Becton Dickinson expects medtech tax to cut 3% from next year’s bottom line

Becton Dickinson logo

Becton Dickinson & Co. (NYSE:BDX) is expecting the medical device tax to cut about 3% off of its 2013 earnings growth, chairman, president & CEO Vincent Forlenza said during an earnings call this week.

During an earnings call for its 4th quarter and full-year 2012, Forlenza told investors that the company expects 2013 earnings to grow about 7% to 8% due to the impact of the tax. Excluding the tax burden, earnings are expected in the range of 10% to 11%, Forlenza said.

That accounts for a $40-$50 million bill the company expects to pay to satisfy the 2.3% medical device tax contained in President Barack Obama’s healthcare reform bill. The tax will also shave about 50 points off the company’s operating margins, Forlenza added.

The tax represents heavy blows, but is a more optimistic figure than calculated in a MassDevice.com analysis, which estimated that BD can more readily absorb the burden than many smaller device makers. Based on BD’s 2011 sales and earnings reports, an added 2.3% sales tax would have cut about 4.9% off of the company’s profits, according to our calculations.

That’s a relatively easy burden to bear compared with some smaller companies, where the tax is expected to take a much larger portion off the bottom line. The top-line tax could take 48% off of earnings for Integra LifeSciences (NSDQ:IART) and 34% off of Hanger Orthopedics (NYSE:HGR), according to MassDevice.com’s estimates.

The tax may not take effect at all, if medical device industry lobbying group AdvaMed has anything to say about it. The group is still looking to the so-called “lame duck” session between the election and the seating of a new Congress as an opportunity to press for repeal of the medical device tax before it takes effect on January 1.

That would be good news for BD, which could use a little boost after reporting a 4% drop in 4th-quarter profits. The Franklin Lakes, N.J.-based company reported $289 million in profits, or $1.43 per diluted share, on $1.97 billion in sales during the 3 months ended Sept. 30, 2012.

That’s a 1.1% drop in sales and a 3.7% dip in profit compared with $300 million earned, or $1.36 per diluted share, on $1.99 billion in sales during the 4th quarter of 2011.

Despite the slide, BD’s adjusted 4th quarter earnings of $1.42 beat analysts’ consensus estimate by 13¢, but that seemed to garner little praise from Wall Street. BD shares have lost 0.9% since opening at $75.75 yesterday, prior to unveiling its latest earnings. Shares were trading at $75.10 at about 12:45 p.m. today.

The company’s total 2012 earning showed modest progress in sales year-over-year, but earnings dropped about 8% to $1.17 billion, or $5.59 per diluted share, on sales of $7.71 billion.

For the year ahead, BD predicted earnings per share of between $5.58-$5.64, expected a 2-3% increase in sales.

RSS From Medical Design & Outsourcing

  • GlobTek presents its latest level VI AC/DC adapter and connverter
    T-43086-WWVV-X.X-Q Model is an addition to GlobTek’s Level VI compliant GT-43086 family and represents GlobTek’s 6 Watt wall plug-in series of AC/DC adapters (power supplies and chargers) with International Interchangeable blades. GlobTek’s changeable input blade system with individual field replaceable input plugs, including: North America and Japan NEMA 1-15P, Australian, UK BS 1363, European CEE […]
  • Sanmina’s familiarity with FDA gets skin treatment product to market fast
    The medical market for cosmetic devices is booming. However, quickly launching new products to meet demand is becoming more challenging because device manufactures face increased regulatory scrutiny. To help meet regulatory requirements, aesthetic and other medical-device OEMs are partnering with electronics manufacturing services (EMS) companies that also offer expertise with the FDA filings necessary to […]
  • Fluid connectors and quick disconnects for IVD equipment from CPC
    Colder Products Company (CPC) offers thousands of tubing connectors, quick disconnects and fittings for smart fluid handling in IVD and analytical equipment. Non-spill connectors speed testing throughput by eliminating drips, preventing air inclusion and increasing operator safety. Panel mount connectors can be added to existing equipment or bottle caps to provide secure, leak-free connections. Puncture […]
  • 310 Watt desktop medical power supply meets efficiency level VI requirements
    Power Partners releases a new 310 Watt medical grade desktop power supply from their PEAMD Series of AC and DC adapters. The 310 Watt unit is packed for ideal performance inside a compact case measuring 7.8 x 4 x 2 in. with a weight of only 3 lbs. The PEAMD310 Series is approved to the latest […]
  • Saelig introduces Multiple Instrument System MIS4 universal test system
    Saelig Company has introduced the ABI Electronics’ Multiple Instrument Station MIS4, an all-in-one testing tool that provides all commonly required test instruments in one compact programmable hardware module, mounted in a compact case or installed in a PC-drive bay. Controlled by ABI’s sophisticated SYSTEM 8 Ultimate PC software with a simple yet programmable operator interface, […]
  • AssurX announces document management software update for small to mid-size companies in FDA regulated industries
    AssurX, an enterprise quality management, risk and regulatory compliance solution provider, announces the release of the latest update to their AssurX document management software. The document management solution provides a cost-effective solution for small to medium sized companies faced with streamlined operations and is fully compliant for FDA regulated industries. Ideal solution for small to […]
  • Saelig presents new Amplicon Impact-R 1100F series computer
    Saelig Company announces the Amplicon Impact-R 1100F series, a fanless system powered by the Intel ATOM D2550 processor. Configured with a high performance 2.5 in. MLC Solid State Drive (SSD), the Impact-R 1100F series is a silent controller system. With options for multiple serial communication ports, the Impact-R 1100F can offer up seven DB9 connections […]
  • Gerresheimer to acquire Centor
    Gerresheimer AG, a partner to the global pharmacy and healthcare industry, will further extend its pharmaceutical packaging business with the acquisition of Centor. Gerresheimer has reached an agreement with Nemera Development S.A. to acquire 100% of the share capital of Centor US Holding. “Centor is the highly profitable market leader for plastic vials and closures in […]
  • Methods Machine Tools presents the new Nakamura-Tome NTRX-300
    Methods Machine Tools, a developer of precision machine tools and automation, has introduced the new Nakamura-Tome NTRX-300, a multitasking turning center featuring complete parts machining in one operation, with a built-in load and unload automation system and advanced operator recognition management software. The NTRX-300 features true opposing twin spindles: an 8 in. A2-6 25 HP or […]
  • MSC Apex Diamond Python and Smart Midsurface speeds modeling to validation
    MSC Software announced a new release of MSC Apex, the company’s award-winning next generation Computer Aided Engineering (CAE) platform. The MSC Apex Diamond Python release introduces: · The fourth release of MSC Apex Modeler is a CAE Specific direct modeling and meshing solution that streamlines CAD clean-up, simplification and meshing workflow. New in this release is […]
  • Quality Metrics: FDA’s plan for a key set of measurements to help ensure manufacturers are producing quality medications
    Editor’s Note: This article is written by Ashley Boam and Mary Malarkey from the “FDA Voice” blog. Boam is an FDA’s acting Director of the Office of Policy for Pharmaceutical Quality, the Office of Pharmaceutical Quality and the Center for Drug Evaluation and Research. Malarkey is an FDA’s Director if the Office of Compliance and Biologics Quality […]

Leave a Reply