United Therapeutics Corporation — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021; filed February 24, 2022. United Therapeutics develops and sells therapies primarily for pulmonary arterial hypertension (PAH), as well as Unituxin for high-risk neuroblastoma. In September 2021, the company converted to a Delaware public benefit corporation, with a stated purpose that includes developing therapies and expanding transplantable-organ availability.
Financial results
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $1,685.5 million | $1,483.3 million | +13.6% |
| Gross profit | $1,563.0 million | $1,375.2 million | +13.7% |
| Gross margin | 92.7% | 92.7% | Essentially unchanged |
| Operating income | $555.9 million | $593.6 million | -6.4% |
| Operating margin | 33.0% | 40.0% | Down 7.0 percentage points |
| Net income | $475.8 million | $514.8 million | -7.6% |
| Diluted EPS | $10.06 | $11.54 | -12.8% |
| Operating cash flow | $598.2 million | $755.7 million | -20.8% |
Revenue growth was led by Tyvaso and Unituxin. Product sales were: Tyvaso $607.5 million (+26%), Remodulin $513.7 million (-1%), Orenitram $306.1 million (+4%), Unituxin $202.3 million (+65%), and Adcirca $55.9 million (-17%). Tyvaso’s PH-ILD label expansion and increased patient volume supported growth; Unituxin growth included $18.4 million from its Japan launch. Remodulin’s U.S. decline was partly offset by higher international sales. Generic competition continued to pressure Adcirca.
Operating expenses rose to $1,129.6 million from $889.7 million. Research and development expense increased 51% to $540.1 million, including a $107.3 million Trevyent impairment, a $105.0 million pediatric priority review voucher, and an $11.6 million facility impairment. SG&A increased 10% to $467.0 million. Other income included realized gains from sales of equity securities; the company reported a $92.6 million realized gain in 2021. These items, along with higher operating expenses, contributed to lower operating and net income despite stronger revenue.
Liquidity, debt, and cash flows
- Cash and cash equivalents were $894.8 million; current and non-current marketable investments totaled $2,685.8 million. Combined cash and marketable investments were $3,580.6 million, up 20% year over year.
- Outstanding revolving credit facility debt was $800.0 million, unchanged from 2020, with maturity in December 2025. The facility permits borrowings up to $1.5 billion. The company reported covenant compliance.
- Operating cash flow was $598.2 million; investing cash outflow was $486.9 million, including $120.8 million of property and equipment purchases; financing cash inflow was $44.8 million.
- Management said available cash, cash equivalents, and marketable securities could fund operations for at least two years at current operating levels, regardless of future revenue. This is management’s assessment, not a guarantee.
Material developments, outlook, and risks
- Tyvaso DPI: The FDA issued a complete response letter in October 2021 citing an inspection issue at a third-party testing facility. The company resubmitted the application in December; FDA accepted it for review in January 2022. After requesting additional pulmonary-safety information in February, FDA designated the response a major amendment and moved its anticipated review deadline to May 2022. Approval and launch were not assured.
- Pipeline and organ programs: Phase 3 studies of Tyvaso in PH-COPD and IPF and phase 3 ralinepag studies were ongoing. The filing also describes xenotransplantation, regenerative medicine, bioprinting, and ex-vivo lung perfusion efforts. In January 2022, a genetically modified pig heart was transplanted into a human under FDA expanded access authorization.
- Program changes: The company discontinued U.S. development of Trevyent after FDA feedback and recognized its impairment; it and Medtronic discontinued further development and commercialization of the implantable Remodulin system in June 2021. OreniPro was discontinued in February 2022.
- Management outlook: Near-term growth was expected to rely on Tyvaso following its PH-ILD approval, Orenitram, a potential Tyvaso DPI launch, possible international PH-ILD approvals, and modest price increases, partly offset by Adcirca generic erosion. No quantified revenue or earnings guidance was provided.
- Competition and legal matters: Risks include generic Remodulin competition, potential Tyvaso and Orenitram generics, Liquidia’s tentatively approved Yutrepia and related patent litigation, and ANI’s Orenitram patent challenge. The 340B contract-pharmacy dispute remained on appeal after a favorable district court ruling. The filing also describes Sandoz/RareGen antitrust litigation and MSP Recovery litigation; outcomes and potential losses were uncertain.
- Other risks: The company cited reimbursement and drug-pricing pressure, reliance on a concentrated distributor base and third-party suppliers, manufacturing and clinical-trial execution, COVID-19 disruption, patent challenges, and variable-rate debt exposure. It had previously paid $210.0 million to settle a 2017 U.S. government investigation concerning patient-assistance-program support and remained subject to a Corporate Integrity Agreement.
Investor verification priorities
- Track Tyvaso DPI’s FDA review, any approval conditions, launch timing, and commercial uptake; verify the status of the cited safety review and manufacturing issue.
- Assess whether Tyvaso’s PH-ILD-driven growth and Unituxin’s international sales can offset Remodulin softness and continued Adcirca erosion.
- Review the full financial statements for the durability of operating cash flow and the role of investment gains, impairments, share-based compensation, and other non-recurring items in reported earnings.
- Monitor Liquidia/Yutrepia and ANI patent proceedings, generic entry dates and challenges, and the 340B appeal for possible effects on sales, margins, and legal costs.
- Confirm debt terms, interest-rate exposure, covenant headroom, and the liquidity assumptions behind management’s stated two-year funding assessment.