01—Abstract
Summary
Summary of the 10-K filed February 22, 2017. Cited figures are marked; the original filing is the authoritative source.
United Therapeutics Corporation (UTHR) reported total revenues of $1,598.8 milliona for 2016, up from $1,465.8 million in 2015, with net income of $713.7 million, or $15.25 per diluted share, compared with $651.6 million in 2015.
Operating income rose to $1,061.7 millionb from $699.0 million. Net product sales are concentrated in its PAH franchise: Remodulin ($602.3 million), Tyvaso ($404.6 million), Adcirca ($372.2 million), and Orenitram ($157.2 million), with Unituxin ($62.5 million) as its oncology product. Tyvaso sales declined to $404.6 million from $470.1 million, which the company attributes to the availability of oral prostacyclin-class therapies.
The filing highlights several sources of future revenue pressure. Generic Adcirca is expected after the U.S. patent expires in November 2017, and the company has settled patent litigation with Sandoz, Teva and Par permitting generic Remodulin launches in June 2018 (Sandoz) and December 2018 (Teva and Par). Litigation continues with Watson over a generic Tyvaso and with Actavis over generic Orenitram, and SteadyMed's inter partes review of a treprostinil patent is awaiting a final PTAB decision expected by April 2017.
Uptravi, an oral IP prostacyclin receptor agonist, competes directly with Orenitram. On the balance sheet, cash, cash equivalents and marketable investments totaled $1,053.1 millionc at year-end, and the company repurchased $500.0 million of common stock during 2016. Cash provided by operating activities was $643.6 million.
The company had no borrowings under its $1.0 billiond unsecured revolving credit facility at December 31, 2016. The filing also discloses a Department of Justice subpoena, received in May 2016, concerning support for 501(c)(3) patient assistance organizations, to which the company is cooperating.
02—Key points
Key Highlights
- Total revenues rose to $1,598.8 million in 2016 from $1,465.8 million in 2015, and net income increased to $713.7 million from $651.6 million.
- Adcirca net product sales increased to $372.2 million from $278.8 million, and Orenitram net product sales increased to $157.2 million from $118.4 million.
- Tyvaso net product sales declined to $404.6 million from $470.1 million, which the company attributes to the availability of oral prostacyclin-class therapies.
- Remodulin represented 38 percent of 2016 total revenues, and the filing projects generic Remodulin entry in June 2018 (Sandoz) and December 2018 (Teva and Par).
- Generic competition for Adcirca is expected after its U.S. patent expires in November 2017, which the filing states could have a material adverse impact on Adcirca revenues.
- Cash, cash equivalents and marketable investments totaled $1,053.1 million at December 31, 2016, and the company repurchased $500.0 million of its common stock during 2016.
- The company faces a Department of Justice subpoena from May 2016 regarding its support of 501(c)(3) patient financial assistance organizations, and it is cooperating with the inquiry.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, United Therapeutics kept $0.45.
- Revenue$1.60B100.0%
- Cost of revenue−$72.7M4.5%
- Gross profit$1.53B95.5%
- Operating costs−$464.4M29.0%
- Operating income$1.06B66.4%
- Interest, other & tax−$348.0M21.8%
- Net income$713.7M44.6%
Where FY2016 revenue went
$1.60B- Net income: $713.7M, 45% of revenue
- Interest, other & tax: $348.0M, 22% of revenue
- SG&A: $316.8M, 20% of revenue
- Cost of revenue: $72.7M, 4.5% of revenue
- R&D: $147.6M, 9.2% of revenue
Kept 45% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 22, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $1.60B$1.47B | +9.1% |
| Cost of Revenue | $72.70M$69.00M | +5.4% |
| Gross Profit | $1.53B$1.40B | +9.3% |
| R&D Expenses | $147.60M$245.10M | −39.8% |
| SG&A Expenses | $316.80M$452.70M | −30.0% |
| Operating Expenses | $537.10M$766.80M | −30.0% |
| Operating Income | $1.06B$699.00M | +51.9% |
| Interest Expense | $3.90M$4.70M | −17.0% |
| Net Income | $713.70M$651.60M | +9.5% |
| EPS (Basic) | $16.29$14.17 | +15.0% |
| EPS (Diluted) | $15.25$12.72 | +19.9% |
| Shares Outstanding (Basic) | 43.80M46.00M | −4.8% |
| Shares Outstanding (Diluted) | 46.80M51.20M | −8.6% |
05—Questions
Frequently Asked Questions
How did United Therapeutics perform financially in 2016?
Total revenues were $1,598.8 million, compared with $1,465.8 million in 2015. Operating income was $1,061.7 million, up from $699.0 million, and net income was $713.7 million, or $15.25 per diluted share, compared with $651.6 million, or $12.72 per diluted share, in 2015.
Which products drive the company's revenue, and how did they change?
Remodulin generated $602.3 million, Tyvaso $404.6 million, Adcirca $372.2 million, Orenitram $157.2 million and Unituxin $62.5 million. Adcirca, Orenitram and Unituxin grew, while Tyvaso declined from $470.1 million in 2015.
What generic competition risks does the filing identify?
The company expects generic Adcirca after its U.S. patent expires in November 2017. It has settled with Sandoz, Teva and Par to permit generic Remodulin launches in June 2018 and December 2018, respectively. It is litigating against generic Tyvaso (Watson) and generic Orenitram (Actavis).
How is the company's balance sheet and capital position described?
Cash, cash equivalents and marketable investments totaled $1,053.1 million at year-end, and operating cash flow was $643.6 million. The $1.0 billion unsecured revolving credit facility, entered into in January 2016, was undrawn at December 31, 2016, and the company repurchased $500.0 million of common stock in 2016.
What competitive threats does the filing highlight for Orenitram and Tyvaso?
Uptravi, an oral IP prostacyclin receptor agonist approved in the United States in December 2015, competes directly with Orenitram. The filing also notes that the availability of oral prostacyclin-class therapies is a factor in the decline in Tyvaso sales.
06—Continue