Today’s Research on Hologic and St. Jude Medical: Will Affordable Care Act Ultimately be Beneficial for the Industry?
LONDON, February 8, 2013 /PRNewswire/ –
At the start of this year, a controversial feature of President Obama’s Affordable
Care Act (ACA) went into effect. Under the ACA, medical devices companies will have to pay
new tax of 2.3% on gross sales. While medical devices companies have opposed the tax,
saying it will hurt research and development activities, proponents of ACA say that it
will ultimately benefit companies such as Hologic Inc. (NASDAQ: HOLX) and St. Jude Medical
Inc. (NYSE: STJ) as the increase in number of insured individuals will boost sales of
medical devices. StockCall initiated free in-depth technical analysis on Hologic and St.
Jude Medical which are currently available upon sign up at
President Obama’s ACA was upheld by the Supreme Court last year. The ambitious plan
will bring sweeping changes to the U.S. healthcare landscape. An estimated 32 million
additional individuals are expected to insured by 2019 as a result of ACA. However, the
healthcare reform requires funding, and in order to generate new streams of revenue,
medical devices companies will have to pay 2.3% tax on their gross sales.
The new tax is expected to generate approximately $30 billion in revenue in 10 years.
However, medical device companies say that the additional costs will hurt their research
and development activities and hamper new product development. Medical devices companies
have also said that the tax will force them to reduce workforce in order to lower costs.
In August last year, St. Jude Medical had announced that it will eliminate 300 jobs,
which will reduce its pre-tax operating expenses by nearly $50-$60 million annually
starting in 2013.
Will ACA Benefit Medical Device Manufacturers in the Long-Term?
The big question is whether ACA will benefit medical device manufacturers in the
long-term? Proponents of the healthcare reform believe it will. The reform will result in
additional insured individuals. This will create a new market for medical device
companies. The argument is that the increase in sales from the additional insured
individuals will offset the increase in costs due to the new tax for medical device
companies. However, medical device manufacturers are expected to continue to reduce costs
in the near-term to lower their expenses.
St. Jude Medical and Hologic Report Quarterly Results
Recently, St. Jude Medical and Hologic reported their financial results for the
quarter ended December 29, 2012. Sign up for the free technical analysis on St. Jude
For the quarter ended December 29, 2012, Hologic reported revenues of $631.4 million.
The company’s non-GAAP adjusted revenue for the quarter was $644.6 million. Hologic saw
year-over-year revenue growth in its three primary business segments. The company’s net
income for the quarter was $3.1 million, or $0.01 per share. Download the free report on
Hologic by registering at
St. Jude Medical reported net sales of $1.372 billion in its fourth quarter ended
December 29, 2012, compared to $1.407 billion reported for the same period in the previous
year. The company’s net sales for the full year were $5.503 billion, compared to $5.612
billion reported in 2011.
Daniel J. Stark, President and CEO of St. Jude Medical, said that he is particularly
pleased with the strong growth of the company’s arterial fibrillation business, its
ability to maintain share in the global ICD market and exceeding prior earnings per share
guidance for the fourth quarter.
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