United Therapeutics Q3 2024 Filing Released

Ticker: UTHR · Form: 10-Q · Filed: Oct 30, 2024

Sentiment: neutral

Topics: 10-Q, financials, pharmaceuticals

TL;DR

UTHR filed its Q3 2024 10-Q. Financials are in.

AI Summary

United Therapeutics Corp. reported its third-quarter financial results for the period ending September 30, 2024. The company's filing details its financial position and operational performance during this period, with specific financial data points and disclosures relevant to its business operations in the pharmaceutical sector.

Why It Matters

This filing provides investors and analysts with the latest financial performance data for United Therapeutics, crucial for understanding the company's current health and future prospects in the pharmaceutical industry.

Risk Assessment

Risk Level: medium — As a pharmaceutical company, United Therapeutics faces inherent risks related to drug development, regulatory approvals, and market competition.

Key Numbers

Key Players & Entities

FAQ

What is the reporting period for this 10-Q filing?

The reporting period for this 10-Q filing is for the period ending September 30, 2024.

When was this 10-Q filing submitted to the SEC?

This 10-Q filing was submitted on October 30, 2024.

What is United Therapeutics Corp.'s fiscal year end?

United Therapeutics Corp.'s fiscal year ends on December 31.

What is the SEC file number for United Therapeutics Corp.?

The SEC file number for United Therapeutics Corp. is 000-26301.

What is the primary business of United Therapeutics Corp. according to the SIC code?

According to the Standard Industrial Classification code, United Therapeutics Corp. is in the business of Pharmaceutical Preparations [2834].

Filing Stats: 4,779 words · 19 min read · ~16 pages · Grade level 7.7 · Accepted 2024-10-30 06:32:28

Key Financial Figures

Filing Documents

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 41 Part II OTHER INFORMATION 42 Item 1.

Legal Proceedings

Legal Proceedings 42 Item 1A.

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55 Item 5. Other Information 56 Item 6. Exhibits 57

SIGNATURES

SIGNATURES 58 2 United Therapeutics, a public benefit corporation Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Balance Sheets (In millions, except share data) September 30, 2024 December 31, 2023 (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,553.9 $ 1,207.7 Marketable investments 1,772.6 1,786.4 Accounts receivable, no allowance for 2024 and 2023 341.8 278.9 Inventories, net 146.7 111.8 Other current assets 185.4 166.2 Total current assets 4,000.4 3,551.0 Marketable investments 1,279.4 1,909.8 Goodwill and other intangible assets, net 112.1 114.2 Property, plant, and equipment, net 1,156.7 1,045.4 Deferred tax assets, net 390.9 394.8 Other non-current assets 183.6 151.8 Total assets $ 7,123.1 $ 7,167.0 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 363.9 $ 298.0 Line of credit (current) 400.0 400.0 Share tracking awards plan 29.4 35.4 Other current liabilities 80.1 71.0 Total current liabilities 873.4 804.4 Line of credit (non-current) — 300.0 Other non-current liabilities 148.8 77.8 Total liabilities 1,022.2 1,182.2 Commitments and contingencies Stockholders' equity: Preferred stock, par value $ .01 , 10,000,000 shares authorized, no shares issued — — Common stock, par value $ .01 , 245,000,000 shares authorized, 74,782,248 and 73,659,761 shares issued, and 44,615,658 and 47,040,545 shares outstanding as of September 30, 2024 and December 31, 2023, respectively 0.7 0.7 Additional paid-in capital 2,647.2 2,549.0 Accumulated other comprehensive income (loss) 7.4 ( 12.8 ) Treasury stock, 30,166,590 and 26,619,216 shares as of September 30, 2024 and December 31, 2023, respectively ( 3,475.3 ) ( 2,579.2 ) Retained earnings 6,920.9 6,027.1 Total stockholders' equity 6,100.9 5,984.8 Total liabilities and stockholders' equity $ 7,123.1 $ 7,167.0 See accompanying notes to consolidated financial statements. Quarterly Report 3 Table of Contents

Financial Information

Part I. Financial Information Consolidated Statements of Operations (In millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (Unaudited) (Unaudited) Total revenues $ 748.9 $ 609.4 $ 2,141.5 $ 1,712.8 Operating expenses: Cost of sales 83.1 70.1 233.8 186.5 Research and development 103.5 84.7 347.2 256.6 Selling, general, and administrative 219.2 127.6 541.2 344.9 Total operating expenses 405.8 282.4 1,122.2 788.0 Operating income 343.1 327.0 1,019.3 924.8 Interest income 49.8 45.3 149.8 111.7 Interest expense ( 10.1 ) ( 15.6 ) ( 35.0 ) ( 44.2 ) Other income (expense), net 5.8 ( 4.9 ) 8.4 ( 13.4 ) Total other income, net 45.5 24.8 123.2 54.1 Income before income taxes 388.6 351.8 1,142.5 978.9 Income tax expense ( 79.5 ) ( 84.2 ) ( 248.7 ) ( 211.2 ) Net income $ 309.1 $ 267.6 $ 893.8 $ 767.7 Net income per common share: Basic $ 6.93 $ 5.71 $ 19.73 $ 16.44 Diluted $ 6.39 $ 5.38 $ 18.43 $ 15.48 Weighted average number of common shares outstanding: Basic 44.6 46.9 45.3 46.7 Diluted 48.4 49.7 48.5 49.6 See accompanying notes to consolidated financial statements. 4 United Therapeutics, a public benefit corporation Table of Contents

Financial Information

Part I. Financial Information Consolidated Statements of Comprehensive Income (In millions) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (Unaudited) (Unaudited) Net income $ 309.1 $ 267.6 $ 893.8 $ 767.7 Other comprehensive income: Foreign currency translation loss included in net income — — 2.4 — Defined benefit pension plan: Actuarial loss arising during period, net of tax — — ( 0.5 ) ( 0.9 ) Actuarial gain and prior service cost included in net periodic pension cost, net of tax ( 1.1 ) ( 0.9 ) ( 3.4 ) ( 4.0 ) Total defined benefit pension plan, net of tax ( 1.1 ) ( 0.9 ) ( 3.9 ) ( 4.9 ) Available-for-sale debt securities: Unrealized gain arising during period, net of tax 23.4 7.8 20.6 16.7 Realized loss included in net income, net of tax — — 1.1 — Total gain on available-for-sale debt securities, net of tax 23.4 7.8 21.7 16.7 Other comprehensive income, net of tax 22.3 6.9 20.2 11.8 Comprehensive income $ 331.4 $ 274.5 $ 914.0 $ 779.5 During the three and nine months ended September 30, 2024, the tax (benefit) expense in other comprehensive income was $( 0.1 ) million and $( 0.3 ) million, respectively, for the defined benefit pension plan and $ 7.6 million and $ 7.0 million, respectively, for the available-for-sale debt securities. During the three and nine months ended September 30, 2023, the tax (benefit) expense in other comprehensive income was $( 0.1 ) million and $( 0.7 ) million, respectively, for the defined benefit pension plan and $ 2.5 million and $ 5.2 million, respectively, for the available-for-sale debt securities. See accompanying notes to consolidated financial statements. Quarterly Report 5 Table of Contents

Financial Information

Part I. Financial Information Consolidated Statements of Stockholders' Equity (In millions) Three Months Ended September 30, 2024 (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Treasury Stock Retained Earnings Stockholders' Equity Shares Amount Balance, July 1, 2024 74.5 $ 0.7 $ 2,543.1 $ ( 14.9 ) $ ( 3,443.5 ) $ 6,611.8 $ 5,697.2 Net income — — — — — 309.1 309.1 Unrealized gain on available-for-sale debt securities — — — 23.4 — — 23.4 Defined benefit pension plan — — — ( 1.1 ) — — ( 1.1 ) Shares issued under employee stock purchase plan ( ESPP ) — — 3.8 — — — 3.8 Restricted stock units ( RSUs ) withheld for taxes — — ( 0.4 ) — — — ( 0.4 ) Share repurchase — — 32.4 — ( 32.4 ) — — Excise tax on net share repurchase — — — — 0.6 — 0.6 Exercise of stock options 0.3 — 32.5 — — — 32.5 Share-based compensation — — 35.8 — — — 35.8 Balance, September 30, 2024 74.8 $ 0.7 $ 2,647.2 $ 7.4 $ ( 3,475.3 ) $ 6,920.9 $ 6,100.9 Three Months Ended September 30, 2023 (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Treasury Stock Retained Earnings Stockholders' Equity Shares Amount Balance, July 1, 2023 73.5 $ 0.7 $ 2,497.7 $ ( 50.6 ) $ ( 2,579.2 ) $ 5,542.4 $ 5,411.0 Net income — — — — — 267.6 267.6 Unrealized gain on available-for-sale debt securities — — — 7.8 — — 7.8 Defined benefit pension plan — — — ( 0.9 ) — — ( 0.9 ) Shares issued under ESPP — — 3.2 — — — 3.2 RSUs withheld for taxes — — ( 0.2 ) — — — ( 0.2 ) Exercise of stock options 0.1 — 4.6 — — — 4.6 Share-based compensation — — 19.0 — — — 19.0 Balance, September 30, 2023 73.6 $ 0.7 $ 2,524.3 $ ( 43.7 ) $ ( 2,579.2 ) $ 5,810.0 $ 5,712.1 6 United Therapeutics, a public benefit corporation Table of Contents

Financial Information

Part I. Financial Information Nine Months Ended September 30, 2024 (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Treasury Stock Retained Earnings Stockholders' Equity Shares Amount Balance, January 1, 2024 73.7 $ 0.7 $ 2,549.0 $ ( 12.8 ) $ ( 2,579.2 ) $ 6,027.1 $ 5,984.8 Net income — — — — — 893.8 893.8 Foreign currency translation loss — — — 2.4 — — 2.4 Unrealized gain on available-for-sale debt securities — — — 21.7 — — 21.7 Defined benefit pension plan — — — ( 3.9 ) — — ( 3.9 ) Shares issued under ESPP — — 7.7 — — — 7.7 RSUs withheld for taxes — — ( 11.9 ) — — — ( 11.9 ) Share repurchase — — ( 109.7 ) — ( 890.3 ) — ( 1,000.0 ) Excise tax on net share repurchase — — — — ( 5.8 ) — ( 5.8 ) Common stock issued for RSUs vested 0.1 — — — — — — Exercise of stock options 1.0 — 126.8 — — — 126.8 Share-based compensation — — 85.3 — — — 85.3 Balance, September 30, 2024 74.8 $ 0.7 $ 2,647.2 $ 7.4 $ ( 3,475.3 ) $ 6,920.9 $ 6,100.9 Nine Months Ended September 30, 2023 (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Treasury Stock Retained Earnings Stockholders' Equity Shares Amount Balance, January 1, 2023 72.7 $ 0.7 $ 2,388.4 $ ( 55.5 ) $ ( 2,579.2 ) $ 5,042.3 $ 4,796.7 Net income — — — — — 767.7 767.7 Unrealized gain on available-for-sale debt securities — — — 16.7 — — 16.7 Defined benefit pension plan — — — ( 4.9 ) — — ( 4.9 ) Shares issued under ESPP — — 6.6 — — — 6.6 RSUs withheld for taxes — — ( 13.7 ) — — — ( 13.7 ) Common stock issued for RSUs vested 0.1 — — — — — — Exercise of stock options 0.8 — 90.7 — — — 90.7 Share-based compensation — — 52.3 — — — 52.3 Balance, September 30, 2023 73.6 $ 0.7 $ 2,524.3 $ ( 43.7 ) $ ( 2,579.2 ) $ 5,810.0 $ 5,712.1 See accompanying notes to consolidated financial statements. Quarterly Report 7 Table of Contents

Financial Information

Part I. Financial Information Consolidated Statements of Cash Flows (In millions) Nine Months Ended September 30, 2024 2023 (Unaudited) Cash flows from operating activities: Net income $ 893.8 $ 767.7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52.8 39.5 Share-based compensation expense 117.0 22.5 Impairment of property, plant, and equipment — 3.6 Other ( 21.7 ) 0.1 Changes in operating assets and liabilities: Accounts receivable ( 62.9 ) ( 38.2 ) Inventories ( 35.3 ) ( 6.6 ) Accounts payable and accrued expenses 60.7 80.2 Other assets and liabilities ( 18.5 ) ( 41.5 ) Net cash provided by operating activities 985.9 827.3 Cash flows from investing activities: Purchases of property, plant, and equipment ( 159.8 ) ( 151.7 ) Deposits ( 22.5 ) ( 14.3 ) Purchases of available-for-sale debt securities ( 1,167.6 ) ( 2,206.3 ) Maturities of available-for-sale debt securities 1,059.0 1,610.6 Sales of available-for-sale debt securities 831.8 — Purchase of investment in privately-held company ( 0.5 ) — Net cash provided by (used in) investing activities 540.4 ( 761.7 ) Cash flows from financing activities: Payments to repurchase common stock ( 1,000.0 ) — Repayment of line of credit ( 300.0 ) — Payments of debt issuance costs ( 2.7 ) ( 2.7 ) Proceeds from the exercise of stock options 126.8 90.7 Proceeds from the issuance of stock under ESPP 7.7 6.6 RSUs withheld for taxes ( 11.9 ) ( 13.7 ) Net cash (used in) provided by financing activities ( 1,180.1 ) 80.9 Net increase in cash and cash equivalents $ 346.2 $ 146.5 Cash and cash equivalents, beginning of period 1,207.7 961.2 Cash and cash equivalents, end of period $ 1,553.9 $ 1,107.7 Supplemental cash flow information: Cash paid for interest $ 33.0 $ 41.8 Cash paid for income taxes $ 289.3 $ 235.9 Non-cash investing and financing activities: Non-cash additions to property, plant, and equipment $ 23.6

Financial Information

Part I. Financial Information

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2024 (Unaudited) 1. Organization and Business Description 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. In 2021, we converted to a Delaware public benefit corporation, with the express public benefit purpose to provide a brighter future for patients through (a) the development of novel pharmaceutical therapies; and (b) technologies that expand the availability of transplantable organs . We have approval from the U.S. Food and Drug Administration ( FDA ) to market the following therapies: Tyvaso DPI (treprostinil) Inhalation Powder ( Tyvaso DPI ), Tyvaso (treprostinil) Inhalation Solution ( nebulized Tyvaso ), Remodulin (treprostinil) Injection ( Remodulin ), Orenitram (treprostinil) Extended-Release Tablets ( Orenitram ), Unituxin (dinutuximab) Injection ( Unituxin ), and Adcirca (tadalafil) Tablets ( Adcirca ). We also derive revenues outside the United States from sales of nebulized Tyvaso, Remodulin, and Unituxin, and within the United States from sales of commercial ex vivo lung perfusion services. As used in these notes to our consolidated financial statements, unless the context otherwise requires, the terms " we ", " us ", " our ", and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries. 2. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ( SEC ) for interim financial information. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with our audited consolidated financial stateme

Financial Information

Part I. Financial Information In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. This ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ( CODM ), a description of other segment items by reportable segment, and any additional measures of a segment profit or loss used by the CODM when deciding how to allocate resources. This ASU also requires all annual disclosures currently required by Topic 280 to be included in interim period disclosures. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance requires retrospective application to all prior periods presented in the financial statements. We are evaluating the impact of adopting this guidance on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which enhances the required disclosures primarily related to the income tax rate reconciliation and income taxes paid. This ASU requires an entity's income tax rate reconciliation to provide additional information for reconciling items meeting a quantitative threshold, and to disclose certain selected categories within the income tax rate reconciliation. This ASU also requires entities to disclose the amount of income taxes paid, disaggregated by federal, state, and foreign taxes. This ASU is effective for annual periods beginning after December 15, 2024, although early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements. 3. Investments Marketable Investments Available-f

Financial Information

Part I. Financial Information The following tables present gross unrealized losses and fair value for those available-for-sale debt securities that were in an unrealized loss position as of September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that the individual securities have been in a continuous loss position (in millions): Less than 12 months 12 months or longer Total As of September 30, 2024 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses U.S. government and agency securities $ 238.0 $ ( 0.2 ) $ 671.2 $ ( 1.3 ) $ 909.2 $ ( 1.5 ) Corporate debt securities 25.9 — 112.4 ( 0.7 ) 138.3 ( 0.7 ) Total $ 263.9 $ ( 0.2 ) $ 783.6 $ ( 2.0 ) $ 1,047.5 $ ( 2.2 ) Less than 12 months 12 months or longer Total As of December 31, 2023 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses U.S. government and agency securities $ 1,101.8 $ ( 4.4 ) $ 838.1 $ ( 12.8 ) $ 1,939.9 $ ( 17.2 ) Corporate debt securities 209.4 ( 0.5 ) 284.1 ( 4.2 ) 493.5 ( 4.7 ) Total $ 1,311.2 $ ( 4.9 ) $ 1,122.2 $ ( 17.0 ) $ 2,433.4 $ ( 21.9 ) As of September 30, 2024 and December 31, 2023, we held 155 and 385 available-for-sale debt securities, respectively, that were in an unrealized loss position. In assessing whether the decline in fair value as of September 30, 2024 of any of these securities resulted from a credit loss, we consulted with our investment managers and reviewed the credit ratings for each security. We believe that these unrealized losses are a direct result of the current interest rate environment and do not represent an indication of credit loss. We do not intend to sell the investments in unrealized loss positions prior to their maturity and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost basis. There were no impairments due to credit loss on our a

Financial Information

Part I. Financial Information 4. Fair Value Measurements We account for certain assets and liabilities at fair value and classify these assets and liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3). Our other current assets and other current liabilities have fair values that approximate their carrying values. Assets and liabilities subject to fair value measurements are as follows (in millions): As of September 30, 2024 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 513.8 $ — $ — $ 513.8 Time deposits (1) 348.6 — — 348.6 U.S. government and agency securities (2) — 2,423.8 — 2,423.8 Corporate debt securities (2) — 606.9 — 606.9 Equity securities (3) 24.0 — — 24.0 Total assets $ 886.4 $ 3,030.7 $ — $ 3,917.1 Liabilities Contingent consideration (4) — — 23.1 23.1 Total liabilities $ — $ — $ 23.1 $ 23.1 As of December 31, 2023 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ 408.5 $ — $ — $ 408.5 Time deposits (1) 126.4 — — 126.4 U.S. government and agency securities (2) — 3,032.6 — 3,032.6 Corporate debt securities (2) — 724.6 — 724.6 Equity securities (3) 14.9 — — 14.9 Total assets $ 549.8 $ 3,757.2 $ — $ 4,307.0 Liabilities Contingent consideration (4) — — 21.1 21.1 Total liabilities $ — $ — $ 21.1 $ 21.1 (1) Included in cash and cash equivalents in our consolidated balance sheets. (2) Included in cash and cash equivalents and current and non-current marketable investments in our consolidated balance sheets. See Note 3— Investments — Marketable Investments — Available-for-Sale Debt Securities for further information. The fair value of these securities is principally measured or corroborated by trade data for identical securities for which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (3) Included in current marketable investments in our consolidated balance sheets. Th

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