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Expand chart
Data: Company reports. Get the data; Chart: Andrew Witherspoon/Axios

Health care companies reported larger profits in the final quarter of 2018, compared with the same period in 2017, and the Republican tax overhaul helped pad their bottom lines, according to an Axios analysis of financial documents.

The intrigue: Like other industries, many health care companies took sizable charges in the final quarter of 2017 as they repatriated overseas cash. Now, firms are feasting on lower tax rates — and in some cases, are getting federal tax refunds.

Between the lines: The GOP law made it easier to bring home money that was parked abroad, which many pharmaceutical and medical device companies did in late 2017. It also eliminated tax provisions that have specifically helped large companies like Blue Cross Blue Shield insurers. But the industry's biggest prize has been the significantly reduced corporate tax rate.

  • Drug giant Pfizer received a $563 million tax benefit in the fourth quarter, and its corporate income tax rate in all of 2018 was just 6%.
  • Johnson & Johnson's effective tax rate in the last quarter of 2018 was 2.6%.
  • Almost half of the $551 million tax break recorded by hospital chain HCA Healthcare in 2018 came in the fourth quarter.

Yes, but: Industry profits would have been even larger in the fourth quarter if it weren't for a few outliers.

  • AbbVie had a $1.8 billion net loss in Q4 because it had to book a $4 billion impairment charge for a drug acquisition that flopped. Mallinckrodt similarly had a giant impairment charge, leading to a $3.7 billion loss in the quarter.

The big picture: The industry remains financially powerful.

  • Tax law aside, the companies that handle the most revenue, like health insurers collecting premiums and drug distributors shipping products, are not the most profitable.
  • The highest margins are still usually associated with manufacturers of prescription drugs and medical devices.

Go deeper:

Go deeper

Study: Key Antarctic ice shelf is speeding up its collapse

Pine Island Glacier calves several new icebergs on Feb. 11, 2020, as seen via satellite. Photo: NASA Earth Observatory

The Pine Island Glacier on the West Antarctic Ice Sheet is responsible for more than a quarter of Antarctica's contribution to global sea level rise over the past decades. Now, a new study shows it is more vulnerable to rapid melting than thought, because climate change is weakening its natural braking system.

Why it matters: At stake is the future of a glacier containing about 160 trillion tons of ice, which if it were all to melt into the ocean would cause about 1.6 feet of global sea level rise.

Felix Salmon, author of Capital
3 hours ago - Economy & Business

Workers are taking power back

Illustration: Aïda Amer/Axios

American workers have been losing power since 1980 — but now the tables are turning.

Why it matters: The 2010s gave us the gig economy and left millions of workers stranded seemingly forever on the precipice of financial ruin. The 2020s could be the decade when workers seize back the reins of power.

Teachers across the U.S. protest laws restricting racism lessons

Thousands of teachers and other educators held protests across the U.S. Saturday against the actions of "at least 15 Republican-led states" that aim to restrict teaching about racism in class, the Washington Post reports.

Driving the news: There were demonstrations in at least 22 cities for the "Day of Action" to raise awareness about moves to limit students' exposure to critical race theory, which links racial discrimination to the nation's foundations and legal system, per Axios' Russell Contreras.

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