2 Obamacare Supreme Court Ruling "Losers" That Didn't Really Lose

Did these two contraceptive-drug makers lose with this week's Supreme Court ruling on Obamacare? Not really.

Jul 1, 2014 at 1:47PM

Put Obamacare in the losers' bracket this week.

On Monday, the U.S. Supreme Court announced a 5-4 decision that prevents the federal government from requiring under the Affordable Care Act that some companies to offer health insurance coverage for specific types of contraceptives for which their owners have religious objections. Clear winners included Hobby Lobby and Conestoga Wood Specialties of Pennsylvania, the two closely held private companies involved in the case.

A couple of other companies were also directly affected by the Supreme Court ruling, as they sell emergency contraceptives. Actavis (NYSE:AGN) sells ella, while Teva Pharmaceutical (NYSE:TEVA) markets Plan B. Both birth control drugs encountered religious objections from Hobby Lobby and Conestoga.Now the highest court in the land has ruled that other closely held companies could opt out of paying for the drugs for employees. That includes as much as 90% of employers in the U.S. and over half of all employees.  

So should Actavis and Teva also be placed in the losers' bracket following the ruling? Probably not.

Neither stock took much of a hit from the potentially far-reaching decision. Actavis on Monday closed down by a paltry 0.1%. Teva fell by only 0.8%. Those small declines don't seem to reflect a worried investor community.

Why did the market yawn? For one thing, there is reason to suspect that the ripple impact won't be very large. Around 96% of U.S. small businesses are already exempt from Obamacare because they have fewer than 50 employees.

It is unknown how many employers that must comply with Obamacare could change their insurance plans as a result of the Supreme Court ruling. A Kaiser Family Foundation survey found that 85% of larger organizations covered contraceptives prior to implementation of the Affordable Care Act. However, it should be noted that this poll didn't include details about coverage of emergency contraceptives such as ella and Plan B. 

There is a bigger reason to believe Actavis and Teva won't be affected significantly by the court's decision. The reality is that the controversial birth control drugs aren't critical for either company's success.

Actavis counts 321 different product groups in its lineup. Ella doesn't even get a footnote in the company's annual regulatory filing. Teva boasts over 55,000 product variants. All of the company's women's health products combined accounted for less than 3% of Teva's total revenue last year. 

For Actavis, the relative importance of ella will soon be diluted even further. The company in February announced plans to acquire Forest Laboratories (NYSE:FRX) for $25 billion. The U.S. Federal Trade Commission voted on Monday to approve the acquisition.  

While Actavis and Teva aren't really losers from the Supreme Court decision this week, that doesn't necessarily make both of them winners. Teva's shares are up 30% so far this year, but the drugmaker faces steep challenges ahead as generic rivals to its largest revenue generator, Copaxone, begin competing for market share.

Actavis, however, appears to be a different story. Its stock has climbed even more than Teva's in 2014 and could still have room to run. The buyout of Forest Labs could create as much as $1 billion annually in operational and tax synergies. Actavis' growth prospects, along with positives from its latest acquisition, should keep this stock in the winners' bracket.  

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Keith Speights has no positions in any stocks mentioned. The Motley Fool recommends Teva Pharmaceutical Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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