United Therapeutics (UTHR) 10-Q 28 Jul 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 21, 2016
Document and Entity Information
Entity Registrant Name	UNITED THERAPEUTICS Corp
Entity Central Index Key	1,082,554
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		43,467,794
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 837.5	$ 831.8
Marketable investments	107.2	122
Accounts receivable, net of allowance of none for 2016 and 2015	238.1	192.8
Inventories, net	89.1	81.3
Other current assets	43.5	47.4
Total current assets	1,315.4	1,275.3
Marketable investments	3.9	38
Goodwill and other intangibles, net	34.1	28.4
Property, plant and equipment, net	490.6	495.8
Deferred tax assets, net	188.1	192.7
Other assets	169.4	154.2
Total assets	2,201.5	2,184.4
Current liabilities:
Accounts payable and accrued expenses	124	103.4
Convertible notes	0.9	5.4
Share tracking awards plan	120.9	274.5
Other current liabilities	46.6	57.4
Total current liabilities	292.4	440.7
Other liabilities	92	144
Total liabilities	384.4	584.7
Commitments and contingencies
Temporary equity	10.9	11.1
Stockholders' equity:
Common stock, par value $.01, 245,000,000 shares authorized, 69,220,268 and 68,987,919 shares issued, and 43,732,565 and 45,760,845 shares outstanding at June 30, 2016 and December 31, 2015, respectively	0.7	0.7
Additional paid-in capital	1,826.7	1,790.6
Accumulated other comprehensive loss	(14.7)	(20.4)
Treasury stock, 25,487,703 and 23,227,074 shares at June 30, 2016 and December 31, 2015, respectively	(2,167.9)	(1,902.1)
Retained earnings	2,161.4	1,719.8
Total stockholders' equity	1,806.2	1,588.6
Total liabilities and stockholders' equity	2,201.5	2,184.4
Preferred stock
Stockholders' equity:
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued
Series A junior participating preferred stock
Stockholders' equity:
Preferred stock, par value $.01, 10,000,000 shares authorized, no shares issued

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Accounts receivable, allowance (in dollars)	$ 0	$ 0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	245,000,000	245,000,000
Common stock, shares issued	69,220,268	68,987,919
Common stock, shares outstanding	43,732,565	45,760,845
Treasury stock, shares	25,487,703	23,227,074
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Series A junior participating preferred stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	0	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Net product sales	$ 412.6	$ 345.8	$ 781.6	$ 671.7
Other		1.4		3
Total revenues	412.6	347.2	781.6	674.7
Operating expenses:
Cost of product sales	20	16	20.7	36.8
Research and development	35.2	49.4	34.8	159.6
Selling, general and administrative	72.2	110	77.2	321.3
Total operating expenses	127.4	175.4	132.7	517.7
Operating income	285.2	171.8	648.9	157
Other income (expense):
Interest expense	(0.6)	(1.3)	(1.2)	(3.4)
Other, net	1.1	(2.1)	1.9	(2)
Total other income (expense), net	0.5	(3.4)	0.7	(5.4)
Income before income taxes	285.7	168.4	649.6	151.6
Income tax expense	(79.6)	(69.2)	(208)	(69)
Net income	$ 206.1	$ 99.2	$ 441.6	$ 82.6
Net income per common share:
Basic (in dollars per share)	$ 4.65	$ 2.15	$ 9.86	$ 1.78
Diluted (in dollars per share)	$ 4.39	$ 1.91	$ 9.24	$ 1.57
Weighted average number of common shares outstanding:
Basic (in shares)	44.3	46.1	44.8	46.4
Diluted (in shares)	46.9	51.9	47.8	52.5

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$ 206.1	$ 99.2	$ 441.6	$ 82.6
Other comprehensive income (loss):
Foreign currency translation (loss) gain	(2.2)	1.5	(1.8)	(1.6)
Defined benefit pension plan:
Actuarial gain (loss) arising during period, net of tax	7.1		7.1	(2.1)
Less: amortization of actuarial gain and prior service cost included in net periodic pension cost, net of tax	0.2	0.2	0.4	0.5
Total defined benefit pension plan, net	7.3	0.2	7.5	(1.6)
Other comprehensive income (loss), net of tax	5.1	1.7	5.7	(3.2)
Comprehensive income	$ 211.2	$ 100.9	$ 447.3	$ 79.4

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income	$ 441.6	$ 82.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15.6	16.7
Share-based compensation (benefit) expense	(143.1)	281.8
Amortization of debt discount and debt issue costs	0.1	5.1
Amortization of discount or premium on investments	0.3	1.4
Other	1.1	(4.5)
Excess tax benefits from share-based compensation	(3.5)	(23.5)
Changes in operating assets and liabilities:
Accounts receivable	(45.3)	(6.9)
Inventories	(8.8)	(1.9)
Accounts payable and accrued expenses	19.8	23.3
Other assets and liabilities	(26.3)	(224)
Net cash provided by operating activities	251.5	150.1
Cash flows from investing activities:
Purchases of property, plant and equipment	(14.2)	(7.8)
Purchases of held-to-maturity investments	(0.8)	(61.3)
Maturities of held-to-maturity investments	49.6	172.8
Purchase of investments under the cost method, net	(7.6)	(4.2)
Purchase of investments under the equity method	(2.1)
Intangible assets acquired	(5.2)
Net cash provided by investing activities	19.7	99.5
Cash flows from financing activities:
Principal payments of debt	(7.9)	(104.3)
Payments of debt issuance costs	(6.8)
Payments to repurchase common stock	(259.7)	(336.8)
Proceeds from the exercise of stock options	5	24.4
Issuance of stock under employee stock purchase plan	2.2	1.9
Excess tax benefits from share-based compensation	3.5	23.5
Net cash used in financing activities	(263.7)	(391.3)
Effect of exchange rate changes on cash and cash equivalents	(1.8)	(1.6)
Net increase (decrease) in cash and cash equivalents	5.7	(143.3)
Cash and cash equivalents, beginning of period	831.8	397.7
Cash and cash equivalents, end of period	837.5	254.4
Supplemental schedule of cash flow information:
Cash paid for interest	0.1	0.7
Cash paid for income taxes	222	110.1
Non-cash investing and financing activities:
Non-cash additions to property, plant and equipment	3.4	1.4
Issuance of common stock upon conversion of convertible notes	$ 6.1	$ 263.3

Organization and Business Descr

Organization and Business Description	6 Months Ended
	Jun. 30, 2016
Organization and Business Description
Organization and Business Description	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 diseases. We have approval from the U.S. Food and Drug Administration (FDA) to market the following therapies: Remodulin ® (treprostinil) Injection (Remodulin), Tyvaso ® (treprostinil) Inhalation Solution (Tyvaso), Adcirca ® (tadalafil) Tablets (Adcirca), Orenitram ® (treprostinil) Extended-Release Tablets (Orenitram) and Unituxin ® (dinutuximab) Injection (Unituxin). We commenced commercial sales of Unituxin in the United States during the third quarter of 2015. Remodulin has also been approved in various countries outside the United States, and Unituxin was granted marketing authorization by the European Medicines Agency in August 2015. Tyvaso is also approved in Israel. As used in these notes to the 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.

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2016
Basis of Presentation
Basis of Presentation	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 (GAAP) for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on February 25, 2016. In our management’s opinion, the accompanying consolidated financial statements contain all adjustments, including normal, recurring adjustments, necessary to fairly present our financial position as of June 30, 2016, statements of operations and comprehensive income (loss) for the three-and six-month periods ended June 30, 2016 and June 30, 2015 and cash flows for the six-month periods ended June 30, 2016 and June 30, 2015. Interim results are not necessarily indicative of results for an entire year. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) . ASU 2014-09 will eliminate transaction-specific and industry-specific revenue recognition guidance under current GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. On July 9, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606); Deferral of the Effective Date , which (1) delays the effective date of ASU 2014-09 by one year to annual periods beginning after December 15, 2017; and (2) allows early adoption of the ASU by all entities as of the original effective date for public entities. We are evaluating the transition method we will elect and the effects of the adoption of this ASU on our financial statements. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11), which requires that inventory be measured at the lower of cost or net realizable value for entities using first-in, first-out or average cost methods. ASU 2015-11 should be applied prospectively and will be effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years, with early adoption permitted. We are evaluating the effect of adoption on our financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , which requires equity investments to be measured at fair value through net income. Equity investments that are accounted for under the equity method are not impacted. ASU 2016-01 provides that equity investments without readily determinable fair values can be valued at cost minus impairment with a simplified impairment assessment using qualitative assessments. ASU 2016-01 requires separate presentation of the financial assets and liabilities by category and form. ASU 2016-01 should be applied prospectively and will be effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is not permitted except in limited circumstances. We are evaluating the effect of adoption on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which requires that organizations recognize lease assets and lease liabilities on the balance sheet. ASU 2016-02 also requires additional quantitative and qualitative disclosures that provide the amount, timing, and uncertainty of cash flows relating to lease arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018 using a modified retrospective approach. The modified retrospective approach requires retrospective application to the earliest period presented in the respective financial statements, provides certain practical expedients related to leases that commenced prior to the effective date and allows the use of hindsight when evaluating lease options. Early adoption is permitted. We are evaluating the effect of adoption on our financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (ASU 2016-09), which serves to simplify the accounting for share-based payment transactions. ASU 2016-09 includes guidance on several aspects of the accounting for share-based payments, including the income tax consequences, forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. Early adoption is permitted. We are evaluating the effect of adoption on our financial statements.

Investments

Investments	6 Months Ended
	Jun. 30, 2016
Investments
Investments	3. Investments Marketable Investments Marketable investments classified as held-to-maturity consist of the following (in millions): As of June 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Government-sponsored enterprises $ $ $ — $ Corporate notes and bonds — — Total $ $ $ — $ Reported under the following captions on the consolidated balance sheet: Current marketable investments $ Noncurrent marketable investments $ As of December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Government-sponsored enterprises $ $ — $ ) $ Corporate notes and bonds — — Total $ $ — $ ) $ Reported under the following captions on the consolidated balance sheet: Current marketable investments $ Noncurrent marketable investments $ The following table summarizes gross unrealized losses and the length of time marketable investments have been in a continuous unrealized loss position (in millions): As of June 30, 2016 As of December 31, 2015 Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Government-sponsored enterprises: Continuous unrealized loss position less than one year $ — $ — $ $ ) Continuous unrealized loss position greater than one year — — — — — — ) Corporate notes and bonds: Continuous unrealized loss position less than one year — — Continuous unrealized loss position greater than one year — — — — — — Total $ $ — $ $ ) We attribute gross unrealized losses pertaining to our held-to-maturity securities as of December 31, 2015 to the variability in related market interest rates. We do not intend to sell these securities, nor is it more likely than not that we will be required to sell them prior to the end of their contractual terms. Furthermore, we do not believe that these securities expose us to undue market risk or counterparty credit risk. As such, we do not consider these securities to be other than temporarily impaired. The following table summarizes the contractual maturities of held-to-maturity marketable investments (in millions): June 30, 2016 Amortized Cost Fair Value Due in less than one year $ $ Due in one to two years Total $ $

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2016
Fair Value Measurements
Fair Value Measurements	4. Fair Value Measurements We account for certain assets and liabilities at fair value and rank these assets within a fair value hierarchy (Level 1, Level 2 or Level 3). Our other current assets and our current liabilities have fair values that approximate their carrying values. Assets and liabilities subject to fair value measurements are as follows (in millions): As of June 30, 2016 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ $ — $ — $ Federally-sponsored and corporate debt securities (2) — — Total assets $ $ $ — $ Liabilities Convertible notes (3) $ $ — $ — $ Contingent consideration (4) — — Total liabilities $ $ — $ $ As of December 31, 2015 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ $ — $ — $ Federally-sponsored and corporate debt securities (2) — — Total assets $ $ $ — $ Liabilities Convertible notes (3) $ $ — $ — $ Contingent consideration (4) — — Total liabilities $ $ — $ $ (1) Included in cash and cash equivalents on the accompanying consolidated balance sheets. (2) Included in current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (3) Included in convertible notes on the accompanying consolidated balance sheets. The fair value of our Convertible Notes is estimated using Level 1 observable inputs since our Convertible Notes are trading with sufficient frequency such that we believe related pricing can be used as the primary basis for measuring their fair value. As of June 30, 2016 and December 31, 2015, the fair value of the Convertible Notes was substantially higher than their book value. This was primarily due to the excess conversion value of the notes compared to the notes’ par value, and the fact that any such excess would be paid in shares of our common stock. (4) Included in other liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability weighted discounted cash flow models (DCF). 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. We analyze and evaluate these fair value measurements quarterly to determine whether valuation inputs continue to be relevant and appropriate or whether current period developments warrant adjustments to valuation inputs and related measurements. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The fair values of our marketable investments and our Convertible Notes are reported above within the fair value hierarchy. Refer to Note 3 —Investments—Marketable Investments and Note 8 —Debt—Convertible Notes .

Inventories

Inventories	6 Months Ended
	Jun. 30, 2016
Inventories
Inventories	5. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market (current replacement cost) and consist of the following, net of reserves (in millions): June 30, 2016 December 31, 2015 Raw materials $ $ Work-in-progress Finished goods Total inventories $ $

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	6 Months Ended
	Jun. 30, 2016
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets	6. Goodwill and Other Intangible Assets Goodwill and other intangible assets comprise the following (in millions): As of June 30, 2016 As of December 31, 2015 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ $ — $ $ $ — $ Other intangible assets: Technology, patents and trade names ) ) In-process, research and development — — Customer relationships and non-compete agreements ) ) Contract-based ) — ) — Total $ $ ) $ $ $ ) $

Share Tracking Awards Plans

Share Tracking Awards Plans	6 Months Ended
	Jun. 30, 2016
Share Tracking Awards Plans
Share Tracking Awards Plans	7. Share Tracking Awards Plans We previously issued awards under the United Therapeutics Corporation Share Tracking Awards Plan, adopted in June 2008 (2008 STAP) and the United Therapeutics Corporation 2011 Share Tracking Awards Plan, adopted in March 2011 (2011 STAP). We refer to the 2008 STAP and the 2011 STAP collectively as the “STAP” and awards granted and/or outstanding under either of these plans as “STAP awards.” STAP awards convey the right to receive in cash an amount equal to the appreciation of our common stock, which is measured as the increase in the closing price of our common stock between the dates of grant and exercise. STAP awards expire on the tenth anniversary of the grant date, and in most cases they vest in equal increments on each anniversary of the grant date over a four-year period. The STAP liability includes vested awards and awards that are expected to vest. We recognize expense for awards that are expected to vest during the vesting period. We discontinued the issuance of STAP awards in June 2015, when our shareholders approved the United Therapeutics Corporation 2015 Stock Incentive Plan (the 2015 Plan), a broad-based stock incentive plan enabling us to grant stock options and other forms of equity compensation to our employees. See Note 9 —Stockholders’ Equity to these consolidated financial statements for information on the 2015 Plan. The aggregate STAP liability balance was $161.3 million and $354.7 million at June 30, 2016 and December 31, 2015, respectively, of which $40.4 million and $80.2 million, respectively, has been classified as non-current liabilities under the caption “Other liabilities” on our consolidated balance sheets based on their vesting terms. 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 (benefit) 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, the expected forfeiture rate and the expected dividend yield. The fair value of the STAP awards is measured each financial reporting period because the awards are settled in cash. The table below includes the weighted-average assumptions used to measure the fair value of the outstanding STAP awards: June 30, 2016 June 30, 2015 Expected volatility % % Risk-free interest rate % % Expected term of awards (in years) Expected forfeiture rate % % Expected dividend yield % % The closing price of our common stock was $105.92 and $173.95 on June 30, 2016 and June 30, 2015, respectively. A summary of the activity and status of STAP awards is presented below: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 $ Granted — — Exercised ) Forfeited ) Outstanding at June 30, 2016 $ $ Exercisable at June 30, 2016 $ $ Expected to vest as of June 30, 2016 $ $ The weighted average grant-date fair value of STAP awards granted during the six-month period ended June 30, 2015 was $58.52. No STAP awards were granted during the six-month period ended June 30, 2016. Share-based compensation (benefit) expense recognized in connection with STAP awards is as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of product sales $ ) $ $ ) $ Research and development ) ) Selling, general and administrative ) ) Share-based compensation (benefit) expense before taxes $ ) $ $ ) $ Related income tax benefit (expense) ) ) Share-based compensation (benefit) expense, net of taxes $ ) $ $ ) $ Cash paid to settle STAP awards exercised during the six-month periods ended June 30, 2016 and June 30, 2015 was $30.4 million and $178.3 million, respectively.

Debt

Debt	6 Months Ended
	Jun. 30, 2016
Debt
Debt	8. Debt Unsecured Revolving Credit Facility In January 2016, we entered into a Credit Agreement (the 2016 Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo), as administrative agent and a swingline lender, and various other lender parties, providing for an unsecured revolving credit facility of up to $1.0 billion (the Revolving Facility), which is available to refinance certain of our existing indebtedness and/or for working capital and other general corporate purposes. The Revolving Facility will mature in January 2021, subject to the lenders’ ability to extend the maturity date by one year if we request such an extension in accordance with the terms of the 2016 Credit Agreement. At our option, amounts borrowed under the Revolving Facility will bear interest at either the LIBOR rate 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 2016 Credit Agreement). The 2016 Credit Agreement contains customary events of default and customary affirmative and negative covenants. As of June 30, 2016, we were in compliance with such covenants and we had not drawn any amounts on the Revolving Facility. Lung Biotechnology PBC is our only subsidiary that guarantees our obligations under the 2016 Credit Agreement though, from time to time, one or more of our other subsidiaries may be required to guarantee such obligations. Convertible Notes In October 2011, we issued $250.0 million in aggregate principal value 1.0 percent Convertible Senior Notes due September 15, 2016 (Convertible Notes). The Convertible Notes are unsecured, unsubordinated debt obligations that rank equally with all of our other unsecured and unsubordinated indebtedness. We pay interest semi-annually on March 15 and September 15 of each year. The initial conversion price was $47.69 per share and the number of underlying shares used to determine the aggregate consideration upon conversion was approximately 5.2 million shares. At June 30, 2016, the principal value of our remaining convertible notes was $0.9 million. During the three-month period ended June 30, 2016, we settled conversion requests representing $4.6 million in principal value of our Convertible Notes. We issued approximately 56,000 shares of our common stock during the settlement process. We also sold to DB London warrants to acquire up to approximately 5.2 million shares of our common stock at a strike price of $67.56 per share. The warrants will expire incrementally on a series of expiration dates subsequent to the maturity date of our Convertible Notes beginning in December 2016 and ending in January 2017.

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2016
Stockholders' Equity
Stockholders' Equity	9. Stockholders’ Equity Earnings Per Common Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per 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 other securities if such securities were converted or exercised. The components of basic and diluted earnings per common share comprised the following (in millions, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Denominator: Weighted average outstanding shares — basic Effect of dilutive securities (1) : Convertible notes — Stock options, restricted stock units and employee stock purchase plan Warrants Weighted average shares — diluted (2) Earnings per common share: Basic $ $ $ $ Diluted $ $ $ $ Stock options and warrants excluded from calculation (2) (1) Calculated using the treasury stock method. (2) Certain convertible notes, stock options and warrants have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive. Under our convertible note hedge agreement, we are entitled to receive shares required to be issued to investors upon conversion of our Convertible Notes. Since related shares used to compute dilutive earnings per share would be anti-dilutive, they have been excluded from the calculation above. Equity Incentive Plans As of June 30, 2016, we have two shareholder-approved equity incentive plans: the United Therapeutics Corporation Amended and Restated Equity Incentive Plan (the 1999 Plan) and the United Therapeutics Corporation 2015 Stock Incentive Plan (the 2015 Plan). The 2015 Plan was approved by our shareholders in June 2015 and provides for the issuance of up to 6,150,000 shares of our common stock pursuant to awards granted under the 2015 Plan. As a result of the approval of the 2015 Plan, no further awards will be granted under the 1999 Plan. Although the terms of the 1999 Plan and the 2015 Plan contemplate a variety of awards, through May 2016, all awards granted under these plans were in the form of stock options. In June 2016, we began issuing awards under the 2015 Plan to non-employee directors in the form of restricted stock units because the non-employee director compensation program had been amended to permit directors to elect to receive initial and annual equity grants in the form of stock options, restricted stock units, or a combination of both. Each restricted stock unit entitles the director to receive one share of our common stock upon vesting, subject to the director’s election to defer receipt of shares to a later date. 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. We measure the fair value of restricted stock units using the stock price on the date of grant. We did not grant any awards under the 1999 Plan during the six-month periods ended June 30, 2016 and June 30, 2015. During the six-months ended June 30, 2016, we granted 1.6 million stock options and 20,960 restricted stock units under the 2015 Plan. These awards had a weighted average grant date fair value of $42.48 per stock option and $101.80 per restricted stock unit, respectively. For the six months ended June 30, 2016, the stock options and restricted stock units have an aggregate grant date fair value of $67.7 million and $2.1 million, respectively. Share-based compensation expense is recorded ratably over the vesting period of the stock option or restricted stock unit. The table below includes the weighted-average assumptions used to measure the fair value of the stock options granted during the six-month period ended June 30, 2016: Expected volatility % Risk-free interest rate % Expected term of awards (in years) Expected forfeiture rate % Expected dividend yield % A summary of the activity and status of stock options under our equity incentive plans during the six-month period ended June 30, 2016 is presented below: Number of Options Weighted- Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 $ Granted Exercised ) Forfeited ) Outstanding at June 30, 2016 $ $ Exercisable at June 30, 2016 $ $ Expected to vest as of June 30, 2016 $ $ Stock option exercise data is summarized below (dollars in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Number of options exercised Cash received $ $ $ $ Total share-based compensation expense relating to stock options and restricted stock units is as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of product sales $ $ — $ $ — Research and development — — Selling, general and administrative — — Share-based compensation expense before taxes — — Related income tax benefit ) — ) — Share-based compensation expense, net of taxes $ $ — $ $ — Selling, general and administrative expense for the three-and six-month periods ended June 30, 2016 includes approximately $9.8 million of costs related to the accelerated vesting of stock options associated with the departure of a company officer during the second quarter of 2016. As of June 30, 2016, unrecognized compensation cost was $48.0 million, which includes $3.1 million related to the grant of stock options and restricted stock units to non-employee directors in June 2016 and $44.9 million related to unvested stock options awarded to employees. Unvested outstanding stock options and restricted stock units as of June 30, 2016 had a weighted average remaining vesting period of 3.5 years. As of June 30, 2015, there was $9.3 million of unrecognized compensation cost, all of which related to the grant of stock options in June 2015 to non-employee directors. As of June 30, 2015, all employee stock options granted under the 1999 Plan were fully vested and there were no employee stock options granted under the 2015 Plan; consequently, there were no amounts of unrecognized compensation cost remaining with respect to stock options granted to employees. Share Repurchases In October 2015, our Board of Directors authorized the repurchase of up to $500.0 million of our common stock in open market or privately negotiated transactions, or otherwise, at our discretion. This repurchase program is effective from January 1, 2016 through December 31, 2016. The specific timing, amount and other terms of any repurchases will depend on market conditions, corporate and regulatory requirements and other factors. During the three- and six- months ended June 30, 2016 we acquired approximately 1.2 million and 2.2 million shares, respectively, of our common stock at an aggregate cost of $136.5 million and $259.7 million, respectively, under this repurchase program.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	6 Months Ended
	Jun. 30, 2016
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss	10. Accumulated Other Comprehensive Loss The following table includes changes in accumulated other comprehensive loss by component, net of tax (in millions): Defined Benefit Pension Plan Foreign Currency Translation Losses Total Balance, January 1, 2016 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) Current-period other comprehensive gain (loss) ) Balance, June 30, 2016 $ $ ) $ )

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2016
Income Taxes
Income Taxes	11. Income Taxes The effective income tax rate (ETR) for the six-months ended June 30, 2016 and 2015 was 32% and 46%, respectively. Our 2016 ETR decreased compared to 2015 primarily due to a decrease in non-deductible share-based compensation, which was driven largely by a decrease in our stock price during 2016. We are subject to federal and state taxation in the United States, as well as various foreign jurisdictions. We are no longer subject to income tax examinations by the Internal Revenue Service and substantially all other major jurisdictions for tax years prior to 2011. As of June 30, 2016 and 2015, our uncertain tax positions are approximately $0.5 million and $1.5 million, respectively, and we are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change within the next twelve months.

Employee Benefit Plans

Employee Benefit Plans	6 Months Ended
	Jun. 30, 2016
Employee Benefit Plans
Employee Benefit Plans	12. Employee Benefit Plans Supplemental Executive Retirement Plan During the second quarter of 2016, certain participants in the United Therapeutics Corporation Supplemental Executive Retirement Plan (SERP) departed prior to reaching retirement age under the terms of the SERP. As a result, we remeasured the benefit obligation under the SERP as of June 30, 2016 and recorded a reduction to the benefit obligation with a corresponding increase to “Actuarial gain arising during period, net of tax” within “Accumulated other comprehensive loss” of $7.1 million. As part of the re-measurement of the benefit obligation, we updated the discount rate assumed at December 31, 2015 from 3.82 percent to 3.36 percent.

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2016
Segment Information
Segment Information	13. Segment Information We currently operate as one operating segment. Our chief operating decision maker regularly reviews net product sales, cost of product sales and gross profit data as a primary measure of performance for each of our five commercial products. Net product sales, cost of product sales and gross profit for each of our commercial products were as follows (in millions): Three Months Ended June 30, Remodulin Tyvaso Adcirca Orenitram Unituxin Total 2016 Net product sales $ $ $ $ $ $ Cost of product sales Gross profit $ $ $ $ $ $ 2015 Net product sales (1) $ $ $ $ $ — $ Cost of product sales Gross profit $ $ $ $ $ ) $ Six Months Ended June 30, Remodulin Tyvaso Adcirca Orenitram Unituxin Total 2016 Net product sales $ $ $ $ $ $ Cost of product sales Gross profit $ $ $ $ $ $ 2015 Net product sales (1) $ $ $ $ $ — $ Cost of product sales Gross profit $ $ $ $ $ ) $ (1) Unituxin was approved by the FDA in March 2015 and we commenced sales of Unituxin in the third quarter of 2015. For the three-month periods ended June 30, 2016 and June 30, 2015, net product sales from our U.S.-based distributors represented 69 percent and 73 percent, respectively, of total revenues. For the six-month periods ended June 30, 2016 and June 30, 2015, net product sales from our U.S.-based distributors represented 71 percent and 75 percent, respectively, of total revenues. Remaining revenues were derived primarily from net product sales of Adcirca and net product sales of Remodulin, Tyvaso, and Unituxin to our international distributors.

Litigation

Litigation	6 Months Ended
	Jun. 30, 2016
Litigation
Litigation	14. Litigation Watson Laboratories, Inc. In June 2015, we received a Paragraph IV certification notice letter from Watson Laboratories, Inc. (Watson) indicating that Watson has submitted an abbreviated new drug application (ANDA) to the FDA to market a generic version of Tyvaso. In its notice letter, Watson states that it intends to market a generic version of Tyvaso before the expiration of U.S. Patent Nos. 6,521,212 and 6,756,033, each of which expires in November 2018; and U.S. Patent No. 8,497,393, which expires in December 2028. Watson’s notice letter states that the ANDA 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 the proposed product described in Watson’s ANDA submission. We responded to the Watson notice letter by filing a lawsuit in July 2015 against Watson in the U.S. District Court for the District of New Jersey alleging infringement of each of the patents noted above. Under the Hatch-Waxman Act, the FDA is automatically precluded from approving Watson’s ANDA for up to 30 months from receipt of Watson’s notice letter or until the issuance of a U.S. District Court decision that is adverse to us with respect to all patents noted above, whichever occurs first. In September 2015, Watson filed (1) a motion to dismiss some, but not all, counts of the complaint; (2) its answer to the complaint; and (3) certain counterclaims against us. The Court granted Watson’s motion to dismiss certain counts of our complaint. In September 2015, we filed our answer to Watson’s counterclaims. The U.S. Patent and Trademark Office issued to us U.S. Patent Nos. 9,339,507 (the ‘507 patent) and 9,358,240 (the ‘240 patent) in May 2016 and June 2016, respectively. The ‘507 patent is directed to a kit for treating pulmonary hypertension and expires in March 2028. The ‘240 patent is directed to a method of treating pulmonary hypertension and expires in May 2028. Both patents have been listed in FDA’s Approved Drug Products with Therapeutic Equivalents publication (also known as the Orange Book) in connection with Tyvaso. On June 21, 2016, we filed an amended complaint against Watson asserting infringement of both of these patents. On June 30, 2016, we received a second Paragraph IV certification notice letter from Watson relating to the previously submitted ANDA, which addresses the ‘507 and ‘240 patents. The parties are currently engaged in discovery, and trial on all patent infringement claims is scheduled to take place in September 2017. We intend to vigorously enforce our intellectual property rights relating to Tyvaso. Actavis Laboratories FL, Inc. In February 2016, we received a Paragraph IV certification notice letter (the First Actavis Notice Letter) from Actavis Laboratories FL, Inc. (Actavis) indicating that Actavis has submitted an ANDA to the FDA to market a generic version of the 2.5 mg strength of Orenitram. The First Actavis Notice Letter states that Actavis intends to market a generic version of the 2.5 mg strength of Orenitram before the expiration of the following patents, all of which are listed in the Orange Book: U.S. Patent No. Expiration Date 8,252,839 May 2024 9,050,311 May 2024 7,544,713 July 2024 7,417,070 July 2026 8,497,393 December 2028 8,747,897 October 2029 8,410,169 February 2030 8,349,892 January 2031 The First Actavis Notice Letter states that the ANDA 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 the proposed product described in Actavis’ ANDA submission. We responded to the First Actavis Notice Letter by filing a lawsuit (the First Actavis Action) against Actavis in March 2016 in the U.S. District Court for the District of New Jersey alleging infringement of each of the patents noted above and one additional patent, U.S. Patent No. 9,278,901 (the ‘901 patent), which expires in May 2024 and is also now listed in the Orange Book. Under the Hatch-Waxman Act, the FDA is automatically precluded from approving Actavis’ ANDA with respect to the 2.5 mg strength of Orenitram for up to 30 months from receipt of Actavis’ notice letter or until the issuance of a U.S. District Court decision that is adverse to us with respect to all of the eight patents listed in the table above, whichever occurs first. In June 2016, we filed an amended complaint against Actavis, Actavis filed its answer and counterclaims to that amended complaint, and we filed our answer to those counterclaims. The Court has set a scheduling conference in the First Actavis Action for August 2, 2016. In May 2016, we received a second Paragraph IV certification notice letter from Actavis (the Second Actavis Notice Letter) indicating that Actavis has amended its ANDA to include its generic version of the 0.25 mg and 1.0 mg strengths of Orenitram, in addition to the 2.5 mg strength identified in the First Actavis Notice Letter. We responded to the Second Actavis Notice Letter by filing an additional lawsuit against Actavis (the Second Actavis Action) on June 17, 2016 in the U.S. District Court for the District of New Jersey alleging infringement of the same patents asserted in the First Actavis Action. The Second Actavis Action triggered an additional 30-month stay with respect to the 0.25 mg and 1.0 mg strengths. Specifically, the FDA is automatically precluded from approving Actavis’ ANDA with respect to the 0.25 mg and 1.0 mg strengths of Orenitram for up to 30 months from receipt of the Second Actavis Notice Letter or until the issuance of a U.S. District Court decision that is adverse to us with respect to all of the eight patents listed in the table above and the ‘901 patent, whichever occurs first. We intend to vigorously enforce our intellectual property rights relating to Orenitram. SteadyMed Ltd. On October 1, 2015, SteadyMed Ltd. (SteadyMed) filed a petition with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office for inter partes review (the IPR Petition) of U.S. Patent No. 8,497,393 (the ‘393 Patent), which we own. In its IPR Petition, SteadyMed seeks to invalidate the claims of the ‘393 Patent, which expires in December 2028 and describes a method of making treprostinil, which is the active pharmaceutical ingredient in our Remodulin, Tyvaso and Orenitram products. We filed a response to the IPR Petition in January 2016. In April 2016, the PTAB instituted an inter partes review of the ‘393 Patent on the basis of SteadyMed’s IPR Petition. The PTAB has preliminarily agreed with SteadyMed’s arguments concerning invalidity, and has initially found that there is a reasonable likelihood that SteadyMed would prevail in challenging the ‘393 patent. The ‘393 Patent was also the subject of the recently-settled litigation with Sandoz, Inc. and Teva Pharmaceuticals USA, Inc. regarding their ANDAs relating to generic forms of Remodulin, and remains the subject of our pending litigation with Watson and Actavis, described above. We intend to vigorously defend the ‘393 Patent. SteadyMed has announced that it is developing a product called Trevyent ® , which is a single-use, pre-filled pump for which it plans to seek FDA approval for delivery of a two-day supply of treprostinil subcutaneously using its PatchPump ® technology. Department of Justice Subpoena In May 2016, we received a subpoena from the U.S. Department of Justice requesting documents regarding our support of 501(c)(3) organizations that provide financial assistance to patients taking our medicines. Other companies have received similar inquiries. We are cooperating with this inquiry.

Investments (Tables)

Investments (Tables)	6 Months Ended
	Jun. 30, 2016
Investments
Schedule of marketable investments classified as held-to-maturity	Marketable investments classified as held-to-maturity consist of the following (in millions): As of June 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Government-sponsored enterprises $ $ $ — $ Corporate notes and bonds — — Total $ $ $ — $ Reported under the following captions on the consolidated balance sheet: Current marketable investments $ Noncurrent marketable investments $ As of December 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Government-sponsored enterprises $ $ — $ ) $ Corporate notes and bonds — — Total $ $ — $ ) $ Reported under the following captions on the consolidated balance sheet: Current marketable investments $ Noncurrent marketable investments $
Summary of gross unrealized losses and the length of time marketable investments have been in a continuous unrealized loss position	The following table summarizes gross unrealized losses and the length of time marketable investments have been in a continuous unrealized loss position (in millions): As of June 30, 2016 As of December 31, 2015 Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Government-sponsored enterprises: Continuous unrealized loss position less than one year $ — $ — $ $ ) Continuous unrealized loss position greater than one year — — — — — — ) Corporate notes and bonds: Continuous unrealized loss position less than one year — — Continuous unrealized loss position greater than one year — — — — — — Total $ $ — $ $ )
Summary of the contractual maturities of held-to-maturity marketable investments	The following table summarizes the contractual maturities of held-to-maturity marketable investments (in millions): June 30, 2016 Amortized Cost Fair Value Due in less than one year $ $ Due in one to two years Total $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Measurements
Schedule of assets and liabilities subject to fair value measurements	Assets and liabilities subject to fair value measurements are as follows (in millions): As of June 30, 2016 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ $ — $ — $ Federally-sponsored and corporate debt securities (2) — — Total assets $ $ $ — $ Liabilities Convertible notes (3) $ $ — $ — $ Contingent consideration (4) — — Total liabilities $ $ — $ $ As of December 31, 2015 Level 1 Level 2 Level 3 Balance Assets Money market funds (1) $ $ — $ — $ Federally-sponsored and corporate debt securities (2) — — Total assets $ $ $ — $ Liabilities Convertible notes (3) $ $ — $ — $ Contingent consideration (4) — — Total liabilities $ $ — $ $ (1) Included in cash and cash equivalents on the accompanying consolidated balance sheets. (2) Included in current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. (3) Included in convertible notes on the accompanying consolidated balance sheets. The fair value of our Convertible Notes is estimated using Level 1 observable inputs since our Convertible Notes are trading with sufficient frequency such that we believe related pricing can be used as the primary basis for measuring their fair value. As of June 30, 2016 and December 31, 2015, the fair value of the Convertible Notes was substantially higher than their book value. This was primarily due to the excess conversion value of the notes compared to the notes’ par value, and the fact that any such excess would be paid in shares of our common stock. (4) Included in other liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability weighted discounted cash flow models (DCF). 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. We analyze and evaluate these fair value measurements quarterly to determine whether valuation inputs continue to be relevant and appropriate or whether current period developments warrant adjustments to valuation inputs and related measurements.

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2016
Inventories
Schedule of inventories, net of reserves	Inventories are stated at the lower of cost (first-in, first-out method) or market (current replacement cost) and consist of the following, net of reserves (in millions): June 30, 2016 December 31, 2015 Raw materials $ $ Work-in-progress Finished goods Total inventories $ $

Goodwill and Other Intangible24

Goodwill and Other Intangible Assets (Tables)	6 Months Ended
	Jun. 30, 2016
Goodwill and Other Intangible Assets
Schedule of goodwill and other intangible assets	Goodwill and other intangible assets comprise the following (in millions): As of June 30, 2016 As of December 31, 2015 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ $ — $ $ $ — $ Other intangible assets: Technology, patents and trade names ) ) In-process, research and development — — Customer relationships and non-compete agreements ) ) Contract-based ) — ) — Total $ $ ) $ $ $ ) $

Share Tracking Awards Plans (Ta

Share Tracking Awards Plans (Tables) - Share tracking award plans (STAP)	6 Months Ended
	Jun. 30, 2016
Awards granted under the STAP
Schedule of assumptions used to measure the fair value of STAP awards	June 30, 2016 June 30, 2015 Expected volatility % % Risk-free interest rate % % Expected term of awards (in years) Expected forfeiture rate % % Expected dividend yield % %
Summary of activity and status of STAP awards	Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 $ Granted — — Exercised ) Forfeited ) Outstanding at June 30, 2016 $ $ Exercisable at June 30, 2016 $ $ Expected to vest as of June 30, 2016 $ $
Schedule of share-based compensation expense (benefit) recognized in connection with the STAP	Share-based compensation (benefit) expense recognized in connection with STAP awards is as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of product sales $ ) $ $ ) $ Research and development ) ) Selling, general and administrative ) ) Share-based compensation (benefit) expense before taxes $ ) $ $ ) $ Related income tax benefit (expense) ) ) Share-based compensation (benefit) expense, net of taxes $ ) $ $ ) $

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings Per Common Share
Schedule of components of basic and diluted earnings per share	The components of basic and diluted earnings per common share comprised the following (in millions, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Denominator: Weighted average outstanding shares — basic Effect of dilutive securities (1) : Convertible notes — Stock options, restricted stock units and employee stock purchase plan Warrants Weighted average shares — diluted (2) Earnings per common share: Basic $ $ $ $ Diluted $ $ $ $ Stock options and warrants excluded from calculation (2) (1) Calculated using the treasury stock method. (2) Certain convertible notes, stock options and warrants have been excluded from the computation of diluted earnings per share because their impact would be anti-dilutive. Under our convertible note hedge agreement, we are entitled to receive shares required to be issued to investors upon conversion of our Convertible Notes. Since related shares used to compute dilutive earnings per share would be anti-dilutive, they have been excluded from the calculation above.
Stock Options
Stock Option Plan
Weighted-average assumptions used to measure the fair value of the stock options granted	Expected volatility % Risk-free interest rate % Expected term of awards (in years) Expected forfeiture rate % Expected dividend yield %
Schedule of stock option activity	Number of Options Weighted- Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 $ Granted Exercised ) Forfeited ) Outstanding at June 30, 2016 $ $ Exercisable at June 30, 2016 $ $ Expected to vest as of June 30, 2016 $ $
Summary of stock option exercise data	Stock option exercise data is summarized below (dollars in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Number of options exercised Cash received $ $ $ $
Schedule of total share-based compensation expense relating to stock options	Total share-based compensation expense relating to stock options and restricted stock units is as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of product sales $ $ — $ $ — Research and development — — Selling, general and administrative — — Share-based compensation expense before taxes — — Related income tax benefit ) — ) — Share-based compensation expense, net of taxes $ $ — $ $ —

Accumulated Other Comprehensi27

Accumulated Other Comprehensive Loss (Tables)	6 Months Ended
	Jun. 30, 2016
Accumulated Other Comprehensive Loss
Schedule of changes in accumulated other comprehensive loss by component, net of tax	The following table includes changes in accumulated other comprehensive loss by component, net of tax (in millions): Defined Benefit Pension Plan Foreign Currency Translation Losses Total Balance, January 1, 2016 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) Current-period other comprehensive gain (loss) ) Balance, June 30, 2016 $ $ ) $ )

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2016
Segment Information
Schedule of net revenues, cost of product sales and gross profit for each commercial product	Net product sales, cost of product sales and gross profit for each of our commercial products were as follows (in millions): Three Months Ended June 30, Remodulin Tyvaso Adcirca Orenitram Unituxin Total 2016 Net product sales $ $ $ $ $ $ Cost of product sales Gross profit $ $ $ $ $ $ 2015 Net product sales (1) $ $ $ $ $ — $ Cost of product sales Gross profit $ $ $ $ $ ) $ Six Months Ended June 30, Remodulin Tyvaso Adcirca Orenitram Unituxin Total 2016 Net product sales $ $ $ $ $ $ Cost of product sales Gross profit $ $ $ $ $ $ 2015 Net product sales (1) $ $ $ $ $ — $ Cost of product sales Gross profit $ $ $ $ $ ) $ (1) Unituxin was approved by the FDA in March 2015 and we commenced sales of Unituxin in the third quarter of 2015.

Litigation (Tables)

Litigation (Tables)	6 Months Ended
	Jun. 30, 2016
Litigation
Schedule of patent expiration dates	U.S. Patent No. Expiration Date 8,252,839 May 2024 9,050,311 May 2024 7,544,713 July 2024 7,417,070 July 2026 8,497,393 December 2028 8,747,897 October 2029 8,410,169 February 2030 8,349,892 January 2031

Investments (Details)

Investments (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Marketable investments classified as held-to-maturity:
Amortized Cost	$ 111.1	$ 160
Gross Unrealized Gains	0.1
Gross Unrealized Losses		(0.2)
Fair Value	111.2	159.8
Government-sponsored enterprises
Marketable investments classified as held-to-maturity:
Amortized Cost	44.2	53.3
Gross Unrealized Gains	0.1
Gross Unrealized Losses		(0.2)
Fair Value	44.3	53.1
Corporate notes and bonds
Marketable investments classified as held-to-maturity:
Amortized Cost	66.9	106.7
Fair Value	$ 66.9	$ 106.7

Investments (Details 2)

Investments (Details 2) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
As reported on the consolidated balance sheets:
Current marketable investments	$ 107.2	$ 122
Noncurrent marketable investments	3.9	38
Total marketable investments	$ 111.1	$ 160

Investments (Details 3)

Investments (Details 3) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Continuous unrealized loss position, Fair Value
Fair Value, Total	$ 3	$ 111.9
Continuous unrealized loss position, Gross Unrealized Loss
Gross Unrealized Loss, Total		(0.2)
Government-sponsored enterprises
Continuous unrealized loss position, Fair Value
Less than one year, Fair value		48.1
Fair Value, Total		48.1
Continuous unrealized loss position, Gross Unrealized Loss
Less than one year, Gross Unrealized Loss		(0.2)
Gross Unrealized Loss, Total		(0.2)
Corporate notes and bonds
Continuous unrealized loss position, Fair Value
Less than one year, Fair value	3	63.8
Fair Value, Total	$ 3	$ 63.8

Investments (Details 4)

Investments (Details 4) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Amortized Cost
Due in less than one year, Amortized Cost	$ 107.2
Due in one to two years, Amortized Cost	3.9
Total marketable investments	111.1	$ 160
Fair Value
Due in less than one year, Fair Value	107.3
Due in one to two years, Fair Value	3.9
Fair Value	$ 111.2	$ 159.8

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Assets
Federally-sponsored and corporate debt securities	$ 111.2	$ 159.8
Recurring fair value measurements | Level 1
Assets
Money market funds	669	496.4
Total assets	669	496.4
Liabilities
Convertible notes	2.6	16
Total liabilities	2.6	16
Recurring fair value measurements | Level 2
Assets
Federally-sponsored and corporate debt securities	111.2	159.8
Total assets	111.2	159.8
Recurring fair value measurements | Level 3
Liabilities
Contingent consideration	10.3	9.4
Total liabilities	10.3	9.4
Recurring fair value measurements | Balance
Assets
Money market funds	669	496.4
Federally-sponsored and corporate debt securities	111.2	159.8
Total assets	780.2	656.2
Liabilities
Convertible notes	2.6	16
Contingent consideration	10.3	9.4
Total liabilities	$ 12.9	$ 25.4

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Inventories:
Raw materials	$ 24.8	$ 23.1
Work-in-progress	27	22.5
Finished goods	37.3	35.7
Total inventories	$ 89.1	$ 81.3

Goodwill and Other Intangible36

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Goodwill and other intangible assets
Goodwill, Gross	$ 10.3	$ 10.3
Goodwill, Net	10.3	10.3
Total Goodwill and other intangible assets, Gross	43.9	37.9
Other intangible assets, Accumulated	(9.8)	(9.5)
Total Goodwill and other intangible assets, Net	34.1	28.4
Technology, patents and trade names
Goodwill and other intangible assets
Other intangible assets, Gross	6.5	6.5
Other intangible assets, Accumulated	(4.7)	(4.7)
Other intangible assets, Net	1.8	1.8
In-process, research and development
Goodwill and other intangible assets
Other intangible assets, Gross	21.5	15.5
Other intangible assets, Net	21.5	15.5
Customer relationships and non-compete agreements
Goodwill and other intangible assets
Other intangible assets, Gross	4.3	4.3
Other intangible assets, Accumulated	(3.8)	(3.5)
Other intangible assets, Net	0.5	0.8
Contract-based
Goodwill and other intangible assets
Other intangible assets, Gross	1.3	1.3
Other intangible assets, Accumulated	$ (1.3)	$ (1.3)

Share Tracking Awards Plans (De

Share Tracking Awards Plans (Details) - Share tracking award plans (STAP) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Awards granted under the STAP
Grant expiration period from the grant date	10 years
Share-based awards, vesting period	4 years
Aggregate STAP liability	$ 161.3		$ 354.7
Long term portion of STAP liability	$ 40.4		$ 80.2
Assumptions used to measure the fair value of STAP awards
Expected volatility (as a percent)	36.90%	34.40%
Risk-free interest rate (as a percent)	0.70%	1.40%
Expected term of awards	3 years	4 years 3 months 18 days
Expected forfeiture rate (as a percent)	10.40%	9.60%
Expected dividend yield (as a percent)	0.00%	0.00%
Closing price of common stock (in dollars per share)	$ 105.92	$ 173.95
Share-based awards activity
Outstanding at the beginning of the year (in shares)	6,845,163
Granted (in shares)		0
Exercised (in shares)	(542,555)
Forfeited (in shares)	(401,962)
Outstanding at the end of the period (in shares)	5,900,646
Exercisable at the end of the period (in shares)	3,185,621
Expected to vest at the end of the period (in shares)	2,422,909
Share awards, Weighted-Average Exercise Price
Outstanding at the beginning of the year (in dollars per share)	$ 86.86
Exercised (in dollars per share)	61.77
Forfeited (in dollars per share)	86.38
Outstanding at the end of the period (in dollars per share)	89.20
Exercisable at the end of the period (in dollars per share)	84.33
Expected to vest at the end of the period (in dollars per share)	$ 94.49
Share awards, Weighted Average Remaining Contractual Term
Outstanding at the end the period	6 years 10 months 24 days
Exercisable at the end of the period	6 years 6 months
Expected to vest at the end of the period	7 years 4 months 24 days
Share awards, Aggregate Intrinsic Value
Outstanding at the end of the period (in dollars)	$ 179.4
Exercisable at the end of the period (in dollars)	103.5
Expected to vest at the end of the period (in dollars)	$ 68.4
Awards granted during the period, weighted average grant date fair value (in dollars per share)		$ 58.52

Share Tracking Awards Plans (38

Share Tracking Awards Plans (Details 2) - Share tracking award plans (STAP) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based compensation (benefit) expense recognized in connection with the STAP
Share-based compensation expense before taxes		$ 47		$ 281.2
Share-based compensation (benefit) before taxes	$ (14.4)		$ (162.3)
Related income tax benefit		(19.5)		(116.7)
Related income tax expense	7.4		59.7
Share-based compensation expense, net of taxes		27.5		164.5
Share-based compensation (benefit) net of taxes	(7)		(102.6)
Cash payments on awards exercised during the period			30.4	178.3
Cost of product sales
Share-based compensation (benefit) expense recognized in connection with the STAP
Share-based compensation expense before taxes		1.3		10.9
Share-based compensation (benefit) before taxes	(0.2)		(12.2)
Research and development
Share-based compensation (benefit) expense recognized in connection with the STAP
Share-based compensation expense before taxes		13.3		88.2
Share-based compensation (benefit) before taxes	(2.3)		(39.7)
Selling, general and administrative
Share-based compensation (benefit) expense recognized in connection with the STAP
Share-based compensation expense before taxes		$ 32.4		$ 182.1
Share-based compensation (benefit) before taxes	$ (11.9)		$ (110.4)

Debt (Details)

Debt (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Oct. 31, 2011
Credit Agreement 2016
Debt
Maximum borrowing capacity	$ 1,000	$ 1,000
Period of extension in maturity		1 year
Convertible Notes
Debt
Debt aggregate principal value			$ 250
Stated percentage rate			1.00%
Conversion price (in dollars per share)			$ 47.69
Convertible debt, number of shares into which convertible			5,200,000
Principal balance	0.9	$ 0.9
Value of convertible note settled due to conversion requests	$ 4.6
Shares issued for conversion of convertible notes (in shares)	56,000
Sale of warrant
Share warrant, number of shares	5,200,000	5,200,000
Share warrant, strike price (in dollars per share)	$ 67.56	$ 67.56

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator:
Net income	$ 206.1	$ 99.2	$ 441.6	$ 82.6
Denominator:
Weighted average outstanding shares - basic	44.3	46.1	44.8	46.4
Effect of dilutive securities:
Convertible notes (in shares)		1	0.1	1.5
Stock options, restricted stock units and employee stock purchase plan (in shares)	0.5	1.5	0.6	1.5
Warrants (in shares)	2.1	3.3	2.3	3.1
Weighted average shares - diluted	46.9	51.9	47.8	52.5
Earnings per common share:
Basic (in dollars per share)	$ 4.65	$ 2.15	$ 9.86	$ 1.78
Diluted (in dollars per share)	$ 4.39	$ 1.91	$ 9.24	$ 1.57
Stock options and warrants excluded from calculation	6.5	3.7	5.3	4.7

Stockholders' Equity (Details 2

Stockholders' Equity (Details 2) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2016USD ($)item$ / sharesshares	Jun. 30, 2015shares
Equity Incentive Plans
Number of equity incentive plans | item	2
Stock Incentive Plan 1999 And 2015 Plan
Equity Incentive Plans
Number of shares of common stock into which each restricted stock unit is entitled	1
Amended and Restated Equity Incentive Plan (The 1999 Plan)
Options disclosures
Granted (in shares)	0	0
Stock Incentive Plan 2015 (The 2015 Plan)
Equity Incentive Plans
Maximum number of shares authorized to be issued	6,150,000
Stock Options
Options disclosures
Granted (in shares)	1,592,552
Stock Options | Stock Incentive Plan 2015 (The 2015 Plan)
Options disclosures
Granted (in shares)	1,600,000	0
Weighted average grant date fair value of stock options (in dollars per share) | $ / shares	$ 42.48
Aggregate grant date fair value | $	$ 67.7
Restricted stock units | Stock Incentive Plan 2015 (The 2015 Plan)
Restricted stock units disclosures
Granted (in shares)	20,960
Awards granted during the period, weighted average grant date fair value (in dollars per share) | $ / shares	$ 101.80
Aggregate grant date fair value | $	$ 2.1

Stockholders' Equity (Details 3

Stockholders' Equity (Details 3) - Stock Options	6 Months Ended
	Jun. 30, 2016
Method and assumptions on valuation of stock options
Expected volatility (as a percent)	34.80%
Risk-free interest rate (as a percent)	1.60%
Expected term of options	5 years 9 months 18 days
Expected forfeiture rate (as a percent)	5.20%
Expected dividend yield (as a percent)	0.00%

Stockholders' Equity (Details 4

Stockholders' Equity (Details 4) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stock option activity
Exercised (in shares)	(73,436)	(345,664)	(154,541)	(597,499)
Stock Options
Stock option activity
Outstanding at the beginning of the period (in shares)			3,247,438
Granted (in shares)			1,592,552
Exercised (in shares)			(154,541)
Forfeited (in shares)			(123,126)
Outstanding at the end of the period (in shares)	4,562,323		4,562,323
Exercisable at the end of the year (in shares)	3,320,647		3,320,647
Expected to vest at the end of the year (in shares)	1,160,247		1,160,247
Employee stock options, Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 93.09
Granted (in dollars per share)			119.24
Exercised (in dollars per share)			32.13
Forfeited (in dollars per share)			120.26
Outstanding at the end of the period (in dollars per share)	$ 103.55		103.55
Exercisable at the end of period (in dollars per share)	97.62		97.62
Expected to vest at the end of period (in dollars per share)	$ 119.28		$ 119.28
Employee stock options, Weighted Average Remaining Contractual Term
Outstanding at the end of the period			7 years 4 months 24 days
Exercisable at the end of the period			6 years 6 months
Expected to vest at the end of the period			9 years 8 months 12 days
Employee stock options, Aggregate Intrinsic Value
Outstanding at the end of the period (in dollars)	$ 66.4		$ 66.4
Exercisable at the end of the period (in dollars)	66.1		66.1
Expected to vest at the end of period (in dollars)	$ 0.3		$ 0.3

Stockholders' Equity (Details 5

Stockholders' Equity (Details 5) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Summary of stock option exercise data
Number of options exercised (in shares)	73,436	345,664	154,541	597,499
Cash received	$ 2.4	$ 14.3	$ 5	$ 24.4

Stockholders' Equity (Details 6

Stockholders' Equity (Details 6) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Stock Options And Restricted Stock Units
Share-based compensation expense related to outstanding awards
Share-based compensation expense before taxes	$ 15.4	$ 18.5
Related income tax benefit	(5.7)	(6.8)
Share-based compensation expense, net of taxes	9.7	11.7
Cost of product sales | Stock Options And Restricted Stock Units
Share-based compensation expense related to outstanding awards
Share-based compensation expense before taxes	0.1	0.2
Research and development | Stock Options And Restricted Stock Units
Share-based compensation expense related to outstanding awards
Share-based compensation expense before taxes	0.4	0.5
Selling, general and administrative | Stock Options | Officer
Share-based compensation expense related to outstanding awards
Share-based compensation expense before taxes	9.8	9.8
Selling, general and administrative | Stock Options And Restricted Stock Units
Share-based compensation expense related to outstanding awards
Share-based compensation expense before taxes	$ 14.9	$ 17.8

Stockholders' Equity (Details 7

Stockholders' Equity (Details 7) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Equity Incentive Plans
Unrecognized compensation cost	$ 48,000,000
Stock Options
Equity Incentive Plans
Unrecognized compensation cost		$ 0
Granted (in shares)	1,592,552
Stock Options | June 2016 Award Date
Equity Incentive Plans
Unrecognized compensation cost	$ 44,900,000
Non-Employee Stock Option | Non-employee directors | June 2015 Award Date
Equity Incentive Plans
Unrecognized compensation cost		$ 9,300,000
Stock Options And Restricted Stock Units | June 2016 Award Date
Equity Incentive Plans
Recognition of share-based compensation expense (in years)	3 years 6 months
Stock Options And Restricted Stock Units | Non-employee directors | June 2016 Award Date
Equity Incentive Plans
Unrecognized compensation cost	$ 3,100,000
Stock Incentive Plan 2015 (The 2015 Plan) | Stock Options
Equity Incentive Plans
Granted (in shares)	1,600,000	0

Stockholders' Equity (Details 8

Stockholders' Equity (Details 8) - 2015 Share Repurchase Program - USD ($) shares in Millions, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Oct. 31, 2015
Stockholders' Equity
Authorized aggregate repurchases of common stock			$ 500
Repurchased shares of common stock	1.2	2.2
Cost of shares repurchased	$ 136.5	$ 259.7

Accumulated Other Comprehensi48

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Changes in accumulated other comprehensive income (loss), net of tax
Balance			$ 1,588.6
Other comprehensive income (loss), net of tax	$ 5.1	$ 1.7	5.7	$ (3.2)
Balance	1,806.2		1,806.2
Accumulated Other Comprehensive Income/(Loss)
Changes in accumulated other comprehensive income (loss), net of tax
Balance			(20.4)
Other comprehensive income (loss) before reclassifications			5.7
Other comprehensive income (loss), net of tax			5.7
Balance	(14.7)		(14.7)
Defined Benefit Pension Plan
Changes in accumulated other comprehensive income (loss), net of tax
Balance			(5.3)
Other comprehensive income (loss) before reclassifications			7.5
Other comprehensive income (loss), net of tax			7.5
Balance	2.2		2.2
Foreign Currency Translation Losses
Changes in accumulated other comprehensive income (loss), net of tax
Balance			(15.1)
Other comprehensive income (loss) before reclassifications			(1.8)
Other comprehensive income (loss), net of tax			(1.8)
Balance	$ (16.9)		$ (16.9)

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Taxes
Effective income tax rate	32.00%	46.00%
Positions of uncertain tax, if realized, would impact the effective tax rate	$ 0.5	$ 1.5

Employee Benefit Plans (Details

Employee Benefit Plans (Details) - Supplemental Executive Retirement Plan (SERP) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Supplemental Executive Retirement Plan Disclosure
Increase to actuarial gain, net of tax within accumulated other comprehensive loss	$ 7.1
Discount Rate (as a percent)	3.36%	3.82%

Segment Information (Details)

Segment Information (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2016USD ($)productsegment	Jun. 30, 2015USD ($)
Net revenues, cost of product sales and gross profits
Number of operating segments | segment			1
Number of commercial products | product			5
Net product sales	$ 412.6	$ 345.8	$ 781.6	$ 671.7
Cost of product sales	20	16	20.7	36.8
Gross profit	392.6	329.8	760.9	634.9
Remodulin
Net revenues, cost of product sales and gross profits
Net product sales	158.9	135.9	298.7	282.2
Cost of product sales	3	3.3	0.6	9.3
Gross profit	155.9	132.6	298.1	272.9
Tyvaso
Net revenues, cost of product sales and gross profits
Net product sales	107	115.8	209.2	229.2
Cost of product sales	6.3	4.5	7.1	12.4
Gross profit	100.7	111.3	202.1	216.8
Adcirca
Net revenues, cost of product sales and gross profits
Net product sales	90.9	68.2	163.5	113.5
Cost of product sales	5.2	3.9	9.5	6.7
Gross profit	85.7	64.3	154	106.8
Orenitram
Net revenues, cost of product sales and gross profits
Net product sales	38	25.9	78.2	46.8
Cost of product sales	3.1	1.8	2.7	5.5
Gross profit	34.9	24.1	75.5	41.3
Unituxin
Net revenues, cost of product sales and gross profits
Net product sales	17.8		32
Cost of product sales	2.4	2.5	0.8	2.9
Gross profit	$ 15.4	$ (2.5)	$ 31.2	$ (2.9)

Segment Information (Details 2)

Segment Information (Details 2)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net revenues | Customer concentration | US Based Distributors
Segment Information
Concentration risk, percentage	69.00%	73.00%	71.00%	75.00%

Litigation (Details)

Litigation (Details) - patent	6 Months Ended
	Jun. 30, 2016	May 31, 2016
Litigation
Number of patents on which district court decision is adverse		8
Pending Litigation
Litigation
Maximum period for which the FDA is automatically precluded from approving Watson's ANDA	30 months
Maximum period for which the FDA is automatically precluded from approving Actavis' ANDA	30 months
Number of days for supply of treprostinil under FDA approval	2 days