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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2023
OR
☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                to                 
Commission file number 0-26301
United Therapeutics Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware52-1984749
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
1000 Spring Street, Silver Spring, MD
20910
(Address of Principal Executive Offices)(Zip Code)
(301) 608-9292
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common Stock, par value $0.01 per shareUTHRNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐    No ☒
The number of shares outstanding of the issuer’s common stock, par value $.01 per share, as of October 25, 2023 was 46,993,601.

TABLE OF CONTENTS
INDEX

2
United Therapeutics, a public benefit corporation
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
(In millions, except share data)
 September 30, 2023December 31, 2022
 (Unaudited) 
Assets  
Current assets:  
Cash and cash equivalents$1,107.7 $961.2 
Marketable investments1,767.8 1,877.5 
Accounts receivable, no allowance for 2023 and 2022
258.6 220.4 
Inventories, net104.3 102.0 
Other current assets220.5 219.2 
Total current assets3,458.9 3,380.3 
Marketable investments2,060.8 1,316.2 
Goodwill and other intangible assets, net44.4 44.5 
Property, plant, and equipment, net992.2 861.5 
Deferred tax assets, net325.6 327.7 
Other non-current assets141.7 114.3 
Total assets$7,023.6 $6,044.5 
Liabilities and Stockholders’ Equity 
Current liabilities:  
Accounts payable and accrued expenses$333.4 $229.9 
Line of credit (current)300.0 — 
Share tracking awards plan40.6 80.8 
Other current liabilities70.1 32.5 
Total current liabilities744.1 343.2 
Line of credit (non-current)
500.0 800.0 
Other non-current liabilities67.4 104.6 
Total liabilities1,311.5 1,247.8 
Commitments and contingencies  
Stockholders’ equity:  
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued
— — 
Common stock, par value $.01, 245,000,000 shares authorized, 73,600,427 and
72,651,280 shares issued, and 46,981,211 and 46,032,064 shares outstanding
as of September 30, 2023 and December 31, 2022, respectively
0.7 0.7 
Additional paid-in capital2,524.3 2,388.4 
Accumulated other comprehensive loss(43.7)(55.5)
Treasury stock, 26,619,216 shares as of September 30, 2023 and December 31, 2022
(2,579.2)(2,579.2)
Retained earnings5,810.0 5,042.3 
Total stockholders’ equity5,712.1 4,796.7 
Total liabilities and stockholders’ equity$7,023.6 $6,044.5 

See accompanying notes to consolidated financial statements.
Quarterly Report
3
Part I. Financial Information
Consolidated Statements of Operations
(In millions, except per share data)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
 (Unaudited)(Unaudited)
Total revenues$609.4 $516.0 $1,712.8 $1,444.8 
Operating expenses:   
Cost of sales70.1 37.2 186.5 92.8 
Research and development84.7 66.1 256.6 229.0 
Selling, general, and administrative127.6 98.4 344.9 318.9 
Total operating expenses282.4 201.7 788.0 640.7 
Operating income327.0 314.3 924.8 804.1 
Interest income45.3 13.3 111.7 24.4 
Interest expense(15.6)(9.2)(44.2)(20.1)
Other expense, net(4.9)(5.9)(13.4)(34.9)
Impairment of investment in privately-held company— — — (1.7)
Total other income (expense), net24.8 (1.8)54.1 (32.3)
Income before income taxes351.8 312.5 978.9 771.8 
Income tax expense(84.2)(73.2)(211.2)(176.6)
Net income$267.6 $239.3 $767.7 $595.2 
Net income per common share:    
Basic$5.71 $5.26 $16.44 $13.14 
Diluted$5.38 $4.91 $15.48 $12.35 
Weighted average number of common shares outstanding:    
Basic46.9 45.5 46.7 45.3 
Diluted49.7 48.7 49.6 48.2 

See accompanying notes to consolidated financial statements.
4
United Therapeutics, a public benefit corporation
Part I. Financial Information
Consolidated Statements of Comprehensive Income
(In millions)
                       Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
(Unaudited)(Unaudited)
Net income$267.6 $239.3 $767.7 $595.2 
Other comprehensive income (loss):
  
Defined benefit pension plan:
Actuarial (loss) gain arising during period, net of tax— — (0.9)0.2 
Actuarial gain and prior service cost included in net periodic pension cost, net of tax(0.9)0.2 (4.0)0.5 
Total defined benefit pension plan, net of tax(0.9)0.2 (4.9)0.7 
Unrealized gain (loss) on available-for-sale securities, net of tax
7.8 (18.8)16.7 (61.8)
Other comprehensive income (loss), net of tax
6.9 (18.6)11.8 (61.1)
Comprehensive income$274.5 $220.7 $779.5 $534.1 

See accompanying notes to consolidated financial statements.
Quarterly Report
5
Part I. Financial Information
Consolidated Statements of Stockholders’ Equity
(In millions)
Three Months Ended September 30, 2023
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Retained EarningsStockholders’ Equity
 SharesAmount
Balance, July 1, 202373.5 $0.7 $2,497.7 $(50.6)$(2,579.2)$5,542.4 $5,411.0 
Net income— — — — — 267.6 267.6 
Unrealized gains on available-for-sale securities
— — — 7.8 — — 7.8 
Defined benefit pension plan— — — (0.9)— — (0.9)
Shares issued under employee stock
purchase plan (ESPP)
— — 3.2 — — — 3.2 
Restricted stock units (RSUs) withheld for taxes
— — (0.2)— — — (0.2)
Exercise of stock options0.1 — 4.6 — — — 4.6 
Share-based compensation— — 19.0 — — — 19.0 
Balance, September 30, 202373.6 $0.7 $2,524.3 $(43.7)$(2,579.2)$5,810.0 $5,712.1 
Three Months Ended September 30, 2022
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Retained EarningsStockholders’ Equity
 SharesAmount
Balance, July 1, 202272.1 $0.7 $2,291.5 $(65.5)$(2,579.2)$4,670.9 $4,318.4 
Net income— — — — — 239.3 239.3 
Unrealized losses on available-for-sale securities— — — (18.8)— — (18.8)
Defined benefit pension plan— — — 0.2 — — 0.2 
Shares issued under ESPP
0.1 — 2.6 — — — 2.6 
RSUs withheld for taxes
— — (0.3)— — — (0.3)
Exercise of stock options— — 4.7 — — — 4.7 
Share-based compensation— — 16.1 — — — 16.1 
Balance, September 30, 202272.2 $0.7 $2,314.6 $(84.1)$(2,579.2)$4,910.2 $4,562.2 
Nine Months Ended September 30, 2023
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Retained EarningsStockholders’ Equity
 SharesAmount
Balance, January 1, 202372.7 $0.7 $2,388.4 $(55.5)$(2,579.2)$5,042.3 $4,796.7 
Net income— — — — — 767.7 767.7 
Unrealized gains on available-for-sale securities— — — 16.7 — — 16.7 
Defined benefit pension plan— — — (4.9)— — (4.9)
Shares issued under ESPP
— — 6.6 — — — 6.6 
RSUs withheld for taxes
— — (13.7)— — — (13.7)
Common stock issued for RSUs vested0.1 — — — — — — 
Exercise of stock options0.8 — 90.7 — — — 90.7 
Share-based compensation— — 52.3 — — — 52.3 
Balance, September 30, 202373.6 $0.7 $2,524.3 $(43.7)$(2,579.2)$5,810.0 $5,712.1 
6
United Therapeutics, a public benefit corporation
Part I. Financial Information
Nine Months Ended September 30, 2022
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Retained EarningsStockholders’ Equity
 SharesAmount
Balance, January 1, 202271.7 $0.7 $2,245.4 $(23.0)$(2,579.2)$4,315.0 $3,958.9 
Net income— — — — — 595.2 595.2 
Unrealized losses on available-for-sale securities— — — (61.8)— — (61.8)
Defined benefit pension plan— — — 0.7 — — 0.7 
Shares issued under ESPP0.1 — 5.9 — — — 5.9 
RSUs withheld for taxes— — (11.4)— — — (11.4)
Common stock issued for RSUs vested0.1 — — — — — — 
Exercise of stock options0.3 — 32.9 — — — 32.9 
Share-based compensation— — 41.8 — — — 41.8 
Balance, September 30, 202272.2 $0.7 $2,314.6 $(84.1)$(2,579.2)$4,910.2 $4,562.2 

See accompanying notes to consolidated financial statements.
Quarterly Report
7
Part I. Financial Information
Consolidated Statements of Cash Flows
(In millions)
 Nine Months Ended September 30,
 20232022
 (Unaudited)
Cash flows from operating activities:  
Net income$767.7 $595.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization39.5 38.1 
Share-based compensation expense22.5 42.0 
Impairment of investment in privately-held company— 1.7 
Impairments of property, plant, and equipment
3.6 7.0 
Realized gain on sale of equity securities— (0.9)
Other0.1 44.6 
Changes in operating assets and liabilities:
Accounts receivable(38.2)(33.0)
Inventories(6.6)0.5 
Accounts payable and accrued expenses80.2 35.4 
Other assets and liabilities(41.5)(56.3)
Net cash provided by operating activities827.3 674.3 
Cash flows from investing activities:  
Purchases of property, plant, and equipment(151.7)(99.3)
Deposits(14.3)— 
Purchases of available-for-sale debt securities(2,206.3)(1,278.1)
Maturities of available-for-sale debt securities1,610.6 752.9 
Sales of investments in equity securities— 3.8 
Purchase of investment in privately-held company— (1.5)
Net cash used in investing activities(761.7)(622.2)
Cash flows from financing activities:  
Proceeds from line of credit— 800.0 
Repayment of line of credit— (800.0)
Payments of debt issuance costs(2.7)(7.5)
Proceeds from the exercise of stock options90.7 32.9 
Proceeds from the issuance of stock under ESPP6.6 5.9 
RSUs withheld for taxes(13.7)(11.4)
Net cash provided by financing activities80.9 19.9 
Net increase in cash and cash equivalents
$146.5 $72.0 
Cash and cash equivalents, beginning of period961.2 894.8 
Cash and cash equivalents, end of period$1,107.7 $966.8 
Supplemental cash flow information:  
Cash paid for interest$41.8 $17.8 
Cash paid for income taxes$235.9 $189.1 
Non-cash investing and financing activities:
Non-cash additions to property, plant, and equipment$34.8 $13.8 
Receivable from maturity of available-for-sale debt securities
$60.0 $— 

See accompanying notes to consolidated financial statements.
8
United Therapeutics, a public benefit corporation
Part I. Financial Information
Notes to Consolidated Financial Statements
September 30, 2023 (Unaudited) 
1. Organization and Business Description
United Therapeutics Corporation is a biotechnology company focused on the development and commercialization of innovative products to address the unmet medical needs of patients with chronic and life-threatening conditions. In 2021, we converted to a Delaware public benefit corporation (PBC), with the express public benefit purpose to provide a brighter future for patients through (a) the development of novel pharmaceutical therapies; and (b) technologies that expand the availability of transplantable organs.
We have approval from the U.S. Food and Drug Administration (FDA) to market the following therapies: Tyvaso DPI® (treprostinil) Inhalation Powder (Tyvaso DPI), Tyvaso® (treprostinil) Inhalation Solution (nebulized Tyvaso), Remodulin® (treprostinil) Injection (Remodulin), Orenitram® (treprostinil) Extended-Release Tablets (Orenitram), Unituxin® (dinutuximab) Injection (Unituxin), and Adcirca® (tadalafil) Tablets (Adcirca). We also derive revenues outside the United States from sales of nebulized Tyvaso, Remodulin, and Unituxin.
As used in these notes to our consolidated financial statements, unless the context otherwise requires, the terms “we”, “us”, “our”, and similar terms refer to United Therapeutics Corporation and its consolidated subsidiaries.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the accompanying notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 22, 2023.
In our management’s opinion, the accompanying consolidated financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of September 30, 2023 and December 31, 2022, our statements of operations, comprehensive income, and stockholders’ equity for the three- and nine-month periods ended September 30, 2023 and 2022, and our statements of cash flows for the nine-month periods ended September 30, 2023 and 2022. Interim results are not necessarily indicative of results for an entire year.
Recently Issued Accounting Standards
Accounting Standards Adopted During the Period
None.
Accounting Standards Not Yet Adopted
None.
Quarterly Report
9
Part I. Financial Information
3. Investments
Marketable Investments
Available-for-Sale Debt Securities
Available-for-sale debt securities are recorded at fair value, with the portion of the unrealized gains and losses that are not credit-related included as a component of accumulated other comprehensive loss in stockholders’ equity, until realized. Available-for-sale debt securities consisted of the following (in millions):
As of September 30, 2023Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
U.S. government and agency securities$3,167.6 $— $(41.3)$3,126.3 
Corporate debt securities716.1 — (11.6)704.5 
Total(1)
$3,883.7 $— $(52.9)$3,830.8 
Reported under the following captions in our consolidated balance sheets:
Cash and cash equivalents$19.1 
Current marketable investments  1,750.9 
Non-current marketable investments  2,060.8 
Total(1)
  $3,830.8 
As of December 31, 2022Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
U.S. government and agency securities$2,697.8 $0.1 $(58.9)$2,639.0 
Corporate debt securities555.6 — (16.0)539.6 
Total(2)
$3,253.4 $0.1 $(74.9)$3,178.6 
Reported under the following captions in our consolidated balance sheets:
Cash and cash equivalents$15.6 
Current marketable investments  1,846.8 
Non-current marketable investments  1,316.2 
Total(2)
  $3,178.6 

(1)Total excludes $60.0 million related to available-for-sale debt securities that matured on September 30, 2023, although cash proceeds were not received until October 2, 2023. We recorded the $60.0 million receivable within other current assets in our consolidated balance sheets as of September 30, 2023.
(2)Total excludes $70.0 million related to available-for-sale debt securities that matured on December 31, 2022, although cash proceeds were not received until January 3, 2023. We recorded the $70.0 million receivable within other current assets in our consolidated balance sheets as of December 31, 2022.

The following tables present gross unrealized losses and fair value for those available-for-sale debt securities that were in an unrealized loss position as of September 30, 2023 and December 31, 2022, aggregated by investment category and length of time that the individual securities have been in a continuous loss position (in millions):

Less than 12 months12 months or longerTotal
As of September 30, 2023Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
U.S. government and agency securities$1,850.5 $(17.8)$1,139.8 $(23.5)$2,990.3 $(41.3)
Corporate debt securities349.1 (3.6)318.3 (8.0)667.4 (11.6)
Total$2,199.6 $(21.4)$1,458.1 $(31.5)$3,657.7 $(52.9)

10
United Therapeutics, a public benefit corporation
Part I. Financial Information
Less than 12 months12 months or longerTotal
As of December 31, 2022Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
U.S. government and agency securities$1,324.6 $(24.2)$1,111.6 $(34.7)$2,436.2 $(58.9)
Corporate debt securities254.2 (6.7)274.1 (9.3)528.3 (16.0)
Total$1,578.8 $(30.9)$1,385.7 $(44.0)$2,964.5 $(74.9)

As of September 30, 2023 and December 31, 2022, we held 578 and 411 available-for-sale debt securities, respectively, that were in an unrealized loss position. In assessing whether the decline in fair value as of September 30, 2023 of any of these securities resulted from a credit loss, we consulted with our investment managers and reviewed the credit ratings for each security. We believe that these unrealized losses are a direct result of the current interest rate environment and do not represent an indication of credit loss. We do not intend to sell the investments in unrealized loss positions prior to their maturity, and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost basis. There were no impairments due to credit loss on our available-for-sale debt securities during the three and nine months ended September 30, 2023 and 2022.

The following table summarizes the contractual maturities of available-for-sale debt securities (in millions). Actual maturities may differ from contractual maturities because the issuers of certain of these debt securities have the right to call the securities or prepay their obligations under the securities with or without penalties.
 As of September 30, 2023
 Amortized CostFair Value
Due within one year$1,790.2 $1,770.0 
Due in one to three years2,093.5 2,060.8 
Total$3,883.7 $3,830.8 
Investments in Equity Securities with Readily Determinable Fair Values
We held investments in equity securities with readily determinable fair values, in the aggregate, of $16.9 million and $30.7 million as of September 30, 2023 and December 31, 2022, 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 expense, net. Refer to Note 4—Fair Value Measurements.
Investments in Privately-Held Companies
As of September 30, 2023 and December 31, 2022, we maintained non-controlling equity investments in privately-held companies of $28.5 million in the aggregate. We measure these investments using the measurement alternative because the fair values of these investments are not readily determinable. Under this alternative, the investments are measured at cost, less any impairment, and adjusted for any observable price changes. We include our investments in privately-held companies within other non-current assets in our consolidated balance sheets. These investments are subject to a periodic impairment review and, if impaired, the investment is measured and recorded at fair value in accordance with ASC 820, Fair Value Measurements.
4. Fair Value Measurements
We account for certain assets and liabilities at fair value and classify these assets and liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3). Our other current assets and other current liabilities have fair values that approximate their carrying values.
Quarterly Report
11
Part I. Financial Information
Assets and liabilities subject to fair value measurements are as follows (in millions):
 As of September 30, 2023
 Level 1Level 2Level 3Balance
Assets    
Money market funds(1)
$210.3 $— $— $210.3 
Time deposits(1)
308.7 — — 308.7 
U.S. government and agency securities(2)
— 3,126.3 — 3,126.3 
Corporate debt securities(2)
— 704.5 — 704.5 
Equity securities(3)
16.9 — — 16.9 
Contingent consideration(4)
— — — — 
Total assets$535.9 $3,830.8 $— $4,366.7 
Liabilities    
Contingent consideration(5)
— — 18.1 18.1 
Total liabilities$— $— $18.1 $18.1 
 As of December 31, 2022
 Level 1Level 2Level 3Balance
Assets    
Money market funds(1)
$459.6 $— $— $459.6 
Time deposits(1)
75.6 — — 75.6 
U.S. government and agency securities(2)
— 2,639.0 — 2,639.0 
Corporate debt securities(2)
— 539.6 — 539.6 
Equity securities(3)
30.7 — — 30.7 
Contingent consideration(4)
— — 0.1 0.1 
Total assets$565.9 $3,178.6 $0.1 $3,744.6 
Liabilities    
Contingent consideration(5)
— — 19.7 19.7 
Total liabilities$— $— $19.7 $19.7 
(1)Included in cash and cash equivalents in our consolidated balance sheets.
(2)Included in cash and cash equivalents and current and non-current marketable investments in our consolidated balance sheets. Refer to Note 3—Investments—Marketable Investments—Available-for-Sale Debt Securities for further information. The fair value of these securities is principally measured or corroborated by trade data for identical securities for which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded.
(3)Included in current marketable investments in our consolidated balance sheets. The fair value of these securities is based on quoted market prices for identical instruments in active markets. During the three and nine months ended September 30, 2023, we recognized $3.4 million and $13.8 million of net unrealized losses, respectively, on these securities. During the three and nine months ended September 30, 2022, we recognized $8.5 million and $29.9 million, respectively, of net unrealized and realized losses on these securities. We recorded these gains and losses in our consolidated statements of operations within other expense, net. Refer to Note 3—Investments—Marketable Investments—Investments in Equity Securities with Readily Determinable Fair Values.
(4)Included in other current assets and other non-current assets in our consolidated balance sheets. We estimated the fair value of contingent consideration using a Monte Carlo simulation. The Monte Carlo simulation incorporates Level 3 inputs including the probability of completing certain milestones during a specified period of time. The fair value of our contingent consideration assets decreased by $0.1 million during the period from December 31, 2022 to September 30, 2023. The loss was recorded within other expense, net in our consolidated statements of operations.
(5)Included in other current liabilities and other non-current liabilities in our consolidated balance sheets. The fair value of our contingent consideration obligations has been estimated using probability-weighted discounted cash flow models (DCFs). The DCFs incorporate Level 3 inputs, including estimated discount rates, that we believe market participants would consider relevant in pricing, and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. The fair value of our contingent consideration liabilities decreased by $1.6 million during the period from December 31, 2022 to September 30, 2023. The gain was recorded within research and development in our consolidated statements of operations.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate fair value because of their short maturities. The fair values of our marketable investments and contingent consideration are
12
United Therapeutics, a public benefit corporation
Part I. Financial Information
reported above within the fair value hierarchy. Refer to Note 3—Investments. The carrying value of our debt is a reasonable estimate of the fair value of the outstanding debt based on the variable interest rate of the debt.
5. Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following, net of reserves (in millions):
 September 30, 2023December 31, 2022
Raw materials$21.5 $18.0 
Work-in-progress34.9 33.3 
Finished goods47.9 50.7 
Total inventories$104.3 $102.0 
6. Property, Plant, and Equipment
Property, plant, and equipment consists of the following (in millions):
 September 30, 2023December 31, 2022
Land and land improvements$146.7 $142.7 
Buildings, building improvements, and leasehold improvements671.5 636.7 
Buildings under construction221.7 110.9 
Furniture, equipment, and vehicles372.8 353.9 
Subtotal1,412.7 1,244.2 
Less—accumulated depreciation(420.5)(382.7)
Property, plant, and equipment, net$992.2 $861.5 
7. Debt
Credit Agreement
In March 2022, we entered into a credit agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo), as administrative agent and a swingline lender, and various other lender parties, which provides for: (1) an unsecured revolving credit facility of up to $1.2 billion; and (2) a second unsecured revolving credit facility of up to $800.0 million (which facilities may, at our request, be increased by up to $500.0 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 Credit Agreement, in March 2023, we extended the maturity date of the Credit Agreement by one year, to March 2028. The Credit Agreement provides the lenders the ability to extend the maturity date by one additional year to March 2029 if we request such an extension.
At our option, amounts borrowed under the 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 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 $800.0 million under the Credit Agreement, and used the funds to repay outstanding indebtedness under a prior credit agreement.
As of September 30, 2023 and December 31, 2022, our outstanding aggregate principal balance under the Credit Agreement was $800.0 million. Although our credit facility matures in 2028, we reclassified $300.0 million of the outstanding balance as a current liability on our consolidated balance sheet as of September 30, 2023, as we intend to repay this amount within one year.
The Credit Agreement contains customary events of default and customary affirmative and negative covenants. As of September 30, 2023, we were in compliance with these covenants. Lung Biotechnology PBC is our only subsidiary that guarantees our obligations under the Credit Agreement though, from time to time, one or more of our other subsidiaries may be required to guarantee our obligations.
The interest expense reported in our consolidated statements of operations for the nine months ended September 30, 2023 and 2022 is related to our borrowings under the Credit Agreement and our borrowings under a prior credit agreement.
Quarterly Report
13
Part I. Financial Information
8. Share-Based Compensation
As of September 30, 2023, we have two 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 (the 2015 Plan). The 2015 Plan provides for the issuance of up to 12,500,000 shares of our common stock pursuant to awards granted under the 2015 Plan, which includes 1,000,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2023. No further awards will be granted under the 1999 Plan. We also have one 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 99,000 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. Refer to the sections entitled Stock Options and RSUs below for additional information regarding these equity-based awards.
In March 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 2025. 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 shares 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. Refer to 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. Refer to the section entitled ESPP below for additional information regarding the ESPP.
The following table reflects the components of share-based compensation expense (benefit) recognized in our consolidated statements of operations (in millions):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Stock options$6.0 $5.7 $12.5 $16.8 
RSUs12.5 9.9 38.3 23.6 
STAP awards2.1 (18.5)(29.8)0.2 
ESPP0.5 0.5 1.5 1.4 
Total share-based compensation expense (benefit) before tax
$21.1 $(2.4)$22.5 $42.0 
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 nine months ended September 30, 2023, in addition to time-based stock options, we granted 0.4 million performance-based stock options with a total grant date fair value of $35.6 million, calculated based on the assumed achievement of maximum performance of the relevant financial performance condition. During the three and nine months ended September 30, 2023, we recorded $5.2 million and $6.4 million of share-based compensation expense, respectively, related to performance-based stock options, calculated based on the assumed level of performance achievement.
The following weighted average assumptions were used in estimating the fair value of stock options granted to employees during the nine months ended September 30, 2023 and 2022:
14
United Therapeutics, a public benefit corporation
Part I. Financial Information
September 30, 2023September 30, 2022
Expected term of awards (in years)6.45.7
Expected volatility31.4 %32.5 %
Risk-free interest rate3.6 %2.7 %
Expected dividend yield— %— %
A summary of the activity and status of stock options under our equity incentive plans during the nine-month period ended September 30, 2023 is presented below:
 Number of
Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term (in Years)		Aggregate
Intrinsic
Value (in millions)
Outstanding as of January 1, 20236,608,019 $128.21   
Granted455,996 218.36   
Exercised(791,777)114.53   
Forfeited— —   
Outstanding as of September 30, 20236,272,238 $136.49 3.8$561.1 
Exercisable as of September 30, 20235,799,624 $129.94 3.3$556.7 
Unvested as of September 30, 2023472,614 $216.82 9.4$4.4 
The weighted average fair value of a stock option granted during each of the nine-month periods ended September 30, 2023 and September 30, 2022 was $85.39 and $75.87, respectively. These stock options have an aggregate grant date fair value of $38.9 million and $3.0 million, respectively. The total grant date fair value of stock options that vested during the nine-month periods ended September 30, 2023 and September 30, 2022 was $54.9 million and $16.3 million, respectively.
Total share-based compensation expense related to stock options is recorded as follows (in millions):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Cost of sales$— $— $— $— 
Research and development0.1 0.1 0.2 0.2 
Selling, general, and administrative5.9 5.6 12.3 16.6 
Share-based compensation expense before taxes6.0 5.7 12.5 16.8 
Related income tax benefit(0.2)(0.2)(0.5)(0.5)
Share-based compensation expense, net of taxes$5.8 $5.5 $12.0 $16.3 
As of September 30, 2023, unrecognized compensation cost related to stock options was $31.8 million. Unvested outstanding stock options as of September 30, 2023 had a weighted average remaining vesting period of 2.3 years.
Stock option exercise data is summarized below (dollars in millions):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Number of options exercised38,433 38,578 791,777 279,451 
Cash received$4.6 $4.7 $90.7 $32.9 
Total intrinsic value of options exercised$4.1 $4.0 $99.5 $28.3 
RSUs
Each RSU entitles the recipient to one 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 nine months ended September 30, 2023, in addition to time-based RSUs, we granted 0.2 million performance-based RSUs with a total grant date fair value of $32.2 million, calculated based on the assumed achievement of maximum performance of the relevant financial and non-financial performance conditions. During the three and nine months ended September 30, 2023, we recorded $2.1 million and $3.2 million of share-based compensation expense, respectively, related to performance-based RSUs, calculated based on the assumed levels of performance achievement.
Quarterly Report
15
Part I. Financial Information
A summary of the activity with respect to, and status of, RSUs during the nine-month period ended September 30, 2023 is presented below:
 Number of
RSUs		Weighted
Average
Grant Date
Fair Value
Unvested as of January 1, 2023841,251 $191.48 
Granted341,325 218.49 
Vested(183,603)145.53 
Forfeited(58,487)197.73 
Unvested as of September 30, 2023940,486 $209.86 
Total share-based compensation expense related to RSUs is recorded as follows (in millions):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Cost of sales$1.0 $0.7 $3.0 $1.9 
Research and development3.0 4.0 12.8 8.8 
Selling, general, and administrative8.5 5.2 22.5 12.9 
Share-based compensation expense before taxes12.5 9.9 38.3 23.6 
Related income tax benefit(2.5)(2.4)(8.6)(5.7)
Share-based compensation expense, net of taxes$10.0 $7.5 $29.7 $17.9 
As of September 30, 2023, unrecognized compensation cost related to the grant of RSUs was $141.4 million. Unvested outstanding RSUs as of September 30, 2023 had a weighted average remaining vesting period of 3.2 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 four-year period. We discontinued the issuance of STAP awards in June 2015.
The aggregate liability balance associated with outstanding STAP awards was $40.6 million and $80.8 million as of September 30, 2023 and December 31, 2022, 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 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.
The table below includes the weighted average assumptions used to measure the fair value of the outstanding STAP awards:
 September 30, 2023September 30, 2022
Expected term of awards (in years)0.61.0
Expected volatility26.7 %31.2 %
Risk-free interest rate5.5 %4.1 %
Expected dividend yield
— %— %
The closing price of our common stock was $225.87 and $209.38 on September 30, 2023 and September 30, 2022, respectively. The closing price of our common stock was $278.09 on December 31, 2022.
16
United Therapeutics, a public benefit corporation
Part I. Financial Information
A summary of the activity and status of STAP awards during the nine-month period ended September 30, 2023 is presented below:
 Number of
Awards		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term
(in Years)		Aggregate
Intrinsic
Value
(in millions)
Outstanding as of January 1, 2023555,600 $140.54   
Granted— —   
Exercised(77,450)100.58   
Forfeited(850)60.16   
Outstanding as of September 30, 2023477,300 $147.17 1.3$37.6 
Exercisable as of September 30, 2023477,300 $147.17 1.3$37.6 
Unvested as of September 30, 2023— $— — $— 
Share-based compensation expense (benefit) recognized in connection with STAP awards is as follows (in millions):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Cost of sales$0.1 $(0.5)$(1.4)$0.2 
Research and development0.2 (2.4)(3.9)3.1 
Selling, general, and administrative1.8 (15.6)(24.5)(3.1)
Share-based compensation expense (benefit) before taxes
2.1 (18.5)(29.8)0.2 
Related income tax (benefit) expense
(0.4)3.3 5.2 (0.6)
Share-based compensation expense (benefit), net of taxes
$1.7 $(15.2)$(24.6)$(0.4)
Cash paid to settle STAP awards exercised during the nine-month periods ended September 30, 2023 and September 30, 2022 was $10.4 million and $42.3 million, respectively. 
ESPP
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. Eligible employees may contribute up to 15 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 85 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 4,000 shares during any offering period. The ESPP expires in June 2032 and limits the aggregate number of shares that can be issued under the ESPP to 3.0 million.
9. Earnings Per Common Share
Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of our outstanding stock options, outstanding RSUs, and shares issuable under the ESPP, as if the RSUs were vested, the stock options were exercised, and the shares expected to be issued under the ESPP at the end of the current offering period were issued.
Basic and diluted earnings per common share are computed independently for each quarter and year-to-date period presented. The sum of the earnings per common share for each quarter in a year-to-date period may not equal the earnings per common share for such year-to-date period due to rounding.
Quarterly Report
17
Part I. Financial Information
The components of basic and diluted earnings per common share comprised the following (in millions, except per share amounts):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Numerator:
Net income$267.6 $239.3 $767.7 $595.2 
Denominator:  
Weighted average outstanding shares — basic46.9 45.5 46.7 45.3 
Effect of dilutive securities(1):