United Therapeutics (UTHR)

Biotechnology company United Therapeutics (NASDAQ:UTHR) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 6.8% year on year to $799.5 million. Its GAAP profit of $7.16 per share was 2.3% above analysts’ consensus estimates.

Company Overview

Founded by a mother seeking treatment for her daughter's pulmonary arterial hypertension, United Therapeutics (NASDAQ:UTHR) develops and commercializes medications for chronic lung diseases and other life-threatening conditions, with a focus on pulmonary hypertension treatments.

Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.

United Therapeutics' competitors in the pulmonary hypertension treatment space include Johnson & Johnson (NYSE:JNJ), which markets Uptravi and Opsumit, Merck (NYSE:MRK) with Adempas, and Pfizer (NYSE:PFE) with Revatio. In the organ manufacturing field, competitors include Revivicor (a subsidiary of United Therapeutics), eGenesis, and Recombinetics.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $3.13 billion in revenue over the past 12 months, United Therapeutics has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, United Therapeutics’s sales grew at an impressive 17.3% compounded annual growth rate over the last five years. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. United Therapeutics’s annualized revenue growth of 19.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, United Therapeutics’s revenue grew by 6.8% year on year to $799.5 million, missing Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to decline by 6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

United Therapeutics has been a well-oiled machine over the last five years. It demonstrated elite profitability for a healthcare business, boasting an average operating margin of 45.7%.

Analyzing the trend in its profitability, United Therapeutics’s operating margin rose by 20.5 percentage points over the last five years, as its sales growth gave it immense operating leverage. Zooming into its more recent performance, however, we can see the company’s margin has decreased by 2.2 percentage points on a two-year basis. Given its business quality, we’re optimistic that United Therapeutics can correct course and return to expansion.

This quarter, United Therapeutics generated an operating margin profit margin of 48.6%, up 2.8 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

United Therapeutics’s EPS grew at an astounding 20.1% compounded annual growth rate over the last five years, higher than its 17.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into United Therapeutics’s earnings to better understand the drivers of its performance. As we mentioned earlier, United Therapeutics’s operating margin expanded by 20.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, United Therapeutics reported EPS of $7.16, up from $6.39 in the same quarter last year. This print beat analysts’ estimates by 2.3%. Over the next 12 months, Wall Street expects United Therapeutics’s full-year EPS of $26.39 to grow 5.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

United Therapeutics has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the healthcare sector, averaging an eye-popping 34.2% over the last five years.

Taking a step back, we can see that United Therapeutics’s margin expanded by 10.6 percentage points during that time. This is encouraging because it gives the company more optionality.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

United Therapeutics’s five-year average ROIC was 27.5%, placing it among the best healthcare companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, United Therapeutics’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

United Therapeutics is a profitable, well-capitalized company with $2.77 billion of cash and $600 million of debt on its balance sheet. This $2.17 billion net cash position is 10.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

Revenue fell short of expectations, making for a softer quarter. The stock traded down 2.4% to $405 immediately following the results.

Updated: December 4, 2025 at 10:50 PM EST

Before investing in or passing on United Therapeutics, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

United Therapeutics is an amazing business ranking highly on our list. First of all, the company’s revenue growth was impressive over the last five years. On top of that, its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits, and its impressive operating margins show it has a highly efficient business model.

United Therapeutics’s P/E ratio based on the next 12 months is 16.2x. Scanning the healthcare space today, United Therapeutics’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $518.25 on the company (compared to the current share price of $484.89), implying they see 6.9% upside in buying United Therapeutics in the short term.