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United Therapeutics Corporation Reports Third Quarter 2012 Financial Results
Date:11/1/2012

SILVER SPRING, Md., Nov. 1, 2012 /PRNewswire/ -- United Therapeutics Corporation (NASDAQ: UTHR) today announced its financial results for the third quarter ended September 30, 2012.

"It is certainly gratifying to see us closely approach, for the first time, a revenue run rate of one billion dollars per year," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer. "Our free cash flow enables us to continue investing in new therapies such as once-daily injectable treprostinil and once-monthly refillable implantable treprostinil that hold great promise for positively transforming the lives of patients with pulmonary arterial hypertension."

Total revenues for the quarter ended September 30, 2012 were $242.5 million, up from $201.7 million for the quarter ended September 30, 2011. Net income for the quarter ended September 30, 2012 was $78.1 million or $1.52 per basic share, compared to $84.4 million or $1.45 per basic share for the same quarter in 2011. Gross margin from sales was $212.9 million for the quarter ended September 30, 2012, compared to $178.3 million for the same quarter last year. Earnings before non-cash charges[1] for the quarter ended September 30, 2012 were $150.9 million, compared to $100.8 million for the same quarter in 2011.

Financial Results for the Three Months Ended September 30, 2012 Revenues

The table below summarizes the components of net revenues (dollars in thousands):Three Months Ended
September 30,Percentage
Change20122011Cardiopulmonary products:Remodulin

$

120,811$

114,9185.1

%Tyvaso

88,30266,33033.1

%Adcirca

31,80419,77260.9

%Other

1,551722114.8

%Total net revenues

$

242,468$

201,74220.2

%Revenues for the quarter ended September 30, 2012 increased by $40.7 million, compared to the same quarter in 2011. The growth in product revenues reflects the continuing increase in the number of patients being treated with our products.

[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.

Expenses

The table below summarizes research and development expense by major project and non-project components (dollars in thousands):Three Months Ended
September 30,Percentage Change20122011Project and non-project component:Cardiopulmonary

$

43,823$

74,125(40.9)

%Share-based compensation expense (benefit)

11,816(22,966)151.4

%Other

9,5168,27415.0

%Total research and development expense

$

65,155$

59,4339.6

%Cardiopulmonary. The $30.3 million decrease in cardiopulmonary program expenses for the quarter ended September 30, 2012, compared to the same quarter in 2011, corresponded to a decrease in expenses related to fees incurred under licensing agreements.

Share-based compensation. The increase in share-based compensation of $34.8 million for the quarter ended September 30, 2012, compared to the same quarter in 2011, resulted from the appreciation in the price of our common stock during the quarter ended September 30, 2012, compared to the decline in our stock price during the same quarter in 2011.

The table below summarizes selling, general and administrative expense by major categories (dollars in thousands):Three Months Ended
September 30,Percentage Change20122011Category:General and administrative

$

32,924$

24,97231.8

%Sales and marketing

17,22915,8228.9

%Share-based compensation expense (benefit)

18,473(24,138)176.5

%Total selling, general and administrative expense

$

68,626$

16,656312.0

%General and administrative. The increase in general and administrative expenses of $8.0 million for the quarter ended September 30, 2012 compared to the same quarter in 2011 was driven by increases in: (1) grants to unaffiliated, not-for-profit organizations that provide financial assistance to patients suffering from pulmonary arterial hypertension and (2) depreciation and operating expenses as a result of the expansion of our corporate headquarters in Maryland and our facilities in North Carolina.

Share-based compensation. The increase in share-based compensation of $42.6 million for the quarter ended September 30, 2012, compared to the same quarter in 2011, corresponded to the appreciation in the price of our common stock during the quarter ended September 30, 2012, compared to the decline in our stock price during the same quarter in 2011.

Other Income (Expenses)

Other income, net was $27.8 million for the quarter ended September 30, 2012, compared to other expenses, net of $4.7 million for the same quarter in 2011. The $32.5 million increase in other income (expense), net resulted largely from the recognition of an approximately $31.0 million gain relating to an insurance settlement.

Income Taxes

The provision for income taxes was $30.4 million for the quarter ended September 30, 2012, compared to $17.6 million for the same quarter in 2011. The increase in the provision for income taxes reflects an increase in pre-tax earnings for the quarter ended September 30, 2012 compared to the same quarter in 2011 and an increase in the estimated annual effective tax rate to 31 percent as of September 30, 2012 from 28 percent as of September 30, 2011. The increase in the estimated annual effective tax rate for 2012 reflects primarily a decrease in estimated business tax credits to be generated from operations as compared to September 30, 2011.

2012 Revenue GuidanceWe reaffirm our 2012 full-year revenue guidance for our three commercial products (Remodulin®, Tyvaso® and Adcirca®), as we continue to expect related revenues to fall within a range of 5% above or below $875 million for 2012.

Earnings Before Non-Cash ChargesEarnings 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, share tracking award and employee stock purchase plan expense).

A reconciliation of net income to earnings before non-cash charges is presented below (in thousands, except per share data):Three Months Ended
September 30,20122011Net income, as reported

$

78,111$

84,398Adjust for non-cash charges:Interest expense

4,3845,416Income tax expense

30,38217,641License fees

—41,332Depreciation and amortization

6,9154,991Impairment charges

—(5,366)Share-based compensation expense (benefit)

31,145(47,609)Earnings before non-cash charges

$

150,937$

100,803Earnings before non-cash charges per share:Basic

$

2.93$

1.73Diluted

$

2.82$

1.65Weighted average number of common shares outstanding:Basic

51,51458,321Diluted

53,59061,210Conference CallWe will host a half-hour teleconference on Thursday, November 1, 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 34857915.

This teleconference is also being webcast and can be accessed via our website at http://ir.unither.com/events.cfm.

About United TherapeuticsUnited 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 InformationThis 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 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. 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 StatementsStatements 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 expectations about future operating results, including our revenue guidance for 2012, and the potential benefits of new therapies such as once-daily injectable treprostinil and once-monthly refillable implantable treprostinil. 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 the date of this press release, 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]

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
September 30,Nine Months Ended 
September 30,2012201120122011(Unaudited)(Unaudited)Revenues:Net product sales

$

240,917$

201,020$

665,692$

546,784Other

1,5517226,5671,221Total revenues

242,468201,742672,259548,005Operating expenses:Research and development

65,15559,433135,911131,379Selling, general and administrative

68,62616,656161,67398,775Cost of product sales

27,96822,67681,63263,577Total operating expenses

161,74998,765379,216293,731Operating income

80,719102,977293,043254,274Other (expense) income:Interest income

1,1381,0163,2252,520Interest expense

(4,384)(5,416)(12,149)(16,256)Equity loss in affiliate

(48)(43)(110)(110)Other, net

31,068(278)31,710(1,301)Total other (expense) income, net

27,774(4,721)22,676(15,147)Income from continuing operations before income taxes

108,49398,256315,719239,127Income tax expense

(30,382)(17,641)(94,532)(65,073)Income from continuing operations

78,11180,615221,187174,054Discontinued operations:Income from discontinued operations, net of tax

———7Gain on disposal of discontinued operations, net of tax

—3,783—618Income from discontinued operations

—3,783—625Net income

$

78,111$

84,398$

221,187$

174,679Net income per common share:BasicContinuing operations

$

1.52$

1.38$

4.20$

3.00Discontinued operations

0.000.070.000.01Net income per basic common share

$

1.52$

1.45$

4.20$

3.01DilutedContinuing operations

$

1.46$

1.32$

4.11$

2.80Discontinued operations

0.000.060.000.01Net income per diluted common share

$

1.46$

1.38$

4.11$

2.81Weighted average number of common shares outstanding:Basic

51,51458,32152,62658,087Diluted

53,59061,21053,84962,062 SELECTED CONSOLIDATED BALANCE SHEET DATA
September 30, 2012
(Unaudited, in thousands) Cash, cash equivalents and marketable securities (excluding restricted amounts of $5.3 million)

$

752,341Total assets

1,647,492Total liabilities and common stock subject to repurchase

586,661Total stockholders' equity

1,060,831 


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SOURCE United Therapeutics Corporation
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