Hospital stocks in 2025: A guide to selection and analysis for investors

Why Hospital Stocks Are Attractive Options in Your Investment Portfolio

Investing in hospital businesses is not a random choice but a strategic investment decision based on sound reasoning. First, healthcare is an essential human need. Regardless of whether the economy is good or bad, people will continue to require medical services. This makes these stocks part of the Defensive Stock category, offering relatively stable returns even during turbulent market conditions.

Second, hospital stocks have a business model that provides continuous returns. Once the hospital infrastructure is established, most subsequent income is net profit. This contrasts with other industries that require repeated investments.

Choosing Hospital Stocks: Key Factors in Decision-Making

1. Classification by Customer Group

Hospital stocks can be divided into two main groups: the first includes hospitals targeting primarily international patients, such as BH, BDMS, BCH, which generate 60-70% of their revenue from foreign clients. The second group comprises hospitals focusing on local populations, such as VIBHA, CHG, PR9, THG, with main revenue from Thai citizens and social security services.

Understanding this distinction is crucial because international hospitals must monitor global economic conditions, tourism trends, and consumer confidence abroad. Conversely, local-focused hospitals are more affected by public health policies and social security rates.

2. Financial Indicators: P/E and ROE

When evaluating the investment worthiness of hospital stocks, P/E ratio (price-to-earnings) and ROE (return on equity) are essential tools.

P/E helps investors understand how much they need to pay to acquire 1 baht of a company’s earnings. A lower P/E may indicate undervaluation, but it’s important to verify whether this is due to company quality or market concerns.

ROE indicates how efficiently a company uses shareholders’ equity. An ROE above (15%) suggests the company can generate profits effectively from its capital.

Comparing seven hospitals, BH has the highest ROE at 31.91%, demonstrating excellent capital management, while VIBHA’s ROE is relatively low at 8.49%. THG even has a negative ROE of (-6.91%), which warrants caution.

3. Growth Strategies of Each Institution

When studying hospital stocks, it’s important to consider how each institution plans to grow. There are three main strategies:

Mergers and Acquisitions (M&A): Some hospitals grow rapidly by acquiring or merging with other hospitals. BDMS exemplifies this with a network spread across several countries, including Myanmar, Mongolia, and Laos. This approach allows quick access to new customer bases but carries integration risks.

Branch Expansion: Hospitals like CHG and PR9 adopt a gradual growth approach by increasing beds and opening new branches in promising areas. This strategy appeals to risk-averse investors but results in slower growth.

Specialization: Some hospitals build strength in specific areas, such as medical tourism centers or surgical specialties. This provides a pricing advantage.

Comparison of 7 Hospitals in 2025

BH : Leader in Capital Efficiency

BH or Bumrungrad Hospital has a market value of 139,110 million Baht and is a private hospital established since 1984. Its standout advantage is a high ROE of 31.91%, indicating highly efficient use of capital.

Its revenue comes from general patients at 66.52% and social security at 32.63%, showing good risk diversification. The company plans to adjust pricing to accommodate more complex cases and expand its international customer base. The P/E ratio of 18.34 is reasonable given its high ROE.

BDMS : Major Player with an International Network

BDMS has the largest market value at 355,980 million Baht, more than twice that of BH. It owns multiple hospitals and has expanded into Myanmar and Mongolia.

Foreign patients account for 67% of BDMS’s revenue, benefiting significantly from medical tourism. Its ROE of 16.77% is good but lower than BH. The P/E ratio of 22.81 suggests investors are willing to pay a premium for expected growth.

BCH : Large Capacity Chain Hospital

BCH operates 15 hospitals and 2 polyclinics across Bangkok, provinces, and Laos. It offers services from primary to tertiary care.

Revenue breakdown shows 71% from domestic patients and 29% from international patients. Its ROE of 11.88% is relatively low, but the P/E of 23.13 is high. Many analysts forecast a profit growth of 23% in 2025.

CHG : Growth Potential in Key Areas

CHG or Chularat Hospital has a market cap of 23,320 million Baht. Although nearly six times smaller than BH, it has a low-cost structure and invests heavily in promising areas.

Revenue sources include outpatient at 30.6%, inpatient at 34.5%, and government welfare programs at 35%, indicating reliance on social security contracts. Its ROE of 15.42% is moderate, and the P/E of 20.32 is reasonable.

PR9 : Local Center for Medical Tourism

PR9 positions itself as a comprehensive health center serving Thailand, China, Myanmar, Laos, and Cambodia. It invests significantly in digital technology, such as the 9 CARE Platform.

Revenue breakdown shows 59% outpatient and 41% inpatient. Most patients pay out-of-pocket at 68%. Its ROE of 13.57% and P/E of 24.47 reflect high market expectations for growth.

VIBHA : Local Center with Growth Potential

VIBHA is a group of general hospitals serving multiple areas. Its ROE of 8.49% is relatively low, indicating possible management challenges. However, some analysts see growth opportunities, with a target price of 2.74 Baht.

Revenue is balanced between outpatient (45%) and inpatient (55%), with coverage across Bangkok, provinces, and international patients.

THG : Struggling Business

THG shows worrying signs, with a negative ROE of (-6.91%) and a market cap of only 10,678 million Baht. Its net loss of (-302.98 million Baht) indicates significant difficulties. Although the stock price has risen after clarifying allegations, investors should exercise caution.

Guidelines for Selecting Hospital Stocks

Step 1: Study Institutional Details

Investors should understand the fundamentals of the hospital, including service quality, cost structure, bed count, and relevant health policies.

Step 2: Analyze Financial Reports

Review income statements, expense reports, financial ratios like P/E and ROE, and observe revenue and profit trends over several years.

Step 3: Understand Organizational Structure and Management

Companies with clear management and experienced leadership tend to show better signals.

Step 4: Monitor Stock Price Trends

Examine historical price movements, news about the hospital, and factors influencing stock prices.

Step 5: Consult Analysts

If lacking expertise in stock analysis, seek advice from financial professionals.

Why Hospital Stocks Are Stable Investment Options

First, the demand for medical services continues to grow due to population increase and aging society. The emergence of new diseases also sustains high service demand.

Second, hospitals are defensive stocks with low risk and steady income. During market turbulence, hospital stocks tend to decline less than the broader market.

Third, hospital stocks often have strong financial positions, as they can quickly recoup investments and maintain relatively consistent cash flows.

Summary

When considering seven hospital stocks in 2025, each has unique strengths. For investors seeking good capital management returns, BH is a strong candidate. For those aiming for large growth, BDMS may be suitable. For potential adaptation and new opportunities, VIBHA and CHG could be promising.

However, thorough fundamental analysis, monitoring latest financial data, and understanding each institution’s growth strategy are essential. Investing in hospital stocks should be a long-term decision, suitable for investors seeking stability and consistent income in their portfolios.