UNITED THERAPEUTICS Corp

September 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, with the express public benefit purposeto 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, and within the United States from sales of commercialex vivo lung perfusion services.

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

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 ofaccumulated other comprehensive income (loss) in stockholders’ equity, until realized. Available-for-sale debt securities consisted of the following (in millions):

(1)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.

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, 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):

As of September 30, 2024 and December 31, 2023, we held 155 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 September 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 wereno impairments due to credit loss on our available-for-sale debt securities during the three and nine months ended September 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.

Investments in Equity Securities with Readily Determinable Fair Values

We held investments in equity securities with readily determinable fair values, in the aggregate, of $24.0 million and $14.9 million as of September 30, 2024 and December 31, 2023, respectively, which are included incurrent 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 September 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.

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):

(1)Included incash and cash equivalents in our consolidated balance sheets.

(2)Included incash and cash equivalents andcurrent andnon-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 incurrent 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, 2024 we recognized $3.1 million and $9.1 million of net unrealized gains, respectively, on these securities. 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. 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 andother 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 $2.0 million during the nine months ended September 30, 2024, of which $1.4 million was a measurement period adjustment during the first quarter of 2024 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.

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):

6. Property, Plant, and Equipment

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

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 byone 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 nine months ended September 30, 2024, we paid down $100.0 million and $300.0 million of our balance under the Credit Agreement, respectively, which brought our aggregate outstanding balance down to $400.0 million as of September 30, 2024. Although our credit facility matures in 2029, we classified all $400.0 million of the outstanding balance as a current liability on our consolidated balance sheet as of September 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 September 30, 2024, we were in compliance with these covenants.

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

8. Share-Based Compensation

As of September 30, 2024, we havetwo 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 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 haveone 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 Optionsand RSUs below for additional information regarding these equity-based awards.

During the nine months ended September 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):

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, 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 nine months ended September 30, 2024 we recorded $7.2 million and $19.1 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 $5.2 million and $6.4 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 nine months ended September 30, 2024 and 2023:

A summary of the activity and status of stock options under our equity incentive plans during the nine-month period ended September 30, 2024 is presented below:

The weighted average fair value of a stock option granted during each of the nine-month periods ended September 30, 2024 and September 30, 2023 was $98.06 and $85.39, respectively. These stock options have an aggregate grant date fair value of $54.1 million and $38.9 million, respectively. The total grant date fair value of stock options that vested during the nine-month periods ended September 30, 2024 and September 30, 2023 was $3.5 million and $54.9 million, respectively.

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

As of September 30, 2024, unrecognized compensation cost related to stock options was $62.0 million. Unvested outstanding stock options as of September 30, 2024 had a weighted average remaining vesting period of 2.1 years.

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

RSUs

Each RSU entitles the recipient toone 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-month periods ended September 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 nine months ended September 30, 2024, we recorded $12.7 million and $19.9 million of share-based compensation expense, respectively, related to performance-based RSUs, calculated based on the assumed levels of performance achievement as compared to $2.1 million and $3.2 million for the same periods in 2023.

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

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

As of September 30, 2024, unrecognized compensation cost related to the grant of RSUs was $185.1 million. Unvested outstanding RSUs as of September 30, 2024 had a weighted average remaining vesting period of 2.5 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 thetenth anniversary of the grant date, and in most cases, they vest in equal increments on each anniversary of the grant date over afour-year period. We discontinued the issuance of STAP awards in June 2015.

The aggregate liability balance associated with outstanding STAP awards was $29.4 million and $35.4 million as of September 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:

The closing price of our common stock was $358.35 and $225.87 on September 30, 2024 and September 30, 2023, respectively. The closing price of our common stock was $219.89 on December 31, 2023.

A summary of the activity and status of STAP awards during the nine-month period ended September 30, 2024 is presented below:

Share-based compensation expense (benefit) recognized in connection with STAP awards is as follows (in millions):

Cash paid to settle STAP awards exercised during the nine-month periods ended September 30, 2024 and September 30, 2023 was $37.7 million and $10.4 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. Stockholders’ Equity

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 the 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.

The components of basic and diluted earnings per common share comprised the following (in millions, except per share amounts):

(1)Calculated using the treasury stock method.

(2)The common shares underlying certain stock options and RSUs have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive.

Share Repurchase

In March 2024, our Board of Directors approved a share repurchase program authorizing up to $1.0 billion in aggregate repurchases of our common stock. Pursuant to this authorization, we entered into an accelerated share repurchase agreement (the ASR agreement) with Citibank, N.A. (Citi) on March 25, 2024, to repurchase approximately $1.0 billion of our common stock. Under the ASR agreement, we made an aggregate upfront payment of $1.0 billion to Citi and received an aggregate initial delivery of 3,275,199 shares of our common stock on March 27, 2024, representing approximately 80 percent of the total shares that would be repurchased under the ASR agreement measured based on the closing price of our common stock on March 25, 2024.

The share repurchase under the ASR agreement was divided intotwo tranches, resulting in upfront payments of $300 million and $700 million, respectively. The final settlement of the $300 million tranche occurred in June 2024, and we received an additional 181,772 shares of our common stock upon settlement. The final settlement of the $700 million tranche occurred in September 2024, and we received an additional 90,403 shares of our common stock upon settlement. In total, we repurchased 3,547,374 shares of our common stock under the ASR agreement that we currently hold as treasury stock on our consolidated balance sheet.

The final number of shares that we ultimately repurchased pursuant to the ASR agreement was based on the average of the daily volume-weighted average price per share of our common stock during the repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreement.

The initial repurchase of our common stock and final settlement of each tranche was treated as a reduction of the outstanding shares used to calculate the weighted average common stock outstanding for basic and diluted earnings per common share. The initial repurchase of our common stock under each tranche was accounted for as a reduction to stockholders’ equity in our consolidated balance sheets. The final settlement of the transactions under the ASR agreement was accounted for as an unsettled forward contract indexed to our common stock until the final settlement occurred. The forward contract related to the first and second tranche was equity classified, in accordance with ASC 815, Derivatives and Hedging, through final settlement. During the nine months ended September 30, 2024, we recorded a liability of $5.8 million for an excise tax imposed under the Inflation Reduction Act as a result of our repurchase of shares under the ASR agreement.

10. Income Taxes

Our effective income tax rate for the nine months ended September 30, 2024 and 2023 was 22 percent.

We record interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2024 and December 31, 2023, our unrecognized tax benefits, including related interest, were approximately $6.8 million and $25.7 million, respectively. Our unrecognized tax benefits as of September 30, 2024 decreased compared to our unrecognized tax benefits as of December 31, 2023, primarily due to the completion of a U.S. Internal Revenue Service examination of tax years 2016, 2017, and 2018. The total amount of unrecognized tax benefits relating to our tax positions as of September 30, 2024 is subject to change based on future events and it is reasonably possible that the balance could change significantly over the next 12 months. Given the uncertainty of future events, we are unable to reasonably estimate the range of possible adjustments to our unrecognized tax benefits.

11. Segment Information

We operate asone operating segment with a focus on the development and commercialization of products to address the unmet needs of patients with chronic and life-threatening conditions. Our Chief Executive Officer, as our chief operating decision maker, manages and allocates resources to the operations of our company on a consolidated basis. This enables our Chief Executive Officer to assess our overall level of available resources and determine how best to deploy these resources across functions, therapeutic areas, and research and development projects in line with our long-term company-wide strategic goals.

Total revenues, cost of sales, and gross profit (loss) for each of our commercial products and other were as follows (in millions):

(1) Total revenues and cost of sales include both the drug product and the respective inhalation device.

(2) Total revenues and cost of sales include sales of infusion devices, including the Remunity Pump.

Geographic revenues are determined based on the country in which our customers (distributors) are located. Total revenues from external customers in the United States and rest-of-world (ROW) for each of our commercial products were as follows (in millions):

(1) Net product sales include both the drug product and the respective inhalation device.

(2) Net product sales include sales of infusion devices, including the Remunity Pump.

We recorded revenue from two distributors in the United States that exceeded ten percent of total revenues. Revenue from these two distributors as a percentage of total revenues is as follows:

12. Litigation

Sandoz Litigation

In April 2019, Sandoz Inc. (Sandoz) and its marketing partner RareGen, LLC (now known as Liquidia PAH, LLC, a subsidiary of Liquidia Corporation) (RareGen), filed a complaint in the U.S. District Court for the District of New Jersey against us and Smiths Medical ASD, Inc. (Smiths Medical), alleging that we and Smiths Medical engaged in anticompetitive conduct in connection with the plaintiffs’ efforts to launch their generic version of Remodulin. In particular, the complaint alleged that we and Smiths Medical unlawfully impeded competition by entering into an agreement for Smiths Medical to produce cartridges used with the CADD-MS®3 (MS-3) infusion system specifically for the administration of subcutaneous Remodulin for our patients, without making these cartridges available for the administration of Sandoz’s generic treprostinil injection. In March

2020, the plaintiffs filed an amended complaint to add a count alleging that we breached our earlier patent settlement agreement with Sandoz by refusing to grant Sandoz access to cartridges purchased for our patients.

Smiths Medical was dismissed from the case in November 2020, based on a settlement resolving the disputes between the plaintiffs and Smiths Medical. As part of this settlement, Smiths Medical paid the plaintiffs $4.25 million, disclosed and made available to the plaintiffs certain specifications and other information related to the MS-3 cartridges, and granted to the plaintiffs a non-exclusive, royalty-free license in the United States to Smiths Medical’s patents and copyrights associated with the MS-3 cartridges and certain other information related to the MS-3 pumps and cartridges.

In March 2022, the court granted our motion for summary judgment with respect to all claims brought by the plaintiffs except the breach of contract claim. As a result, all antitrust claims, all claims under state competition laws, and the common law tortious interference claim were resolved in our favor. These were the only claims in the case that gave rise to any potential for trebling of damages, punitive damages, disgorgement, and/or the award of attorneys’ fees. The court also denied the plaintiffs’ request for injunctive relief.

The court granted Sandoz’s motion for summary judgment with respect to Sandoz’s breach of contract claim. RareGen has no claim for breach of contract and, as a result, has no remaining claims in the litigation. The issue of what, if any, damages Sandoz is entitled to based on the court’s decision on the contract claim went to trial on April 29, 2024, and the court heard closing arguments on June 4, 2024. The trial was limited to determining the amount of damages under the breach of contract claim. The court issued an opinion on September 6, 2024, but did not determine the amount of damages with specificity. The court directed the parties to confer about the amount of damages based on the opinion and submit a proposed judgment with an amount of damages based on the factual findings in the opinion. On October 7, 2024, the parties submitted to the court their respective positions on damages, and the parties await the court’s decision. We, Sandoz, and RareGen will each have the right to appeal the summary judgment ruling and the result of the trial upon entry of final judgment. We accrued a liability of $65.1 million during the third quarter of 2024, reflecting the amount of damages we calculated based on factual findings made by the court and included in our submission to the court regarding damages. We currently do not expect that the amount of any loss in excess of the accrual would be material to our financial statements; however, the amount ultimately payable, if any, could be higher or lower than this amount depending on the final judgment entered by the court, the amount of post judgment interest, and the outcome of any appeals.

We intend to continue to vigorously defend ourselves against the claims made in this litigation. Among other things, we believe our settlement agreement with Sandoz did not provide Sandoz any rights with respect to delivery systems such as the MS-3. We also believe that the plaintiffs, who were on notice that Smiths Medical would discontinue the MS-3 system, failed to fulfill their duty to properly mitigate their exposure as a result of such discontinuation, and any damages they incurred are the result of their own failure to properly plan their own product launch. However, due to the uncertainty inherent in any litigation, we cannot guarantee that an outcome adverse to us will not result. Any litigation of this nature could involve substantial cost, and an adverse outcome could result in substantial monetary damages.

Litigation with Liquidia Technologies, Inc.

In March 2020, Liquidia Technologies, Inc. (Liquidia) filedtwo petitions forinter partes review (IPR) with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO). In its petitions, Liquidia sought to invalidate U.S. Patent Nos. 9,604,901 (the’901 patent) and 9,593,066 (the’066 patent), both of which relate to a method of making treprostinil, the active pharmaceutical ingredient in Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram. These patents were issued in March 2017 and were listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations publication, also known as the Orange Book, for Tyvaso DPI, nebulized Tyvaso, Remodulin, and Orenitram. In October 2020, the PTAB declined to institute IPR proceedings on the ’066 patent because Liquidia failed to establish a reasonable likelihood of prevailing on any claim relating to the ’066 patent. The PTAB instituted IPR proceedings on the ’901 patent in October 2020 and issued a final written decision in October 2021. The final written decision found that Liquidia had proven the unpatentability ofseven of the claims of the ‘901 patent but failed to prove the invalidity oftwo other claims. Each party appealed portions of this decision. The Federal Circuit affirmed the PTAB final written decision on June 27, 2024. The ‘901 patent has been delisted from the Orange Book.

In January 2020, Liquidia submitted an NDA to the FDA for approval of Yutrepia™, a dry powder inhalation formulation of treprostinil, to treat pulmonary arterial hypertension (PAH). This NDA was submitted under the 505(b)(2) regulatory pathway with nebulized Tyvaso as the reference listed drug. In November 2021, the FDA granted tentative approval of Liquidia’s NDA.

In April 2020, we received a Paragraph IV Certification Notice Letter (Notice Letter) from Liquidia, stating that it intends to market Yutrepia before the expiration of all patents listed in the Orange Book for nebulized Tyvaso. The Notice Letter stated that Liquidia’s NDA for Yutrepia contains a Paragraph IV certification alleging that these patents are not valid, not enforceable, and/or will not be infringed by the commercial manufacture, use, or sale of Yutrepia.

In June 2020, we filed a lawsuit in the U.S. District Court for the District of Delaware against Liquidia for infringement of the ’901 patent and the ’066 patent. We filed our lawsuit within 45 days of receipt of notice from Liquidia of its NDA filing. As a result, under the Hatch-Waxman Act, the FDA was precluded by regulation from approving Liquidia’s NDA for up to 30 months or until the resolution of the litigation, whichever occurs first. In July 2020, Liquidia filed an answer to our complaint that included counterclaims alleging, among other things, that the patents at issue in the litigation are not valid and will not be infringed by the commercial manufacture, use, or sale of Yutrepia.

In July 2020, the USPTO issued U.S. Patent No. 10,716,793 (the’793 patent), a new patent related to Tyvaso with an expiration date in May 2027. In July 2020, we filed an amended complaint against Liquidia to include a claim for infringement of the ’793 patent. The ’793 patent relates to a method of administering treprostinil via inhalation and includes claims covering the dosing regimen used to administer Tyvaso DPI and nebulized Tyvaso. In December 2021, we filed a stipulation that the ’901 patent would not be infringed by Liquidia based on the court’s claim construction ruling.

Trial took place during March 2022, and the court issued its decision in August 2022. The court found that Liquidia’s product would infringe the ’793 patent and that Liquidia had not proved that any claim of that patent is invalid. The court also determined that Liquidia had proved certain claims of the ’066 patent were invalid and that we had not proved Liquidia’s infringement of another ’066 patent claim. Accordingly, the court issued a final judgment that bars the FDA from approving Yutrepia until expiration of the ’793 patent in May 2027. The parties appealed portions of the decision adverse to each of them, and on July 24, 2023, the appellate court issued its decision affirming the district court decision in its entirety. The court subsequently denied the parties’ requests for rehearing, so the appellate court decision is now final. On January 23, 2024, Liquidia filed a petition for writ of certiorari seeking review by the U.S. Supreme Court, and that petition was denied on February 20, 2024. Liquidia also filed a motion with the district court seeking to modify the portion of the judgment that bars the FDA from finally approving Yutrepia until the ’793 patent expires. On March 28, 2024, the court granted the motion to permit the FDA to grant final approval for Yutrepia. We appealed that decision, and on October 9, 2024, we withdrew our appeal.

In January 2021, Liquidia filed another petition for IPR with the PTAB. In its petition, Liquidia sought to invalidate the ’793 patent. In July 2022, the PTAB issued a final written decision finding all claims of the ’793 patent to be unpatentable. We filed a request for rehearing and for precedential opinion panel review. On October 26, 2022, the PTAB denied our request for precedential opinion panel review, but “determine[d] that the Board’s Final Written Decision did not address adequately whether the [references relied upon as the basis for canceling claims] qualify as prior art.” Thus, the PTAB directed the original panel “in its consideration on rehearing, to clearly identify whether the … references qualify as prior art.” The original panel issued its decision on our request for rehearing in February 2023. The original panel agreed that it had overlooked our arguments and that its rationale for determining that certain references are prior art was erroneous. Nonetheless, the original panel determined the references qualify as prior art under a new rationale. Thus, the original panel maintained that the claims of this patent are not valid. We appealed this decision, and the appellate court affirmed the PTAB decision. On January 19, 2024, we filed a petition for rehearing, and the court denied that motion on March 15, 2024. On June 10, 2024, we filed a petition seeking review by the U.S. Supreme Court. On October 7, 2024, the Supreme Court denied that petition. The ‘793 patent has been delisted from the Orange Book.

On September 5, 2023, we filed a lawsuit in the U.S. District Court for the District of Delaware against Liquidia for infringement of the ’793 patent based on Liquidia’s efforts to obtain FDA approval for a PH-ILD indication for Yutrepia. On November 30, 2023, we filed an amended complaint to assert a new patent: U.S. Patent No. 11,826,327 (the’327 patent). The claims of the ’327 patent generally cover improving exercise capacity in patients suffering from PH-ILD by inhaling treprostinil at specific dosages. On January 22, 2024, we filed a stipulation withdrawing the ’793 patent from the case. As a result, the only patent at issue in the case is the ’327 patent. Liquidia answered the complaint asserting a variety of defenses. The case is pending, and trial is set for June 2025. As noted below under FDA Litigation Regarding Yutrepia, we believe this lawsuit could entitle us to a 30-month stay, preventing the FDA from approving Yutrepia for the treatment of PH-ILD until the resolution of this lawsuit, or the expiration of the 30-month period following receipt of a Paragraph IV notice, whichever occurs first.

On May 10, 2024, we filed a citizen petition with the FDA asking the FDA to rescind its tentative approval of Yutrepia and issue a complete response letter to address an issue with Liquidia’s treprostinil supplier. That supplier is currently under a consent decree to address purported long-standing violations of the Food, Drug, and Cosmetics Act. The citizen petition sought to ensure that Yutrepia is not approved until the supplier has fully and successfully discharged its obligations under the consent decree and that Liquidia supplies the FDA with sufficient data and information to establish that the identity, strength, quality, and purity of its proposed Yutrepia drug product in fact meets all the statutory and regulatory requirements for approval. The FDA denied our petition on August 16, 2024.

In June 2021, we filed a motion in the patent case in the U.S. District Court for the District of Delaware to file an amended complaint adding trade secret misappropriation claims against Liquidia and a former Liquidia employee, Dr. Robert Roscigno. The court denied the motion based on a finding that adding the additional claims would impact the case schedule. Thus, we filed those claims as a separate case against Liquidia and Dr. Roscigno in North Carolina state court. Discovery is complete. On January 5, 2024, Dr. Roscigno filed a motion for summary judgment, which was denied on July 31, 2024. On July 3, 2024, Liquidia filed a motion for summary judgment, which is pending. We commenced a separate, related case against Liquidia and Dr. Roscigno in North Carolina state court on May 9, 2024, and filed a complaint in this case including a claim for breach of contract on May 29, 2024.

We plan to continue to vigorously enforce our intellectual property rights related to Tyvaso DPI and nebulized Tyvaso.

FDA Litigation Regarding Yutrepia

On February 20, 2024, we filed an action against the FDA in the U.S. District Court for the District of Columbia regarding the FDA’s review of Liquidia’s efforts to obtain a PH-ILD indication for its Yutrepia product. Liquidia submitted an amendment to its pending Yutrepia NDA to pursue approval for a PH-ILD indication. The suit alleged that FDA rules, precedents, and procedures require that such a new indication be pursued in a new NDA rather than as an amendment to a pending NDA. Thus, we asked the FDA to require Liquidia to submit a new NDA if it wishes to further pursue approval for a PH-ILD indication. If Liquidia is required to submit a new NDA, we believe that we would be entitled to a 30-month stay of any PH-ILD approval based on our assertion of the ‘327 patent against Liquidia as discussed under Litigation with Liquidia Technologies, Inc. That is, Liquidia could not obtain final approval for a PH-ILD indication until the earlier of the expiration of the 30-month stay or a district court decision in Liquidia’s favor.

On March 4, 2024, we filed a motion for preliminary injunction and temporary restraining order seeking to prevent the FDA from approving the PH-ILD indication for Yutrepia by amendment. The court denied that motion on March 29, 2024, following a hearing on the motion.

On August 16, 2024, the FDA (1) confirmed that it was permitting Liquidia to add the PH-ILD indication to its pending Yutrepia NDA by amendment rather than requiring a new NDA and provided an explanation for that decision; and (2) granted Liquidia tentative approval for its Yutrepia NDA, including the PAH and PH-ILD indications. The FDA granted tentative rather than final approval because it determined that we are entitled to a period of exclusivity based on a clinical trial that we conducted to obtain approval for a PH-ILD indication, and that this exclusivity bars final approval of Liquidia’s product until expiration of exclusivity in May 2025. Following the FDA’s decisions, we voluntarily dismissed our case against the FDA.

On August 21, 2024, Liquidia filed an action against the FDA in the U.S. District Court for the District of Columbia challenging the FDA’s decisions to award us exclusivity and to withhold final approval for Yutrepia until that exclusivity has expired. We intervened, and the parties are currently briefing cross-motions for summary judgment and preliminary injunction. The court has set a December 5, 2024 hearing date on those motions. We also asserted a cross-claim against the FDA for improperly permitting Liquidia to pursue a PH-ILD indication in an amendment rather than a new NDA. This cross-claim is substantively identical to the claim we asserted against FDA in the now-dismissed action described above.

MSP Recovery Litigation

In July 2020, MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; and Series PMPI, a designated series of MAO-MSO Recovery II, LLC, filed a “Class Action Complaint” against Caring Voices Coalition, Inc. (CVC) and us in the U.S. District Court for the District of Massachusetts. The complaint alleged that we violated the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and various state laws by coordinating with CVC when making donations to a PAH fund so that those donations would go towards copayment obligations for Medicare patients taking drugs manufactured and marketed by us. The plaintiffs claim to have received assignments from various Medicare Advantage health plans and other insurance entities that allow them to bring this lawsuit on behalf of those entities to recover allegedly inflated amounts they paid for our drugs. In April 2021, the court granted our motion to transfer the case to the U.S. District Court for the Southern District of Florida.

In October 2021, the plaintiffs filed an amended complaint that includes state antitrust claims based on alleged facts similar to those raised by Sandoz and RareGen in the matter described above. The amended complaint added MSP Recovery Claims Series 44, LLC as a plaintiff and Smiths Medical and CVC as defendants. In December 2021, we filed a motion to dismiss all of the plaintiffs’ claims in the amended complaint, including the new antitrust claims. Smiths Medical also filed a motion to dismiss the plaintiffs’ claims against Smiths Medical. In September 2022, the court dismissed all of the plaintiffs’ claims against us and Smiths Medical without prejudice.

In October 2022, the plaintiffs filed a second amended complaint, which added federal antitrust claims and consumer protection claims under other states’ laws to the claims previously asserted. The second amended complaint also named Accredo Health Group, CVS Health Corporation, Express Scripts, Inc., and Express Scripts Holding Company (collectively, the Specialty Pharmacies), and the Adira Foundation as additional defendants. In March 2023, we filed our motion to dismiss the second amended complaint. The Specialty Pharmacies filed their own motion to dismiss, as did Smiths Medical. On March 22, 2024, the magistrate judge recommended dismissal of the plaintiffs’ complaint against all defendants in its entirety with prejudice, and for administrative purposes, issued an order dismissing the complaint. On April 12, 2024, the plaintiffs filed an objection to the magistrate judge’s recommendation. On May 10, 2024, we filed a response to the plaintiffs’ objection, as did the other defendants. If the district court judge adopts the magistrate judge’s recommendation and dismisses the case, the plaintiffs will have the right to appeal.

We intend to continue to vigorously defend ourselves against the claims made in this lawsuit.

Litigation with Humana and United Healthcare

Humana Inc. (Humana) and United Healthcare Services, Inc. (United) filed separate lawsuits against us in the U.S. District Court for the District of Maryland in December 2022 and November 2022, respectively. Each of these lawsuits includes allegations similar to those in the MSP Recovery matter discussed above concer ning our charitable contributions to CVC. In particular, these lawsuits allege that our donations to CVC violated RICO and various state laws. We filed motions to dismiss both of these lawsuits in March 2023. On March 25, 2024, the court dismissed both the Humana and United complaints in their entirety. In both cases, the RICO claims were dismissed with prejudice. In the Humana case, the state law claims were dismissed without prejudice, and in the United case, some of the state law claims were dismissed with prejudice, while others were dismissed without prejudice. Neither Humana nor United filed an appeal to date, and their deadlines for filing appeals have passed.

On April 24, 2024, Humana and United each filed lawsuits against us in the Circuit Court for Montgomery County, Maryland. These lawsuits include allegations similar to those in Humana and United’s lawsuits discussed above concerning charitable contributions. Humana and United allege that our donations to CVC give rise to common law causes of action, violations of state consumer protection statutes, and violations of insurance fraud statutes under the laws of various states. On July 22, 2024, we filed motions to dismiss both of these lawsuits. Oral argument on these motions to dismiss took place on October 24, 2024.

We intend to continue to vigorously defend ourselves against the claims made in these lawsuits.

340B Program Litigation

We participate in the Public Health Service’s 340B drug pricing program (the 340B program), through which we sell our products to covered entities at no more than a statutory ceiling price. Increasing use of pharmacies that have contracts with such covered entities (340B contract pharmacies), coupled with a lack of oversight and transparency, has resulted in increased risks of 340B statutory violations related to the diversion of 340B-purchased drugs to individuals who are not patients of the 340B covered entity, and to prohibited “duplicate discounts” when a Medicaid rebate is triggered on 340B-purchased drugs. In November 2020, we notified the U.S. Health Resources and Services Administration (HRSA) that we would begin implementing narrowly-tailored 340B contract pharmacy policies with the goal of stemming abuses of the 340B program without upsetting the status quo or creating hardship for covered entities or their patients. At around the same time, a number of other manufacturers also announced their own contract pharmacy policies.

In December 2020, the U.S. Department of Health and Human Services (HHS) General Counsel issued a non-binding Advisory Opinion (the Advisory Opinion) concluding that, among other things, pharmaceutical manufacturers are obligated to sell their drugs at the 340B discounted price to an unlimited number of 340B contract pharmacies. In May 2021, HRSA sent a letter to us stating that our 340B contract pharmacy policies violated the 340B statute. HRSA also sent materially similar letters to other pharmaceutical manufacturers. We responded to that letter by clarifying our policies and requesting additional information from HRSA. To date, HRSA has not responded.

The federal government’s pronouncements regarding the use of 340B contract pharmacies have triggered a variety of litigation. In one of those cases, the court concluded that the Advisory Opinion was “legally flawed,” and in response HHS withdrew the Advisory Opinion. Notwithstanding the withdrawal of the Advisory Opinion, HRSA has made clear that it is not withdrawing its May 2021 letter to us and the threat of enforcement action.

In June 2021, we commenced litigation against HRSA and HHS in the U.S. District Court for the District of Columbia seeking to vindicate the lawfulness of our 340B program contract pharmacy policies. Despite the litigation, in September 2021, HRSA sent to us, along with the other manufacturers challenging HRSA’s 340B interpretation, letters stating that HRSA was referring “this issue to the HHS Office of the Inspector General (OIG)” for potential enforcement action. We have not received any communication from the OIG regarding our 340B contract pharmacy policy. Meanwhile, the parties submitted and fully briefed cross-motions for summary judgment, and the court heard oral argument on those motions, and also similar motions in a related case involving Novartis, in October 2021. In November 2021, the court granted our motion for summary judgment in part, and issued a decision holding that the HRSA letters threatening enforcement action “contain legal reasoning that rests upon an erroneous reading of Section 340B.” The court explained that “[t]he statute’s plain language, purpose, and structure do not prohibit drug manufacturers from attaching any conditions to the sales of covered drugs through contract pharmacies. Nor do they permit all conditions. Accordingly, any future enforcement action must rest on a new statutory provision, a new legislative rule, or a well-developed legal theory that Section 340B precludes the specific conditions at issue here.”

HRSA and HSS appealed to the U.S. Court of Appeals for the District of Columbia Circuit in December 2021 and oral arguments were heard in October 2022. The court issued a decision affirming the district court on May 21, 2024, stating that “we hold that section 340B does not categorically prohibit manufacturers from imposing conditions on the distribution of covered drugs to covered entities. We further hold that the conditions at issue here do not violate section 340B on their face.” The government did not further pursue the case, and there are no additional opportunities to appeal.

We intend to continue to vigorously defend our 340B program contract pharmacy policies.

13. Business Combination

On October 29, 2023, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Miromatrix, a publicly traded company developing bioengineered kidney and liver alternative products. On December 13, 2023, we completed the transactions contemplated by the Merger Agreement and Miromatrix became a wholly-owned subsidiary of United Therapeutics. Pursuant to the terms of the Merger Agreement, we paid former Miromatrix shareholders $3.25 per share in cash at closing, representing cash consideration paid to former Miromatrix shareholders of $89.1 million. Former Miromatrix shareholders also received one contractual contingent value right per share, representing the right to receive a contingent payment of $1.75 per share in cash (an aggregate of approximately $54.0 million) upon the first implantation of Miromatrix’s development-stage, fully-implantable kidney alternative product known as mirokidney into a living human patient by the end of 2025 in a clinical trial meeting requirements set forth in the form of the Contingent Value Rights Agreement attached to the Merger Agreement. In addition to the cash consideration noted above, the aggregate purchase price included $2.5 million that we ascribed to the contingent value rights, of which $1.4 million was recorded as a measurement period adjustment during the first quarter of 2024. During the three months ended September 30, 2024, we recorded a measurement period adjustment to decrease goodwill and other intangible assets, net and increase deferred tax assets, net by $2.8 million. The purchase price allocation is considered complete as of September 30, 2024.

The merger met the definition of a business combination in accordance with ASC 805, Business Combinations, and as such, we applied the acquisition method to account for the transaction, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the closing date.