United Therapeutics Tops on 4Q Revenues, Earnings Up Y/Y

United Therapeutics Corporation UTHR reported fourth quarter earnings of $3.68 per share (excluding stock-based compensation expense), up 30% from the year-ago period. The Zacks Consensus Estimate for fourth quarter 2015 earnings was $2.57 per share. Including stock-based compensation expense, earnings were $2.21 per share.

Revenues for the reported quarter increased 17% year over year to $404.9 million, surpassing the Zacks Consensus Estimate of $377 million.

Full year revenues increased 14% to $1.47 billion while earnings jumped 33.2% to $12.33 per share.

The Quarter in Detail

Revenues in the fourth quarter grew from the year-ago period due to an increase in the number of patients being treated with Orenitram and higher Adcirca revenues as well as Unituxin sales.

Orenitram, which was launched in 2014, registered sales of $37.3 million in the third quarter of 2015, up 85% from the year-ago period and 8.4% sequentially.

On the call, the company said that Orenitram revenues were driven by new patient starts, which were 14% higher than in the third quarter of 2015 reflecting a growing number of prescribers. About 70% of the patient starts in the fourth quarter were from patients new to prostacyclin. However, the balance represented transitions from Tyvaso or Remodulin.

Increasing patient referrals in the fourth quarter should boost Orenitram sales in the first quarter of 2016.

Remodulin revenues grew 3% from the year-ago quarter to $140.5 million. Meanwhile, Tyvaso and Adcirca contributed $119.1 million (up 4%) and $91.6 million (up 25%), respectively, to fourth-quarter revenues. Recently launched Unituxin delivered revenues of $15.7 million, up from $4.7 million in the third quarter.

Research and development (R&D) expenses for the fourth quarter grew 6% from the year-ago quarter to $75.9 million mainly due to higher share-based compensation expense.

Selling, general and administrative (SG&A) expenses shot up 84% from the year-ago quarter, also due to higher share-based compensation expense.

Meanwhile, the company is looking to bring its lead product, Remodulin, in the form of an implantable pump system to markets. The company has a collaboration agreement with Medtronic MDT for the development of an implantable pump (the SynchroMed II implantable drug infusion system) to deliver Remodulin.

Our Take

United Therapeutics’ fourth quarter revenues were strong, comfortably surpassing expectations. While Orenitram sales should continue picking up on the back of new patient starts, increasing patient referrals, continued transition from other treatments including Tyvaso and Remodulin and increasing uptake in community centers, Actelion’s ALIOF recently launched Uptravi could have a near-term impact on sales. We expect investor focus to remain on Orenitram sales ramp and pipeline updates.

United Therapeutics is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the health care sector is Gilead Sciences Inc. GILD, a Zacks Rank #1 (Strong Buy) stock.

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