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

November 8, 2012 by MassDevice staff

Medical products maker Becton Dickinson's unveils its 4th quarter earnings and predicts that next year's earnings growth will take a 3% hit after the medical device tax shaves 2.3% off its top 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.

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The tax represents heavy blows, but is a more optimistic figure than calculated in a 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.