United Therapeutics Corporation — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 22, 2023. The company develops and sells therapies primarily for pulmonary arterial hypertension (PAH), and pursues technologies to expand transplantable-organ supply. It operates as a Delaware public benefit corporation.
Financial performance
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Total revenue | $1,936.3 million | $1,685.5 million | Up 15% |
| Operating income | $979.7 million | $555.9 million | Up 76% |
| Net income | $727.3 million | $475.8 million | Up 53% |
| Diluted EPS | $15.00 | $10.06 | Up 49% |
| Net cash from operations | $802.5 million | $598.2 million | Up 34% |
Gross profit was $1,784.7 million, or approximately 92% of revenue; operating margin was approximately 51%, and net margin approximately 38%. The filing reports no separate quarterly Q4 results in the supplied text.
2022 product revenue: Tyvaso and Tyvaso DPI $873.0 million, up 44%; Remodulin $500.2 million, down 3%; Orenitram $325.1 million, up 6%; Unituxin $182.9 million, down 10%; Adcirca $41.3 million, down 26%; and other $13.8 million. Tyvaso sales benefited from the Tyvaso DPI launch in June 2022 and continued PH-ILD patient growth. The three leading U.S. distributors represented 51%, 32%, and 9% of revenue, respectively.
Liquidity and debt: Cash and cash equivalents were $961.2 million; current and non-current marketable investments totaled $3,193.7 million. Together, cash and marketable investments were $4,154.9 million, up 16% year over year. Total current assets were $3,380.3 million and current liabilities $343.2 million. Outstanding revolving-credit debt was $800.0 million, variable-rate and due in March 2027; $1.2 billion of the $2.0 billion facility remained undrawn, subject to agreement terms. A 100-basis-point rate increase would raise annual interest expense by about $8 million. The company reported compliance with credit covenants.
Investing cash outflow was $811.5 million, including $138.8 million of capital expenditures; financing cash inflow was $75.4 million. The filing does not present a standalone EBITDA measure.
Material changes and unusual items
- Revenue growth was led by Tyvaso/Tyvaso DPI; Remodulin, Unituxin, and Adcirca revenue declined. Adcirca continued to face generic competition, while Remodulin faced generic competition in the U.S. and internationally.
- Operating expenses fell to $956.6 million from $1,129.6 million, primarily because 2021 included a $107.3 million Trevyent impairment, a $105.0 million pediatric priority review voucher purchase, and other impairment charges. 2022 R&D expense was $322.9 million, down 40%.
- Other expense, net was $29.1 million in 2022 versus income of $38.0 million in 2021, largely reflecting changes in gains and losses on equity securities. Available-for-sale debt securities had $74.9 million in gross unrealized losses at year-end, attributed by management to interest rates rather than credit losses.
- Income tax expense rose to $223.3 million from $118.1 million; the effective tax rate increased to about 23% from 20%. The filing cites valuation allowance and uncertain-tax-position changes among the drivers.
- Operating cash flow increased partly because 2021 included the $105.0 million voucher purchase and higher STAP settlement payments.
Outlook, commentary, and principal risks
- Management expects near-term revenue growth mainly from Tyvaso’s PH-ILD indication, Tyvaso DPI uptake, Orenitram growth, and modest price increases, partly offset by Adcirca generic erosion. No numerical revenue or earnings guidance is provided.
- Pipeline priorities include Phase 3 TETON studies of Tyvaso for idiopathic pulmonary fibrosis and Phase 3 ralinepag studies for PAH; RemoPro is in Phase 1. Management also continues organ-manufacturing research, including xenotransplantation and ex vivo lung perfusion.
- Material execution risks include clinical-trial and regulatory uncertainty; competition and generic entry; payer coverage, pricing, and reimbursement changes, including the Inflation Reduction Act; and reliance on a limited number of distributors and sole-source manufacturers. The company depends entirely on MannKind for Tyvaso DPI supply and Minnetronix for the Tyvaso inhalation system.
- Liquidia’s Yutrepia could compete with inhaled treprostinil products. A district court ruling bars FDA approval until May 2027 based on a patent, but appeals and patent-review proceedings remain unresolved; earlier entry could be possible if the rulings change or are stayed.
- Other significant legal matters include the 340B contract-pharmacy policy appeal and litigation alleging improper charitable-assistance arrangements. The 10-K says loss estimates for the Sandoz contract-damages claim could not be reasonably determined. The company states it intends to defend these matters.
- The company disclosed a prior $210 million DOJ settlement in 2017 concerning patient-assistance support; its five-year Corporate Integrity Agreement ended in December 2022.
Key investor verification points
- Track Tyvaso DPI adoption, Tyvaso PH-ILD growth, and whether sales momentum offsets weakness in Remodulin, Unituxin, and Adcirca.
- Review the latest court, appeal, and PTAB developments involving Liquidia/Yutrepia, including the potential timing of competition.
- Assess the effect of IRA and Medicaid rebate changes on product pricing, net revenue, and margins.
- Monitor supply continuity and capacity for Tyvaso DPI, inhalation systems, Remodulin pumps, and internally manufactured products.
- Reconcile cash generation and investment values with the $800 million floating-rate debt, capital spending, and contractual obligations.
- Review updates on the 340B appeal and patient-assistance litigation, as well as rebate-estimate sensitivity; accrued rebates and chargebacks were $81.3 million at year-end.