Lantheus (LNTH)

Radiopharmaceutical company Lantheus Holdings (NASDAQ:LNTH) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $372.8 million. The company’s full-year revenue guidance of $1.57 billion at the midpoint came in 1.5% below analysts’ estimates. Its non-GAAP profit of $1.53 per share was 7.5% below analysts’ consensus estimates.

Company Overview

Pioneering the "Find, Fight and Follow" approach to disease management, Lantheus Holdings (NASDAQGM:LNTH) develops and commercializes radiopharmaceuticals and other imaging agents that help healthcare professionals detect, diagnose, and treat diseases.

The medical devices and supplies industry, particularly those specializing in imaging and diagnostics, operates with a comparatively stable yet capital-intensive business model. Companies in this space benefit from consistent demand driven by the essential nature of diagnostic tools in patient care, as well as recurring revenue streams from consumables, service contracts, and equipment maintenance. However, the industry faces challenges such as significant upfront development costs, stringent regulatory requirements, and pricing pressures from hospitals and healthcare systems, which are increasingly focused on cost containment. Looking ahead, the industry should enjoy tailwinds from advancements in technology, including the integration of artificial intelligence to enhance diagnostic accuracy and workflow efficiency, as well as rising demand for imaging solutions driven by aging populations. On the other hand, headwinds could arise from a rethinking of healthcare costs potentially resulting in reimbursement cuts and slower capital equipment purchasing. Additionally, cybersecurity concerns surrounding connected medical devices could introduce new risks and complexities for manufacturers.

Lantheus Holdings competes with several companies in the radiopharmaceutical and medical imaging space. In the PSMA-PET imaging market, its competitors include Telix Pharmaceuticals, Novartis AG, and Blue Earth Diagnostics (a Bracco subsidiary). For its DEFINITY ultrasound enhancing agent, Lantheus competes with GE Healthcare and Bracco. In the SPECT radiopharmaceutical market, competitors include Curium, GE Healthcare, Bracco, Jubilant Life Sciences, and potentially BWXT Medical.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.54 billion in revenue over the past 12 months, Lantheus is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive. On the bright side, Lantheus’s smaller revenue base allows it to grow faster if it can execute well.

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Lantheus grew its sales at an incredible 34.3% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Lantheus’s annualized revenue growth of 22.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Lantheus’s $372.8 million of revenue was flat year on year, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 7% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market sees some success for its newer products and services.

Lantheus has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average operating margin of 18.4%.

Looking at the trend in its profitability, Lantheus’s operating margin rose by 28.2 percentage points over the last five years, as its sales growth gave it immense operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 32.6 percentage points on a two-year basis. These data points are very encouraging and shows momentum is on its side.

This quarter, Lantheus generated an operating profit margin of 27.4%, down 1.4 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Lantheus’s EPS grew at an astounding 39.7% compounded annual growth rate over the last five years, higher than its 34.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Lantheus’s earnings to better understand the drivers of its performance. As we mentioned earlier, Lantheus’s operating margin declined this quarter but expanded by 28.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Lantheus reported EPS at $1.53, down from $1.69 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Lantheus’s full-year EPS of $6.62 to grow 8.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Lantheus has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 24% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that Lantheus’s margin expanded by 29.5 percentage points during that time. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Lantheus’s free cash flow clocked in at $98.85 million in Q1, equivalent to a 26.5% margin. The company’s cash profitability regressed as it was 5.6 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t put too much weight on this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Lantheus’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 9.4%, slightly better than typical healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Lantheus’s ROIC has increased. This is a great sign when paired with its already strong returns, but we also recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Companies with more cash than debt have lower bankruptcy risk.

Lantheus is a profitable, well-capitalized company with $938.5 million of cash and $566.8 million of debt on its balance sheet. This $371.7 million net cash position is 6.7% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We struggled to find many positives in these results. Its full-year EPS guidance missed significantly and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 8.3% to $96.07 immediately following the results.

Updated: June 14, 2025 at 11:30 PM EDT

Before making an investment decision, investors should account for Lantheus’s business fundamentals and valuation in addition to what happened in the latest quarter.

We think Lantheus is a good business. First off, its revenue growth was exceptional over the last five years. And while its subscale operations give it fewer distribution channels than its larger rivals, its impressive operating margins show it has a highly efficient business model. On top of that, its rising cash profitability gives it more optionality.

Lantheus’s P/E ratio based on the next 12 months is 10.8x. When scanning the healthcare space, Lantheus trades at a fair valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $129.31 on the company (compared to the current share price of $77.80), implying they see 66.2% upside in buying Lantheus in the short term.