xfdfx YOUR-WORLD-WITH-NEIL-03
<Show: YOUR WORLD WITH NEIL CAVUTO>
<Date: March 23, 2010>
<Time: 16:00:00>
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<Tran: 032303cb.140>
<Type: INTERVIEW>
<Head: ZOLL Medical Corporation - Chairman & CEO Interview>
<Sect: Business>
<Byline: Neil Cavuto>
<Guest: Richard Packer>
<Spec: Business; Electromedical and Electrotherapeutic Apparatus;
ZOLL (Nasdaq); SIC: 3845>
<Time: 16:35:00>
NEIL CAVUTO, HOST: All right, it's passed -- now the tax, medical device companies about to pay a whole more in taxes included in that health care bill, about $20 billion over the next 10 years.My next guest not so happy about it. He says he could have to outsource jobs because of.
Chairman and CEO of ZOLL Medical, Richard Packer, joining me right now.
Richard, we should point out, is just into anything that keeps the heart going, defibrillators, any of that.
(CROSSTALK)
(LAUGHTER)
RICHARD PACKER, CHAIRMAN AND CEO, ZOLL MEDICAL CORPORATION: Our business is bringing people back from cardiac arrest. It's the number-one killer in the United States. If you have a cardiac arrest, your chance of swine survival is only 6 percent. And we make lots of technology, including defibrillators, that help with that...
(CROSSTALK)
CAVUTO: Because you were having a cardiac arrest when you saw this vote, right?
PACKER: Yes, it was not a banner day for medical device companies when we saw...
(CROSSTALK)
CAVUTO: Why did they go after you guys? Because at least you were under the radar. I could see the health care CEOs. They're always the evil gift that keeps giving. Bank and brokerage CEOs, they are fine. They're always being vilified. But you guys, generally, people like you.
PACKER: Yes. I think we got lumped into with the pharmaceutical companies, which no one likes the pharmaceutical companies.
CAVUTO: Well, they're always evil. They're always evil.
But then they were going to exact this huge pound of flesh out of you, and you say it's going to cost you big-time.
PACKER: Yes, it is. The $20 billion is a big number, but when it translating down to a real company, it's an even bigger number.
CAVUTO: For your company, what would...
(CROSSTALK)
PACKER: So, for our company, it will be somewhere between $5 and $10 million. What's in the current bill from the House should put it at 2.3 percent, which will be about $7.5 million dollars. Our total profit last year was $9.5 million dollars.
CAVUTO: So, it almost wipes out your profits?
PACKER: So, it almost wipes out our profits.
CAVUTO: So, you have a couple of choices here. You cut jobs or send them overseas, or you increase the price of your product, not easy to do.
PACKER: Yes, or cut back on research and development. And our business is built around new science, new clinical trials.
CAVUTO: Or a lot more people die as a result. They don't get your....
(CROSSTALK)
PACKER: That's right.
(CROSSTALK)
CAVUTO: All right. So, what do you think happens?
PACKER: Well, I think we're going to make every attempt to pass it through. The tax starts in 2013. We have some time to try and deal with that.
(CROSSTALK)
CAVUTO: What did you make of the rollout of these taxes and when they happen?
PACKER: What do I make off of it?
CAVUTO: Yes. Now, it's only a few years off, as far as the tax part of it.
PACKER: Well, I think that they're trying to get the taxes going before the benefits. It's all part of the scoring system. I don't think that that is...
CAVUTO: But when you make a forecast, I mean, you have to plan on, short of something strange happening on the reconciliation bill that's more to your liking, for a big hit.
PACKER: I do. I do. But I'm hoping that the company can grow faster than what we originally anticipated. We will tighten belts in other areas. We will look at things...
CAVUTO: Well, what are your competitors going to do? They're facing the same quagmire, but a lot of them are a lot bigger than you.
(CROSSTALK)
PACKER: They are. They are. I that's why many of us will try and pass this thing through.
And that's part of the fallacy of the whole math equation. If we're passing the tax through, it's raising health care costs. It's not generating anything to pay for health care.
(CROSSTALK)
CAVUTO: All right, well, keep us posted, Richard. We're watching your company and you very, very closely -- Richard Packer.
END
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