STRATEGY

Out of control

For CFOs trying to limit spikes in operating expenses, keeping healthcare costs in check might feel like trying to alter a law of nature. The sun rises in the east. Birds fly south for winter. Spending on healthcare outpaces inflation.

Now, skyrocketing demand for weight loss injections like Zepbound and Wegovy—as well as Mounjaro and Ozempic, the diabetes medications they’re based on and which are prescribed off-label for obesity—threatens to make the work even more difficult. The treatments increased employers’ prescription drug spending last year, according to Mercer, and that spending is bound to increase as more employers begin covering them. Prescription drugs are already the main reason employers’ healthcare costs have been rising.

That price increase is landing on the CFO’s desk.

In a simpler world, companies could respond to ever-rising costs for drugs by negotiating lower prices. We hear many of you laughing bitterly through your screens, because you know that is definitely not the world we live in.

That said, while CFOs and other benefit decision-makers have no leverage to negotiate what they pay for the drugs, they can act to keep costs from rising more than they otherwise might.

Click here for more on managing drug price increases.—GD

PRESENTED BY CUBE

Take the pain outta planning

FP&A is an essential business function—but it can also feel like herding cats.

Long nights spent gathering and reconciling data from multiple sources. Meetings upon meetings getting stakeholders to agree on assumptions. Decision-making blocked by tedious manual data entry and inaccuracies.

It’s enough to make anyone’s head spin. Thankfully, there’s Cube.

With Cube, you can automate data entry, fast-track insights, make decisions that guide future business performance, and keep collaborators in lockstep—all from the comfort of your spreadsheets.

If you’re ready to get out of the weeds and into the strategy, try Cube. Bonus alert: Get a $100 gift card when you hop on a quick call to talk FP&A.

COMPLIANCE

Taxing proposal

President Biden’s State of the Union address was a doozy, as highly scripted, meticulously stage-managed bits of political theater go. But setting optics aside, Biden offered substantial new corporate tax proposals that would, among other things, raise the corporate tax rate to 28%, increase the minimum corporate tax to 21%, boost the stock buyback tax to 4% from 1%, eliminate deductions for employee salaries over $1 million, and close corporate jet loopholes.

If they pass, that’s a lot of change to the corporate tax structure. To help understand Biden’s proposals, CFO Brew spoke with Wally Adeyemo, deputy secretary of the Treasury Department, about the thinking behind them, their chances of passage, and what finance professionals should be considering.

What do corporate finance and tax professionals need to be thinking about in the six- to 18-month time frame as far as these proposals go?

So, your audience are stakeholders that I talk to on a regular basis. I think from the standpoint of corporate finance professionals and tax professionals, the thing to think through is how to help the businesses they work with as they’re thinking about making investments in the United States.

For more of Adeyemo’s thoughts on the new tax proposals, click here.—DA

PRICING

Ws and Ls

Can businesses still get away with raising prices?

On the one hand, inflation has been hovering near 3% for seven months. On the other: You wouldn’t know it from asking consumers in the US how they feel about prices. The seven in 10 consumers sweating price hikes today isn’t much lower than the 83% who were when inflation hit 9.1% in June 2022, according to Deloitte surveys.

To see how different companies have handled this balancing act, we took a little tour through some recent earnings. Here’s what their executives had to say.

McDonald’s. The chain, which said it had “mid to high single-digit price increases last year,” according to CEO Chris Kempczinski, lost lower-income customers in the fourth quarter. “[P]articularly among the low-income consumer, there’s some transaction size reduction that we’re seeing,” he said. He added that heading into 2024, there will probably be more attention to what he “would describe as affordability” over value deals. CFO Ian Borden said overall prices are “coming down in line with inflation getting back to what I’ll call more normal levels.”

Click to see how PepsiCo, Warner Bros. Discovery, and others fared.—GD

TOGETHER WITH CALM

The workforce has spoken. Find out what it has to say in Calm’s 2024 Voice of the Workplace Report. Get the scoop on workplace mental health trends and learn actionable takeaways for leaders. Here’s a not-so-surprising teaser: Financial woes are a top stressor for employees. Grab your copy of the full report.

MARKET FORCES