01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
United Therapeutics Corporation's 2015 Annual Report (Form 10-K, filed February 25, 2016) reports total revenues of $1,465,761 thousanda ($1.47 billion) for 2015, up from $1,288,519 thousand in 2014, and net income of $651,639 thousand, compared with $340,074 thousand in 2014.
Net product sales are led by Remodulin ($572.8 millionb, 39% of total revenues), Tyvaso ($470.1 million, 32%), Adcirca ($278.8 million, 19%), Orenitram ($118.4 million, 8%) and Unituxin ($20.4 million, first full quarter of U.S. sales in Q3 2015). The company relies heavily on its PAH franchise, and substantially all revenues come from Remodulin, Tyvaso, Orenitram and Adcirca. The filing highlights several generic and patent risks.
Sandoz and Teva may launch generic Remodulin in June 2018 and December 2018, respectively, under settlement agreements. Adcirca's U.S. patent expires in November 2017. Generic challenges are pending against Tyvaso (Watson) and Orenitram (Actavis, notice received February 2016), and SteadyMed has petitioned for inter partes review of a treprostinil patent.
Management also cites the FDA review of the Remodulin Implantable System (with a 2016 FDA action expected) and the Medtronic consent decree as sources of uncertainty. Capital allocation was active in 2015. The company sold a Rare Pediatric Priority Review Voucher for $350.0 millionc, repurchased $394.5 million of stock under its 2014 program, and settled $133.2 million of convertible notes.
Cash, cash equivalents and marketable investments were $991.8 milliond at year-end. In January 2016 it entered a $1.0 billion unsecured revolving credit facility and authorized a new $500.0 million repurchase program for 2016.
02—Key points
Key Highlights
- Total revenues rose to $1,465,761 thousand in 2015 from $1,288,519 thousand in 2014; operating income was $699,015 thousand.
- Net income was $651,639 thousand (diluted EPS $12.72) in 2015, including a $350.0 million gain on sale of the Rare Pediatric Priority Review Voucher.
- Remodulin ($572.8 million), Tyvaso ($470.1 million), Adcirca ($278.8 million) and Orenitram ($118.4 million) account for substantially all revenues; Orenitram rose from $41.3 million in 2014.
- Generic Remodulin entry is settled for June 2018 (Sandoz) and December 2018 (Teva); Adcirca's U.S. patent expires November 2017.
- Pending patent challenges include Watson's ANDA for Tyvaso, Actavis's ANDA for Orenitram (2.5 mg), and SteadyMed's inter partes review petition.
- Cash, cash equivalents and marketable investments were $991.8 million at December 31, 2015; the company repurchased $394.5 million of stock in 2015.
- In January 2016 the company entered a $1.0 billion unsecured revolving credit facility and authorized a $500.0 million share repurchase program for 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, United Therapeutics kept $0.44.
- Revenue$1.47B100.0%
- Cost of revenue−$69.0M4.7%
- Gross profit$1.40B95.3%
- Operating costs−$697.8M47.6%
- Operating income$699.0M47.7%
- Interest, other & tax−$47.4M3.2%
- Net income$651.6M44.5%
Where FY2015 revenue went
$1.47B- Net income: $651.6M, 44% of revenue
- SG&A: $452.7M, 31% of revenue
- R&D: $245.1M, 17% of revenue
- Cost of revenue: $69.0M, 4.7% of revenue
- Interest, other & tax: $47.4M, 3.2% of revenue
Kept 44% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $1.47B$1.29B | +13.8% |
| Cost of Revenue | $69.00M$125.90M | −45.2% |
| Gross Profit | $1.40B$1.15B | +21.1% |
| R&D Expenses | $245.10M$242.50M | +1.1% |
| SG&A Expenses | $452.70M$381.30M | +18.7% |
| Operating Expenses | $766.80M$749.70M | +2.3% |
| Operating Income | $699.00M$538.80M | +29.7% |
| Interest Expense | $4.70M$17.60M | −73.3% |
| Net Income | $651.60M$340.10M | +91.6% |
| EPS (Basic) | $14.17$7.06 | +100.7% |
| EPS (Diluted) | $12.72$6.28 | +102.5% |
| Shares Outstanding (Basic) | 46.00M48.20M | −4.6% |
| Shares Outstanding (Diluted) | 51.20M54.20M | −5.5% |
05—Questions
Frequently Asked Questions
What drove revenue growth in 2015?
The filing attributes the $177.2 million increase to a $77.2 million rise in Orenitram net product sales from more patients on therapy, a $57.4 million rise in Adcirca net product sales driven by Lilly-set price increases and more bottles sold, and $20.4 million of Unituxin net product sales after its U.S. launch in the third quarter of 2015.
When could generic competition affect Remodulin and Adcirca?
Under settlements, Sandoz may launch generic Remodulin in the United States beginning June 2018 and Teva beginning December 2018, each possibly earlier in certain circumstances. The U.S. patent for Adcirca for pulmonary hypertension expires in November 2017, after which the company expects generic competition.
Why was 2015 net income so much higher than 2014?
Net income was $651,639 thousand versus $340,074 thousand. Operating income rose to $699,015 thousand from $538,800 thousand, and the company also recognized a $350.0 million gain on sale of the Rare Pediatric Priority Review Voucher, partly offset by income tax expense of $392,798 thousand.
What regulatory milestones are pending for the company's newer products?
The Medtronic Remodulin Implantable System PMA amendment was accepted for review in January 2016, with FDA action expected in 2016; the company resubmitted its supplemental application as a new NDA in December 2015 with a ten-month review expected to end in October 2016. A Medtronic consent decree adds uncertainty to that program. The company also plans to file a New Drug Application for the DEKA pre-filled pump, targeting FDA approval by the end of 2018.
How is the company returning capital and managing its debt?
In 2015 the company repurchased $394.5 million of common stock under its prior program and settled $133.2 million of convertible note conversions, leaving $5.6 million of principal due in September 2016. It entered a $1.0 billion unsecured revolving facility in January 2016 and authorized up to $500.0 million of repurchases for 2016. The filing states it has never paid cash dividends and does not intend to do so.
06—Continue