United Therapeutics Corporation Reports Third Quarter 2017 Financial Results
"Our third quarter net revenues totaled
Key financial highlights include (dollars in millions, except per share data):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Changes | |||||||
Revenues | $ | 445.5 | $ | 408.2 | 9 | % | |||
Net income | $ | 276.3 | $ | 161.8 | 71 | % | |||
Non-GAAP earnings(1) | $ | 206.9 | $ | 195.6 | 6 | % | |||
Net income, per diluted share | $ | 6.27 | $ | 3.50 | 79 | % | |||
Non-GAAP earnings, per diluted share(1) | $ | 4.69 | $ | 4.23 | 11 | % | |||
(1) | See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below. |
Financial Results for the Three Months Ended
Revenues
The following table presents the components of total revenues (dollars in millions):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Change | |||||||
Net product sales: | |||||||||
Remodulin® | $ | 187.3 | $ | 152.4 | 23 | % | |||
Tyvaso® | 88.9 | 101.8 | (13) | % | |||||
Adcirca® | 99.8 | 96.0 | 4 | % | |||||
Orenitram® | 52.5 | 40.7 | 29 | % | |||||
Unituxin® | 17.0 | 17.3 | (2) | % | |||||
Total revenues | $ | 445.5 | $ | 408.2 | 9 | % |
Revenues for the three months ended
Expenses
Cost of product sales. The following table summarizes cost of product sales by major category (dollars in millions):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Change | |||||||
Category: | |||||||||
Cost of product sales, excluding share-based compensation | $ | 21.3 | $ | 20.0 | 7 | % | |||
Share-based compensation (benefit) expense(1) | (1.8) | 3.6 | (150) | % | |||||
Total cost of product sales | $ | 19.5 | $ | 23.6 | (17) | % | |||
(1) | Refer to Share-based compensation (benefit) expense below for discussion. |
Research and development expense. The following table summarizes research and development expense by major category (dollars in millions):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Change | |||||||
Category: | |||||||||
Research and development, excluding share-based compensation | $ | 62.0 | $ | 37.2 | 67 | % | |||
Share-based compensation (benefit) expense(1) | (7.0) | 8.7 | (180) | % | |||||
Total research and development expense | $ | 55.0 | $ | 45.9 | 20 | % | |||
(1) | Refer to Share-based compensation (benefit) expense below for discussion. |
Research and development, excluding share-based compensation. The increase in research and development expense of
Selling, general and administrative expense. The following table summarizes selling, general and administrative expense by major category (dollars in millions):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Change | |||||||
Category: | |||||||||
General and administrative, excluding share-based compensation | $ | 46.6 | $ | 42.4 | 10 | % | |||
Sales and marketing, excluding share-based compensation | 15.8 | 20.1 | (21) | % | |||||
Share-based compensation (benefit) expense(1) | (15.2) | 37.6 | (140) | % | |||||
Total selling, general and administrative expense | $ | 47.2 | $ | 100.1 | (53) | % | |||
(1) | Refer to Share-based compensation (benefit) expense below for discussion. |
General and administrative, excluding share-based compensation. The increase in general and administrative expense of
Sales and marketing, excluding share-based compensation. The decrease in sales and marketing expense of
Share-based compensation (benefit) expense. The following table summarizes share-based compensation (benefit) expense by major category (dollars in millions):
Three Months Ended | Percentage | ||||||||
2017 | 2016 | Change | |||||||
Category: | |||||||||
Share tracking awards plan | $ | (38.0) | $ | 45.8 | (183) | % | |||
Stock options | 13.1 | 3.3 | 297 | % | |||||
Other(1) | 0.9 | 0.8 | 13 | % | |||||
Total share-based compensation (benefit) expense | $ | (24.0) | $ | 49.9 | (148) | % | |||
(1) | Includes expense related to restricted stock units and employee stock purchase plan. |
Share tracking awards plan. We re-measure the fair value of share tracking awards at the end of each financial reporting period. Changes in the share tracking award liability resulting from such re-measurements are recorded as adjustments to share-based compensation (benefit) expense. Decreases in our stock price will generally result in a reduction in the share tracking award liability.
Income Tax Expense
The provision for income taxes was
Share Repurchase
In
Non-GAAP Earnings
Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation (benefit) expense, net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); (2) extraordinary, non-recurring and unusual items; and (3) tax impact on non-GAAP earnings adjustments.
A reconciliation of net income to non-GAAP earnings is presented in the following table (in millions, except per share data):
Three Months Ended | |||||||
2017 | 2016 | ||||||
Net income, as reported | $ | 276.3 | $ | 161.8 | |||
Adjusted for: | |||||||
Share-based compensation (benefit) expense, net(1) | (24.0) | 49.9 | |||||
Estimated loss contingency(1) | 0.9 | — | |||||
Impairment of cost method investments(2) | 3.1 | — | |||||
Tax benefit (expense)(1)(3) | (49.4) | (16.1) | |||||
Non-GAAP earnings | $ | 206.9 | $ | 195.6 | |||
Non-GAAP earnings per share: | |||||||
Basic | $ | 4.77 | $ | 4.53 | |||
Diluted | $ | 4.69 | $ | 4.23 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 43.4 | 43.2 | |||||
Diluted | 44.1 | 46.2 | |||||
(1) | We calculated the total tax impact of non-discrete quarterly non-GAAP earnings adjustments based on our estimated annual effective tax rates, before considering discrete items, of approximately 33 percent and approximately 32 percent for each of the quarters ended |
(2) | This non-GAAP earnings adjustment is currently not considered tax deductible. |
(3) | The tax benefit (expense) for the three months ended |
Conference Call
We will host a half-hour teleconference on
This teleconference is also being webcast and can be accessed via our website at http://ir.unither.com/events.cfm.
About
Non-GAAP Financial Information
This press release contains a financial measure, non-GAAP earnings, which does not comply with
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, the calculation of our non-GAAP financial measure may differ from the methodology used by other companies. The presentation of our 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 regarding the revenue growth opportunity for Orenitram, as well as statements regarding the expected increase in net revenues in the fourth quarter and our pipeline research and development programs. 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
Orenitram, Remodulin, Tyvaso and Unituxin are registered trademarks of
Adcirca is a registered trademark of Eli Lilly and Company.
| |||||||
Three Months Ended | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
Revenues: | |||||||
Net product sales | $ | 445.5 | $ | 408.2 | |||
Total revenues | 445.5 | 408.2 | |||||
Operating expenses: | |||||||
Cost of product sales | 19.5 | 23.6 | |||||
Research and development | 55.0 | 45.9 | |||||
Selling, general and administrative | 47.2 | 100.1 | |||||
Total operating expenses | 121.7 | 169.6 | |||||
Operating income | 323.8 | 238.6 | |||||
Other (expense) income: | |||||||
Interest expense | (3.3) | (0.5) | |||||
Other, net | 3.3 | 1.0 | |||||
Impairment of cost method investment | (3.1) | — | |||||
Total other (expense) income, net | (3.1) | 0.5 | |||||
Income before income taxes | 320.7 | 239.1 | |||||
Income tax expense | (44.4) | (77.3) | |||||
Net income | $ | 276.3 | $ | 161.8 | |||
Net income per common share: | |||||||
Basic | $ | 6.37 | $ | 3.75 | |||
Diluted | $ | 6.27 | $ | 3.50 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 43.4 | 43.2 | |||||
Diluted | 44.1 | 46.2 |
SELECTED CONSOLIDATED BALANCE SHEET DATA | ||||
| ||||
Cash, cash equivalents and marketable investments | $ | 1,549.2 | ||
Total assets | 2,936.0 | |||
Total liabilities and temporary equity | 866.1 | |||
Total stockholders' equity | 2,069.9 | |||
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