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Summary

  • Global leader in developing, manufacturing, selling and distributing innovative diagnostic medical imaging agents and products.
  • 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.

Based in North Billerica, MA, Lantheus Holdings (LNTH) scheduled a $125 million IPO on the Nasdaq with a market capitalization of $370 million at a price range midpoint of $13.50 for Wednesday, July 30, 2014.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Co-Managers: Citi, Jefferies & Co.

Joint Managers: RBC Capital Markets, Wells Fargo Securities, Baird

End of lockup (180 days): Monday, January 26, 2015

End of 25-day quiet period: Monday, August 25, 2014

Summary

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.

Valuation

Glossary

Accumulated deficit ($mm)

-$353

Per share dilution

-$20.57

Valuation Ratios

Mrkt Cap ($mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Annualizing Jan '14 qtr

Lantheus Holdings

$369

1.3

-70.9

-2.8

-1.9

34%

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.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

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.

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 files 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.

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.

Disclaimer: This LNTH IPO report is based on a reading and analysis of LNTH's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.