ORLANDO HEALTH SOUTH LAKE HOSPITAL
1. Target Overview & Investment Thesis
ORLANDO HEALTH SOUTH LAKE HOSPITAL is a 167-bed suburban community hospital in LAKE, FL with $331.8M in net patient revenue and a 7.2% operating margin. The hospital serves a payer mix of 28.9% Medicare, 2.3% Medicaid, and 68.8% commercial.
Thesis: Turnaround. Our ML models identify $24.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 7.2% to 14.5% (+736bps).
| Net Revenue HCRIS | $331.8M |
| Current EBITDA COMPUTED | $23.8M |
| Operating Margin COMPUTED | 7.2% |
| Occupancy HCRIS | 89.3% |
| Revenue / Bed COMPUTED | $2.0M |
| Net-to-Gross HCRIS | 14.0% |
| Distress Probability ML | 36.3% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 7.2% places it above the state median. Among 123 size-comparable peers (84-334 beds), the median margin is 2.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (84-334), prioritizing same-state peers. 123 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ORLANDO HEALTH SOUTH LAKE HOSP (Target) | FL | 167 | $331.8M | 7.2% |
| MOFFITT CANCER CENTER | FL | 218 | $1.91B | 16.0% |
| MAYO CLINIC FLORIDA | FL | 304 | $1.09B | 21.6% |
| NICKLAUS CHILDRENS HOSPITAL | FL | 259 | $769.3M | 5.5% |
| JOHNS HOPKINS ALL CHILDRENS HO | FL | 259 | $584.5M | -10.3% |
| HOLY CROSS HOSPITAL | FL | 286 | $566.3M | -0.7% |
| ADVENTHEALTH DAYTONA BEACH | FL | 330 | $532.7M | -1.9% |
| CCF HOSPITAL - WESTON | FL | 258 | $465.4M | -3.8% |
| DELRAY MEDICAL CENTER | FL | 324 | $453.3M | 12.7% |
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: $24.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $6.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $6.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.0M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $212K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $23.8M |
| + RCM Uplift | +$24.4M |
| Pro Forma EBITDA | $48.2M |
| Current Margin | 7.2% |
| Pro Forma Margin | 14.5% |
| WC Released (1x) | $12.7M |
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 | $36.6M | $401.1M | 10.96x | 61.4% |
| Base (11x exit) | 10.0x | 11.0x | $36.6M | $453.0M | 12.38x | 65.4% |
| Bull Case | 9.0x | 11.0x | $32.9M | $545.5M | 16.57x | 75.3% |
| Bull (12x exit) | 9.0x | 12.0x | $32.9M | $604.8M | 18.37x | 79.0% |
| Bear Case | 11.0x | 10.0x | $40.2M | $267.1M | 6.64x | 46.0% |
| Bear (11x exit) | 11.0x | 11.0x | $40.2M | $306.8M | 7.63x | 50.1% |
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
- 123 hospitals with 84-334 beds
- Same-state prioritization (n=124)
- Comp margins: P25=-5.7% / P50=2.8% / P75=16.2%
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.