2016 Q4 Form 10-Q Financial Statement

#000119312516755496 Filed on November 01, 2016

View on sec.gov

Income Statement

Concept 2016 Q4 2016 Q3 2015 Q3
Revenue $74.35M $73.06M $74.12M
YoY Change 4.42% -1.43% -2.06%
Cost Of Revenue $39.70M $39.38M $40.42M
YoY Change 4.97% -2.56% -8.23%
Gross Profit $34.65M $33.68M $33.71M
YoY Change 3.79% -0.07% 6.53%
Gross Profit Margin 46.6% 46.1% 45.47%
Selling, General & Admin $18.68M $18.80M $17.84M
YoY Change 4.18% 5.37% -7.89%
% of Gross Profit 53.92% 55.81% 52.93%
Research & Development $3.710M $2.849M $2.458M
YoY Change 20.85% 15.91% -19.38%
% of Gross Profit 10.71% 8.46% 7.29%
Depreciation & Amortization $5.060M $3.840M $1.900M
YoY Change 68.67% 102.11% -13.64%
% of Gross Profit 14.6% 11.4% 5.64%
Operating Expenses $22.39M $21.65M $20.30M
YoY Change 6.67% 6.65% -9.46%
Operating Profit $12.26M $12.60M $13.41M
YoY Change -1.08% -6.06% 45.41%
Interest Expense -$6.360M $6.792M $7.100M
YoY Change -19.08% -4.34% -167.62%
% of Operating Profit -51.89% 53.93% 52.95%
Other Income/Expense, Net $440.0K -$148.0K -$183.0K
YoY Change 0.0% -19.13% -141.5%
Pretax Income $5.740M $4.240M $6.125M
YoY Change 15.49% -30.78% -763.6%
Income Tax $880.0K $20.00K $739.0K
% Of Pretax Income 15.33% 0.47% 12.07%
Net Earnings $4.869M $4.220M $5.386M
YoY Change 24.34% -21.65% -721.22%
Net Earnings / Revenue 6.55% 5.78% 7.27%
Basic Earnings Per Share $0.13 $0.14 $0.18
Diluted Earnings Per Share $0.13 $0.13 $0.18
COMMON SHARES
Basic Shares Outstanding 35.72M shares 31.22M shares 30.36M shares
Diluted Shares Outstanding 32.40M shares 30.76M shares

Balance Sheet

Concept 2016 Q4 2016 Q3 2015 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $51.20M $53.20M $21.90M
YoY Change 79.02% 142.92% -19.19%
Cash & Equivalents $51.18M $53.20M $21.92M
Short-Term Investments
Other Short-Term Assets $5.183M $6.369M $5.210M
YoY Change 34.59% 22.25% 24.05%
Inventory $17.64M $16.06M $16.58M
Prepaid Expenses
Receivables $36.82M $34.84M $39.72M
Other Receivables $700.0K $0.00 $0.00
Total Short-Term Assets $110.8M $110.5M $83.44M
YoY Change 23.12% 32.4% -6.67%
LONG-TERM ASSETS
Property, Plant & Equipment $94.19M $84.98M $92.39M
YoY Change -1.53% -8.02% -3.86%
Goodwill $15.71M $15.71M $15.71M
YoY Change 0.0% 0.0%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $20.00M $19.73M $20.12M
YoY Change -2.51% -1.95% -27.63%
Total Long-Term Assets $145.1M $144.5M $152.7M
YoY Change -4.79% -5.37% -10.49%
TOTAL ASSETS
Total Short-Term Assets $110.8M $110.5M $83.44M
Total Long-Term Assets $145.1M $144.5M $152.7M
Total Assets $255.9M $255.0M $236.1M
YoY Change 5.58% 7.98% -9.18%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $18.94M $13.62M $10.70M
YoY Change 62.48% 27.26% -30.52%
Accrued Expenses $21.20M $21.90M $20.00M
YoY Change 14.59% 9.5% -43.02%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change -100.0%
Long-Term Debt Due $3.650M $3.650M $3.650M
YoY Change 0.0% 0.0%
Total Short-Term Liabilities $43.84M $39.12M $34.32M
YoY Change 23.41% 13.98% -42.42%
LONG-TERM LIABILITIES
Long-Term Debt $274.5M $294.6M $350.4M
YoY Change -21.55% -15.92% -12.23%
Other Long-Term Liabilities $34.75M $33.72M $33.52M
YoY Change 1.77% 0.59% -16.21%
Total Long-Term Liabilities $309.2M $328.3M $383.9M
YoY Change -19.48% -14.48% -12.59%
TOTAL LIABILITIES
Total Short-Term Liabilities $43.84M $39.12M $34.32M
Total Long-Term Liabilities $309.2M $328.3M $383.9M
Total Liabilities $362.4M $376.1M $426.3M
YoY Change -15.26% -11.77% -14.54%
SHAREHOLDERS EQUITY
Retained Earnings -$332.4M -$337.3M -$363.1M
YoY Change -7.45% -7.11%
Common Stock $226.8M $217.2M $175.4M
YoY Change 28.99% 23.83%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares 0.000 shares
Shareholders Equity -$106.5M -$121.2M -$190.1M
YoY Change
Total Liabilities & Shareholders Equity $255.9M $255.0M $236.1M
YoY Change 5.58% 7.98% -9.18%

Cashflow Statement

Concept 2016 Q4 2016 Q3 2015 Q3
OPERATING ACTIVITIES
Net Income $4.869M $4.220M $5.386M
YoY Change 24.34% -21.65% -721.22%
Depreciation, Depletion And Amortization $5.060M $3.840M $1.900M
YoY Change 68.67% 102.11% -13.64%
Cash From Operating Activities $12.78M $15.44M $5.420M
YoY Change 1.27% 184.87% -73.59%
INVESTING ACTIVITIES
Capital Expenditures -$2.420M -$2.590M -$2.310M
YoY Change -48.84% 12.12% 26.92%
Acquisitions
YoY Change
Other Investing Activities $60.00K $1.550M $0.00
YoY Change -100.0%
Cash From Investing Activities -$2.360M -$1.050M -$2.310M
YoY Change -50.11% -54.55% 44.38%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -12.26M -16.09M -3.020M
YoY Change 1078.85% 432.78% -58.8%
NET CHANGE
Cash From Operating Activities 12.78M 15.44M 5.420M
Cash From Investing Activities -2.360M -1.050M -2.310M
Cash From Financing Activities -12.26M -16.09M -3.020M
Net Change In Cash -1.840M -1.700M 90.00K
YoY Change -126.86% -1988.89% -99.22%
FREE CASH FLOW
Cash From Operating Activities $12.78M $15.44M $5.420M
Capital Expenditures -$2.420M -$2.590M -$2.310M
Free Cash Flow $15.20M $18.03M $7.730M
YoY Change -12.39% 133.25% -65.4%

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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <b>1.&#xA0;Business Overview</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Description of Business</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> Holdings, a Delaware corporation, is the parent company of LMI, also a Delaware corporation.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The Company develops, manufactures and commercializes innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis and treatment of cardiovascular and other diseases. The Company&#x2019;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 to radiopharmacies, hospitals, clinics, group practices, integrated delivery networks and group purchasing organizations. The Company sells its products globally and has operations in the United States, Puerto Rico and Canada and third-party distribution relationships in Europe, Australia, Asia Pacific and Latin America.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The Company&#x2019;s portfolio of nine commercial products is diversified across a range of imaging procedures. The Company&#x2019;s imaging agents and products include the following:</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">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 United States, is indicated for use in patients with suboptimal echocardiograms to assist in the visualization of the left ventricle, the main pumping chamber of the heart. The use of DEFINITY in echocardiography allows physicians to significantly improve their assessment of the function of the left ventricle.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">TechneLite is a self-contained system, or generator, of technetium (Tc99m), a radioisotope with a six hour half-life, used by radiopharmacies to prepare various nuclear imaging agents.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Xenon Xe 133 Gas (&#x201C;Xenon&#x201D;) is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also cerebral blood flow.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Neurolite is an injectable, technetium-labeled imaging agent used with Single Photon Emission Computed Tomography (&#x201C;SPECT&#x201D;), technology to identify the area within the brain where blood flow has been blocked or reduced due to stroke.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WORD-SPACING: 0px; BORDER-COLLAPSE: collapse; TEXT-TRANSFORM: none; ORPHANS: 2; WIDOWS: 2; LETTER-SPACING: normal; TEXT-INDENT: 0px; -webkit-text-stroke-width: 0px" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Cardiolite is an injectable, technetium-labeled imaging agent, also known by its generic name Sestamibi, used with SPECT technology in myocardial perfusion imaging (&#x201C;MPI&#x201D;), procedures that assess blood flow distribution to the heart.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In the United States, the Company sells DEFINITY through its sales team that calls on healthcare providers in the echocardiography space, as well as group purchasing organizations and integrated delivery networks. The Company&#x2019;s radiopharmaceutical products are primarily distributed through third party commercial radiopharmacies.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The Company&#x2019;s International operations consist of sales directly to end users through its wholly owned radiopharmacy in Puerto Rico and sales through the Company&#x2019;s distributors in Canada, Europe, Australia, Asia Pacific and Latin America.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Basis of Presentation</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (&#x201C;U.S. GAAP&#x201D;) for interim information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (&#x201C;SEC&#x201D;). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.&#xA0;These condensed consolidated financial statements and accompanying notes are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company&#x2019;s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March&#xA0;2, 2016 and updated, as necessary, in this quarterly report.&#xA0;There were no other changes to the Company&#x2019;s accounting policies since December 31, 2015.</p> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Lantheus Holdings, Inc. include all normal and recurring adjustments necessary for a fair statement of the Company&#x2019;s condensed consolidated financial position as of September 30, 2016 and December 31, 2015, results of operations and comprehensive earnings for the three and nine months ended September 30, 2016 and 2015, and cash flows for the nine months ended September 30, 2016 and 2015.&#xA0;The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future period.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Principles of Consolidation</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Manufacturing and Customer Concentrations, Liquidity and Management&#x2019;s Plans</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The Company currently relies on Jubilant HollisterStier (&#x201C;JHS&#x201D;) as its sole source manufacturer of DEFINITY, Neurolite and evacuation vials for TechneLite. The Company recently completed its technology transfer activities at JHS and received Food and Drug Administration (&#x201C;FDA&#x201D;) approval for its Cardiolite product supply. The Company has technology transfer activities ongoing at Pharmalucence for the manufacture and supply of DEFINITY, but such activities have been further delayed and the Company cannot predict when or if Pharmalucence will be able to manufacture and supply DEFINITY.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> Until the Company successfully becomes dual sourced for its principal products, the Company is vulnerable to future supply shortages. Disruption in the financial performance of the Company could also occur if it experiences significant adverse changes in customer mix, broad economic downturns, adverse industry or Company conditions or catastrophic external events. If the Company experiences one or more of these events in the future, it 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.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The Company has historically been dependent on key customers and group purchasing organizations for the majority of the sales of its medical imaging products. The Company&#x2019;s ability to maintain and profitably renew those contracts and relationships with those key customers and group purchasing organizations is an important aspect of the Company&#x2019;s strategy.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> Borrowing capacity under the Company&#x2019;s $50.0 million revolving credit facility&#xA0;(the &#x201C;Revolving Facility&#x201D;), is calculated by reference to a borrowing base consisting of a percentage of certain eligible accounts receivable, inventory and machinery and equipment minus any reserves (the &#x201C;Borrowing Base&#x201D;). If the Company is not successful in achieving its forecasted operating results, the Company&#x2019;s accounts receivable and inventory could be negatively affected, thus reducing the Borrowing Base and limiting the Company&#x2019;s borrowing capacity. As of September 30, 2016, the aggregate Borrowing Base was approximately $40.4 million, which was reduced by the $8.8 million unfunded Standby Letter of Credit and $0.1 million in accrued interest, resulting in a net Borrowing Base availability of approximately $31.5 million. The Company&#x2019;s senior secured term loan facility (the &#x201C;Term Facility&#x201D;), contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. Incremental borrowings under the Revolving Facility may affect the Company&#x2019;s ability to comply with the covenants in the Term Facility, including the financial covenant restricting total net leverage. Accordingly, the Company may be limited in utilizing its net Borrowing Base availability as a source of liquidity.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> Based on the Company&#x2019;s current operating plans, the Company believes its existing cash and cash equivalents, results of operations and availability under the Revolving Facility will be sufficient to continue to fund the Company&#x2019;s liquidity requirements for at least the next twelve months.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Use of Estimates</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> The preparation of condensed consolidated financial statements in conformity with U.S.&#xA0;GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The more significant estimates reflected in the Company&#x2019;s condensed consolidated financial statements include certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirement obligations, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities and accrued expenses. Actual results could materially differ from those estimates or assumptions.</p> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 18px; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 0pt; LETTER-SPACING: normal; TEXT-INDENT: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> <i>Recent Accounting Pronouncements</i></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 6pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In August 2016, the Financial Accounting Standards Board (&#x201C;FASB&#x201D;) issued Accounting Standards Update (&#x201C;ASU&#x201D;) 2016-15,&#xA0;<i>Statement of Cash Flows (Topic 230) &#x2013; Classification of Certain cash Receipts and Cash Payments</i>.&#xA0;ASU 2016-15 will make eight targeted changes to how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce existing diversity in practice.&#xA0;ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.&#xA0;Early adoption is permitted, including adoption in an interim period.&#xA0;Adoption is required on a retrospective basis unless it is impracticable to apply, in which case the amendments for those issues are to be applied prospectively as of the earliest date practicable.&#xA0;The Company is currently evaluating the impact this ASU will have on our cash flows and disclosures.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In March 2016, the FASB, issued ASU 2016-09,&#xA0;<i>Compensation &#x2013; Stock Compensation (Topic 719), Improvements to Employee Share-Based Payment Accounting</i>.&#xA0;ASU 2016-09 simplifies several aspects of accounting for employee share-based payment transactions, including the accounting for income tax consequences, the classification of awards as either equity or liabilities, an accounting policy election for forfeitures, statutory tax withholding requirements and certain classifications on the statement of cash flows.&#xA0;ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods.&#xA0;Early adoption is permitted.&#xA0;The Company is currently evaluating the impact this ASU will have on our financial position, results of operations, cash flows and disclosures.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In February 2016, the FASB, issued ASU 2016-02,&#xA0;<i>Leases (Topic 842)</i>. ASU 2016-02 supersedes the existing guidance for lease accounting,&#xA0;<i>Leases (Topic 840)</i>. ASU 2016-02 was issued to increase transparency and comparability among organizations by requiring lessees to recognize all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset (as defined). The accounting for lessors remains largely unchanged. ASU 2016-02 retains a distinction between finance leases and operating leases. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a lease liability and right-of-use asset. ASU 2016-02 is effective for fiscal years beginning after December&#xA0;15, 2018, including interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company is currently evaluating the impact this ASU will have on our financial position, results of operations, cash flows and disclosures.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: &quot;Times New Roman&quot;; WHITE-SPACE: normal; WORD-SPACING: 0px; TEXT-TRANSFORM: none; FONT-WEIGHT: normal; COLOR: rgb(0,0,0); FONT-STYLE: normal; ORPHANS: 2; WIDOWS: 2; MARGIN-TOP: 12pt; LETTER-SPACING: normal; TEXT-INDENT: 4%; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px"> In May 2014, the FASB issued ASU 2014-09,&#xA0;<i>Revenue from Contracts with Customers (Topic 606</i>) or ASU 2014-09. ASU 2014-09 represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled to receive in exchange for those goods or services. This ASU sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed. In August 2015, the FASB issued ASU 2015-14,&#xA0;<i>Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date</i>, which defers the effective date of ASU 2014-09 to annual reporting periods beginning after December&#xA0;15, 2017 with early adoption permitted as of its original effective date of December&#xA0;15, 2016. In March 2016 and April 2016, the FASB issued ASU 2016-08,&#xA0;<i>Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)&#xA0;</i>and ASU 2016-10,&#xA0;<i>Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing,</i>&#xA0;respectively, which further clarifies the implementation guidance on principal versus agent considerations, identification of performance obligations and accounting for intellectual property licenses.&#xA0;In May 2016, the FASB issued ASU 2016-12,&#xA0;<i>Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients&#xA0;</i>or ASU 2016-12, which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for noncash consideration and completed contracts at transition.&#xA0;The Company is currently evaluating the impact these ASUs will have on our financial position, results of operations, cash flows and disclosures.</p> </div>
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