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United Therapeutics Corp. (UTHR - Analyst Report) reported fourth-quarter earnings of $1.60 per share, well above the year-ago earnings of 77 cents and the Zacks Consensus Estimate of $1.25. Higher revenues and lower expenses led to the year-over-year improvement in earnings.
Fourth quarter revenues increased 24.9% to $243.8 million, well above the Zacks Consensus Estimate of $232.0 million.
Full-year earnings increased 56% to $5.71 per share, beating the Zacks Consensus Estimate of $5.33. Full year revenues increased 23.3% to $916 million, well above the Zacks Consensus Estimate of $906 million.
The Quarter in Detail
Net product revenues, consisting of Remodulin, Tyvaso and Adcirca, increased 23.7% to $240.4 million in the reported quarter. Revenues increased primarily due to the continued increase in the number of patients being prescribed Remodulin, Tyvaso and Adcirca.
Moreover, revenues benefited by about $3.6 million as wholesalers ordered additional shipments of Adcirca toward the end of Dec 2012 to avoid near-term shortages resulting from the timing of the holidays.
United Therapeutics derives the majority of its product revenues from Remodulin, which posted sales of $116.2 million, up 8.5%. Remodulin sales should benefit from the approval of the intravenous (IV) formulation in Europe.
United Therapeutics is working on developing Remodulin for the Japanese and Chinese markets which would bring in incremental sales. Moreover, the company has an agreement with Medtronic, Inc. (MDT - Analyst Report) for the development of an implantable pump to deliver Remodulin. Patient enrolment for the implantable pump study has been completed with results expected in Aug 2013.
Meanwhile, Tyvaso and Adcirca contributed $86.0 million and $38.2 million, respectively, to fourth quarter revenues.
We note that United Therapeutics is facing a patent challenge for Remodulin (treprostinil) injection. Sandoz, Novartis’ (NVS - Snapshot Report) generic unit, is seeking approval for its generic version of Remodulin (10 mg/mL). United Therapeutics has filed a patent infringement lawsuit against Sandoz.
R&D expenses for the fourth quarter declined 22.9% to $37.5 million mainly due to lower share-based compensation expense.
SG&A spending decreased 30.6% from the year-ago quarter to $40.1 million due to lower share-based compensation and sales and marketing costs.
United Therapeutics maintained its revenue guidance for 2013. The company expects 2013 revenues to be about $1 billion with a plus/minus margin of 5%.
United Therapeutics currently carries a Zacks Rank #3 (Hold). The company is well-positioned to gain share in the pulmonary arterial hypertension market. Remodulin continues to look very strong in both the IV and subcutaneous (SC) forms.
With the approval of Adcirca and Tyvaso, United Therapeutics has a varied range of therapies available for the treatment of pulmonary arterial hypertension. We believe United Therapeutics’ pulmonary arterial hypertension product portfolio will drive strong top-and bottom-line growth.
However, competition will continue to increase with several companies working on bringing additional therapies to the market.
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