The 2016 election in the filings

It’s now been three weeks since Americans elected Donald Trump as the nation’s next President. While Trump doesn’t take office until Jan. 20, 2017, we’ve seen a number of interesting disclosures in SEC filings related to the pending change in administrations. Given that the outcome has widely been viewed as a surprise, many companies (and their lawyers) are still probably trying to get a handle on just what the election outcome will mean for them.

All told, we found 35 references to the election in 8-Ks, 10-Qs and 10-Ks that were filed in the past three weeks. When we narrow that down to companies with market caps of more than $1B, the number dropped to 9. That might seem low, but keep in mind that the majority of companies (those on a typical calendar year) had already filed their 10-Qs prior to the Nov. 9 deadline.

As you might expect, since one of the key talking points during the campaign was the Patient Protection and Affordable Care Act (sometimes referred to as Obamacare), some of the more significant disclosures pertained to that law. In light of the fact that Trump named outspoken Obamacare critic Rep. Tom Price to the position of Health and Human Services Secretary on Tuesday, we’re quite certain that we’ve only seen the tip of the iceberg, and that more disclosures related to the law will be made in future filings.

On Nov. 9, the day after the election, two smaller biotech companies – Theravance Biopharma and Coherus Biosciences – both warned that changes in healthcare law and implementing regulations, including government restrictions on pricing and reimbursement, as well as healthcare policy and other healthcare payor cost-containment initiatives, may negatively impact their ability to generate revenues. Theravance’s 10-Q said,

“The pricing and reimbursement environment for VIBATIV and any future products may change in the future and become more challenging due to, among other reasons, policies advanced by the current or any new presidential administration, federal agencies, new healthcare legislation passed by Congress or fiscal challenges faced by all levels of government health administration authorities.”

Both companies warned that changes to the current law could have a material impact on their results. So did WebMD Health, which warned in its 10-Q that it was “unable to predict the impact from any future changes to the Affordable Care Act or its implementation.” On Nov. 10, Amsurg Corp. added a new risk factor in this 8-K noting that “Our business may be adversely impacted if the Patient Protection and Affordable Care Act is repealed in its entirety or certain aspects of the Patient Protection and Affordable Care Act that are beneficial to our business are repealed or changed as a result of recent elections.”

A few other disclosures also jumped out at us, like one made by Ralph Lauren in the 10-Q it filed on Nov. 10, which warned that the outcome of the election “may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices.” The company didn’t explain which markets it might have to exit, or which business practices it might have to modify.

On Nov. 22, Palo Alto Networks’ 10-Q added new language to its forward-looking statements about the “political, economic and social instability, such as those caused by the recent U.S. presidential election.”

In addition to disclosures in the filings, we’ve also seen a number of disclosures about top SEC officials planning to leave. Among those is Commissioner Mary Jo White, who announced her departure on Nov. 14. More recently, last week Chief Litigation Counsel Matthew Solomon and Chief Accountant James Schnurr both announced their plans to depart the SEC.

So far, at least, there haven’t been many mentions of Trump by name. But that’s sure to change over the coming weeks and months as more cabinet officers are announced. We’ll continue to keep an eye on these changes in the filings.