This is a very good move. This is an extraordinary move -- but these are extraordinary times. Merck is updating 2010 forecasts, and only about 10 days before an earnings release. I commend Merck for this -- and the results aren't too terribly awful, just as the results at J&J weren't so awful, earlier this week.
. . . .Merck & Co., Inc. today provided information on the expected impact of the recently enacted U.S. Health Care Reform legislation.
With the passage of health care reform this year, there will be improvements in access to coverage and important market reforms that begin this year. The more significant changes and improvements to coverage and access begin in 2014. Many companies will begin to incur costs related to the Health Care Reform legislation starting in 2010. These costs include increased Medicaid rebates and a one-time non-cash charge related to taxes on post-retirement medical benefits.
Accordingly, in the first quarter of 2010, Merck anticipates that Medicaid rebates and other impacts will reduce revenue by approximately $35 million. The company also plans to take a first quarter non-cash charge, related to theelimination of a tax benefit for retiree prescription drug coverage, of approximately $150 million, which will be excluded from first quarter 2010 non-GAAP earnings per share.
For the full year 2010, Merck anticipates that the increased Medicaid rebates (including Managed Medicaid) and other impacts will reduce revenue by approximately $170 million, which includes the first quarter impact of $35 million mentioned above.
The company estimates that the unfavorable sales impact related to the passage of this legislation, in 2011 will be approximately $300-$350 million. . . .
Smart -- get the news out now. My hat's off to Dick Clark and Peter Kellog, here. Merck's stock just jumped about a buck on the NYSE, on the news. Now about $1.50 up. Nice.
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