SSH - WILMINGTON INC
1. Target Overview & Investment Thesis
SSH - WILMINGTON INC is a 34-bed community hospital in NEW CASTLE, DE with $20.2M in net patient revenue and a 2.7% operating margin. The hospital serves a payer mix of 41.2% Medicare, 0.0% Medicaid, and 58.8% commercial.
Thesis: Turnaround. Our ML models identify $1.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.7% to 10.1% (+736bps).
| Net Revenue HCRIS | $20.2M |
| Current EBITDA COMPUTED | $550K |
| Operating Margin COMPUTED | 2.7% |
| Occupancy HCRIS | 95.3% |
| Revenue / Bed COMPUTED | $594K |
| Net-to-Gross HCRIS | 11.7% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
DE has 14 Medicare-certified hospitals with a median operating margin of 0.7%. The target's margin of 2.7% places it above the state median. Among 2635 size-comparable peers (17-68 beds), the median margin is -5.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (17-68), prioritizing same-state peers. 2635 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSH - WILMINGTON INC (Target) | DE | 34 | $20.2M | 2.7% |
| DANA-FARBER CANCER INSTITUTE | MA | 30 | $1.88B | -35.1% |
| FRED HUTCHINSON CANCER CENTER | WA | 20 | $1.17B | -50.0% |
| MERCY WALWORTH HOSPITAL | WI | 25 | $616.4M | 4.4% |
| USC NORRIS CANCER HOSPITAL | CA | 60 | $468.7M | 19.1% |
| LAKEVIEW MEMORIAL | MN | 68 | $411.9M | 60.9% |
| MOUNTAIN VIEW HOSPITAL | ID | 43 | $382.5M | 8.7% |
| WISE HEALTH SYSTEM - PARKWAY | TX | 36 | $361.0M | -15.5% |
| CORYELL MEMORIAL HOSPITAL | TX | 25 | $305.9M | -1.5% |
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: $1.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $424K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $404K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $400K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $246K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $13K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $550K |
| + RCM Uplift | +$1.5M |
| Pro Forma EBITDA | $2.0M |
| Current Margin | 2.7% |
| Pro Forma Margin | 10.1% |
| WC Released (1x) | $775K |
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 | $847K | $18.5M | 21.84x | 85.3% |
| Base (11x exit) | 10.0x | 11.0x | $847K | $20.6M | 24.35x | 89.4% |
| Bull Case | 9.0x | 11.0x | $762K | $25.8M | 33.86x | 102.3% |
| Bull (12x exit) | 9.0x | 12.0x | $762K | $28.4M | 37.23x | 106.2% |
| Bear Case | 11.0x | 10.0x | $931K | $10.8M | 11.58x | 63.2% |
| Bear (11x exit) | 11.0x | 11.0x | $931K | $12.2M | 13.07x | 67.2% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 2635 hospitals with 17-68 beds
- Same-state prioritization (n=3)
- Comp margins: P25=-17.7% / P50=-5.3% / P75=5.2%
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.