ST. FRANCIS HOSPITAL WILMINGTON
1. Target Overview & Investment Thesis
ST. FRANCIS HOSPITAL WILMINGTON is a 146-bed suburban community hospital in NEW CASTLE, DE with $129.0M in net patient revenue and a -2.5% operating margin. The hospital serves a payer mix of 28.2% Medicare, 5.3% Medicaid, and 66.5% commercial.
Thesis: Undervalued. Our ML models identify $9.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -2.5% to 4.8% (+736bps).
| Net Revenue HCRIS | $129.0M |
| Current EBITDA COMPUTED | $-3.3M |
| Operating Margin COMPUTED | -2.5% |
| Occupancy HCRIS | 32.8% |
| Revenue / Bed COMPUTED | $884K |
| Net-to-Gross HCRIS | 29.7% |
| Distress Probability ML | 53.0% |
2. Market Context & Competitive Position
DE has 14 Medicare-certified hospitals with a median operating margin of 0.7%. The target's margin of -2.5% places it below the state median. Among 9 size-comparable peers (73-292 beds), the median margin is -0.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (73-292), prioritizing same-state peers. 9 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. FRANCIS HOSPITAL WILMINGT (Target) | DE | 146 | $129.0M | -2.5% |
| ALFRED I DUPONT HOSP FOR CHILD | DE | 206 | $694.0M | 17.3% |
| BAYHEALTH HOSPITAL KENT CAMPU | DE | 279 | $588.4M | -7.6% |
| BEEBE MEDICAL CENTER | DE | 210 | $549.7M | -0.9% |
| BAYHEALTH HOSPITAL SUSSEX CAM | DE | 117 | $298.6M | -1.4% |
| NANTICOKE MEMORIAL HOSPITAL | DE | 92 | $153.2M | -7.4% |
| ROCKFORD | DE | 148 | $32.4M | 2.3% |
| MEADOW WOOD HOSPITAL | DE | 120 | $30.5M | 9.6% |
| DOVER BEHAVIORAL HEALTH SYSTEM | DE | 104 | $27.8M | 7.7% |
4. Predicted Improvement Opportunities
Improvement targets set at P75 of comparable peers with 60% gap closure assumption. Coefficients calibrated to published research bands. Total EBITDA uplift: $9.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $83K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.3M |
| + RCM Uplift | +$9.5M |
| Pro Forma EBITDA | $6.2M |
| Current Margin | -2.5% |
| Pro Forma Margin | 4.8% |
| WC Released (1x) | $4.9M |
6. Returns Analysis — Scenario Matrix
5-year hold, 5.5x leverage, 3% organic growth, 10%/yr debt paydown. Base case uses 100% of predicted RCM uplift. Bull case: 130% uplift at lower entry. Bear case: 50% uplift at higher entry.
| Scenario | Entry | Exit | Equity In | Equity Out | MOIC | IRR |
|---|---|---|---|---|---|---|
| Base Case | 10.0x | 10.0x | $-5.0M | $73.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-5.0M | $79.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.5M | $108.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.5M | $117.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-5.5M | $27.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-5.5M | $28.6M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
| Medium | Low occupancy | At 32.8%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 53.0% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
8. Data Sources & Methodology Appendix
Data Sources
- CMS HCRIS Cost Reports (Medicare-certified hospitals)
- CMS Medicare Utilization (DRG-level volumes)
- CMS Chronic Conditions (county-level disease prevalence)
- HCRIS multi-year trend data (financial time series)
Comparable Selection
- 9 hospitals with 73-292 beds
- Same-state prioritization (n=10)
- Comp margins: P25=-7.4% / P50=-0.9% / P75=7.7%
Bridge Methodology
- Targets: P75 of comparable peers (60% gap closure)
- Denial: avoidable share = 35% of delta × NPR
- AR: bad debt coefficient = $0.65 per day per $1K NPR
- NCR: 60% coefficient on collection rate improvement
- CDI: 0.75% of Medicare revenue per 0.01 CMI point
Returns Assumptions
- Leverage: 5.5x entry (84.6% debt / 15.4% equity)
- Organic growth: 3% annual EBITDA growth
- Debt paydown: 10% of principal per year
- Hold period: 5 years
Generated by SeekingChartis on April 26, 2026. All predictions use public data only. Confidence intervals calibrated via split conformal prediction (90% coverage target). This memo is for informational purposes and does not constitute investment advice.