ADVENTHEALTH HEART OF FLORIDA
1. Target Overview & Investment Thesis
ADVENTHEALTH HEART OF FLORIDA is a 202-bed suburban community hospital in POLK, FL with $258.6M in net patient revenue and a 11.6% operating margin. The hospital serves a payer mix of 19.0% Medicare, 3.8% Medicaid, and 77.2% commercial.
Thesis: Platform Growth. Our ML models identify $19.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 11.6% to 19.0% (+736bps).
| Net Revenue HCRIS | $258.6M |
| Current EBITDA COMPUTED | $30.0M |
| Operating Margin COMPUTED | 11.6% |
| Occupancy HCRIS | 53.3% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 12.7% |
| Distress Probability ML | 45.2% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 11.6% places it above the state median. Among 121 size-comparable peers (101-404 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 (101-404), prioritizing same-state peers. 121 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ADVENTHEALTH HEART OF FLORIDA (Target) | FL | 202 | $258.6M | 11.6% |
| 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% |
| SOUTH MIAMI HOSPITAL | FL | 375 | $688.4M | 11.6% |
| BOCA RATON REGIONAL HOSPITAL | FL | 361 | $609.5M | -9.6% |
| 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% |
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: $19.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $165K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $30.0M |
| + RCM Uplift | +$19.0M |
| Pro Forma EBITDA | $49.0M |
| Current Margin | 11.6% |
| Pro Forma Margin | 19.0% |
| WC Released (1x) | $9.9M |
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 | $46.2M | $388.2M | 8.41x | 53.1% |
| Base (11x exit) | 10.0x | 11.0x | $46.2M | $442.1M | 9.58x | 57.1% |
| Bull Case | 9.0x | 11.0x | $41.5M | $519.9M | 12.51x | 65.8% |
| Bull (12x exit) | 9.0x | 12.0x | $41.5M | $579.4M | 13.95x | 69.4% |
| Bear Case | 11.0x | 10.0x | $50.8M | $278.1M | 5.48x | 40.5% |
| Bear (11x exit) | 11.0x | 11.0x | $50.8M | $322.4M | 6.35x | 44.7% |
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
- 121 hospitals with 101-404 beds
- Same-state prioritization (n=122)
- Comp margins: P25=-6.5% / P50=2.8% / P75=16.8%
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.