Technology

United Therapeutics (UTHR) Down 6.9% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for United Therapeutics (UTHR). Shares have lost about 6.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is United Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

United Therapeutics Q2 Earnings In Line, Sales Beat

United Therapeutics reported earnings of $2.41 per share for the second quarter of 2020, which were in line with the Zacks Consensus Estimate but lower than $4.66 per share reported in the year-ago quarter.

The abovementioned earnings include the impact of share-based compensation expenses, unrealized gains/losses on equity securities, license related fees and other items. Excluding these items, adjusted earnings were $3.68 per share, up 1% year over year.

Revenues for the reported quarter were $362.0 million, which beat the Zacks Consensus Estimate of $341 million. However, revenues fell 3% year over year.

While the company saw a decline in new prescriptions for Remodulin, Tyvaso and Orenitram in the month of April as patients were unable to visit their doctors, the number of new patient prescriptions grew to reach close to pre-pandemic levels as the quarter progressed.

Quarter in Detail

Adcirca sales were $19.4 million, down 33% year over year as generic competition resulted in continued erosion of market share in the quarter.

Orenitram sales amounted to $75.4 million in the reported quarter, up 40% year over year due to higher volumes resulting from expanded Orenitram label, reflecting the FREEDOM-EV results. Tyvaso sales totaled $119.2 million, up 9% year over year, gaining from fewer discontinuations in the quarter.

Remodulin sales were $119.0 million, down 24% year over year due to lower volumes in Europe as a result of generic competition and the impact of COVID-19 as it is a hospital-based product. Volumes also declined in the United States due to reductions in new patient prescriptions and new patient starts amid COVID-19 related decline in patient visits to doctor office.

Unituxin’s (for the treatment of pediatric patients with high-risk neuroblastoma) sales of $29.0 million were up 16% year over year.

Research and development (R&D) expenses were $78.3 million in the quarter, down 18% year over year. General and administrative expense rose 7% to $54.8 million in the quarter while sales and marketing costs declined 7% to $12.7 million.

Pipeline Update

Along with the earnings release, regarding its clinical studies, the company said that enrollment of new patients has resumed at select study sites for certain studies after it was paused in the first quarter. However, enrollment in PERFECT study of Tyvaso in PAH patients who have COPD remains paused.

Regarding RemUnity, the company said that the timing of commercial launch has been delayed from July due to pandemic-related issues. The pandemic has hurt its partner, DEKA’s ability to secure certain components and raw materials necessary to build the pumps.

The company expects to re-file the NDA for Trevyent disposable treprostinil pump system in 2021.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -7.93% due to these changes.

VGM Scores

Currently, United Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

United Therapeutics has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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