Monday, March 11, 2013

US Big Other Health Care Corps 2012 Annual Earnings Up 5.2% and EPS Up a Much Higher 10.8%

Other than the 6 US Big Pharma Corps, which I covered in an earlier post, I found 18 US Big Other Health Care Corps filing with the SEC which generated Non-GAAP Adjusted After-tax Net Income or Net Loss of over $1 bil each in either annual 2012 or annual 2011.  I excluded from these 18 Express Scripts since it had a major acquisition in the most recent year which was financed with its common stock and thus a comparison of its Earnings Growth and EPS Growth with the prior year is not very useful.

Non-GAAP Adjusted After-tax Net Income, which is generally used by the investment community to value common stocks, was used when this amount was disclosed in the company's earnings release, and it excludes Special, Unusual Items which are significant in amount relative to Reported GAAP Net Income.

How did these 18 US Big Other Health Care Corps do on the earnings front in 2012?  Pretty well.

The Total Non-GAAP Adjusted After-tax Net Income of these 18 US Big Other Health Care Corps was $38.5 bil in annual 2012, up a healthy 5.2% over 2011.

And on an Earnings Per Share basis, the total growth was a substantially more robust 10.8%, which was a company-earnings-weighted 5.6%, or 108%, higher than the 5.2% total earnings growth.

So, what's with this substantial add-on 5.6% earnings growth on an EPS basis, as compared with the 5.2% growth on just an earnings growth basis.  After all, EPS and EPS growth are what drive common stock prices.

It's the massive common stock buyback programs that nearly all of the US Big Other Health Care Corps Corps have.  The US Fed has facilitated this with its extremely low interest rates, which makes these common stock buyback programs incredibly lucrative for all large US Corps, and the US Big Other Health Care Corps Corps have clearly taken this common stock buyback strategy to a completely different level.

Yeah, that's right, more than half of the total earnings growth of these 18 fine US Big Other Health Care Corps is coming from their massive stock buyback programs.   

But the problem with these massive stock buyback programs is that they only benefit the very wealthy and they further expand the huge wealth gap between the very wealthy and everyone else, including small businesses, who are not able to take economic advantage of it.

And these massive common stock buyback programs have been one of the major reasons for the US stock market advancing so high as compared what has been happening with the US general economy and with US real GDP growth.

Why?  Well, by increasing annual earnings growth from 5.2% to 10.8% on an annual EPS growth basis, the intrinsic value of the common stock goes up dramatically, thus causing an artificially high stock market bubble.  The US stock market is not increasing so dramatically because the US economy is growing at the same pace.  Instead, the US stock market is growing so dramatically because of the artificially high EPS growth, caused by the massive common stock buybacks, which have been fueled by US Fed action on interest rates and by clear lack of US Congressional oversight.  And this artificially high US stock market predominantly benefits economically only the top 1%, leaving the remaining 99% even further behind.

And instead of legislating to more fairly deal with this, the US Congress just sits there and twittles its thumbs.  

Below here is the Non-GAAP Adjusted After-tax Net Income for both annual 2012 and 2011 for each of these 18 US Big Other Health Care Corps:



Annual Annual Adjusted Adjusted

2012 2011 Net Net Adjusted Earnings

Non-GAAP Non-GAAP Income Income EPS Growth

Adjusted Adjusted Increase Increase Increase Positive

Net Net (Decrease) (Decrease) (Decrease) %
Company  FYE Income Income Amount % % Spread

mils of $s mils of $s mils of $s

Other Health Care

Amgen Dec 5,119 4,858 261 5.4% 22.1% 16.7%
CVS Caremark Dec 4,397 3,766 631 16.8% 22.5% 5.7%
Medtronic Apr 3,666 3,643 23 0.6% 2.7% 2.1%
Gilead Sciences Dec 3,084 3,039 45 1.5% 1.0% -0.5%
Walgreens Aug 2,565 2,710 (145) -5.4% 0.0% 5.4%
Baxter Dec 2,516 2,471 45 1.8% 5.1% 3.3%
Celgene Dec 2,162 1,753 409 23.3% 29.6% 6.3%
Covidien Ltd Sep 2,068 1,974 94 4.8% 7.3% 2.5%
HCA Dec 1,603 1,413 190 13.4% 22.5% 9.1%
McKesson Mar 1,602 1,396 206 14.8% 20.2% 5.4%
Biogen IDEC Dec 1,567 1,446 121 8.4% 10.7% 2.3%
Stryker Dec 1,560 1,448 112 7.7% 9.4% 1.7%
Allergan Dec 1,272 1,132 140 12.4% 13.4% 1.0%
Becton Dickinson Sep 1,123 1,206 (83) -6.9% 0.8% 7.7%
Cardinal Health Jun 1,119 988 131 13.3% 14.6% 1.3%
St Jude Medical Dec 1,095 1,074 21 2.0% 6.1% 4.1%
Forest Labs Mar 1,063 1,290 (227) -17.6% -12.4% 5.2%
Boston Scientific Dec 933 1,018 (85) -8.3% -1.5% 6.8%

Total all 18 Other Health Care
38,514 36,625 1,889 5.2% 10.8% 5.6%