Q2 2025 Lantheus Holdings Inc Earnings Call

Good morning. Welcome to Leia's second quarter 2025 conference call. All lines have been placed on mute. This call is being recorded, and a replay will be available in the investor section of the company's website approximately 2 hours after the completion of the call, and will be archived for at least 30 days. I'll now turn the call over to Mark Kinarney, Vice President of Investor Relations. Mark.

Thank you. Good morning with me today, are Brian marcusen, our CEO Paul blanchfield, our president and Bob Marshall our CFO. We will begin with prepare remarks and then take your questions.

This morning, we issued a press release, which was furnished to the SEC under formate K reporting. Our second quarter, 2025 results, the release. And today's slide presentation are available in the investor section of our website.

Any comments made during this call may include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties, which are detailed in our SEC filings.

Discussions will also include certain non-gaap Financial measures reconciliation of these measures to the most directly comparable. Gaap, Financial measures is included in the investor section of our website.

I will now turn the call over to our CEO, Brian Markison.

Thank you, Mark, and thank you for joining us today.

Before I go into the broader steps that we are taking to diversify our business and establish a new growth trajectory for the company, I want to drill down on polari and the current Dynamics in the psma Pet Market.

In the back half of the quarter, the confluence of musi-based reimbursements and aggressive discounting by what had been a somewhat dormant F-18 competitor.

LED some economically sensitive customers to reassess their choice of psma Agents.

This led to the renegotiation of some existing strategic Partnerships as well as a conscious decision to walk away from those volumes at certain accounts. That requested pricing terms that were not in the long term interest of our psma pet franchise.

To clarify, also continues to be concentrated in large institutions that do to constraints continue to grow at a slower rate than the overall Market. However, our strategic partnership agreements have proven and will continue to prove a effective at retaining. The vast majority of our customers who recognize polarized clinical differentiation

This is reflected in our us quarterly, volume growth 2% year-over-year and over 4% sequentially.

Paul will provide greater detail, but I want to be clear. We understand the Dynamics that we faced. During the quarter, how we expect these Dynamics to evolve in the second half of the year and how these changes impact our business we have implemented actions to ensure we maintain our Market leadership, and maximize the long-term value of the franchise.

These actions include conducting a continuous and comprehensive review of our customer base.

Expanding our strategic Partnerships to the smaller high growth accounts and enhancing our availability and Geographic reach.

proactively, communicating the value, proposition of polari, and our growing Innovative radio, pharmaceutical portfolio, including neuros

And executing a disciplined pricing strategy. Lantheus has a leading role in the prostate cancer market and our strategy and actions will enable the sustained growth and success of this franchise.

Underscoring the value of this franchise we announced today that the FDA has accepted rnda for a new formulation of polarizing, which will increase batch size by approximately. 50%, enabling increased patient access Supply, resilience and enhanced production, efficiency all to the benefit of our customers and patients,

our prostate cancer franchise will be further enhanced in the long term by the development of lnth 2401 and 2402 our grpr radio Diagnostic and radio therapeutic product candidates

Part of our decision to remain disciplined with our pricing is to preserve the value of our PSA pet franchise in anticipation of launching our new psma pet agent. If approved, we believe it will be eligible for 3 years of transitional pass through payment status and will reinvigorate growth.

Fundamental differences in the chemical structure of psma. PET Imaging agents significantly influence their performance. For example, we have heard firsthand from hcps, they have begun to see increasing numbers of false positives in recurrent patients from their real world use of competing F-18 agent.

Which wild anecdotal is a risk specifically called out in their package insert and with respect to gallium, the shorter, Half-Life lower positron, yield and lower spatial resolution are well known.

Beyond clarify, we continue to advance our strategy to diversify our portfolio and build talent and capabilities needed to lead at all stages of the radio pharmaceutical value chain.

The Acquisitions of Evergreen on April 1st, the life molecular on July 21st and complimentary capabilities bring immediate growth drivers. Expand our Pipeline and importantly, diversify our Revenue positioning us for a long term growth.

We grew our neurology franchise. With the addition of

Therapies.

This broader label, combined with the continued adoption of Alzheimer's therapeutics and advancements in therapeutic development programs.

Reinforces our belief.

In the significant growth, potential of the US Alzheimer's disease, Pet Imaging Market, 1, we estimate could exceed 1.5 billion dollars by the end of the decade and reach approximately 2.5 billion dollars by the mid 2030s.

In fact, the recent AEIC meeting highlighted a number of therapeutic programs rapidly advancing in the clinic.

Most of the more promising programs already incorporate, at least 1 of our avoid or towel tracers for selection criteria, and monitoring and follow-up.

Looking ahead to the next 18 months, we expect the further expand our commercial portfolio and diversify, our revenue streams with the launch of 4.

Additional radio pharmaceutical products including our new F-18. PSA pep formulation mk62 40, our late stage, Dow targeted radio, diagnostic for Alzheimer's disease.

As well as octv and pnt 2000003 are. Registrational stage radio Diagnostic and therapeutic for neuroendocrine tumors.

Taken together, we believe these strategic moves will solidify our position as the partner of choice for nuclear medicine and certainly drive future growth.

To underscore our confidence, in our long-term strategy, and our ability to execute the board has authorized a new 400 million stock repurchase program.

This decision, reflects our belief in the intrinsic value of the business, and our commitment to deliver shareholder returns. It also signals our conviction in the strength of our pipeline, our significant free cash flow generation and the durability of our financial position.

By repurchasing shares, we are not only optimizing capital allocation but also reinforcing our confidence in the future.

I will now turn the call over to Paul to discuss the market dynamics and the actions we're taking in more detail.

Paul. Thank you, Brian.

Sales of polari for 251 million during the quarter down 8.3% versus last year.

Us volumes for polari, were up 2% year-over-year and more than 4% sequentially. Both lower than our expectations.

as Brian mentioned in the back half of the quarter psma, pet competitive pricing pressures intensified

Particularly, from an F-18 competitor. And we experience an increase in account losses, which significantly impacted volume in the latter, half of May and June.

The majority of the impact occurred in accounts that had greater exposure to muc based reimbursement and a greater focus on economics.

We made the intentional decision to remain disciplined with our pricing strategy, even at the cost of losing select accounts.

Rather than Chase volume and harm. The long-term value of our psma pet franchise.

Additionally, those competitive price offerings.

Combined with our musi based reimbursement. Led to an increase in renegotiations of some existing Partnerships.

Resulting in further net price compression during the quarter.

These Dynamics, overshadowed the progress, we made in expanding, strategic Partnerships with smaller later adopters where our volume growth outpaced that of our larger accounts.

Importantly, our strategic Partnerships, which cover the vast majority of our business have been effective on multiple fronts.

First they have enabled us to maintain and grow volumes with a significantly higher market share in contracted than non-contracted accounts.

Though we are increasingly coexisting with gallium, even within contracted accounts.

Second, they have largely leveled the playing field related to muc based reimbursement.

And finally, they frequently offer us a last look when competitive price offers arise, which left us decide to renegotiate when doing so is in the long term interest of the franchise or in some cases walk away from dose volume.

As we look ahead to the remainder of the year, we expect volume growth to continue to be positive all by below that of the broader Market.

Impression as recently renegotiated contracts annualized and 340b or best price resets, particularly in the fourth quarter of 2025, as a result of the 2 quarter, lag in government price reporting.

I want to reaffirm lisez commitment to maintaining polarized Market leadership.

We are navigating current market dynamics with discipline and focus Guided by clear strategic principles that are in the long term interest of the franchise.

Clarify will continue to command a premium price in the market.

This is driven by polarized clear and compelling clinical performance, which is an area. We are increasing our emphasis specifically through increased investment in our medical Affairs function.

We are preparing to commercialize our new psma, pet agent with the FDA having recently accepted the NDA and providing a March 6th 2026 Padua date.

We expect this new formulation to enhance production, efficiency and increase batch sizes, which will ultimately improve both patient and customer access.

If approved, we expect to introduce this new agent to the market upon receiving coding coverage and payment, including a Hicks pics code and transitional pass through payment status.

We expect this to level the reimbursement playing field, enabling HCPs to make decisions that reflect the strengths of our clinical profile and the differentiated value of our PSMA PET franchise.

As I mentioned, we are also doing more to reinforce polarized clinical differentiation based on, fundamental, differences in the chemical structures of the currently approved. Psma, pet agents and the important differences including in the label of the only other F-18 agent on the market.

Our Medical Affairs team is focused on communicating polarized clinical attributes that are different from other agents on the market.

And to be clear with HCPs about how that can translate to the best care for patients,

we have new leadership in medical Affairs and are confident that updated education and ongoing evidence generation will further. Support polari. While we also prepare for future launches and the advancement of our expanded pipeline.

Finally, we continue to prioritize exceptional, customer service and long-term Partnerships with nuclear medicine departments.

Given the current marketplace dynamics, Brian and I have worked closely with our commercial teams.

To conduct a comprehensive review of our customer base.

Including a Bottoms Up evaluation of our existing contracts and have actively engaged with customers including those who have shifted to competing products.

Through this listening tool, we've developed a conclusive, understanding of the key drivers behind their decisions.

Several customers noted, the transitive nature of TPT reimbursement and that in some cases the impact had been larger than they anticipated.

They also shared their real world clinical experiences with competing agents, most notably an F-18 agent that has resulted in an increase in false positive lesions in recurrent patients.

Which is expressly mentioned in that competitor's label.

This reinforces our belief that our educational programs are needed and will resonate with providers.

We are encouraged by the growing interest, across the nuclear medicine community, and our other products and pipelines. Particularly in Alzheimer's disease, including neuro seek and our late stage, Tau and beta omalo programs, as well as pnt 20003 and octavi both for neuroendocrine tumors.

We understand the current market dynamics and are taking steps to address them. We believe our disciplined approach to pricing, based on polarized clinical differentiation, along with our expanding commercial portfolio, will maximize the value of the franchise.

In other areas of the portfolio, we have definitely continued to perform well, up 7.5% year-over-year, despite competitors fully returning to the market after some prior supply disruptions.

We continue to believe dfinity is long-term success remains driven by its proven clinical and commercial value long-standing track record of clinical application and our ongoing operational excellence.

I will now turn the call over to Bob. Thank you Paul.

focusing on adjusted results with comparisons to the prior year quarter, unless otherwise noted

Consolidated, net revenue for the second quarter was 378 million, a decrease of 4.1%.

Radio. Pharmaceutical oncology, currently polarized contribute. 250.6 million of sales down 8.3% lower than previously, expected.

All us volumes were up over 4% sequentially. As described, by Paul competitive Dynamics, have driven the net price environment lower than expected.

Precision Diagnostics revenue of $115.8 million was up 3.3%. Highlights include sales of Dfinity at $83.9 million, which is 7.5% higher, along with Technolite revenue of $25 million, down 11.4% due to a prior year comp that included greater opportunistic sales to endow.

Lastly strategic Partnerships and other Revenue was 11.6 million up to 32.8% due to the continued contribution. From our investigational product candidate MK 6240 at 6.5 million as well as 3.4 million from the newly acquired, Evergreen CD, cdmo business,

Gross profit margin for the second quarter was 67.6%. A decrease of 80 basis points, the decrease is mainly attributed to unfavorable pricing impacts to margin the inclusion of the Evergreen manufacturing infrastructure, offset in part by favorable year-over-year, volume from both dfinity and pollari

Operating expenses at 27.2% of net, revenue were 227 basis points higher than the prior year rate. But generally in line with previously, guided underlying spending levels,

As noted in our last earnings call increases in operating expenses. Reflect Investments made to support several growth. In efficiency initiatives, notably research and development increased 271 basis points to 7.7% of net revenue in support of a number of late and early stage development programs, including, but not limited to the recent NDA filing for the new psma, pet product candidate.

Operating profit for the quarter is 152.6 million or a decrease of 10.8% other income and expense. At 2 million of income, is a result of net interest income offset in part by interest expense on our existing debt

This is slightly less than expected due to the purchase of 100 million of our shares in the quarter.

Total adjustments in the quarter were 50.1 million of expense before taxes of this amount 22.3 and 8 million of expenses associated with non-cash stock and incentive plans and acquired intangible amortization respectively.

Non-recurring expenses tied to closing and integrating our announced acquisitions, as well as other strategic collaboration costs, totaled $30.2 million to $32.9 million, offset in part by an unrealized gain on equity investments of $14.5 million, with the remaining tied to other non-recurring expenses.

Our effective tax rate was 28.4%.

The resulting reported net income for the second quarter was 78.8 million and 110.6 million on an adjusted basis. A decrease of 12.8%

Gap, fully diluted earnings per share for the second quarter, where $1 and 12 cents and $15.57 on an adjusted basis. A decrease of 12.8

Now, turning to cash flow, second quarter, operating cash flow totaled, 87.1 million up to 2.4 million from Q2 last year as working capital, particularly DPO metrics have normalized from the post sap, implementation environment.

Included in net income is 7.5, million of non-recurring. Post combination, expense related to the acceleration and cash settlement of unvested Evergreen stock awards,

Capital expenditures, total 8 million 3.2 million lower than the prior year. Free cash flow which we Define as operating cash flow. Less Capital expenditures was 79.1 Million 5.6 million higher than the prior year period.

During the quarter, the company invested $100 million of its own in its own shares at the average price of $79. In addition, the company completed the acquisition of Evergreen with an additional outlay of approximately $226 million, net of cash acquired.

And as a reminder, the company prepaid 50 million toward this transaction, at the end of the first quarter.

Taken together cash and cash equivalents net of restricted cash stood at 695.6 million at quarter end and does not reflect the use of funds for the LMI transaction which closed on July 21st.

Purchase authorization with an expiry of 12/31/27, replacing the $50 million remaining on our current repurchase plan, reflective of our conviction that our strategy and execution will create long-term value.

Including the potential launch of the 4 new products, including our new psma. Pet diagnostic product candidate.

Turning. Now, to our updated guidance, for the full year, 2025 based on market dynamics, our go forward strategy and extrapolating out

For what we saw in the latter part of Q2.

And, accounting for anticipated mix of wins and losses, we are adjusting our polar fire range to $940 million to $965 million. We do not anticipate any changes to other existing products, but for the inclusion of LMI and our forward view,

Specifically nursing, which we expect to be in the range of 40 to 45 million and 4 cents of eps contribution for partial, Q3 and 4.

Full Q4 inclusion taken together.

Full year of Revenue is now expected to be arranged of 1.475 to 1.51 billion from the prior range of 1.55 to 1.585 billion.

Taking these Revenue changes into consideration, and the inclusion of LMI, we now see adjusted EPs and range of 5 dollars and 50 to 5.70 versus the prior guide of $6.60 and $6.

And 700 cents with that. Let me turn the call back over to Brian.

Thank you, Bob, before we turn to Q&A.

I want to reiterate our steadfast focus on driving, commercial execution for Polaris.

As we continue to position ourselves from growth and sustained, radio pharmaceutical leadership.

While we are pleased with our progress in strengthening our capabilities.

Expanding the portfolio.

And enhancing our long-term potential. We fully understand that driving commercial execution, is critical to supporting our efforts and remains our top priority.

We have been taking, and will continue to take, decisive actions across our Commercial Business.

Innovation efforts and use of capital in both the near and long term that we believe are in the best interest of the business.

Patients and shareholders.

With that, I'll turn it over to Q&A. Operator, thank you as a reminder, to ask a question. Please press star, 1 1 1 on your telephone, and wait, for your name to be announced.

To withdraw your question. Please press star 1 1 again. We ask that you please limit yourselves to 1 question.

Please stand by while we compile the Q&A roster.

Our first question comes from the line of Matt Taylor from Jeffrey's.

Hi, thanks for taking the question.

Um,

I wanted to ask about your product comments on 2026. You talked about,

The Acquisitions that are in mid single digit kager to an underlying growth rate. Getting you to consistent double digit growth.

Do you think with the changes that are happening in the market? Now you could still achieve that. Or could you offer any thoughts on how to think about 2026 at a high level?

Yeah, I think it's certainly achievable uh but again I'll let Bob um give you the answer in full but it is a combination of organic and inorganic growth as we described before. So Bob, yeah. Well, let's build on that. I mean, it is largely predicated on a number of factors that really haven't changed. Um, you know, I, you know, putting 2026 for Polaris side. There are a lot of moving Parts there, um, but this is a math problem. And what I have often talked about is the fact that, you know, it's the keys are, you know, having definity kind of get back to its normal, run rate, which is, you know, going to be in a high single digit.

The trajectory and you're seeing that sort of playing out, um, even in this quarter, which was, um, you know, pretty positive. But the re the real Keys here are going to be, um, you know, as Brian noted from an inorganic perspective, the sale of the spec business, which removes about 120 million dollars from the base year. And then the real key is what has been, uh, what we've done and accomplished here with LMI transaction is

The annualization of nursing um, and we and the growth trajectory that that product has, which is uh, been very positive.

But, you know, supporting that. But to a lesser degree, um, continues to be the launch of MK 6240, pnt 200003 octavi. Um, so you know, while those are more minor in in in contribution, in 2026, just given the time of the year that they'll that when they would potentially launch, um, they would still be contributors but again um you know mathematically it is still something that's on the table.

Thank you. 1 moment for our next question.

Our next question comes from the line of Anthony. Petrin from mizuho Americas.

Uh, thanks. And I'll I'll stick with um,

A guidance question. Uh, maybe just the

You know, the what is actually baked in top and bottom line for LMI.

And as we sit here into, you know, early August, I think I'm coming up with, you know, if we add 30 million top lines, plug range is minus 4 to minus 6%.

To clarify in 2 Q is down 8. Uh, so certainly still you know, pressured but maybe if you can give us a sense of

You know, the share losses. Do you is that done at at this point? And maybe just a little bit on actually where the underlying market growth rate is uh at the moment, thanks again.

Yeah. So

At the beginning of your question and then Paul will pick up. Um, be back here for the question, but if I do want to reinforce, we are beginning to see signs of stabilization in the psma, pet Marketplace, which is encouraging. Uh, but Bob, go ahead.

Thanks, Anthony. Um, you're right. I mean the editions of both Evergreen and, uh, LMI in terms of nursing, you know, are sort of fitting into our goal of continuing to diversify our revenue streams.

So specifically, you know, we're forecasting from an August to December contribution and revenue of 40 to 45 million of of net revenue with.

4 cents of um, eps accretion.

So when you net, I mean I had previously talked about the fact that, you know, I thought the combination of Evergreen and LMI would be low single digit dilution. And that is actually what we're seeing. Um, we do have 2 different sort of contribution periods in terms of Evergreen being sort of 9 months and we've got 5 months of LMI my normalize that we certainly get down into that low single digit solution perspective. So right on we're right on uh Pace uh, for that, uh, part of the contribution, but for the clarify,

Question, I'll turn it to Paul. Thanks Bob. Thanks Anthony. Um, so our assumptions for the second half for Polar fire, that we continue to grow volumes year over year, uh, in the low, single digit range, which would largely consistent with what we saw in the first half of the

Year.

Um, the broader Market will continue to grow in the

Mid to high teens in the second half of the year year over year. So that does factor in some continued share loss driven by our over indexing to larger institutions um and recognizing some of the competitive Dynamics in the marketplace notably, we expect net price to continue to decline sequentially in both the third and the fourth quarter for polari. This is due to the pricing actions in both renegotiations, that took place in the second quarter, um, in the back half that will then fully um, cerize if you will for the third quarter as well as in the fourth quarter, and then we also expect to see some impact on best price or 340b. Um, that's a 2 quarter lag from a government pricing perspective and so volumes for clarify will continue to grow as they have in the first half of this year, but we will see um, that less than the market. And we will see further price degradation um, giving some of the competitive

Dynamics and those are the underlying assumptions baked within our guide.

Thank you. 1 moment for our next question.

Our next question comes from the line of Richard. New order from truist securities.

Hi. Thanks for taking my question. Um maybe just on the new formulary uh for uh polari. I guess. Uh what's the earliest that you could potentially be commercial with a product like this? Um,

Uh, it's you know, from a Time standpoint with a I guess a March 6th pufa, so is it possible? You could have this by mid year keeping key in place, or is it more likely in the October time frame of next year? And then just on that, uh, uh, uh, next year and clarify, uh, products. I'm just curious if you could talk a little bit about, you know, what, why, why why couldn't this have been put out earlier? Um, I guess, uh, it it feels a little reactionary, but, but, but I'm just, I'm just curious on on kind of how the strategy there, uh, took form. And, and when when that began, thank you.

A little more detail. But I think the way you've discussed the Padua date and potential approval and hick picks codes. I think you're pretty much spot on, but but all the poll review, it 1 more time. As far as the why now is concerned, you know, research and development is never on a stopwatch the way you'd like it to be. And you know while we have said repeatedly that we have a lot of work in development, we wanted to make sure that we really got it right and had a new formulation that would actually work in the marketplace and actually be worth our time and energy and have rewards and pay out for the customers. And I think the Improvement in batch yield improvement in our ability to if you will load the formulation for greater outdoor time greater convenience uh all makes it work, um, extremely well and also, you know, there's a gross margin benefit that we will AC

Through here as well, which is pretty meaningful. So, um, you know, our research and development in large part, has some Serendipity involved.

So I'd like to be available sooner but it's available, I think at the right time for us. So, Paul a little bit on timing. Yeah, thanks Brian. Um thanks Rich. Um so as as was mentioned, we're going to work expeditiously to activate our supply chain to secure coding coverage and payment including Hicks and TPT um we're going to share more exact timing as we get closer to Launch.

But effectively, with a March.

2026 Padua date. We would expect uh, to be able to potentially meet the June 1st submission for TPT, which would then go live in the fall October 1st. Um, you know, at the latest we would imagine January 1st, but there is some sequencing in order to get our pfn pmf, chains, activated, um, and approved to be able to go forward with this new formulation, which is Brian mentioned, we think, will provide a number of benefits including batch size, um, including production, efficiency. And most importantly, leveling the playing field with regard to TPT reimbursement, um, and then ultimately ensuring, that clinical differentiation is recognized, and is appreciated by customers and wins the day and overcome some of the transitory reimbursement related and equities in the market.

Thank you. 1 moment for our next question.

Our next question comes from the line of you on June from B, Riley.

Oh, good morning, thank you for taking our questions. Uh, maybe Brian or Paul, how should we think about this new formulation? Uh, manner? It will have an impact on your long-term contracts already in place. Will it be an add-on to the contract or will it trigger another negotiation of those kind?

Okay, thank you.

Well, it's very simple. It'll be in a complete add-on. It's already contract, contemplated in our contract language and um, could potentially offer the opportunity for a 340 B price reset uh, which would be very helpful of meaningful to the franchise into the marketplace. So, um, the contracts already contemplate this appreciate the question, uh, and we're ready to roll.

Thank you. 1 moment for our next question.

Our next question comes from the line of Mazi. Ali Mohammed from Ling.

Oh thanks. All this is Maisy on for rowana, thanks for taking our question. Um, so can you provide more details on the commercial opportunity for Tau Imaging and how this fits with the broader Alzheimer's strategy? Alongside nurse

Yeah, I think it's terrific question.

week ago, there are a number of

important agents in late stage development that quite frankly already used mk62 40 for patient selection, uh, and longitudinal, uh, follow-up. So

Tomorrow. But it certainly has what we believe is potential across our neuro portfolio to be similar in size as pollari.

And maybe I'll just, um, add agree with everything Brian mentioned. I, I think, as we start to work work more closely with our new newly welcomed, LMI colleagues. I think we're incredibly pleased with the capabilities and the talent of our LMI neuro team, which serves as an existing commercial franchise that will be able to further highlight, the clinical differentiation that we believe MK and indeed neuro seek and our late stage Pipeline. And so, we're excited to build on that scale and those talent and capabilities that have recently joined our organization to be a preeminent leader in the neuro pet diagnostic market, like we have been in psma,

Thank you. 1 moment for our next question.

Our next question comes from the line of Larry solo from CJs securities.

Great, thank you. Could you just, um, give us an idea of your, how much of your business on, on Polaris? Civically is contracted versus non-contracted? Um, maybe you know, I'm just kind of

Paid into that, you know, I imagine I've said, it's been continuing to Rise. Um, but you know, and then the second part of that question is, uh, on these contracts themselves. You mentioned some, some renegotiation. So, did you lose some share like of these strategic agreements or you know, from strategic agreements. So I'm just trying to get a little more hold of, you know, grasp and you know how firm are these agreements. Because it sounds like you've

walked Walked Away from maybe in some cases. Some contracted business as well. If I'm not if I'm hearing that correctly. Thanks.

yeah, I

Question. Uh we have not given specific accounts if you will or percentages but the vast majority of our business is under contract and I think 1 of the things that has evolved with the change to muc reimbursement, is some of our accounts had much greater exposure. If you will, to the muc reimbursement, Dynamic, uh, then the classic 20% that would normally be across the board, uh, exposed to this through traditional Medicare and with those accounts if they're especially price sensitive. Um, the negotiation gives us basically a last look and we have decided it's not in our best interest. It's really, we don't think it's in their best interest, uh, for their patients. But we have decided to walk away from a discounting dynamic. That was

More than we're willing to tolerate. So Paul I think you want to build on that. Yeah thanks Brian and and thanks for the question there Larry. Um you know the Strategic Partnerships have been successful in a number of fronts as we've shared, they enabled us to maintain and grow volumes in our Core Business to have significantly higher market share in those accounts than we do in those small. Number of accounts that are not contracted, um, though we are increasingly coexisting with gallium. Um, they were designed and largely leveled the playing field related to the muc based reimbursement, Dynamics, at hospitals. What we particularly saw in the quarter, is that 1 of our competitors in F18, based competitor significantly, increase aggressive pricing. Um, that was greater and broader than was anticipated. And so, when we look at our strategic Partnerships, when we have the muc based reimbursement, dynamics that they were largely designed to level the

Playing field when we add.

The.

Pricing Dynamics and offers that. Put some customers in a position to have to come back to us um to relook at the terms of those contracts. In some cases, it made sense economically for the long term health of the franchise to renegotiate. Those contracts to maintain the business and those core customers in others. Um, given some of the best price Dynamics. It did not make sense. And so we made the

Difficult. The decision in some cases to walk away from volumes to not honor, uh to to not increase our pricing terms, such that we could inadvertently materially impact, the long-term health of the business. And those are some of the Dynamics. We have conducted a Bottoms Up review of all of our contracts, Brian myself and our commercial team, we have proactively reached out to customers. We do believe there is stabilization um, emerging in the marketplace. Um, and that those will prove uh, continued value added for the long-term health of the business.

Thank you. 1 moment for our next question.

Our next question comes from the line of Justin. Walsh PhD from Jones trading.

Hi, thanks for taking the question. Um, you mentioned the TPT reset, you're hoping to see if the new formulation, can you comment on the most recent updates for the TPT timelines for key competitors? If you expect these competitors, maybe make similar moves and how confident you are that, the new formulations will be awarded TPT.

All right, I'll start.

A NDA application. Uh, we've had an extensive review with our internal and external experts and feel highly confident that this formulation, uh, should be approved will be eligible for new hix, pix codes, uh, and, uh, reimbursement. So Paul. I um, yeah, Justin maybe maybe just get into some of the, the specifics agree with Brian. Uh, and our overall confidence, on our new formulation being eligible for a hix pix code. And for TPT if we look at the broader Marketplace, our our primary gallium competitor lost TPT on their um product on July 1st of this year. Um now they do have another agent in development um that they have been discussing um, and they presumably plan for TPT later this year, but I'll leave that up to them.

A comment. Um, our number 1 F-18 based competitor would lose TPT as of October 1st 2026.

Um, and so those are the latest timelines. And as I shared earlier, I believe in my response, um, to Rich, uh, we would expect potential TPT for our new formulation, uh, and the same time frame, as our F-18 competitor were to lose it as for their internal development plans, I will leave that up today.

Thank you.

1 moment for our next question.

Our next question comes from the line of Tara bankroft from TD securities.

Hi. This is Francis on for Tara ban Croft.

So, for the new psma Imaging agent, how are you seeking to position versus clarify and what are your assumptions with several new pricing consumptions? With several new entrance? Do you expect to offer a substantial discount for this versus clarifying to gain traction?

Um, I think we are very excited about the new formulation. Um, we are expeditiously working to prepare our launch plans, um, to continue to engage with the agency and to meet our March 6th 2026 Padua date. Um, I think overall, uh, we believe this will allow us to improve the pricing Dynamics in the marketplace, driven by a number.

Front 1. Um, the reset of 340b best price in the marketplace. Given, the kind of 2 quarter 6-month lag from a government price reporting, Dynamic. Um, I think, secondly, when we look at our new formulation being on a 3-year, TPT Dynamic, we think some of the Strategic Partnerships while remaining critical. Um, also pose an opportunity recognizing there would be more of a reimbursement Level, Playing Field in the marketplace than the current disadvantage that clarify uh has. And so we feel um incredibly optimistic and positive that first, it will level the playing field. And secondly it will enable us to focus on the continued clinical differentiation of the agent which is still very much understood and is increasingly emerging in the marketplace. As competitors experience. Other F-18 agents and see some of the downsides in those agents. But unfortunately,

Definitely, given some of the muc based reimbursement, Dynamics are providing a temporal challenge. That we believe our new formulation will help address.

Thank you. 1 moment for our next question.

Our next question comes from the line of Kemp dolliver from Brookline Capital markets.

Hi, thank you for uh, taking the question. Uh, so uh, looking farther out into say, you know, 2027

Dynamics. Thank you.

Yeah, appreciate the question. Uh we moved to ASP, let's presume it's the beginning of 20127. It's perfectly in line with our strategy. Uh, the new formulation will replace the older. We'll have an improvement in gross margin and again the potential for a 340b price reset and our current contracts or Partnerships already contemplate. Uh, the ability to add portfolio products to their agreements.

So, thank you.

Thank you. 1 moment for our next question.

Our next question comes from the line of John vandermosten from Zach.

Good morning, everyone. Um, another question on the new, um, formulation of Polari. How much expansion in the market size do you think the new formulation, uh, is clarified will get? And then, uh, will the new formulation completely replace the existing Clarify? I think you may have said that, Brian, but I just want to clarify, um, you know, how you expect that to, uh, change over time that mix between the new and the old.

to clarify, as it currently exists in the marketplace. And as far as expanding the market, uh, I think with a Level Playing Field and what we believe is the best psma agent, uh, we think we'll be able to return to growth and certainly

Customers that I'm talking to right now that are seeing poor performance with the other F-18 agents. Um I participate that they're going to come back to us.

Uh, we will also have expanded out the door times and the ability to deliver across a wider radius with a newer formulation. So,

I'm very much looking forward to the launch of that product and it's a key part of our future strategy.

Thank you. 1 moment for our next question.

Our next question comes from the line of Andy Shay from William Blair.

Uh, thanks for taking our, our question, um, just kind of going back to the AIC conference. I guess, 1 of the things that came out, um, is using blood-based biomarkers as a rule out, tests specifically for the symptomatic patients. Um, I believe you highlighted um, um, your your Alzheimer's um, sensitivity across, different product portfolios.

I'm I'm just curious about um, you know, your strategy and boosting the utility and the pro dual patient population. So you can expand um Beyond just screening for the high-risk patients in that setting. Thank you.

yeah, it's a great question and I appreciate it, you know, I think we're really looking at the blood-based biomarkers as a Market expansion opportunity and a way for Primary Care to basically

Almost view it. Like, it's a PSA PSA test for prostate cancer and get patients to the neurologist. And then let the neurologist. Make the decision, uh, upon a full workup for an AMOLED, or a talc or both. And I think, um, the game going forward is all about, identifying these patients much earlier in their treatment Paradigm or the disease course. And I think if you look at our tracers, uh, particularly MK and nav, and further in the pipeline 2620, they are definitely more sensitive and have better spatial resolution than the current first generation traces available. So we're very much looking forward to Future Therapeutics that seem to be on the near-term horizon and could be a step up over what's currently available.

Thank you.

1 moment for our next question.

Our next question comes from the line of un Jew from B Riley.

Maybe it won't follow up a question to Bob. Paul On Your 6. What's the underlying Assumption of year-over-year growth in both volume and price for your 40 million dollar Revenue? Guidance in 2025 for the last 5 months. Thank you.

So we are not going to be able to disclose um sort of the year to date. Mercy uh performance. Um as the it is still within another public company, albeit a a South African listed company.

Integrating. Um, and getting planned a probably if you want to expand on uh sort of the, the efforts from a Us sales trajectory. Yeah. Absolutely. I mean, I think we're, uh, thanks for the question you on? We're very excited about Nurse seat. Um, we think the growth will continue to be driven by a growing overall pet diagnostic market for Alzheimer's, led by increased patient and customer awareness and the continued adoption of therapeutic agents. Um, both those that are on the market and the excitement uh, in the long term about the late stage pipelines. Um, we are incredibly pleased with the team that's joining us from LMI. And we believe that our combined organizations will enable greater Supply and Geographic expansion from a pmf network Levering, the expertise, we built with polari deeper customer relationships, driven by our broader portfolio and then improved systems and processes. Um, and we believe, as I mentioned earlier, that the Alzheimer's commercial franchise, that the LMI team,

Has so, uh, built um, with Incredible talent and capabilities is going to serve as a great launching PAD, as we think about mk62 240 and our own, um, combined late, stage Alzheimer's portfolio.

Thank you. 1 moment for our next question.

Our next question comes from the line of David Turley from citizens.

Hey I 1 1 for Bob quickly here, so I just wanted to check some math. So

given the, um,

Guidance for clarify implied, in the back, half of the year.

if we kind of look at that as a

Base point for 2026.

Um,

And we assume a little volume growth off. Kind of how you exit this year.

Would it be fair to look at clarifai revenues in 26 and say they could be flattish to possibly even down a little bit versus 25.

Given sort of what we're seeing today.

I don't think that's an unfair, assumption. Obviously, we're not here to provide guidance on 2026. Um, you know, your, your math. And your thinking around some of the trajectory in terms of annualizing through, um, the the pricing dynamics that we've we've seen here, um, and what we're expecting in the second half of the year. I do think that, you know, we will annualize through those as we go through the first half of next year. So what we've seen obviously does sort of expand out that annualization process. So, again, your assumptions are not wrong. Um, in totality

David, I would just add to Bob agree with everything you said. I, I, we want to be really clear. Our top priority is, to stabilize polari to maintain Market leadership, um, in 2025 and ensure that we set up our psma, pet franchise for long-term growth leadership and success. And so, we'll certainly come to 26 when it's appropriate, but that remains our clear Focus as an organization.

Thank you. One moment for our next question.

Our next question comes from the line of Richard newer from truist securities.

Hi, thanks. Uh, for the follow-up just just on that last. Uh, on that last answer for David's question. I guess when you said that double digit growth, you know, combined, uh, inorganic and organic in 2026 is still, uh, still the goal or or on the table. It sounds like you're assuming the possibility that that's achievable with negative polarized growth. Uh, as you just said, is that correct?

Yes.

Yeah, I think.

Thank you, operator.

Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program. You may disconnect, and have a wonderful day.