Gary Santo - Head of Capital Markets and Investor Relations Mary Anne Heino - President and Chief Executive Officer Jack Crowley - Chief Financial Officer.

Erin Wright - Credit Suisse Larry Biegelsen - Wells Fargo Travis Steed - Cantor Fitzgerald.

Good afternoon, ladies and gentlemen. I would like to welcome everyone to the Lantheus Holdings' Second Quarter 2017 Earnings Conference Call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes.

A replay of the audio webcast will be available in Investors section of the company's website approximately two hours after completion of the call through September 1, 2017. I would now like to turn the call over to your host for today, Gary Santo, Head of Capital Markets and Investor Relations..

Thank you, Howard. Good afternoon everyone, and thank you for joining us for Lantheus Holdings' second quarter 2017 earnings conference call. With me on the call today are Mary Anne Heino, our President and Chief Executive Officer; and Jack Crowley, our Chief Financial Officer.

Please note that earlier this afternoon, we issued a press release also filed with the Securities and Exchange Commission under Form 8-K reporting our second quarter 2017 results. Later this afternoon, we anticipate filing our Form 10-Q with the SEC for the quarter ended June 30, 2017.

You can find these documents, as well as a replay of this call in the Investor section of our website at www.lantheus.com.

Remarks that we make today regarding future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, which we disclose in more detail in the risk factor sections of our Form 10-K and 10-Q.

We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update any such forward-looking statements in the future, we specifically disclaim any obligation to do so.

Finally, on today's call, we will reference certain non-GAAP financial measures with respect to our performance. We use these non-GAAP indicators for financial and operational decision-making and as a means to evaluate our performance.

Reconciliations to GAAP metrics for EBITDA, adjusted EBITDA, adjusted operating income, adjusted net income, adjusted net income for diluted common share and free cash flow are set forth in our earnings press release.

On particular note, these tables include the reconciliation of our GAAP net income to adjusted EBITDA, a metric we consider to be particularly relevant at this time due to the variability of our technology transfer activities and related costs.

Mary Anne will begin her comments today with a high level review of our second quarter accomplishments, after which Jack will provide a more detailed review of our financial performance during the quarter. Mary Anne will then provide additional and closing comments. With that, I will now turn the call over to Mary Anne..

Thank you, Gary. And welcome to everyone joining us today on our conference call. Performance for the quarter was once again very strong with second quarter 2017 results exceeding the high end of our guidance for the quarter. Total worldwide revenues for the quarter grew about 14%, as compared to the second quarter of 2016.

For the second consecutive quarter, our flagship imaging agent DEFINITY demonstrated worldwide revenue growth of approximately 20%, compared to the same period a year ago, driven by higher review unit volumes.

During the second quarter, terms under our nuclear contracting strategy contributed to approximately 6% revenue growth in our TechnoLite product on a year-over-year basis. Likewise, Xenon revenues for the quarter were up 17%, compared to the second quarter of 2016, primarily as a result of higher contracted volumes.

Also during the quarter, we received an upfront payment of $5 million as part of the collaboration and license agreement with GE Healthcare for flurpiridaz F 18. These strong results yielded an increase in our net income of 85%, as well as an approximately 31% increase in our adjusted EBITDA, compared to the second quarter of 2016.

Excluding the proceeds from GE, net income grew by approximately 20%, and adjusted EBITDA grew by approximately 8% year-over-year. Combined with the significant reduction in our debt service cost, these results enable us to make additional investments in strategic initiatives in the future, while continuing to drive bottom-line results.

I now invite Jack to provide a more detailed review of our second quarter 2017 results, as well as our updated guidance for the year, after which I will provide an update on some of our strategic initiatives and some closing comments.

Jack?.

Thanks Mary Anne and good afternoon everyone. As a reminder, the tables included in today's press release include a reconciliation of our GAAP results to the as adjusted non-GAAP performance I will be covering with you this afternoon.

I’ll begin my comments by focusing on our second quarter results, as compared to the second quarter of 2016 followed by our third quarter and revised full year guidance. In the second quarter of 2017, Lantheus delivered $88.8 million in worldwide revenue, an increase of 13.9%, compared to $78 million for the second quarter of 2016.

Excluding the impact of the GE payment that Mary Anne referenced earlier, as well as the impact of the August 2016 sale of our Australian radiopharmacy business year-over-year revenue grew 10.6%.

Strong growth within our primary product lines has continued with DEFINITY once again leading the way, posting worldwide revenues totaling $40.1 million for the quarter, a 19.9% increase over last year.

Accurately TechneLite in the second quarter was $26.7 million, an increase of 5.8% and Xenon revenue for the second quarter was $7.9 million, an increase of 17%. Finally, revenue from our other product category was $14.1 million in the second quarter, up 12.8% from one year ago. This is primarily attributable to the payment from GE mentioned earlier.

Moving below the revenue line, our second quarter 2017 gross profit margin, excluding technology transfer activities, which we referred to in our reconciliations as new manufacturing costs, totaled approximately 53%. Excluding the impact of the GE payment, our gross profit margin was approximately 49%, an increase of 310 basis points over last year.

This improvement is attributable to the increased contribution of our higher margin products, as well as the impact of Xenon cost savings generated by the addition of processing and finishing capabilities at our Billerica facility late last year.

As previously noted, we expect our gross profit margin, excluding technology transfer activities to be in the high-40s so we are pleased with this quarter's performance. Operating expenses were $28.1 million for the second quarter of 2017, an increase of $6.4 million from last year.

This is largely attributable to $1.6 million in R&D expense related to accelerated depreciation under our campus consolidation plan, as well as $1.8 million in increased sales and marketing expenses as we continue to invest in our echo business, as well as our nuclear product lines.

Operating income for the second quarter of 2017 was $17.9 million, an increase of $3.7 million over last year. Excluding the impact of accelerated depreciation, public secondary offering, and other costs, adjusted operating income for the second quarter grew by $6.7 million or 47.3%, compared to the prior year.

Further excluding the impact of the GE payment adjusted operating income grew by $1.9 million or 13.2%.

Moving below operating income, second quarter interest expense totaled $4.3 million, a 38.6% improvement over the same period a year ago as a result of over $87 million in debt principal reduction, as well as the lower interest rate of our debt as a result of our refinancing activities completed in the first quarter.

Net income for the second quarter of 2017 was $13.6 million or $0.35 per diluted share, compared to $7.4 million or $0.24 per diluted share for the second quarter of 2016. Excluding accelerated depreciation public secondary operating costs and other costs, adjusted net income for the second quarter grew by $9.2 million or 126.9%.

Further excluding the impact of the GE payment, adjusted net income for the second quarter grew by $4.4 million or 60.5%, compared to the prior year. Moving on to our quarter end balance sheet, cash flow, and liquidity as of June 30, 2017 we had cash and cash equivalents totaling $57.2 million.

Borrowing capacity under our revolving credit facilities was $75 million making our total liquidity, including cash on hand $132.2 million, providing substantial support for our operating needs and representing a 48% improvement over last year. Second quarter 2017 operating cash flow totaled $20.6 million, compared to $17.6 million last year.

Capital expenditures during the second quarter were $3.4 million, compared to $0.7 million in the second quarter of 2016. The relative increase in capital expenditures is principally due to timing matters, which resulted in lower than expected spend in the second quarter of 2016.

Turning to our guidance for both the upcoming quarter and full year, excluding the impact of the $5 million payment from the GE agreement we are increasing our full-year total revenue guidance to a range of $318 million to $322 million and our full-year adjusted EBITDA guidance to a range of $82 million to $85 million.

Including the GE payment, full-year revenue and adjusted EBITDA guidance ranges are $323 million to $327 million, and $87 million to $90 million, respectively. For the third quarter of 2017, we anticipate a total revenue range of $75 million to $78 million.

Contemplating the investment and strategic initiatives, which Mary Anne referenced, we anticipate an adjusted EBITDA range for the third quarter of $17 million to $19 million. In closing, we are extremely pleased with our performance during the second quarter, which builds upon the momentum established in the first quarter.

We report to continuing that success into the second half of the year. With that, I will now turn the call back over to Mary Anne..

Thank you, Jack. I would now like to spend a few minutes discussing a number of strategic initiatives that are key contributors to the Lantheus growth story. As you might imagine, DEFINITY continues to be an important component of that story.

With the number of echocardiogram procedures performed in the US continuing to rise and penetration rate for use of an imaging agent in those procedures increasing, we believe this remains a strong market with continued opportunity.

Outside of the U.S., we continue to seek opportunities in new markets such as Taiwan, where we expect to have products in the market before the end of the year, following last quarter's announcement of our regulatory approval in that country.

While still early into last year’s re-launch in Austria, Germany, the Netherlands, and the UK, we believe there are additional opportunities in other EU, as well as Latin American countries, where we already possess regulatory approval.

We continue to work with our partner Double-Crane on our DEFINITY China program and are pleased to announce we have received the important Chinese regulatory approval, necessary to start our confirmatory study.

In fact, the first patient in the cardiac study has already enrolled, and we anticipate that first patients will enroll for the kidney and liver studies before the end of the year. I’d now like to spend a few moments discussing our next generation program for DEFINITY.

As you’ve heard me share previously, DEFINITY has a composition of matter patent set to expire in mid-2019 followed by a method of manufacture patent approximately two years later. Our next generation program is multi-faceted. Based upon market dynamics and competitive sensitivities, I choose not to disclose specific details.

However, be assured that Lantheus seeks to maintain its leadership position in the echo contrast market through a franchise approach that contemplates alternatives in formulation, indication, and manufacturing, as well as additional product offerings. Looking beyond DEFINITY, we continue to advance our pipeline assets.

Our collaboration with GE Healthcare on flurpiridaz F 18 continues to progress with technology trends for well advanced and regulatory and clinical development activities moving forward rapidly. Next in the pipeline is our cardiac neuronal agent assets CNA. This is also a fluorine 18 based PET agent.

However, instead of assessing blood flow to the heart muscle, this agent focuses on nerve function in the heart. We believe that CNA has the potential to identify heart failure patients, who may benefit from the implantation of a cardioverter defibrillator, possibly decreasing the risk of sudden cardiac death.

Work with independent investigators in the US Canada and Europe continues as we accumulate clinical data that may allow us to enter into pivotal clinical trials. Finally we continue to look at products that will further strengthen our existing nuclear product portfolio or could benefit from additional marketing efforts.

This coupled with our continued investment in growing our core business may cause a slight increase in our sales and marketing spend in the coming quarters. We look forward to providing updates on our progress with strategic initiatives, while continuing to deliver shareholder value in the second half of 2017.

With that, I’ll conclude my comments and open the call for questions.

Operator?.

[Operator Instructions] Our first question or comment comes from the line of Erin Wright from Credit Suisse. Your line is open..

Great thanks. Can you speak to I guess the overall demand trends and pricing trends driving the continued strength for DEFINITY in the quarter and should we expect this momentum to continue? Thanks..

Yeah, Erin, it is Jack, I will take that question. When we talk about DEFINITY, we’ve talked about the various components that add to that and certainly pricing and market is one of those. In Q2 2017 over 2016, we certainly talk about the volume increase that we’ve seen and the number of procedures being done.

As we look for the momentum to continue, we will certainly look to go through the rest of the year and push as much as we can.

I know Erin you joined the team late last year, but one of the things we talked about last year in Q3 was that we do see a summer, we will call it seasonality and the number of procedures that are done in over the summer months, whereas last year we saw our Q3 overall decrease versus Q2, and we expect that trend to continue this year.

So if you look at kind of our for full-year guidance, you can see the lower half of 2017 versus the first half of 2017 overall. So that’s how we kind of manifest that through. Having said that, we are really pleased with how DEFINITY is performing and we’re doing - our sales team is working very hard to continue that performance..

Erin, I’ll add to that. Jack mentions a little bit of a book hold on the vacationality that we see in the third quarter, but the macro trends for our market are really quite simple to describe for DEFINITY. First is the echocardiogram market, and as we noted continues to grow.

Second, is the number of procedures within that market that are executed using a contrast agent, there we also continue to see growth. The third component that then defines our performance in the market is our market share and I’m happy to report that we continue to hold a very strong leadership position with regards to market share in the market.

The fourth item that ultimately defines our revenue is our price per Vial and that is not something that we disclose..

That’s very helpful. And then just on the quarterly progression here, I guess you get somewhat of a timbered EBITDA margin trend, can you kind of speak to the factors, I think you mentioned the increased sales and marketing spend that you alluded to, I guess can you give us some more detail on some of your strategic initiatives there? Thanks..

I can speak to the financial aspect of it and then I will turn it over to Mary Anne for further discussion.

From a financial perspective Erin, the things that we saw in the second quarter, I was trying to be clear and I thought I talked a little too much in the call about pulling out the GE payment, I mean that’s a one-time event that really drove some increased EBITDA margin, but even when you pull that out, we still saw a strong EBITDA margin in the second quarter, and part of that is related to some timing of expenses that we expect to see.

We thought we are you going to happen in Q2 and just do the timing that will push to the second half of the year.

So, when you look at the overall guidance for the year, we still expect to see a strong EBITDA margin of about 26%, but if you look at the guidance for Q3, you can see some of that pressure on the bottom line P&L coming through in that guidance..

I will speak to some of the other timing of investments.

I think Jack also referenced during the call that some of the difference between Q3 and Q2 of this year has to do with timing of expenses that we had thought would hit in Q2 and now we'll hit in Q3, but other purposeful investments in Q3, certainly relate to our DEFINITY life-cycle program in some of the activities that will undertake there.

In addition on our campus, one of the items that we’ve spoken to previously is, we run a large and highly integrated manufacturing campus and we’re constantly looking at these full foot print of our campus and considering ways to make it more efficient or make it more productive.

Some of the expenses that we see in Q3 are related to investments that we are confident, pay us back either in efficiency or increased capability in the future..

Great, thank you so much..

Thank you. Our next question or comment comes from line of Larry Biegelsen from Wells Fargo. Your line is open..

Hi, good afternoon guys, congrats again on a nice quarter Mary Anne you’ve been talking about business development for few quarters now, I believe, could you give us a little bit more color on the criteria that you are using regarding say, dilution and how is the pipeline of deals and what I'm wondering is, why haven't you done that deal yet, is the pipeline full, any color on business development will be helpful? And I have a follow-up..

Thanks Larry. Happy to talk about that. I won't speak to the larger market about whether the pipeline of deals is full or not. I will speak to what we see and what we’re interested in, you know we find ourselves in a position where from a liquidity standpoint we have choices, we have choices on how to fund deals that might be attractive to us.

And with that, we are looking at deals ideally. The perfect deal has a short return in time to revenue production for our company, but that’s not an absolute knockout criteria.

We look first at adjacencies to the businesses we’re already in, and you’ve heard me reference some work we’re doing around our nuclear product portfolio, both within the products we have and some external assets that we are interested in.

If we look, recently, and you are right Larry, I have been talking about business development, I’m going to continue to talk about it and my goal is to bring you transactional information. But even in recent history you have seen us announce three different deals.

We announced the divestiture of our Canadian radiopharmacy business, the divestiture of sale of our Australian radiopharmacy business and then in the last quarter we announced our flurpiridaz deal.

So, we’re active, you know these are deals that do take time to close, but I would signal that you will continue to hear me speak not only somewhat prospectively or conceptually about business development, but then the actual details of transactions..

That’s helpful.

I mean, would you be willing to say if it’s pre-revenue or revenue assets you are looking for and how you think about dilution?.

So, I do look at both and when I look at the dilution, I absolutely consider how we’ve come to where we are today, and what we’ve been rewarded for from a market perspective, and I take that very seriously and that is important that we continue to deliver top and bottom line.

So that is important, but I’m also looking out of longer forward look, I would say, and as I look at it over the five-year period for our company, my responsibility is to continue to deliver shareholder value. So, I’m looking at the entire time frame.

As I look at the more mathematical metrics that we look at, absolutely is ROI and NPV and if those two match and those two are strong than it’s a deal that we will consider..

That's helpful. And then Mary Anne, maybe just more specifically on the echo market, where - are you willing to give us any sense of where do you think contrast penetration is today, whether it be the overall echo market in the U.S.

or the sub-optimal segment and where do you think that can go over the next 3 years to 5 years?.

I will only speak to one step, because I don’t to confuse the audience, as Larry is referring to, we can either state the current penetration of contrast use across the entire spectrum of echo procedures, which is 33 million plus denominator or we can speak to how it’s progressing versus that subset of studies, which is about 20%, so you want to call that about maybe 6.2 million studies that are considered optimal, sub optimal and therefore ideal for the addition of a contrast agent.

I will tell you that that current penetration rate now well exceeds 5%, and for those of you who have followed us over the years, you’ve known that, you have seen us talk about that and 3% up, we’re [indiscernible] Larry, I see no reason that with medical education and continued promotional effort by myself and also by our competitors in this space, why we can't approach - ultimately approach that 20% mark.

It’s a very promotionally sensitive product. We are the absolute lead in that promotional effort and quite frankly I would love to see my competitors come to the market with more voice and energy around advocating for the appropriate use of contract..

Let me speak one last question and Mary Anne is there any update on the Cardinal and Triad contracts that are due to expire at year-end and remind us again of the products it involved there? Thanks for taking the questions..

You’re welcome as always Larry. Both those contracts are within our nuclear products portfolio, so the lead product contracted within those are TechneLite, which is our generator, Xenon, which is our preliminary, our nuclear pulmonary agent and then the kind of numerous cold and other hot products that form a larger portfolio.

We’ve not announced a new contract with either Cardinal or Triad as we look out to the market, Triad is currently involved in a transaction with another company within the space which is [indiscernible] and there is a transaction we are currently treating two of them, as you can imagine that, put somewhat of a pause on ability to move forward strongly on detail side items that our relationship with both those customers is strong.

I think, I’m fair in saying the current contract we have has been a win-win for both companies, both customers and supplier, we being the supplier and we being the reason that we cannot replicate that going forward..

Thanks for taking the questions..

You're welcome..

Thank you. Our next question or comment comes from the line of Raj Denhoy from Jefferies. Your line is open..

Hi Mary and Jack, this is Christian [ph] on for Raj, thanks for taking the question.

First one just on the APAC front, which you touched on briefly that you’re going to begin Q be selling into the Taiwanese market at the end of the year, maybe if you could just help us understand a, the size of the opportunity in Taiwan, and then b, the ability to extend into China, it has been a major focus of the story obviously in the past and just looking for an update of when you will be able to sell products there?.

Sure Raj [ph]. First let me say Taiwan, as a market, as a solo market is small.

And I think like many other markets for life sciences, the key markets really are U.S., EU, Canada and everything else, you know bearing some unique examples the rest of the markets are small and collectively you source, I’m going to say probably less than 15% of your total revenue from the rest collective market.

We recognized that to be a small market.

We do think it’s an important market because it also solidifies our entry into specific RIM that our re-entry back into specific RIM with DEFINITY and all evidence that we gather in the use of DEFINITY in the inhabitants of Pacific RIM is helpful and generally look positively on by other specific RIM countries.

With specific reference to China as I mentioned that program continues to develop or we have a partner who’s highly engaged, I was actually over in China, in March, with them and I had my Chief Medical Officer, Cesare Orlandi with me. And Ces was just there over the weekend.

He was there to witness the first patient in, in the cardiac study and what I can say is, that the patient population there is massive, we see there is a good sign for an accelerated or a fast completion of our clinical studies, and also as representative of the opportunity once we are proved.

The piece in-between that I can't speak too definitively because I don't control it is the approval process. This is in the hands of our partner Double-Crane, he is very capable, but they are already marketed in China, where there is very high demand on the regulatory powers that be for approval of product into that market.

We are lucky that our product does not consider to generic and therefore our approval queue is different than the very long approval queue that is populated with generics interested in entering China, but I still will offer that, if we look at what’s published by the Chinese FDA, and if we apply their published timeline to DEFINITY than it is possible that DEFINITY could be approved, as early as the end of 2018, but again I don't control that.

We are continuously accessing and evolving. We have got great consultants working with us over there, but at the end of the day it is the timeline of the Chinese FDA that will ultimately determine when we can enter that market..

Thanks and then just on the partnership with Double-Crane, if you could refresh us, what is the difference in the margin structure for you when you’re selling through them as a partner just in terms of, what it’s going to look like when you are in the market in China?.

I don't think we’ve disclosed the sum of the finer details of that arrangement. So, I’m not going to use it as a prompt session to discuss it.

I think what I have shared in the past that we believe speaks to the arrangement is, the Chinese market, given that we will compete in both the cardiac and abdominal areas for use of the contract agent is approximately four times the size of the US market. So we see tremendous opportunity there, when we are in the marketplace.

As we get closer to launch, we will be able to offer you more information. I will share that our contract is based on a transfer price arrangement with Double-Crane, so really guaranteed revenue per vial that moves into a market. So, in that sense for us it’s much more of a volume than a margin play..

Thanks, and, just, thanks again for taking the questions, just one last one on the nuclear product side, I was wondering in terms of market dynamics as the other competitor in the market has shifted Curium, have you seen any changes in the competitive dynamics in either your discussions with new contracts or just in general the fulfillment capabilities of Curium, compared to Mallinckrodt when they are exiting the business? Thank you again..

So first let me say, and I have said this before that I’m thrilled to have a new competitor in the market and one that’s wholly dedicated to the nuclear space, while those assets were at the company they were at before, I think it was fairly public knowledge that they were not considered to be a strategic set of assets.

So I’m glad to have them now, a wholly-owned and by someone who is really interested in the market and committed to the market.

You are going to find continuously from me that it is not my choice to speak about my competitors, I also would ask them to respect and not speak about me, but I will say something that we have made fairly obvious, it’s a highly contracted market.

So, I wouldn't expect to see quick shifts in the dynamics of the market for having a transactional change in ownership that that market was already contracted, and even going forward as we look at the market, you will hear me speak as we close each contract, you will hear me speak in general to what our position is in the market, but I will never offer specifics on our market share versus our competitors..

Thank you..

Thank you. Our next question or comment comes from the line of Travis Steed from Cantor Fitzgerald. Your line is open..

Thanks for taking the questions.

So, in China you mentioned the large patient populations, but can you discuss a little bit about how likely clinicians are to adopt and would you expect that to be faster than we have seen in the US?.

I’m not sure that I am capable of having an intelligent comment there just because we are not in the market yet. I will tell you that what we have seen in the US market is that the product is promotionally sensitive. I can't speak to whether it is the same dynamics or uptake in the same pattern would occur in China.

I can tell you that the impact of adding contrast to a study is dramatic, and especially if you look at in the Chinese market, the opportunity for use of contrast in differentiating liver disease from oncologic versus suicidal or non-cancer driven impact deliver, it’s really quite dramatic when you see what contrast help clear that can be made once you had contrast to that scan.

And I would hope that with the support of Double-Crane they have a terrific position in that market, they are very well known, they are very well respected that we will see what, you know appropriate uptake of use of agent in Chinese medical societies..

Okay that’s helpful, thank you.

And then on the next gen DEFINITY program, when can we hear more specifics around your plans there and specifically like when new products are heading the market? And then can you also remind us of any selling day differences moving to the second half and how much that impacts growth rates?.

Sure. You’ve heard me say and I am honestly not trying to hide behind words, but for us it is competitively sensitive. Some of the components we have to our program. So for every right reason for shareholder value, I am actively choosing not to offer more detail about what they are.

As you can imagine if we execute transactions then of course, I will announce them to you.

As we look at the second half of the year your question is actually very smart on asking about selling days, actually if you look at our selling days across the year, the second half of the year is lighter than first half of the year and in fact our final quarter, our Q4 quarter has two less selling days than our second quarter.

As our sales grow, than the impact of each selling day on quarter-over-quarter difference is actually magnified, and there are two less selling days in Q4 versus Q2..

Okay, thanks for taking the questions..

You’re very welcome..

Thank you. That concludes the Q&A portion for this call today. This also concludes today's call. Thank you for participating in today's conference. You may now disconnect. Everyone have a wonderful day..