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Press Release

Press Release

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February 19, 2008 / 7:00 AM ET
PRESS RELEASE

United Therapeutics Reports Fourth Quarter and Annual 2007 Financial Results

- Total Annual Revenues of $210.9 Million

- Annual EPS of $0.94 per Basic Share, or $0.88 per Diluted Share

- Annual EBITDASO of $4.03 per Basic Share, or $3.81 per Diluted Share

SILVER SPRING, Md., Feb. 19 /PRNewswire-FirstCall/ -- United Therapeutics Corporation (Nasdaq: UTHR) today announced financial results for the fourth quarter and year ended December 31, 2007.

"We are pleased to report that United Therapeutics' revenues for the year ended December 31, 2007, totaled $210.9 million," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer. "This is the sixth straight year our revenues have grown by more than 30%. Our EBITDASO (earnings before interest, taxes, depreciation, amortization and stock option expense) for the year were $85.5 million, or $4.03 per basic share."

Net income for the three months ended December 31, 2007, was $2.0 million or $0.09 per basic share, as compared to $55.5 million or $2.54 per basic share for the three months ended December 31, 2006. EBITDASO for the three months ended December 31, 2007, was $24.7 million or $1.14 per basic share, as compared to $18.7 million or $0.81 per basic share for the three months ended December 31, 2006. Net income for the year ended December 31, 2007, was $19.9 million or $0.94 per basic share, as compared to $74.0 million or $3.21 per basic share in 2006.

Results

    Revenues.  Revenues grew to $210.9 million for the year ended December 31,
2007, as compared to $159.6 million for the year ended December 31, 2006, an
increase of 32%.  Gross margins from sales were $186.5 million, or 89%, in
2007, which is consistent with gross margins from sales of $142.6 million, or
89%, in 2006. The table below summarizes the components of our revenues for
the three months and years ended December 31, 2007 and 2006 (dollars in
thousands):



                                  Three Months Ended          Years Ending
                                      December 31,             December 31,
                                    2007      2006          2007        2006
    Revenues:
      Net product sales           $56,899   $44,147       $201,348    $153,448
      Service sales                 2,172     1,679          7,435       6,184
      Distributor fees                827         -          2,160           -

                 Total revenues   $59,898   $45,826       $210,943    $159,632


The increases in revenues resulted primarily from growth in sales of Remodulin.

Operating Expenses. Our operating expenses include research and development expenses, sales and marketing expenses, costs of product sales and cost of service sales.

Research and development expenses consist primarily of salaries and related expenses, costs to acquire pharmaceutical products and product rights for development, and amounts paid to contract research organizations, hospitals and laboratories for the provision of services and materials for drug development and clinical trials. The table below summarizes research and development expenses by major project and non-project components for the three months and year ended December 31, 2007 and 2006 (dollars in thousands):


                                     Three Months Ended        Years Ending
                                         December 31,           December 31,
                                       2007       2006       2007         2006

    Project and non-project:
      Cardiovascular                  $8,570    $11,276     $38,459    $33,005
      Cancer                           3,189      3,231      13,874     10,462
      Infectious disease                 278        204         824        753
      Stock option                     3,671      2,600      12,373      9,240
      Other                            2,002      1,026       6,809      4,110
      R&D expense from issuance of
       common stock for license            -          -      11,013          -

        Total research and
         development expense         $17,710    $18,337     $83,352    $57,570


Selling, general and administrative expenses consist primarily of salaries, travel, office expenses, insurance, professional fees, provision for doubtful accounts receivable, depreciation and amortization. The table below summarizes selling, general and administrative expenses by major categories for the three months and year ended December 31, 2007 and 2006 (dollars in thousands):


                                       Three Months Ended       Years Ending
                                           December 31,         December 31,
                                         2007        2006      2007       2006

    Category:
      General and administrative       $11,361     $7,300    $34,933   $25,434
      Sales and marketing                7,826      4,584     24,159    14,438
      Impairment charges                 2,068          -      3,582     2,024
      Stock option                      22,971      7,303     36,353    14,156

        Total selling, general
         and administrative expense    $44,226    $19,187    $99,027   $56,052


For the year ended December 31, 2007, as compared to the year ended December 31, 2006, the increase in general and administrative expenses was primarily related to increased expenses for salaries, associated expenses and other operating expenses from growth in our operations. The increase in sales and marketing related expenses was primarily related to increased salaries and an increase in headcount, marketing, travel and associated expenses from growth in our operations. The trends for the three-month period ended December 31, 2007, as compared to the same period in 2006, are similar to those noted for the annual period.

The impairment charge during the three months ended December 31, 2007, was primarily related to an other-than-temporary decline of our investment in ViRexx Medical Corp. due to the unsuccessful results of our IMPACT I and II Phase III clinical trials of OvaRex in advanced ovarian cancer.

Stock option expense increased during the three-month and twelve-month periods ended December 31, 2007, over the same periods in 2006, primarily as a result of a stock option grant to our Chief Executive Officer based on the 89% increase in our share price during 2007.

Interest Income. Interest income for the year ended December 31, 2007, was $13.6 million, as compared to interest income of $10.7 million for the year ended December 31, 2006. The difference was due primarily to an increase in market interest rates and amounts available to invest. Interest income for the three months ended December 31, 2007, was comparable to interest income for the same period in 2006.

Income Tax Benefit. We recognized an income tax benefit of approximately $3.3 million and $34.1 million for the years ended December 31, 2007 and 2006, respectively. For the three-month periods ended December 31, 2007 and 2006, we recognized a tax benefit of $7.1 million and $47.7 million, respectively. The tax benefit recognized for 2007 was primarily due to the amount of tax credits generated during the year from our orphan drug related research and development activities. For the year ended December 31, 2006, the tax benefit recognized was primarily due to a reduction of approximately $45.7 million in the valuation allowance against most of our deferred tax assets based on our determination that certain portions of these deferred tax assets are more likely than not realizable.

EBITDASO Calculation

    The following table provides a reconciliation of net income and EBITDASO
for the three-month periods ended December 31, 2007 and 2006, and for the
years ended December 31, 2004 through 2007 (in thousands, except per share
data):



                                           Year ended December 31,
                                   2004       2005        2006       2007

    Net income, as reported     $15,449    $65,016     $73,965     $19,859
    Add (subtract) back:
      Interest expense                4         29         482       2,175
      Income tax (benefit)            -    (17,494)    (34,057)     (3,276)
      One time expense                -          -       2,024      14,595
      Depreciation and
       amortization               2,381      2,534       2,713       3,427
      Stock option expense          329        983      23,513      48,766
    EBITDASO                    $18,163    $51,068     $68,640     $85,546

    EBITDASO earnings per
     share (1):
      Basic                       $0.84      $2.24       $2.98       $4.03
      Diluted                     $0.78      $2.03       $2.84       $3.81



                                       Three months ended
                                          December 31,
                                     2007              2006

    Net income, as reported         $1,986           $55,508
    Add (subtract) back:
      Interest expense                  34               481
      Income tax (benefit)          (7,104)          (47,718)
      One time expense               2,067                 -
      Depreciation and
       amortization                    941               770
      Stock option expense          26,792             9,687
    EBITDASO                       $24,716           $18,728

    EBITDASO earnings per
     share (1):
       Basic                         $1.14             $0.86
       Diluted                       $1.04             $0.82

(1) Calculated by dividing EBITDASO from above by weighted average shares outstanding, as reported below.

Conference Call

United Therapeutics will host a half-hour teleconference on Tuesday, February 19, 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 by dialing 1-800-642-1687, with international callers dialing 1-706-645- 1687, and using access code 33422885.

This teleconference is also being webcast and can be accessed via United Therapeutics' website at http://ir.unither.com/eventdetail.cfm?eventid=51056.

About United Therapeutics

United 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 cardiovascular and infectious diseases and cancer.

Non-GAAP Financial Information

This press release contains certain financial measures that do not comply with GAAP, which measures supplement our financial results prepared in accordance with GAAP.

We use EBITDASO, a non-GAAP measure, for our operating, budgeting and financial planning purposes and as a metric for our Company-wide Milestone Incentive Bonus Program, and believe our investors' understanding of our performance is enhanced by disclosing this measure.

The presentation of these non-GAAP financial measures 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 Reform Act of 1995. These forward-looking statements include our expectations and intentions regarding the payment of federal and state income taxes for 2007, the generation of taxable income, the availability and utilization of net operating loss carry forwards to reduce taxable income, and the availability, creation and utilization of research tax credits to pay income taxes that are based on our current beliefs and expectations as to future outcomes. 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, which 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 Reform Act of 1995 for forward-looking statements. We are providing this information as of February 19, 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.

    OvaRex is a registered trademark of AltaRex Medical Corp.



                       UNITED THERAPEUTICS CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share data)

                                         Three Months Ended    Years Ending
                                            December 31,       December 31,
                                           2007      2006     2007      2006
    Revenues:
      Net product sales                  $56,899   $44,147  $201,348  $153,448
      Service sales                        2,172     1,679     7,435     6,184
      Distributor fees                       827         -     2,160         -
        Total revenues                    59,898    45,826   210,943   159,632

    Operating expenses:
      Research and development            17,710    18,337    83,352    57,570
      Selling, general and
       administrative                     44,226    19,187    99,027    56,052
      Cost of product sales                5,745     4,251    19,919    14,973
      Cost of service sales                  612       502     2,342     2,055
        Total operating expenses          68,293    42,277   204,640   130,650
        Income (loss) from operations     (8,395)    3,549     6,303    28,982

    Other income (expense):
      Interest income                      3,939     3,653    13,602   10,700
      Interest expense                       (34)     (481)   (2,175)    (482)
      Equity (loss) in affiliate             (56)      (93)     (321)    (491)
      Other, net                            (572)    1,162      (826)   1,199
        Total other income, net            3,277     4,241    10,280   10,926
    Income (loss) before income tax
     benefit                              (5,118)    7,790    16,583    39,908
    Income tax benefit                     7,104    47,718     3,276    34,057
    Net income                            $1,986   $55,508   $19,859   $73,965
    Net income per common share:
      Basic                                $0.09     $2.54     $0.94     $3.21
      Diluted                              $0.08     $2.42     $0.88     $3.06
    Weighted average number of common
     shares outstanding:
      Basic                               21,666    21,893    21,224    23,010
      Diluted                             23,746    22,894    22,451    24,138



                       CONSOLIDATED BALANCE SHEET DATA:
                              As of December 31,
                                (In thousands)
                                                           2007         2006

    Cash, cash equivalents and marketable investments    $299,287     $264,163
     (excluding restricted amounts of $44,195
       and $38,988, respectively)
    Total assets                                         $587,884     $478,550
    Total liabilities                                    $280,346     $273,944
    Total stockholders' equity                           $296,656     $204,606

SOURCE United Therapeutics Corporation

Contact: Andrew Fisher of United Therapeutics Corporation, +1-202-483-7000, [email protected]

Dewey Steadman, (202) 919-4097, [email protected]