80% of CFOs Expect Revenue, Profit Declines Due to COVID-19

CFOs of healthcare organizations and other major companies are becoming increasingly pessimistic about the impact COVID-19 will have on their bottom lines, according to a new survey from PricewaterhouseCoopers (PwC).

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About 80 percent of CFOs and other finance leaders expect COVID-19 to decrease revenue and/or profits this year, the survey of finance leaders in US and Mexico found. The 55 respondents of the March 23 survey included CFOs and finance leaders in healthcare, as well as Fortune 1000 companies, non-profit associations, and privately held companies.

Only 58 percent of finance leaders in PwC’s March 11 survey said the outbreak would harm revenue and profits, researchers pointed out.

The latest survey also found that more respondents do not expect their businesses to back bounce quickly after the worst of the pandemic is over. In the survey, only 76 percent of respondents said they expect their business to go back to normal within three months if COVID-19 were to end immediately. That was down from 90 percent two weeks ago.

“The realization that the effects of COVID-19 aren’t going away quickly is settling in,” the authors of the survey report stated.

Most companies (87 percent) now believe COVID-19 will have a significant impact on business operations, and it is causing finance leaders a great concern, the survey found. That is up from 54 percent in the previous survey.

The percentage of respondents anticipating COVID-19 to impact just some of the business also fell to 9 percent from 34 percent two weeks ago.

Healthcare organizations are especially seeing severe operational disruptions because of COVID-19. These organizations are on the frontline of the pandemic, which is creating capacity shortages across the entire healthcare system and prompting providers to delay or cancel revenue-driving elective procedures.

Healthcare organizations are also seeing significant disruptions to its workforce, supply chain, and balance sheet, leaders at healthcare consulting firm Kaufman Hall explained in a recent report.

 These disruptions could get worse before they get better, the PwC survey indicated. In the next month, 60 percent of finance leaders anticipate productivity loss due to the lack of remote work capabilities and 56 percent expect higher demand for employee protections (e.g. sick leave policies).

Another 44 percent foresee temporary furloughs and 24 percent do not expect to have a sufficient workforce to accomplish critical work.

To mitigate the impact of these concerns, most companies have thrown out budgets created prior to the first COVID-19 outbreak. The survey found that 67 percent of respondents have already implemented cost containment, such as stopping discretionary spending, including trvael. Approximately 58 percent also reported deferring or canceling planned investments.

Some finance leaders are also considering additional cost containment actions, the survey found. For example, 64 percent of respondents are now considering canceling or delaying planned investments, up from 32 percent two weeks ago. The areas most likely to be targeted for those cancelations and deferrals are facilities and IT.

About half (49 percent) of respondents also expect to adjust their guidance as a result of COVID-19. About 68 percent of respondents to a separate question said they plan to change disclosures as a result of the virus, although 24 percent of the surveyed CFOs said it was currently too difficult to assess what changes would need to be made.

In addition to financial strategy changes, businesses also plan on supply chain shifts, the survey found. About 42 percent of respondents said they are considering changing the breadth of their organization’s supply chain (e.g., vendors, facilities, markets). And that is up from 30 percent two weeks ago.

Meanwhile, the percentage of respondents not altering their supply chain strategy fell to 31 percent from 52 percent. The remaining respondents were unsure.

“US businesses have had to contend with a number of supply disruptions in the past three years, including escalations in US-China tariffs and a spate of natural disasters. This crisis may be a tipping point for what’s likely going to be a strategic shift in where supply is sourced and products are assembled,” the authors of the survey stated.

This may especially be true for healthcare organizations, which are currently facing an unprecedented shortage of personal protective equipment (PPE) and other needed supplies to battle COVID-19. Hospitals have also reported higher vendor fees because of the shortages.