How Sequestration Will Affect the Health-Care Sector and Your Pocketbook: Gilead Sciences, Inc. (GILD), Life Technologies Corp. (LIFE)

On the other hand, a reduction in grants from the NIH could spur consolidation in a very thin biotechnology and life sciences sector which I’d view as a positive. Life Technologies Corp. (NASDAQ:LIFE), for instance, announced in January that it was conducting its annual strategic review, implying to investors that a sale of the company was being pondered. Although a sale may not come to fruition with bidder Thermo Fisher Scientific Inc. (NYSE:TMO) no longer in the running after Life Technologies Corp. (NASDAQ:LIFE)’s huge run-up in price, consolidation could become increasingly common as grant funds decrease.

Will the sequester affect your bottom line?
The primary question most people have is how sequestration could affect their personal care. Ultimately, it shouldn’t result in any immediate out-of-pocket costs — but that doesn’t mean you’re out of the woods, either.

Most social programs — including Social Security, Medicaid, and unemployment benefits — are exempt from the budget cuts. Even Medicare beneficiaries were spared the reduction, with lawmakers instead voting to cut 2% out of the budgets of those reimbursed by Medicare. This means that health-benefits companies and hospitals could feel a bit of a pinch. Humana Inc (NYSE:HUM) is a perfect example of a company expected to suffer from the implementation of the sequester. Humana’s Medicare Advantage business currently accounts for 63.5% of total sales. With reimbursements expected to be down 2%, it’s going to be extremely difficult for Humana to grow its top-line numbers. That would be all the more reason to expect Medicare-reliant health-benefits providers to do whatever they can to boost premiums.

The article How Sequestration Will Affect the Health-Care Sector and Your Pocketbook originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Thermo Fisher Scientific.

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