Apr 1, 2019

GOP tax law lifts health care industry

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

Coronavirus only part of the story behind the Dow’s drop

Photo: Andrew Burton/Getty Images

As someone has certainly told you by now, the Dow fell by more than 1,000 points yesterday, its worst day in more than two years, erasing all of 2020's gains. Most news headlines assert that the stock market's momentum was finally broken by "coronavirus fears," but that's not the full story.

What's happening: The novel coronavirus has been infecting and killing scores of people for close to a month and, depending on the day, the market has sold off or risen to record highs.

Bernie's historic Jewish fight

Illustration: Sarah Grillo/Axios

Sen. Bernie Sanders would be the first Jewish presidential nominee of a major American political party — but that history-making possibility is being overshadowed by his conflicts with America's Jewish leaders and Israel's leadership.

The big picture: That's partly because we're all focusing on the implications of Democrats nominating a self-described democratic socialist. It's also because a candidate's religion no longer seems to matter as much to voters or the media, making the potential milestone of a Jewish nominee more of a non-event.

Coronavirus "infodemic" threatens world's health institutions

Illustration: Aïda Amer/Axios

The spread of the novel coronavirus outbreak is being matched, or even outrun, by the spread on social media of both unintentional misinformation about it and vociferous campaigns of malicious disinformation, experts tell Axios.

Why it matters: The tide of bad information is undermining trust in governments, global health organizations, nonprofits and scientists — the very institutions that many believe are needed to organize a global response to what may be turning into a pandemic.

Go deeperArrow3 hours ago - Health