Nonprofit Healthcare takes hit, Positive outlook expected for pharma due to COVID-19

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The financial outlook for the nonprofit public healthcare sector in the U.S. has changed from stable to negative, primarily because of the effects of the COVID-19 coronavirus outbreak. Currently, there is no Medicare inpatient diagnosis-related group for COVID-19, and many admitted patients will require resource-intensive ICU treatment. That said, the federal government has set aside relief funding for the coronavirus crisis, although it is unclear how much hospitals will receive. These non-profit institutions will certainly take a hit as they may have to do many layoffs as well as invest in many more supplies such as masks and respirators. Short-term debt risks will increase due to market disruptions, and revenue and expense constraints will continue to weigh on margins during the outbreak and following the pandemic.

As for pharma, both hospitals and federal governments are investing many billions of dollars into research for a vaccine as well as medicine to keep the virus at bay for infected people. The approval of these products may be credit positive but the revenue opportunties are unpredictable at the moment due to the uncertainty surrounding the severity and the duration of the pandemic, as well as other variables. Experimental vaccines are entering human studies, but approvals are at least 12-18 months away. Share values may increase, but only time will tell. 

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