Abiomed chairman, president & CEO Mike Minogue testifies before the House of Representatives' Committee on Small Business that the impending 2.3% medical device tax will pose an extra burden on small businesses that "need every dollar to survive."
Abiomed (NSDQ:ABMD) chairman, president & CEO Mike Minogue took to Capitol Hill today to testify before the House of Representatives' Committee on Small Business, defending small medical device companies amid the burden they face as the medical device tax nears implementation.
A vocal advocate for repealing the medical device tax, Minogue has warned before that the tax, which applies to both companies with reported profits and those without, represents an unfair burden on small firms that "need every dollar to survive."
Speaking on behalf of medical device industry lobby AdvaMed, Minogue told committee members today that repealing the medical device tax is, in his opinion, the single most important thing Congress can do to help fledgling device makers.
"As a chairman, president & CEO for the last 9 years, I'm acutely familiar with the challenges involved with running a small business," Minogue said. "When we were founded we had 10 people and we had no revenue. Today we have 440 employees and our revenues last year were $126 million. The company in its 30-year journey has just become profitable last fiscal year."
Abiomed reported about $1.5 million in profit on the $126 million in sales the company realized during fiscal 2012. Had the medical device tax been in effect then, the company would have had to turn in every penny of its profits, plus another $1.4 million or so.
Furthermore, the tax extends to companies that have no reported profits as well.
Committee member Rep. Richard Hanna (R-N.Y.) asked Minogue whether there were circumstances under which it may be appropriate to impose a tax on a pre-profit company, Minogue quickly replied, "I can't think of any."
The hit to small device makers could translate to a decline in innovation in the industry Minogue added.
"The majority of our industry is made up of small companies," he said. "More than 70% of the industry is made up of companies that have less than $100 million in revenues and are not yet profitable."
"These companies, much like Abiomed, started with scientists or physicians and have an idea that would help patients. Many of these technologies are where the breakthroughs come from," he added.
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