Theragenics ($TGX) would have eked out a small profit in its 2013 first quarter, if not for the new 2.3% medical device excise tax the industry is aggressively trying to get repealed.
The Georgia maker of surgical products and prostate cancer treatments said it paid $193,000 as required by the tax, which helps fund the Affordable Care Act. But it lost $34,000. Executives blame a sluggish market for the results, which are down overall from the same period in 2011. But Theragenics' net loss, versus the new expenses created by the tax, illustrate a common complaint among the industry: that the device tax will cause the most harm to small- and medium-sized companies where the tax can make a difference between a loss and profit.
At the end of the last quarter, Theragenics CEO Christine Jacobs thought enough of it to issue a statement with the company's results, noting that the device tax would create "a significant hurdle" for smaller device companies such as hers. Hitting the point home, the company is even breaking out in its financials how much the device tax costs the company for each product line, reporting that during the 2013 first quarter the device tax cost Theragenics a total of $135,000 for its surgical products division and an extra $58,000 for the company's brachytherapy arm.
All of that might not seem like a lot. But the company and others like it view the tax as an added burden. Theragenics, for example, is trying to regroup after dealing with sluggish sales. Consolidated revenue reached nearly $19.9 million during the quarter, down from almost $21.6 million in the 2012 first quarter. And that $34,000 loss compares to a small but crucial $934,000 profit over the same period last year. Reorganization expenses helped push the company into the red.
But Theragenics is continuing to revamp its operations in order to boost profitability. An effort continues to move vascular access surgical product manufacturing to outsourcers in Latin America after closing a plant in Garland, TX, by the end of 2014. Other work will be shifted to an existing manufacturing facility in North Attleboro, MA. And once this and other restructuring efforts are complete, the company said it will save up to $3.6 million annually.
- read the full earnings release