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Press release from PR Newswire

United Therapeutics Corporation Reports 2011 Fourth Quarter and Annual Financial Results

Tuesday, February 14, 2012

United Therapeutics Corporation Reports 2011 Fourth Quarter and Annual Financial Results07:00 EST Tuesday, February 14, 2012- 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 ShareSILVER 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 ResultsRevenuesThe table below summarizes the components of revenues (in thousands): Three Months Ended December 31,Year EndedDecember 31,2011201020112010Cardiopulmonary products:Remodulin$107,116$101,879$430,132$403,598Tyvaso64,54748,713240,382151,797Adcirca22,64712,80370,58036,307Other8682942,0891,197Total revenues$195,178$163,689$743,183$592,899Revenues 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.ExpensesThe table below summarizes research and development expense by major project and non-project component (in thousands):Three Months EndedDecember 31,Year EndedDecember 31,2011201020112010Project and non-project:Cardiopulmonary$28,142$31,908$150,501$86,161Share-based compensation9,68719,774(7,994)45,878Other10,80710,23337,50833,267Total research and development expense$48,636$61,915$180,015$165,306Cardiopulmonary.  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 EndedDecember 31,Year EndedDecember 31,2011201020112010Category:General and administrative$26,608$21,878$97,785$75,292Sales and marketing19,09113,48066,40546,123Share-based compensation12,00832,549(7,708)67,191Total selling, general and administrative expense$57,707$67,907$156,482$188,606General 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 GuidanceWe 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 OperationsResults 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 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 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 MonthsEnded December 31,201120102009200820112010Net  income (loss), as reported$217,868$105,916$19,462$(49,327)$43,189$9,544Add (subtract) non-cash charges:Interest expense21,37219,71412,87511,4395,1125,459Income tax expense (benefit)82,18341,923(695)(34,394)16,800(5,040)License fees37,049(1)??150,000(2)(4,283)?Depreciation and amortization                                    20,53517,91911,3944,5364,8983,739Impairment charges?7,6885,4571,605(250)6,178Share-based compensation (benefit) expense(15,715)113,942100,81036,39322,07552,815Earnings before non-cash charges$363,292$307,102$149,303$120,252$87,541$72,695Earnings before non-cash charges per share: Basic$6.36$5.47$2.80$2.63$1.61$1.27Diluted$6.12$5.16$2.66$2.41$1.56$1.18Weighted average number of common shares outstanding:  Basic57,16356,14253,31445,80254,42457,187  Diluted59,39559,51656,13349,90055,95261,715(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 CallWe 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 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 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 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 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 CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)Three Months Ended December 31,Year Ended December 31,2011201020112010Revenues:Net product sales$194,310$163,395$741,094$591,702Other8682942,0891,197    Total revenue195,178163,689743,183592,899Operating expenses:Research and development48,63661,915180,015165,306Selling, general and administrative57,70767,907156,482188,606Cost of product sales25,32718,53488,90467,674    Total operating expenses131,670148,356425,401421,586        Operating income63,50815,333317,782171,313Other (expense) income:Interest income9296293,4502,939Interest expense(5,112)(5,455)(21,367)(19,710)Equity loss in affiliate(9)(30)(119)(160)Other, net673314(629)769    Total other (expense) income, net(3,519)(4,542)(18,665)(16,162)Income from continuing operations before income taxes59,98910,791299,117155,151Income tax (expense) benefit(16,800)3,307(81,874)(43,945)Income from continuing operations43,18914,098217,243111,206Discontinued 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$105,916Net 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$1.89Diluted    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$1.78Weighted average number of common shares outstanding:Basic54,42457,18757,16356,142Diluted55,95261,71559,39559,516SELECTED CONSOLIDATED BALANCE SHEET DATA(In thousands)December 31,20112010Cash, cash equivalents and marketable securities (excluding restricted amounts of $5,123 and $5,122, respectively)$747,378$759,932Total assets1,518,0791,431,635Total liabilities and common stock subject to repurchase569,591547,749Total stockholders' equity948,488883,886SOURCE United Therapeutics CorporationFor further information: Andrew Fisher, +1-202-483-7000, Afisher@unither.com