United Therapeutics Corporation Reports 2012 Fourth Quarter and Annual Financial Results

    United Therapeutics Corporation Reports 2012 Fourth Quarter and Annual
                              Financial Results

- Total Annual Revenues of $916.1 million

- Annual Earnings per Share of $5.84 per Basic Share or $5.71 per Diluted
Share

- Annual Earnings Before Non-Cash Charges of $9.97 per Basic Share or $9.75
per Diluted Share

PR Newswire

SILVER SPRING, Md., Feb. 26, 2013

SILVER SPRING, Md., Feb. 26, 2013 /PRNewswire/ -- United Therapeutics
Corporation (NASDAQ: UTHR) today announced its financial results for the
fourth quarter and year ended December 31, 2012.

"Our excellent annual results reflect both our leadership in pulmonary
hypertension medicines and our discipline in focusing company resources on
transformative growth opportunities," noted Martine Rothblatt, Ph.D., United
Therapeutics' Chairman and Chief Executive Officer. "It is especially
noteworthy that our medicines are now being prescribed to more pulmonary
hypertension patients in the United States than any other company's
medicines."

Total revenues for the quarter ended December 31, 2012 were $243.8 million, up
from $195.2 million for the quarter ended December 31, 2011. Net income for
the quarter ended December 31, 2012 was $83.3 million or $1.65 per basic
share, compared to $43.2 million or $0.79 per basic share for the quarter
ended December 31, 2011. For the year ended December 31, 2012, we had net
income of $304.4 million, or $5.84 per basic share and $5.71 per diluted
share, compared to $217.9 million, or $3.81 per basic share and $3.67 per
diluted share, for the year ended December 31, 2011. Earnings before non-cash
charges^(1) for the quarter ended December 31, 2012, were $126.3 million or
$2.50 per basic share, compared to $87.5 million or $1.61 per basic share for
the quarter ended December 31, 2011.

^(1)See definition of earnings before non-cash charges, a non-GAAP financial
measure, and a reconciliation of net income to earnings before non-cash
charges below.  

Operating Results

Revenues

The table below summarizes the components of revenues (in thousands): 

 

                          Three Months Ended      Year Ended

                          December 31,            December 31,
                          2012        2011        2012        2011
Cardiopulmonary products:
Remodulin                 $ 116,214   $ 107,116   $ 457,969   $ 430,132
Tyvaso                    86,036      64,547      325,614     240,382
Adcirca                   38,182      22,647      122,540     70,580
Other                     3,385       868         9,953       2,089
Total revenues            $ 243,817   $ 195,178   $ 916,076   $ 743,183

 

Revenues for the quarter ended December 31, 2012 increased by $48.6 million
compared to the quarter ended December 31, 2011. The growth in revenues
corresponded primarily to the continued increase in the number of patients
being prescribed our products. In addition, approximately $3.6 million of the
increase in Adcirca revenue was the result of shipments toward the end of
December 2012, as wholesalers ordered additional product to avert near-term
shortages of Adcirca due to the timing of the holidays. Other revenues include
approximately $3.1 million recognized under our contract with the National
Institute of Allergy and Infectious Diseases of the United States National
Institutes for Health to develop antiviral agents.

Gross margins from sales for the quarters ended December 31, 2012 and 2011
were $202.8 million and $169.0 million, or 84% and 87%, respectively, of total
revenues. The decrease in gross margins as a percentage of sales for the
fourth quarter of 2012 reflects an $8.9 million increase in our reserves for
inventory obsolescence, which represents the cost of the Tyvaso inhalation
devices expected to be rendered obsolete based on the pending release of our
modified inhalation device, the TD-100, in 2013.

Expenses

The table below summarizes research and development expense by major project
and non-project component (in thousands): 

 

                                  Three Months Ended    Year Ended

                                  December 31,          December 31,
                                  2012       2011       2012        2011
Project and non-project:
Cardiopulmonary                   $ 30,892   $ 28,142   $ 122,350   $ 150,501
Share-based compensation          (3,722)    9,687      11,237      (7,994)
(benefit) expense
Other                             10,306     10,807     39,800      37,508
Total research and development    $ 37,476   $ 48,636   $ 173,387   $ 180,015
expense

 

Cardiopulmonary.  The increase in cardiopulmonary project expenses of $2.8
million for the quarter ended December 31, 2012 over the same quarter in 2011
resulted from $1.9 million and $1.3 million in expenses associated with on the
development of self-injectable prostacyclin analogues and our Remodulin
implantable pump program, respectively.

Share-based compensation.  The $13.4 million decrease in share-based
compensation expense for the quarter ended December 31, 2012 over the same
quarter in 2011 reflects the 4 percent decline in the price of our common
stock during the quarter ended December 31, 2012 compared to the 26 percent
appreciation in the price of our common stock for the same quarter in 2011.

The table below summarizes selling, general and administrative expense by
major category (in thousands): 

                                  Three Months Ended    Year Ended

                                  December 31,          December 31,
                                  2012       2011       2012        2011
Category:
General and administrative        $ 31,118   $ 26,608   $ 116,899   $ 97,785
Sales and marketing               15,788     19,091     67,220      66,405
Share-based compensation          (6,833)    12,008     17,627      (7,708)
(benefit) expense
Total selling, general and        $ 40,073   $ 57,707   $ 201,746   $ 156,482
administrative expense

 

General and administrative. The $4.5 million increase in general and
administrative expenses for the quarter ended December 31, 2012 compared to
the same quarter in 2011 resulted from increases of: (1) $2.2 million in
depreciation and amortization expense as a result of the expansion of our
facilities in Maryland and North Carolina; and (2) $1.3 million in
compensation expense due to an increase in both headcount and incentive-based
compensation.

Sales and marketing. The $3.3 million decrease in sales and marketing expenses
for the quarter ended December 31, 2012 compared to the same quarter in 2011
was attributable to a decrease of $2.8 million in professional fees and
advertising expenses incurred in connection with the timing of our
marketing-related activities.

Share-based compensation.  The $18.8 million decrease in share-based
compensation expense for the quarter ended December 31, 2012 over the same
quarter in 2011 reflects the 4 percent decline in the price of our common
stock during the quarter ended December 31, 2012 compared to the 26 percent
appreciation in the price of our common stock for the same quarter in 2011.

Income Taxes

The provision for income taxes was $41.7 million for the quarter ended
December 31, 2012, compared to $16.8 million for the quarter ended December
31, 2011. The increase in income tax expense was attributable to the increase
in pre-tax earnings. 

2013 Revenue Guidance

We reaffirm our 2013 full-year revenue guidance, as we continue to expect
revenues to fall within a range of 5% above or below $1 billion for 2013.

This forward-looking guidance is inherently subject to variability;
consequently, we anticipate reaffirming or updating our expectation for 2013
when we present our quarterly results during 2013.

Discontinued Operations

Results for the quarter and year ended December 31, 2011 do not include the
results of Medicomp, Inc. (Medicomp), our former telemedicine subsidiary,
which we sold during the first quarter of 2011. The results of Medicomp have
been reported within discontinued operations on our consolidated statements of
operations presented below.

Earnings Before Non-Cash Charges

Earnings before non-cash charges is defined as net income, adjusted for the
following non-cash charges, as applicable: (1) interest; (2) income taxes; (3)
license fees; (4) depreciation and amortization; (5) impairment charges; and
(6) share-based compensation (stock option, share tracking award and employee
stock purchase plan expense).

A reconciliation of net income to earnings before non-cash charges is
presented below (in thousands, except per share data): 

 

                                                                Three Months Ended
             Year Ended December 31,
                                                                December 31,
             2012           2011        2010        2009        2012        2011
Net income,  $ 304,442      $ 217,868   $ 105,916   $ 19,462    $ 83,255    $ 43,189
as reported
Add
(subtract)
non-cash
charges:
Interest     16,639         21,372      19,714      12,875      4,490       5,112
expense
Income tax
expense      136,229        82,183      41,923      (695)       41,697      16,800
(benefit)
License fees —              37,049      —           —           —           (4,283)
Depreciation
and          27,145         20,535      17,919      11,394      7,290       4,898
amortization
Impairment   4,839     (1)  —           7,688       5,457       —           (250)
charges
Share-based
compensation 30,115         (15,715)    113,942     100,810     (10,453)    22,075
expense
(benefit)
Earnings
before       $ 519,409      $ 363,292   $ 307,102   $ 149,303   $ 126,279   $ 87,541
non-cash
charges
Earnings
before
non-cash
charges per
share:
Basic        $ 9.97         $ 6.36      $ 5.47      $ 2.80      $ 2.50      $ 1.61
Diluted      $ 9.75         $ 6.12      $ 5.16      $ 2.66      $ 2.42      $ 1.56
Weighted
average
number of
common
shares
outstanding:
Basic        52,093         57,163      56,142      53,314      50,503      54,424
Diluted      53,280         59,395      59,516      56,133      52,133      55,952

^(1) Consists of a $6.8 million impairment loss relating to a contract-based
intangible asset, upon the termination of the underlying license agreement
during the year ending December 31, 2012, net of $2.0 million of deferred
revenue we recognized as a result of the terminated license agreement and the
termination of our obligation to perform future services thereunder.

Conference Call

We will host a half-hour teleconference on Tuesday, February 26, 2013, 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 89593584.

This teleconference is also being webcast and can be accessed via our website
at http://ir.unither.com/events.cfm.

About United Therapeutics

United Therapeutics Corporation is a biotechnology company focused on the
development and commercialization of unique 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, earnings before non-cash
charges, that 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 earnings before non-cash charges 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. In addition, we have historically reported
earnings before non-cash charges to investors, and believe the inclusion of
this non-GAAP financial measure provides investors with a consistent method of
comparison to historical periods. 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 earnings before non-cash charges can be found in the
table above under the heading, Earnings Before Non-Cash Charges.

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, our expectations about future operating results, including statements
regarding our revenue guidance for 2013, our transformative growth
opportunities and the pending release of the TD-100 in 2013. 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 26, 2013, 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]

Remodulin and Tyvaso 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 thousands, except per share data)
                      Three Months Ended December 31,  Year Ended December 31,
                      2012              2011           2012         2011
Revenues:
Net product sales     $   240,431       $  194,310     $  906,123   $ 741,094
Other                 3,386             868            9,953        2,089
Total revenue         243,817           195,178        916,076      743,183
Operating expenses:
Research and          37,476            48,636         173,387      180,015
development
Selling, general and  40,073            57,707         201,746      156,482
administrative
Cost of product sales 37,665            25,327         119,297      88,904
Total operating       115,214           131,670        494,430      425,401
expenses
Operating income      128,603           63,508         421,646      317,782
Other (expense)
income:
Interest income       716               929            3,941        3,450
Interest expense      (4,490)           (5,112)        (16,639)     (21,367)
Equity loss in        (33)
affiliate                               (9)            (143)        (119)
                       
Other, net            156               673            31,866       (629)
Total other (expense) (3,651)           (3,519)        19,025       (18,665)
income, net
Income from
continuing operations 124,952           59,989         440,671      299,117
before income taxes
Income tax expense    (41,697)          (16,800)       (136,229)    (81,874)
Income from           83,255            43,189         304,442      217,243
continuing operations
Discontinued
operations
Income from
discontinued          —                 —              —            7
operations, net of
tax
Gain on disposal of
discontinued          —                 —              —            618
operations, net of
tax
Income from
discontinued          —                 —              —            625
operations
Net income            $   83,255        $  43,189      $  304,442   $ 217,868
Net income per common
share:
Basic
Continuing operations $   1.65          $  0.79        $  5.84      $ 3.80
Discontinued          —                 —              —            0.01
operations
Net income per basic  $   1.65          $  0.79        $  5.84      $ 3.81
common share
Diluted
Continuing operations $   1.60          $  0.77        $  5.71      $ 3.66
Discontinued          —                 —              —            0.01
operations
Net income per        $   1.60          $  0.77        $  5.71      $ 3.67
diluted common share
Weighted average
number of common
shares outstanding:
Basic                 50,503            54,424         52,093       57,163
Diluted               52,133            55,952         53,280       59,395

 

SELECTED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
                                                        December 31,
                                                        2012        2011
Cash, cash equivalents and marketable securities
(excluding restricted amounts of $5,377 and $5,123,     $ 784,931   $ 747,378
respectively)
Total assets                                            1,626,595   1,518,079
Total liabilities and common stock subject to           542,614     569,591
repurchase
Total stockholders' equity                              1,083,981   948,488

 

SOURCE United Therapeutics Corporation

Website: http://www.unither.com
Contact: Andrew Fisher, +1-202-483-7000, Afisher@unither.com