United Therapeutics Reports Third Quarter 2008 Financial Results

SILVER SPRING, Md., Oct. 30 /PRNewswire-FirstCall/ -- United Therapeutics Corporation (Nasdaq: UTHR) today announced its results of operations for the quarter ended September 30, 2008. Total revenues for the third quarter of 2008 were $75.0 million, up from $59.0 million for the third quarter of 2007. Net income for the third quarter of 2008 was $12.6 million, or $0.55 per basic share, compared to $14.8 million, or $0.70 per basic share, for the third quarter of 2007. Gross margins from sales were $66.7 million for the third quarter of 2008, compared to $52.2 million for the third quarter of 2007. The increases in revenues and gross margins corresponded to the continued growth in sales of our lead product, Remodulin. Earnings before non-cash charges, defined as net income before non-cash income taxes, depreciation, amortization, impairment charges and share-based compensation (stock option and share tracking award expense), were $37.8 million for the third quarter of 2008, up 39% from $27.3 million for the third quarter of 2007.

"I am enthused about being on track for a $300 million per year revenue run rate based on this quarter's results," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer. "We are also energized by the great opportunity of bringing prostacyclin therapy to the thousands of additional patients who need it."

Research and Development Expenses

The table below summarizes research and development expenses by major project and non-project components (dollars in thousands):

                                         Three Months Ended
                                           September 30,
                                         2008           2007        Percentage
                                                                      Change
    Project and non-project:
      Cardiovascular                   $11,678        $11,761         (0.7)%
      Cancer                               984          3,408        (71.1)%
      Infectious disease                   347            202          71.8%
      Share-based compensation           4,701          3,148          49.3%
      Other                              1,503          1,040          44.5%
        Total research and
         development expenses          $19,213        $19,559         (1.8)%


    Selling, General and Administrative Expenses

The table below summarizes selling, general and administrative expenses by major category (dollars in thousands):

                                         Three Months Ended
                                            September 30,
                                                                    Percentage
                                         2008           2007          Change
    Category:
      General and administrative        $9,832         $8,380          17.3%
      Sales and marketing                7,920          5,923          33.7%
      Share-based compensation          12,266          4,860         152.4%
        Total selling, general and
         administrative expenses       $30,018        $19,163          56.6%

The increase in sales and marketing expenses primarily reflects increases in salaries and related expenses as a result of headcount growth.

Share-based compensation was higher for the quarter ended September 30, 2008, compared to the same quarter in 2007, as a result of an approximate $5.2 million increase relating to the fair value of a potential year-end stock option grant to our Chief Executive Officer, which is governed by her employment agreement.

Earnings Before Non-Cash Charges

The following table provides a reconciliation of net income to earnings before non-cash charges for the three-month periods ending September 30, 2008 and 2007 (in thousands, except per share data):

                                                       Three Months Ended
                                                          September 30,
                                                       2008           2007

    Net income, as reported                          $12,623        $14,848
    Add back:
      Income tax expense                               6,712          2,010
      Depreciation and amortization                    1,143            865
      Impairment charges                                 353          1,515
      Share-based compensation                        16,989          8,040
    Earnings before non-cash charges                 $37,820        $27,278
    Earnings before non-cash charges per share (1):
      Basic                                            $1.65          $1.29
      Diluted                                          $1.48          $1.22


    (1) Calculated by dividing earnings before non-cash charges by the
        weighted average shares outstanding, as reported below.

    Conference Call

United Therapeutics will host a half-hour teleconference on Thursday, October 30, 2008, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-800-603-1777, with international callers dialing 1-706-679-8129. A rebroadcast of the teleconference will be available for one week and can be accessed by dialing 1-800-642-1687, with international callers dialing 1-706-645-9291, and using conference code: 67213939.

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

About United Therapeutics

United Therapeutics 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 cardiovascular and infectious diseases and cancer.

Non-GAAP Financial Information

This press release contains a financial measure that does not comply with U.S. generally accepted accounting principals (GAAP). This measure supplements our financial results prepared in accordance with GAAP as reported below.

We use earnings before non-cash charges, a financial non-GAAP measure, internally for operating, budgeting and financial planning purposes and as a metric to determine the efficiency of our operations. We believe our investors' understanding of our performance is enhanced by disclosing this measure. The presentation of this non-GAAP financial measure is not to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

Forward-looking Statements

Statements 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 and intentions related to financial performance and results, including our annual revenue run rate and our belief about the future prospects of Remodulin. 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 October 30, 2008, 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.

    Remodulin is a registered trademark of United Therapeutics Corporation.
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                       UNITED THERAPEUTICS CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)

                                Three Months Ended         Nine Months Ended
                                   September 30,             September 30,
                                 2008         2007         2008         2007
                                    (Unaudited)              (Unaudited)
    Revenues:
      Net product sales        $72,149      $56,661     $196,799     $144,449
      Service sales              2,324        1,718        6,944        5,263
      Distributor fees             559          666        1,892        1,333
        Total revenues          75,032       59,045      205,635      151,045

    Operating expenses:
      Research and
       development
             19,213       19,559       59,430       65,642
      Selling, general and
       administrative           30,018       19,163       72,442       54,801
      Cost of product sales      6,950        5,568       19,689       14,174
      Cost of service sales        791          598        2,270        1,730
        Total operating
         expenses
              56,972       44,888      153,831      136,347
        Income from
         operations             18,060       14,157       51,804       14,698

    Other income (expense):
      Interest income            2,311        3,681        8,723        9,663
      Interest expense               -         (717)           -       (2,141)
      Equity loss in affiliate       1          (72)        (155)        (265)
      Other, net                  (493)         (34)          32         (254)
        Total other income,
         net                     1,819        2,858        8,600        7,003
    Income before income tax
   19,879       17,015       60,404       21,701
    Income tax expense          (7,256)      (2,167)     (22,048)      (3,828)
    Net income                 $12,623      $14,848      $38,356      $17,873
    Net income per common
     share:
      Basic                      $0.55        $0.70        $1.70        $0.85
      Diluted                    $0.50        $0.66        $1.55        $0.80
    Weighted average number
     of common shares
     outstanding:
      Basic                     22,934       21,087       22,624       21,075
      Diluted                   25,482       22,443       24,707       22,380



                       CONSOLIDATED BALANCE SHEET DATA
                           As of September 30, 2008
                          (Unaudited, in thousands)

    Cash, cash equivalents and marketable investments
     (excluding restricted amounts of $45,353)                  $341,861
    Total assets                                                $766,680
    Total liabilities & common stock subject to repurchase      $348,094
    Total stockholders' equity                                  $418,586

SOURCE United Therapeutics Corporation