These 23 US Health Care Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $19,998 mil, which was down 7.3% from the $21,574 mil earned in the 1Q 2012.
On the other hand, these same 23 US Health Care Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 1.8% in the 1Q 2013 as compared with the 1Q 2012.
So, what's up with the 5.5% positive earnings spread from the down 7.3% Pretax Income in the 1Q 2013 to the down 1.8% After-tax Net Income in the 1Q 2013?
Well, it's all about the effective income tax rate and financial engineering.
In total, these 23 US Health Care Corps slashed their effective income tax rates on a book basis from 25.0% of Pretax Income in the 1Q 2012 to 20.6% in the 1Q 2013.
Having the key US Health Care Sector generating a total decline of 7.3% in Pretax earnings in the 1Q 2013 is just horrible for the US economy. And it's also terrible for US job creation in this key US sector. The key question is that, given these horrible operating results, just how much shedding of US jobs will there be in this key US Health Care Sector.
So, how does the US Congress react to this horrible 1Q 2013 quarter for the key US Health Care Sector? Well, they flee Washington DC.
It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time. So how has the US Congress responded? Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.
And so what has the US Congress done instead? They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Health Care Corps, of US Manufacturers, of US Technology Corps, and of the huge Dow Industrial Corps.
And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth? An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.
And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative? By ignoring its collapse.
Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 23 US Health Care Corps:
| 1Q 2013 | 1Q 2012 | GAAP | ||||||||
| 1Q 2013 | GAAP | 1Q 2012 | GAAP | GAAP | Combined | |||||
| 1Q 2013 | GAAP | Effective | 1Q 2012 | GAAP | Effective | Pretax | Net | |||
| GAAP | Income | Income | GAAP | Income | Income | Income | Income | |||
| Pretax | Tax | Tax | Pretax | Tax | Tax | Increase | Increase | |||
| Income | Expense | Rate | Income | Expense | Rate | (Decrease) | (Decrease) | |||
| mil $s | mil $s | mil $s | mil $s | mil $s | mil $s | |||||
| Health Care Corps | ||||||||||
| Johnson & Johnson | 4,261 | 764 | 17.9% | 5,045 | 1,135 | 22.5% | (784) | (413) | ||
| United Health Group | 1,961 | 721 | 36.8% | 2,169 | 781 | 36.0% | (208) | (148) | ||
| Eli Lilly | 1,951 | 403 | 20.7% | 1,335 | 324 | 24.3% | 616 | 537 | ||
| Amgen | 1,343 | (91) | -6.8% | 1,366 | 182 | 13.3% | (23) | 250 | ||
| WellPoint | 1,287 | 402 | 31.2% | 1,310 | 453 | 34.6% | (23) | 28 | ||
| AbbVie | 1,239 | 271 | 21.9% | 1,006 | 123 | 12.2% | 233 | 85 | ||
| Walgreen's | 1,192 | 436 | 36.6% | 1,088 | 405 | 37.2% | 104 | 73 | ||
| Medtronic | 1,155 | 167 | 14.5% | 1,053 | 208 | 19.8% | 102 | 143 | ||
| Baxter | 693 | 141 | 20.3% | 732 | 144 | 19.7% | (39) | (36) | ||
| Bristol Myers Sqlulibb | 674 | 51 | 7.6% | 2,027 | 545 | 26.9% | (1,353) | (859) | ||
| Covidien Ltd | 565 | 124 | 21.9% | 568 | 77 | 13.6% | (3) | (50) | ||
| Abbott Labs | 554 | 10 | 1.8% | 463 | 112 | 24.2% | 91 | 193 | ||
| Biogen IDEC | 496 | 66 | 13.3% | 385 | 82 | 21.3% | 111 | 127 | ||
| Celgene | 448 | 64 | 14.3% | 474 | 73 | 15.4% | (26) | (17) | ||
| Stryker | 375 | 71 | 18.9% | 468 | 118 | 25.2% | (93) | (46) | ||
| AmeriSource Bergen | 331 | 127 | 38.4% | 354 | 135 | 38.1% | (23) | (15) | ||
| Zimmer Holdings | 284 | 66 | 23.2% | 281 | 72 | 25.6% | 3 | 9 | ||
| St Jude Medical | 260 | 38 | 14.6% | 279 | 67 | 24.0% | (19) | 10 | ||
| Intuitive Surgical | 256 | 67 | 26.2% | 197 | 54 | 27.4% | 59 | 46 | ||
| Lab Corp of America | 241 | 94 | 39.0% | 270 | 108 | 40.0% | (29) | (15) | ||
| Universal Health Services | 204 | 74 | 36.3% | 222 | 80 | 36.0% | (18) | (12) | ||
| Quest Diagnostics | 197 | 73 | 37.1% | 268 | 103 | 38.4% | (71) | (41) | ||
| Forest Labs | 31 | (15) | -48.4% | 214 | 21 | 9.8% | (183) | (147) | ||
| Total all 23 Health Care | 19,998 | 4,124 | 20.6% | 21,574 | 5,402 | 25.0% | (1,576) | (298) | ||
| Total Pretax Income % Decrease | -7.31% | |||||||||
| Total After-tax Combined Net Income % Decrease | -1.84% | |||||||||
| = Positive Income Tax Earnings Spread | 5.46% |
