Biotechnology company United Therapeutics (NASDAQ:UTHR) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 19.7% year on year to $735.9 million. Its GAAP profit of $6.19 per share was 1.2% below analysts’ consensus estimates.
Is now the time to buy United Therapeutics? Find out in our full research report .
United Therapeutics (UTHR) Q4 CY2024 Highlights:
“I want to congratulate every Unitherian for their relentless dedication, which has allowed us to deliver a third consecutive year of record revenue,” said Martine Rothblatt, Ph.D., Chairperson and Chief Executive Officer of United Therapeutics.
Company Overview
Founded in 1996 with a focus on treating rare diseases, United Therapeutics (NASDAQ:UTHR) is a biotechnology company focused on developing and commercializing innovative therapies for rare diseases, particularly pulmonary arterial hypertension (PAH).
Therapeutics
Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, United Therapeutics’s 14.7% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. United Therapeutics’s annualized revenue growth of 21.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.
This quarter, United Therapeutics’s year-on-year revenue growth was 19.7%, and its $735.9 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market is baking in some success for its newer products and services.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
United Therapeutics has been a well-oiled machine over the last five years. It demonstrated elite profitability for a healthcare business, boasting an average operating margin of 45.5%.
Looking at the trend in its profitability, United Therapeutics’s operating margin rose by 7.8 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming into its more recent performance, however, we can see the company’s margin has decreased by 2.7 percentage points on a two-year basis. Given its business quality, we’re optimistic that United Therapeutics can correct course and return to expansion.
This quarter, United Therapeutics generated an operating profit margin of 48.6%, up 6.3 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
United Therapeutics’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
In Q4, United Therapeutics reported EPS at $6.19, up from $4.36 in the same quarter last year. Despite growing year on year, this print slightly missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects United Therapeutics’s full-year EPS of $24.60 to grow 13.9%.
Key Takeaways from United Therapeutics’s Q4 Results
We struggled to find many positives in these results, especially because EPS missed. Overall, this quarter could have been better. The stock traded down 3% to $347.50 immediately after reporting.
So do we think United Therapeutics is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .
