UNITED THERAPEUTICS Corp

Previous wording

The following discussion should be read in conjunction with our consolidated financial statements and related notes to our consolidated financial statements. All statements in this filing are made as of the date this Report is filed with the U.S. Securities and Exchange Commission (SEC). We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise.

Current wording

The following discussion should be read in conjunction with our consolidated financial statements and related notes to our consolidated financial statements. All statements in this filing are made as of the date this Report is filed with the SEC. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events, or otherwise.

Previous wording

•Expectations of revenues, expenses, profitability, cash flows, and growth in the number of patients being treated with our products, including continued growth in sales of our newest product, Tyvaso DPI, and anticipated growth in the number of patients with pulmonary hypertension associated with interstitial lung disease (PH-ILD) being treated with our Tyvaso products;

Current wording

•Expectations of revenues, expenses, profitability, cash flows, and growth in the number of patients being treated with our products, including continued growth in sales of Tyvaso DPI, and anticipated growth in the number of patients with PH-ILD being treated with our Tyvaso products;

Previous wording

•Our ability to maintain attractive pricing and reimbursement levels for our products, in light of increasing competition, including from generic products, and pressure from government and other payers to decrease the costs associated with healthcare, including the potential impact of the Inflation Reduction Act of 2022 (IRA) on our business;

Current wording

•Our ability to maintain attractive pricing and reimbursement levels for our products, in light of increasing competition, including from generic products, and pressure from government and other payers to decrease the costs associated with healthcare, including the potential impact of the IRA on our business and the Trump administration’s most favored nation pricing initiatives;

Previous wording

•The timing and outcome of ongoing litigation, including the lawsuit filed against us by Sandoz, Inc. (Sandoz) and Liquidia PAH, LLC (formerly known as RareGen, LLC) (RareGen); our patent and trade secret litigation with Liquidia Technologies, Inc. (Liquidia) related to its new drug application (NDA) for Yutrepia; Liquidia’s lawsuit against the FDA related to the FDA’s decision to grant us a period of exclusivity and our cross-claims against the FDA related to Liquidia’s efforts to add an indication for PH-ILD to the NDA for Yutrepia; and our litigation with Humana Inc., United Healthcare Services, Inc., MSP Recovery Claims, Series LLC, and related entities;

Current wording

•The timing and outcome of ongoing litigation, including the lawsuit filed against us by Sandoz and Liquidia PAH, LLC (formerly known as RareGen); our patent and trade secret litigation with Liquidia related to Yutrepia; Liquidia’s patent lawsuit against us related to Tyvaso DPI; and our litigation with Humana Inc., United Healthcare Services, Inc., MSP Recovery Claims, Series LLC, and related entities;

Previous wording

•The impact of competing therapies on sales of our commercial products, including the impact of generic versions of Remodulin; established therapies such as Uptravi; and therapies such as Merck’s recently-approved Winrevair and Liquidia’s Yutrepia, if it is approved by the FDA;

Current wording

•The impact of competing therapies on sales of our commercial products, including the impact of generic versions of Remodulin; established therapies such as Uptravi®; and newer therapies such as Merck’s Winrevair and Liquidia’s Yutrepia;

Previous wording

•Expectations regarding the amount and timing of capital expenditures to construct new facilities to support our product development and commercialization efforts;

Current wording

•Expectations regarding the amount and timing of capital expenditures to construct new facilities to support our product development and commercialization efforts, including our xenotransplantation-related facilities;

Previous wording

•Tyvaso DPI, a dry powder inhaled formulation of the prostacyclin analogue treprostinil, approved by the FDA in May 2022 to improve exercise ability in patients with pulmonary arterial hypertension (PAH) and PH-ILD. We initiated commercial shipments of Tyvaso DPI to our U.S. distributors in June 2022.

Current wording

•Tyvaso DPI, a dry powder inhaled formulation of the prostacyclin analogue treprostinil, approved by the FDA in May 2022 to improve exercise ability in patients with PAH and PH-ILD.

Previous wording

•Nebulized Tyvaso, a liquid inhaled formulation of treprostinil, approved by the FDA and regulatory authorities in Argentina, Israel, and Japan to improve exercise ability in patients with PAH. Nebulized Tyvaso was also approved by the FDA in March 2021 and by regulators in Israel and Japan in December 2022 and September 2024, respectively, to improve exercise ability in patients with PH-ILD. In addition, marketing authorization applications for nebulized Tyvaso to treat PAH and/or PH-ILD have also been approved, and others are pending, in various other countries in Latin America, Asia, and the Middle East.

Current wording

•Nebulized Tyvaso, a nebulized liquid inhaled formulation of treprostinil, approved by the FDA to improve exercise ability in patients with PAH. Nebulized Tyvaso was also approved by the FDA in March 2021 to improve exercise ability in patients with PH-ILD. Nebulized Tyvaso has also been approved with respect to PAH and/or PH-ILD in various countries outside of the United States.

Previous wording

•Remodulin, a continuously-infused formulation of treprostinil, approved by the FDA for subcutaneous and intravenous delivery to diminish symptoms associated with exercise in patients with PAH. Remodulin has also been approved in various countries outside of the United States. In February 2021, we launched U.S. sales of the Remunity Pump, a next-generation subcutaneous infusion system for Remodulin.

Current wording

•Remodulin, a continuously-infused formulation of treprostinil, approved by the FDA for subcutaneous and intravenous delivery to diminish symptoms associated with exercise in patients with PAH. Remodulin has also been approved in various countries outside of the United States. In February 2021, we launched U.S. sales of the Remunity Pump, a next-generation subcutaneous infusion system for Remodulin developed under an exclusive development and license agreement with DEKA. In September 2025, we launched a new patient-filled version of the Remunity Pump, called RemunityPRO, which is intended to improve the patient experience by making the pump easier to use.

Previous wording

•Adcirca, an oral immediate-release tablet form of the PDE-5 inhibitor tadalafil, approved by the FDA to improve exercise ability in PAH patients.

Current wording

•Adcirca, an oral immediate-release tablet form of the PDE-5 inhibitor tadalafil, approved by the FDA to improve exercise ability in PAH patients. We sell Adcirca under an in-license from Lilly that expires December 31, 2026.

Previous wording

We are engaged in research and development of new indications and delivery devices for our existing products. In 2021, we launched a new pump for subcutaneous delivery of Remodulin, called the Remunity Pump, and recently completed development of a new version of the Remunity Pump, called RemunityPRO, which was cleared by the FDA in January 2025. We are studying nebulized Tyvaso in patients with idiopathic pulmonary fibrosis and progressive pulmonary fibrosis (the TETON studies).

Current wording

We are engaged in research and development of new indications and delivery devices for our existing products. We are studying Nebulized Tyvaso in patients with IPF and PPF (the TETON studies).

Previous wording

In addition, we are developing a new product to treat PAH, ralinepag. We are also heavily engaged in research and development of organ transplantation-related technologies including xenotransplantation, regenerative medicine, bio-artificial organ alternatives, 3D organ alternative bioprinting, andex vivo lung perfusion. For additional detail regarding our research and development programs, see Part I, Item 1—Business—Research and Development.

Current wording

In addition, we are developing a new product to treat PAH, ralinepag. We are also heavily engaged in research and development of organ transplantation-related technologies including xenotransplantation, regenerative medicine, andex vivo lung perfusion. For additional detail regarding our research and development programs, see Part I, Item 1—Business—Research and Development.

Previous wording

Our total revenues consist primarily of sales of the commercial products noted above, including the delivery devices (in the case of Tyvaso DPI, nebulized Tyvaso, and Remodulin). We have entered into separate, non-exclusive distribution agreements with Accredo Health Group, Inc. and its affiliates (Accredo) and Caremark, L.L.C. (CVS Specialty) to distribute Tyvaso DPI, nebulized Tyvaso, Remodulin, the Remunity Pump, and Orenitram in the United States, and we have entered into an exclusive distribution agreement with ASD Specialty Healthcare, Inc., an affiliate of Cencora, Inc. (formerly known as AmerisourceBergen Corporation), to distribute Unituxin inthe United States. We also sell nebulized Tyvaso, Remodulin, and Unituxin to distributors internationally. We sell Adcirca through the pharmaceutical wholesale network of Eli Lilly and Company (Lilly). To the extent we have increased the price of any of these products, increases have typically been in the single-digit percentages per year, except for Adcirca, the price of which is set solely by Lilly. We also derive revenues from the sale of commercialex vivo lung perfusion services, which are presented under Other within Note 13—Segment Information to our consolidated financial statements included in this Report.

Current wording

Our total revenues consist primarily of sales of the commercial products noted above, including the delivery devices (in the case of Tyvaso DPI, Nebulized Tyvaso, and Remodulin). We have entered into separate, non-exclusive distribution agreements with Accredo and CVS Specialty to distribute Tyvaso DPI, Nebulized Tyvaso, Remodulin, the Remunity and RemunityPRO Pumps, and Orenitram in the United States, and we have entered into an exclusive distribution agreement with Cencora Global Procurement Ltd. to distribute Unituxin inthe United States. We also sell Nebulized Tyvaso, Remodulin, and Unituxin to distributors internationally. We sell Adcirca through Lilly’s pharmaceutical wholesale network. To the extent we have increased the price of any of these products, increases have typically been in the single-digit percentages per year, except for Adcirca, the price of which is set solely by Lilly. We also derive revenues from the sale of commercialex vivo lung perfusion services, which are presented under Other within Note 13—Segment Information to our consolidated financial statements included in this Report.

Previous wording

Our research and development expenses primarily include costs associated with the research and development of products and post-marketing research commitments. These costs also include share-based compensation and salary-related expenses for research and development functions, professional fees for preclinical and clinical studies, costs associated with clinical manufacturing, facilities-related expenses, regulatory costs, and costs associated with payments to third-party contract manufacturers before FDA approval of the relevant product. Expenses also include costs for third-party arrangements, including upfront fees and milestone payments required under license arrangements for therapies under development. We do not track fully-burdened research and development expenses by individual product candidate.

Current wording

Our research and development expenses primarily include costs associated with the research and development of new products, new indications for existing products, and various post-marketing research activities. These costs also include share-based compensation and salary-related expenses for research and development functions, professional fees for preclinical and clinical studies, costs associated with clinical manufacturing, facilities-related expenses, regulatory costs, and costs associated with payments to third-party contract manufacturers before FDA approval of the relevant product. Expenses also include costs for third-party arrangements, including upfront fees and milestone payments required under license arrangements for therapies under development. We do not track fully-burdened research and development expenses by individual product candidate.

Previous wording

Historically, we granted stock options under our Amended and Restated Equity Incentive Plan and awards under our Share Tracking Awards Plan (the STAP). Issuance of awards under both of these plans was discontinued in 2015, and as of December 31, 2024, there were no longer any awards outstanding under our Amended and Restated Equity Incentive Plan. Currently, we grant stock options and restricted stock units under the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan), which provides for the issuance of up to 13,820,000 shares of our common stock, including the 1,320,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2024. In February 2019, our Board of Directors approved the 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), which provides for the issuance of up to 99,000 shares of our common stock pursuant to awards granted to newly-hired Unitherians. Currently, we grant equity-based awards to Unitherians and members of our Board of Directors in the form of stock options and restricted stock units under the 2015 Plan, and we may grant restricted stock units to newly-hired Unitherians under the 2019 Inducement Plan. The grant date fair values of stock options and restricted stock units are recognized as share-based compensation expense ratably over their vesting periods.

Current wording

Currently, we grant stock options and restricted stock units under the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan), which provides for the issuance of up to 14,770,000 shares of our common stock, including the 950,000 shares added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2025. In February 2019, our Board of Directors approved the 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), which provides for the issuance of up to 99,000 shares of our common stock pursuant to awards granted to newly-hired Unitherians. Currently, we grant equity-based awards to Unitherians and members of our Board of Directors in the form of stock options and restricted stock units under the 2015 Plan, and we may grant restricted stock units to newly-hired Unitherians under the 2019 Inducement Plan. The grant date fair values of stock options and restricted stock units are recognized as share-based compensation expense ratably over their vesting periods. Historically, we granted awards under our Share Tracking Awards Plan (the STAP). Issuance of awards under this plan was discontinued in 2015 and all remaining outstanding STAP awards were exercised during the first quarter of 2025.

Previous wording

The fair value of STAP awards and stock options is measured using inputs and assumptions under the Black-Scholes-Merton model. The fair value of restricted stock units is measured using our stock price on the date of grant. Although we no longer grant STAP awards, we had approximately 0.1 million STAP awards outstanding as of December 31, 2024. We account for STAP awards as liabilities because they are settled in cash. As such, we must re-measure the fair value of STAP awards at the end of each financial reporting period until the awards are no longer outstanding. Changes in our liability associated with outstanding STAP awards as a result of such re-measurements are recorded as adjustments to share-based compensation expense (benefit) and can create volatility within our operating expenses from period to period. The following factors, among others, impact the amount of share-based compensation expense (benefit) recognized in connection with STAP awards from period to period: (1) volatility in the price of our common stock (specifically, increases in the price of our common stock will generally result in an increase in our liability and related compensation expense, while decreases in our stock price will generally result in a reduction in our liability and related compensation expense); and (2) decreases in the number of outstanding awards.

Current wording

The fair value of stock options is measured using inputs and assumptions under the Black-Scholes-Merton model. The fair value of restricted stock units is measured using our stock price on the date of grant.

Previous wording

We anticipate that revenue growth over the near-term will be driven primarily by: (1) continued growth in sales of Tyvaso DPI; (2) continued growth in the number of PH-ILD patients prescribed Tyvaso DPI and nebulized Tyvaso; (3) continued growth in the number of patients prescribed Orenitram; and (4) modest price increases for some of our products. We believe that additional revenue growth in the medium- and longer-term will be driven by new products and new indications for existing products being developed in our pipeline, as described above under Part I, Item 1—Business—Research and Development.

Current wording

We anticipate that revenue growth over the near-term will be driven primarily by: (1) continued growth in sales of Tyvaso DPI; (2) continued growth in the number of PH-ILD patients prescribed Tyvaso DPI and Nebulized Tyvaso; (3) continued growth in the number of patients prescribed Orenitram; and (4) modest price increases for some of our products. We believe that additional revenue growth in the medium- and longer-term will be driven by new products, new indications for existing products, and new devices to deliver our existing products, as described above under Part I, Item 1—Business—Research and Development.

Previous wording

Our ability to achieve our objectives, grow our business, and maintain profitability will depend on many factors, including among others: (1) the timing and outcome of preclinical research, clinical trials, and regulatory approval applications for products we develop; (2) the timing and degree of our success in commercially launching new products; (3) the demand for our products; (4) the net price of our products and the reimbursement of our products by public and private health insurance organizations, including the impact on such net prices and reimbursement amounts as a result of the IRA, and as a result of additional payer rebates; (5) the competition we face within our industry, including competition from generic companies and the anticipated launch of new PAH and PH-ILD therapies; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against challenges to our patents; and (8) the risks identified in Part I, Item 1A—Risk Factors, included in this Report.

Current wording

Our ability to achieve our objectives, grow our business, and maintain profitability will depend on many factors, including among others: (1) the timing and outcome of preclinical research, clinical trials, and regulatory approval applications for products we develop; (2) the timing and degree of our success in commercially launching new products; (3) the demand for our products; (4) the net price of our products and the reimbursement of our products by public and private health insurance organizations, including the impact on such net prices and reimbursement amounts as a result of the IRA and other government initiatives focused on drug pricing, and as a result of additional payer rebates; (5) the competition we face within our industry, including competition from generic companies, the recent launch of Yutrepia, and the potential launch of new therapies for PAH, PH-ILD, IPF, and/or PPF; (6) our ability to effectively manage our business in an increasingly complex legal and regulatory environment; (7) our ability to defend against challenges to our patents; and (8) the risks identified in Part I, Item 1A—Risk Factors, included in this Report.

Previous wording

We have budgeted approximately $750 million for capital expenditures during 2025 through the end of 2027 to construct additional facilities to support the development and commercialization of our products and technologies. This amount is primarily dedicated to construction of a new Tyvaso DPI manufacturing facility in Research Triangle Park, North Carolina (RTP); construction of a clinical-scale designated pathogen-free (DPF) facility in Stewartville, Minnesota; and initial pre-construction activities for a commercial-scale DPF facility. We plan to fund these capital expenditures using cash on hand.

Current wording

We have budgeted approximately $400 million for capital expenditures during 2026 and through the end of 2028 to construct additional facilities to support the development and commercialization of our products and technologies. This amount is primarily dedicated to construction of a new manufacturing facility in RTP; and construction of clinical-scale DPF facilities in Stewartville, Minnesota and Houston, Texas. We plan to fund these capital expenditures using cash on hand.

Previous wording

We anticipate our first commercial-scale DPF facility will provide an initial commercial supply of our xeno-organ products if and when they are approved by the FDA. Our commercial-scale DPF facilities will be very capital-intensive, but they will be executed in stages with the ability to adjust the schedule (and anticipated cost) depending on the progress of our clinical and regulatory activities. In addition to the production capacity of our commercial-scale DPF facility, we anticipate additional commercial capacity stemming from at least three clinical-scale facilities: our existing DPF facility in Virginia; a DPF facility we are building in Minnesota, as noted above; and a third clinical-scale DPF facility we plan to build in Houston, Texas.

Current wording

We anticipate our existing DPF facility in Virginia and the two planned DPF facilities in Minnesota and Texas will provide an initial commercial supply of our xeno-organ products if and when they are approved by the FDA. However, if our xeno-organ products are approved by the FDA, we likely will need to continue building additional DPF facilities to satisfy demand for these products. Additional DPF facilities will be very capital-intensive, but we expect they will be executed in stages, which will enable us to adjust the schedule (and anticipated cost) of construction depending on the progress of our clinical and regulatory activities.

Previous wording

Total Tyvaso net product sales grew 31 percent to $1,620.4 million in 2024, compared to $1,233.7 million for 2023. Tyvaso DPI net product sales increased in 2024, as compared to 2023, due to an increase in quantities sold of $269.2 million and, to a lesser extent, price increases, partially offset by higher gross-to-net revenue deductions. The increase in Tyvaso DPI quantities sold was primarily due to continued growth in the number of patients following the product’s launch (including by PH-ILD patients) and, to a lesser extent, increased commercial utilization following implementation of the Part D redesign under the Inflation Reduction Act. Nebulized Tyvaso net product sales increased in 2024, as compared to 2023, primarily due to higher quantities sold of $51.9 million and, to a lesser extent, a price increase. Growth in nebulized Tyvaso was also driven by continued growth in use by PH-ILD patients.

Current wording

Total Tyvaso net product sales grew 16 percent to $1,878.2 million in 2025, compared to $1,620.4 million in 2024, driven by growth in Tyvaso DPI net product sales. Tyvaso DPI net product sales increased in 2025, as compared to 2024, primarily due to an increase in quantities sold of $268.5 million. The increase in quantities sold was primarily due to continued growth in the number of patients following the product’s launch and, to a lesser extent, increased commercial utilization following the implementation of the Medicare Part D benefit redesign under the IRA.

Previous wording

Orenitram net product sales increased in 2024, as compared to 2023, primarily due to an increase in quantities sold and, to a lesser extent, a price increase. The increase in quantities sold was driven, at least in part, by increased commercial utilization following the implementation of the Part D redesign under the Inflation Reduction Act.

Current wording

Orenitram net product sales increased in 2025, as compared to 2024, primarily due to an increase in quantities sold of $46.0 million. The increase in quantities sold was driven, at least in part, by increased commercial utilization following the implementation of the Medicare Part D benefit redesign under the IRA.

Previous wording

Cost of sales, excluding share-based compensation. The increase in cost of sales for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to an increase in Tyvaso DPI royalty expense and product costs driven by growth in Tyvaso DPI revenues.

Current wording

Cost of sales, excluding share-based compensation. The increase in cost of sales for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to increases in: (1) royalty expense resulting from a growth in revenues; (2) inventory reserve expense; and (3) the cost of products and services sold.

Previous wording

(1)External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before FDA approval of the relevant product.

Current wording

(1)External research and development primarily includes fees paid to third parties (such as clinical trial sites, contract research organizations, and contract laboratories) for preclinical and clinical studies and payments to third-party contract manufacturers before regulatory approval of the relevant product.

Previous wording

(2)Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before FDA approval, and internal facilities-related expenses, including depreciation, related to research and development activities.

Current wording

(2)Internal research and development primarily includes salary-related expenses for research and development functions, internal costs to manufacture product candidates before regulatory approval, and internal facilities-related expenses, including depreciation, related to research and development activities.

Previous wording

(4)Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products, adjustments to the fair value of our contingent consideration obligations, and costs to acquire certain in-process research and development (IPR&D) assets. During the year ended December 31, 2024, we recorded $40.2 million and $8.0 million in expense related to upfront non-refundable licensing payments for drug delivery device technologies andex vivo lung

Current wording

(4)Other primarily includes upfront fees and milestone payments to third parties under license agreements related to development-stage products, adjustments to the fair value of our contingent consideration obligations, and costs to acquire certain in-process research and development (IPR&D) assets. During the year ended December 31, 2025, we recorded (a) $42.2 million in expense related to milestone payments for drug delivery device and formulation technologies; and (b) $10.8 million in expense related to adjustments to the fair value of contingent consideration obligations for manufactured organ and organ alternative projects.

Previous wording

Research and development, excluding share-based compensation. The increase in research and development expense for the year ended December 31, 2024, as compared to the same period in 2023, was due to: (1) increased expenditures related to manufactured organ and organ alternative projects; (2) non-refundable licensing payments for drug delivery device technologies andex vivo lung perfusion technology; and (3) increased expenditures related to the TETON studies of nebulized Tyvaso in patients with IPF and PPF. These increases were partially offset by the impact of an IPR&D expense recorded during the year ended December 31, 2023 in connection with the acquisition of IVIVA, which expense did not recur in 2024.

Current wording

Research and development, excluding share-based compensation. The increase in research and development expense for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to: (1) increased expenditures related to manufactured organ and organ alternative projects; and (2) increased expenditures for drug delivery device and formulation technologies.

Previous wording

General and administrative, excluding litigation accrual and share-based compensation. The increase in general and administrative expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to increases in: (1) personnel expense due to growth in headcount; (2) legal expenses related to litigation matters; and (3) consulting expenses.

Current wording

General and administrative, excluding impairment of PP&E, litigation accrual, and share-based compensation. The increase in general and administrative expense for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to increases in: (1) personnel expense due to growth in headcount; and (2) legal expenses related to litigation matters.

Previous wording

Litigation accrual. As of December 31, 2024, we accrued a liability of $71.1 million related to ongoing litigation with Sandoz reflecting the final judgment and post-judgment interest accrued through the end of 2024. We currently do not expect that the amount of any loss in excess of this accrual would be material to our financial results; however, the amount ultimately payable, if any, could be higher or lower than this amount depending on the amount of post judgment interest and the outcome of appeals, as discussed in Note 14—Litigation, to our consolidated financial statements. The litigation accrual is included within selling, general, and administrative in our consolidated statements of operations.

Current wording

Litigation accrual. During the years ended December 31, 2025 and 2024, we recorded accruals of$3.0 million and $71.1 million, respectively, related to ongoing litigation with Sandoz. We currently do not expect that the amount of any loss in excess of this accrual would be material to our financial results; however, the amount ultimately payable, if any, could be higher or lower than this amount depending on the amount of post judgment interest and the outcome of appeals, as discussed in Note 14—Litigation, to our consolidated financial statements. The litigation accrual is included within selling, general, and administrative in our consolidated statements of operations.

Previous wording

Sales and marketing, excluding share-based compensation. The increase in sales and marketing expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to increases in: (1) personnel expense due to growth in headcount; (2) marketing expenses; and (3) consulting expenses.

Current wording

Sales and marketing, excluding share-based compensation. The increase in sales and marketing expense for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to increases in: (1) personnel expense due to growth in headcount; and (2) marketing expenses.

Previous wording

The increase in share-based compensation expense for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) an increase in STAP expense driven by a 60 percent increase in our stock price during 2024, as compared to a 21 percent decrease in our stock price during 2023; (2) an increase in restricted stock unit expense due to a greater number of awards granted and remaining outstanding in 2024, as compared to the same period in 2023; and (3) an increase in stock option expense due to a greater number of awards granted in 2024, as compared to the same period in 2023. See Note 8—Share-Based Compensation, to our consolidated financial statements for more information.

Current wording

The increase in share-based compensation expense for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to: (1) an increase in restricted stock unit expense due to a greater number of outstanding performance-based restricted stock units during the year ended December 31, 2025, as compared to the same period in 2024; and (2) an increase in stock option expense due to a greater number of unvested and outstanding performance-based stock options during the year ended December 31, 2025, as compared to the same period in 2024, partially offset by a decrease in STAP expense, as all remaining STAP awards were exercised during the first quarter of 2025. See Note 8—Share-Based Compensation, to our consolidated financial statements for more information.

Previous wording

Income tax expense was $343.9 million for the year ended December 31, 2024, compared to $289.5 million for the same period in 2023. For the years ended December 31, 2024 and 2023, our effective income tax rates (ETR) were approximately 22 percent and 23 percent, respectively. Our ETR for the year ended December 31, 2024 decreased, compared to our ETR for the year ended December 31, 2023, primarily due to a decrease in nondeductible acquisition costs and an increase in excess tax benefits from share-based compensation, partially offset by an increase in nondeductible compensation. For additional details, see Note 10—Income Taxes to our consolidated financial statements.

Current wording

Income tax expense was $379.2 million for the year ended December 31, 2025, as compared to $343.9 million for the same period in 2024. Our effective income tax rate was approximately 22 percent for the years ended December 31, 2025 and 2024. For additional details, see Note 10—Income Taxes to our consolidated financial statements.

Previous wording

In March 2024, we entered into an accelerated share repurchase agreement (the ASR agreement) with Citibank, N.A. (Citi). 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, which represented 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.

Current wording

In March 2024, we entered into an accelerated share repurchase agreement (the 2024 ASR agreement) with Citi. Under the 2024 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, which represented approximately 80 percent of the total shares that would be repurchased under the 2024 ASR agreement, measured based on the closing price of our common stock on March 25, 2024.

Previous wording

The share repurchase under the ASR agreement was divided into two 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 in our consolidated balance sheets.

Current wording

The share repurchase under the 2024 ASR agreement was divided into two 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 2024 ASR agreement that we currently hold as treasury stock in our consolidated balance sheets.

Previous wording

We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements. We believe that our current sources of liquidity are sufficient to fund ongoing operations and future business plans as we expect aggregate growth in revenues from our commercial products. Furthermore, our customer base remains stable, and we believe that it presents minimal credit risk. However, any projections of future cash flows are inherently subject to uncertainty and we may seek other forms of financing. In March 2022, we entered into a credit agreement (the 2022 Credit Agreement), which provides for unsecured revolving credit facilities of up to $2.0 billion in the aggregate. Our aggregate outstanding balance under the 2022 Credit Agreement was $300.0 million and $700.0 million as of December 31, 2024 and 2023, respectively. Although our credit facility matures in 2029, we reclassified the outstanding balance of $300.0 million as a current liability in our consolidated balance sheets as of December 31, 2024, as we intend to repay this amount within one year. See Unsecured Revolving Credit Facilities below for further details.

Current wording

We have funded our operations principally through sales of our commercial products and, from time-to-time, third-party financing arrangements. We believe that our current sources of liquidity are sufficient to fund ongoing operations and future business plans as we expect aggregate growth in revenues from our commercial products. Furthermore, our customer base remains stable, and we believe that it presents minimal credit risk. However, any projections of future cash flows are inherently subject to uncertainty, and we may seek other forms of financing. In April 2025, we entered into the 2025 Credit Agreement, which provides for an unsecured revolving credit facility of up to $2.5 billion. Our outstanding balance under the 2025 Credit Agreement, which matures in 2030, was zero as of December 31, 2025. See Unsecured Revolving Credit Facilities below for further details.

Previous wording

Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable, accrued expenses, liabilities for our STAP awards, and tax-related payables and receivables.

Current wording

Our operating assets and liabilities consist primarily of accounts receivable, inventories, accounts payable, accrued expenses, and tax-related receivables and payables.

Previous wording

The increase of $349.1 million in net cash provided by operating activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to an increase in net cash received due to the growth in sales of our commercial products.

Current wording

The increase of $234.1 million in net cash provided by operating activities for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to an increase in net cash received due to the growth in sales of our commercial products.

Previous wording

The increase of $1,136.8 million in net cash provided by investing activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) a $1,099.7 million decrease in cash used for total purchases, sales, and maturities of marketable investments; and (2) an $89.2 million decrease in net cash paid related to the acquisitions of IVIVA and Miromatrix in 2023; partially offset by: (1) a $30.5 million increase in cash paid to purchase investments in privately-held companies; (2) a $16.1 million increase in cash paid to purchase property, plant, and equipment; and (3) a $5.5 million increase in deposits.

Current wording

The increase of $968.5 million in net cash used in investing activities for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to: (1) a $682.6 million increase in cash used for total purchases, sales, and maturities of marketable investments; and (2) a $274.0 million increase in cash paid to purchase property, plant, and equipment.

Previous wording

The increase of $1,242.9 million in net cash used in financing activities for the year ended December 31, 2024, as compared to the same period in 2023, was primarily due to: (1) a $1.0 billion payment in 2024 to repurchase shares of our common stock; and (2) a $300.0 million increase in cash paid for repayments on our line of credit; partially offset by a $54.5 million increase in proceeds from the exercise of stock options.

Current wording

The decrease of $104.8 million in net cash used in financing activities for the year ended December 31, 2025, as compared to the same period in 2024, was primarily due to a $100.0 million decrease in net repayments on our line of credit.

Previous wording

In March 2022, we entered into the 2022 Credit Agreement, which provides for unsecured revolving credit facilities of up to $2.0 billion in the aggregate. On March 31, 2022, we borrowed $800.0 million under the facilities and used the funds to repay outstanding indebtedness under our then-existing credit agreement. We paid down $400.0 million of our balance under the 2022 Credit Agreement during the year ended December 31, 2024. The aggregate balance of $300.0 million under our 2022 Credit Agreement remained outstanding as of both December 31, 2024 and February 26, 2025. See Note 7—Debt, to our consolidated financial statements.

Current wording

On April 25, 2025, we terminated the 2022 Credit Agreement and entered into the 2025 Credit Agreement, which provides for an unsecured revolving credit facility of up to $2.5 billion in the aggregate. On April 25, 2025, we borrowed $200.0 million under the 2025 Credit Agreement and used the proceeds to repay all outstanding indebtedness under the 2022 Credit Agreement in connection with its termination. During the second quarter of 2025, we repaid the remaining $200.0 million balance under the 2025 Credit Agreement, which brought our aggregate outstanding balance to zero as of June 30, 2025. Our aggregate outstanding debt balance remained zero as of December 31, 2025 and February 25, 2026. See Note 7—Debt—2025 Credit Agreement, to our consolidated financial statements for additional information.