Why Lantheus Holdings Stock Got Thrashed on Tuesday

Radiopharmaceutical specialist Lantheus Holdings (NASDAQ: LNTH) had some news to report Tuesday morning, but the market didn't greet it warmly. Following its announcement of a fresh acquisition, investors traded out of the niche healthcare stock, leaving it with a more than 7% loss on the day. That was in contrast with the S&P 500 index, which increased by 0.9%.

New day, new deal

Well before market open that morning, Lantheus announced that it has signed a definitive agreement to acquire clinical-stage peer Evergreen Theragnostics. For its new asset, Lantheus will make an up-front cash payment of $250 million, and is to be on the hook for up to $725.5 million more if and when a series of milestone payments are earned by Evergreen.

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Like Lantheus, Evergreen is a highly specialized healthcare company engaged in the field of radiopharmaceuticals. These are medicines that use radioactive substances to achieve a desired effect.

Lantheus' move is part of an effort to bolster its manufacturing efforts. It wrote in the press release trumpeting the deal that "the addition of Evergreen's scalable manufacturing capabilities and infrastructure enhances Lantheus' ability to meet the complex demands of radiopharmaceutical development and production."

Cash on hand

In the press release, Lantheus reaffirmed its existing 2024 full-year guidance. This calls for $1.51 billion to $1.52 billion in revenue, filtering down into non-GAAP (adjusted) earnings of $6.65 to $6.70 per share.

Lantheus did not specify how it would fund the Evergreen acquisition, which was probably one reason for the negative investor reaction. However, at the end of September it had more than enough to at least handle that up-front payment, with $866 million in cash on its books.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lantheus. The Motley Fool has a disclosure policy.