NEW YORK, NY--(Marketwire - Dec 7, 2012) - The Medical Devices Industry has shown admirable gains in 2012, but a medical device excise tax set to kick in next year will have a major impact on companies' profits going forward. The iShares Dow Jones US Medical Devices ETF (IHI) has gained over 15 percent year-to-date. The Paragon Report examines investing opportunities in the Medical Equipment and Supplies Industry and provides equity research on MAKO Surgical Corp. (NASDAQ: MAKO) and Stryker Corp. (NYSE: SYK).
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The medical device excise tax, which was designed to support the Affordable Care Act, places a 2.3 percent levy on all sales of medical devices regardless if a company makes a profit or not. Despite not taking effect until January 1, 2013, many companies have already announced job cuts and delayed expansion plans in preparation for the tax.
"America already has the highest corporate tax rates in the world," AdvaMed senior executive vice president David Nexon told reporters today. "To load this additional burden on an industry which is so important to our economy and which is facing a strong international competitive pressure makes no sense at all; it flies in the face of everything tax reform is supposed to achieve."
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MAKO Surgical Corp. is a medical device company that markets its RIO Robotic-Arm Interactive Orthopedic system, joint specific applications for the knee and hip and proprietary RESTORIS implants for orthopedic procedures called MAKOplasty. The company reported revenues of $29.2 million in the third quarter, a 46 percent increase when compared to the year-ago quarter.
Stryker offers a diverse array of innovative medical technologies, including reconstructive, medical and surgical, and neurotechnology and spine products to help people lead more active and more satisfying lives. The company has increased their quarterly dividend by 25 percent to $0.265 per share.
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