Share-Based Compensation

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

As of March 31, 2026, we have one shareholder-approved equity incentive plan: the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (the 2015 Plan). The 2015 Plan provides for the issuance of up to 14,770,000 shares of our common stock pursuant to awards granted under the 2015 Plan, which includes 950,000 shares that were added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2025. We also have one equity incentive plan, the United Therapeutics Corporation 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), that has not been approved by our shareholders, as permitted by the Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to 99,000 shares of our common stock under awards granted to newly hired employees. Currently, we grant equity-based awards to employees and members of our Board of Directors in the form of stock options and restricted stock units (RSUs) under the 2015 Plan, and we may grant RSUs to newly hired employees under the 2019 Inducement Plan. See the sections entitled Stock Options and RSUs below for additional information regarding these equity-based awards.

During the three months ended March 31, 2026 and 2025, we issued stock options and RSUs to certain executives with vesting conditions tied to the achievement of specified performance criteria through the end of 2028 and 2027, respectively. Additionally, during the three months ended March 31, 2026 and 2025, we issued RSUs to certain other employees with vesting conditions tied to the achievement of specified performance criteria during specified performance periods, with the latest performance period ending in 2028. Throughout each performance period, we reassess the estimated performance and update the number of performance-based awards that we believe will ultimately vest. Estimating future performance requires the use of judgment. Upon the conclusion of the performance period, the performance level achieved and the ultimate number of stock options and RSUs that may vest are determined. Share-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and anticipated achievement of the specified performance criteria.

We previously issued awards under the United Therapeutics Corporation 2011 Share Tracking Awards Plan (the STAP). We discontinued the issuance of STAP awards in June 2015 and all remaining outstanding STAP awards were exercised during the first quarter of 2025.

In 2012, our shareholders approved the United Therapeutics Corporation Employee Stock Purchase Plan (ESPP), which is structured to comply with Section 423 of the Internal Revenue Code. See the section entitled ESPP below for additional information regarding the ESPP.

The following table reflects the components of share-based compensation expense recognized in our consolidated statements of operations (in millions):


	Three Months Ended March 31,
		2026		2025
Stock options		$	11.5	$	8.5
RSUs		21.5		23.4
STAP awards		—		(0.8)
ESPP		0.9		0.7
Total share-based compensation expense before tax		$	33.9	$	31.8

Stock Options

We estimate the fair value of stock options using the Black-Scholes-Merton valuation model, which requires us to make certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, the expected term of stock option awards, and the expected dividend yield.

During the three months ended March 31, 2026 and 2025, in addition to time-based stock options, we granted 0.3 million performance-based stock options in each period with grant date fair values of $53.9 million and $38.0 million, respectively, calculated based on the assumed achievement of the relevant financial performance condition. During the three months ended March 31, 2026 and 2025, we recorded $10.5 million and $7.7 million of share-based compensation expense, respectively, related to performance-based stock options.

The following weighted average assumptions were used in estimating the fair value of stock options granted to employees during the three months ended March 31, 2026 and 2025:


	March 31, 2026		March 31, 2025
Expected term of awards (in years)	5.0		5.0
Expected volatility	32.5	%	32.2	%
Risk-free interest rate	3.9	%	4.1	%
Expected dividend yield	0.0	%	0.0	%

A summary of the activity and status of stock options under the 2015 Plan during the three-month period ended March 31, 2026 is presented below:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of January 1, 2026	4,636,330	$	166.11
Granted	289,956	536.12
Exercised	(495,147)	138.00
Forfeited	(365)	120.26
Outstanding as of March 31, 2026	4,430,774	$	193.46	3.6	$	1,770.2
Exercisable as of March 31, 2026	3,243,872	$	142.88	2.2	$	1,460.1
Unvested as of March 31, 2026	1,186,902	$	331.72	7.2	$	310.1

The weighted average fair value of a stock option granted during each of the three-month periods ended March 31, 2026 and March 31, 2025 was $190.42 and $110.11, respectively. These stock options have an aggregate grant date fair value of $55.2 million and $39.0 million, respectively. The total grant date fair value of stock options that vested during the three-month periods ended March 31, 2026 and March 31, 2025 was $36.7 million and $1.2 million, respectively.

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


	Three Months Ended March 31,
		2026		2025
Cost of sales		$	—	$	—
Research and development		0.1		0.1
Selling, general, and administrative		11.4		8.4
Share-based compensation expense before taxes		11.5		8.5
Related income tax benefit		(0.2)		(0.2)
Share-based compensation expense, net of taxes		$	11.3	$	8.3

As of March 31, 2026, unrecognized compensation cost related to stock options was $97.0 million. Unvested outstanding stock options as of March 31, 2026 had a weighted average remaining vesting period of 2.3 years.

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


	Three Months Ended March 31,
		2026		2025
Number of options exercised		495,147		131,474
Cash received		$	68.3	$	16.6
Total intrinsic value of options exercised		$	182.9	$	29.1

RSUs

Each RSU entitles the recipient to one share of our common stock upon vesting. We measure the fair value of RSUs using the stock price on the date of grant. Share-based compensation expense for RSUs is recorded ratably over their vesting period.

During the three months ended March 31, 2026 and 2025, in addition to time-based RSUs, we granted 0.2 million performance-based RSUs in each period, with total grant date fair values of $88.7 million and $67.3 million, respectively, calculated based on the assumed achievement of the relevant financial and non-financial performance conditions. During the three months ended March 31, 2026 and 2025, we recorded $5.2 million and $8.3 million of share-based compensation expense, respectively, related to performance-based RSUs.

A summary of the activity with respect to, and status of, RSUs during the three-month period ended March 31, 2026 is presented below:


	Number of RSUs	Weighted Average Grant Date Fair Value
Unvested as of January 1, 2026	1,416,871	$	252.86
Granted	295,640	520.38
Vested	(274,965)	234.77
Forfeited	(16,515)	248.71
Unvested as of March 31, 2026	1,421,031	$	312.06

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


	Three Months Ended March 31,
		2026		2025
Cost of sales		$	1.0	$	1.0
Research and development		4.9		6.7
Selling, general, and administrative		15.6		15.7
Share-based compensation expense before taxes		21.5		23.4
Related income tax benefit		(3.5)		(3.8)
Share-based compensation expense, net of taxes		$	18.0	$	19.6

As of March 31, 2026, unrecognized compensation cost related to the grant of RSUs was $273.4 million. Unvested outstanding RSUs as of March 31, 2026 had a weighted average remaining vesting period of 2.4 years.

ESPP

The ESPP provides eligible employees with the right to purchase shares of our common stock at a discount through elective accumulated payroll deductions at the end of each offering period. Eligible employees may contribute up to 15 percent of their base salary, subject to certain annual limitations as defined in the ESPP. The purchase price of the shares is equal to the lower of 85 percent of the closing price of our common stock on either the first or last trading day of a given offering period. In addition, the ESPP provides that no eligible employee may purchase more than 4,000 shares during any offering period. The ESPP expires in June 2032 and limits the aggregate number of shares that can be issued under the ESPP to 3.0 million.