IPO Report: Lantheus Holdings (LNTH)

Lantheus Holdings (LNTH) is a global leader in developing, manufacturing, selling and distributing innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis of cardiovascular and other diseases. It is headquartered in North Billerica, MA.

Nineteen other companies are scheduled to IPO for the week of July 28, 2014.  The full IPO calendar is available at IPOpremium.

The manager and co-managers are Citi, Jefferies & Co.  The joint managers are RBC Capital Markets, Wells Fargo Securities, Baird.

LNTH scheduled a $125 million IPO with a market capitalization of $370 million at a price range midpoint of $13.50 for Wednesday, July 30, 2014 on the Nasdaq.   SEC filings

Lantheus IPO Overview

LNTH is a global leader in developing, manufacturing, selling and distributing innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis of cardiovascular and other diseases.

LNTH Valuation

Glossary

LNTH Conclusion

The rating is neutral minus.

Never profitable, accumulated deficit of -$353 million.

Revenue down in 2012 and 2013, up only 3% in Q1 '14 vs Q1 '13.
In Q1 '14 interest payments exceeded operating earnings.

Lantheus Business

LNTH is a global leader in developing, manufacturing, selling and distributing innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis of cardiovascular and other diseases.

LNTH’s agents are routinely used to diagnose coronary artery disease, congestive heart failure, stroke, peripheral vascular disease and other diseases.

Clinicians use LNTH’s imaging agents and products across a range of imaging modalities, including nuclear imaging, echocardiography and magnetic resonance imaging, or MRI.

LNTH believes that the resulting improved diagnostic information enables healthcare providers to better detect and characterize, or rule out, disease, potentially achieving improved patient outcomes, reducing patient risk and limiting overall costs for payers and the entire healthcare system.

LNTH’s commercial products are used by nuclear physicians, cardiologists, radiologists, internal medicine physicians, technologists and sonographers working in a variety of clinical settings.

LNTH sells its products to radiopharmacies, hospitals, clinics, group practices, integrated delivery networks, group purchasing organizations and, in certain circumstances, wholesalers.

LNTH sells its products globally and have operations in the United States, Puerto Rico, Canada and Australia and distribution relationships in Europe, Asia Pacific and Latin America.

Financial Summary

For the three months ended March 31, 2014, LNTH recorded revenues, net income (loss) and Adjusted EBITDA of $73.3 million, $(1.3) million and $16.0 million, respectively. For the year ended December 31, 2013, LNTH recorded revenues, net income (loss) and Adjusted EBITDA of $283.7 million, $(61.6) million and $47.4 million, respectively. LNTH’s products are sold in 30 countries and LNTH generated approximately 23% and 25% of its revenues outside of the United States for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively.

LNTH Dividend Policy

No dividends are planned initially.

Intellectual Property

LNTH owns various trademarks, service marks and trade names, including DEFINITY, TechneLite, Cardiolite, Neurolite, Ablavar, Vialmix, Quadramet (U.S. only) and Lantheus Medical Imaging. LNTH has registered these trademarks, as well as others, in the United States and numerous foreign jurisdictions.

LNTH actively seeks to protect the proprietary technology that it considers important to its business, including chemical species, compositions and formulations, their methods of use and processes for their manufacture, as new intellectual property is developed.

In addition to seeking patent protection in the United States, LNTH file patent applications in numerous foreign countries in order to further protect the inventions that LNTH considers important to the development of its international business.

LNTH also relies upon trade secrets and contracts to protect its proprietary information.

As of May 31, 2014, LNTH’s patent portfolio included a total of 39 issued U.S. patents, 206 issued foreign patents, 19 pending patent applications in the United States and 146 pending foreign applications.

Some of these patents include claims covering the composition of matter and methods of use for all of LNTH’s preclinical and clinical stage agents.

Lantheus' Competition

LNTH’s principal competitors in existing diagnostic modalities include large, global companies that are more diversified than LNTH is and that have substantial financial, manufacturing, sales and marketing, distribution and other resources.

These competitors include Mallinckrodt, GE Healthcare, Bayer, Bracco and Draxis, as well as other competitors.

LNTH cannot anticipate their competitive actions, such as significant price reductions on products that are comparable to its own, development of new products that are more cost-effective or have superior performance than LNTH’s current products or the introduction of generic versions after its proprietary products lose their current patent protection.

LNTH’s current or future products could be rendered obsolete or uneconomical as a result of this competition.

Generic Competition

Generic competition has substantially eroded LNTH’s market share for Cardiolite, beginning in September 2008 when the first generic product was launched. LNTH is currently aware of four separate, third party generic offerings of sestamibi. LNTH also sells its own generic version of sestamibi.

5% Stockholders

Avista         98.4            %               

Use of Proceeds

LNTH intends to use the $114 million in proceeds from its IPO as follows:

$104.9 million to redeem a portion of its outstanding 9.750% Senior Notes due 2017, which includes a $4.9 million redemption premium;

$8.0 million to pay down the amounts outstanding under its revolving credit facility;