United Therapeutics Corporation Reports 2011 Fourth Quarter and Annual Financial Results

- Total Annual Revenues of $743.2 million

- Annual Earnings per Share of $3.81 per Basic Share or $3.67 per Diluted Share

- Annual Earnings Before Non-Cash Charges of $6.36 per Basic Share or $6.12 per Diluted Share

Feb 14, 2012, 07:00 ET from United Therapeutics Corporation

SILVER SPRING, Md., Feb. 14, 2012 /PRNewswire/ -- United Therapeutics Corporation (NASDAQ: UTHR) today announced its financial results for the fourth quarter and year ended December 31, 2011.

"I am pleased that we met our annual revenue target for 2011, which highlighted our favorable operating results for the year," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer. "In addition, we have reaffirmed our revenue guidance for 2012 and 2013, as revenues from our commercial product lines continue to grow."

Total revenues for the quarter ended December 31, 2011 were $195.2 million, up from $163.7 million for the quarter ended December 31, 2010. Net income for the quarter ended December 31, 2011 was $43.2 million or $0.79 per basic share, compared to $9.5 million or $0.17 per basic share for the quarter ended December 31, 2010. For the year ended December 31, 2011, we had net income of $217.9 million, or $3.81 per basic share and $3.67 per diluted share, compared to $105.9 million, or $1.89 per basic share and $1.78 per diluted share, for the year ended December 31, 2010. Earnings before non-cash charges(1) for the quarter ended December 31, 2011 were $87.5 million or $1.61 per basic share, compared to $72.7 million or $1.27 per basic share for the quarter ended December 31, 2010.   

(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

December 31,

Year Ended

December 31,

2011

2010

2011

2010

Cardiopulmonary products:

Remodulin

$

107,116

$

101,879

$

430,132

$

403,598

Tyvaso

64,547

48,713

240,382

151,797

Adcirca

22,647

12,803

70,580

36,307

Other

868

294

2,089

1,197

Total revenues

$

195,178

$

163,689

$

743,183

$

592,899

Revenues for the quarter ended December 31, 2011 increased by $31.5 million compared to the quarter ended December 31, 2010. The growth in revenues corresponded primarily to the continued increase in the number of patients being prescribed our products. Gross margins from sales for the quarters ended December 31, 2011 and 2010 were $169.0 million and $144.9 million, or 87% and 89%, respectively, of total revenues. These trends were consistent with the full calendar year results for both 2011 and 2010.

Expenses

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

Three Months Ended

December 31,

Year Ended

December 31,

2011

2010

2011

2010

Project and non-project:

Cardiopulmonary

$

28,142

$

31,908

$

150,501

$

86,161

Share-based compensation

9,687

19,774

(7,994)

45,878

Other

10,807

10,233

37,508

33,267

Total research and development expense

$

48,636

$

61,915

$

180,015

$

165,306

Cardiopulmonary.  The decrease in cardiopulmonary project expenses of $3.8 million for the quarter ended December 31, 2011 over the same quarter in 2010 resulted principally from a $7.9 million decrease in expenses associated with our development of beraprost-MR, as we incurred $9.0 million in milestone-related expenses during the quarter ended December 31, 2010. This decrease was offset in part by a $3.5 million increase in expenses relating to our other cardiopulmonary projects.

Share-based compensation.  The decrease in share-based compensation expense of $10.1 million for the quarter ended December 31, 2011 over the same quarter in 2010 corresponded to the decline in the price of our common stock.

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

Three Months Ended

December 31,

Year Ended

December 31,

2011

2010

2011

2010

Category:

General and administrative

$

26,608

$

21,878

$

97,785

$

75,292

Sales and marketing

19,091

13,480

66,405

46,123

Share-based compensation

12,008

32,549

(7,708)

67,191

Total selling, general and administrative expense

$

57,707

$

67,907

$

156,482

$

188,606

General and administrative. The increase in general and administrative expenses of $4.7 million for the quarter ended December 31, 2011 compared to the same quarter in 2010 resulted principally from increases of $2.0 million in professional fees incurred primarily in connection with completed and prospective transactions and $2.2 million in salaries and operating expenses as a result of our growing headcount.  

Sales and marketing. The increase in sales and marketing expenses of $5.6 million for the quarter ended December 31, 2011 compared to the same quarter in 2010 was attributable principally to increases of $3.8 million in professional fees and expenses incurred in connection with our marketing and advertising initiatives and $1.4 million in salaries due to the expansion of our sales force.

Share-based compensation.  For the quarter ended December 31, 2011, share-based compensation decreased by $20.5 million over the same quarter in 2010 as a result of the decline in the price of our common stock.  

Income Taxes

The provision for income taxes was $16.8 million for the quarter ended December 31, 2011, compared to an income tax benefit of $3.3 million for the quarter ended December 31, 2010. The increase in income tax expense was largely attributable to the increase in pre-tax earnings, as the effective tax rates for both periods were materially comparable.  

2012 and 2013 Revenue Guidance

We reaffirm our 2012 and 2013 full-year revenue guidance, as we continue to expect revenues to fall within a range of 5% above or below $875 million for 2012 and $1 billion for 2013.

This forward-looking guidance is inherently subject to variability; consequently, we anticipate reaffirming or updating our expectation for 2012 when we present our quarterly results during 2012.  

Discontinued Operations

Results for the quarters and years ended December 31, 2011 and 2010 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 and share tracking award expense).

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

Year Ended December 31,

Three Months

Ended December 31,

2011

2010

2009

2008

2011

2010

Net  income (loss), as reported

$

217,868

$

105,916

$

19,462

$

(49,327)

$

43,189

$

9,544

Add (subtract) non-cash charges:

Interest expense

21,372

19,714

12,875

11,439

5,112

5,459

Income tax expense (benefit)

82,183

41,923

(695)

(34,394)

16,800

(5,040)

License fees

37,049

(1)

150,000

(2)

(4,283)

Depreciation and amortization                                    

20,535

17,919

11,394

4,536

4,898

3,739

Impairment charges

7,688

5,457

1,605

(250)

6,178

Share-based compensation (benefit) expense

(15,715)

113,942

100,810

36,393

22,075

52,815

Earnings before non-cash charges

$

363,292

$

307,102

$

149,303

$

120,252

$

87,541

$

72,695

Earnings before non-cash charges per share:

Basic

$

6.36

$

5.47

$

2.80

$

2.63

$

1.61

$

1.27

Diluted

$

6.12

$

5.16

$

2.66

$

2.41

$

1.56

$

1.18

Weighted average number of common

shares outstanding:

 Basic

57,163

56,142

53,314

45,802

54,424

57,187

 Diluted

59,395

59,516

56,133

49,900

55,952

61,715

(1)   Includes the non-cash portion of a charge to research and development expense recognized in connection with our July

2011 amended license agreement with Toray Industries, Inc.

(2)   During the year ended December 31, 2008, we paid Eli Lilly and Company (Lilly) $150.0 million in fees as part of our

licensing arrangement for Adcirca and recognized a corresponding charge to research and development expense. Under this

arrangement, we also issued approximately 6.3 million shares of our common stock to Lilly for $150.0 million. As there

was no net impact on our cash flows associated with these transactions, we have presented the payment as a non-cash

adjustment to net loss.

Conference Call

We will host a half-hour teleconference on Tuesday, February 14, 2012, 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 46781201.

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 to enhance the financial performance of our business; (3) evaluating the effectiveness of our operational strategies; and (4) evaluating our capacity to fund capital expenditures and expand our business. We believe this non-GAAP financial measure enhances 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 forecasted revenues for 2012 and 2013 for our existing commercial product portfolio. 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 14, 2012, 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]

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,

2011

2010

2011

2010

Revenues:

Net product sales

$

194,310

$

163,395

$

741,094

$

591,702

Other

868

294

2,089

1,197

   Total revenue

195,178

163,689

743,183

592,899

Operating expenses:

Research and development

48,636

61,915

180,015

165,306

Selling, general and administrative

57,707

67,907

156,482

188,606

Cost of product sales

25,327

18,534

88,904

67,674

   Total operating expenses

131,670

148,356

425,401

421,586

       Operating income

63,508

15,333

317,782

171,313

Other (expense) income:

Interest income

929

629

3,450

2,939

Interest expense

(5,112)

(5,455)

(21,367)

(19,710)

Equity loss in affiliate

(9)

(30)

(119)

(160)

Other, net

673

314

(629)

769

   Total other (expense) income, net

(3,519)

(4,542)

(18,665)

(16,162)

Income from continuing operations before income taxes

59,989

10,791

299,117

155,151

Income tax (expense) benefit

(16,800)

3,307

(81,874)

(43,945)

Income from continuing operations

43,189

14,098

217,243

111,206

Discontinued operations

(Loss) income from discontinued operations, net of tax

(4,554)

7

(5,290)

Gain on disposal of discontinued operations, net of tax

618

(Loss) income from discontinued operations

(4,554)

625

(5,290)

Net income

$

43,189

$

9,544

$

217,868

$

105,916

Net income per common share:

Basic

   Continuing operations

$

0.79

$

0.25

$

3.80

$

1.98

   Discontinued operations

(0.08)

0.01

(0.09)

       Net income per basic common share

$

0.79

$

0.17

$

3.81

$

1.89

Diluted

   Continuing operations

$

0.77

$

0.23

$

3.66

$

1.87

   Discontinued operations

(0.08)

0.01

(0.09)

       Net income per diluted common share

$

0.77

$

0.15

$

3.67

$

1.78

Weighted average number of common shares outstanding:

Basic

54,424

57,187

57,163

56,142

Diluted

55,952

61,715

59,395

59,516

SELECTED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

December 31,

2011

2010

Cash, cash equivalents and marketable securities (excluding restricted amounts of $5,123 and $5,122, respectively)

$

747,378

$

759,932

Total assets

1,518,079

1,431,635

Total liabilities and common stock subject to repurchase

569,591

547,749

Total stockholders' equity

948,488

883,886

SOURCE United Therapeutics Corporation



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