United Therapeutics Corporation Reports 2005 Annual Financial Results

SILVER SPRING, Md., Feb. 21 /PRNewswire-FirstCall/ -- United Therapeutics Corporation today announced financial results for the fourth quarter and year ended December 31, 2005.

"We are pleased to report that United Therapeutics' revenues for the year ended December 31, 2005 totaled $115.9 million, representing a 58% increase over 2004. Additionally, our annual net income was $65.0 million for 2005, $17.5 million of which was due to a tax benefit. This represents a 321% increase over 2004's net income with the tax benefit and 208% without the benefit," said Martine Rothblatt, Ph.D., United Therapeutics' Chairman and Chief Executive Officer. "In addition to these operating results, our financial position continued to strengthen, as we ended the year with $191.0 million of cash and investments and no debt."

Annual Results

Revenues grew to $115.9 million in 2005, as compared to $73.6 million in 2004. Gross margins from sales were $103.6 million or 89% in 2005, as compared to $65.3 million or 89% in 2004. The increases in revenues and gross margins resulted primarily from expanded sales of Remodulin(R). Inventories held by United States distributors at the end of 2005 were $14.1 million, as compared to $14.0 million at the end of 2004.

Net income was $65.0 million or $2.85 per basic share in 2005, of which $17.5 million was due from the tax benefit, as compared to net income of $15.5 million or $0.71 per basic share in 2004.

Research and development expenses were $36.1 million in 2005, as compared to $30.7 million in 2004. The increase was due primarily to increased expenses for our Remodulin-related and cancer programs. Selling, general and administrative expenses were $24.7 million in 2005, as compared to $21.4 million in 2004. The increase was due primarily to application fees to European countries for Remodulin approvals and increases in salary and related expenses.

Interest income was $5.4 million in 2005, as compared to $3.0 million in 2004. This increase was attributable primarily to more cash available for investing and higher market interest rates in 2005.

As noted above, a tax benefit totaling $17.5 million was reported in 2005, as compared to none in 2004. The benefit was due primarily from the reduction of our valuation allowance for deferred tax assets. In 2005, we concluded that it is more likely than not these tax assets will be realized in future periods and, hence, must be recognized at this time.

Fourth Quarter Results

Revenues grew to $29.6 million in 2005 as compared to $21.6 million in 2004. Gross margins from sales were $26.5 million or 89% in 2005, as compared to $19.4 million or 90% in 2004. The increases in revenues and gross margins resulted primarily from expanded sales of Remodulin. Inventories held by United States distributors at December 31, 2005 were $14.1 million, as compared to $16.4 million at September 30, 2005.

Net income was $29.4 million or $1.27 per basic share in 2005, of which $17.5 million was due from the tax benefit, as compared to $6.9 million or $0.31 per basic share in 2004.

Research and development expenses were $9.5 million in 2005, as compared to $7.5 million in 2004. The increase was due primarily to increased expenses for our Remodulin-related and cancer programs. Selling, general and administrative expenses were $6.7 million in 2005, as compared to $5.5 million in 2004. The increase was due primarily to application fees to European countries for Remodulin approvals and increases in salary and related expenses

Interest income was $1.8 million in 2005, as compared to $892,000 in 2004. This increase was attributable primarily to more cash available for investing and higher market interest rates in 2005.

As noted above, a tax benefit totaling $17.5 million was reported in 2005, as compared to none in 2004. The benefit was due primarily from the reduction of our valuation allowance for deferred tax assets. In 2005, we concluded that it is more likely than not these tax assets will be realized in future periods and, hence, must be recognized at this time.

Conference Call

United Therapeutics will host a half-hour teleconference on Tuesday, February 21, 2006 at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-800-310-1961, with international dialers calling 001-719-457- 2692. A rebroadcast of the teleconference will be available for one week following the teleconference by dialing 1-888-203-1112, with international callers dialing 001-719-457-0820, and using access code 2147202.

United Therapeutics is a biotechnology company focused on the development and commercialization of innovative therapeutic products for patients with chronic and life-threatening cardiovascular, cancer and infectious diseases.

UNITED THERAPEUTICS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS DATA (In thousands, except per share data) Three months ended Years ended December 31, December 31, 2005 2004 2005 2004 Revenues: Product sales $ 28,270 $ 20,537 $ 110,412 $ 69,539 Service sales 1,371 1,076 5,241 4,051 License fees - - 262 - Total revenue 29,641 21,613 115,915 73,590 Operating expenses: Research and development 9,463 7,501 36,052 30,713 Selling, general and administrative 6,670 5,546 24,655 21,418 Cost of product sales 2,633 1,715 10,242 6,347 Cost of service sales 520 537 2,073 1,903 Total operating expenses 19,286 15,299 73,022 60,381 Income from operations 10,355 6,314 42,893 13,209 Other income (expense): Interest income 1,759 892 5,359 2,986 Interest expense (21) 2 (29) (4) Equity loss in affiliate (190) (303) (754) (785) Other, net 13 (15) 53 43 Total other income (expense) 1,561 576 4,629 2,240 Income before income tax benefit 11,916 6,890 47,522 15,449 Income tax benefit 17,494 - 17,494 - Net income $ 29,410 $ 6,890 $ 65,016 $ 15,449 Net income per common share: Basic $ 1.27 $ 0.31 $ 2.85 $ 0.71 Diluted $ 1.14 $ 0.28 $ 2.58 $ 0.66 Weighted average number of common shares outstanding: Basic 23,195 22,325 22,825 21,726 Diluted 25,835 24,270 25,206 23,351 CONSOLIDATED BALANCE SHEET DATA As of December 31, (In thousands) 2005 2004 Cash, cash equivalents and marketable investments (including restricted amounts) $191,013 $139,140 Total assets $291,413 $207,158 Total liabilities $16,311 $15,522 Total stockholders' equity $275,102 $191,636

United Therapeutics Corporation

CONTACT: Andrew Fisher of United Therapeutics Corporation,+1-301-608-9292, or Afisher@unither.com

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