As Coronavirus Hits Memorial Services, U.S. Funeral Homes Struggle to Adapt
Like companies across the United States, funeral homes and mortuaries are limiting contact with customers in order to avoid spreading the highly contagious respiratory illness, in some cases livestreaming memorial services to extended family and friends.
The state of Washington, the early epicenter of the U.S. outbreak, has outright banned funerals, although burials continue. The pandemic appears to be leading to lost sales of funeral homes’ most profitable services, such as elaborate memorials and luxurious coffins.
Shares of the largest U.S. funeral-related companies have tumbled along with Wall Street in recent weeks as investors struggle with uncertainty around the pandemic.
Service Corporation International, which operates over 1,900 funeral homes and cemeteries, has dropped almost 30% from a March 4 record high, and smaller rival Carriage Services Inc has fallen almost the same amount.
Matthews International Corp and Hillenbrand Inc , which both sell caskets and other memorial products, have each fallen over 30% since Feb. 19, when the S&P 500 ended its 11-year bull market. Both stocks have underperformed the S&P 500.
Carriage Services’ funeral homes and crematoriums are following local social distancing rules, in some cases video-streaming memorial services. The company is also preparing for a range of potential outcomes related to the spread of the outbreak.
“We have a plan for each one of our 219 businesses out there,” Carriage Services President Bill Goetz said, citing the company’s focus on safety.
Funeral homes in California, one of several states where people have been ordered to stay indoors, have limited the options they offer and are restricting the number of family members who may gather, even at outdoor graveside ceremonies.
“We do remain open, but we are only doing cremations and burials. We are not offering memorials or any additional services,” said Ruby Joyner, manager of C.P. Bannon Mortuary in Oakland.
Joyner said some of her customers hoped to hold memorial services once the outbreak is contained but that many were likely to hold them at churches instead of funeral homes.
Funerals including memorial services typically cost about $9,000, including a casket, while cremations can cost from $1,000, said Barrington Research analyst Alexander Paris.
As well as taking a hit from offering fewer elaborate ceremonies, funeral homes may also struggle to pre-sell packages, a source of sales that some of them have relied on for growth in recent years.
Such “pre-need” customers are typically elderly, and the outbreak may make those people reluctant to leave home or receive visitors because they are worried about becoming sick.
“Pre-need is kind of the driver of these stocks,” said Oppenheimer analyst Scott Schneeberger. “Pre-need is also a discretionary spend. Think of the older guy seeing his retirement portfolio take a hit.”
In Italy, priests are holding burials without family members amid a backlog of deceased people, while South Korean authorities have urged the families of coronavirus victims to cremate their loved ones first and hold a funeral later.
So far, at least 720 people in the United States have died from the global pandemic, although experts and government officials expect that count to increase dramatically.
A March 16 study by Imperial College in London – published before steps were taken to contain the outbreak, including closing schools and social distancing – predicted that an unmitigated epidemic could lead to 2.2 million deaths in the United States.
While many people eventually will die in the United States from the outbreak, analysts – for now – do not expect the fortunes of funeral homes to significantly improve.
About 2.8 million people died in the United States in 2017, including 56,000 fatalities from influenza and pneumonia, according to the U.S. Centers for Disease Control and Prevention.
“If it did pick up and significantly increase the death rate in the U.S. in 2020, I think that would help these stocks, but for the short term, it’s the no-public-gathering rules that are going to affect them,” Barrington’s Paris said.