Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Catch up on the day's biggest business stories
Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter
Stay on top of the latest market trends
Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.
Tech news worthy of your time
Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
Want a daily digest of the top Des Moines news?
Get a daily digest of the most important stories affecting your hometown with Axios Des Moines
Want a daily digest of the top Twin Cities news?
Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities
Want a daily digest of the top Tampa Bay news?
Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
Sign up for Axios NW Arkansas
Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters
The health care industry recorded an immensely profitable first quarter, according to an analysis of financial documents for 108 companies. Year-over-year earnings among the 10 biggest health care corporations by net profit soared by 8.4%.
Yes, but: Wall Street wants more. The S&P 500 health care index so far this year is trailing the broader S&P 500 as well as other industries, including energy and technology.
The bottom line: The 108 companies cumulatively boosted Q1 global revenues by 6.3% to $558 billion — an amount from just one quarter that is about the size of Sweden's economy. Their collective profits actually decreased 0.8% to $44.7 billion, but if a few one-off elements from 2017 were eliminated, profits would have increased.
- More than half of the industry's earnings came from 10 companies.
- All 10 of those companies that reaped the largest earnings are either pharmaceutical firms or are involved with the drug supply chain.
- No health care company collected more Q1 earnings than Johnson & Johnson, the maker of drugs, medical devices and Band-Aids.
- Drug maker Amgen's 41.6% profit margin was the highest among all companies in Q1.
- Of the 10 companies with the highest profit margins, eight were pharmaceutical firms. The other two were a real estate investment trust (Welltower) and a medical device company (Intuitive Surgical).
- The Republican tax overhaul contributed to increased earnings, as savings from a lower corporate tax rate immediately fall to the bottom line — especially for companies like health insurers that have almost all of their business in the U.S.
- The analysis did not include not-for-profit hospital systems, but most of those organizations have been doing well, too.
The big picture: Higher profits and revenues naturally mean U.S. health care spending is increasing. That inevitably affects other portions of the economy — like how people may not be getting significant salary raises since their employers are covering the rising costs of health care.
Go deeper: The health care industry's bubble.