United Therapeutics Corporation Reports Second Quarter 2018 Financial Results
"Our second quarter net revenues totaled
Update on SteadyMed Acquisition
Our previously-announced acquisition of SteadyMed Ltd. (SteadyMed) has satisfied two key closing conditions. On
Financial Results for the Three Months Ended
Key financial highlights include (dollars in millions, except per share data):
Three Months Ended | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Revenues | $ | 444.5 | $ | 444.6 | $ | (0.1) | — | % | ||||
Net income (loss) | $ | 172.9 | $ | (56.0) | $ | 228.9 | 409 | % | ||||
Non-GAAP earnings(1) | $ | 189.1 | $ | 199.2 | $ | (10.1) | (5) | % | ||||
Net income (loss), per basic share | $ | 4.01 | $ | (1.25) | $ | 5.26 | 421 | % | ||||
Net income (loss), per diluted share | $ | 3.98 | $ | (1.25) | $ | 5.23 | 418 | % | ||||
Non-GAAP earnings, per diluted share(1) | $ | 4.36 | $ | 4.37 | $ | (0.01) | — | % |
(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 following table presents the components of total revenues (dollars in millions):
Three Months Ended | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Net product sales: | ||||||||||||
Remodulin® | $ | 159.5 | $ | 157.7 | $ | 1.8 | 1 | % | ||||
Tyvaso® | 105.9 | 104.2 | 1.7 | 2 | % | |||||||
Adcirca® | 109.8 | 120.6 | (10.8) | (9) | % | |||||||
Orenitram® | 49.5 | 46.0 | 3.5 | 8 | % | |||||||
Unituxin® | 19.8 | 16.1 | 3.7 | 23 | % | |||||||
Total revenues | $ | 444.5 | $ | 444.6 | $ | (0.1) | — | % |
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 | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Category: | ||||||||||||
Cost of product sales | $ | 61.1 | $ | 19.3 | $ | 41.8 | 217 | % | ||||
Share-based compensation expense (benefit)(1) | 0.6 | (0.4) | 1.0 | 250 | % | |||||||
Total cost of product sales | $ | 61.7 | $ | 18.9 | $ | 42.8 | 226 | % |
(1) | Refer to Share-based compensation expense (benefit) below for discussion. |
Cost of product sales, excluding share-based compensation. The increase in cost of product sales of
Research and development expense. The following table summarizes research and development expense by major category (dollars in millions):
Three Months Ended | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Category: | ||||||||||||
Research and development projects | $ | 79.1 | $ | 61.6 | $ | 17.5 | 28 | % | ||||
Share-based compensation expense (benefit)(1) | 3.2 | (1.8) | 5.0 | 278 | % | |||||||
Total research and development expense | $ | 82.3 | $ | 59.8 | $ | 22.5 | 38 | % |
(1) | Refer to Share-based compensation expense (benefit) below for discussion. |
Research and development expense, 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 | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Category: | ||||||||||||
General and administrative | $ | 50.8 | $ | 51.6 | $ | (0.8) | (2) | % | ||||
Sales and marketing | 15.6 | 15.5 | 0.1 | 1 | % | |||||||
Share-based compensation expense(1) | 16.7 | 0.3 | 16.4 | NM | (2) | |||||||
Total selling, general and administrative expense | $ | 83.1 | $ | 67.4 | $ | 15.7 | 23 | % |
(1) | Refer to Share-based compensation expense (benefit) below for discussion. |
(2) | Calculation is not meaningful. |
Share-based compensation expense (benefit). The following table summarizes share-based compensation (benefit) expense by major category (dollars in millions):
Three Months Ended | Dollar | Percentage | ||||||||||
2018 | 2017 | Change | Change | |||||||||
Category: | ||||||||||||
Stock options | $ | 15.5 | $ | 12.2 | $ | 3.3 | 27 | % | ||||
Restricted stock units | 2.0 | 0.5 | 1.5 | 300 | % | |||||||
Share tracking awards plan (STAP) | 2.7 | (14.9) | 17.6 | 118 | % | |||||||
Employee stock purchase plan | 0.3 | 0.3 | — | — | % | |||||||
Total share-based compensation expense (benefit) | $ | 20.5 | $ | (1.9) | $ | 22.4 | NM | (1) |
(1) | Calculation is not meaningful. |
The increase in share-based compensation expense of
Loss Contingency
In
Impairment of Investment in a
During the quarter ended
Income Tax Expense
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) loss contingency; (3) impairment of investment in privately-held company; and (4) tax impact on non-GAAP earnings adjustments.
A reconciliation of net income (loss) to non-GAAP earnings is presented in the following table (in millions, except per share data):
Three Months Ended | |||||||
2018 | 2017 | ||||||
Net income (loss), as reported | $ | 172.9 | $ | (56.0) | |||
Adjusted for the following charges: | |||||||
Share-based compensation expense (benefit)(1) | 20.5 | (1.9) | |||||
Loss contingency(2) | — | 210.0 | |||||
Impairment of investment in privately-held company(2) | — | 46.5 | |||||
Tax (benefit) expense(1) | (4.3) | 0.6 | |||||
Non-GAAP earnings | $ | 189.1 | $ | 199.2 | |||
Non-GAAP earnings per share: | |||||||
Basic | $ | 4.39 | $ | 4.44 | |||
Diluted | $ | 4.36 | $ | 4.37 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 43.1 | 44.9 | |||||
Diluted | 43.4 | 45.6 |
(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 21 percent and approximately 33 percent for the quarters ended |
(2) | As of |
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-presentations.
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 our potential revenue growth, and the potential for our 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 | |||||||
2018 | 2017 | ||||||
(Unaudited) | |||||||
Revenues: | |||||||
Net product sales | $ | 444.5 | $ | 444.6 | |||
Total revenues | 444.5 | 444.6 | |||||
Operating expenses: | |||||||
Cost of product sales | 61.7 | 18.9 | |||||
Research and development | 82.3 | 59.8 | |||||
Selling, general and administrative | 83.1 | 67.4 | |||||
Loss contingency | — | 210.0 | |||||
Total operating expenses | 227.1 | 356.1 | |||||
Operating income | 217.4 | 88.5 | |||||
Other (expense) income: | |||||||
Interest expense | (2.9) | (1.4) | |||||
Other, net | 3.4 | 3.6 | |||||
Impairment of investment in privately-held company | — | (46.5) | |||||
Total other income (expense), net | 0.5 | (44.3) | |||||
Income before income taxes | 217.9 | 44.2 | |||||
Income tax expense | (45.0) | (100.2) | |||||
Net income (loss) | $ | 172.9 | $ | (56.0) | |||
Net income (loss) per common share: | |||||||
Basic | $ | 4.01 | $ | (1.25) | |||
Diluted | $ | 3.98 | $ | (1.25) | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 43.1 | 44.9 | |||||
Diluted | 43.4 | 44.9 | |||||
SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited, in millions) | |||||||
| |||||||
Cash, cash equivalents and marketable investments | $ | 1,791.3 | |||||
Total assets | 3,244.9 | ||||||
Total liabilities and temporary equity | 679.3 | ||||||
Total stockholders' equity | 2,565.6 | ||||||
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