UNITED THERAPEUTICS CORPORATION SILVER SPRING, Md. and RESEARCH TRIANGLE PARK, N.C., July 28, 2015 /PRNewswire/ -- United Therapeutics Corporation (NASDAQ: UTHR) today announced its financial results for the second quarter ended June 30, 2015.
"Orenitram(®) sales grew nearly 300% as compared to the second quarter of 2014 when the product was first launched," said Roger Jeffs, Ph.D., United Therapeutics' President and Co-Chief Executive Officer. "The growth in Orenitram sales was due to an increase in the number of patients being treated, which strengthens our belief in the organic growth opportunity of our orally-administered prostacyclin analogue."
Key financial highlights include (in thousands, except per share data):
Three Months Ended
June 30,
--------
2015 2014
---- ----
Revenues $347,161 $322,802
Net income $99,211 $111,852
Non-GAAP
earnings(1) $132,517 $118,655
Net income, per
diluted share $1.91 $2.10
Non-GAAP earnings,
per diluted
share(1) $2.55 $2.23
(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 June 30, 2015
Revenues
The table below summarizes the components of net revenues (dollars in thousands):
Three Months Ended Percentage
June 30,
--------
2015 2014 Change
---- ---- ------
Cardiopulmonary products:
Remodulin(R) $135,957 $138,152 (1.6)%
Tyvaso(R) 115,841 121,227 (4.4)%
Adcirca(R) 68,081 55,318 23.1%
Orenitram(R) 25,870 6,632 290.1%
Other 1,412 1,473 (4.1)%
----- ----- -----
Total net revenues $347,161 $322,802 7.5%
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Revenues for the quarter ended June 30, 2015 increased by $24.4 million, compared to the same quarter in 2014. The growth in revenues for the quarter ended June 30, 2015, compared to the same quarter in 2014, resulted from a $19.2 million increase in Orenitram revenues due to an increase in the number of patients being treated and a $12.8 million increase in Adcirca revenues, primarily due to price increases.
Expenses
Research and development expense. The table below summarizes research and development expense by major project and non-project components (dollars in thousands):
Three Months Ended Percentage
June 30,
--------
2015 2014 Change
---- ---- ------
Project and non-
project component:
Cardiopulmonary $30,886 $28,274 9.2%
Share-based
compensation expense 13,400 1,047 1,179.8%
Other 5,125 10,421 (50.8)%
----- ------ ------
Total research and
development expense $49,411 $39,742 24.3%
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Share-based compensation expense. The increase in share-based compensation of $12.4 million for the quarter ended June 30, 2015, compared to the same quarter in 2014, resulted principally from a 1 percent increase in our stock price during the quarter ended June 30, 2015, as compared to a 6 percent decrease in our stock price during the same quarter in 2014.
Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major categories (dollars in thousands):
Three Months Ended Percentage
June 30,
--------
2015 2014 Change
---- ---- ------
Category:
General and
administrative $53,040 $47,889 10.8%
Sales and
marketing 24,373 22,046 10.6%
Share-based
compensation
expense
(benefit) 32,574 (1,904) 1,810.8%
------ ------ -------
Total selling,
general and
administrative
expense $109,987 $68,031 61.7%
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General and administrative. The increase in general and administrative expense of $5.2 million for the quarter ended June 30, 2015, compared to the same quarter in 2014, resulted primarily from a $9.0 million increase in grants to non-profit organizations that provide financial assistance to patients and a $2.1 million increase in salaries and related expenses due to the growth of our operations, partially offset by an $8.0 million decrease in professional and consulting fees, primarily driven by a decrease in legal fees in connection with ongoing legal matters.
Share-based compensation expense (benefit). The increase in share-based compensation of $34.5 million for the quarter ended June 30, 2015, compared to the same quarter in 2014, resulted principally from a 1 percent increase in our stock price during the quarter ended June 30, 2015, as compared to a 6 percent decrease in the price of our stock during the same quarter in 2014.
Cost of product sales. The table below summarizes cost of product sales by major categories (dollars in thousands):
Three Months Ended Percentage
June 30,
--------
2015 2014 Change
---- ---- ------
Category:
Cost of product
sales $14,748 $39,725 (62.9)%
Share-based
compensation
expense (benefit) 1,310 (1,016) 228.9%
----- ------ -----
Total cost of
product sales $16,058 $38,709 (58.5)%
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Cost of product sales. The decrease in cost of product sales for the quarter ended June 30, 2015, compared to the same quarter in 2014, was due to the expiration of our royalty obligation to GlaxoSmithKline plc in October 2014. During the three months ended June 30, 2014, we incurred $24.1 million in royalty expense related to this royalty obligation.
Income Tax Expense
The provision for income tax expense is based on an estimated annual effective tax rate that is subject to adjustment in subsequent quarterly periods if any of the components used to estimate the annual effective tax rate are updated or revised. Our estimated annual effective tax rates were approximately 42 percent and approximately 35 percent as of June 30, 2015 and June 30, 2014, respectively. Our 2015 estimated annual effective tax rate increased as of June 30, 2015 primarily due to an increase in estimated non-deductible share-based compensation expense as compared to the prior year, which was driven largely by an increase in our stock price.
Non-GAAP Earnings
Non-GAAP earnings is defined as net income, adjusted for the following charges, which are presented net of the annual effective income tax rate, as applicable: (1) interest expense; (2) license fees; (3) depreciation and amortization; (4) impairment charges; and (5) share-based compensation expense (stock option, share tracking award and employee stock purchase plan).
A reconciliation of net income to non-GAAP earnings is presented below (in thousands, except per share data):
Three Months Ended
June 30,
--------
2015 2014
---- ----
Net income, as reported $99,211 $111,852
Adjust for the following
charges(1):
Interest expense 758 3,071
Depreciation and amortization 4,901 4,944
Share-based compensation expense
(benefit) 27,647 (1,212)
------ ------
Non-GAAP earnings $132,517 $118,655
======== ========
Non-GAAP earnings per share:
Basic $2.88 $2.49
===== =====
Diluted $2.55 $2.23
===== =====
Weighted average number of common
shares outstanding:
Basic 46,091 47,617
====== ======
Diluted 51,905 53,252
====== ======
(1) Non-GAAP earnings adjustments are presented net of the impact of our estimated effective income tax rates of
approximately 42 percent and approximately 35 percent for the three-months ended June 30, 2015 and 2014,
respectively. We changed the presentation of our non-GAAP earnings in the first quarter of 2015 for all periods
presented, to reflect the impact of our estimated effective income tax rates on each component.
Conference Call
We will host a half-hour teleconference on Tuesday, July 28, 2015, 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: 72033077.
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 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, 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 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 continued growth of Orenitram. 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 July 28, 2015, 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 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 Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenues:
Net product sales $345,749 $321,329 $671,666 $605,882
Other 1,412 1,473 2,999 6,323
----- ----- ----- -----
Total revenues 347,161 322,802 674,665 612,205
Operating expenses:
Research and development 49,411 39,742 159,623 52,190
Selling, general and administrative 109,987 68,031 321,327 98,246
Cost of product sales 16,058 38,709 36,836 69,309
------ ------ ------ ------
Total operating expenses 175,456 146,482 517,786 219,745
Operating income 171,705 176,320 156,879 392,460
Other (expense) income:
Interest expense (1,296) (4,746) (3,355) (9,356)
Other, net (2,075) 1,459 (1,982) 3,145
------ ----- ------ -----
Total other expense, net (3,371) (3,287) (5,337) (6,211)
Income before income taxes 168,334 173,033 151,542 386,249
Income tax expense (69,123) (61,181) (68,972) (136,873)
------- ------- ------- --------
Net income $99,211 $111,852 $82,570 $249,376
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Net income per common share:
Basic $2.15 $2.35 $1.78 $5.09
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Diluted $1.91 $2.10 $1.57 $4.54
===== ===== ===== =====
Weighted average number of common
shares outstanding:
Basic 46,091 47,617 46,397 49,002
====== ====== ====== ======
Diluted 51,905 53,252 52,457 54,948
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SELECTED CONSOLIDATED BALANCE SHEET DATA
June 30, 2015
(Unaudited, in thousands)
Cash, cash equivalents and marketable
securities (excluding restricted
amounts) $556,167
Total assets 1,736,822
Total liabilities and temporary equity 696,349
Total stockholders' equity 1,040,473
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SOURCE United Therapeutics Corporation
