Impact of COVID-19 on the Financial Performance of Private Tertiary Care Centers in Sri Lanka

Abstract

Aims: To examine the differential financial impact of COVID-19 on three major private tertiary care hospitals in Sri Lanka during 2020-2021, and to identify institutional factors determining pandemic financial resilience using DuPont Return on Equity decomposition analysis. Study Design: Quantitative retrospective longitudinal trend analysis of secondary financial data. Place and Duration of Study: Three Colombo Stock Exchange-listed private tertiary care hospitals in Sri Lanka: Nawaloka Hospitals PLC, Asiri Hospital Holdings PLC, and Hemas Holdings PLC, between January 2015 and December 2021 (pre-pandemic baseline: 2015-2019; pandemic period: 2020-2021). Methodology: Secondary financial data were obtained exclusively from Colombo Stock Exchange audited financial statements, annual reports, and published financial filings. DuPont Return on Equity decomposition analysis was applied: ROE = Net Profit Margin × Asset Turnover × Equity Multiplier. Key metrics analyzed included liquidity ratios, profitability margins, receivable days, return on equity, debt service coverage ratios, and cash flow generation. Horizontal and vertical analysis of financial statements was conducted with year-on-year percentage changes and comparative analysis across three institutions. No primary data collection involving human subjects was conducted. Results: Despite identical pandemic pressures, the three hospitals demonstrated markedly divergent outcomes. Nawaloka achieved 102% ROE improvement (from -8.3% to +9.5%) driven by net margin expansion (2.1% to 8.7%) and asset turnover increase (1.18 to 1.54). Asiri experienced 51% ROE decline (9.2% to 4.5%) due to severe asset turnover deterioration (-20%, from 1.22 to 0.98). Hemas declined 33% (6.8% to 4.5%) with worst asset turnover collapse (-23%, from 1.15 to 0.88). All three experienced significant liquidity compression (current ratios declining 35-57%). Conclusion: Pre-existing operational efficiency, asset utilization capacity, and financial flexibility determined pandemic survival more than external environmental pressures. Asset turnover deterioration proved more critical than margin compression during crisis periods.