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Why Lantheus Holdings Inc. Got Smacked Down Today

By Brian Orelli, PhD - Mar 14, 2017 at 1:13PM

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A large shareholder is liquidating some of its shares.

What happened

Lantheus Holdings (LNTH 0.60%) is down 12% at 12:38 p.m. EDT after announcing that an existing shareholder plans to sell 3 million shares.

So what

Unlike a secondary offering where a company sells new shares, Lantheus Holdings won't get any cash for the sale. On the other hand, current investors also won't be diluted like they are during a secondary offering. It's no different than shares trading hands on the Nasdaq exchange, just in a much larger volume.

Balance sheet printed on a paper with a pen and magnifying glass on it.

Image source: Getty Images.

It appears that shares are down simply because it's a large shareholder, Avista Capital Partners, that's selling a large chunk of its shares. Lantheus Holdings has about 37 million shares outstanding, so this transaction represents about 8% of the outstanding shares. Investors are likely worried that there's some unknown issue that's leading Avista Capital to sell some of its shares.

But, alternatively, it could just be that the private equity firm needs to liquidate its assets for reasons that have nothing to do with Lantheus' future prospects. Before Lantheus Holdings came to market in 2015, it was backed by Avista Capital, which bought the segment from Bristol-Myers Squibb (BMY -0.53%) in 2008. With Lantheus trading at more than double its IPO price, Avista Capital may have decided that now is a good time to return some of the invested capital to its investors.

Now what

After selling the 3 million shares, Avista Capital will still own 33.2% of Lantheus, so it's not like the private equity firm is getting out completely.

Investors might be getting a good deal investing at this knocked-down price, although cautious investors might want to wait and see where the buyers of those 3 million shares will value Lantheus' shares.

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lantheus Holdings, Inc. Stock Quote
Lantheus Holdings, Inc.
$83.34 (0.60%) $0.50
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$74.46 (-0.53%) $0.40

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