SILVER SPRING, Md. and
RESEARCH TRIANGLE PARK, N.C.,
Feb. 21, 2018 /PRNewswire/ -- United Therapeutics Corporation
(NASDAQ: UTHR) today announced its financial results for the fourth
quarter and year ended December 31, 2017.
"Our fourth quarter net revenues reached $465 million and our annual net revenues reached
$1.7 billion, our highest quarterly
and annual net revenues ever," said Martine
Rothblatt, Ph.D., United Therapeutics Chairman and Chief
Executive Officer. "Orenitram's fourth quarter net revenues grew by
25%, as compared to the same period in the prior year, representing
our third consecutive quarter of greater than 20% net revenue
growth for this therapy and confirming our belief in the organic
growth opportunity for Orenitram, which is the only true oral
prostacyclin analogue therapy for the large and increasing number
of pulmonary arterial hypertension (PAH) patients. These financial
results strengthen our ability to develop and advance our growing
product pipeline, which currently includes seven phase III
programs and multiple next-generation treprostinil drug delivery
systems as well as investigative regenerative medicine and organ
manufacturing programs, which we hope will ultimately provide a
cure for PAH and other end-stage organ diseases."
Key financial highlights include (in millions, except per share
data):
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
464.7
|
|
$
|
409.0
|
|
$
|
1,725.3
|
|
$
|
1,598.8
|
|
Net income
|
|
$
|
19.0
|
|
$
|
110.3
|
|
$
|
417.9
|
|
$
|
713.7
|
|
Non-GAAP
earnings(1)
|
|
$
|
170.2
|
|
$
|
184.3
|
|
$
|
741.3
|
|
$
|
726.0
|
|
Net income, per
diluted share
|
|
$
|
0.43
|
|
$
|
2.43
|
|
$
|
9.31
|
|
$
|
15.25
|
|
Non-GAAP earnings,
per diluted share(1)
|
|
$
|
3.89
|
|
$
|
4.06
|
|
$
|
16.51
|
|
$
|
15.51
|
|
_________________________
(1)
|
See definition of
non-GAAP earnings, a non-GAAP financial measure, and a
reconciliation of net income to non-GAAP earnings
below.
|
Revenues
The table below summarizes the components of total revenues
(dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Percentage
|
|
Year Ended
December 31,
|
|
Percentage
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
Net product
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remodulin®
|
|
$
|
180.1
|
|
$
|
151.2
|
|
19.1
|
%
|
$
|
670.9
|
|
$
|
602.3
|
|
11.4
|
%
|
Tyvaso®
|
|
92.4
|
|
93.6
|
|
(1.3)
|
%
|
372.9
|
|
404.6
|
|
(7.8)
|
%
|
Adcirca®
|
|
119.3
|
|
112.7
|
|
5.9
|
%
|
419.7
|
|
372.2
|
|
12.8
|
%
|
Orenitram®
|
|
48.0
|
|
38.3
|
|
25.3
|
%
|
185.8
|
|
157.2
|
|
18.2
|
%
|
Unituxin®
|
|
24.9
|
|
13.2
|
|
88.6
|
%
|
76.0
|
|
62.5
|
|
21.6
|
%
|
Total
revenues
|
|
$
|
464.7
|
|
$
|
409.0
|
|
13.6
|
%
|
$
|
1,725.3
|
|
$
|
1,598.8
|
|
7.9
|
%
|
Revenues for the quarter ended December 31, 2017 increased
by $55.7 million as compared to the
same period in 2016. The growth in revenues primarily resulted
from: (1) a $28.9 million
increase in Remodulin net product sales; (2) an $11.7 million increase in Unituxin net product
sales; (3) a $9.7 million
increase in Orenitram net product sales; and (4) a
$6.6 million increase in Adcirca net
product sales, partially offset by a $1.2
million decrease in Tyvaso net product sales.
Revenues for the year ended December 31, 2017 increased by
$126.5 million as compared to the
same period in 2016. The growth in revenues primarily resulted from
the following: (1) a $68.6
million increase in Remodulin net product sales; (2) a
$47.5 million increase in Adcirca net
product sales; (3) a $28.6
million increase in Orenitram net product sales; and
(4) a $13.5 million increase in
Unituxin net product sales, partially offset by a $31.7 million decrease in Tyvaso net product
sales.
Expenses
Cost of product sales. The table below summarizes cost of
product sales by major category (dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Percentage
|
|
Year Ended
December 31,
|
|
Percentage
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product
sales
|
|
$
|
46.7
|
|
$
|
19.5
|
|
139.5
|
%
|
$
|
103.1
|
|
$
|
72.1
|
|
43.0
|
%
|
Share-based
compensation
expense(1)
|
|
6.3
|
|
8.9
|
|
(29.2)
|
%
|
2.6
|
|
0.6
|
|
333.3
|
%
|
Total cost of product
sales
|
|
$
|
53.0
|
|
$
|
28.4
|
|
86.6
|
%
|
$
|
105.7
|
|
$
|
72.7
|
|
45.4
|
%
|
________________________
(1)
|
Refer to
Share-based compensation expense below for
discussion.
|
Cost of product sales, excluding share-based
compensation. The increases in cost of product sales of
$27.2 million and $31.0 million, respectively, for the quarter and
year ended December 31, 2017 as compared to the same periods
in 2016, were primarily attributable to a $21.9 million increase in royalty expense for
Adcirca. Our amended license agreement with Eli Lilly and Company
resulted in our royalty rate on net product sales of Adcirca
increasing from five percent to an effective rate of approximately
42.5 percent beginning December 1, 2017. The remaining
increase in cost of product sales was primarily attributable to an
increase in sales.
Research and development expense. The table below
summarizes research and development expense by major category
(dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Percentage
|
|
Year Ended
December 31,
|
|
Percentage
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
Project and
non-project:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expense
|
|
$
|
91.5
|
|
$
|
46.6
|
|
96.4
|
%
|
$
|
256.4
|
|
$
|
157.6
|
|
62.7
|
%
|
Share-based
compensation expense (benefit)(1)
|
|
22.1
|
|
20.3
|
|
8.9
|
%
|
8.2
|
|
(10.0)
|
|
182.0
|
%
|
Total research
and
development expense
|
|
$
|
113.6
|
|
$
|
66.9
|
|
69.8
|
%
|
$
|
264.6
|
|
$
|
147.6
|
|
79.3
|
%
|
________________________
(1)
|
Refer to
Share-based compensation expense below for
discussion.
|
Research and development expense, excluding share-based
compensation. The increases in research and development expense
of $44.9 million and $98.8 million, respectively, for the quarter and
year ended December 31, 2017 as compared to the same periods
in 2016, were driven by the expansion of our pipeline programs to
treat cardiopulmonary disease and cancer and to develop organ
manufacturing technologies.
Selling, general and administrative expense. The table
below summarizes selling, general and administrative expense by
major category (dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Percentage
|
|
Year Ended
December 31,
|
|
Percentage
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
$
|
51.4
|
|
$
|
45.9
|
|
12.0
|
%
|
$
|
203.1
|
|
$
|
210.7
|
|
(3.6)
|
%
|
Sales and
marketing
|
|
17.6
|
|
17.5
|
|
0.6
|
%
|
64.3
|
|
84.6
|
|
(24.0)
|
%
|
Share-based
compensation
expense(1)
|
|
90.1
|
|
76.1
|
|
18.4
|
%
|
62.7
|
|
21.5
|
|
191.6
|
%
|
Total selling, general
and
administrative expense
|
|
$
|
159.1
|
|
$
|
139.5
|
|
14.1
|
%
|
$
|
330.1
|
|
$
|
316.8
|
|
4.2
|
%
|
_______________________
(1)
|
Refer to
Share-based compensation expense below for
discussion.
|
General and administrative, excluding share-based
compensation. The decrease in general and administrative
expenses of $7.6 million for the year
ended December 31, 2017, as compared to the same period in
2016, primarily resulted from: (1) a $32.0
million decrease in grants to non-affiliated, non-profit
organizations that provide financial assistance to patients with
PAH; and (2) a $9.3 million decrease
of expenses in connection with the disposition and write down of
various properties in 2016. The decrease was partially offset by:
(1) a $9.4 million increase in legal
fees incurred in connection with intellectual property litigation
and the Department of Justice (DOJ) investigation of our support of
501(c)(3) organizations that provide financial assistance to
patients; (2) a $9.2 million increase
in compensation due to an increase in staffing; and (3) a
$6.5 million increase in consulting
expenses.
Sales and marketing, excluding share-based compensation.
The decrease in sales and marketing expenses of $20.3 million for the year ended
December 31, 2017, as compared to the same period in 2016,
primarily resulted from a $11.3
million decrease in compensation and related costs
associated with the 2016 consolidation of our sales and marketing
staff.
Share-based compensation expense. The table below
summarizes share-based compensation expense (benefit) by major
category (dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Percentage
|
|
Year Ended
December 31,
|
|
Percentage
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
|
Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
$
|
13.1
|
|
$
|
3.1
|
|
322.6
|
%
|
$
|
43.0
|
|
$
|
24.8
|
|
73.4
|
%
|
Share tracking awards
plan
|
|
104.6
|
|
101.3
|
|
3.3
|
%
|
27.1
|
|
(15.2)
|
|
278.3
|
%
|
Other(1)
|
|
0.8
|
|
0.9
|
|
(11.1)
|
%
|
3.4
|
|
2.5
|
|
36.0
|
%
|
Total
share-based
compensation expense
|
|
$
|
118.5
|
|
$
|
105.3
|
|
12.5
|
%
|
$
|
73.5
|
|
$
|
12.1
|
|
507.4
|
%
|
_______________________
(1)
|
Includes expense
related to restricted stock units and our employee stock purchase
plan for the periods ended December 31, 2017 and
2016.
|
Share-based compensation. The increase in share-based
compensation expense of $13.2 million
during the quarter ended December 31, 2017, as compared to the
same period in 2016, was primarily due to a $10.0 million increase in stock option expense
due to additional awards outstanding in 2017.
The increase in share-based compensation expense of $61.4 million during the year ended
December 31, 2017, as compared to the same period in 2016, was
primarily due to: (1) a $42.3 million
increase in share tracking awards expense related to an increase in
our stock price during 2017 and the continued vesting of
outstanding awards; and (2) an $18.2
million increase in stock option expense due to additional
awards granted and outstanding in 2017.
Settlement of Loss Contingency
In December 2017, we entered into a civil Settlement
Agreement with the U.S. Government to resolve a DOJ investigation
related to our support of 501(c)(3) organizations that provide
financial assistance to patients. During the second quarter of
2017, we recorded a $210.0 million accrual relating to this matter,
and ultimately paid this amount, plus interest, to the U.S.
Government upon settlement. This matter is described in more detail
in Note 16—Litigation—Department of Justice Subpoena, to our
consolidated financial statements included within our Annual Report
on Form 10-K for the year ended December 31, 2017.
Impairment of Cost Method Investment
During the year ended December 31, 2017, we recorded
$49.6 million of impairment charges
related to our cost method investments in privately-held companies.
There were no such impairment charges in the year ended
December 31, 2016.
Income Taxes
The provision for income taxes was $351.6
million for the year ended December 31, 2017, compared
to $346.5 million for the same period
in 2016. The change in the provision for income taxes was primarily
due to a charge for the revaluation of deferred taxes due to the
lower corporate tax rate enacted by The Tax Cuts and Jobs Act ("Tax
Reform"), which is effective as of January 1, 2018, and
increases in nondeductible items, partially offset by a decrease in
income before income taxes. For the years ended December 31,
2017 and 2016, the effective tax rates were approximately
46 percent and 33 percent, respectively.
Non-GAAP Earnings
Non-GAAP earnings is defined as net income, adjusted for:
(1) share-based compensation expense (including expenses
relating to stock options, restricted stock units, share tracking
awards, and our employee stock purchase plan); (2) settlement
of loss contingency; (3) impairment charges; (4) impact
of Tax Reform; and (5) tax impact on non-GAAP earnings
adjustments.
A reconciliation of net income to non-GAAP earnings is presented
below (in millions, except per share data):
|
|
Three Months Ended
December 31,
|
|
Year Ended December 31,
|
|
|
|
2017
|
|
2016
(1)
|
|
2017
|
|
2016
(1)
|
|
Net income, as
reported
|
|
$
|
19.0
|
|
$
|
110.3
|
|
$
|
417.9
|
|
$
|
713.7
|
|
Adjust for the
following charges:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense(2)
|
|
118.5
|
|
105.3
|
|
73.5
|
|
12.1
|
|
Settlement of loss
contingency(3)
|
|
—
|
|
—
|
|
210.0
|
|
—
|
|
Impairment of cost
method investments(4)
|
|
—
|
|
—
|
|
49.6
|
|
—
|
|
Other impairment
charges(4)
|
|
—
|
|
4.3
|
|
—
|
|
4.3
|
|
Impact of Tax
Reform(5)
|
|
71.0
|
|
—
|
|
71.0
|
|
—
|
|
Tax
benefit(2)(3)
|
|
(38.3)
|
|
(35.6)
|
|
(80.7)
|
|
(4.1)
|
|
Non-GAAP
earnings
|
|
$
|
170.2
|
|
$
|
184.3
|
|
$
|
741.3
|
|
$
|
726.0
|
|
Non-GAAP earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.94
|
|
$
|
4.37
|
|
$
|
16.85
|
|
$
|
16.58
|
|
Diluted
|
|
$
|
3.89
|
|
$
|
4.06
|
|
$
|
16.51
|
|
$
|
15.51
|
|
Weighted average
number of common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
43.2
|
|
42.2
|
|
44.0
|
|
43.8
|
|
Diluted
|
|
43.8
|
|
45.4
|
|
44.9
|
|
46.8
|
|
_______________________
(1)
|
We changed the
presentation of our non-GAAP earnings in the first quarter of 2017
to exclude adjustments for interest expense and depreciation and
amortization. Prior year periods have been conformed to match the
current year presentation.
|
|
|
(2)
|
We calculated the
total tax impact of non-discrete quarterly non-GAAP earnings
adjustments based on our annual effective tax rates, before
considering discrete items, of approximately 32 percent and
approximately 34 percent for each of the quarters and years ended
December 31, 2017 and 2016, respectively.
|
|
|
(3)
|
The tax benefit for
the year ended December 31, 2017 includes $57.0 million of
benefit for the estimated loss contingency recognized during the
second quarter of 2017 relating to the DOJ investigation of our
support of 501(c)(3) organizations that provide financial
assistance to patients.
|
|
|
(4)
|
This non-GAAP
earnings adjustment is currently not considered tax
deductible.
|
|
|
(5)
|
The impact of Tax
Reform is a significant and unusual component of tax expense,
therefore in the calculation of non-GAAP earnings, it is presented
separately from the tax benefit that is derived from the other
non-GAAP adjustments.
|
Conference Call
We will host a half-hour teleconference on Wednesday,
February 21, 2018, at 9:00 a.m. Eastern Time. The
teleconference is accessible by dialing 1-877-351-5881, with
international callers dialing 1-970-315-0533. A rebroadcast of the
teleconference will be available for one week by dialing
1-855-859-2056, with international callers dialing 1-404-537-3406
and using access code 2296917.
This teleconference is also being webcast and can be accessed
via our website at http://ir.unither.com/events.
About United Therapeutics
United Therapeutics Corporation is a biotechnology company
focused on the development and commercialization of innovative
products to address the unmet medical needs of patients with
chronic and life-threatening conditions.
Non-GAAP Financial Information
This press release contains a financial measure, non-GAAP
earnings, which does not comply with United States generally accepted accounting
principles (GAAP). This measure supplements our financial results
prepared in accordance with GAAP as reported below.
We use non-GAAP earnings to assist us in: (1) planning,
including the preparation of our annual operating budget;
(2) allocating resources in an effort to enhance the financial
performance of our business; (3) evaluating the effectiveness
of our operational strategies; and (4) assessing our capacity
to fund capital expenditures and expand our business. We believe
this non-GAAP financial measure improves investors' understanding
of our financial results by excluding certain expenses that we do
not consider when evaluating and comparing the performance of our
core operations and making operating decisions. However, there are
limitations in the use of this non-GAAP financial measure in that
it excludes certain operating expenses that are recurring in
nature. In addition, our calculation of this non-GAAP financial
measure may differ from the methodology used by other companies.
The presentation of this non-GAAP financial measure should not be
considered in isolation or as a substitute for our financial
results prepared in accordance with GAAP. A reconciliation of net
income, the most directly comparable GAAP financial measure, to
non-GAAP earnings can be found in the table above under the
heading, Non-GAAP Earnings.
Forward-looking Statements
Statements included in this press release that are not
historical in nature are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, among others, statements
relating to the growth opportunity for Orenitram, our ability to
develop and advance products within our pipeline, and the
potential for these programs to result in a cure for PAH and other
end-stage organ diseases. These forward-looking statements are
subject to certain risks and uncertainties, such as those described
in our periodic reports filed with the Securities and Exchange
Commission, that could cause actual results to differ materially
from anticipated results. Consequently, such forward-looking
statements are qualified by the cautionary statements, cautionary
language and risk factors set forth in our periodic reports and
documents filed with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on
Form 8-K. We claim the protection of the safe harbor contained
in the Private Securities Litigation Reform Act of 1995 for
forward-looking statements. We are providing this information as of
February 21, 2018, and assume no obligation to update or
revise the information contained in this press release whether as a
result of new information, future events or any other reason.
[uthr-g]
Orenitram, Remodulin, Tyvaso and Unituxin are registered
trademarks of United Therapeutics Corporation.
Adcirca is a registered trademark of Eli Lilly and Company.
UNITED
THERAPEUTICS CORPORATION
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net product
sales
|
|
$
|
464.7
|
|
$
|
409.0
|
|
$
|
1,725.3
|
|
$
|
1,598.8
|
|
Total
revenues
|
|
464.7
|
|
409.0
|
|
1,725.3
|
|
1,598.8
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of product
sales
|
|
53.0
|
|
28.4
|
|
105.7
|
|
72.7
|
|
Research and
development
|
|
113.6
|
|
66.9
|
|
264.6
|
|
147.6
|
|
Selling, general and
administrative
|
|
159.1
|
|
139.5
|
|
330.1
|
|
316.8
|
|
Settlement of loss
contingency
|
|
—
|
|
—
|
|
210.0
|
|
—
|
|
Total operating
expenses
|
|
325.7
|
|
234.8
|
|
910.4
|
|
537.1
|
|
Operating
income
|
|
139.0
|
|
174.2
|
|
814.9
|
|
1,061.7
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(3.5)
|
|
(2.2)
|
|
(9.0)
|
|
(3.9)
|
|
Other, net
|
|
5.5
|
|
(0.5)
|
|
13.2
|
|
2.4
|
|
Impairment of cost
method investment
|
|
—
|
|
—
|
|
(49.6)
|
|
—
|
|
Total other income
(expense), net
|
|
2.0
|
|
(2.7)
|
|
(45.4)
|
|
(1.5)
|
|
Income before income
taxes
|
|
141.0
|
|
171.5
|
|
769.5
|
|
1,060.2
|
|
Income tax
expense
|
|
(122.0)
|
|
(61.2)
|
|
(351.6)
|
|
(346.5)
|
|
Net income
|
|
$
|
19.0
|
|
$
|
110.3
|
|
$
|
417.9
|
|
$
|
713.7
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.44
|
|
$
|
2.61
|
|
$
|
9.50
|
|
$
|
16.29
|
|
Diluted
|
|
$
|
0.43
|
|
$
|
2.43
|
|
$
|
9.31
|
|
$
|
15.25
|
|
Weighted average
number of common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
43.2
|
|
42.2
|
|
44.0
|
|
43.8
|
|
Diluted
|
|
43.8
|
|
45.4
|
|
44.9
|
|
46.8
|
|
SELECTED
CONSOLIDATED BALANCE SHEET DATA
|
(In
millions)
|
|
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
Cash, cash
equivalents and marketable securities
|
|
$
|
1,430.1
|
|
$
|
1,053.1
|
|
Total
assets
|
|
2,879.4
|
|
2,325.6
|
|
Total liabilities and
temporary equity
|
|
777.6
|
|
474.3
|
|
Total stockholders'
equity
|
|
2,101.8
|
|
1,851.3
|
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/united-therapeutics-corporation-reports-2017-fourth-quarter-and-annual-financial-results-300601608.html
SOURCE United Therapeutics Corporation