Lantheus Holdings' shares experienced a significant decline on Tuesday.
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Lantheus Holdings, a radiopharmaceutical specialist, reported some news on a Tuesday morning, but the market's response was far from welcoming. Following the announcement of a new acquisition, investors opted to sell off the niche healthcare stock, resulting in a hefty 7% loss for the day. In contrast, the S&P 500 index saw an increase of 0.9%.
A New Deal Awaits
Well before the market even opened, Lantheus made public its intention to secure a clinical-stage peer, Evergreen Theragnostics, through a definitive agreement. To acquire this new asset, Lantheus will pour out $250 million in upfront cash, with additional payments worth up to $725.5 million contingent on achieving specific milestones set by Evergreen.
Just like Lantheus, Evergreen is deeply entrenched in the complex world of radiopharmaceuticals. These are healthcare innovations that leverage radioactive substances to achieve desired outcomes.
Lantheus' latest move is part of its larger strategy to bolster its production capabilities. The company emphasized in its press release that "the incorporation of Evergreen's scalable manufacturing capabilities and infrastructure amplifies Lantheus' potential to satisfy the intricate demands of radiopharmaceutical development and production."
Pencil in the Dates
In the press release, Lantheus firmly upheld its existing 2024 full-year outlook. This outlook anticipates revenue between $1.51 and $1.52 billion, translating into non-GAAP (adjusted) earnings of $6.65 to $6.70 per share.
At the time of the acquisition's announcement, Lantheus did not shed light on its funding plan, which likely contributed to the investors' bearish sentiments. However, with over $866 million in cold hard cash on hand at the end of September, Lantheus seems to have enough resources to cover the upfront payment.
Source:[1] Business Wire[2] S&P Global Market Intelligence[3] Yahoo Finance[4] GlobeNewswire
In light of Lantheus' plan to acquire Evergreen Theragnostics, some investors decided to offload their shares, leading to a significant financial loss for the company. Given Lantheus' substantial cash reserves, the question of how they will finance the acquisition has become a topic of interest in the finance world.
