Odds & Ends: Health-care reform edition __»

April 28, 2010

The health-care reform bill signed by President Obama on March 23 continues to leave its (so far) modest imprint on corporate filings. A few of the sightings over the last week or so illustrates the wide range of responses by companies in different circumstances:

  • Intuitive Surgical (ISRG), a surgical-equipment maker, warned in its April 20 10-Q filing that a 2.3% sales tax on medical devices in the legislation “does apply to all of the Company’s products and product candidates” and “may result in decreased profits to us, lower reimbursements by payors for our products, reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations, possibly materially.”
  • In the 10-Q Centene Corp. (CNC) filed on Tuesday, the company bemoaned the fact that the legislation would increase competition for the company: “Subject to limited exceptions by federally approved state applications, the federal government requires that there be choices for Medicaid recipients among managed care programs. Voluntary programs, increases in the number of competitors and mandated competition may limit our ability to increase our market share.”
  • Several more companies disclosed the first-quarter impact of the health-reform law’s change to the tax treatment of federal subsidies under Medicare for companies that provide prescription benefits to retirees — an issue we looked at more closely in Footnoted Pro at the beginning of this month (that report is here for subscribers). Among them: Abbott Laboratories (ABT) said in the earnings release it filed April 21 that it would take a $53 million charge for the change — or 4 cents a share, less than the $115 million, or 7-cent-a-share, charge it took for the devaluation of the Venezuelan Bolivar. Other companies reporting charges included Kimberly-Clark (KMB) at $20 million; The New York Times (NYT) at $10.9 million; PepsiCo (PEP) at $40 million; Altria Group (MO) at $12 million; United States Steel (X) at $27 million; and Johnson Controls (JCI) at $18 million.
  • By contrast, AMR Corp. (AMR), the parent of American Airlines, was more equivocal, concluding in the 10-Q it filed April 21 that “the extent of [the] impact, if any, cannot be determined until regulations are promulgated.” Among other uncertainties are rules that “include the elimination of lifetime limits on retiree medical coverage.” Like AT&T, the company warned that “the Company may consider plan amendments in future periods that may have accounting implications.”
  • Then there’s Microsoft (MSFT), which spent 117 words in the 10-Q it filed April 22 to conclude that:

“We do not expect any short term impact on our financial results as a result of the legislation. One provision that will impact certain companies significantly is the elimination of the tax deductibility of the Medicare Part D subsidy. This provision does not affect us as we do not provide retiree health benefits.”

Image source: Andres Rueda via Flickr.

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