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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

58 mins ago - Health

Nevada to impose insurance surcharge on unvaccinated state workers

Nevada Gov. Steve Sisolak. Photo: Ethan Miller/Getty Images

Nevada's Public Employees' Benefit Program Board voted Thursday to charge workers enrolled in public employee health insurance plans a surcharge of up to $55 a month if they're not vaccinated against COVID-19, the Las Vegas Review-Journal reports.

Why it matters: Nevada is the first state to announce such a move, per AP.

Oklahoma sues Biden administration over Pentagon vaccine mandate

Secretary of Defense Lloyd J. Austin testifies before a House Armed Services Committee hearing on Sept. 29 in Washington, D.C. Photo: Olivier Douliery/Pool via Getty Images

The state of Oklahoma filed a lawsuit against the Biden administration on Thursday in an attempt to block the enforcement of its vaccine mandate for federal employees.

Why it matters: The move comes one day after Defense Secretary Lloyd Austin denied Oklahoma Gov. Kevin Stitt's (R) request to exempt the state's National Guard from the mandate.

Congress passes stopgap funding bill to avert shutdown

Senate Majority Leader Chuck Schumer. Photo: Chip Somodevilla/Getty Images

The Senate voted 69-28 to pass legislation Thursday night to fund the government until February 18.

Why it matters: The move staves off a government shutdown but lawmakers still have a busy month ahead: Congress needs to work out a deal to raise the debt ceiling in a few weeks and Democrats are trying to pass their behemoth social spending bill.

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