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Private hospital shares not faring well in the time of COVID-19

There are few, if any, places to seek shelter on the Johannesburg Stock Exchange (JSE) while the COVID-19 pandemic rages. Business Day reports that one JSE subsector that has, unfortunately, been busy during the pandemic is the private hospital cluster dominated by Mediclinic International, Netcare and Life Healthcare. Over the past 90 days the share prices of these counters have dropped 23%, 24% and 26% respectively.

The report says recent trading statements from Mediclinic and Netcare might be prescriptions for caution. The underlying gist of the trading statements is that, put simply, care provided for COVID-19 patients will not make up for delays and postponements in elective surgeries at private hospitals.

Asief Mohamed, chief investment officer at Aeon Investment Management, says the reduced number of cars on the roads and the ban on alcohol sales have led to fewer trauma admissions for all hospitals. He says the number of COVID-19 cases needing intensive care unit beds in South Africa is well below international norms and has not offset the significant drop in revenue from elective procedures and trauma treatment.

[link url="https://www.businesslive.co.za/fm/money-and-investing/2020-04-23-hospital-groups-how-have-they-fared-amid-covid-19/"]Full Business Day report[/link]

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