United Therapeutics Corporation Reports 2017 Fourth Quarter And Annual Financial Results
"Our fourth quarter net revenues reached
Key financial highlights include (in millions, except per share data):
Three Months Ended | Year Ended | ||||||||||||
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 | Percentage | Year Ended | 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
Revenues for the year ended
Expenses
Cost of product sales. The table below summarizes cost of product sales by major category (dollars in millions):
Three Months Ended | Percentage | Year Ended | 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 | 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
Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):
Three Months Ended | Percentage | Year Ended | 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 | $ | 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
Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major category (dollars in millions):
Three Months Ended | Percentage | Year Ended | 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 | 90.1 | 76.1 | 18.4 | % | 62.7 | 21.5 | 191.6 | % | |||||||||
Total selling, general and | $ | 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
Sales and marketing, excluding share-based compensation. The decrease in sales and marketing expenses of
Share-based compensation expense. The table below summarizes share-based compensation expense (benefit) by major category (dollars in millions):
Three Months Ended | Percentage | Year Ended | 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 | $ | 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 |
Share-based compensation. The increase in share-based compensation expense of
The increase in share-based compensation expense of
Settlement of Loss Contingency
In
Impairment of
During the year ended
Income Taxes
The provision for income taxes was
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 | 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 | |||||||||||||
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 |
(3) | The tax benefit for the year ended |
(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. |
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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, 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
Orenitram, Remodulin, Tyvaso and Unituxin are registered trademarks of
Adcirca is a registered trademark of Eli Lilly and Company.
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 | |||||||||||||
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) | |||||||
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 | |||||
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