December 31, 2017$9,866As of December 31, 2017 and 2016, the total amount of unrecognized tax benefits were $9.9 million and $10.4 million, respectively, all of which, ifrecognized, would affect the effective tax rate. These amounts are primarily associated with domestic state tax issues, such as the allocation of income amongvarious state tax jurisdictions.As of December 31, 2017 and 2016, total liabilities for tax obligations and associated interest and penalties were $37.0 million and $34.4 million,respectively, consisting of income tax provisions for uncertain tax benefits of $9.9 million and $10.4 million, interest accruals of $24.9 million and$21.9 million, and penalty accruals of $2.2 million and $2.1 million, respectively. As of December 31, 2017 and 2016, $36.3 million and $33.2 million,respectively, were included in other long-term liabilities on the consolidated balance sheets and $0.7 million and $1.2 million, respectively, have reducedthe Company’s deferred tax assets. Included in the 2017, 2016 and 2015 tax provisions are $3.1 million, $1.5 million and $2.5 million, respectively, relatingto interest and penalties, net of benefits for reversals of uncertain tax positions and interest and penalties recognized upon settlements and lapses of relevantstatutes of limitation.In accordance with the Company’s acquisition of the medical imaging business from Bristol Myers Squibb (“BMS”) in 2008, the Company entered intoa tax indemnification agreement with BMS related to certain tax obligations arising prior to the acquisition of the Company, for which the Company has theprimary legal obligation. A long-term receivable is recorded to account for the expected value to the Company of future indemnification payments, net ofactual U.S. federal tax benefits. The tax indemnification receivable is recognized within other noncurrent assets. The total noncurrent asset related to theindemnification was $26.3 million and $17.9 million at December 31, 2017 and 2016, respectively. The changes in the tax indemnification asset arerecognized within other (income) expense, in the consolidated statement of operations. In accordance with the Company’s accounting policy, the change inthe 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 other (income)expense. Assuming that the receivable from BMS continues to be considered recoverable by the Company, there will be minimal net effect on earnings andnet cash outflows related to these liabilities.During the year ended December 31, 2017, BMS made no payments on behalf of the Company with respect to indemnified contingent tax liabilities. In2016 and 2015, BMS, on behalf of the Company, made payments totaling $0.7 million and $1.9 million, respectively to several states in connection withprior year state income tax filings. The amount due from BMS, included within other long-term assets, increased by $8.4 million, primarily due to thedecrease in U.S. corporate tax rates effective January 1, 2018. In 2016 and 2015, the amount due from BMS decreased by $1.3 million and $1.6 million forthe years ended December 31, 2016, and 2015, respectively, which represented the release of asset balances associated with pre-acquisition year-related taxpayments made by BMS.Included in other (income) expense for the years ended December 31, 2017, 2016 and 2015, is tax indemnification income of $8.4 million, $1.1 millionand $1.7 million, respectively. For the year ended December 31, 2017, $6.5 million of the tax indemnification income is related to the impact of the U.S.federal tax rate reduction, and the remainder arises from increases in the indemnified liabilities.88Table of Contents5. Sales of Certain International Segment AssetsSale of Certain Canadian AssetsDuring the fourth quarter of 2015, the Company committed to a plan to sell certain assets and liabilities associated with the Company’s Canadianoperations in the International Segment. This event qualified for held for sale accounting and the Company determined that the fair value of the net assetsbeing sold significantly exceeded the carrying value as of December 31, 2015. The transaction was finalized in the first quarter of 2016.Effective January 7, 2016, the Canadian subsidiary of the Company entered into an asset purchase agreement (“Canadian Asset Purchase Agreement”)pursuant to which it would sell substantially all of the assets of its Canadian radiopharmacy businesses and Gludef manufacturing and distribution businessto one of its existing Canadian radiopharmacy customers.The purchase price for the asset sale was $9.0 million in cash and also included a working capital adjustment of $0.5 million, which was settled in thethird quarter of 2016. The Canadian Asset Purchase Agreement contained customary representations, warranties and covenants by each of the parties. Subjectto certain limitations, the buyer will be indemnified for damages resulting from breaches or inaccuracies of the Company’s representations, warranties andcovenants in the Canadian Asset Purchase Agreement.As part of the transaction, the Company and the buyer also entered into a customary transition services agreement and a long-term supply contractunder which the Company will supply the buyer with certain of the Company’s products on commercial terms and under which the buyer has agreed tocertain product minimum purchase commitments.The Company does not believe the sale of certain net assets in the international segment constituted a strategic shift that would have a major effect onits operations or financial results. As a result, this transaction is not classified as discontinued operations in the Company’s consolidated financial statements.This sale of assets resulted in a pre-tax book gain of $5.9 million, which is recorded within gain on sales of assets in the accompanying consolidatedstatements of operations for the year ended December 31, 2016.Sale of Australian Radiopharmacy Servicing SubsidiaryEffective August 11, 2016, the Company entered into a share purchase agreement (“Australian Share Purchase Agreement”) with one of its existingradiopharmacy customers under which it sold all of the stock of its Australian radiopharmacy servicing subsidiary.The aggregate share sale price was AUD $2.0 million (approximately $1.5 million) in cash and also included a working capital adjustment ofapproximately AUD $2.0 million (approximately $1.5 million) for total proceeds of AUD $4.0 million (approximately $3.0 million) from the sale. As a resultof this sale, the Company disposed of net assets of $2.2 million, primarily comprised of working capital accounts of $2.0 million.This share sale resulted in an adjusted pre-tax book gain of $0.5 million, which is recorded within gain on sales of assets in the accompanyingconsolidated statements of operations for the year ended December 31, 2016. As a result of the sale of the Australian subsidiary, the Company reclassified$0.4 million from other comprehensive income to gain on sale of assets in the accompanying consolidated statements of operations for the year endedDecember 31, 2016.The Australian Share Purchase Agreement contains customary representations, warranties and covenants by each of the parties. Subject to certainlimitations, the buyer will be indemnified for damages resulting from breaches or inaccuracies of the Company’s representations, warranties and covenants inthe Australian Share Purchase Agreement.As part of the transaction, the Company and the buyer also entered into a long-term supply and distribution contract under which the Company willsupply the buyer and its subsidiaries with the Company’s products on commercial terms and under which the buyer has agreed to certain product minimumpurchase commitments.The Company does not believe this sale of certain net assets in the international segment constituted a strategic shift that would have a major effect onits operations or financial results. As a result, this transaction is not classified as discontinued operations in the Company’s accompanying consolidatedfinancial statements.89Table of Contents6. InventoryInventory consisted of the following: December 31,(in thousands)2017 2016Raw materials$10,447 $9,658Work in process5,509 3,965Finished goods10,124 4,017Total inventory$26,080 $17,640As of December 31, 2017 and 2016, the Company had $1.1 million and $1.2 million of inventory classified within other long‑term assets, respectively,which represent raw materials not expected to be used by the Company during the next twelve months.7. Property, Plant & Equipment, NetProperty, plant & equipment, net, consisted of the following: December 31,(in thousands)2017 2016Land$13,450 $14,950Buildings76,059 70,628Machinery, equipment and fixtures71,870 65,407Computer software20,271 18,482Construction in progress7,622 7,224 189,272 176,691Less: accumulated depreciation and amortization(96,273) (82,504)Total property, plant & equipment, net$92,999 $94,187Depreciation and amortization expense related to property, plant & equipment, net, was $14.8 million, $12.1 million and $12.9 million for the yearsended December 31, 2017, 2016 and 2015, respectively.Long-Lived Assets Held for SaleDuring the fourth quarter of 2017, the Company committed to a plan to sell a portion of its land in the U.S. segment. This event qualified for held forsale accounting and the land was written down to its fair value, less estimated costs to sell, which is classified in other current assets in the accompanyingconsolidated balance sheet. This resulted in a loss of $0.9 million, which is included within general and administrative expenses in the accompanyingconsolidated statement of operations. The fair value was estimated utilizing Level 3 inputs and using a market approach, based on available data fortransactions in the region, discussions with real estate brokers and the asking price of comparable properties in its principal market. In February 2018, theCompany sold the land for net proceeds of $1.0 million.8. Asset Retirement ObligationsThe Company considers its legal obligation to remediate its facilities upon a decommissioning of its radioactive-related operations as an assetretirement obligation. The Company has production facilities which manufacture and process radioactive materials at its North Billerica, Massachusetts andSan Juan, Puerto Rico sites.The Company is required to provide the U.S. Nuclear Regulatory Commission and Massachusetts Department of Public Health financial assurancedemonstrating the Company’s ability to fund the decommissioning of its North Billerica, Massachusetts production facility upon closure, although theCompany does not intend to close the facility. The Company has provided this financial assurance in the form of a $28.2 million surety bond.The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. As of December 31, 2017, theliability is measured at the present value of the obligation expected to be incurred, of approximately $26.9 million, and is adjusted in subsequent periods asaccretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying values of the related long-lived assets anddepreciated over the assets’ useful lives.90Table of ContentsThe following table provides a summary of the changes in the Company’s asset retirement obligations:(in thousands)AmountBalance, December 31, 2016$9,370Accretion expense1,042Balance, December 31, 2017$10,4129. Intangibles, NetIntangibles, net, consisted of the following: December 31, 2017(in thousands)AmortizationMethod Cost AccumulatedAmortization NetTrademarksStraight-Line $13,540 $(9,304) $4,236Customer relationshipsAccelerated 99,133 (92,072) 7,061PatentsStraight-Line 42,780 (42,279) 501Total $155,453 $(143,655) $11,798 December 31, 2016(in thousands)AmortizationMethod Cost AccumulatedAmortization NetTrademarksStraight-Line $13,540 $(8,752) $4,788Customer relationshipsAccelerated 98,926 (89,705) 9,221PatentsStraight-Line 42,780 (41,671) 1,109Total $155,246 $(140,128) $15,118The Company recorded amortization expense for its intangible assets of $3.3 million, $5.1 million and $6.0 million for the years ended December 31,2017, 2016 and 2015, respectively.The below table summarizes the estimated aggregate amortization expense expected to be recognized on the above intangible assets:(in thousands)Amount2018$2,64920191,80620201,57120211,31220221,1752023 and thereafter3,285Total$11,79810. Accrued Expenses and Other LiabilitiesAccrued expenses are comprised of the following: December 31,(in thousands)2017 2016Compensation and benefits$14,469 $12,312Freight, distribution and operations3,604 2,995Accrued rebates, discounts and chargebacks2,860 2,297Accrued professional fees2,852 1,701Other2,751 1,944Total accrued expenses and other liabilities$26,536 $21,24991Table of Contents11. Financing ArrangementsOn March 30, 2017, the Company refinanced its previous $365 million seven-year term loan agreement (the facility thereunder, the “2015 TermFacility”) with a new five-year $275 million term loan facility (the “2017 Term Facility” and the loans thereunder, the “Term Loans”). In addition, theCompany replaced its previous $50 million five-year asset based loan facility (the “ABL Facility”) with a new $75 million five-year revolving credit facility(the “2017 Revolving Facility” and, together with the 2017 Term Facility, the “2017 Facility”). The terms of the 2017 Facility are set forth in that certainAmended and Restated Credit Agreement, dated as of March 30, 2017 (the “Credit Agreement”), by and among Holdings, the Company, the lenders fromtime to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent. The 2017 Term Facility was issued net of a $0.7million discount. The Company has the right to request an increase to the 2017 Term Facility or request the establishment of one or more new incrementalterm loan facilities, in an aggregate principal amount of up to $75.0 million, plus additional amounts, in certain circumstances.The net proceeds of the 2017 Term Facility, together with approximately $15.3 million of cash on hand, were used to refinance in full the aggregateremaining principal amount of the loans outstanding under the 2015 Term Facility and pay related interest, transaction fees and expenses. No amounts wereoutstanding under the ABL Facility at that time. The Company accounted for the refinancing as both a debt extinguishment and debt modification byevaluating the refinancing on a creditor by creditor basis. The Company recorded a loss on extinguishment of debt of $2.2 million related to the write-off ofunamortized debt issuance costs and incurred general and administrative expenses of $1.7 million related to third-party costs associated with the modifieddebt. In addition, the Company incurred and capitalized $1.6 million of new debt issuance costs related to the refinancing.On November 29, 2017, the Company entered into Amendment No. 1 (the “Repricing Amendment”) to the 2017 Facility to, among other things, (i)reduce the applicable interest rate margins with respect to the LIBOR and Base Rate Term Loans and (ii) reduce the applicable interest rate margins withrespect to the LIBOR and Base Rate Revolving Loans. The Company accounted for the Repricing Amendment as both a debt extinguishment and debtmodification by evaluating the refinancing on a creditor by creditor basis. The Company recorded a loss on extinguishment of $0.2 million related to thewrite-off of unamortized debt issuance costs and incurred general and administrative expenses of $0.9 million related to third-party costs associated with therepricing.2017 Term FacilityThe Term Loans under the 2017 Term Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBOR plus a spreadof 3.75% or (ii) the Base Rate (as defined in the Credit Agreement) plus a spread of 2.75%. Interest is payable (i) with respect to LIBOR Term Loans, at theend of each Interest Period (as defined in the Credit Agreement) and (ii) with respect to Base Rate Term Loans, at the end of each quarter. At December 31,2017, the Company’s interest rate under the 2017 Term Facility was 5.3%.The Company is permitted to voluntarily prepay the Term Loans, in whole or in part. The 2017 Term Facility requires the Company to make mandatoryprepayments of the outstanding Term Loans in certain circumstances. The 2017 Term Facility amortizes at 1.00% per year until its June 30, 2022 maturitydate.The Company’s maturities of principal obligations under the 2017 Term Facility are as follows as of December 31, 2017:(in thousands)Amount20182,75020192,75020202,75020212,7502022261,937Total principal outstanding272,937Unamortized debt discount(2,036)Unamortized debt issuance costs(2,758)Total268,143Less: current portion(2,750)Total long-term debt$265,39392Table of Contents2017 Revolving FacilityUnder the terms of the 2017 Revolving Facility, the lenders thereunder agreed to extend credit to the Company from time to time until March 30, 2022(the “Revolving Termination Date”) consisting of revolving loans (the “Revolving Loans” and, together with the Term Loans, the “Loans”) in an aggregateprincipal amount not to exceed $75.0 million (the “Revolving Commitment”) at any time outstanding. The 2017 Revolving Facility includes a $20.0million sub-facility for the issuance of letters of credit (the “Letters of Credit”). The Letters of Credit and the borrowings under the 2017 Revolving Facilityare expected to be used for working capital and other general corporate purposes.The Revolving Loans under the 2017 Revolving Facility bear interest, with pricing based from time to time at the Company’s election at (i) LIBORplus a spread of 3.00% or (ii) the Base Rate (as defined in the Credit Agreement) plus a spread of 2.00%. The 2017 Revolving Facility also includes anunused line fee, which is set at 0.38% while the Company’s secured leverage ratio (as defined in the Credit Agreement) is greater than 3.00 to 1.00 and 0.25%when the Company’s secured leverage ratio is less than or equal to 3.00 to 1.00.The Company is permitted to voluntarily prepay the Revolving Loans, in whole or in part, or reduce or terminate the Revolving Commitment, in eachcase, without premium or penalty. On any business day on which the total amount of outstanding Revolving Loans and Letters of Credit exceeds the totalRevolving Commitment, the Company must prepay the Revolving Loans in an amount equal to such excess. As of December 31, 2017, there were nooutstanding borrowings under the 2017 Revolving Facility.2017 Facility CovenantsThe 2017 Facility contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions andmateriality thresholds. The 2017 Facility requires the Company to be in quarterly compliance, measured on a trailing four quarter basis, with a financialcovenant. The maximum consolidated leverage ratio permitted by the financial covenant is displayed in the table below:2017 Facility Financial CovenantPeriodConsolidatedLeverage RatioQ4 2017 through Q1 20185.00 to 1.00Q2 2018 through Q1 20194.75 to 1.00Thereafter4.50 to 1.00The 2017 Facility contains usual and customary restrictions on the ability of the Company and its subsidiaries to: (i) incur additional indebtedness(ii) create liens; (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; (iv) sell certain assets; (v) pay dividends on,repurchase or make distributions in respect of capital stock or make other restricted payments; (vi) make certain investments; (vii) repay subordinatedindebtedness prior to stated maturity; and (viii) enter into certain transactions with its affiliates.Upon an event of default, the administrative agent under the Credit Agreement will have the right to declare the Loans and other obligationsoutstanding immediately due and payable and all commitments immediately terminated or reduced.The 2017 Facility is guaranteed by Lantheus Holdings and Lantheus MI Real Estate, LLC (“LMI-RE”), and obligations under the 2017 Facility aregenerally secured by first priority liens over substantially all of the assets of each of LMI, Holdings and LMI-RE (subject to customary exclusions set forth inthe transaction documents) owned as of March 30, 2017 or thereafter acquired.12. Stock-Based CompensationEquity Incentive PlansAs of December 31, 2017, the Company’s approved equity incentive plans included the 2015 Equity Incentive Plan (“2015 Plan”), the 2013 EquityIncentive Plan (“2013 Plan”), and the 2008 Equity Incentive Plan (“2008 Plan”). These plans are administered by the Board of Directors and permit thegranting of stock options, stock appreciation rights, restricted stock, restricted stock units and dividend equivalent rights (“DERs”) to employees, officers,directors and consultants of the Company. The Board of Directors may, at its sole discretion, grant DERs with respect to any award and such DER is treated asa separate award.The Company has certain stock option and restricted stock awards outstanding under each of its equity incentive plans but, upon adoption of the 2015Plan, no longer grants new equity awards under its 2008 and 2013 Plans. The Company adopted its 2015 Plan in June 2015 and subsequently amended theplan in April 2017 to increase the common stock reserved for issuance under the plan to an aggregate 5,755,277 shares.93Table of ContentsStock-based compensation expense recognized in the consolidated statements of operations is summarized below: Year EndedDecember 31,(in thousands)2017 2016 2015Cost of goods sold$1,692 $359 $192Sales and marketing640 339 254General and administrative2,964 1,438 1,330Research and development632 388 226Total stock-based compensation expense$5,928 $2,524 $2,002Stock OptionsStock option awards under the 2015 Plan are granted with an exercise price equal to the fair value of the Company’s common stock at the date of grant.Time based option awards vest based on time, typically four years, and performance based option awards vest based on the performance criteria specified inthe grant. All option awards have a ten-year contractual term. The Company recognizes compensation costs for its time based awards on a straight-line basisequal to the vesting period. The compensation cost for performance based awards is recognized on a graded vesting basis, based on the probability ofachieving the performance targets over the requisite service period for the entire award. The fair value of each option award is estimated on the date of grantusing a Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historic volatility of aselected peer group. Expected dividends represent the dividends expected to be issued at the date of grant. The expected term of options represents the periodof time that options granted are expected to be outstanding. The risk-free interest rate assumption is the U.S. Treasury rate at the date of the grant which mostclosely resembles the expected life of the options.The table below summarizes the key assumptions used in valuing stock options granted: Year EndedDecember 31, 2015Expected volatility 26.0% - 30.0%Expected dividends —Expected life (in years) 4.1 - 6.3Risk-free interest rate 1.3% - 1.9%There were no stock options granted during the years ended December 31, 2017 and 2016.A summary of option activity for 2017 is presented below: TimeBased PerformanceBased TotalStockOptions Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm(Years) AggregateIntrinsicValueBalance at January 1, 2017818,331 219,006 1,037,337 $10.63 Options granted— — — $— Options exercised(338,133) (127,099) (465,232) $6.98 Options forfeited and expired(2,565) (4,115) (6,680) $9.47 Outstanding at December 31, 2017477,633 87,792 565,425 $13.65 3.9 $4,150,751Vested and expected to vest at December 31, 2017477,633 87,792 565,425 $13.65 3.9 $4,150,751Exercisable at December 31, 2017371,861 87,792 459,653 $14.94 4.4 $2,774,300The weighted-average grant-date fair values of options granted during the year ended December 31, 2015 was $1.44. During the years endedDecember 31, 2017 and 2016, 465,232 and 40,976 options were exercised having aggregate intrinsic values of $5.1 million and $0.2 million, respectively.No stock options were exercised during the year ended December 31, 2015.As of December 31, 2017, there was no remaining unrecognized compensation expense related to outstanding stock options. In addition, performancebased options contain certain contingent features, such as change in control provisions, which allow for the vesting of previously forfeited and unvestedawards.94Table of ContentsRestricted StockA summary of restricted stock awards activity for 2017 is presented below: Shares Weighted-Average GrantDate Fair Value PerShareNonvested restricted stock, January 1, 20172,156,372 $3.71Granted395,146 $12.94Vested(744,244) $3.86Cancelled(42,012) $3.78Nonvested restricted stock, December 31, 20171,765,262 $5.72As of December 31, 2017, there was $6.2 million of unrecognized compensation expense related to outstanding restricted stock, which is expected to berecognized over a weighted-average period of 1.9 years.Performance Restricted Stock AwardsPerformance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. The Companymonitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly. Theperformance targets include the achievement of internal performance targets only.A summary of performance restricted stock award activity for 2017 is presented below: Shares Weighted-Average GrantDate Fair Value PerShareNonvested performance restricted stock, January 1, 2017— $—Granted303,495 $16.69Vested— $—Cancelled(12,323) $16.62Nonvested performance restricted stock, December 31, 2017291,172 $16.70As of December 31, 2017, there was $3.9 million of unrecognized compensation expense related to outstanding performance restricted stock which isexpected to be recognized over a weighted-average period of 2.1 years.ModificationsDuring the year ended December 31, 2017, the Company recognized approximately $1.3 million of stock-based compensation expense associated withthe modification of awards held by two individuals, one of which was effectuated in the third quarter of 2017 and one of which was effectuated in the fourthquarter of 2017. The modification of these awards affected the vesting terms of the awards.Employee Stock Purchase PlanIn April 2017, the Company’s stockholders approved the 2017 Employee Stock Purchase Plan (“2017 ESPP”), which authorized the issuance of up to250,000 shares of common stock thereunder. Under the terms of the 2017 ESPP, eligible U.S. employees can elect to acquire shares of the Company’scommon stock through periodic payroll deductions during a series of six month offering periods, which will generally begin in March and September of eachyear. Purchases under the 2017 ESPP are effected on the last business day of each offering period at a 15% discount to the closing price on that day. The 2017ESPP was implemented, subject to stockholder approval, on March 10, 2017, and the first purchases thereunder were made on September 13, 2017.95Table of Contents13. Net Income (Loss) Per Common ShareA summary of net income (loss) per common share is presented below: Year EndedDecember 31,(in thousands, except per share amounts)2017 2016 2015Net income (loss)$123,385 $26,762 $(14,746) Basic weighted-average common shares outstanding37,276 32,044 24,440Effect of dilutive stock options288 612 —Effect of dilutive restricted stock1,296 — —Effect of dilutive performance restricted stock32 — —Diluted weighted-average common shares outstanding38,892 32,656 24,440 Basic income (loss) per common share$3.31 $0.84 $(0.60)Diluted income (loss) per common share$3.17 $0.82 $(0.60) Antidilutive securities excluded from diluted net income (loss) per common share604 1,563 2,26914. Commitments and ContingenciesLeases and Purchase CommitmentsThe Company leases certain buildings, hardware and office space under operating leases and equipment under capital leases. In addition, the Companyhas entered into purchasing arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis.As of December 31, 2017, future payments required under noncancelable lease agreements and purchase commitments are as follows:(in thousands)Amount2018$4,04620192,2622020257202123520222352023 and thereafter412Total$7,447Rent expense was $0.3 million, $0.4 million and $0.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.The Company has entered into agreements which contain certain percentage volume purchase requirements. The Company has excluded these futurepurchase commitments from the table above since there are no minimum purchase commitments or payments under these agreements.Legal ProceedingsFrom time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. In addition, the Company has in thepast been, and may in the future be, subject to investigations by governmental and regulatory authorities, which expose it to greater risks associated withlitigation, regulatory or other proceedings, as a result of which the Company could be required to pay significant fines or penalties. The outcome oflitigation, regulatory or other proceedings cannot be predicted with certainty, and some lawsuits, claims, actions or proceedings may be disposed ofunfavorably to the Company. In addition, intellectual property disputes often have a risk of injunctive relief which, if imposed against the Company, couldmaterially and adversely affect its financial condition or results of operations.96Table of ContentsAs of December 31, 2017, the Company has no material ongoing litigation in which the Company was a party or any material ongoing regulatory orother proceedings and had no knowledge of any investigations by government or regulatory authorities in which the Company is a target that could have amaterial adverse effect on its current business.The Company is currently in arbitration with Pharmalucence in connection with a Manufacturing and Supply Agreement dated November 12, 2013,under which Pharmalucence agreed to manufacture and supply DEFINITY for the Company. The commercial arrangement contemplated by that agreementwas repeatedly delayed and ultimately never successfully realized. After extended settlement discussions between Sun Pharma, the ultimate parent ofPharmalucence, and the Company, which did not lead to a mutually acceptable outcome, on November 10, 2017, the Company filed an arbitration demand(and later an amended arbitration demand) with the American Arbitration Association (“AAA”) against Pharmalucence, alleging breach of contract, breach ofthe covenant of good faith and fair dealing, tortious misrepresentation and violation of the Massachusetts Consumer Protection Law, also known as Chapter93A. The Company cannot predict the outcome of this dispute resolution proceeding and whether the Company will be able to obtain any financial recoveryas a result of this proceeding.15. 401(k) PlanThe 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 meet certaineligibility requirements. Under the terms of the 401(k) Plan, the employees may elect to make tax-deferred contributions through payroll deductions withinstatutory and plan limits, and the Company may elect to make non-elective discretionary contributions. The Company may also make optional contributionsto the 401(k) Plan for any plan year at its discretion.Expense recognized by the Company for matching contributions made to the 401(k) Plan was $1.8 million, $1.6 million and $1.6 million for the yearsended December 31, 2017, 2016 and 2015, respectively.16. Related Party TransactionsAvista Capital Partners, L.P. and its affiliates (“Avista”), historically the Company’s largest stockholder, provided certain advisory services to theCompany pursuant to an advisory services and monitoring agreement. The Company was required to pay an annual fee of $1.0 million and other reasonableand customary advisory fees, as applicable, paid on a quarterly basis. The initial term of the agreement was seven years. On June 25, 2015, the Companyexercised its right to terminate its advisory services and monitoring agreement with Avista. In connection with such termination, the Company paid Avista anaggregate termination fee of $6.5 million, which is included in general and administrative expenses in the consolidated statements of operations for the yearended December 31, 2015.In the first quarter of 2016, the Company entered into a services agreement with INC Research Holdings, Inc. (“INC”), now known as Syneos Health,Inc., to provide pharmacovigilance services. Avista and certain of its affiliates were principal owners of both INC and the Company during 2016. Theagreement has a term of three years. During the year ended December 31, 2016, investment funds affiliated with Avista disposed of shares of INC commonstock held by them. As a result, such investment funds were no longer a principal owner of INC. Related party expenses included in the following tablerepresent expenses incurred during the period under which investment funds affiliated with Avista held an investment in INC.The Company purchases inventory supplies from VWR Scientific (“VWR”). Avista and certain of its affiliates were principal owners of both VWR andthe Company.97Table of ContentsRelated party expenses consisted of the following: Year EndedDecember 31,(in thousands)Transaction Type 2017 2016 2015Avista Capital Partners, L.P. and its affiliates*Offering costs paid on behalf of Avistapursuant to registration rights agreement,advisory services and other charges $326 $12 $500Avista Capital Partners, L.P. and its affiliates*Termination fee — — 6,500INC Research Holdings, Inc.Pharmacovigilance services — 780 —VWR Scientific*Inventory supplies 297 354 300Total related party expenses $623 $1,146 $7,300* During the year ended December 31, 2017, Avista distributed approximately 6.3 million shares of common stock of the Company in the aggregate,representing the remainder of their holdings in the Company. The transactions were effected as distributions-in-kind of the Company’s common stock to theinvestors in those investment funds. As such, Avista and VWR Scientific (an entity in which Avista had an interest) are no longer related parties.Amounts billed and unbilled for related parties included in accounts payables and accrued expenses were immaterial at December 31, 2016.17. Segment InformationThe Company reports two operating segments, U.S. and International, based on geographic customer base. The results of these operating segments areregularly reviewed by the Company’s chief operating decision maker, the President and Chief Executive Officer. The Company’s segments derive revenuesthrough the manufacture, marketing, selling and distribution of medical imaging products, focused primarily on cardiovascular diagnostic imaging. Allgoodwill has been allocated to the U.S. operating segment. The Company does not identify or allocate assets to its segments.98Table of ContentsSelected information regarding the Company’s segments are provided as follows: Year EndedDecember 31,(in thousands)2017 2016 2015Revenues from external customers U.S.$290,002 $257,420 $235,824International41,376 44,433 57,637Total revenues from external customers$331,378 $301,853 $293,461 Revenues by product DEFINITY$157,268 $131,612 $111,859TechneLite104,644 99,217 72,562Xenon31,377 29,086 48,898Other38,089 41,938 60,142Total revenues$331,378 $301,853 $293,461 Geographical revenues U.S.$290,002 $257,420 $235,824Canada18,770 18,918 28,340All other22,606 25,515 29,297Total revenues$331,378 $301,853 $293,461 Operating income U.S.$49,239 $46,909 $42,008International2,614 9,679 522Operating income51,853 56,588 42,530Interest expense18,410 26,618 38,715Debt retirement costs— 1,896 —Loss on extinguishment of debt2,442 — 15,528Other (income) expense(8,638) (220) 65Income (loss) before income taxes$39,639 $28,294 $(11,778) Depreciation and amortization U.S.$17,672 $15,995 $17,054International517 1,335 1,850Total depreciation and amortization$18,189 $17,330 $18,904 December 31,(in thousands)2017 2016Long-lived assets U.S.$91,537 $92,650International1,462 1,537Total long-lived assets$92,999 $94,18799Table of Contents18. Valuation and Qualifying Accounts(in thousands) Balance atBeginning ofYear Charged toIncome Deductions fromReserves(1) OtherAdjustments Balance atEnd of YearAllowance for doubtful accountsYear ended December 31, 2017 $969 $136 $(128) $— $977Year ended December 31, 2016 $881 $53 $(30) $65 $969Year ended December 31, 2015 $585 $773 $(477) $— $881 Rebates and allowancesYear ended December 31, 2017 $2,297 $9,568 $(8,351) $(654) $2,860Year ended December 31, 2016 $2,303 $7,255 $(6,809) $(452) $2,297Year ended December 31, 2015 $2,164 $6,413 $(6,190) $(84) $2,303________________________________(1)Amounts charged to deductions from allowance for doubtful accounts represent the write-off of uncollectible balances and represent payments for rebates andallowances.19. Quarterly Consolidated Financial Data (Unaudited)Summarized quarterly consolidated financial data is presented below: Quarterly Periods During the Year Ended December 31, 2017 Q1 Q2 Q3 Q4 (in thousands, except per share data)Revenues$81,359 $88,837 $79,941 $81,241Gross profit$39,762 $45,947 $38,527 $37,899Net income(a)$4,138 $13,595 $8,526 $97,126Basic income per weighted-average share(b)$0.11 $0.37 $0.23 $2.58Diluted income per weighted-average share(b)$0.11 $0.35 $0.22 $2.47 Quarterly Periods During the Year Ended December 31, 2016 Q1 Q2 Q3 Q4 (in thousands, except per share data)Revenues$76,474 $77,966 $73,063 $74,350Gross profit$33,701 $35,751 $33,681 $34,647Net income$10,323 $7,350 $4,220 $4,869Basic income per weighted-average share(b)$0.34 $0.24 $0.14 $0.13Diluted income per weighted-average share(b)$0.34 $0.24 $0.13 $0.13________________________________(a)Net income for the fourth quarter of 2017 reflects the income tax benefit due to the release of the Company’s valuation allowance of $141.1million against its deferred tax assets offset by a provision of $45.1 million for remeasuring the Company’s deferred tax assets for thechange in tax rates enacted under the Tax Cuts and Jobs Act of 2017.(b)Quarterly and annual computations are prepared independently. Accordingly, the sum of each quarter may not necessarily total the fiscalyear period amounts noted elsewhere within this Annual Report on Form 10-K.100Table of ContentsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNot applicable.Item 9A. Controls and ProceduresDisclosure Controls and ProceduresThe Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), itsprincipal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company’s disclosure controls and proceduresas defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the Company’s Chief Executive Officer and Chief FinancialOfficer concluded that the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of theperiod covered by this report.Management’s Annual Report on Internal Control Over Financial ReportingOur management, with the participation of our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financialreporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to ourmanagement and Board of Directors regarding 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, 2017. In making its assessment of internalcontrol over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2017, our internal control overfinancial reporting was effective.We do not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting in thisAnnual Report on Form 10-K pursuant to the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As a company with less than$1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company,” as defined in the JOBS Act. An emerging growth companymay take advantage of specified reduced reporting and other regulatory requirements or up to five years that are otherwise applicable generally to publiccompanies. These provisions include, among other matters:▪Exemption from the auditor attestation requirement on the effectiveness of our system of internal control over financial reporting;▪Exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory auditfirm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit andthe financial statements of the issuer;▪Exemption from the requirement to seek non-binding advisory votes on executive compensation and golden parachute arrangements; and▪Reduced disclosure about executive compensation arrangements.We will remain an emerging growth company until December 31, 2020 unless, prior to that time, we have (i) more than $1.07 billion in annual revenue,(ii) have a market value for our common stock held by non-affiliates of more than $700 million as of the last day of our second fiscal quarter of the fiscal yearwhen a determination is made that we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 promulgated under the Securities Exchange Actof 1934, as amended, or the Exchange Act, or (iii) issue more than $1 billion of non-convertible debt over a three-year period. As a result, we were notrequired to have our independent registered public accounting firm attest to, and report on, internal controls over financial reporting.Changes in Internal Control Over Financial ReportingThere have been no changes during the quarter ended December 31, 2017 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 financial reporting.Item 9B. Other InformationNone.101Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate GovernancePursuant to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a code of conduct and ethics (our “Code of Conduct”) for all of ouremployees, including our CEO, CFO and other senior financial officers, or persons performing similar functions, and each of the non-employee directors onour Board of Directors. Our Code of Conduct is currently available on our website, www.lantheus.com. The information on our web site is not part of, and isnot incorporated into, this Annual Report on Form 10-K. We intend to provide any required disclosure of any amendment to or waiver from such code thatapplies to our CEO, CFO and other senior financial officers, or persons performing similar functions, in a Current Report on Form 8-K filed with the SEC.The additional information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 AnnualMeeting of Stockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.Item 11. Executive CompensationThe information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 Annual Meeting ofStockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 Annual Meeting ofStockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 Annual Meeting ofStockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.Item 14. Principal Accountant Fees and ServicesThe information required with respect to this item is incorporated herein by reference to our Definitive Proxy Statement for our 2018 Annual Meeting ofStockholders to be filed with the SEC no later than 120 days after the close of our year ended December 31, 2017.102Table of ContentsPART IVItem 15. Exhibits and Financial Statement Schedules(a)(1) Financial StatementsThe following consolidated financial statements of Lantheus Holdings, Inc. are filed as part of this Annual Report on Form 10-K under Part II, Item 8.Financial Statements and Supplementary Data: PageReport of Independent Registered Public Accounting Firm69Consolidated Balance Sheets as of December 31, 2017 and 201670Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 201571Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017, 2016 and 201572Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2017, 2016 and 201573Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 201574Notes to Consolidated Financial Statements76(a)(2) SchedulesAll schedules are omitted because they are not applicable, not required, or because the required information is included in the consolidated financialstatements or notes thereto.(a)(3) ExhibitsEXHIBIT INDEX Incorporated by ReferenceExhibitNumber Description of Exhibits Form File Number Exhibit Filing Date2.1† Amended and Restated Asset Purchase Agreement, effective January 7, 2016, byand between Lantheus MI Canada, Inc. and Isologic InnovativeRadiopharmaceuticals Ltd. 10-Q/A 001-36569 2.1 August 25, 20162.2† Share Purchase Agreement, effective August 11, 2016, by and between LantheusMedical Imaging, Inc. and Global Medical Solutions, Ltd. 10-Q 001-36569 10.1 November 1, 20163.1 Amended and Restated Certificate of Incorporation of Lantheus Holdings, Inc. 8-K 001-36569 3.1 June 30, 20153.2 Amended and Restated Bylaws of Lantheus Holdings, Inc. 8-K 001-36569 3.2 June 30, 20154.1 Common Stock Certificate. 8-K 001-36569 4.1 June 30, 20154.2 Indenture, dated as of May 10, 2010, among Lantheus Medical Imaging, Inc.,Lantheus MI Intermediate, Inc. and Lantheus MI Real Estate, LLC as guarantors,and Wilmington Trust FSB, as trustee. S-4 333-169785 4.1 October 6, 20104.3 First Supplemental Indenture, dated as of March 14, 2011, among LantheusMedical Imaging, Inc., Lantheus MI Intermediate, Inc. and Lantheus MI RealEstate, LLC as guarantors, and Wilmington Trust FSB, as trustee. 8-K 333-169785 4.1 March 16, 20114.4 Second Supplemental Indenture, dated as of March 21, 2011, among LantheusMedical Imaging, Inc., Lantheus MI Intermediate, Inc. and Lantheus MI RealEstate, LLC as guarantors, and Wilmington Trust FSB, as trustee. 8-K 333-169785 4.1 March 21, 20114.5 Registration Rights Agreement, dated May 10, 2010, by and among LantheusMedical Imaging, Inc., Lantheus MI Intermediate, Inc. and Lantheus MI RealEstate, LLC, as guarantors, and Jefferies & Company, Inc. S-4 333-169785 4.2 October 6, 20104.6 Registration Rights Agreement, dated March 21, 2011, by and among LantheusMedical Imaging, Inc., Jefferies & Company, Inc., as representative of the initialpurchasers and the guarantors party thereto. 8-K 333-169785 4.2 March 21, 20114.7 Form of 9.750% Senior Notes due 2017 (included in Exhibit 4.2). S-4 333-169785 4.1 October 6, 20104.8 Third Supplemental Indenture, dated as of June 25, 2015, among LantheusMedical Imaging, Inc., Lantheus MI Intermediate, Inc. and Lantheus MI RealEstate, LLC as guarantors, and Wilmington Trust FSB, as trustee. 8-K 001-36569 4.2 June 30, 201510.1 Advisory Services and Monitoring Agreement, dated January 8, 2007, by andbetween ACP Lantern Acquisition, Inc. (now known as Lantheus MedicalImaging, Inc.) and Avista Capital Holdings, L.P. S-4 333-169785 10.3 October 6, 2010103Table of Contents Incorporated by ReferenceExhibitNumber Description of Exhibits Form File Number Exhibit Filing Date10.2 Amended and Restated Shareholders Agreement, dated as of February 26, 2008among Lantheus Holdings, Inc., Avista Capital Partners, L.P., Avista CapitalPartners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certain managementshareholders named therein. S-4 333-169785 10.4 October 6, 201010.3 Employee Shareholders Agreement, dated as of May 8, 2008, among LantheusHoldings, Inc., Avista Capital Partners, L.P., Avista Capital Partners (Offshore),L.P., ACP-Lantern Co-Invest, LLC and certain employee shareholders namedtherein. S-4 333-169785 10.5 October 6, 201010.4† Sales Agreement, dated as of April 1, 2009, between Lantheus Medical Imaging,Inc. and NTP Radioisotopes (Pty) Ltd. S-4 333-169785 10.9 December 23, 201010.5† Amendment No. 1 to Sales Agreement, dated as of January 1, 2010, betweenLantheus Medical Imaging, Inc. and NTP Radioisotopes (Pty) Ltd. S-4 333-169785 10.10 December 1, 201010.6† Amendment No. 2 to Sales Agreement, dated as of January 1, 2010, betweenLantheus Medical Imaging, Inc. and NTP Radioisotopes (Pty) Ltd. 10-Q 333-169785 10.1 May 13, 201110.7† Purchase and Supply Agreement, dated as of April 1, 2010, between LantheusMedical Imaging, Inc. and Nordion (Canada) Inc. (formerly known as MDSNordion, a division of MDS (Canada) Inc.). S-4 333-169785 10.12 December 23, 201010.8† Amendment No. 1 to the Purchase and Supply Agreement, dated as ofDecember 1, 2010, between Lantheus Medical Imaging, Inc. and Nordion(Canada) Inc. 10-K 333-169785 10.13 March 8, 201110.9† Amendment No. 1 to the Amended and Restated Supply Agreement (Thalliumand Generators), dated as of December 29, 2009 between Lantheus MedicalImaging, Inc. and Cardinal Health 414, LLC. S-4 333-169785 10.26 December 1, 201010.10† Amended and Restated Supply Agreement (Thallium and Generators), datedOctober 1, 2004, by and between Lantheus Medical Imaging, Inc. and CardinalHealth 414, LLC. S-4 333-169785 10.14 December 23, 201010.11† Distribution Agreement, dated as of October 31, 2001, by and between Bristol-Myers Squibb Pharma Company (now known as Lantheus Medical Imaging,Inc.) and Medi-Physics Inc., doing business as Amersham Health. S-4 333-169785 10.16 December 29, 201010.12† First Amendment to Distribution Agreement, dated as of January 1, 2005, by andbetween Bristol-Myers Squibb Medical Imaging, Inc. (formerly known asBristol-Myers Squibb Pharma Company and now known as Lantheus MedicalImaging, Inc.) and Medi-Physics Inc., doing business as G.E. Healthcare. S-4 333-169785 10.17 December 1, 201010.13+ Lantheus Holdings, Inc. 2008 Equity Incentive Plan. S-4 333-169785 10.18 October 6, 201010.14+ Amendment No. 1 to Lantheus Holdings, Inc. 2008 Equity Incentive Plan. S-4 333-169785 10.19 October 6, 201010.15+ Amendment No. 2 to Lantheus Holdings, Inc. 2008 Equity Incentive Plan. S-4 333-169785 10.20 October 6, 201010.16+ Form of Option Grant Award Agreement. S-4 333-169785 10.21 October 6, 201010.17+ Lantheus Medical Imaging, Inc. Severance Plan Policy. S-4 333-169785 10.24 October 6, 201010.18† Second Amendment, effective as of January 1, 2012, to the DistributionAgreement, dated as of October 31, 2001, by and between Lantheus MedicalImaging, Inc., formerly known as Bristol-Myers Squibb Medical Imaging, Inc.,and Medi-Physics, Inc., doing business as G.E. Healthcare Inc. 10-Q 333-169785 10.1 May 15, 201210.19† Manufacturing and Supply Agreement, dated as of February 1, 2012, for themanufacture of DEFINITY® by and between Lantheus Medical Imaging, Inc.and Jubilant HollisterStier LLC. 10-Q 333-169785 10.2 May 15, 201210.20† First Amendment to Manufacturing and Supply Agreement, dated as of May 3,2012, for the manufacture of DEFINITY® by and between Lantheus MedicalImaging, Inc. and Jubilant HollisterStier LLC. 10-Q 333-169785 10.1 August 14, 201210.21† Amendment No. 2, dated as of October 15, 2012, to the Purchase and SupplyAgreement between Lantheus Medical Imaging, Inc. and Nordion (Canada) Inc. 10-K 333-169785 10.52 March 29, 201310.22† Amendment No. 3, effective as of October 1, 2012, to Sales Agreement betweenLantheus Medical Imaging, Inc. and NTP Radioisotopes (Pty) Ltd. 10-K 333-169785 10.53 March 29, 201310.23† Amendment No. 2, effective as of December 27, 2012, to the Amended andRestated Supply Agreement (Thallium and Generators) between LantheusMedical Imaging, Inc. and Cardinal Health 414, LLC. 10-K 333-169785 10.54 March 29, 201310.25† Fission Mo-99 Supply Agreement, effective January 1, 2013, by and betweenLantheus Medical Imaging, Inc. and the Institut National des Radioelements. 10-Q 333-169785 10.1 May 10, 201310.26+ Lantheus Holdings, Inc. 2013 Equity Incentive Plan. 8-K 333-169785 10.1 May 6, 201310.27+ Form of Employee Option Grant Award Agreement. 8-K 333-169785 10.2 May 6, 2013104Table of Contents Incorporated by ReferenceExhibitNumber Description of Exhibits Form File Number Exhibit Filing Date10.28+ Form of Non-Employee Director Option Grant Award Agreement. 8-K 333-169785 10.3 May 6, 201310.30 Amended and Restated Credit Agreement date as of July 3, 2013, by and amongLantheus Medical Imaging Inc., Lantheus MI Intermediate Inc., Lantheus MIReal Estate, LLC, the lenders from time to time party thereto, and Wells FargoBank, National Association, as collateral agent and administrative agent and assole lead arranger, book runner and syndication agent. 10-Q 333-169785 10.1 August 7, 201310.33+ Employment Agreement, effective August 12, 2013, by and between LantheusMedical Imaging, Inc. and Cesare Orlandi. 10-K 333-169785 10.48 March 11, 201410.34 Amendment to Amended and Restated Credit Agreement, dated June 24, 2014,by and among Lantheus Medical Imaging Inc., Lantheus MI Intermediate Inc.,Lantheus MI Real Estate, LLC, the lenders from time to time party thereto, andWells Fargo Bank, National Association, as collateral agent and administrativeagent and as sole lead arranger, book runner and syndication agent. S-1 333-196998 10.34 June 24, 201510.35 Amendment, dated June 25, 2015, to Amended and Restated ShareholdersAgreement, among Lantheus Holdings, Inc., Avista Capital Partners, L.P., AvistaCapital Partners (Offshore), L.P., ACP-Lantern Co-Invest, LLC and certainmanagement shareholders named therein. 8-K 001-36569 10.2 June 30, 201510.36 Amendment, dated June 25, 2015, to Employee Shareholders Agreement, amongLantheus Holdings, Inc., Avista Capital Partners, L.P., Avista Capital Partners(Offshore), L.P., ACP-Lantern Co-Invest, LLC and certain employeeshareholders named therein. 8-K 001-36569 10.3 June 30, 201510.37+ 2015 Equity Incentive Plan of Lantheus Holdings, Inc. S-1 333-196998 10.37 June 24, 201510.38+ Form of 2015 Restricted Stock Agreement of Lantheus Holdings, Inc. S-1 333-196998 10.38 June 24, 201510.39+ Form of 2015 Option Award Agreement of Lantheus Holdings, Inc. S-1 333-196998 10.39 June 24, 201510.40+ Form of Amendment to the Lantheus Holdings, Inc. 2013 Equity Incentive Plan. S-1 333-196998 10.40 June 24, 201510.41+ Form of Amendment to the Lantheus Holdings, Inc. 2008 Equity Incentive Plan. S-1 333-196998 10.41 June 24, 201510.42+ Amended and Restated Employment Agreement, effective March 16, 2015, byand between Lantheus Medical Imaging, Inc. and Mary Anne Heino. 10-Q 333-169785 10.1 May 5, 201510.43 Affirmation and Assumption Agreement, dated June 25, 2015, to Amended andRestated Credit Agreement, dated July 3, 2013, among Lantheus MedicalImaging, Inc., Lantheus MI Intermediate, Inc., Lantheus MI Real Estate, LLC,the lenders from time to time party thereto, and Wells Fargo Bank, NationalAssociation, as collateral agent and administrative agent and as sole lead arranger,book runner and syndication agent. 8-K 001-36569 10.1 June 30, 201510.46 Term Loan Agreement, dated as of June 30, 2015, among Lantheus MedicalImaging, Inc., as borrower, Credit Suisse AG, Cayman Islands Branch, asadministrative agent and collateral agent, each of the lenders party thereto, andLantheus Holdings, Inc. and Lantheus MI Real Estate, LLC, each as guarantors inrespect thereto. 8-K 001-36569 10.4 June 30, 201510.47 Second Amended and Restated Credit Agreement, dated as of June 30, 2015,among Lantheus Medical Imaging, Inc., as borrower, Wells Fargo Bank, NationalAssociation, as administrative agent and collateral agent, each of the lenders partythereto and Lantheus Holdings, Inc. and Lantheus MI Real Estate, LLC, each asguarantors in respect thereto. 8-K 001-36569 10.5 June 30, 201510.49+ Amendment, dated June 25, 2015, to the Amended and Restated EmploymentAgreement, effective March 16, 2015, by and between Lantheus MedicalImaging, Inc. and Mary Anne Heino. 8-K 001-36569 10.7 June 30, 201510.50+ Amendment, dated June 25, 2015, to the Employment Agreement, datedAugust 12, 2013, by and between Lantheus Medical Imaging, Inc. and CesareOrlandi. 8-K 001-36569 10.8 June 30, 201510.52+ Amendment to Employment Agreement, dated August 31, 2015, by and betweenLantheus Medical Imaging, Inc. and Mary Anne Heino. 10-Q 001-36569 10.2 November 4, 201510.53† Term Sheet for Supply Agreement, dated November 19, 2015, by and betweenLantheus Medical Imaging, Inc. and Cardinal Health 414, LLC. 10-K 001-36569 10.53 March 2, 201610.54+ Employment Agreement, effective August 12, 2013, by and between LantheusMedical Imaging, Inc. and John Crowley. 10-Q 001-36569 10.1 May 3, 201610.55+ Amendment to Employment Agreement, effective June 22, 2015, by andbetween Lantheus Medical Imaging, Inc. and John Crowley. 10-Q 001-36569 10.2 May 3, 201610.56+ Amendment to Employment Agreement, effective March 25, 2016, by andbetween Lantheus Medical Imaging, Inc. and John Crowley. 10-Q 001-36569 10.3 May 3, 201610.57+ Amendment to Lantheus Holdings, Inc. 2015 Equity Incentive Plan. 8-K 001-36569 10.1 April 28, 2016105Table of Contents Incorporated by ReferenceExhibitNumber Description of Exhibits Form File Number Exhibit Filing Date10.58† Second Amendment, effective September 2, 2016, to the Manufacturing andSupply Agreement, dated as of February 1, 2012 and amended on May 3, 2012,by and between Lantheus Medical Imaging, Inc. and Jubilant HollisterSteir LLC. 10-Q 001-36569 10.2 November 1, 201610.59+ Second Amendment to Lantheus Holdings, Inc. 2015 Equity Incentive Plan 8-K 001-36569 10.1 April 28, 201710.60+ Lantheus Holdings, Inc. 2017 Employee Stock Purchase Plan 8-K 001-36569 10.2 April 28, 201710.61 Amended and Restated Credit Agreement, dated as of March 30, 2017, by andamong JPMorgan Chase Bank, N.A., as administrative agent and collateral agent,each of the lenders from time to time party thereto, Lantheus Medical Imaging,Inc., as borrower, and Lantheus Holdings, Inc. 10-Q 001-36569 10.1 May 2, 201710.62† Collaboration and License Agreement by and between Lantheus MedicalImaging, Inc. and GE Healthcare Limited dated April 25, 2017. 10-Q 001-36569 10.1 August 1, 201710.63† Amended and Restated Supply Agreement, dated as of April 25, 2017, by andbetween Lantheus Medical Imaging, Inc. and Medi-Physics Inc., doing businessas GE Healthcare. 10-Q 001-36569 10.2 August 1, 201710.64*† Term Sheet for Supply Agreement, dated as of October 30, 2017, by andbetween Lantheus Medical Imaging, Inc. and Cardinal Health 414, LLC. 10.65*† Amendment No. 4 to Sales Agreement, dated as of December 29, 2017, by andbetween Lantheus Medical Imaging, Inc. and NTP Radioisotopes (SOC) Ltd. 21.1* Subsidiaries of Lantheus Holdings, Inc. 23.1* Consent of Independent Registered Public Accounting Firm. 24.1* Power of Attorney (included as part of the signature page hereto). 31.1* Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a). 31.2* Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a). 32.1** Certification pursuant to 18 U.S.C. Section 1350. 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema 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.+Indicates management contract or compensatory plan or arrangement.†Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange CommissionItem 16. Form 10-K SummaryNone.106Table of ContentsSIGNATURESPursuant 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 signed on itsbehalf by the undersigned, thereunto duly authorized.LANTHEUS HOLDINGS, INC. By:/S/ MARY ANNE HEINOName:Mary Anne HeinoTitle:President and Chief Executive OfficerDate:February 26, 2018We, the undersigned directors and officers of Lantheus Holdings, Inc., hereby severally constitute and appoint Mary Anne Heino, John W. Crowley andMichael P. Duffy, and each of them individually, with full powers of substitution and resubstitution, our true and lawful attorneys, with full powers to themand each of them to sign for us, in our names and in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed withthe SEC, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisiteand necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirmingthat 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.Signature Title Date /S/ MARY ANNE HEINO Chief Executive Officer, President and Director(Principal Executive Officer) February 26, 2018Mary Anne Heino /S/ JOHN W. CROWLEY Chief Financial Officer and Treasurer(Principal Financial and Accounting Officer) February 26, 2018John W. Crowley /S/ BRIAN MARKISON Chairman of the Board of Directors February 26, 2018Brian Markison /S/ JAMES C. CLEMMER Director February 26, 2018James C. Clemmer /S/ SAMUEL R. LENO Director February 26, 2018Samuel R. Leno /S/ JULIE H. MCHUGH Director February 26, 2018Julie H. McHugh /S/ DR. FREDERICK A. ROBERTSON Director February 26, 2018Dr. Frederick A. Robertson /S/ DR. DERACE L. SCHAFFER Director February 26, 2018Dr. Derace L. Schaffer 107EXHIBIT 10.64Term Sheet1. PartiesCardinal Health 414, LLC (“CAH”) and Lantheus Medical Imaging, Inc. (“LMI”)2. Productsa) Standard (Non-LEU) TechneLite® generators and LEU TechneLite® generators (collectively “TechneLite®Generators”)b) Xenon 133 Gasc) NEUROLITE® (Kit for the Preparation of Technetium Tc99m Bicisate for Injection)d) Cardiolite® (Kit for the Preparation of Technetium Tc99m Sestamibi for Injection) and GenericSestamibi (collectively “Sestamibi Product”)e) Thallium 201 (Thallous Chloride Tl201 Injection)f) Gallium 67 (Gallium Citrate Ga67 Injection)g) Product development - The parties agree to meet on a routine basis to discuss product developmentopportunities, and will endeavor to work together to ****.3. TerritoryUnited States and Puerto Rico4. TermJanuary 1, 2018 through December 31, 2018 (the “Term”). 5. PricingSubject to the purchase commitments described below, pricing will be firm as set forth in the attachedExhibit A (the “Pricing Schedule”) (and subject to adjustment as set forth in the attached Pricing Schedule).6. TechneLite® GeneratorsBeginning January 1, 2018 and continuing through December 31, 2018, CAH will establish standing ordersof at least ****% of CAH’s aggregate curie volume each week.7. Xenon 133 GasFor the period January 1, 2018 through December 31, 2018, CAH will establish standing orders of at least****% of CAH’s aggregate mCi volume each week. 8. NEUROLITE®a) For the period January 1, 2018 through December 31, 2018, CAH shall purchase a minimum of**** kits during each calendar quarter; provided, that all Neurolite® kits will be supplied per CAH’spurchase order with ****. ****. Concurrently with signing this Term Sheet, CAH shall provide LMI witha written, good faith **** forecast of the quantities of Neurolite® kits that CAH expects to purchasefrom LMI for the **** (the "Initial **** Forecast"). No later than ****, CAH shall provide LMI with awritten, good faith **** forecast of the quantities of Neurolite® kits that CAH expects to purchasefrom LMI for the **** (the "Subsequent **** Forecast"). Only if LMI satisfies the conditions above,both the Initial **** Forecast and Subsequent **** Forecast will be binding on CAH, and CAH willplace purchase orders that in the aggregate for each calendar quarter equate to at least the quantitiesspecified therein. For the avoidance of doubt, CAH may place purchase orders in excess of the Initial**** Forecast and/ or the Subsequent **** Forecast to meet its requirements, and LMI will use ****to ship such orders.b) All purchases will be invoiced at the **** set forth on the Pricing Schedule. Within **** days of the endof each ****, LMI will calculate CAH’s actual purchase volume, and ****. For the avoidance of doubt,if CAH’s **** volume is less than **** kits because LMI could not meet the requirement to supplyNeurolite® kits with at least ****, as applicable.9. Sestamibi Productsa) Per Pricing Scheduleb) Concurrently with signing this Term Sheet with respect to the **** and **** (****) days prior to eachsubsequent ****, CAH shall provide LMI with a written, good faith **** forecast of the quantities andtypes of Sestamibi Products which CAH expects to purchase from LMI during the forthcoming ****(the "**** Forecast"). The Quarterly Forecast will be binding on CAH, and CAH will place purchaseorders that in the aggregate for each **** equate to at least the quantities specified therein. For theavoidance of doubt, CAH may place purchase orders in excess of the **** Forecast to meet itsrequirements, and LMI will use **** to ship such orders.10. Thallium 201a) Per Pricing Scheduleb) Subject to continued negotiations, if the Parties mutually agree upon a purchase commitment, forLMI’s Cyclotron-planning purposes, CAH will provide LMI with a written good faith estimate on mCi’splanned to be ordered during each ****, broken down by each ****.11. Gallium 67For the period January 1, 2018 through December 31, 2018, CAH will establish standing orders of at least****% of CAH’s total mCi volume each ****.12. Invoicing TermsNet **** days13. Audit Rightsa) LMI will have a right to audit CAH’s compliance with its purchase commitment obligations through anindependent third party that enters into a confidentiality agreement in favor of CAH.b) CAH will have a right to audit any **** for TechneLite® Generators through an independent third partythat enters into a confidentiality agreement in favor of LMI.14. Continued NegotiationsAs promptly as practicable following execution and delivery of this Term Sheet, each of the parties willnegotiate reasonably and in good faith with the objective of mutually agreeing on all matters not yetspecified in this Term Sheet. Without limitation to the foregoing, the parties acknowledge that continuednegotiations are intended to include additional terms not yet set forth under this Term Sheet related toproducts and pricing for ****; provided, that nothing hereunder requires either party to agree to any suchadditional terms unless mutually agreed upon in writing by the parties.Additional TermsThis Term Sheet addresses only certain of the principal terms that would be included in a Defini(cid:75)ve Agreement and does not describe all of thematerial terms and condi(cid:75)ons that would be included in a Defini(cid:75)ve Agreement. This Term Sheet cons(cid:75)tutes a binding agreement among theparties with respect to the terms set forth herein.As soon as prac(cid:75)cable, each party will reasonably and in good faith nego(cid:75)ate and execute a defini(cid:75)ve supply agreement incorpora(cid:75)ng theterms and condi(cid:75)ons set forth in this Term Sheet and such other material terms and condi(cid:75)ons as may be mutually agreed or otherwiseincorporated in the manner contemplated by the next paragraph (a “Definitive Agreement”).If the par(cid:75)es are unable, for any reason, to complete nego(cid:75)a(cid:75)on and execu(cid:75)on of a Defini(cid:75)ve Agreement that supersedes this Term Sheet onor before ****, then at that (cid:75)me this Term Sheet will be (a) deemed to be a reinstatement of, and amendment to relevant and applicableterms of, (i) the Amended and Restated Supply Agreement (Thallium and Generators) by and between Lantheus Medical Imaging, Inc. andCardinal Health 414, LLC, dated October 1, 2004, as amended by Amendment No. 1 thereto, dated as of December29, 2009, Amendment No. 2 thereto, effec(cid:75)ve as of December 27, 2012, and as further amended by the provisions of the Term Sheet forSupply Agreement, effec(cid:75)ve as of November 19, 2015 (the “Previous Term Sheet”) (collec(cid:75)vely, as amended, but the “GeneratorAgreement”), and (ii) the Amended and Restated Cardiolite® License and Supply Agreement by and between Lantheus Medical Imaging, Inc.and Cardinal Health 414, LLC, entered into as of January 1, 2009 and effec(cid:75)ve as of January 1, 2004, as amended by Amendment No. 1thereto, effec(cid:75)ve as of February 9, 2012, Amendment No. 2 thereto, effec(cid:75)ve as of December 27, 2012, and as further amended by thePrevious Term Sheet (collec(cid:75)vely, as amended, , the “Cardiolite® Agreement”), as the case may be, (b) construed and interpreted along withthe Generator Agreement and the Cardiolite® Agreement and (c) deemed incorporated, as applicable, into the Generator Agreement and theCardiolite® Agreement; provided that for the avoidance of doubt, Sec(cid:75)ons 5 through 12, Sec(cid:75)on 14 and the Pricing Schedule of the PreviousTerm Sheet shall be deemed superseded, and have no force or effect, for all purposes from and a(cid:77)er January 1, 2018. Any conflicts betweenthis Term Sheet and the Generator Agreement and the Cardiolite® Agreement will be resolved in favor of this Term Sheet.MiscellaneousEach party agrees to maintain in confidence and not disclose, disseminate or otherwise make available to any unaffiliated third party theexistence of this Term Sheet and/or the terms and condi(cid:75)ons offered under this Term Sheet, except as may otherwise be required byapplicable law, including, without limitation, the U.S. federal securities laws.This Term Sheet and all claims, controversies and causes of ac(cid:75)on arising under or rela(cid:75)ng to this Term Sheet are subject to the laws of thestate of New York, without regard to its conflicts of laws principles.This Term Sheet may be executed in one or more counterparts, each of which will be deemed to be an original and such counterparts willtogether cons(cid:75)tute on and the same instrument. Signatures to this Term Sheet may be delivered by facsimile, by electronic mail (e.g., a “.pdf”file) or by any other electronic means that is intended to preserve the original appearance of the document, and such delivery will have thesame effect as the delivery of the paper document bearing the actual, hand-written signatures.[The remainder of this page is left blank intentionally.]IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed this Term Sheet as of this 30th day of October, 2017.Cardinal Health 414, LLCBy: /s/ Aaron Lynch Name: Aaron Lynch Title: Vice President SourcingLantheus Medical Imaging, Inc.By: /s/ Mary Anne Heino Name: Mary Anne Heino Title: President/CEOExhibit A Pricing ScheduleThe prices in this Exhibit A will apply if the Term Sheet is fully executed on or before November 1, 2017.TechneLite®The purchase prices of TechneLite® Generators shall be as follows:Generator Size per mCi*****% of Aggregate RequirementsVolume Price1000$****2000$****2500$****3000$****4000$****4500$****5000$****6000$****7500$****10000$****12500$****15000$****18000$*****Includes ****.In addition, at any time during the Term, subject to the ****, LMI may increase the prices for TechneLite® Generators to reflect any materialincrease in cost of molybdenum incurred by LMI as a result of a material change imposed by LMI’s suppliers following the effective date of thisTerm Sheet. A cost increase is considered material if an increase in the cost of molybdenum exceeds ****% of prior costs, and that increase issustained over a **** day period following the effective date of this Term Sheet. In the event of a material increase, LMI will be entitled toincrease purchase prices to ****%; provided, that prior to such price increase LMI provides CAH **** (****) days prior written notice andreasonable documentation (such as a certificate of an officer as to the increase and a reasonable proof-source letter) supporting such changein costs. In the event of ****. Without limitation to the foregoing, ****.XenonThe purchase prices of Xenon Products for the period from January 1, 2018 through December 31, 2018 shall be as follows:Xenon 133 (Xenon XE133 Gas)Xenon Item NumbersPriceX110$****X510$****X120$****X520$****NEUROLITE®The purchase price of NEUROLITE® Products for the period from January 1, 2018 through December 31, 2018 shall be as follows:NEUROLITE® (Kit for the Preparation of Technetium Tc99m Bicisate for Injection)NEUROLITE® Item Number********NE2D (2 vial kit)$****$****Sestamibi ProductsThe purchase prices of Sestamibi Products for the period from January 1, 2018 through December 31, 2018 shall be as follows:Cardiolite® (Kit for the Preparation of Technetium Tc99m Sestamibi for Injection) and Unbranded Sestamibi (Kit for the Preparation ofTechnetium Tc99m Sestamibi for Injection)Item NumbersPriceCAKD (5 vials)$****CAPD (20 vials)$****GNCA (Sestamibi 20 vials)$****ThalliumThe purchase prices of Thallium Products for the period from January 1, 2018 through December 31, 2018 shall be as follows:Thallium 201 (Thallous Chloride Tl201 Injection)ThalliumPrice per mCiTL201$****GalliumThe purchase prices of Gallium Products for the period from January 1, 2018 through December 31, 2018 shall be as follows:Gallium 67 (Gallium Citrate Ga67 injection)Gallium Item Numbers************GA624 mCi12 mCi$****GA832 mCi17 mCi$****GA1247 mCi25 mCi$****GA1871 mCi37 mCi$*****Manufactured on Thursday, shipped for delivery beginning on Friday and calibrated for the following Thursday.EXHIBIT 10.65CONFIDENTIAL 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 EXCHANGE COMMISSION.Execution VersionCONFIDENTIALAmendment No. 4 to Sales AgreementThis Amendment No. 4 to Sales Agreement (this “Amendment”) is made by and between (i) NTP Radioisotopes (SOC) Ltd., acommercial company registered and existing under the laws of the Republic of South Africa, having its registered office at Building1700, Pelindaba, R104 Elias Motswaledi Extension, Brits District, North West Province of South Africa (“NTP”), and (ii) LantheusMedical Imaging, Inc., a corporation organized and existing under the laws of Delaware with a place of business at 331 Treble CoveRoad, North Billerica, Massachusetts, United States of America 01862 (“Lantheus”), effective as of December 29, 2017 (the“Amendment Effective Date”).WHEREAS:1.Lantheus and NTP, on behalf of itself and its former Subcontractor, IRE, entered into a Sales Agreement, effective as of April1, 2009 (the “Sales Agreement”);2.Lantheus and NTP, on behalf of itself and its former Subcontractor, IRE, entered into Amendment No. 1 to the SalesAgreement effective as of January 1, 2010 (“Amendment No. 1”);3.Lantheus and NTP, on behalf of itself and its former and current Subcontractors, IRE and ANSTO, respectively, entered intoAmendment No. 2 to the Sales Agreement effective as of April 1, 2011 (“Amendment No. 2”);4.Lantheus and NTP, on behalf of itself and its current Subcontractor, ANSTO, entered into Amendment No. 3 to the SalesAgreement effective as of October 1, 2012 (“Amendment No. 3”) (the Sales Agreement, Amendment No. 1, Amendment No.2 and Amendment No. 3, collectively, the “Existing Agreement”);5.Lantheus and NTP, on behalf of itself and its current Subcontractor, ANSTO/ANM, wish to further amend the ExistingAgreement by amending, restating and/or supplementing certain provisions of the Existing Agreement as of the AmendmentEffective Date (the Existing Agreement, as amended by this Amendment, the “Agreement”), in order to:(a)extend the term of the Existing Agreement and specify pricing and volume levels for the supply of Product during thatextended term;(b)enable Lantheus to maintain a diversified, balanced, reliable and responsive supply chain for (i) LEU-based Product forroutine supply and, (ii) to the extent of any outages, shortages or other emergencies affecting any portion of Lantheus’LEU-based Product supply chain and sufficient LEU-based Product supply is not availablefrom NTP and its Subcontractor, HEU-based Product on a back-up basis consistent with U.S. law (AMIPA) andinternational efforts to eliminate the use of HEU in medical isotope production;(c)enhance the reliability of transportation and logistics related to Lantheus’ Product supply to the extent reasonablypracticable;(d)implement incremental capacity improvement and continuous production improvement efforts and optimize thealignment of NTP’s and ANSTO/ANM’s reactor schedules to ensure the ability to efficiently meet Lantheus’ ****requirements related to LEU-based Product and HEU-based Product supplied from NTP and ANSTO/ANM;(e)provide **** to (i) ensure reservation of supply capacity to enable NTP and its Subcontractor to supply all of Lantheus’forecasted Product demand during the Term, (ii) ensure delivery of all of Lantheus’ standard orders on time and in thequantities ordered and (iii) **** NTP for ****;(f)enable NTP to ****; and(g)provide mechanisms potentially enabling NTP to share **** (clauses (a) through (g), collectively, the “StatedPurposes”).NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:1.Definitions. Certain capitalized terms used in this Amendment are defined in Exhibit A to this Amendment. Capitalized termsused but not defined in this Amendment (including Exhibit A) have the meanings ascribed to those terms in the ExistingAgreement.2.Amendments.(a)The Parties acknowledge and agree that the Stated Purposes set forth above are essential to the purposes of theAgreement, and the Parties will perform their obligations under the Agreement to fulfill, and otherwise usecommercially reasonable efforts to undertake activities necessary to fulfill, those Stated Purposes.(b)The Parties acknowledge and agree that (i) NTP and its Subcontractor are in the process of converting their productioncapabilities to supply Product derived exclusively from LEU, but that, (ii) to the extent of any outages, shortages orother emergencies affecting NTP’s and its Subcontractor’s ability to fulfill Lantheus’ orders exclusively with LEU-based Product, NTP and its Subcontractor may, with Lantheus’ prior consent, fulfill Lantheus’ orders with HEU-basedProduct in such situations. In furtherance of the foregoing, in situations in which Lantheus consents to accept HEU-based Product, all provisions in the Agreement relating to LEU-basedwill (x) apply to such HEU-based Product, mutatis mutandis, and (x) supersede the provisions relating to HEU-basedProduct in this Agreement.(c)Section 1.2 of the Existing Agreement is hereby amended by adding the following sentence to the end of that section:Neither NTP nor its Subcontractor shall subcontract any of their respective obligations under this Agreement (other than toSubcontractor, as expressly set forth in this Agreement) without Lantheus’ prior written consent.(d)Section 2.1(b) of the Existing Agreement is hereby amended and restated in its entirety as follows:Commencing on the **** and continuing through ****, (i) Lantheus shall place routine orders on a regular **** basis for, andpurchase from NTP and its Subcontractor, through NTP, volumes of Product representing at least that percentage of its total ****Product requirements set forth in the following table (as may be adjusted pursuant to the last sentence of Section 5.1(b)(iii) and/orthe last paragraph of this Section 2.1(b)), and (ii) NTP and its Subcontractor shall promptly accept such orders and supply toLantheus all Product necessary to meet such Product requirements:Time PeriodPercentage of Lantheus’ Total Worldwide Requirements of Product**** through and including ******** percent (****%)**** through and including ******** percent (****%)**** through and including ******** percent (****%)**** through and including ******** percent (****%)NTP and its Subcontractor shall supply all such orders placed by Lantheus; provided that, as set forth in the next sentence andSection 2.1(c), Lantheus’ purchase volume obligations set forth herein shall only apply in those periods in which NTP and itsSubcontractors are able to satisfy, and NTP and its Subcontractors do satisfy, all Product orders for those periods. In addition, to theextent that NTP and its Subcontractors are unable to supply all quantities of Product requested by Lantheus hereunder, the Partiesacknowledge and agree that Lantheus shall have the right to purchase Product from any third party supplier of Product only duringthe period of such unavailability and for a reasonable period of time before or after such period and, to the extent and for theduration of such third party purchases, Lantheus shall not be in violation of the purchase volume obligations set forth herein andshall be relieved of its purchase volume obligations for such period. Lantheus will continue to provide NTP in good faith a non-binding forecast (each, a “Forecast”) on the **** of each ****. Lantheus will also continue to provide NTP with firm orders forProduct at least **** (****) in advance of the required date of Product shipment. The Parties hereby agree to meet no later thanthe end of **** to commence discussions in good faith regarding the terms of a supply agreement beyond the term of thisAgreement, and the Parties will use their reasonable, good faith efforts to agree on the terms of any such extension by the end of****.Notwithstanding anything to the contrary in this Agreement, commencing with the ****, Lantheus shall have the right(exercisable**** during the Term upon advance written notice provided to NTP on or prior to **** of the calendar yearimmediately preceding the first full calendar year with respect to which such rights are being exercised) to commit topurchase up to **** percent (****%) of its **** requirements from **** for each **** during the Term, in which case, thepurchase commitments to NTP and its Subcontractor in the table above (as adjusted from time to time in accordance with thisAgreement) for each remaining calendar year during the Term will be automatically decreased to take into account the supply ofProduct that Lantheus will purchase from that other supplier for each such calendar year (for example, if Lantheus commits ****percent (****%) of its requirements to the other supplier ****, then it will provide written notice to NTP on or before **** andLantheus’ commitment under this Agreement for each of the **** will decrease from **** percent (****%) to **** percent(****%) of its requirements for the ****, respectively); provided, however, if and to the extent that the Parties and the alternatesupplier mutually agree to have the alternate supplier join this Agreement instead, then (i) the alternate supplier will become aSubcontractor of NTP under this Agreement, (ii) this Agreement will be amended appropriately and (iii) the alternate supplier willenter into a separate joinder, amendment or side agreement with Lantheus, NTP and its Subcontractor(s), in the case of each ofclauses (i) through (iii), as mutually agreed and in accordance with all applicable laws, including antitrust and competition laws;provided further that, in the event of Lantheus’ election to purchase any such alternate supply, (x) the Parties will in good faithdiscuss, negotiate and (by **** of the immediately preceding calendar year) attempt to agree on whether to **** under thisAgreement for each remaining **** during the Term, taking into account the **** under this Agreement for such **** and ****,but (y) neither Party will be obligated to agree to any such ****, in which case the **** set forth in this Agreement will continueto apply during the remainder of the Term.If Lantheus fails to fulfill its Product purchase obligations in accordance with the provisions of this Agreement (for the avoidanceof doubt, which obligations are subject to, among other things, NTP and its Subcontractor’s ability to supply Product andLantheus’ rights to purchase Product from alternate suppliers in specified circumstances) in any calendar year, then Lantheus shallpay to NTP an amount equal to (i) **** that Lantheus so failed to purchase in that calendar year, multiplied by (ii) the ****applicable in that ****.(e)Section 2.1(c) of the Existing Agreement is hereby amended and restated in its entirety as follows:Subject to Section 3.8, such Product shall be supplied and delivered to John F. Kennedy International Airport, Jamaica, New York(“JFK”) or Logan International Airport, Boston, Massachusetts (“BOS”) (or other mutually agreed upon delivery location) on amutually agreed schedule with follow-on trucking delivery to the Lantheus facility in North Billerica, Massachusetts; providedthat, subject to Section 3.8, Product supplied by the Subcontractor will be supplied and delivered to Lantheus’ designated carrierat Sydney (Kingsford Smith) Airport, Mascot, New South Wales, Australia (“SYD”) (or other mutually agreed upon deliverylocation) on a mutually agreed schedule with follow-on delivery to the Lantheus facility in North Billerica, Massachusetts.Lantheus shall provide NTP with notice of its intention to change such location at least **** (****) in advance of the requiredinception date of such changes. NTP and its Subcontractor shall be responsible to ensure that Lantheus’ full order of Product isdelivered to Lantheus (other than during scheduled outages for routine maintenance and unscheduled outages or failures of theproduction lines of NTP and its Subcontractors) (i.e., under conditions of normal operations prevailing at NTP and itsSubcontractors’ facilities), but in all cases subject to compliance with Section 2.1(d), (e), (f), (h) and (i) and the last sentence of thisSection 2.1(c). The Parties agree that supply of Lantheus’ annual Product requirements will, in general, be ****, and the AccountManager at NTP (“Account Manager”) will allocate Product supply among NTP and its Subcontractor accordingly; provided thatLantheus will have the communication and coordination rights set forth in Section 3.8. Lantheus shall be advised in a timely wayof the manner in whichsupply obligations hereunder will be allocated among NTP and its Subcontractor. NTP and its Subcontractor will scheduledeliveries of Product to Lantheus during scheduled outages at either facility in such a way that the full amount of Product orderedby Lantheus (including, subject to the provisions of Section 2.1(d), any specific quantities of LEU-based Product) will bemaintained under such circumstances.(f)Section 2.1(d) of the Existing Agreement is hereby amended and restated in its entirety as follows:For any supply of Product by NTP and its Subcontractor during the Term, NTP and its Subcontractor will increase productionlevels of LEU-based Product so as to make available to Lantheus up to **** percent (****%) of its demand for LEU-basedProduct, unless otherwise directed by Lantheus.Lantheus will include the amount of HEU and LEU-based Product that it expects to order from NTP and its Subcontractor in eachForecast. Both Parties acting in good faith will use commercially reasonable efforts to achieve the common goal described hereinrelating to the development of a more robust supply of LEU-based Product by NTP and its Subcontractor and an associatedincrease in demand from Lantheus. To the extent that the total volume of LEU-based Product available for sale by NTP and itsSubcontractor is not (or will not be) sufficient to meet all customer orders for any reason on any given ****, NTP and itsSubcontractor shall supply Lantheus’ orders **** by providing Lantheus with at least (i) **** of the Supply Available (asdefined below) on ****, plus, (ii) if the shortage on **** was reasonably foreseeable as of the ****, **** of the Supply Availableon the **** that was not utilized to fulfill Lantheus’ orders for **** (calibrated in accordance with Section 2.5 as of ****), up**** (referred to herein as a “****”). An illustration of the calculation of **** is set forth in Exhibit B. For purposes of clarity, theParties 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 **** (including ****) shall be filled by NTP and its Subcontractors withLEU-based Product on a ****. The Parties further acknowledge and agree that NTP’s and its Subcontractor’s 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 Subcontractor shall use their best effortsto supply any amounts of LEU-based Product ordered by Lantheus, with the understanding that NTP’s or its Subcontractor’sability to completely supply such LEU-based Product may be affected by their scheduled outages for routine maintenance orunscheduled outages or failures of production lines (provided that nothing in this sentence affects NTP’s and its Subcontractor’sobligations to coordinate Product supply during outages or shortages and to allocate available Product supply to Lantheus inaccordance with the requirements of this Agreement). The Parties will work together in good faith to establish supply schedules forthe production and supply of LEU-based Product from NTP and its Subcontractor based on the market demand for the manufactureand supply of Lantheus’ Technetium-99m generators. NTP and its Subcontractor will also ensure the segregation of HEU and LEU-based Product when a mix of such Product is delivered to Lantheus in one aggregate shipment. The Parties acknowledge and agreethat 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 volumerequirement that otherwise modifies Section 2.1(b) hereof.As used in this Agreement, the term **** means, for any ****, a percentage (not to exceed **** percent (****%)) equal to:(i) the actual aggregate number of curies of Product purchased **** from NTP and its Subcontractors on **** of the ****over the immediately preceding **** (****) full calendar ****,divided by(ii) the actual aggregate number of curies of Product purchased by **** from NTP and its Subcontractors on **** of the**** over the immediately preceding **** (****) full calendar ****;ignoring, for purposes of this ****calculation, any periods of extended shutdown of NTP’s and/or its Subcontractor’s facilitiesduring which Lantheus did not receive its full orders but which, if included for purposes of this calculation, would have the effectof reducing Lantheus’ ultimate ****.As used in this Agreement:(i) the term “Supply Available” means, for any given ****, the aggregate number of curies of Product actually availableat NTP and its Subcontractor for delivery on **** to ****;(ii) the term **** means, for any given ****, Lantheus and each **** ordering Product for delivery (or use in technetiumgenerators sold) in ****, with delivery of such order scheduled for ****;(iii) the term **** means, for any given ****, Lantheus and each **** ordering Product for delivery (or use intechnetium generators sold) ****, with delivery of such order scheduled for ****;provided that, for clarity, NTP and each of its Subcontractors will each be deemed to be ****.As used in this Agreement, the term “best efforts” means (a) taking all steps necessary and proper to achieve the relevant objective,(b) attempting all reasonably feasible alternatives with immediacy and urgency and (c) carrying out such activities to their logicalconclusions, in the case of each of clauses (a)-(c), in a good faith, sustained manner that (i) gives due deference to Lantheus’specifically negotiated rights and interests under this Agreement and (ii) is consistent with the highest standards of care, diligence,judgment and skill exercised by the best suppliers of molybdenum-99m in the world. Solely for purposes of illustration, the use ofbest efforts may, in certain specific facts and circumstances, require NTP and its Subcontractor to take actions such as thefollowing: (v) NTP and its Subcontractor at all times maintaining sufficient levels of targets, fuel rods, irradiation and processingcapacity, staffing, subject matter experts, containers, logistics arrangements and other resources to ensure NTP and itsSubcontractor will be in a position to, and actually will, satisfy all of the Product orders submitted by Lantheus, (w) ****, (x)coordinating fulfillment obligations among NTP, its Subcontractor and their backup suppliers, (y) if it is reasonably foreseeablethat one or more specific shipments may be untimely, at Lantheus’ request, turn over the responsibility for coordinating logisticsfor those specific shipments and (z) giving immediate notice to Lantheus whenever any of the foregoing undertakings cannot bemet. Nothing in the foregoing definition of best efforts is intended to restrict or limit NTP or its Subcontractor’s obligations toundertake other efforts or actions in this Agreement.(g)Section 2.1(g) of the Existing Agreement is hereby amended and restated in its entirety as follows:Compliance with requirements of Section 2.1 will be confirmed at the end of the second and fourth quarters of each calendar year,at which time NTP will furnish to Lantheus a certificate, executed by a duly authorized officer of NTP stating that such officer hasreviewed the supply of Product during such period and that NTP and its Subcontractors have complied with Section 2.1. Lantheuswill have the right to audit NTP’s and its Subcontractor’s compliance with those provisions through an independent third partythat has entered into a nondisclosure agreement in favor of NTP and/or its Subcontractors, as applicable, in reasonable, customaryform that permits disclosure by that third party to Lantheus of (i) the fact that NTP and its Subcontractors have complied with thoseprovisions and (ii) the underlying facts of any instances of noncompliance (provided that in no event will the names of NTP’s or itsSubcontractor’s customers be disclosed to Lantheus). Non-compliance with Section 2.1(d)-(i) or the third sentence of Section 2.1(c)will constitute a material breach of this Agreement.(h)The first and second sentences of Section 2.1(h) of the Existing Agreement are hereby amended and restated as follows:NTP represents, warrants, acknowledges and covenants to Lantheus that, as of the Amendment Effective Date and throughout theterm of this Agreement:(i) NTP Supply Agreements. It has entered into (A) a backup supply agreement with IRE that supports (and that compels IRE tosupport) NTP and its Subcontractor to fully perform all of their obligations and supply Product to Lantheus under this Agreement(as may be amended, modified, supplemented, renewed or superseded from time to time, the “NTP/IRE Backup SupplyAgreement”) and (B) a supply agreement and a license agreement with ANSTO/ANM that enables (and that compels ANSTO/ANMto enable) NTP and its Subcontractor to fully perform all of their obligations and supply Product to Lantheus under thisAgreement, including by imposing on ANSTO/ANM obligations which are the same, in all material and operationally-relevantrespects, as those imposed on NTP and its Subcontractor in this Agreement, for the benefit of Lantheus (the agreements describedin clause (B) (as may be amended, modified, supplemented, renewed or superseded from time to time) are referred to, collectively,as the “NTP/ANSTO Supply Agreements”) (the NTP/IRE Backup Supply Agreement and the NTP/ANSTO Supply Agreements arereferred to, collectively, as the “NTP Supply Agreements”).(ii) Enforceability. Each of this Agreement and the NTP Supply Agreements (A) has been duly executed and delivered by NTPand the relevant counterparty thereto and (B) constitutes, and throughout the term of this Agreement will continue to be effectiveand will continue to constitute, NTP’s and that counterparty’s legal, valid and binding obligation, each enforceable between NTPand that counterparty in accordance with its respective terms. The execution, delivery and performance by NTP and thatcounterparty of that agreement does not and will not (1) violate or conflict with, result in a breach of, or constitute a default (or anevent which, with or without notice or lapse of time or both, would constitute a default) under, any contract to which NTP, thatcounterparty or any of their respective affiliates is a party or by which NTP, that counterparty or any of their respective affiliates isbound, including any of the other NTP Supply Agreements, (2) violate any law applicable to NTP, that counterparty or any of theirrespective affiliates or (3) violate or conflict with any provision of the organizational documents of NTP, that counterparty or anyof their respective affiliates.(iii) No Adverse Modifications. None of the NTP Supply Agreements nor any of their respective provisions will be amended,modified, terminated, waived, enforced or (upon expiration) not renewed on the same terms, to the extent doing so would be to thedirect or indirect detriment of Lantheus (i.e., in any manner that adversely affects (or that could adversely affect) NTP’s and itsSubcontractor’s ability to fully perform their obligations and supply Product to Lantheus in accordance with this Agreement) (eachsuch event, an “Material Adverse Event”) without Lantheus’ prior written approval. The Parties acknowledge that NTP isnegotiating a new agreement with ANSTO/ANM, including but not limited to a “back-to-back” supply agreement, to replace oneor more of the current NTP/ANSTO Supply Agreements upon their current expiration on ****, that will impose on ANSTO/ANMobligations which are the same, in all material and operationally-relevant respects, as those imposed on NTP and its Subcontractorin this Agreement and that has a term contemporaneous with the entire term of this Agreement, for the benefit of Lantheus. Forclarity, **** In the event that a Material Adverse Event occurs or is reasonably likely to occur, NTP will notify Lantheusimmediately by telephone and follow up in writing promptly with a reasonably detailed explanation of the situation and theMaterial Adverse Event. NTP will keep Lantheus fully and promptly apprised of all significant developments in such matters. NTPwill take all actions necessary to eliminate the Material Adverse Event as soon as possible. The Material Adverse Event willconstitute a material breach of this Agreement and, because of the risk introduced into Lantheus’ Product supply chain, for as longas such Material Adverse Event remains in effect, ****.(iv) Counterparty Breach. In the event that any counterparty to any of the NTP Supply Agreements either (x) breaches any of itsobligations to NTP under that NTP Supply Agreement and/or (y) takes, fails to take, or is unwilling to take, any other actions, theresult of which adversely affects (or could adversely affect) NTP’s and/or its Subcontractor’s ability to fully perform theirobligations and supply Product to Lantheus in accordance with this Agreement (each such event described in clauses (x) through(y), but subject to the last sentence of this clause (iv) below, a “Counterparty Breach”) (the counterparty associated with aCounterparty Breach, the relevant “Breaching Counterparty”), then:(A) NTP will notify Lantheus immediately by telephone and follow up in writing promptly with a reasonably detailedexplanation of the situation and the Counterparty Breach,(B) NTP will keep Lantheus fully and promptly apprised of all significant developments in such matters; and(C) (1) NTP will enforce its rights against that Breaching Counterparty under all NTP Supply Agreement(s) with thatBreaching Counterparty to the fullest extent (including, without limitation, by **** and (2) NTP will take all otheractions, and use its best efforts to compel that Breaching Counterparty to take all actions, in the case of each of clauses (1)and (2), in an expeditious and diligent manner, to the extent necessary to (I) fully perform (and to ensure NTP and itsSubcontractor are performing and remain able and willing to perform) their obligations and supply Product to Lantheusunder this Agreement and (II) fully compensate Lantheus for all direct and incidental damages (including reasonableattorneys’ fees) incurred by Lantheus as a result of the Counterparty Breach.Notwithstanding anything to the contrary, a failure to fully perform and supply Product to Lantheus in accordance with thisAgreement will not constitute a Counterparty Breach if (i) such failure resulted from a scheduled outage for routine maintenance oran unscheduled outage or failure of production line, and (ii) such failure (and the underlying outage or production line failure) didnot arise as a result of NTP’s or the Counterparty’s intentionalor negligent act or omission, and (iii) such failure (and the underlying outage or production line failure) was outside the reasonablecontrol of NTP and the Counterparty, and (iv) NTP and its Subcontractor have complied with their obligations underSections 2.1(d), (e), (f), (h) and (i) and the last sentence of Section 2.1(c).(v) Indirect Enforcement Rights. (A) It is crucial to ensure that Lantheus’ interests in a diversified, balanced, reliable andresponsive Product supply chain (as expressed through the terms and conditions of this Agreement) are fully addressed by NTP andits Subcontractor; (B) as such, it is necessary for Lantheus to have a right, but not the obligation, to be involved in or jointlycontrol the enforcement by NTP of its rights under the NTP/ANSTO Supply Agreements against ANSTO/ANM; (C) each of theParties acknowledges its preference is to attempt to resolve any Counterparty Breach situation with a Breaching Counterpartyamicably and cost effectively, utilizing litigation only as a measure of last resort; (D) the Parties acknowledge that NTP will firstattempt to resolve any Counterparty Breach situation with a Breaching Counterparty in an amicable manner (i.e., discussions andnegotiations) before resorting to litigation, if appropriate; and (E) therefore, if (1) Lantheus in good faith believes that NTP’sefforts to resolve a Counterparty Breach in an amicable manner is ****, then NTP will provide more frequent and detailed updatesabout the matter and NTP will in good faith consider permitting Lantheus to be directly involved in the discussions andnegotiations with the Breaching Counterparty to seek a resolution of the matter, and (2) if NTP **** to the extent necessary tocause ANSTO/ANM to (I) fully perform (and to ensure NTP and its Subcontractor are performing and remain able and willing toperform) their obligations and supply Product to Lantheus under this Agreement and (II) fully compensate Lantheus for all directand incidental damages (including reasonable attorneys’ fees) incurred by Lantheus as a result of the Counterparty Breach in anexpeditious or diligent manner (as mutually determined by NTP and Lantheus, each acting reasonably and in good faith andgiving due deference to Lantheus’ specifically negotiated rights and interests under this Agreement), then Lantheus will have theright (exercisable upon **** (****) business days’ written notice to NTP or less, if required to preserve Lantheus’ rights under thecircumstances), but not the obligation, to confer with, to be directly apprised by, and/or to control (jointly with NTP, each actingreasonably and in good faith), the legal and other counsel representing NTP in such matter (which counsel must be mutuallyacceptable to NTP and Lantheus, each acting reasonably and in good faith, and must be appointed in accordance with NTP’sinternal processes), and NTP will instruct such counsel to take direction from Lantheus, all at NTP’s sole cost and expense;provided that, in the event that the Parties cannot reach mutual agreement regarding whether resolution of a Counterparty Breachis being expeditiously and diligently pursued under clause (E)(2) above, then Lantheus will have the right to control such counsel****. In furtherance of the forgoing, NTP will (and will cause such counsel to) (x) fully and promptly cooperate with Lantheus insuch matters, (y) keep Lantheus fully and promptly apprised of all significant developments in such matters and (z) provide toLantheus copies of, and full access to, all documentation and other information relating to such matter, including copies of theNTP/ANSTO Agreements under reasonable conditions of confidentiality and privilege, and related correspondence. NTP willnotify Lantheus in writing reasonably in advance of filing a lawsuit against a Breaching Counterparty, and Lantheus shall have theoption to exercise its rights under this clause (v) in connection with the filing of that lawsuit.(vi) Remedies for a Continuing Counterparty Breach. Throughout the period during which a Counterparty Breach is continuingand not resolved in a manner that (A) assures NTP and its Subcontractor will fully perform their obligations and supply Product toLantheus under this Agreement and (B) fully compensates Lantheus for all direct and incidental damages (including reasonableattorneys’ fees) incurred by Lantheus as a result of the Counterparty Breach, (x) NTP shall have the option to source Product froman alternate supplier of Product (the use of which is approved by the U.S. Food and Drug Administrationin the manufacture of Lantheus’ TechneLite®) and NTP will supply that Product to Lantheus at the ****, but (y) for any periodduring which NTP is unable to source such alternative supply for any reason (including during the pendency of any required U.S.Food and Drug Administration approval), Lantheus may itself proceed to source substitute Product from an alternate supplier and(in the case of this clause (y)) the following will apply:(1)****, to partly compensate Lantheus for its additional efforts in securing substitute Product supply from an alternatesupplier; provided that, once the Counterparty Breach is fully resolved and Lantheus is fully compensated (ascontemplated above), ****; and(2)****(vii) Solvency and Financial Ability. NTP is and will continue to be solvent, and it has and will continue to have sufficientfinancial resources to perform its obligations under this Agreement, including this Section 2.1(h).(viii) Equitable Remedies. Irreparable damage would occur if any provision of this Agreement were not performed by NTP and itsSubcontractor in accordance with the terms of this Agreement and that Lantheus will be entitled to specific performance of theprovisions of this Agreement and provisional remedies, in addition to any other remedy to which it is entitled under thisAgreement, at law, in equity, by statute, in any other agreement between the Parties or otherwise.(ix) Cumulative Remedies. All of Lantheus’ rights and remedies provided in this Agreement are cumulative and not exclusive,and the exercise by it of any right or remedy does not preclude its exercise of any other rights or remedies that may now orsubsequently be available under this Agreement, at law, in equity, by statute, in any other agreement between the Parties orotherwise.(x) Essential Purpose. This Section 2.1(h) and the existence, legal effectiveness and performance by NTP and its counterparties ofeach of the NTP Supply Agreements are essential to the purposes of this Agreement, and Lantheus would not have entered into thisAgreement in the absence of this Section 2.1(h) or those NTP Supply Agreements.(i)Section 2.1(i) of the Existing Agreement is hereby amended by replacing the phrase “on a **** basis” with the phrase“on a **** basis.”(j)Section 3.1 of the Existing Agreement is hereby amended to replace the phrase “the supply schedule provided pursuantto Section 2.2” with the phrase “its purchase order.”(k)A new Section 3.8 of the Existing Agreement is hereby added as follows:Notwithstanding anything to the contrary in this Section 3, (a) if Lantheus requests, NTP and/or its Subcontractor will useLantheus’ designated freight forwarder to arrange shipment of Product and, (b) if Lantheus requests, Lantheus will assumeresponsibility for arranging transportation of Product at a designated point, in which case, title and risk of loss will transfer toLantheus at the point at which Product is loaded onto Lantheus’ designated carrier. In such an event, with respect to any particularProduct shipment, Lantheus will be entitled to communicate and coordinate directly with NTP or its Subcontractor, as applicable(i.e.,whichever supplier from which that originates), the freight forwarder and the transport company with respect to that shipment.(l)A new Section 10.3 of the Existing Agreement is hereby added as follows:Notwithstanding any of the provisions of this Agreement, (a) NTP’s liability in respect of all claims for damages and losses institutedagainst NTP by Lantheus in terms of this Agreement shall be limited to direct and incidental damages actually suffered by Lantheus as aresult of NTP’s or its Subcontractor’s negligence, willful misconduct or material breach of this Agreement, and (b) Lantheus’ liability inrespect of all claims for damages and losses instituted against Lantheus by NTP or its Subcontractor in terms of this Agreement shall belimited to direct and incidental damages actually suffered by NTP or its Subcontractor as a result of Lantheus’ negligence, willfulmisconduct or material breach of this Agreement.(m)Section 5.1(a) of the Existing Agreement is hereby amended and restated in its entirety as follows:Commencing on the Amendment Effective Date and continuing through the term of this Agreement, but subject to the last twoparagraphs of this Section 5.1(a), the unit price of Product to be invoiced to Lantheus by NTP shall be the applicable price perCurie (at the calibration date and time) set forth in the table below (the “Invoice Price”). The calibration date and time shall be inaccordance with Section 2.5.Time PeriodInvoice Price Per Curie of NTP-Supplied ProductInvoice Price Per Curie of Subcontractor-SuppliedProduct***** through and including ****$****$******** through and including ****$****$******** through and including ****$****$******** through and including ****$****$*****The Invoice Price for Subcontractor-supplied Product ****:(i)the Invoice Price for Subcontractor-supplied Product will be first ****, on a prospective basis, for purchase orders issued on and after thedate on ****;(ii)the Invoice Price for Subcontractor-supplied Product will next ****, on a prospective basis, for purchase orders issued on and after the dateon ****;(iii)the Invoice Price for Subcontractor-supplied Product will next ****, on a prospective basis, for orders placed on and after the date on ****;(iv)the Invoice Price for Subcontractor-supplied Product will next ****, on a prospective basis, for orders placed on and after the date on ****;and(v)thereafter, the Invoice Price for Subcontractor-supplied Product will ****;provided, however, that the Invoice Price for Subcontractor-supplied Product will ****.For purposes of clauses (iii) and (iv) above, the term “Satisfactory Performance” means “Silver-level performance” (as described on Exhibit A to theAmendment) in reference to Subcontractor-supplied Product only (but including on a backup basis to cover any NTP outages or shortages), andignoring for such purposes any Delivery Failures (as defined on Exhibit A to the Amendment) otherwise directly caused by NTP or relating to NTP-supplied Product only.For the avoidance of doubt, the price per Curie of Product for Product ordered for delivery during the period from **** through the**** before the **** is as set forth in the invoice previously received by Lantheus.Notwithstanding anything to the contrary in this Agreement, (i) from the **** and until the earlier of (A) **** and (B) ****, the**** per Curie of Product will be **** **** Curie of Product ****, mutatis mutandis. Once **** into and/or the **** is no longerin effect, as applicable, the **** per Curie of Product will **** to the **** per Curie of Product applicable under the otherprovisions of this Section 5.1(a).(n)Section 5.1(b) of the Existing Agreement is hereby amended and restated in its entirety as follows:(i) To mitigate the period of increased Product supply volatility tied to the implementation of the double run capability at NTPand the startup of additional Subcontractor-capacity at the Subcontractor, the provisions set forth in Exhibit A to the Amendmentwill apply from the Amendment Effective Date until the Compliance Date (the “Incentive Program Term”), to provide monetaryincentives and reward NTP for delivering Lantheus’ normal orders on time and in the quantities ordered and **** for **** toLantheus in **** (the “Incentive Program”).(ii) The Parties agree that Lantheus will not be responsible for paying for ****, except to the extent used to fill:(A) ****; or(B) ****; provided, however, that (i) Lantheus agrees in advance to pay **** and (ii) NTP and its Subcontractor willnot burden Lantheus with the ****.For clarity, Lantheus will **** only as follows:***** Purchase orders issued to NTP and its Subcontractor ****.** Purchase orders issued to NTP and its Subcontractor for ****.(iii) In the event that Lantheus has the opportunity to ****, at Lantheus’ request, the Parties will negotiate reasonably and ingood faith potential, mutually beneficial adjustments to the terms of the Agreement in order to enable Lantheus to ****. In theevent that Lantheus sources Product from another supplier for this purpose, ****.(iv) Separately, to the extent that Lantheus’**** during any **** as compared to the **** Lantheus will make to NTP ****.Conversely, to the extent that Lantheus’ ****. For the avoidance of doubt, changes in the ****. For clarity, Exhibit C to theAmendment provides illustrative examples.For the avoidance of doubt, NTP will invoice Lantheus for Product at the applicable Invoice Price set forth in the table above.The calculations in this Section 5(b)(iv) will be based on specially-prepared, TechneLite® generator product-level financialstatements prepared by Lantheus in accordance with U.S. generally accepted accounting principles, consistently applied, andLantheus will furnish to NTP on an annual basis a certificate, executed by a duly authorized officer of Lantheus stating whetherand to what extent this Section 5.1(b)(iv) is triggered. NTP will have the right to audit such financial statements through anindependent third party that has entered into a nondisclosure agreement in favor of Lantheus in reasonable, customary form thatpermits disclosure by that third party to NTP of the aggregate amount of any discrepancies found (provided that in no event willthe amounts of individual line items be disclosed to NTP).In addition, within **** (****) days after the end of each ****, Lantheus will notify NTP and its Subcontractor whether it hasactually accrued in its financial statements ****for that **** and, if so, the amount of that accrual.The ****for any given **** will be due within **** (****) days after the date on which Lantheus files its annual report on Form10-K for that year with the U.S. Securities and Exchange Commission.Notwithstanding the foregoing, no **** will be due to NTP and its Subcontractor with respect to any year in which (i) the Baseline(as defined in Exhibit A to the Amendment) for a “model week” **** by more than **** percent (****%) of that initial level or(ii) Lantheus’ **** on TechneLite® generator sales is within ****and **** (****) percentage points lower than the ****.(o)Section 5.1(c) of the Existing Agreement is hereby deleted in its entirety.(p)Section 5.1(d) of the Existing Agreement is hereby amended and restated as follows:For so long as Lantheus has satisfied its purchase volume commitments set forth in Section 2.1(b) as measured with reference to theaverage volume of Curies purchased over the immediately preceding **** period and Lantheus is **** as measured during suchperiod (as calculated consistent with calibrations as set out in Section 2.5), the prices payable by Lantheus for Product **** thanthe purchase price (as calculated consistent with calibration as set out in Section 2.5) paid by **** from NTP or its Subcontractorsfor delivery into or use ****, regardless of whether such delivery or use is direct or indirect. For purposes of calculating thepurchase price paid **** in order to determine if any price adjustment shall be made hereunder, the Parties agree that the purchaseprice paid by **** will be calculated after giving effect to all rebates, discounts, and similar pricing concessions or incentivesavailable to **** (but excluding ****) and after giving effect to all incentives (whether relating to ****) paid or payable to NTPand/or its Subcontractor, and, if such purchase price is paid in a currency different from the United States dollar pursuant to awritten contract or spot order, such purchase price shall be determined using the exchange rate of the United States dollar againstsuch different currency applicable to such purchases as of the date of entering into, or modifying the pricing-related terms of, suchcontracts or spot orders. For the sake of clarity, no such price adjustment shall apply where **** paid by ****, in US dollar terms,(i) occurs solely after **** and (ii) are solely caused by ****. In addition, noncompliance with the foregoing provisions will resultin a **** the price payable by Lantheus for Product hereunder only during the period in which the purchase price of ****.Compliance with requirements of this Section 5.1(d) will be confirmed at the end of**** of each ****, at which time NTP will furnish to Lantheus a certificate, executed by a duly authorized officer of NTP statingthat such officer has reviewed the sales of such Product during such period and that NTP and its Subcontractors have compliedwith this Section 5.1(d). Lantheus will have the right to audit NTP’s and its Subcontractor’s compliance with this Section 5.1(d)through an independent third party that has entered into a nondisclosure agreement in favor of NTP and/or its Subcontractors, asapplicable, in reasonable, customary form that permits disclosure by that third party to Lantheus of (i) the fact that NTP and itsSubcontractors have complied with this Section 5.1(b) and (ii) the underlying facts of any instances of noncompliance (providedthat in no event will the names of NTP’s or its Subcontractor’s customers be disclosed to Lantheus). To the extent it is determinedthat NTP is not in compliance with this Section 5.1(d), NTP will adjust the pricing payable by Lantheus and credit Lantheus withthe difference between the price paid by Lantheus and the amount otherwise contemplated by this Section 5.1(d).(q)The last sentence of Section 8.1 of the Existing Agreement is hereby deleted in its entirety.(r)A new Section 10.2 is hereby added to the Existing Agreement:(a) In the event that (i) NTP is required to **** arising solely as a result of **** and (ii) the conduct of NTP that serves as a basisof such action or claim did not adversely affect Lantheus (such action or claim meeting the requirements of clauses (i) and (ii), an“NTP Qualifying Action”), then Lantheus shall reasonably assist NTP (initially, at NTP’s reasonable cost and expense) indefending against such NTP Qualifying Action. If NTP is finally adjudicated by a **** court of competent jurisdiction to be liablein such NTP Qualifying Action (or, with Lantheus’ prior consent (not to be unreasonably withheld, conditioned or delayed), settlessuch NTP Qualifying Action), then each of the Parties shall ****. For the avoidance of doubt, Lantheus will not be responsible forany ****.(b) In the event that (i) Lantheus is required to **** arising solely as a result of **** and (ii) the conduct of Lantheus that servesas a basis of such action or claim did not adversely affect NTP (such action or claim meeting the requirements of clauses (i) and (ii),a “Lantheus Qualifying Action”), then NTP shall reasonably assist Lantheus (initially, at ****) in defending against suchLantheus Qualifying Action. If Lantheus is finally adjudicated by a **** court of competent jurisdiction to be liable in suchLantheus Qualifying Action (or, with NTP’s prior consent (not to be unreasonably withheld, conditioned or delayed), settles suchLantheus Qualifying Action), then each of the Parties shall ****. For the avoidance of doubt, NTP will not be responsible for any****.(s)Section 11.1 of the Existing Agreement is hereby amended by (i) replacing “31st Day of December 2017” with “31stDay of December 2020” and (ii) inserting the following as the last sentence of Section 11.1:At any Party’s request, the Parties will negotiate reasonably and in good faith a further proposed amendment to the Agreementpursuant to which (i) the term of the Agreement would be extended through the ****, (ii) Lantheus would commit to purchase****% or more of its Product demand in each of those calendar years from NTP and its Subcontractors and (iii) the **** price perCurie of Product (i.e., ****) would be reset to **** (which will be determined using the same method described underSection 5.1(d)), subject to a cap on such **** of **** percent (****%) of ****.(t)Section 13.10 of the Existing Agreement is hereby amended by adding the following sentence to the end of that section:Notwithstanding anything to the contrary, this Section 13.10 does not prohibit any announcement that may be required byapplicable law, regulation or order of a governmental authority of competent jurisdiction.3.General. Except as specifically amended by this Amendment, the Existing Agreement remains in full force and effect andotherwise unamended by this Amendment. This Amendment constitutes a final written expression of the terms hereof and is acomplete and exclusive statement of those terms. This Amendment shall be governed by and construed in accordance with thelaws of England, without reference to the choice of laws rules of any jurisdiction.[The remainder of this page is left blank intentionally.]IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first written above.For and on behalf of NTP:NTP Radioisotopes (SOC) Ltd./s/ Thabo Tselane Thabo Tselane Acting Group Managing DirectorFor and on behalf of Lantheus:Lantheus Medical Imaging, Inc./s/ Mary Anne Heino Mary Anne Heino President and Chief Executive OfficerExhibit AIncentive ProgramTo mitigate the period of increased Product supply volatility tied to the implementation of the double run capability at NTP and the startup of Subcontractorcapacity at Subcontractor, this Incentive Program will apply during the Incentive Program Term to provide monetary incentives and reward NTP fordelivering Lantheus’ normal orders on time and in the quantities ordered and for allocating available supply to Lantheus in shortage situations.1.Baseline Curies. The Parties will, acting reasonably and in good faith, agree to a baseline number of Curies for each ***** of Product productionduring a ***** that is necessary to satisfy Lantheus’ forecasted Product requirements under the Agreement for that “model ****” (with respect toeach such ***** as updated from time to time, its “Baseline Curies” and, on a ***** basis, the “Baseline”) during the period from the AmendmentEffective Date through ****; provided that (i) the initial level of Baseline Curies will reflect no less than the number of Curies of Product thatLantheus requested from NTP and its Subcontractor on each ***** during the **** and ****; and (ii)(A) on ****, the Parties will, actingreasonably and in good faith, update the level of Baseline Curies for each *****in order to reflect any ***** in Lantheus’ forecasted Productrequirements, and NTP’s and its Subcontractor’s reasonable best ability to supply such *****, for each ***** during the upcoming **** (****)month period; and (B) any such updates will be effective as of each ****, as applicable, unless otherwise agreed.2.**** Performance Evaluation. At the end of each ***** (each, a *****), NTP and its Subcontractor’s daily Product supply performance during that***** will be compared against each corresponding purchase order (or portion thereof) placed by Lantheus to the extent reflecting no more than theBaseline Curies for **** in the ***** (each such corresponding purchase order (or portion thereof), a “Normal PO”). For clarity, in the event thatLantheus’ Product supply requirements increase after the Parties have already reached agreement on the applicable Baseline Curies, but before thenext period during which the Baseline Curies are due to be updated in accordance with Section 1 above (for instance, as a result of *****), theParties will still refer to that initial, agreed upon level of Baseline Curies for purposes of evaluating NTP and its Subcontractor’s Product supplyperformance under this Incentive Program until the updated level of Baseline Curies takes effect.3.Incentive Payments.(a)For Normal Supply. For each *****, NTP will be entitled to an incentive payment in an aggregate amount equal to:(i)the number of weeks (“Weeks”) in that ***** in which no Delivery Failure (as defined below) occurred and no Event of ForceMajeure (as defined in the Existing Agreement) occurred, multiplied by(ii)the applicable “Weekly Amount” set forth in the table below:Performance Level for the ****No. of Weeks **** With AtLeast One Delivery FailureWeekly AmountGold****$****Silver****$****Bronze****$****Other****$****(b)For Backup Supply. In addition to any incentive payments payable under Section 3(a) above, for each *****, NTP will be entitled to anadditional, $**** incentive payment for each Week in that ***** in which NTP and its Subcontractor supplies to Lantheus on a timelybasis all Curies of Product that Lantheus specifies in a supplemental purchase order to cover *****. For clarity, NTP and its Subcontractorcan earn incentive payments for ***** under this Section 3(b), regardless of whether they have earned incentive payments for Normal POsunder Section 3(a) above for the same *****.(c)Illustrative Example. For illustrative purposes only:if NTP and its Subcontractor fulfilled all **** (except for **** Delivery Failures and an Event of Force Majeure that delayed an entireProduct shipment, each occurring in separate ***) and fulfilled ***** in **** separate ****during the *****, as follows:**** #12345678910111213******************************************************************************************************************Key: üü = delivery fulfilled DF = Delivery Failure EoFM = Event of Force Majeure that prevents delivery then NTP would be entitled to $**** in incentive payments, calculated as follows: Incentive Payments for **** **** AmountNo. of **** for which Incentive Payments are EarnedTotal Incentive Payments Earned for **** in *****Only **** Delivery Failuresü ****-level performance**** Amount = $**** ***** – **** with Delivery Failures – **** with an Event of ForceMajeure that prevents delivery **** for which incentive payments areearned the ***** $***** 10 Weeks= $**** in performance incentives in **** Incentive Payments for Filling ***** **** AmountNo. of **** for which Incentive Payments are EarnedTotal Incentive Payments Earned for ********* Amount = $******** in which ***** were fulfilled $**** * ****= $**** in performance incentives ***** 4.*****. Incentive payments earned for any ***** will be aggregated and become due and payable **** (****) **** after the end of that *****.5.Miscellaneous. For purposes of these provisions:(a)A “Delivery Failure” occurs whenever any of the following occurs:(i)NTP and its Subcontractor fail to supply to Lantheus on a timely basis any Curies of Product specified in any **** (other than as aresult of an Event of Force Majeure); or(ii)Lantheus issues a purchase order reflecting a number of Curies of Product *****, simply in order to obtain (as of Lantheus’corresponding **** of TechneLite® generator manufacture and after taking into account *****) a number of Curies of Productequal to the Baseline Curies (e.g., *****).(b)Delivery of Product is considered “timely” only if it arrives at Lantheus’ dock on its delivery date within **** (****) ****of its scheduleddelivery time, each as indicated in the applicable purchase order.(c)Notwithstanding anything to the contrary, in the event that Lantheus’ total requirements for Product across all suppliers ***** more than**** percent (****%) of its requirements as of signing for **** (****) ****, then this Incentive Program will automatically terminate.(d)Notwithstanding anything to the contrary, no incentive payments under the Incentive Program will be earned with respect to any Week inwhich *****.Exhibit BIllustration of ***** CalculationsExample #1: Assuming a **** on **** that was reasonably foreseeable as of the **** (i.e., ****) before that ****. **** ofthe ****onwhichShortageOccursNo. ofCuriesOrderedbyLantheusfor ****No. ofCuriesPurchasedby ***** on **** (over the**** fullcalendar****)No. ofCuries Purchasedby ***** on **** (over the**** fullcalendar****)Lantheus' ***** on ****Total “SupplyAvailable”for***** on ****No. of CuriesRepresenting Lantheus' ***** on ****Lantheus’ *****forthe **** minus No. ofCuriesActuallyDeliveredtoLantheus for **** (pre-decay)Lantheus’ *****forthe **** minus No. ofCuriesActuallyDeliveredtoLantheus for **** (post-****of decay)Maximum No. of Curies Allocated to Lantheus for ****No. of Curies to be Delivered to Lantheus for **** *********************%**** ************ **** **** Example #2: Assuming a shortage on **** that was not reasonably foreseeable as of **** (i.e., ****) before ****. **** ofthe ****onwhichShortageOccursNo. ofCuriesOrderedbyLantheusfor ****No. ofCuriesPurchasedby ***** on **** (over the**** fullcalendar****)No. ofCuries Purchasedby ***** on **** (over the**** full****months)Lantheus' ***** on ****Total “SupplyAvailable” on ****No. of CuriesRepresenting Lantheus' ***** on ****Lantheus’ *****forthe **** minus No. ofCuriesActuallyDeliveredtoLantheus for **** (pre-decay)Lantheus’ *****forthe **** minus No. ofCuriesActuallyDeliveredtoLantheus for **** (post-****of decay)Maximum No. of Curies Allocated to Lantheus for ****No. of Curies to be Delivered to Lantheus for **** *********************%**** ************ **** ***** Note: NTP and its Subcontractor would be able to *****.Exhibit CIllustrations of *****For the **** and the **** ***** PricingScenarioReference***** (for ****)***** (for the****)Change in*****Change in***** in excess of the***** or****%*****Dollar Valueof Change in***** or****%*****Percentage ofLantheus' Total Mo-99RequirementsSupplied byNTP/ANM (in thatperiod)***** (for thatperiod)SignificantIncrease****%****%****%****% $ ********% $ ****Increase****%****%****%****% $ **** ****% $ ****Flat****%****%****%****%$ ********%$ ****Decrease****%****%****%****% $ ********% $ ****SignificantDecrease****%****%****%****% $ ********% $ **** * Assumption: for purposes of simplicity, these illustrations assume a hypothetical ***** and that a **** change in ***** equates to a**** change in *****. For the **** ***** PricingScenarioReference***** (for ****)***** (for the**** *****)Change in*****Change in***** or****%*****Dollar Valueof Change in*****or****%*****Percentage ofLantheus' Total Mo-99RequirementsSupplied byNTP/ANM (in that year)***** (for thatyear)SignificantIncrease****%****%****%****% $ **** ****%$ ****Increase****%****%****%****%$ ********% $ ****Flat****%****%****%****%$ **** ****%$ ****Decrease****%****%****%****%$ ********%$ ****SignificantDecrease****%****%****%****%$ ********% $ **** * Assumption: for purposes of simplicity, these illustrations assume a hypothetical *****and that a **** (****) ****change in***** equates to a **** change in *****.Exhibit 21.1LANTHEUS HOLDINGS, INC.SUBSIDIARIES SubsidiaryState or Other Jurisdiction of OrganizationLantheus Medical Imaging, Inc.DelawareLantheus MI Canada, Inc.Ontario, CanadaLantheus MI Real Estate, LLCDelawareLantheus MI Radiopharmaceuticals, Inc.Commonwealth of Puerto RicoLantheus MI UK LimitedEngland and WalesExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-214343, 333-205211, 333-220049 and 333-220050 on Form S-8 andRegistration Statement No. 333-215055 on Form S-3 of our report dated February 26, 2018, relating to the financial statements of Lantheus Holdings, Inc.appearing in this Annual Report on Form 10-K of Lantheus Holdings, Inc. for the year ended December 31, 2017./s/ Deloitte & Touche LLPBoston, MassachusettsFebruary 26, 2018Exhibit 31.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TOEXCHANGE ACT RULE 13a-14(a)I, Mary Anne Heino, certify that:1.I have reviewed this Annual Report on Form 10-K of Lantheus Holdings, 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) and 15d-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 our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose 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 the 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; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourthfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financialreporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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; andb.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.Date:February 26, 2018/s/ MARY ANNE HEINO Name:Mary Anne Heino Title:President and Chief Executive OfficerExhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TOEXCHANGE ACT RULE 13a-14(a)I, John W. Crowley, certify that:1.I have reviewed this Annual Report on Form 10-K of Lantheus Holdings, 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) and 15d-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 our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others 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 the preparation of financial statements for externalpurposes 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 the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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 are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date:February 26, 2018/S/ JOHN W. CROWLEY Name:John W. Crowley Title:Chief Financial Officer and Treasurer(Principal Financial and Accounting Officer)Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Mary Anne Heino, the Chief ExecutiveOfficer, and John W. Crowley, the Chief Financial Officer, of Lantheus Holdings, Inc. (the “Company”), hereby certify, that, to their knowledge:1.The Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Report”) of the Company fully complies with therequirements of Section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date:February 26, 2018 /S/ MARY ANNE HEINO Name:Mary Anne Heino Title:President and Chief Executive Officer Date:February 26, 2018/s/ JOHN W. CROWLEY Name:John W. Crowley Title:Chief Financial Officer and Treasurer (PrincipalFinancial Officer and Principal Accounting Officer)A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished tothe Securities and Exchange Commission or its staff upon request.

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