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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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LANTHEUS HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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35-2318913
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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331 Treble Cove Road, North Billerica, MA
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01862
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(Address of principal executive offices)
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(Zip Code)
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(978) 671-8001
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(Registrant’s telephone number, including area code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report
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Large accelerated filer
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☐
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Accelerated filer
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þ
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging Growth Company
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þ
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Page
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March 31,
2019 |
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December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
112,061
|
|
|
$
|
113,401
|
|
Accounts receivable, net
|
45,021
|
|
|
43,753
|
|
||
Inventory
|
32,044
|
|
|
33,019
|
|
||
Other current assets
|
6,372
|
|
|
5,242
|
|
||
Total current assets
|
195,498
|
|
|
195,415
|
|
||
Property, plant and equipment, net
|
112,211
|
|
|
107,888
|
|
||
Intangibles, net
|
8,686
|
|
|
9,133
|
|
||
Goodwill
|
15,714
|
|
|
15,714
|
|
||
Deferred tax assets, net
|
79,755
|
|
|
81,449
|
|
||
Other long-term assets
|
32,044
|
|
|
30,232
|
|
||
Total assets
|
$
|
443,908
|
|
|
$
|
439,831
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current portion of long-term debt and other borrowings
|
$
|
2,854
|
|
|
$
|
2,750
|
|
Revolving line of credit
|
—
|
|
|
—
|
|
||
Accounts payable
|
15,323
|
|
|
17,955
|
|
||
Accrued expenses and other liabilities
|
24,591
|
|
|
32,050
|
|
||
Total current liabilities
|
42,768
|
|
|
52,755
|
|
||
Asset retirement obligations
|
11,895
|
|
|
11,572
|
|
||
Long-term debt, net and other borrowings
|
263,293
|
|
|
263,709
|
|
||
Other long-term liabilities
|
42,739
|
|
|
40,793
|
|
||
Total liabilities
|
360,695
|
|
|
368,829
|
|
||
Commitments and contingencies (See Note 14)
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock ($0.01 par value, 25,000 shares authorized; no shares issued and outstanding)
|
—
|
|
|
—
|
|
||
Common stock ($0.01 par value, 250,000 shares authorized; 38,818 and 38,466 shares issued and outstanding, respectively)
|
388
|
|
|
385
|
|
||
Additional paid-in capital
|
242,068
|
|
|
239,865
|
|
||
Accumulated deficit
|
(158,191
|
)
|
|
(168,140
|
)
|
||
Accumulated other comprehensive loss
|
(1,052
|
)
|
|
(1,108
|
)
|
||
Total stockholders’ equity
|
83,213
|
|
|
71,002
|
|
||
Total liabilities and stockholders’ equity
|
$
|
443,908
|
|
|
$
|
439,831
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenues
|
$
|
86,510
|
|
|
$
|
82,630
|
|
Cost of goods sold
|
42,426
|
|
|
40,321
|
|
||
Gross profit
|
44,084
|
|
|
42,309
|
|
||
Operating expenses
|
|
|
|
||||
Sales and marketing
|
10,397
|
|
|
10,640
|
|
||
General and administrative
|
12,589
|
|
|
12,543
|
|
||
Research and development
|
4,929
|
|
|
3,989
|
|
||
Total operating expenses
|
27,915
|
|
|
27,172
|
|
||
Operating income
|
16,169
|
|
|
15,137
|
|
||
Interest expense
|
4,592
|
|
|
4,050
|
|
||
Other income
|
(1,187
|
)
|
|
(920
|
)
|
||
Income before income taxes
|
12,764
|
|
|
12,007
|
|
||
Income tax expense
|
2,815
|
|
|
3,796
|
|
||
Net income
|
$
|
9,949
|
|
|
$
|
8,211
|
|
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.26
|
|
|
$
|
0.22
|
|
Diluted
|
$
|
0.25
|
|
|
$
|
0.21
|
|
Weighted-average common shares outstanding:
|
|
|
|
||||
Basic
|
38,603
|
|
|
37,886
|
|
||
Diluted
|
39,787
|
|
|
39,493
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
9,949
|
|
|
$
|
8,211
|
|
Other comprehensive income:
|
|
|
|
||||
Foreign currency translation
|
56
|
|
|
—
|
|
||
Total other comprehensive income
|
56
|
|
|
—
|
|
||
Comprehensive income
|
$
|
10,005
|
|
|
$
|
8,211
|
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders’ Equity |
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance, January 1, 2018
|
|
37,765
|
|
|
$
|
378
|
|
|
$
|
232,960
|
|
|
$
|
(209,013
|
)
|
|
$
|
(1,034
|
)
|
|
$
|
23,291
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,211
|
|
|
—
|
|
|
8,211
|
|
|||||
Forfeiture of dividend equivalent right
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
|
|
—
|
|
|
355
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock option exercises and employee stock plan purchases
|
|
94
|
|
|
1
|
|
|
719
|
|
|
—
|
|
|
—
|
|
|
720
|
|
|||||
Vesting of restricted stock awards and units
|
|
174
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld to cover taxes
|
|
(36
|
)
|
|
(1
|
)
|
|
(708
|
)
|
|
—
|
|
|
—
|
|
|
(709
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
1,796
|
|
|
—
|
|
|
—
|
|
|
1,796
|
|
|||||
Balance, March 31, 2018
|
|
37,997
|
|
|
$
|
380
|
|
|
$
|
234,765
|
|
|
$
|
(200,447
|
)
|
|
$
|
(1,034
|
)
|
|
$
|
33,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, January 1, 2019
|
|
38,466
|
|
|
$
|
385
|
|
|
$
|
239,865
|
|
|
$
|
(168,140
|
)
|
|
$
|
(1,108
|
)
|
|
$
|
71,002
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,949
|
|
|
—
|
|
|
9,949
|
|
|||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
56
|
|
|||||
Stock option exercises and employee stock plan purchases
|
|
37
|
|
|
—
|
|
|
606
|
|
|
—
|
|
|
—
|
|
|
606
|
|
|||||
Vesting of restricted stock awards and units
|
|
365
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld to cover taxes
|
|
(50
|
)
|
|
(1
|
)
|
|
(1,119
|
)
|
|
—
|
|
|
—
|
|
|
(1,120
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
2,720
|
|
|
—
|
|
|
—
|
|
|
2,720
|
|
|||||
Balance, March 31, 2019
|
|
38,818
|
|
|
$
|
388
|
|
|
$
|
242,068
|
|
|
$
|
(158,191
|
)
|
|
$
|
(1,052
|
)
|
|
$
|
83,213
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
9,949
|
|
|
$
|
8,211
|
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
||||
Depreciation, amortization and accretion
|
3,323
|
|
|
3,596
|
|
||
Amortization of debt related costs
|
320
|
|
|
320
|
|
||
Provision for bad debt
|
(190
|
)
|
|
195
|
|
||
Provision for excess and obsolete inventory
|
511
|
|
|
1,220
|
|
||
Stock-based compensation
|
2,720
|
|
|
1,796
|
|
||
Deferred taxes
|
1,741
|
|
|
2,923
|
|
||
Long-term income tax receivable
|
(802
|
)
|
|
(841
|
)
|
||
Long-term income tax payable and other long-term liabilities
|
1,018
|
|
|
854
|
|
||
Other
|
(6
|
)
|
|
(46
|
)
|
||
Increases (decreases) in cash from operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,040
|
)
|
|
(7,816
|
)
|
||
Inventory
|
465
|
|
|
(6,579
|
)
|
||
Other current assets
|
(1,152
|
)
|
|
(1,003
|
)
|
||
Accounts payable
|
1,458
|
|
|
2,160
|
|
||
Accrued expenses and other liabilities
|
(7,847
|
)
|
|
(5,656
|
)
|
||
Net cash provided by (used in) operating activities
|
10,468
|
|
|
(666
|
)
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(10,550
|
)
|
|
(2,135
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
1,000
|
|
||
Net cash used in investing activities
|
(10,550
|
)
|
|
(1,135
|
)
|
||
Financing activities
|
|
|
|
||||
Payments on long-term debt and other borrowings
|
(717
|
)
|
|
(715
|
)
|
||
Proceeds from stock option exercises
|
324
|
|
|
514
|
|
||
Proceeds from issuance of common stock
|
282
|
|
|
206
|
|
||
Payments for minimum statutory tax withholding related to net share settlement of equity awards
|
(1,120
|
)
|
|
(709
|
)
|
||
Net cash used in financing activities
|
(1,231
|
)
|
|
(704
|
)
|
||
Effect of foreign exchange rates on cash and cash equivalents
|
(27
|
)
|
|
(46
|
)
|
||
Net decrease in cash and cash equivalents
|
(1,340
|
)
|
|
(2,551
|
)
|
||
Cash and cash equivalents, beginning of period
|
113,401
|
|
|
76,290
|
|
||
Cash and cash equivalents, end of period
|
$
|
112,061
|
|
|
$
|
73,739
|
|
|
|
Three Months Ended
March 31, 2019 |
|
Three Months Ended
March 31, 2018 |
||||||||||||||||||||
Major Products/Service Lines (in thousands)
|
|
U.S.
|
|
International
|
|
Total
|
|
U.S.
|
|
International
|
|
Total
|
||||||||||||
Product revenue, net
(1)
|
|
$
|
75,434
|
|
|
$
|
10,549
|
|
|
$
|
85,983
|
|
|
$
|
71,488
|
|
|
$
|
10,580
|
|
|
$
|
82,068
|
|
License and royalty revenues
|
|
—
|
|
|
527
|
|
|
527
|
|
|
—
|
|
|
562
|
|
|
562
|
|
||||||
Total revenues
|
|
$
|
75,434
|
|
|
$
|
11,076
|
|
|
$
|
86,510
|
|
|
$
|
71,488
|
|
|
$
|
11,142
|
|
|
$
|
82,630
|
|
(1)
|
The Company’s principal products include DEFINITY and TechneLite and are categorized within product revenue, net. The Company applies the
|
(in thousands)
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||
Amounts included in the contract liability at the beginning of the period
|
$
|
8
|
|
|
$
|
8
|
|
Performance obligations satisfied (or partially satisfied) in previous periods
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Level 1
— Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
•
|
Level 2
— Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs 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 or liability. The Company develops these inputs based on the best information available, including its own data.
|
|
March 31, 2019
|
||||||||||||||
(in thousands)
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market
|
$
|
55,730
|
|
|
$
|
55,730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
55,730
|
|
|
$
|
55,730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
(in thousands)
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market
|
$
|
61,391
|
|
|
$
|
61,391
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
61,391
|
|
|
$
|
61,391
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Income tax expense
|
$
|
2,815
|
|
|
$
|
3,796
|
|
(in thousands)
|
March 31,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
11,521
|
|
|
$
|
11,100
|
|
Work in process
|
9,007
|
|
|
4,261
|
|
||
Finished goods
|
11,516
|
|
|
17,658
|
|
||
Total inventory
|
$
|
32,044
|
|
|
$
|
33,019
|
|
(in thousands)
|
March 31,
2019 |
|
December 31,
2018 |
||||
Land
|
$
|
13,450
|
|
|
$
|
13,450
|
|
Buildings
|
64,957
|
|
|
64,444
|
|
||
Machinery, equipment and fixtures
|
70,133
|
|
|
69,298
|
|
||
Computer software
|
19,846
|
|
|
19,266
|
|
||
Construction in progress
|
29,034
|
|
|
24,169
|
|
||
|
197,420
|
|
|
190,627
|
|
||
Less: accumulated depreciation and amortization
|
(85,209
|
)
|
|
(82,739
|
)
|
||
Total property, plant and equipment, net
|
$
|
112,211
|
|
|
$
|
107,888
|
|
(in thousands)
|
Amount
|
||
Balance at January 1, 2019
|
$
|
11,572
|
|
Accretion expense
|
323
|
|
|
Balance at March 31, 2019
|
$
|
11,895
|
|
(in thousands)
|
Amount
|
||
Remainder of 2019
|
$
|
2,063
|
|
2020
|
2,750
|
|
|
2021
|
2,750
|
|
|
2022
|
261,937
|
|
|
Total principal outstanding
|
269,500
|
|
|
Unamortized debt discount
|
(1,471
|
)
|
|
Unamortized debt issuance costs
|
(1,992
|
)
|
|
Finance lease liabilities
|
110
|
|
|
Total
|
266,147
|
|
|
Less: current portion
|
(2,854
|
)
|
|
Total long-term debt, net and other borrowings
|
$
|
263,293
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Cost of goods sold
|
$
|
440
|
|
|
$
|
229
|
|
Sales and marketing
|
451
|
|
|
302
|
|
||
General and administrative
|
1,574
|
|
|
980
|
|
||
Research and development
|
255
|
|
|
285
|
|
||
Total stock-based compensation expense
|
$
|
2,720
|
|
|
$
|
1,796
|
|
(in thousands)
|
Classification
|
March 31, 2019
|
||
Assets
|
|
|
||
Operating
|
Other long-term assets
|
$
|
1,062
|
|
Finance
|
Property, plant and equipment, net
|
107
|
|
|
Total leased assets
|
|
$
|
1,169
|
|
Liabilities
|
|
|
||
Current
|
|
|
|
|
Operating
|
Accrued expenses and other liabilities
|
$
|
180
|
|
Finance
|
Current portion of long-term debt and other borrowings
|
104
|
|
|
Noncurrent
|
|
|
||
Operating
|
Other long-term liabilities
|
958
|
|
|
Finance
|
Long-term debt, net and other borrowings
|
6
|
|
|
Total leased liabilities
|
|
$
|
1,248
|
|
(in thousands)
|
Three Months Ended
March 31, 2019 |
||
Operating Lease Expense
|
$
|
56
|
|
Finance Lease Expense
|
|
||
Amortization of ROU assets
|
29
|
|
|
Interest on lease liabilities
|
2
|
|
|
Short Term Lease Expense
|
23
|
|
|
Total Lease Expense
|
$
|
110
|
|
|
March 31, 2019
|
Weighted average remaining lease term (Years):
|
|
Operating leases
|
5.5
|
Finance leases
|
1.0
|
Weighted average discount rate:
|
|
Operating leases
|
5.1%
|
Finance leases
|
5.9%
|
|
|
(in thousands)
|
Three Months Ended
March 31, 2019 |
Cash paid for amounts included in the measurement of lease liabilities:
|
|
Operating cash flows from operating leases
|
57
|
Operating cash flows from finance leases
|
2
|
Financing cash flows from finance leases
|
30
|
ROU assets obtained in exchange for lease obligations:
|
|
Operating leases
|
—
|
Finance leases
|
—
|
(in thousands)
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2019
|
$
|
173
|
|
|
$
|
93
|
|
2020
|
238
|
|
|
21
|
|
||
2021
|
238
|
|
|
—
|
|
||
2022
|
238
|
|
|
—
|
|
||
2023
|
238
|
|
|
—
|
|
||
Thereafter
|
178
|
|
|
—
|
|
||
Total future minimum lease payments
|
1,303
|
|
|
114
|
|
||
Less: interest
|
165
|
|
|
4
|
|
||
Total
|
$
|
1,138
|
|
|
$
|
110
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands, except per share amounts)
|
2019
|
|
2018
|
||||
Net income
|
$
|
9,949
|
|
|
$
|
8,211
|
|
|
|
|
|
||||
Basic weighted-average common shares outstanding
|
38,603
|
|
|
37,886
|
|
||
Effect of dilutive stock options
|
58
|
|
|
150
|
|
||
Effect of dilutive restricted stock
|
1,126
|
|
|
1,457
|
|
||
Diluted weighted-average common shares outstanding
|
39,787
|
|
|
39,493
|
|
||
|
|
|
|
||||
Basic income per common share
|
$
|
0.26
|
|
|
$
|
0.22
|
|
Diluted income per common share
|
$
|
0.25
|
|
|
$
|
0.21
|
|
|
|
|
|
||||
Antidilutive securities excluded from diluted net income per common share
|
222
|
|
|
86
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Foreign currency gains
|
$
|
42
|
|
|
$
|
72
|
|
Tax indemnification income
|
802
|
|
|
841
|
|
||
Interest income
|
283
|
|
|
7
|
|
||
Other
|
60
|
|
|
—
|
|
||
Total other income
|
$
|
1,187
|
|
|
$
|
920
|
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Revenues from external customers
|
|
|
|
||||
U.S.
|
$
|
75,434
|
|
|
$
|
71,488
|
|
International
|
11,076
|
|
|
11,142
|
|
||
Total revenues from external customers
|
$
|
86,510
|
|
|
$
|
82,630
|
|
Operating income
|
|
|
|
||||
U.S.
|
$
|
14,584
|
|
|
$
|
14,156
|
|
International
|
1,585
|
|
|
981
|
|
||
Total operating income
|
16,169
|
|
|
15,137
|
|
||
Interest expense
|
4,592
|
|
|
4,050
|
|
||
Other income
|
(1,187
|
)
|
|
(920
|
)
|
||
Income before income taxes
|
$
|
12,764
|
|
|
$
|
12,007
|
|
•
|
Our ability to continue to grow the appropriate use of DEFINITY in suboptimal echocardiograms in the face of segment competition from other echocardiography contrast agents, including Optison from GE Healthcare Limited (“GE Healthcare”) and Lumason from Bracco Diagnostics Inc. (“Bracco”), and potential generic competition as a result of future patent and regulatory exclusivity expirations;
|
•
|
The instability of the global Moly supply, including periodic outages at the NTP Radioisotopes (“NTP”) processing facility in South Africa in 2017, 2018 and 2019 and the most recent outage commencing in April 2019, resulting in our inability to fill all of the demand for our TechneLite generators on certain manufacturing days during those periods;
|
•
|
Risks associated with revenues and unit volumes for Xenon in pulmonary studies as a result of increased competition from Curium;
|
•
|
Our dependence upon third parties for the manufacture and supply of a substantial portion of our products, raw materials and components, including DEFINITY at JHS;
|
•
|
Our dependence on key customers for our medical imaging products, and our ability to maintain and profitably renew our contracts with those key customers, including Cardinal Health (“Cardinal”), United Pharmacy Partners (“UPPI”), GE Healthcare and Jubilant DraxImage Radiopharmaceuticals d/b/a Triad Isotopes, Inc. (“Triad”);
|
•
|
Our ability to identify and acquire or in-license additional products, businesses or technologies to drive our future growth;
|
•
|
Risks associated with the technology transfer programs to secure production of our products at additional contract manufacturer sites, including a modified formulation of DEFINITY at Samsung BioLogics (“SBL”) in South Korea;
|
•
|
Risks associated with our lead agent in development, flurpiridaz F 18, which in 2017 we out-licensed to GE Healthcare, including:
|
•
|
The ability 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 on-going internal clinical development of: DEFINITY for a left ventricular ejection fraction (“LVEF”) indication;
|
•
|
Risks associated with our development agent, LMI 1195, for patient populations that would benefit from molecular imaging of the norepinephrine pathway, including: (i) finalizing a Special Protocol Assessment (“SPA”) with the FDA in connection with our Phase 3 clinical program in heart failure patients eligible for cardioverter defibrillator implantation, and (ii) designing two Phase 3 clinical trials for the diagnosis and treatment follow-up of neuroendocrine tumors in pediatric and adult populations, respectively, which may qualify for an Orphan Drug designation from the FDA and could allow for a streamlined regulatory process;
|
•
|
Risks associated with the manufacturing and distribution of our products and the regulatory requirements related thereto;
|
•
|
Risks associated with our investment in, and construction of, additional specialized manufacturing capabilities at our North Billerica, Massachusetts facility, including our ability to bring the new capabilities online by 2021;
|
•
|
The dependence of certain of our customers upon third-party healthcare payors and the uncertainty of third-party coverage and reimbursement rates;
|
•
|
Uncertainties regarding the impact of on-going U.S. healthcare reform proposals on our business, including related reimbursements for our current and potential future products;
|
•
|
Our being subject to extensive government regulation and oversight, our potential inability to comply with those regulations and the costs of compliance;
|
•
|
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, health and safety liability;
|
•
|
The extensive costs, time and uncertainty associated with new product development, including further product development relying on external development partners or potentially developed internally;
|
•
|
Our ability to introduce new products and adapt to an evolving technology and medical practice landscape;
|
•
|
Our ability 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 ability to adequately qualify, operate, maintain and protect our facilities, equipment and technology infrastructure;
|
•
|
Our ability to hire or retain skilled employees and key personnel;
|
•
|
Our ability 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 a large accelerated filer;
|
•
|
Risks related to the ownership of our common stock; and
|
•
|
Other factors that are described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.
|
•
|
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 to radiopharmacies, integrated delivery networks, hospitals, clinics and group practices.
|
•
|
International Segment
operations consist of production and distribution activities in Puerto Rico and some direct distribution activities in Canada. Additionally, within our International Segment, we have established and maintain third-party distribution relationships under which our products are marketed and sold in Europe, Canada, Australia, Asia-Pacific and Latin America.
|
•
|
DEFINITY
is a
microbubble
contrast agent used in ultrasound exams of the heart, also known as echocardiography exams. DEFINITY contains perflutren-containing lipid microspheres and is indicated in the U.S. for use in patients with suboptimal echocardiograms to assist in imaging the left ventricular chamber and left endocardial border of the heart in ultrasound procedures.
|
•
|
TechneLite
is a Technetium generator that provides the essential nuclear material used by radiopharmacies to radiolabel Cardiolite, Neurolite and other Technetium-based radiopharmaceuticals used in nuclear medicine procedures. TechneLite uses Moly as its active ingredient.
|
|
Three Months Ended
March 31, |
||||||||||||
(in thousands)
|
2019
|
|
% of
Revenues |
|
2018
|
|
% of
Revenues |
||||||
DEFINITY
|
$
|
51,111
|
|
|
59.1
|
%
|
|
$
|
44,655
|
|
|
54.0
|
%
|
TechneLite
|
24,145
|
|
|
27.9
|
%
|
|
21,395
|
|
|
25.9
|
%
|
||
Other nuclear
|
15,120
|
|
|
17.5
|
%
|
|
19,486
|
|
|
23.6
|
%
|
||
Rebates and allowances
|
(3,866
|
)
|
|
(4.5
|
)%
|
|
(2,906
|
)
|
|
(3.5
|
)%
|
||
Total revenues
|
$
|
86,510
|
|
|
100.0
|
%
|
|
$
|
82,630
|
|
|
100.0
|
%
|
•
|
Patents -
We continue to actively pursue additional patents in connection with DEFINITY, both in the U.S. and internationally. In the U.S., we have an Orange Book-listed method of use patent expiring in March 2037. This patent augments an Orange Book-listed composition of matter patent expiring in June 2019, and additional manufacturing patents that are not Orange Book-listed expiring in 2021, 2023 and 2037. Outside of the U.S., our DEFINITY patent protection or regulatory exclusivity currently expires in 2019.
|
•
|
LVEF Indication -
We are currently conducting two well-controlled Phase 3 studies designed to demonstrate improved accuracy of LVEF measurements with DEFINITY-enhanced echocardiography versus unenhanced echocardiography. The truth standard in these studies is cardiac magnetic resonance imaging. The studies will be conducted at 20 U.S. sites and will eventually enroll a total of approximately 300 subjects. We believe DEFINITY could improve the accuracy of LVEF calculations, giving clinicians greater confidence in patient management decisions. An LVEF indication could substantially
|
•
|
Modified Formulation -
We are developing at SBL a modified formulation of DEFINITY. We believe this modified formulation will provide an enhanced product profile enabling storage as well as shipment at room temperature (DEFINITY’s current formulation requires refrigerated storage), will give clinicians additional choice, and will allow for greater utility of this formulation in broader clinical settings. We were recently granted a composition of matter patent on the modified formulation which runs through December 2035. If the modified formulation is approved by the FDA, then this patent would be eligible to be listed in the Orange Book. We currently believe that, if approved by the FDA, the modified formulation could become commercially available in 2020, although that timing cannot be assured. Given its physical characteristics, the modified formulation may also be better suited for inclusion in kits requiring microbubbles for other indications and applications.
|
•
|
New Clinical Applications
- As we continue to look for other opportunities to expand our microbubble franchise, we are evaluating new indications and clinical applications beyond echocardiography and contrast imaging generally. For example, we recently announced a strategic development and commercial collaboration with Cerevast Medical, Inc. in which our microbubble will be used in connection with Cerevast’s ocular ultrasound device to target improving blood flow in occluded retinal veins in the eye. Retinal vein occlusion is one of the most common causes of vision loss worldwide.
|
•
|
In-House Manufacturing -
We are currently building specialized in-house manufacturing capabilities at our North Billerica, Massachusetts facility for DEFINITY and, potentially, other sterile vial products. We believe the investment in these efforts will allow us to better control DEFINITY manufacturing and inventory, reduce our costs in a potentially more price competitive environment, and provide us with supply chain redundancy. We currently expect to be in a position to use this in-house manufacturing capability by early 2021, although that timing cannot be assured.
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Revenues
|
$
|
86,510
|
|
|
$
|
82,630
|
|
Cost of goods sold
|
42,426
|
|
|
40,321
|
|
||
Gross profit
|
44,084
|
|
|
42,309
|
|
||
Operating expenses
|
|
|
|
||||
Sales and marketing
|
10,397
|
|
|
10,640
|
|
||
General and administrative
|
12,589
|
|
|
12,543
|
|
||
Research and development
|
4,929
|
|
|
3,989
|
|
||
Total operating expenses
|
27,915
|
|
|
27,172
|
|
||
Operating income
|
16,169
|
|
|
15,137
|
|
||
Interest expense
|
4,592
|
|
|
4,050
|
|
||
Other income
|
(1,187
|
)
|
|
(920
|
)
|
||
Income before income taxes
|
12,764
|
|
|
12,007
|
|
||
Income tax expense
|
2,815
|
|
|
3,796
|
|
||
Net income
|
$
|
9,949
|
|
|
$
|
8,211
|
|
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
U.S.
|
|
|
|
|
|
|
|
|
|||||||
DEFINITY
|
|
$
|
49,716
|
|
|
$
|
43,506
|
|
|
$
|
6,210
|
|
|
14.3
|
%
|
TechneLite
|
|
20,058
|
|
|
18,063
|
|
|
1,995
|
|
|
11.0
|
%
|
|||
Other nuclear
|
|
9,524
|
|
|
12,817
|
|
|
(3,293
|
)
|
|
(25.7
|
)%
|
|||
Rebates and allowances
|
|
(3,864
|
)
|
|
(2,898
|
)
|
|
(966
|
)
|
|
33.3
|
%
|
|||
Total U.S. revenues
|
|
75,434
|
|
|
71,488
|
|
|
3,946
|
|
|
5.5
|
%
|
|||
International
|
|
|
|
|
|
|
|
|
|
||||||
DEFINITY
|
|
1,395
|
|
|
1,149
|
|
|
246
|
|
|
21.4
|
%
|
|||
TechneLite
|
|
4,087
|
|
|
3,332
|
|
|
755
|
|
|
22.7
|
%
|
|||
Other nuclear
|
|
5,596
|
|
|
6,669
|
|
|
(1,073
|
)
|
|
(16.1
|
)%
|
|||
Rebates and allowances
|
|
(2
|
)
|
|
(8
|
)
|
|
6
|
|
|
(75.0
|
)%
|
|||
Total International revenues
|
|
11,076
|
|
|
11,142
|
|
|
(66
|
)
|
|
(0.6
|
)%
|
|||
Total revenues
|
|
$
|
86,510
|
|
|
$
|
82,630
|
|
|
$
|
3,880
|
|
|
4.7
|
%
|
(in thousands)
|
Rebates and
Allowances
|
||
Balance, January 1, 2019
|
$
|
4,654
|
|
Provision related to current period revenues
|
3,818
|
|
|
Adjustments relating to prior period revenues
|
48
|
|
|
Payments or credits made during the period
|
(3,972
|
)
|
|
Balance, March 31, 2019
|
$
|
4,548
|
|
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
U.S.
|
|
$
|
41,551
|
|
|
$
|
39,873
|
|
|
$
|
1,678
|
|
|
4.2
|
%
|
International
|
|
2,533
|
|
|
2,436
|
|
|
97
|
|
|
4.0
|
%
|
|||
Total gross profit
|
|
$
|
44,084
|
|
|
$
|
42,309
|
|
|
$
|
1,775
|
|
|
4.2
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
U.S.
|
$
|
9,969
|
|
|
$
|
9,987
|
|
|
$
|
(18
|
)
|
|
(0.2
|
)%
|
International
|
428
|
|
|
653
|
|
|
(225
|
)
|
|
(34.5
|
)%
|
|||
Total sales and marketing
|
$
|
10,397
|
|
|
$
|
10,640
|
|
|
$
|
(243
|
)
|
|
(2.3
|
)%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
U.S.
|
$
|
12,348
|
|
|
$
|
12,387
|
|
|
$
|
(39
|
)
|
|
(0.3
|
)%
|
International
|
241
|
|
|
156
|
|
|
85
|
|
|
54.5
|
%
|
|||
Total general and administrative
|
$
|
12,589
|
|
|
$
|
12,543
|
|
|
$
|
46
|
|
|
0.4
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
U.S.
|
$
|
4,650
|
|
|
$
|
3,343
|
|
|
$
|
1,307
|
|
|
39.1
|
%
|
International
|
279
|
|
|
646
|
|
|
(367
|
)
|
|
(56.8
|
)%
|
|||
Total research and development
|
$
|
4,929
|
|
|
$
|
3,989
|
|
|
$
|
940
|
|
|
23.6
|
%
|
|
Three Months Ended
March 31, |
|||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
Change
$ |
|
Change
% |
|||||||
Income tax expense
|
$
|
2,815
|
|
|
$
|
3,796
|
|
|
$
|
(981
|
)
|
|
(25.8
|
)%
|
|
|
Three Months Ended
March 31, |
||
|
|
2019
|
|
2018
|
Effective tax rate
|
|
22.1%
|
|
31.6%
|
|
Three Months Ended
March 31, |
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Net cash provided by (used in) operating activities
|
$
|
10,468
|
|
|
$
|
(666
|
)
|
Net cash used in investing activities
|
$
|
(10,550
|
)
|
|
$
|
(1,135
|
)
|
Net cash used in financing activities
|
$
|
(1,231
|
)
|
|
$
|
(704
|
)
|
•
|
The costs of acquiring or in-licensing, developing, obtaining regulatory approval for, and commercializing, new products, businesses or technologies, together with the costs of pursuing opportunities that are not eventually consummated;
|
•
|
The pricing environment and the level of product sales of our currently marketed products, particularly DEFINITY and any additional products that 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 and additional 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 costs and timing of establishing manufacturing and supply arrangements for commercial supplies of our products and raw materials and components;
|
•
|
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 and distribution 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;
|
•
|
The legal costs relating to maintaining, expanding and enforcing our intellectual property portfolio, pursuing insurance or other claims and defending 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.
|
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Programs
|
|
Approximate Dollar
Value of Shares that
May Yet Be Purchased Under
the Program
|
|||
January 2019**
|
|
9,274
|
|
|
$
|
16.61
|
|
|
*
|
|
*
|
February 2019**
|
|
13,737
|
|
|
$
|
23.90
|
|
|
*
|
|
*
|
March 2019**
|
|
27,464
|
|
|
$
|
23.44
|
|
|
*
|
|
*
|
Total
|
|
50,475
|
|
|
|
|
*
|
|
|
*
|
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 which resulted from the exercise or vesting of equity awards.
|
|
|
|
|
INCORPORATED BY REFERENCE
|
||||||
EXHIBIT
NUMBER
|
|
DESCRIPTION OF EXHIBITS
|
|
FORM
|
|
FILE
NUMBER
|
|
EXHIBIT
|
|
FILING
DATE
|
10.1*+
|
|
|
|
|
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
+
|
Indicates management contract or compensatory plan or arrangement.
|
|
|
|
LANTHEUS HOLDINGS, INC.
|
||
|
|
|
By:
|
|
/s/ MARY ANNE HEINO
|
Name:
|
|
Mary Anne Heino
|
Title:
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
|
April 30, 2019
|
|
||
LANTHEUS HOLDINGS, INC.
|
||
|
|
|
By:
|
|
/s/ ROBERT J. MARSHALL, JR.
|
Name:
|
|
Robert J. Marshall, Jr.
|
Title:
|
|
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
|
Date:
|
|
April 30, 2019
|
1.
|
Defined Terms
. Capitalized terms used herein, but not otherwise defined herein, have the respective meanings ascribed to them in the Plan.
|
2.
|
Amendments
.
|
(a)
|
Restrictions on Dividend Payments and Other Distributions
. A new Section 3.4 of the Plan is hereby inserted, as follows:
|
(b)
|
Minimum Vesting/Acceleration Restrictions
. A new Section 3.5 of the Plan is hereby inserted, as follows:
|
(c)
|
Deletion of Provisions Related to Former Sponsor That Are No Longer Applicable
. The definition of the term “Avista Entity” in Section 2 of the Plan is hereby deleted in its entirety and Section 12.2(a) of the Plan is hereby amended and restated in its entirety, as follows:
|
3.
|
Reference to and Effect on the Plan
. Except as specifically amended hereby, the Plan shall remain in full force and effect and otherwise unmodified. All references in the Plan to the “Plan” shall mean the Plan as amended hereby.
|
4.
|
Effectiveness
. This Amendment is effective as of the date first written above.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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 the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial 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 in Exchange 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 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
/s/ MARY ANNE HEINO
|
Name:
|
|
Mary Anne Heino
|
Title:
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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 the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial 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 in Exchange 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 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
/s/ ROBERT J. MARSHALL, JR.
|
Name:
|
|
Robert J. Marshall, Jr.
|
Title:
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
1.
|
The Quarterly Report on Form 10-Q for the period ended
April 30, 2019
(the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
/s/ MARY ANNE HEINO
|
Name:
|
|
Mary Anne Heino
|
Title:
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ ROBERT J. MARSHALL, JR.
|
Name:
|
|
Robert J. Marshall, Jr.
|
Title:
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|