UNITED THERAPEUTICS Corp [UTHR] Filings

10-Q 1 uthr-20240630.htm 10-Q uthr-20240630

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 June 30, 2024

☐ 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)


Delaware						52-1984749
(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 class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.01 per share	UTHR	Nasdaq 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 July 24, 2024 was 44,491,176.

Table of Contents

TABLE OF CONTENTS

INDEX


		Page

Part I	FINANCIAL INFORMATION (UNAUDITED)	3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42

Part II	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 5.	Other Information	56
Item 6.	Exhibits	57

SIGNATURES		58


2			United Therapeutics, a public benefit corporation

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Consolidated Balance Sheets
(In millions, except share data)


	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,355.7	$	1,207.7
Marketable investments	1,615.8		1,786.4
Accounts receivable, no allowance for 2024 and 2023	290.7		278.9
Inventories, net	136.5		111.8
Other current assets	220.8		166.2
Total current assets	3,619.5		3,551.0
Marketable investments	1,330.4		1,909.8
Goodwill and other intangible assets, net	115.2		114.2
Property, plant, and equipment, net	1,094.6		1,045.4
Deferred tax assets, net	395.6		394.8
Other non-current assets	167.9		151.8
Total assets	$	6,723.2	$	7,167.0
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	325.3	$	298.0
Line of credit (current)	400.0		400.0
Share tracking awards plan	29.2		35.4
Other current liabilities	77.8		71.0
Total current liabilities	832.3		804.4
Line of credit (non-current)	100.0		300.0
Other non-current liabilities	93.7		77.8
Total liabilities	1,026.0		1,182.2
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, 74,497,837 and 73,659,761 shares issued, and 44,421,650 and 47,040,545 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	0.7		0.7
Additional paid-in capital	2,543.1		2,549.0
Accumulated other comprehensive loss	(14.9)		(12.8)
Treasury stock, 30,076,187 and 26,619,216 shares as of June 30, 2024 and December 31, 2023, respectively	(3,443.5)		(2,579.2)
Retained earnings	6,611.8		6,027.1
Total stockholders’ equity	5,697.2		5,984.8
Total liabilities and stockholders’ equity	$	6,723.2	$	7,167.0

See accompanying notes to consolidated financial statements.


Quarterly Report			3

Table of Contents

Part I. Financial Information

Consolidated Statements of Operations
(In millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)



Total revenues	$	714.9	$	596.5	$	1,392.6	$	1,103.4
Operating expenses:
Cost of sales	77.8		64.1		150.7		116.4
Research and development	139.6		89.0		243.7		171.9
Selling, general, and administrative	177.6		130.0		322.0		217.3

Total operating expenses	395.0		283.1		716.4		505.6
Operating income	319.9		313.4		676.2		597.8
Interest income	46.2		37.2		100.0		66.4
Interest expense	(11.6)		(14.8)		(24.9)		(28.6)
Other income (expense), net	0.8		(0.6)		2.6		(8.5)


Total other income, net	35.4		21.8		77.7		29.3
Income before income taxes	355.3		335.2		753.9		627.1
Income tax expense	(77.2)		(76.0)		(169.2)		(127.0)
Net income	$	278.1	$	259.2	$	584.7	$	500.1
Net income per common share:
Basic	$	6.26	$	5.53	$	12.79	$	10.73
Diluted	$	5.85	$	5.24	$	12.03	$	10.08
Weighted average number of common shares outstanding:
Basic	44.4		46.9		45.7		46.6
Diluted	47.5		49.5		48.6		49.6

See accompanying notes to consolidated financial statements.


4			United Therapeutics, a public benefit corporation

Table of Contents

Part I. Financial Information

Consolidated Statements of Comprehensive Income
(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)
Net income	$	278.1	$	259.2	$	584.7	$	500.1
Other comprehensive income (loss):
Foreign currency translation loss included in net income	—		—		2.4		—
Defined benefit pension plan:

Actuarial loss arising during period, net of tax	—		—		(0.5)		(0.9)
Actuarial gain and prior service cost included in net periodic pension cost, net of tax	(1.1)		(0.8)		(2.3)		(3.1)
Total defined benefit pension plan, net of tax	(1.1)		(0.8)		(2.8)		(4.0)
Available-for-sale debt securities:
Unrealized gain (loss) arising during period, net of tax	1.8		(11.0)		(2.8)		8.9
Realized loss included in net income, net of tax	—		—		1.1		—
Total gain (loss) on available-for-sale debt securities, net of tax	1.8		(11.0)		(1.7)		8.9
Other comprehensive income (loss), net of tax	0.7		(11.8)		(2.1)		4.9
Comprehensive income	$	278.8	$	247.4	$	582.6	$	505.0

During the three and six months ended June 30, 2024, the tax (benefit) expense in other comprehensive income was $(0.1) million and $(0.2) million, respectively, for the defined benefit pension plan and $0.6 million and $(0.6) million, respectively, for the available-for-sale debt securities.

During the three and six months ended June 30, 2023, the tax (benefit) expense in other comprehensive income was $(0.1) million and $(0.6) million, respectively, for the defined benefit pension plan and $(3.6) million and $2.7 million, respectively, for the available-for-sale debt securities.

See accompanying notes to consolidated financial statements.


Quarterly Report			5

Table of Contents

Part I. Financial Information

Consolidated Statements of Stockholders’ Equity

(In millions)


	Three Months Ended June 30, 2024
	(Unaudited)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Treasury Stock		Retained Earnings		Stockholders’ Equity
	Shares	Amount
Balance, April 1, 2024	74.1	$	0.7	$	2,405.4	$	(15.6)	$	(3,386.1)	$	6,333.7	$	5,338.1
Net income	—	—		—		—		—		278.1		278.1

Unrealized gain on available-for-sale debt securities	—	—		—		1.8		—		—		1.8
Defined benefit pension plan	—	—		—		(1.1)		—		—		(1.1)

Restricted stock units (RSUs) withheld for taxes	—	—		(0.1)		—		—		—		(0.1)

Share repurchase	—	—		57.9		—		(57.9)		—		—
Excise tax on net share repurchase	—	—		—		—		0.5		—		0.5

Exercise of stock options	0.4	—		52.1		—		—		—		52.1
Share-based compensation	—	—		27.8		—		—		—		27.8


Balance, June 30, 2024	74.5	$	0.7	$	2,543.1	$	(14.9)	$	(3,443.5)	$	6,611.8	$	5,697.2


	Three Months Ended June 30, 2023
	(Unaudited)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Treasury Stock		Retained Earnings		Stockholders’ Equity
	Shares	Amount
Balance, April 1, 2023	73.3	$	0.7	$	2,457.3	$	(38.8)	$	(2,579.2)	$	5,283.2	$	5,123.2
Net income	—	—		—		—		—		259.2		259.2

Unrealized loss on available-for-sale debt securities	—	—		—		(11.0)		—		—		(11.0)
Defined benefit pension plan	—	—		—		(0.8)		—		—		(0.8)





Exercise of stock options	0.2	—		24.7		—		—		—		24.7
Share-based compensation	—	—		15.7		—		—		—		15.7


Balance, June 30, 2023	73.5	$	0.7	$	2,497.7	$	(50.6)	$	(2,579.2)	$	5,542.4	$	5,411.0


	Six Months Ended June 30, 2024
	(Unaudited)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Treasury Stock		Retained Earnings		Stockholders’ Equity
	Shares	Amount
Balance, January 1, 2024	73.7	$	0.7	$	2,549.0	$	(12.8)	$	(2,579.2)	$	6,027.1	$	5,984.8
Net income	—	—		—		—		—		584.7		584.7
Foreign currency translation loss	—	—		—		2.4		—		—		2.4
Unrealized loss on available-for-sale debt securities	—	—		—		(1.7)		—		—		(1.7)
Defined benefit pension plan	—	—		—		(2.8)		—		—		(2.8)
Shares issued under employee stock purchase plan (ESPP)	—	—		3.9		—		—		—		3.9
RSUs withheld for taxes	—	—		(11.5)		—		—		—		(11.5)

Share repurchase	—	—		(142.1)		—		(857.9)		—		(1,000.0)
Excise tax on net share repurchase	—	—		—		—		(6.4)		—		(6.4)
Common stock issued for RSUs vested	0.1	—		—		—		—		—		—
Exercise of stock options	0.7	—		94.3		—		—		—		94.3
Share-based compensation	—	—		49.5		—		—		—		49.5


Balance, June 30, 2024	74.5	$	0.7	$	2,543.1	$	(14.9)	$	(3,443.5)	$	6,611.8	$	5,697.2


6			United Therapeutics, a public benefit corporation

Table of Contents

Part I. Financial Information


	Six Months Ended June 30, 2023
	(Unaudited)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Treasury Stock		Retained Earnings		Stockholders’ Equity
	Shares	Amount
Balance, January 1, 2023	72.7	$	0.7	$	2,388.4	$	(55.5)	$	(2,579.2)	$	5,042.3	$	4,796.7
Net income	—	—		—		—		—		500.1		500.1

Unrealized gain on available-for-sale debt securities	—	—		—		8.9		—		—		8.9
Defined benefit pension plan	—	—		—		(4.0)		—		—		(4.0)
Shares issued under ESPP	—	—		3.4		—		—		—		3.4
RSUs withheld for taxes	—	—		(13.5)		—		—		—		(13.5)


Common stock issued for RSUs vested	0.1	—		—		—		—		—		—
Exercise of stock options	0.7	—		86.1		—		—		—		86.1
Share-based compensation	—	—		33.3		—		—		—		33.3


Balance, June 30, 2023	73.5	$	0.7	$	2,497.7	$	(50.6)	$	(2,579.2)	$	5,542.4	$	5,411.0

See accompanying notes to consolidated financial statements.


Quarterly Report			7

Table of Contents

Part I. Financial Information

Consolidated Statements of Cash Flows

(In millions)


	Six Months Ended June 30,
	2024		2023
	(Unaudited)
Cash flows from operating activities:
Net income	$	584.7	$	500.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33.7		26.2
Share-based compensation expense	75.3		1.4




Impairment of property, plant, and equipment	—		3.6

Other	(16.0)		1.9

Changes in operating assets and liabilities:
Accounts receivable	(11.8)		(52.2)
Inventories	(24.0)		(3.5)
Accounts payable and accrued expenses	27.7		40.8
Other assets and liabilities	(60.9)		(37.2)
Net cash provided by operating activities	608.7		481.1
Cash flows from investing activities:
Purchases of property, plant, and equipment	(83.3)		(86.0)


Deposits	(4.7)		(3.7)


Purchases of available-for-sale debt securities	(759.8)		(1,561.5)



Maturities of available-for-sale debt securities	671.8		1,202.9

Sales of available-for-sale debt securities	831.8		—

Purchase of investment in privately-held company	(0.5)		—

Net cash provided by (used in) investing activities	655.3		(448.3)
Cash flows from financing activities:

Payments to repurchase common stock	(1,000.0)		—
Repayment of line of credit	(200.0)		—
Payments of debt issuance costs	(2.7)		(2.7)
Proceeds from the exercise of stock options	94.3		86.1
Proceeds from the issuance of stock under ESPP	3.9		3.4
RSUs withheld for taxes	(11.5)		(13.5)
Net cash (used in) provided by financing activities	(1,116.0)		73.3

Net increase in cash and cash equivalents	$	148.0	$	106.1
Cash and cash equivalents, beginning of period	1,207.7		961.2
Cash and cash equivalents, end of period	$	1,355.7	$	1,067.3
Supplemental cash flow information:
Cash paid for interest	$	23.4	$	27.2
Cash paid for income taxes	$	212.0	$	147.5
Non-cash investing and financing activities:
Non-cash additions to property, plant, and equipment	$	17.9	$	32.7
Measurement period adjustment to purchase price	$	1.4	$	—
Excise tax on net share repurchase	$	6.4	$	—
Receivable from maturity of available-for-sale debt securities	$	45.0	$	—

See accompanying notes to consolidated financial statements.


8			United Therapeutics, a public benefit corporation

Table of Contents

Part I. Financial Information

Notes to Consolidated Financial Statements
June 30, 2024 (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, 2023, as filed with the SEC on February 21, 2024.

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 June 30, 2024 and December 31, 2023, our statements of operations, comprehensive income, and stockholders’ equity for the three- and six-month periods ended June 30, 2024 and 2023, and our statements of cash flows for the six-month periods ended June 30, 2024 and 2023. 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

In October 2023, the FASB issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements, which incorporates certain existing or incremental disclosure and presentation requirements of SEC Regulation S-X and Regulation S-K into the FASB Accounting Standards Codification (Codification). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification topics and to align the requirements in the Codification with the SEC’s regulations. The effective date for each amendment in the ASU will be the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or if the SEC has not removed the related requirement by June 30, 2027, the applicable amendment will be removed from the Codification and will not become effective for any entity. Early adoption is prohibited. We are evaluating the impact of adopting this guidance on our consolidated financial statements.


Quarterly Report			9

Table of Contents

Part I. Financial Information

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. This ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment profit or loss used by the CODM when deciding how to allocate resources. This ASU also requires all annual disclosures currently required by Topic 280 to be included in interim period disclosures. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance requires retrospective application to all prior periods presented in the financial statements. We are evaluating the impact of adopting this guidance on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the required disclosures primarily related to the income tax rate reconciliation and income taxes paid. This ASU requires an entity’s income tax rate reconciliation to provide additional information for reconciling items meeting a quantitative threshold, and to disclose certain selected categories within the income tax rate reconciliation. This ASU also requires entities to disclose the amount of income taxes paid, disaggregated by federal, state, and foreign taxes. This ASU is effective for annual periods beginning after December 15, 2024, although early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.

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 June 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government and agency securities	$	2,386.7	$	0.4	$	(14.3)	$	2,372.8
Corporate debt securities	582.7		0.4		(3.4)		579.7

Total(1)	$	2,969.4	$	0.8	$	(17.7)	$	2,952.5


Reported under the following captions in our consolidated balance sheets:
Cash and cash equivalents	$	27.2
Current marketable investments	1,594.9
Non-current marketable investments	1,330.4
Total(1)	$	2,952.5


As of December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government and agency securities	$	3,044.5	$	5.3	$	(17.2)	$	3,032.6
Corporate debt securities	727.2		2.1		(4.7)		724.6

Total(2)	$	3,771.7	$	7.4	$	(21.9)	$	3,757.2


Reported under the following captions in our consolidated balance sheets:
Cash and cash equivalents	$	75.9
Current marketable investments	1,771.5
Non-current marketable investments	1,909.8
Total(2)	$	3,757.2

(1)Total excludes $45.0 million related to available-for-sale debt securities that matured on June 30, 2024, although cash proceeds were not received until July 1, 2024. We recorded the $45.0 million receivable within other current assets in our consolidated balance sheets as of June 30, 2024.

(2)Total excludes $21.0 million related to available-for-sale debt securities that matured on December 31, 2023, although cash proceeds were not received until January 2, 2024. We recorded the $21.0 million receivable within other current assets in our consolidated balance sheets as of December 31, 2023.


10			United Therapeutics, a public benefit corporation

Table of Contents

Part I. Financial Information

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 June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that the individual securities have been in a continuous loss position (in millions):


	Less than 12 months				12 months or longer				Total
As of June 30, 2024	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	1,145.8	$	(4.9)	$	1,114.6	$	(9.4)	$	2,260.4	$	(14.3)
Corporate debt securities	289.0		(1.4)		154.6		(2.0)		443.6		(3.4)
Total	$	1,434.8	$	(6.3)	$	1,269.2	$	(11.4)	$	2,704.0	$	(17.7)


	Less than 12 months				12 months or longer				Total
As of December 31, 2023	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	1,101.8	$	(4.4)	$	838.1	$	(12.8)	$	1,939.9	$	(17.2)
Corporate debt securities	209.4		(0.5)		284.1		(4.2)		493.5		(4.7)
Total	$	1,311.2	$	(4.9)	$	1,122.2	$	(17.0)	$	2,433.4	$	(21.9)

As of June 30, 2024 and December 31, 2023, we held 541 and 385 available-for-sale debt securities, respectively, that were in an unrealized loss position. In assessing whether the decline in fair value as of June 30, 2024 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 six months ended June 30, 2024 and 2023.

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 June 30, 2024
	Amortized Cost		Fair Value
Due within one year	$	1,632.2	$	1,622.1
Due in one to three years	1,337.2		1,330.4


Total	$	2,969.4	$	2,952.5

Investments in Equity Securities with Readily Determinable Fair Values

We held investments in equity securities with readily determinable fair values, in the aggregate, of $20.9 million and $14.9 million as of June 30, 2024 and December 31, 2023, 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 income (expense), net. See Note 4—Fair Value Measurements.

Investments in Privately-Held Companies

As of June 30, 2024 and December 31, 2023, we maintained non-controlling equity investments in privately-held companies of $29.0 million and $28.5 million, respectively, 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.


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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.

Assets and liabilities subject to fair value measurements are as follows (in millions):


	As of June 30, 2024
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds(1)	$	104.2	$	—	$	—	$	104.2
Time deposits(1)	343.9		—		—		343.9
U.S. government and agency securities(2)	—		2,372.8		—		2,372.8
Corporate debt securities(2)	—		579.7		—		579.7
Equity securities(3)	20.9		—		—		20.9


Total assets	$	469.0	$	2,952.5	$	—	$	3,421.5
Liabilities

Contingent consideration(4)	—		—		22.6		22.6
Total liabilities	$	—	$	—	$	22.6	$	22.6


	As of December 31, 2023
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds(1)	$	408.5	$	—	$	—	$	408.5
Time deposits(1)	126.4		—		—		126.4
U.S. government and agency securities(2)	—		3,032.6		—		3,032.6
Corporate debt securities(2)	—		724.6		—		724.6
Equity securities(3)	14.9		—		—		14.9


Total assets	$	549.8	$	3,757.2	$	—	$	4,307.0
Liabilities

Contingent consideration(4)	—		—		21.1		21.1
Total liabilities	$	—	$	—	$	21.1	$	21.1

(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. See 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 six months ended June 30, 2024 we recognized $0.4 million and $6.0 million of net unrealized gains, respectively, on these securities. During the three and six months ended June 30, 2023, we recognized $1.6 million and $10.4 million of net unrealized losses, respectively, on these securities. We recorded these gains and losses in our consolidated statements of operations within other income (expense), net. See Note 3—Investments—Marketable Investments—Investments in Equity Securities with Readily Determinable Fair Values.

(4)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 increased by $1.5 million during the six months ended June 30, 2024, of which $1.4 million was a measurement period adjustment related to our acquisition of Miromatrix Medical Inc. (Miromatrix) in 2023, with the remaining change 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 reported above within the fair value hierarchy. See 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.


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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):


	June 30, 2024		December 31, 2023

Raw materials	$	22.0	$	21.7
Work-in-progress	34.4		34.4
Finished goods	80.1		55.7

Total inventories	$	136.5	$	111.8

6. Property, Plant, and Equipment

Property, plant, and equipment consists of the following (in millions):


	June 30, 2024		December 31, 2023
Land and land improvements	$	152.9	$	148.0
Buildings, building improvements, and leasehold improvements	851.5		685.3
Buildings under construction	110.1		259.1
Furniture, equipment, and vehicles	441.4		381.2
Subtotal	1,555.9		1,473.6
Less—accumulated depreciation	(461.3)		(428.2)
Property, plant, and equipment, net	$	1,094.6	$	1,045.4

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 2024, we extended the maturity date of the Credit Agreement by one year, to March 2029.

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 December 31, 2023, our outstanding aggregate principal balance under the Credit Agreement was $700.0 million. During the three and six months ended June 30, 2024, we paid down $100.0 million and $200.0 million of our balance under the Credit Agreement, respectively, which brought our aggregate outstanding balance down to $500.0 million as of June 30, 2024. Although our credit facility matures in 2029, we classified $400.0 million of the outstanding balance as a current liability on our consolidated balance sheet as of June 30, 2024, 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 June 30, 2024, we were in compliance with these covenants.

The interest expense reported in our consolidated statements of operations for the six months ended June 30, 2024 and 2023 is related to our borrowings under the Credit Agreement.

8. Share-Based Compensation

As of June 30, 2024, 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 13,820,000 shares of our


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common stock pursuant to awards granted under the 2015 Plan, which includes 1,320,000 shares that were added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2024. 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. See the sections entitled Stock Options and RSUs below for additional information regarding these equity-based awards.

During the six months ended June 30, 2024 and 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 2026 and 2025, respectively. 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 stock options and RSUs 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. See 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. See the section entitled ESPP below for additional information regarding the ESPP.

The following table reflects the components of share-based compensation expense recognized in our consolidated statements of operations (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Stock options	$	8.1	$	1.6	$	13.8	$	6.5
RSUs	19.2		13.6		34.7		25.8
STAP awards	21.9		(1.9)		25.8		(31.9)
ESPP	0.5		0.5		1.0		1.0
Total share-based compensation expense before tax	$	49.7	$	13.8	$	75.3	$	1.4

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 six months ended June 30, 2024 and 2023, in addition to time-based stock options, we granted 0.5 million and 0.4 million performance-based stock options with a total grant date fair value of $50.2 million and $35.6 million, respectively, in each case calculated based on the assumed achievement of maximum performance of the relevant financial performance condition. During the three and six months ended June 30, 2024 we recorded $7.1 million and $11.9 million of share-based compensation expense, respectively, related to performance-based stock options, calculated based on the assumed levels of performance achievement, as compared to $1.0 million and $1.2 million for the same periods in 2023.

The following weighted average assumptions were used in estimating the fair value of stock options granted to employees during the six months ended June 30, 2024 and 2023:


	June 30, 2024		June 30, 2023
Expected term of awards (in years)	6.5		6.5
Expected volatility	31.6	%	31.4	%
Risk-free interest rate	4.3	%	3.6	%
Expected dividend yield	—	%	—	%


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A summary of the activity and status of stock options under our equity incentive plans during the six-month period ended June 30, 2024 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, 2024	6,213,853	$	136.60
Granted	535,797	236.02
Exercised	(725,416)	129.89
Forfeited	—	—
Outstanding as of June 30, 2024	6,024,234	$	146.25	3.9	$	1,038.0
Exercisable as of June 30, 2024	5,029,432	$	130.15	2.8	$	947.6
Unvested as of June 30, 2024	994,802	$	227.64	9.3	$	90.4

The weighted average fair value of a stock option granted during each of the six-month periods ended June 30, 2024 and June 30, 2023 was $97.24 and $85.52, respectively. These stock options have an aggregate grant date fair value of $52.1 million and $36.3 million, respectively. The total grant date fair value of stock options that vested during the six-month periods ended June 30, 2024 and June 30, 2023 was $0.9 million and $52.9 million, respectively.

Total share-based compensation expense related to stock options is recorded as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of sales	$	—	$	—	$	—	$	—
Research and development	0.1		—		0.2		0.1
Selling, general, and administrative	8.0		1.6		13.6		6.4
Share-based compensation expense before taxes	8.1		1.6		13.8		6.5
Related income tax benefit	(0.3)		(0.1)		(0.5)		(0.3)
Share-based compensation expense, net of taxes	$	7.8	$	1.5	$	13.3	$	6.2

As of June 30, 2024, unrecognized compensation cost related to stock options was $68.0 million. Unvested outstanding stock options as of June 30, 2024 had a weighted average remaining vesting period of 2.4 years.

Stock option exercise data is summarized below (dollars in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Number of options exercised	398,149		214,244		725,416		753,344
Cash received	$	52.1	$	24.7	$	94.3	$	86.1
Total intrinsic value of options exercised	$	52.3	$	23.8	$	88.0	$	95.4

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 six-month periods ended June 30, 2024 and 2023, in addition to time-based RSUs, we granted 0.2 million and 0.2 million performance-based RSUs with a total grant date fair value of $47.5 million and $32.2 million, respectively, calculated based on the assumed achievement of maximum performance of the relevant financial and non-financial performance conditions. During the three and six months ended June 30, 2024, we recorded $5.1 million and $7.2 million of share-based compensation expense, respectively, related to performance-based RSUs, calculated based on the assumed levels of performance achievement as compared to $0.9 million and $1.1 million for the same periods in 2023.


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A summary of the activity with respect to, and status of, RSUs during the six-month period ended June 30, 2024 is presented below:


	Number of RSUs	Weighted Average Grant Date Fair Value
Unvested as of January 1, 2024	964,759	$	210.35
Granted	396,352	235.84
Vested	(140,382)	186.67
Forfeited	(11,958)	214.60
Unvested as of June 30, 2024	1,208,771	$	221.41

Total share-based compensation expense related to RSUs is recorded as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of sales	$	1.1	$	1.0	$	2.0	$	2.0
Research and development	5.8		5.1		11.4		9.8
Selling, general, and administrative	12.3		7.5		21.3		14.0
Share-based compensation expense before taxes	19.2		13.6		34.7		25.8
Related income tax benefit	(3.5)		(3.2)		(6.8)		(6.1)
Share-based compensation expense, net of taxes	$	15.7	$	10.4	$	27.9	$	19.7

As of June 30, 2024, unrecognized compensation cost related to the grant of RSUs was $185.4 million. Unvested outstanding RSUs as of June 30, 2024 had a weighted average remaining vesting period of 2.7 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 $29.2 million and $35.4 million as of June 30, 2024 and December 31, 2023, 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:


	June 30, 2024		June 30, 2023
Expected term of awards (in years)	0.7		0.8
Expected volatility	29.4	%	26.1	%
Risk-free interest rate	5.2	%	5.4	%

Expected d