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(1) Net product sales include both the drug product and the respective inhalation device.
(2) Net product sales include sales of infusion devices, including the Remunity Pump.
Gross-to-Net Deductions
We recognize revenues net of: (1) rebates and chargebacks; (2) prompt pay discounts; (3) allowance for sales returns; and (4) distributor fees. These are referred to as gross-to-net deductions and are primarily based on estimates reflecting historical experiences as well as contractual and statutory requirements. We currently estimate our allowance for sales returns using reports from our distributors. The tables below present a reconciliation of the liability accounts associated with these deductions (in millions):
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| | Year Ended December 31, 2024 |
| | Rebates & Chargebacks | | Prompt Pay Discounts | | Allowance for Sales Returns | | Distributor Fees | | Total |
| Balance, January 1, 2024 | | $ | 108.4 | | | $ | 5.3 | | | $ | 1.9 | | | $ | 10.4 | | | $ | 126.0 | |
| Provisions attributed to sales in: | | | | | | | | | | |
| Current period | | 356.0 | | | 64.4 | | | 1.9 | | | 41.8 | | | 464.1 | |
| Prior periods | | (10.6) | | | — | | | (1.0) | | | (0.9) | | | (12.5) | |
| Payments or credits attributed to sales in: | | | | | | | | | | |
| Current period | | (215.8) | | | (59.3) | | | — | | | (30.4) | | | (305.5) | |
| Prior periods | | (97.2) | | | (5.3) | | | (0.6) | | | (9.3) | | | (112.4) | |
| Balance, December 31, 2024 | | $ | 140.8 | | | $ | 5.1 | | | $ | 2.2 | | | $ | 11.6 | | | $ | 159.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2023 |
| | Rebates & Chargebacks | | Prompt Pay Discounts | | Allowance for Sales Returns | | Distributor Fees | | Total |
| Balance, January 1, 2023 | | $ | 81.3 | | | $ | 4.4 | | | $ | 3.3 | | | $ | 10.9 | | | $ | 99.9 | |
| Provisions attributed to sales in: | | | | | | | | | | |
| Current period | | 278.0 | | | 52.5 | | | 1.3 | | | 40.7 | | | 372.5 | |
| Prior periods | | (2.5) | | | (0.1) | | | (1.9) | | | (0.9) | | | (5.4) | |
| Payments or credits attributed to sales in: | | | | | | | | | | |
| Current period | | (169.8) | | | (47.3) | | | — | | | (30.3) | | | (247.4) | |
| Prior periods | | (78.6) | | | (4.2) | | | (0.8) | | | (10.0) | | | (93.6) | |
| Balance, December 31, 2023 | | $ | 108.4 | | | $ | 5.3 | | | $ | 1.9 | | | $ | 10.4 | | | $ | 126.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2022 |
| | Rebates & Chargebacks | | Prompt Pay Discounts | | Allowance for Sales Returns | | Distributor Fees | | Total |
| Balance, January 1, 2022 | | $ | 67.8 | | | $ | 3.8 | | | $ | 6.3 | | | $ | 7.9 | | | $ | 85.8 | |
| Provisions attributed to sales in: | | | | | | | | | | |
| Current period | | 202.8 | | | 43.2 | | | 2.3 | | | 34.5 | | | 282.8 | |
| Prior periods | | (4.3) | | | (0.5) | | | (3.1) | | | 0.5 | | | (7.4) | |
| Payments or credits attributed to sales in: | | | | | | | | | | |
| Current period | | (121.1) | | | (38.9) | | | (0.7) | | | (23.6) | | | (184.3) | |
| Prior periods | | (63.9) | | | (3.2) | | | (1.5) | | | (8.4) | | | (77.0) | |
| Balance, December 31, 2022 | | $ | 81.3 | | | $ | 4.4 | | | $ | 3.3 | | | $ | 10.9 | | | $ | 99.9 | |
Cost of Sales
The table below summarizes cost of sales by major category (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | Dollar Change | | Percentage Change |
| 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Category: | | | | | | | | | | | | | |
| Cost of sales | $ | 304.3 | | | $ | 255.1 | | | $ | 146.7 | | | $ | 49.2 | | | $ | 108.4 | | | 19 | % | | 74 | % |
Share-based compensation expense(1) | 5.4 | | | 2.4 | | | 4.9 | | | 3.0 | | | (2.5) | | | 125 | % | | (51) | % |
| Total cost of sales | $ | 309.7 | | | $ | 257.5 | | | $ | 151.6 | | | $ | 52.2 | | | $ | 105.9 | | | 20 | % | | 70 | % |
(1)See Share-Based Compensation section below for discussion.
Cost of sales, excluding share-based compensation. The increase in cost of sales for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to an increase in Tyvaso DPI royalty expense and product costs driven by growth in Tyvaso DPI revenues.
Research and Development
The table below summarizes the nature of research and development expense by major expense category (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | Dollar Change | | Percentage Change |
| | 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Category: | | | | | | | | | | | | | |
External research and development(1) | $ | 217.5 | | | $ | 192.0 | | | $ | 168.8 | | | $ | 25.5 | | | $ | 23.2 | | | 13 | % | | 14 | % |
Internal research and development(2) | 183.6 | | | 146.6 | | | 131.4 | | | 37.0 | | | 15.2 | | | 25 | % | | 12 | % |
Share-based compensation expense(3) | 29.1 | | | 15.6 | | | 23.8 | | | 13.5 | | | (8.2) | | | 87 | % | | (34) | % |
| | | | | | | | |
Other(4) | 50.8 | | | 53.8 | | | (1.1) | | | (3.0) | | | 54.9 | | | (6) | % | | NM(5) |
| Total research and development expense | $ | 481.0 | | | $ | 408.0 | | | $ | 322.9 | | | $ | 73.0 | | | $ | 85.1 | | | 18 | % | | 26 | % |
(1)External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before FDA approval of the relevant product.
(2)Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before FDA approval, and internal facilities-related expenses, including depreciation, related to research and development activities.
(3)See Share-Based Compensation section below for discussion.
(4)Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products, adjustments to the fair value of our contingent consideration obligations, and costs to acquire certain in-process research and development (IPR&D) assets. During the year ended December 31, 2024, we recorded $40.2 million and $8.0 million in expense related to upfront non-refundable licensing payments for drug delivery device technologies and ex vivo lung
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60 | United Therapeutics, a public benefit corporation |
perfusion technology, respectively. During the year ended December 31, 2023, we recorded $46.0 million in IPR&D expense in connection with the acquisition of IVIVA Medical, Inc. (IVIVA).
(5)Calculation is not meaningful.
Research and development, excluding share-based compensation. The increase in research and development expense for the year ended December 31, 2024, as compared to the same period in 2023, was due to: (1) increased expenditures related to manufactured organ and organ alternative projects; (2) non-refundable licensing payments for drug delivery device technologies and ex vivo lung perfusion technology; and (3) increased expenditures related to the TETON studies of nebulized Tyvaso in patients with IPF and PPF. These increases were partially offset by the impact of an IPR&D expense recorded during the year ended December 31, 2023 in connection with the acquisition of IVIVA, which expense did not recur in 2024.
Selling, General, and Administrative
The table below summarizes selling, general, and administrative expense by major category (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | Dollar Change | | Percentage Change |
| | 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Category: | | | | | | | | | | | | | |
General and administrative(1) | $ | 432.8 | | | $ | 374.2 | | | $ | 333.2 | | | $ | 58.6 | | | $ | 41.0 | | | 16 | % | | 12 | % |
Litigation accrual | 71.1 | | | — | | | — | | | 71.1 | | | — | | | NM(3) | | — | % |
| Sales and marketing | 96.3 | | | 81.8 | | | 70.8 | | | 14.5 | | | 11.0 | | | 18 | % | | 16 | % |
Share-based compensation expense(2) | 109.5 | | | 21.1 | | | 78.1 | | | 88.4 | | | (57.0) | | | 419 | % | | (73) | % |
| Total selling, general, and administrative expense | $ | 709.7 | | | $ | 477.1 | | | $ | 482.1 | | | $ | 232.6 | | | $ | (5.0) | | | 49 | % | | (1) | % |
(1)Excluding litigation accrual. See Litigation accrual section below.
(2)See Share-Based Compensation section below for discussion.
(3)Calculation is not meaningful.
General and administrative, excluding litigation accrual and share-based compensation. The increase in general and administrative expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to increases in: (1) personnel expense due to growth in headcount; (2) legal expenses related to litigation matters; and (3) consulting expenses.
Litigation accrual. As of December 31, 2024, we accrued a liability of $71.1 million related to ongoing litigation with Sandoz reflecting the final judgment and post-judgment interest accrued through the end of 2024. We currently do not expect that the amount of any loss in excess of this accrual would be material to our financial results; however, the amount ultimately payable, if any, could be higher or lower than this amount depending on the amount of post judgment interest and the outcome of appeals, as discussed in Note 14—Litigation, to our consolidated financial statements. The litigation accrual is included within selling, general, and administrative in our consolidated statements of operations.
Sales and marketing, excluding share-based compensation. The increase in sales and marketing expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to increases in: (1) personnel expense due to growth in headcount; (2) marketing expenses; and (3) consulting expenses.
Share-Based Compensation
The table below summarizes share-based compensation expense by major category (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | Dollar Change | | Percentage Change |
| | 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Category: | | | | | | | | | | | | | |
| Stock options | $ | 29.8 | | | $ | 15.4 | | | $ | 22.6 | | | $ | 14.4 | | | $ | (7.2) | | | 94 | % | | (32) | % |
| Restricted stock units | 79.7 | | | 52.4 | | | 35.7 | | | 27.3 | | | 16.7 | | 52 | % | | 47 | % |
| STAP awards | 32.3 | | | (30.7) | | | 46.7 | | | 63.0 | | | (77.4) | | | 205 | % | | (166) | % |
| Employee stock purchase plan | 2.2 | | | 2.0 | | | 1.8 | | | 0.2 | | | 0.2 | | | 10 | % | | 11 | % |
| Total share-based compensation expense | $ | 144.0 | | | $ | 39.1 | | | $ | 106.8 | | | $ | 104.9 | | | $ | (67.7) | | | 268 | % | | (63) | % |
The table below summarizes share-based compensation expense by line item in our consolidated statements of operations (dollars in millions):
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| | Year Ended December 31, | | Dollar Change | | Percentage Change |
| | 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Cost of sales | $ | 5.4 | | | $ | 2.4 | | | $ | 4.9 | | | $ | 3.0 | | | $ | (2.5) | | | 125 | % | | (51) | % |
| Research and development | 29.1 | | | 15.6 | | | 23.8 | | | 13.5 | | | (8.2) | | | 87 | % | | (34) | % |
| Selling, general, and administrative | 109.5 | | | 21.1 | | | 78.1 | | | 88.4 | | | (57.0) | | | 419 | % | | (73) | % |
| Total share-based compensation expense | $ | 144.0 | | | $ | 39.1 | | | $ | 106.8 | | | $ | 104.9 | | | $ | (67.7) | | | 268 | % | | (63) | % |
The increase in share-based compensation expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) an increase in STAP expense driven by a 60 percent increase in our stock price during 2024, as compared to a 21 percent decrease in our stock price during 2023; (2) an increase in restricted stock unit expense due to a greater number of awards granted and remaining outstanding in 2024, as compared to the same period in 2023; and (3) an increase in stock option expense due to a greater number of awards granted in 2024, as compared to the same period in 2023. See Note 8—Share-Based Compensation, to our consolidated financial statements for more information.
Other Income (Expense), Net
The change in other income (expense), net for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to net unrealized gains on equity securities. See Note 4—Investments and Note 5—Fair Value Measurements, to our consolidated financial statements for more information.
Income Tax Expense
Income tax expense was $343.9 million for the year ended December 31, 2024, compared to $289.5 million for the same period in 2023. For the years ended December 31, 2024 and 2023, our effective income tax rates (ETR) were approximately 22 percent and 23 percent, respectively. Our ETR for the year ended December 31, 2024 decreased, compared to our ETR for the year ended December 31, 2023, primarily due to a decrease in nondeductible acquisition costs and an increase in excess tax benefits from share-based compensation, partially offset by an increase in nondeductible compensation. For additional details, see Note 10—Income Taxes to our consolidated financial statements.
Share Repurchase
In March 2024, we entered into an accelerated share repurchase agreement (the ASR agreement) with Citibank, N.A. (Citi). Under the ASR agreement, we made an aggregate upfront payment of $1.0 billion to Citi and received an aggregate initial delivery of 3,275,199 shares of our common stock on March 27, 2024, which represented approximately 80 percent of the total shares that would be repurchased under the ASR agreement, measured based on the closing price of our common stock on March 25, 2024.
The share repurchase under the ASR agreement was divided into two tranches, resulting in upfront payments of $300 million and $700 million, respectively. The final settlement of the $300 million tranche occurred in June 2024, and we received an additional 181,772 shares of our common stock upon settlement. The final settlement of the $700 million tranche occurred in September 2024, and we received an additional 90,403 shares of our common stock upon settlement. In total, we repurchased 3,547,374 shares of our common stock under the ASR agreement that we currently hold as treasury stock in our consolidated balance sheets.
Financial Condition, Liquidity, and Capital Resources
We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements. We believe that our current sources of liquidity are sufficient to fund ongoing operations and future business plans as we expect aggregate growth in revenues from our commercial products. Furthermore, our customer base remains stable, and we believe that it presents minimal credit risk. However, any projections of future cash flows are inherently subject to uncertainty and we may seek other forms of financing. In March 2022, we entered into a credit agreement (the 2022 Credit Agreement), which provides for unsecured revolving credit facilities of up to $2.0 billion in the aggregate. Our aggregate outstanding balance under the 2022 Credit Agreement was $300.0 million and $700.0 million as of December 31, 2024 and 2023, respectively. Although our credit facility matures in 2029, we reclassified the outstanding balance of $300.0 million as a current liability in our consolidated balance sheets as of December 31, 2024, as we intend to repay this amount within one year. See Unsecured Revolving Credit Facilities below for further details.
For information regarding the fluctuation explanations between 2023 and 2022, see our 2023 Annual Report.
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62 | United Therapeutics, a public benefit corporation |
Cash and Cash Equivalents and Marketable Investments
Cash and cash equivalents and marketable investments comprise the following (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | Dollar Change | | Percentage Change |
| 2024 | | 2023 | | 2024 v. 2023 | | 2024 v. 2023 |
| Cash and cash equivalents | $ | 1,697.2 | | | $ | 1,207.7 | | | $ | 489.5 | | | 41 | % |
| Marketable investments—current | 1,569.8 | | | 1,786.4 | | | (216.6) | | | (12) | % |
| Marketable investments—non-current | 1,475.3 | | | 1,909.8 | | | (434.5) | | | (23) | % |
| Total cash and cash equivalents and marketable investments | $ | 4,742.3 | | | $ | 4,903.9 | | | $ | (161.6) | | | (3) | % |
Cash Flows
Cash flows comprise the following (dollars in millions):
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| Year Ended December 31, | | Dollar Change | | Percentage Change |
| | 2024 | | 2023 | | 2022 | | 2024 v. 2023 | | 2023 v. 2022 | | 2024 v. 2023 | | 2023 v. 2022 |
| Net cash provided by operating activities | $ | 1,327.1 | | | $ | 978.0 | | | $ | 802.5 | | | $ | 349.1 | | | $ | 175.5 | | | 36 | % | | 22 | % |
Net cash provided by (used in) investing activities | $ | 417.2 | | | $ | (719.6) | | | $ | (811.5) | | | $ | 1,136.8 | | | $ | 91.9 | | | 158 | % | | 11 | % |
Net cash (used in) provided by financing activities | $ | (1,254.8) | | | $ | (11.9) | | | $ | 75.4 | | | $ | (1,242.9) | | | $ | (87.3) | | | NM(1) | | (116) | % |
(1) Calculation is not meaningful.
Operating Activities
Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable, accrued expenses, liabilities for our STAP awards, and tax-related payables and receivables.
The increase of $349.1 million in net cash provided by operating activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to an increase in net cash received due to the growth in sales of our commercial products.
Investing Activities
The increase of $1,136.8 million in net cash provided by investing activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) a $1,099.7 million decrease in cash used for total purchases, sales, and maturities of marketable investments; and (2) an $89.2 million decrease in net cash paid related to the acquisitions of IVIVA and Miromatrix in 2023; partially offset by: (1) a $30.5 million increase in cash paid to purchase investments in privately-held companies; (2) a $16.1 million increase in cash paid to purchase property, plant, and equipment; and (3) a $5.5 million increase in deposits.
Financing Activities
The increase of $1,242.9 million in net cash used in financing activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) a $1.0 billion payment in 2024 to repurchase shares of our common stock; and (2) a $300.0 million increase in cash paid for repayments on our line of credit; partially offset by a $54.5 million increase in proceeds from the exercise of stock options.
Unsecured Revolving Credit Facilities
In March 2022, we entered into the 2022 Credit Agreement, which provides for unsecured revolving credit facilities of up to $2.0 billion in the aggregate. On March 31, 2022, we borrowed $800.0 million under the facilities and used the funds to repay outstanding indebtedness under our then-existing credit agreement. We paid down $400.0 million of our balance under the 2022 Credit Agreement during the year ended December 31, 2024. The aggregate balance of $300.0 million under our 2022 Credit Agreement remained outstanding as of both December 31, 2024 and February 26, 2025. See Note 7—Debt, to our consolidated financial statements.
Contractual Obligations
As of December 31, 2024, we had the following contractual obligations (in millions):
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| | | Payments Due by Period |
| | | Total | | Less than 1 year | | 2-3 Years | | 4-5 Years | | More than 5 Years |
| | | | | |
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| Operating lease obligations | | $ | 38.6 | | | $ | 6.1 | | | $ | 12.1 | | | $ | 10.8 | | | $ | 9.6 | |
Long-term debt obligations(1) | | 341.3 | | | 314.6 | | | 16.4 | | | 10.3 | | | — | |
Obligations under the STAP(2) | | 10.5 | | | 10.5 | | | — | | | — | | | — | |
Obligations under the SERP(3) | | 63.2 | | | 30.8 | | | — | | | 12.2 | | | 20.2 | |
Purchase obligations(4) | | 1,139.4 | | | 829.1 | | | 277.0 | | | 28.3 | | | 5.0 | |
Total(5) (6) | | $ | 1,593.0 | | | $ | 1,191.1 | | | $ | 305.5 | | | $ | 61.6 | | | $ | 34.8 | |
(1)Long-term debt obligations include future principal and interest payments on our adjusted variable rate obligations under the 2022 Credit Agreement. The 2022 Credit Agreement will mature in March 2029. As of December 31, 2024, we have classified the outstanding balance of $300.0 million as a current liability on our consolidated balance sheet, as we intend to repay this amount within one year. See Note 7—Debt to our consolidated financial statements for further details.
(2)Estimated based on the intrinsic value of exercisable outstanding STAP awards as of December 31, 2024. See Note 8—Share-Based Compensation—STAP Awards to our consolidated financial statements for further details.
(3)Consists of actuarially derived, undiscounted, estimated future payouts of benefits. See Note 11—Employee Benefit Plans—Supplemental Executive Retirement Plan to our consolidated financial statements for further details.
(4)Purchase obligations primarily include: commitments related to research and development (including clinical trials) for new and existing products; open purchase orders for capital expenditures primarily related to our continued investment in construction of additional facilities to support the development and commercialization of our products and technologies; and open purchase orders for the acquisition of goods and services in the ordinary course of business. The timing and amount of our obligations may differ based on certain future events.
(5)In addition to amounts in the table above, we are contractually obligated to make payments upon the achievement of various development, regulatory, and commercial milestones for agreements we have entered into with third parties. These payments are contingent upon the occurrence of various future events, some of which have a high degree of uncertainty of occurring. These contingent payments have not been included in the table above, and, except with respect to the fair value of the contingent consideration obligations, are not recorded in our consolidated balance sheets. See Note 12—Commitments and Contingencies to our consolidated financial statements for further details.
(6)As of December 31, 2024, our other non-current liabilities in our consolidated balance sheets includes a liability of $20.0 million for unrecognized tax benefits, including related interest and penalties. Due to the high degree of uncertainty on the timing of future events that could extinguish these unrecognized tax benefits, we are unable to estimate the period of settlement and therefore we have excluded these unrecognized tax benefits from the table above. See Note 10—Income Taxes to our consolidated financial statements for further details.
Obligations Under License Agreements and Acquisition Agreements
We pay a ten percent royalty on our net sales of Tyvaso DPI under our license agreement with MannKind. Under our agreement with Arena, we will owe a low double-digit, tiered royalty on net product sales of ralinepag (for any route of administration), plus certain milestone payments upon defined regulatory events. We pay Lilly a royalty equal to ten percent of our net product sales of Adcirca, as well as milestone payments of $325,000 for each $1,000,000 in Adcirca net product sales. We pay a single-digit percentage royalty based on net product sales of Orenitram under our license agreement with Supernus. We also pay The Scripps Research Institute a one percent royalty on sales of Unituxin. We have entered into other license agreements under which we are required to make milestone payments upon the achievement of certain developmental and commercialization objectives and royalty payments upon the commercialization of products covered by the license agreements. See Note 12—Commitments and Contingencies to our consolidated financial statements for further details. In addition, we may owe additional earn-out consideration to the former securityholders of IVIVA and Miromatrix, as described in Note 15—Acquisitions to our consolidated financial statements.
Off-Balance Sheet Arrangements
We hold an interest in an unconsolidated variable interest entity (VIE). We determined that we are not the primary beneficiary of this entity. As a result, we do not consolidate this VIE. See Note 4—Investments—Variable Interest Entities. We do not have any other off-balance sheet arrangements within the meaning of Item 303(a)(4) of Regulation S-K.
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64 | United Therapeutics, a public benefit corporation |
Summary of Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in conformity with generally accepted accounting principles in the United States (GAAP). GAAP requires that we make estimates and assumptions that affect the amounts and timing reported in our consolidated financial statements. As we become aware of updated information or new developments, these estimates and assumptions may change and materially impact reported amounts. We consider the following accounting policies to be critical to our consolidated financial statements because they require the use of our judgment and estimates (including those that are forward-looking) in their application.
Revenue Recognition
We generate revenues from the sale of our commercial products: Tyvaso DPI, nebulized Tyvaso, Remodulin, Orenitram, Unituxin, and Adcirca. Revenue is recognized when we transfer control of our products to our distributors, as our contracts have a single performance obligation (delivery of our product). These revenues are subject to various product sales allowances, referred to as gross-to-net deductions, which are deducted from revenues to determine net product sales. For a description of our related accounting policies, see Note 2—Summary of Significant Accounting Policies—Revenue Recognition to our consolidated financial statements.
The following category of gross-to-net deductions involves the use of significant estimates and judgments and information obtained from external sources.
Rebates and Chargebacks
Our most significant rebates relate to our participation in state Medicaid programs, contractual rebates to certain of our domestic distributors, and contractual rebates offered to managed care organizations covering Medicare Part D and commercial plans. Chargebacks relate to our participation in programs with the U.S. Department of Veterans Affairs and 340B covered entities. Although we accrue for our allowance for rebates and chargebacks in the same period that we recognize revenue, the actual rebate or chargeback on the sale of our product to a distributor is not invoiced to us until a future period, generally within six months from the date of sale. Due to this time lag, we must estimate the amount of rebates and chargebacks to accrue. As of December 31, 2024 and 2023, we had a liability of $140.8 million and $108.4 million, respectively, related to rebates and chargebacks.
Estimates associated with our participation in state Medicaid programs are particularly susceptible to adjustment given the extensive time lag that may occur between our recording of an accrual and its ultimate invoicing by individual state Medicaid programs, which can occur up to several years after the sale of our product. Because of the time lag for Medicaid and other rebates, in any particular quarter, our adjustments may incorporate revisions of accruals for prior quarters. Historically, adjustments to our estimates to reflect actual results or updated expectations have not been material to our overall financial results. Provisions attributed to sales in prior periods have been less than one percent of our total revenues for each of the years ended December 31, 2024, 2023, and 2022.
For a roll-forward of the liability accounts associated with our gross-to-net deductions, see the section above entitled Results of Operations—Gross-to-Net Deductions.
Recently Issued Accounting Standards
See Note 3—Recently Issued Accounting Standards, to our consolidated financial statements for information on our adoption and anticipated adoption of recently issued accounting standards.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Investment Risk
As of December 31, 2024, we have invested $3.0 billion in corporate debt securities and U.S. government and agency securities. The market value of these investments varies inversely with changes in prevailing market interest rates. In general, as interest rates increase, the market value of a debt investment would be expected to decrease. Conversely, as interest rates decrease, the market value of a debt investment would be expected to increase. During the year ended December 31, 2024, we did not experience significant volatility in the value of these investments. To address market risk, we invest in debt securities with terms no longer than three years and typically hold these investments to maturity so that they can be redeemed at their stated or face value. Many of our investments may be called by their respective issuers prior to maturity.
The following table summarizes the expected maturities and weighted average interest rates as of December 31, 2024 (dollars in millions):
| | | | | | | | | | | | | | | | | |
| Expected Maturity |
| 2025 | | 2026 | | 2027 |
|
|
|
|
|
Common stock, par value $, shares authorized, and shares issued, and and shares outstanding as of December 31, 2024 and 2023, respectively | | | | | |
| Additional paid-in capital | | | | | |
Accumulated other comprehensive loss | () | | | () | |
Treasury stock, and shares as of December 31, 2024 and 2023, respectively | () | | | () | |
| Retained earnings | | | | | |
| Total stockholders’ equity | | | | | |
| Total liabilities and stockholders’ equity | $ | | | | $ | | |
See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations
(In millions, except per share data)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
|
|
|
| Total revenues | $ | | | | $ | | | | $ | | |
| Operating expenses: | | | | | |
| Cost of sales | | | | | | | | |
| Research and development | | | | | | | | |
| Selling, general, and administrative | | | | | | | | |
|
| Total operating expenses | | | | | | | | |
| Operating income | | | | | | | | |
|
| Interest income | | | | | | | | |
| Interest expense | () | | | () | | | () | |
|
Other income (expense), net | | | | () | | | () | |
Impairment of investment in privately-held company | | | | | | | () | |
Total other income (expense), net | | | | | | | () | |
| Income before income taxes | | | | | | | | |
| Income tax expense | () | | | () | | | () | |
| Net income | $ | | | | $ | | | | $ | | |
| Net income per common share: | | | | | |
| Basic | $ | | | | $ | | | | $ | | |
| Diluted | $ | | | | $ | | | | $ | | |
| Weighted average number of common shares outstanding: | | | | | |
| Basic | | | | | | | | |
| Diluted | | | | | | | | |
See accompanying notes to consolidated financial statements.
| | | | | |
F-6 | United Therapeutics, a public benefit corporation |
Consolidated Statements of Comprehensive Income
(In millions)
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2024 | | 2023 | | 2022 |
| Net income | $ | | | | $ | | | | $ | | |
Other comprehensive income (loss): | | | | | |
Foreign currency translation loss included in net income | | | | | | | | |
| Defined benefit pension plan: | | | | | |
|
Actuarial (loss) gain arising during period, net of tax | () | | | | | | | |
Actuarial gain and prior service cost included in net periodic pension cost and settlement, net of tax | () | | | () | | | | |
| Total defined benefit pension plan, net of tax | () | | | () | | | | |
Available-for-sale debt securities: | | | | | |
Unrealized gain (loss) arising during period, net of tax | | | | | | | () | |
Realized loss included in net income, net of tax | | | | | | | | |
Total gain (loss) on available-for-sale debt securities, net of tax | | | | | | | () | |
| Other comprehensive income (loss), net of tax | | | | | | | () | |
| Comprehensive income | $ | | | | $ | | | | $ | | |
During the years ended December 31, 2024, 2023, and 2022, the tax (benefit) expense in other comprehensive income was $() million, $() million, and $ million, respectively, for the defined benefit pension plan and $ million, $ million, and $() million, respectively, for the available-for-sale securities.
See accompanying notes to consolidated financial statements.
Consolidated Statements of Stockholders’ Equity
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional
Paid-in
Capital | | Accumulated
Other
Comprehensive
Loss | | Treasury
Stock | | Retained Earnings | | Stockholders’ Equity |
| | Shares | | Amount | |
| Balance, December 31, 2021 | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | | | | |
Unrealized loss on available-for-sale debt securities | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Defined benefit pension plan | — | | | — | | | — | | | | | | — | | | — | | | | |
Shares issued under employee stock purchase plan (ESPP) | | | | — | | | | | | — | | | — | | | — | | | | |
Common stock issued for restricted stock units (RSUs) vested | | | | — | | | — | | | — | | | — | | | — | | | — | |
| RSUs withheld for taxes | — | | | — | | | () | | | — | | | — | | | — | | | () | |
| Exercise of stock options | | | | — | | | | | | — | | | — | | | — | | | | |
| Share-based compensation | — | | | — | | | | | | — | | | — | | | — | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Balance, December 31, 2022 | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | | | | |
Unrealized gain on available-for-sale debt securities | — | | | — | | | — | | | | | | — | | | — | | | | |
| Defined benefit pension plan | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Shares issued under ESPP | — | | | — | | | | | | — | | | — | | | — | | | | |
Common stock issued for RSUs vested | | | | — | | | — | | | — | | | — | | | — | | | — | |
| RSUs withheld for taxes | — | | | — | | | () | | | — | | | — | | | — | | | () | |
| Exercise of stock options | | | | — | | | | | | — | | | — | | | — | | | | |
| Share-based compensation | — | | | — | | | | | | — | | | — | | | — | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Balance, December 31, 2023 | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | | |
Foreign currency translation loss | — | | | — | | | — | | | | | | — | | | — | | | | |
Unrealized gain on available-for-sale debt securities | — | | | — | | | — | | | | | | — | | | — | | | | |
| Defined benefit pension plan | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Shares issued under ESPP | — | | | — | | | | | | — | | | — | | | — | | | | |
| RSUs withheld for taxes | — | | | — | | | () | | | — | | | — | | | — | | | () | |
Share repurchase | — | | | — | | | () | | | — | | | () | | | — | | | () | |
Excise tax on net share repurchase | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| Common stock issued for RSUs vested | | | | — | | | — | | | — | | | — | | | — | | | — | |
| Exercise of stock options | | | | | | | | | | — | | | — | | | — | | | | |
| Share-based compensation | — | | | — | | | | | | — | | | — | | | — | | | | |
| | | | | | | | |
| Balance, December 31, 2024 | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | |
See accompanying notes to consolidated financial statements.
| | | | | |
F-8 | United Therapeutics, a public benefit corporation |
Consolidated Statements of Cash Flows
(In millions)
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2024 | | 2023 | | 2022 |
| Cash flows from operating activities: | | | | | |
| Net income | $ | | | | $ | | | | $ | | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | | | | | | | | |
| Share-based compensation expense | | | | | | | | |
Impairment of investment in privately-held company | | | | | | | | |
| Impairments of property, plant, and equipment | | | | | | | | |
|
| Realized gain on sale of investment in privately-held company | | | | | | | () | |
| Realized gain on sale of equity securities | | | | | | | () | |
| Other | () | | | () | | | | |
|
| Changes in operating assets and liabilities: | | | | | |
| Accounts receivable | () | | | () | | | () | |
| Inventories | () | | | () | | | () | |
| Accounts payable and accrued expenses | | | | | | | | |
|
| Other assets and liabilities | () | | | () | | | () | |
| Net cash provided by operating activities | | | | | | | | |
| Cash flows from investing activities: | | | | | |
| Purchases of property, plant, and equipment | () | | | () | | | () | |
|
| Deposits | () | | | () | | | | |
|
|
| Purchases of available-for-sale debt securities | () | | | () | | | () | |
| Maturities of available-for-sale debt securities | | | | | | | | |
| Sales of available-for-sale debt securities | | | | | | | | |
| Sales of investments in equity securities | | | | | | | | |
| Sale of investment in privately-held company | | | | | | | | |
| Proceeds from note receivable | | | | | | | | |
Purchases of investments in privately-held companies | () | | | | | | () | |
|
|
|
|
|
Acquisitions, net of cash acquired | | | | () | | | | |
Net cash provided by (used in) investing activities | | | | () | | | () | |
| Cash flows from financing activities: | | | | | |
Payments to repurchase common stock | () | | | | | | | |
| Proceeds from line of credit | | | | | | | | |
| Repayment of line of credit | () | | | () | | | () | |
|
| Payments of debt issuance costs | () | | | () | | | () | |
|
|
|
| Proceeds from the exercise of stock options | | | | | | | | |
| Proceeds from the issuance of stock under ESPP | | | | | | | | |
| RSUs withheld for taxes | () | | | () | | | () | |
|
Net cash (used in) provided by financing activities | () | | | () | | | | |
| Net increase in cash and cash equivalents | $ | | | | $ | | | | $ | | |
| Cash and cash equivalents, beginning of year | | | | | | | | |
| Cash and cash equivalents, end of year | $ | | | | $ | | | | $ | | |
| Supplemental cash flow information: | | | | | |
| Cash paid for interest | $ | | | | $ | | | | $ | | |
| Cash paid for income taxes | $ | | | | $ | | | | $ | | |
| Non-cash investing and financing activities: | | | | | |
| Non-cash additions to property, plant, and equipment | $ | | | | $ | | | | $ | | |
Measurement period adjustment to purchase price | $ | () | | | $ | | | | $ | | |
Excise tax on net share repurchase | $ | | | | $ | | | | $ | | |
| Receivable from maturity of available-for-sale debt securities | $ | | | | $ | | | | $ | | |
|
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
1.
2.
| | | | | |
F-10 | United Therapeutics, a public benefit corporation |
| | $ | | |
| Work-in-progress | | | | | |
| Finished goods | | | | | |
| Total inventories | $ | | | | $ | | |
t result in any impairment losses. Indefinite-lived intangible assets are not amortized but are evaluated annually or more frequently for impairment if impairment indicators exist. Our indefinite-lived intangible assets include purchased in-process research and development (IPR&D) assets, which were measured at their estimated fair values as of their acquisition dates. There were impairment losses related to indefinite-lived intangible assets during the years ended December 31, 2024, 2023, and 2022.
We recorded impairment losses during the years ended December 31, 2024, 2023, and 2022 related to intangible assets subject to amortization.
| | $ | — | | | $ | | | | $ | | | | $ | — | | | $ | | | | Other intangible assets: | | | | | | | | | | | |
| In-process research and development | | | | — | | | | | | | | | — | | | | |
Other | | | | () | | | | | | | | | () | | | | |
| | | | | | |
|
| Total | $ | | | | $ | | |
Investments in Equity Securities with Readily Determinable Fair Values
We held investments in equity securities with readily determinable fair values of $ million and $ million as of December 31, 2024 and 2023, respectively, which are included in current marketable investments in our consolidated balance sheets. Changes in the fair value of publicly-traded equity securities are recorded in our consolidated statements of operations within other income (expense), net. See Note 5—Fair Value Measurements.
During the years ended December 31, 2024, 2023, and 2022, we received , , and $ million, respectively, in cash from the sale of investments in equity securities. During 2022, we sold a portion of our investment in a publicly-traded company and realized a gain of $ million. The gain was recorded within other income (expense), net in our consolidated statements of operations for the year ended December 31, 2022.
Investments in Privately-Held Companies
As of December 31, 2024 and 2023, we maintained non-controlling equity investments in privately-held companies of $ million and $ million, respectively, in the aggregate within other non-current assets in our consolidated balance sheets. We made payments of $ million and $ million for investments in privately-held companies during the years
| | | | | |
F-18 | United Therapeutics, a public benefit corporation |
such payments were made during the year ended December 31, 2023.When an observable price transaction occurs that is identified as similar or identical to our investment, we perform a valuation analysis to assess the fair value of our investment using various inputs, such as the discount rate, expected time to a liquidation event, and price volatility of peer company stocks. We adjust the fair value of our investment based on the valuation analysis and recognize the gain or loss in the period in which the observable price change occurred. During the years ended December 31, 2024, 2023, and 2022, there were aggregate increases or decreases in the value of our investments.
During 2022, a privately-held company in which we held an investment was acquired. We received $ million in cash as a result of the acquisition and realized a gain of $ million. The gain was recorded within other income (expense), net in our consolidated statements of operations.
During 2022, we identified an indicator of impairment for of the private companies in which we hold an investment and recognized an impairment charge of $ million. The impairment charge was recorded within impairment of investment in privately-held company in our consolidated statements of operations.
For non-controlling equity investments in privately-held companies in which we held an investment as of December 31, 2024, cumulative impairments and downward fair value adjustments were $ million and cumulative upward fair value adjustments were $ million.
Variable Interest Entities (VIEs)
We evaluate our interests in VIEs and will consolidate any VIE in which we have a controlling financial interest and are deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (1) the power to direct the activities of the VIE that most significantly impact its economic performance; and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both of the characteristics are met, we are considered to be the primary beneficiary and therefore will consolidate that VIE into our consolidated financial statements.
Unconsolidated VIE
In November 2019, we entered into a supply agreement with an affiliate of DEKA Research & Development Corporation (DEKA) to manufacture and supply the Remunity® Pump to us. The supply agreement was later amended to include supply of the RemunityPRO™ Pump. Under the terms of the supply agreement, we reimburse all the affiliate’s costs to manufacture and supply the Remunity and RemunityPRO systems. We determined that the affiliate is a VIE as we are the primary customer of the affiliate and the affiliate currently relies on our reimbursement of its costs to sustain its operations. We have determined we are not the primary beneficiary of the affiliate as we do not have the power to direct or control its significant activities related to the manufacturing of medical devices. Accordingly, we have not consolidated the affiliate’s results of operations and financial position with ours. As of December 31, 2024 and 2023, our consolidated balance sheets included $ million and $ million of assets, respectively, related to the supply agreement. As of December 31, 2024 and 2023, our consolidated balance sheets included a $ million and $ million liability, respectively, for our obligation to reimburse costs related to the supply agreement. While the terms of the supply agreement expose us to various future risks of loss given our responsibility to reimburse all costs incurred by the affiliate to manufacture and supply the Remunity and RemunityPRO systems, we believe that our maximum exposure to loss as of December 31, 2024 as a result of our involvement with the affiliate is $ million, the amount of assets related to the supply agreement noted above.
Consolidation of VIEs
In August 2019 and July 2022, we entered into operating agreements and trust agreements related to the contribution of assets to newly created trusts of which we are the beneficiary. The trusts were created for legal and administrative purposes and are not expected to make future purchases. As the operator of the assets, we are required to incur all future expenses related to the operation and maintenance of the assets. Accordingly, the trusts are deemed VIEs because they rely on our capital to sustain future operating expenses. We are deemed the primary beneficiary of the VIEs because we are the sole provider of financial support and can unilaterally remove the trustee without cause. Accordingly, we consolidate the VIE’s balance sheet and results of operations.
As of December 31, 2024, our consolidated balance sheets included $ million of assets due to the consolidation of these VIEs included within property, plant, and equipment, net. Upon consolidating the VIEs, which were not deemed a business as defined in ASC 805, Business Combinations, gain or loss was recognized. These VIEs have no recourse against our assets and general credit, and the VIEs’ assets cannot be used to settle the VIEs’ liabilities. Our total risk of loss is the $ million of assets we contributed, as noted above.
5.
| | $ | | | | $ | | | | $ | | | Time deposits(1) | | | | | | | | | | | |
U.S. government and agency securities(2) | | | | | | | | | | | |
Corporate debt securities(2) | | | | | | | | | | | |
Equity securities(3) | | | | | | | | | | | |
| | |
| Total assets | $ | | | | $ | | | | $ | | | | $ | | |
| Liabilities | | | | | | | |
Contingent consideration(4) | | | | | | | | | | | |
| Total liabilities | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2023 |
| | Level 1 | | Level 2 | | Level 3 | | Balance |
| Assets | | | | | | | |
Money market funds(1) | $ | | | | $ | | | | $ | | | | $ | | |
Time deposits(1) | | | | | | | | | | | |
U.S. government and agency securities(2) | | | | | | | | | | | |
Corporate debt securities(2) | | | | | | | | | | | |
Equity securities(3) | | | | | | | | | | | |
| | |
|
|
| Total accounts payable and accrued expenses | $ | | | | $ | | |
7.
billion; and (2) a second unsecured revolving credit facility of up to $ million (which facilities may, at our request, be increased by up to $ million in the aggregate subject to obtaining commitments from existing or new lenders for such increase and other conditions). In accordance with the terms of the 2022 Credit Agreement, in March 2024, we extended the maturity date of the 2022 Credit Agreement by , to March 2029.At our option, amounts borrowed under the 2022 Credit Agreement bear interest at either an adjusted Term Secured Overnight Finance Rate (Term SOFR) or a fluctuating base rate, in each case, plus an applicable margin determined on a quarterly basis based on our consolidated ratio of total indebtedness to EBITDA (as calculated in accordance with the 2022 Credit Agreement). To date, we have elected to calculate interest on the outstanding balance at an adjusted Term SOFR plus an applicable margin.
On March 31, 2022, we borrowed $ million under the 2022 Credit Agreement, and used the funds to repay outstanding indebtedness under the 2018 Credit Agreement as discussed below under 2018 Credit Agreement.
As of December 31, 2023, our outstanding aggregate principal balance under the 2022 Credit Agreement was $ million. During the year ended December 31, 2024, we paid down $ million of our balance under the 2022 Credit Agreement, which brought our aggregate outstanding balance down to $ million as of December 31, 2024. Although our credit facility matures in 2029, we reclassified the outstanding balance of $ million as a current liability in our consolidated balance sheets as of December 31, 2024, as we intend to repay this amount within one year.
The 2022 Credit Agreement contains customary events of default and customary affirmative and negative covenants. As of December 31, 2024, we were in compliance with these covenants.
The interest expense reported in our consolidated statements of operations for each of the years ended December 31, 2024, 2023, and 2022, related to our borrowings under the 2022 Credit Agreement and 2018 Credit Agreement.
billion; and (2) a second unsecured revolving credit facility of up to $ million.On March 31, 2022, we terminated the 2018 Credit Agreement and entered into the 2022 Credit Agreement. We repaid in full all our obligations under the 2018 Credit Agreement in connection with the termination of the 2018 Credit Agreement and our entry into the 2022 Credit Agreement. There were no penalties associated with the early termination of the 2018 Credit Agreement.
8.
shareholder-approved equity incentive plans: the United Therapeutics Corporation Amended and Restated Equity Incentive Plan (the 1999 Plan) and the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan). The 2015 Plan provides for the issuance of up to shares of our common stock pursuant to awards granted under the 2015 Plan, which includes shares that were added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2024. further awards will be granted under the 1999 Plan. We also have equity incentive plan, the United Therapeutics Corporation 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), that has not been approved by our shareholders, as permitted by the Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to shares of our common stock under awards granted to newly-hired employees. Currently, we grant equity-based awards to employees and members of our Board of Directors in the form of stock options and restricted stock units (RSUs) under the 2015 Plan, and we may grant RSUs to newly-hired employees under the 2019 Inducement Plan. See the sections entitled Stock Options and RSUs below for additional information regarding these equity-based awards.In March 2024 and 2023, we issued stock options and RSUs to certain executives with vesting conditions tied to the achievement of specified performance criteria through the end of 2026 and 2025, respectively. Throughout the performance period, we reassess the estimated performance and update the number of performance-based awards that we believe will ultimately vest. Estimating future performance requires the use of judgment. Upon the conclusion of the performance period, the performance level achieved and the ultimate number of stock options and RSUs that may vest are determined. Share-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and anticipated achievement of the specified performance criteria.
We previously issued awards under the United Therapeutics Corporation 2011 Share Tracking Awards Plan (the STAP). We refer to awards outstanding under the STAP as STAP awards. See the section entitled STAP Awards below for additional information regarding STAP awards. We discontinued the issuance of STAP awards in June 2015.
In 2012, our shareholders approved the United Therapeutics Corporation Employee Stock Purchase Plan (ESPP), which is structured to comply with Section 423 of the Internal Revenue Code. See the section entitled ESPP below for additional information regarding the ESPP.
| | $ | | | | $ | | | | RSUs | | | | | | | | |
| STAP awards | | | | () | | | | |
| ESPP | | | | | | | | |
| Total share-based compensation expense before tax | $ | | | | $ | | | | $ | | |
| Share-based compensation capitalized as part of inventory | $ | | | | $ | | | | $ | | |
Stock Options
We estimate the fair value of stock options using the Black-Scholes-Merton valuation model, which requires us to make certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, the expected term of stock option awards, and the expected dividend yield.
During the years ended December 31, 2024 and 2023, in addition to time-based stock options, we granted million and million performance-based stock options with a total grant date fair value of $ million and $ million, respectively,
| | | | | |
F-22 | United Therapeutics, a public benefit corporation |
million and $ million of share-based compensation expense, respectively, related to performance-based stock options, calculated based on the assumed levels of performance achievement.A description of the key inputs, requiring estimates, used in determining the fair value of stock options are provided below:
Expected term—The expected term reflects the estimated time period we expect an award to remain outstanding. For the years ended December 31, 2024, 2023, and 2022, we used the simplified approach to develop this input for our stock options as we do not have sufficient historical data related to stock option exercises. Under the simplified approach, the expected term reflects the weighted average midpoint between the vesting date and the expiration date of the awards. For the expected term input related to our STAP awards, see the STAP Awards section below.
Expected volatility—Volatility is a measure of the amount the price of our common stock has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. We use historical volatility based on weekly price observations of our common stock during the period immediately preceding an award that is equal to its expected term up to a maximum period of . We believe that the volatility in the price of our common stock over the preceding generally provides a reliable projection of future long-term volatility.
Risk-free interest rate—The risk-free interest rate is the average interest rate consistent with the yield available on a U.S. Treasury note with a term equal to the expected term of an award.
Expected dividend yield—We do not pay cash dividends on our common stock and do not expect to do so in the future. Therefore, the dividend yield is .
| | | | | Expected volatility | | % | | | % | | | % |
| Risk-free interest rate | | % | | | % | | | % |
| Expected dividend yield | | % | | | % | | | % |
| | $ | | | | | | | | Granted | | | | | | | | | |
| Exercised | () | | | | | | | | |
| Forfeited | | | | | | | | | |
| Outstanding as of December 31, 2024 | | | | $ | | | | | | $ | | |
| Exercisable as of December 31, 2024 | | | | $ | | | | | | $ | | |
| Unvested as of December 31, 2024 | | | | $ | | | | | | $ | | |
The weighted average fair value of a stock option granted during each of the years in the three-year period ended December 31, 2024, was $, $, and $, respectively. The total fair value of stock options that vested for each of the years in the three-year period ended December 31, 2024, was $ million, $ million, and $ million, respectively.
| | $ | | | | $ | | | | Research and development | | | | | | | | |
| Selling, general, and administrative | | | | | | | | |
| Share-based compensation expense before taxes | | | | | | | | |
| Related income tax benefit | () | | | () | | | () | |
| Share-based compensation expense, net of taxes | $ | | | | $ | | | | $ | | |
| As of December 31, 2024, unrecognized compensation cost relating to stock options was $ million. Unvested outstanding stock options as of December 31, 2024 had a weighted average remaining vesting period of years.
| | | | | | |
| Cash received from options exercised | $ | | | | $ | | | | $ | | |
| Total intrinsic value of options exercised | $ | | | | $ | | | | $ | | |
Tax benefits realized from options exercised(1) | $ | | | | $ | | | | $ | | |
(1)We recognize these tax benefits in our consolidated statements of operations within income tax expense.
RSUs
We issue RSUs to employees and non-employee directors. Each RSU entitles the recipient to share of our common stock upon vesting. We measure the fair value of RSUs using the stock price on the date of grant. Share-based compensation expense for RSUs is recorded ratably over their vesting period.
During the years ended December 31, 2024 and 2023, in addition to time-based RSUs, we granted million performance-based RSUs in both years, with a total grant date fair value of $ million and $ million, respectively, calculated based on the assumed achievement of maximum performance of the relevant financial and non-financial performance conditions. During the years ended December 31, 2024 and 2023, we recorded $ million and $ million of share-based compensation expense, respectively, related to performance-based RSUs, calculated based on the assumed levels of performance achievement.
| | $ | | | | Granted | | | | | |
| Vested | () | | | | |
| Forfeited | () | | | | |
| Unvested as of December 31, 2024 | | | | $ | | |
| | | | | |
F-24 | United Therapeutics, a public benefit corporation |
| | $ | | | | $ | | | | Research and development | | | | | | | | |
| Selling, general, and administrative | | | | | | | | |
| Share-based compensation expense before taxes | | | | | | | | |
| Related income tax benefit | () | | | () | | | () | |
| Share-based compensation expense, net of taxes | $ | | | | $ | | | | $ | | |
| As of December 31, 2024, unrecognized compensation cost related to the grant of RSUs was $ million. Unvested outstanding RSUs as of December 31, 2024 had a weighted average remaining vesting period of years.
STAP Awards
STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. STAP awards expire on the tenth anniversary of the grant date, and in most cases, they vest in equal increments on each anniversary of the grant date over a period. We discontinued the issuance of STAP awards in June 2015.
The aggregate liability balance associated with outstanding STAP awards was $ million and $ million as of December 31, 2024 and 2023, respectively, all of which was classified as a current liability in our consolidated balance sheets.
Estimating the fair value of STAP awards requires the use of certain inputs that can materially impact the determination of fair value and the amount of compensation expense (benefit) we recognize. Inputs used in estimating fair value include the price of our common stock, the expected volatility of the price of our common stock, the risk-free interest rate, the expected term of STAP awards, and the expected dividend yield. The fair value of the STAP awards is measured at the end of each financial reporting period because the awards are settled in cash. See the descriptions of these key inputs, requiring estimates, used in determining the fair value of the awards in the Stock Options section above. A description of the expected term input for STAP awards is provided below:
Expected term—The expected term reflects the estimated time period we expect an award to remain outstanding. We use the full weighted average remaining contractual term to calculate the expected term of outstanding STAP awards.
| | | |
| Expected volatility | | % | | | % | | | % |
| Risk-free interest rate | | % | | | % | | | % |
| Expected dividend yield | | % | | | % | | | % |
The closing price of our common stock was $, $, and $ on December 31, 2024, 2023, and 2022, respectively.
| | $ | | | | | | | | Granted | | | | | | | | | |
| Exercised | () | | | | | | | | |
| Forfeited | | | | | | | | | |
| Outstanding as of December 31, 2024 | | | | $ | | | | | | $ | | |
| Exercisable as of December 31, 2024 | | | | $ | | | | | | $ | | |
| Unvested as of December 31, 2024 | — | | | $ | — | | | — | | | $ | — | |
| | $ | () | | | $ | | | | Research and development | | | | () | | | | |
| Selling, general, and administrative | | | | () | | | | |
Share-based compensation expense (benefit) before taxes | | | | () | | | | |
Related income tax (benefit) expense | () | | | | | | () | |
Share-based compensation expense (benefit), net of taxes | $ | | | | $ | () | | | $ | | |
Cash paid to settle STAP awards exercised during the years ended December 31, 2024, 2023, and 2022 was $ million, $ million, and $ million, respectively.
ESPP
In June 2012, our shareholders approved the ESPP, which is structured to comply with Section 423 of the Internal Revenue Code. The ESPP provides eligible employees with the right to purchase shares of our common stock at a discount through elective accumulated payroll deductions at the end of each offering period. Offering periods, which began in 2012, occur in consecutive periods commencing on September 5th and March 5th of each year. Eligible employees may contribute up to percent of their base salary, subject to certain annual limitations as defined in the ESPP. The purchase price of the shares is equal to the lower of percent of the closing price of our common stock on either the first or last trading day of a given offering period. In addition, the ESPP provides that no eligible employee may purchase more than shares during any offering period. The ESPP has a term and limits the aggregate number of shares that can be issued under the ESPP to million.
9.
| | $ | | | | $ | | | | Denominator: | | | | | |
| Weighted average outstanding shares — basic | | | | | | | | |
Effect of dilutive securities(1): | | | | | |
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(1) Net product sales include both the drug product and the respective inhalation device.
(2) Net product sales include sales of infusion devices, including the Remunity Pump.
% | | | % | | | % |
| Distributor 2 | | % | | | % | | | % |
| | | $ | | | | $ | | |
| Rest-of-World | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
14.
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F-34 | United Therapeutics, a public benefit corporation |
million, disclosed and made available to the plaintiffs certain specifications and other information related to the MS-3 cartridges, and granted to the plaintiffs a non-exclusive, royalty-free license in the United States to Smiths Medical’s patents and copyrights associated with the MS-3 cartridges and certain other information related to the MS-3 pumps and cartridges.In March 2022, the court granted our motion for summary judgment with respect to all claims brought by the plaintiffs except the breach of contract claim. As a result, all antitrust claims, all claims under state competition laws, and the common law tortious interference claim were resolved in our favor. These were the only claims in the case that gave rise to any potential for trebling of damages, punitive damages, disgorgement, and/or the award of attorneys’ fees. The court also denied the plaintiffs’ request for injunctive relief.
The court granted Sandoz’s motion for summary judgment with respect to Sandoz’s breach of contract claim. RareGen has no claim for breach of contract and, as a result, has no remaining claims in the litigation. The issue of what, if any, damages Sandoz is entitled to based on the court’s decision on the contract claim went to trial on April 29, 2024, and the court heard closing arguments on June 4, 2024. The trial was limited to determining the amount of damages under the breach of contract claim. The court issued an opinion on September 6, 2024, but did not determine the amount of damages with specificity. The court directed the parties to confer about the amount of damages based on the opinion and submit a proposed judgment with an amount of damages based on the factual findings in the opinion. On October 7, 2024, the parties submitted to the court their respective positions on damages. On November 1, 2024, the court entered a final judgment in favor of Sandoz, ordering UT to pay to Sandoz (a) $ in damages; (b) prejudgment interest in the amount of $; and (c) post-judgment interest. All parties have appealed the final judgment, including the court’s March 30, 2022 summary judgment decision.
We accrued a liability of $ million during the third quarter of 2024, and a further $ million during the fourth quarter of 2024, reflecting the final judgment and post-judgment interest accrued through the end of 2024. We currently do not expect that the amount of any loss in excess of these accruals would be material to our financial results; however, the amount ultimately payable, if any, could be higher or lower than this amount depending on the amount of post judgment interest, and the outcome of appeals. We recorded this liability within other non-current liabilities in our consolidated balance sheets.
We intend to continue to vigorously defend ourselves against the claims made in this litigation. Among other things, we believe our settlement agreement with Sandoz did not provide Sandoz any rights with respect to delivery systems such as the MS-3. We also believe that the plaintiffs, who were on notice that Smiths Medical would discontinue the MS-3 system, failed to fulfill their duty to properly mitigate their exposure as a result of such discontinuation, and any damages they incurred are the result of market conditions and their own failure to properly plan their own product launch. However, due to the uncertainty inherent in any litigation, we cannot guarantee that appeals will not result in an outcome adverse to us. This litigation has involved, and will likely continue to involve, substantial cost to defend, and an adverse appellate outcome could result in substantial monetary damages in excess of the liability we have accrued to-date.
Litigation with Liquidia Technologies, Inc.
Since March 2020, we have been engaged in litigation with Liquidia Technologies, Inc. (Liquidia) regarding its efforts to obtain FDA approval for Yutrepia™, a dry powder inhalation formulation of treprostinil. That litigation has included petitions for inter partes review (IPR) filed by Liquidia with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO), as well as multiple lawsuits we have brought alleging infringement by Liquidia of several of our patents. Most of these cases have now been finally resolved, and Liquidia has tentative approval from the FDA to market Yutrepia to treat PAH and PH-ILD following expiration of FDA-conferred exclusivity on May 23, 2025.
We have ongoing patent infringement lawsuit against Liquidia, which was originally filed on September 5, 2023 in the U.S. District Court for the District of Delaware, alleging infringement of U.S. Patent No. 10,716,793 (the ’793 patent), a patent related to Tyvaso with an expiration date in May 2027 that was later invalidated as a result of an IPR proceeding, and therefore is no longer at issue in this litigation. On November 30, 2023, we filed an amended complaint to assert a new patent: U.S. Patent No. 11,826,327 (the ’327 patent), which is now the only patent remaining at issue in the case. The claims of the ’327 patent generally cover improving exercise capacity in patients suffering from PH-ILD by inhaling treprostinil at specific dosages. This case is pending, and trial is set for June 2025.
In June 2021, we filed a motion in one of our patent cases against Liquidia in the U.S. District Court for the District of Delaware to file an amended complaint adding trade secret misappropriation claims against Liquidia and a former Liquidia employee, Dr. Robert Roscigno. The court denied the motion based on a finding that adding the additional claims would impact the case schedule. Thus, we filed those claims as a separate case against Liquidia and Dr. Roscigno in North Carolina state court. Discovery is complete. On January 5, 2024, Dr. Roscigno filed a motion for summary judgment, which was denied on July 31, 2024. On July 3, 2024, Liquidia filed a motion for summary judgment, which is pending. We commenced a separate, related case against Liquidia and Dr. Roscigno in North Carolina state court on May 9, 2024, and filed a complaint in this case including a claim for breach of contract on May 29, 2024.
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F-36 | United Therapeutics, a public benefit corporation |
15.
million. In addition to the upfront payment, the transaction consideration includes potential earnout consideration, payable in cash, structured as a percent royalty on net sales of IVIVA’s kidney products, subject to certain reductions. The transaction was accounted for as an asset acquisition as substantially all of the fair value was concentrated in a single IPR&D asset we acquired. We allocated $ million of the purchase price to the IPR&D and recorded the expense within research and development in our consolidated statements of operations for the year ended December 31, 2023. For tax purposes, the purchase price allocated to the IPR&D is not deductible and was capitalized into the tax basis of the equity we acquired. We also recorded an intangible asset of $ million related to the asset acquisition and recorded the amount within goodwill and other intangible assets, net in our consolidated balance sheet as of December 31, 2023.Business Combination
On October 29, 2023, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Miromatrix, a publicly traded company developing bioengineered kidney and liver alternative products. On December 13, 2023, we completed the transactions contemplated by the Merger Agreement and Miromatrix became a wholly-owned subsidiary of United Therapeutics. Pursuant to the terms of the Merger Agreement, we paid former Miromatrix shareholders $ per share in cash at closing, representing cash consideration paid to former Miromatrix shareholders of $ million. Former Miromatrix shareholders also received one contractual contingent value right per share, representing the right to receive a contingent payment of $ per share in cash (an aggregate of approximately $ million) upon the first implantation of Miromatrix’s development-stage, fully-implantable kidney alternative product known as mirokidney into a living human patient by the end of 2025 in a clinical trial meeting requirements set forth in the form of the Contingent Value Rights Agreement attached to the Merger Agreement (the Milestone). In addition to the cash consideration noted above, the aggregate purchase price included $ million that we ascribed to the contingent value rights, of which $ million was recorded as a measurement period adjustment during the first quarter of 2024. During the third quarter of 2024, we recorded a measurement period adjustment to decrease goodwill and other intangible assets, net and increase deferred tax assets, net by $ million. The purchase price allocation was considered complete as of September 30, 2024.
Purchase Price Allocation
The merger met the definition of a business combination in accordance with ASC 805, Business Combinations, and as such, we applied the acquisition method to account for the transaction, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the closing date. The aggregate purchase price was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair values at the closing date using primarily Level 2 and Level 3 inputs. These Level 2 and Level 3 valuation inputs included an estimate of future cash flows and discount rates. Additionally, estimated fair values were based, in part, upon third-party valuations of certain assets, which included specifically-identified intangible assets.
The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and is subject to change within the measurement period (up to one year from the closing date) as additional information concerning final asset and liability valuations is obtained. The primary elements of this preliminary purchase price allocation that are not yet finalized relate to the forecast of future cash flows
| Other current assets | | |
Intangible assets: | |
IPR&D | | |
Goodwill(1) | | |
Deferred tax assets, net | | |
Property, plant, and equipment, net | | |
Other non-current assets | | |
Total fair value of assets acquired | $ | | |
Accounts payable and accrued expenses | | |
Other current liabilities | | |
Other non-current liabilities | | |
Total fair value of liabilities assumed | $ | | |
Total purchase price | $ | | |
(1)The goodwill is not deductible for income tax purposes.
We determined the fair value of the IPR&D using the multi-period earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D, less charges representing the required return on other assets to sustain those cash flows. The multi-period earnings method is a Level 3 fair value measurement. Significant assumptions inherent in determining fair value of the IPR&D included annual net cash flows over a period of time and a discount rate applied to those cash flows to reflect the overall risk of the asset.
We ascribed $ million to the contingent value rights as of the closing date based on a probability weighted discounted cash flow model, utilizing probability adjusted expectations of achieving the Milestone. In making this determination, we considered expectations regarding the timing and probability of achieving the Milestone by the end of 2025.
Following the acquisition, the operating results of Miromatrix have been included in our consolidated financial statements. The acquisition did not have a material impact on our consolidated financial statements, and therefore, historical and pro forma disclosures have not been presented.
Costs incurred to complete the acquisition and integrate Miromatrix into our business were expensed as incurred and included within selling, general, and administrative in our consolidated statements of operations. During the year ended December 31, 2023, we recognized $ million of acquisition-related costs. These costs represented transaction costs, legal fees, and professional third-party service fees.
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F-38 | United Therapeutics, a public benefit corporation |
| | $ | | | | $ | | | | $ | () | | | $ | | | Year Ended December 31, 2023(2) | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | | |
Year Ended December 31, 2022 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
(1)Deductions relate primarily to changes from finalization of acquisition accounting.
(2)Other additions relate to valuation allowances on certain tax attributes obtained through acquisitions. Deductions relate to state net operating losses.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Inventory Reserves |
| | Balance at Beginning of Year | | Additions Charged to Expense | | Deductions | | Balance at End of Year |
| Year Ended December 31, 2024 | $ | | | | $ | | | | $ | () | | | $ | | |
| Year Ended December 31, 2023 | $ | | | | $ | | | | $ | () | | | $ | | |
| Year Ended December 31, 2022 | $ | | | | $ | | | | $ | () | | | $ | | |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with participation of our Chairperson and Chief Executive Officer and Chief Financial Officer and Treasurer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2024. Based on that evaluation, our Chairperson and Chief Executive Officer and Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures were effective as of December 31, 2024.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting was designed to provide reasonable assurance to our management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal controls over financial reporting, no matter how well designed, have inherent limitations. As a result of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those internal controls determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective.
Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting. The report of Ernst & Young LLP is contained in Item 8 of this Report.
Attestation of Independent Registered Public Accounting Firm
The attestation report of our independent registered public accounting firm regarding internal control over financial reporting is set forth in Item 8 of this Report under the caption “Report of Independent Registered Public Accounting Firm” and incorporated herein by reference.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
(c)
, , a , a trading plan intended to satisfy Rule 10b5-1(c) to exercise up to stock options and sell the shares of common stock received, subject to certain conditions., , a , a trading plan intended to satisfy Rule 10b5-1(c) to exercise up to stock options and sell the shares of common stock received, subject to certain conditions. | | | | | |
67 | United Therapeutics, a public benefit corporation |
, , a , a trading plan intended to satisfy Rule 10b5-1(c) to exercise up to stock options and sell the shares of common stock received, subject to certain conditions.During the fourth quarter of December 31, 2024, no director or Section 16 officer any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408 of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Information as to the individuals serving on our board of directors is set forth below under the heading Board of Directors. Additional information required by Item 10 regarding nominees and directors appearing under Proposal No. 1: Election of Directors in our definitive proxy statement for our 2025 annual meeting of shareholders currently scheduled for June 26, 2025 (the 2025 Proxy Statement) is hereby incorporated herein by reference. Information regarding our executive officers appears in Item 1 of this Report under the heading Information about our Executive Officers. Information regarding our Audit Committee and our Audit Committee’s financial expert appearing under the heading Committees of our Board of Directors—Audit Committee in our 2025 Proxy Statement is hereby incorporated herein by reference.
Information appearing under the headings Delinquent Section 16(a) Reports and Insider Trading Policies and Procedures in our 2025 Proxy Statement is hereby incorporated herein by reference.
We have a written Code of Conduct and Business Ethics that applies to our principal executive officer, principal financial officer and our principal accounting officer and every other director, officer and employee of United Therapeutics. The Code of Conduct and Business Ethics is available on our Internet website at http://ir.unither.com/corporate-governance. A copy of the Code of Conduct and Business Ethics will be provided free of charge by making a written request and mailing it to our corporate headquarters offices to the attention of the Investor Relations Department. If any amendment to, or a waiver from, a provision of the Code of Conduct and Business Ethics that applies to the principal executive officer, principal financial officer and principal accounting officer is made, we intend to post such information on our Internet website within four business days at www.unither.com.
Board of Directors
Christopher Causey, M.B.A.
Former Consultant and Healthcare Executive
Raymond Dwek, C.B.E., F.R.S.
Emeritus Director, Oxford Glycobiology Institute, Oxford University
Richard Giltner
Former Portfolio Manager at Lyxor Asset Management, an asset management group at Société Générale, S.A.
Ray Kurzweil
Principal Researcher and AI Visionary, Google Inc.
Jan Malcolm
Former Commissioner of Health, State of Minnesota
Linda Maxwell, M.D., M.B.A.
Surgeon; Operating Partner, DCVC
Nilda Mesa, J.D.
Adjunct Professor, Columbia University; Former Director, NYC Mayor’s Office of Sustainability
Judy D. Olian, Ph.D.
President, Quinnipiac University
Christopher Patusky, J.D., M.G.A.
Founding Principal, Patusky Associates, LLC
Martine Rothblatt, Ph.D., J.D., M.B.A.
Chairperson and Chief Executive Officer of United Therapeutics
Louis Sullivan, M.D.
President Emeritus, Morehouse School of Medicine; Former Secretary, U.S. Department of Health and Human Services
Tommy Thompson, J.D.
Former Governor of Wisconsin; Former Secretary, U.S. Department of Health and Human Services
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69 | United Therapeutics, a public benefit corporation |
Item 11. Executive Compensation
Information concerning executive compensation required by Item 11 will appear under the headings Director Compensation, Compensation Discussion and Analysis, and Executive Compensation Data in our 2025 Proxy Statement and is incorporated herein by reference.
Information concerning the Compensation Committee required by Item 11 will appear under the heading Compensation Committee Report in our 2025 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information regarding beneficial ownership of our common stock required by Item 12 will appear under Beneficial Ownership of Common Stock in our 2025 Proxy Statement and is incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table presents information as of December 31, 2024, regarding our securities authorized for issuance under equity compensation plans:
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| Plan category | | Number of securities to be issued upon exercise of outstanding options and RSUs (a)(3) | | Weighted average exercise price of outstanding options (b)(4) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(5) |
Equity compensation plan approved by security holders(1) | | 6,756,476 | | | $ | 148.62 | | | 5,463,222 | |
Equity compensation plan not approved by security holders(2) | | 34,723 | | | — | | | 1,448 | |
| Total | | 6,791,199 | | | $ | 148.62 | | | 5,464,670 | |
(1)All outstanding stock options were issued under our equity incentive plan approved by security holders in 2015. Except for RSUs issued under the 2019 Inducement Plan discussed below, all outstanding RSUs were issued under the 2015 Plan. In addition, our employees have outstanding rights to purchase our common stock at a discount as part of our ESPP, which was approved by security holders in 2011. Information regarding these plans is contained in Note 8—Share-Based Compensation to our consolidated financial statements.
(2)We have one equity incentive plan, the 2019 Inducement Plan, that has not been approved by our shareholders, as permitted by the Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to 99,000 shares of our common stock in the aggregate under awards granted to newly-hired employees. Information regarding this plan is contained in Note 8—Share-Based Compensation to our consolidated financial statements.
(3)Column (a) includes 5,571,545 shares of our common stock issuable upon the exercise of outstanding stock options issued under the 2015 Plan; 1,184,931 shares issuable upon the vesting of outstanding RSUs issued under the 2015 Plan; and 34,723 shares issuable upon the vesting of outstanding RSUs issued under the 2019 Inducement Plan. The number under column (a) represents the actual number of shares issuable under our outstanding awards without giving effect to the share counting formula described below in footnote 5.
(4)Column (b) represents the weighted average exercise price of the outstanding stock options only. The outstanding RSUs are not included in this calculation because they do not have an exercise price.
(5)Column (c) includes 2,466,548, 2,996,674, and 1,448 of shares available for future issuance under the ESPP, the 2015 Plan, and the 2019 Inducement Plan, respectively. Under the ESPP, employees may purchase shares based upon a six-month offering period at an amount equal to the lesser of (1) 85 percent of the closing market price of the Common Stock on the first day of the offering period, or (2) 85 percent of the closing market price of the Common Stock on the last day of the offering period. See Note 8—Share-Based Compensation—ESPP for more information. The 2015 Plan and 2019 Inducement Plan use a share counting formula for determining the number of shares available for issuance under the plans. In accordance with this formula, each RSU granted prior to March 17, 2020 under the 2015 Plan and each RSU granted under the 2019 Inducement Plan depletes the number of shares available for future issuance by 2.14 shares, while each RSU granted on or after March 17, 2020 under the 2015 Plan depletes the number of shares available for future issuance by 1.35 shares. Therefore, if any RSU does not vest, the number of shares available for future issuance will increase by 1.35 and 2.14 under the 2015 Plan and 2019 Plan, respectively, because of the share counting formula described above. Each stock option granted under the 2015 Plan depletes the number of shares available for future issuance by one share and does not use the share counting formula described above.
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71 | United Therapeutics, a public benefit corporation |
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information concerning related party transactions and director independence required by Item 13 will appear under the headings Other Matters—Certain Relationships and Related Party Transactions, Our Corporate Governance—Board of Directors and Nominees—Director Independence, and Our Corporate Governance—Board Structure—Committees of Our Board of Directors in our 2025 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information required by Item 14 concerning the principal accounting fees paid by the Registrant and the Audit Committee’s pre-approval policies and procedures, will appear under the heading Audit Matters in our 2025 Proxy Statement and is incorporated herein by reference.
PART IV
Item 15. Exhibits and Financial Statement Schedules
In reviewing the agreements included or incorporated by reference as exhibits to this Report, it is important to note that they are included to provide investors with information regarding their terms, and are not intended to provide any other facts or disclose any other information about United Therapeutics or the other parties to the agreements. The agreements contain representations and warranties made by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement, and: (1) should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; (2) have, in some cases, been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (3) may apply standards of materiality in a way that is different from what may be material to investors; and (4) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about United Therapeutics may be found elsewhere in this Report and our other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
| | | | | |
| (a)(1) | Our financial statements filed as part of this report on Form 10-K are set forth in the Index to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K. |
| (a)(2) | The Schedule II—Valuation and Qualifying Accounts is filed as part of this Form 10-K. All other schedules are omitted because they are not applicable or not required, or because the required information is included in our consolidated statements or notes thereto. |
| (a)(3) | Exhibits filed as a part of this Form 10-K are listed on the Exhibit Index, which is incorporated by reference herein. |
Certain exhibits to this report have been included only with the copies of this report filed with the Securities and Exchange Commission. Copies of individual exhibits will be furnished to shareholders upon written request to United Therapeutics and payment of a reasonable fee (covering the expense of furnishing copies). Shareholders may request exhibit copies by contacting: United Therapeutics Corporation, Attn: Investor Relations, 1000 Spring Street, Silver Spring, Maryland 20910.
Exhibit Index
| | | | | |
Exhibit No. | Description |
| 2.1* | |
| 3.1 | |
| 3.2 | |
| | | | | |
Exhibit No. | Description |
| 4.1 | Reference is made to Exhibits 3.1 and 3.2. |
4.2 | |
| 10.1 | |
| 10.2** | |
| 10.3** | |
| 10.4** | |
| 10.5** | |
| 10.6** | |
| 10.7** | |
| 10.8** | |
| 10.9** | |
| 10.10** | |
| 10.11** | |
| 10.12** | |
| 10.13** | |
| 10.14** | |
10.15** | |
| 10.16 | |
10.17** | |
| | | | | |
73 | United Therapeutics, a public benefit corporation |
| | | | | |
Exhibit No. | Description |
| 10.18 | |
10.19** | |
10.20** | |
10.21** | |
10.22** | |
10.23** | |
10.24** | |
10.25** | |
10.26** | |
10.27** | |
10.28**† | |
10.29** | |
10.30** | |
10.31** | |
10.32** | |
10.33** | |
10.34** | |
10.35** | |
10.36** | |
| | | | | |
Exhibit No. | Description |
10.37** | |
10.38** | |
10.39* | |
10.40 | |
10.41 | |
10.42* | |
10.43+ | |
10.44+ | |
10.45+ | |
10.46+ | |
10.47 | |
10.48 | |
10.49 | |
10.50+ | |
10.51 | |
10.52 | |
| | | | | |
75 | United Therapeutics, a public benefit corporation |
| | | | | |
Exhibit No. | Description |
| 10.53 | |
| 10.54 | |
| 10.55 | |
| 10.56 | |
| 10.57 | |
| 10.58 | |
| 10.59 | |
| 10.60 | Credit Agreement, dated as of March 31, 2022, among the Registrant, certain of its subsidiaries party thereto, as guarantors, the lenders referred to therein, and Wells Fargo Bank, National Association, as administrative agent and as a swingline lender, incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on April 1, 2022. |
10.61+ | |
19† |
|
21† | |
23.1† | |
31.1† | |
31.2† | |
32.1† | |
32.2† | |
| 97 | |
101† | The following financial information from our Annual Report on Form 10‑K for the year ended December 31, 2024, filed with the SEC on February 26, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) our Consolidated Balance Sheets as of December 31, 2024 and 2023, (2) our Consolidated Statements of Operations for each of three years in the period ended December 31, 2024, (3) our Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2024, (4) our Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2024, (5) our Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2024, and (6) the Notes to our Consolidated Financial Statements. |
104† | Cover Page Interactive Data File (embedded within the iXBRL document) |
+ Certain identified information has been omitted from this exhibit because it is both (1) not material and (2) would be competitively harmful if publicly disclosed.
* Confidential treatment has been requested with respect to certain portions of this exhibit pursuant to Rule 406 of the Securities Act of 1933, as amended or Rule 24b‑2 of the Securities Act of 1934, as amended. The omitted portions of this document have been filed with the Securities and Exchange Commission.
** Designates management contracts and compensation plans.
† Filed herewith.
Note: Except as otherwise noted above, all exhibits incorporated by reference to the Registrant’s previously filed reports with the Securities and Exchange Commission are filed under File No. 000‑26301.
Item 16. Form 10-K Summary
None.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| | | | | | | | |
| | UNITED THERAPEUTICS CORPORATION |
| | | |
| By: | /s/ MARTINE ROTHBLATT |
| February 26, 2025 | | Martine Rothblatt, Ph.D. Chairperson and Chief Executive Officer |
| | | | | |
77 | United Therapeutics, a public benefit corporation |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | | | | | | | | | | | | |
| Signatures | | Title | | Date | |
| | | | | | |
| /s/ MARTINE ROTHBLATT | | Chairperson, Chief Executive Officer, and Director (Principal Executive Officer) | | February 26, 2025 | |
| Martine Rothblatt | | | |
| | | | | | |
| /s/ JAMES C. EDGEMOND | | Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer) | | February 26, 2025 | |
| James C. Edgemond | | | |
| | | | | | |
| /s/ CHRISTOPHER CAUSEY | | Director | | February 26, 2025 | |
| Christopher Causey | | | |
| | | | | | |
| /s/ RAYMOND DWEK | | Director | | February 26, 2025 | |
| Raymond Dwek | | | |
| | | | | | |
| /s/ RICHARD GILTNER | | Director | | February 26, 2025 | |
| Richard Giltner | | | |
| | | | | | |
| /s/ RAYMOND KURZWEIL | | Director | | February 26, 2025 | |
| Raymond Kurzweil | | | |
| | | | | | |
| /s/ JAN MALCOLM | | Director | | February 26, 2025 | |
| Jan Malcolm | | | |
| | | | | | |
| /s/ LINDA MAXWELL | | Director | | February 26, 2025 | |
| Linda Maxwell | | | |
| | | | | | |
| /s/ NILDA MESA | | Director | | February 26, 2025 | |
| Nilda Mesa | | | |
| | | | | | |
| /s/ JUDY D. OLIAN | | Director | | February 26, 2025 | |
| Judy D. Olian | | | |
| | | | | | |
| /s/ CHRISTOPHER PATUSKY | | Director | | February 26, 2025 | |
| Christopher Patusky | | | |
| | | | | | |
| /s/ LOUIS W. SULLIVAN | | Director | | February 26, 2025 | |
| Louis W. Sullivan | | | |
| | | | | | |
| /s/ TOMMY G. THOMPSON | | Director | | February 26, 2025 | |
| Tommy Thompson | | | |
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