Medtronic Sees Medical Device Tax Slashing 2013 Profits

Bloomberg reported that Medtronic Inc. said it is planning for a U.S. tax on medical products that will cost the company $125 million to $175 million annually starting next year.

Medtronic will provide a forecast for the 2013 year in May. The estimate will include four months during which the company was subject to a 2.3% excise tax on medical devices that was part of the 2010 healthcare law.

The Minneapolis-based company estimates it will pay a tax of $40-60 million in 2013, based on the draft regulations currently available. Medtronic is trying to determine how much of the tax it can pass on to hospitals and other customers who purchase the company’s devices.

“We’ve looked at this as basically one of the costs we’re going to have to cover as we put together our plans for 2013 and as we put together our initiatives on a long-term basis,” said Gary Ellis, Medtronic's chief financial officer, in a conference call with investors. “We’re going to have to make the tradeoffs, and there’s probably going to be things that we can’t do as a result of that. It means we won’t have as much to invest going forward.”

The full article can be accessed at Bloomberg's website.

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