HCA FL FT WALTON-DESTIN HOSP
1. Target Overview & Investment Thesis
HCA FL FT WALTON-DESTIN HOSP is a 231-bed suburban community hospital in OKALOOSA, FL with $361.3M in net patient revenue and a 38.1% operating margin. The hospital serves a payer mix of 35.2% Medicare, 4.2% Medicaid, and 60.5% commercial.
Thesis: Platform Growth. Our ML models identify $26.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 38.1% to 45.5% (+736bps).
| Net Revenue HCRIS | $361.3M |
| Current EBITDA COMPUTED | $137.8M |
| Operating Margin COMPUTED | 38.1% |
| Occupancy HCRIS | 75.3% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 8.9% |
| Distress Probability ML | 40.3% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 38.1% places it above the state median. Among 115 size-comparable peers (116-462 beds), the median margin is 3.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (116-462), prioritizing same-state peers. 115 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HCA FL FT WALTON-DESTIN HOSP (Target) | FL | 231 | $361.3M | 38.1% |
| 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% |
| HCA FLORIDA NORTH FLORIDA HOSP | FL | 462 | $630.8M | 28.9% |
| 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% |
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: $26.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $7.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $7.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $231K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $137.8M |
| + RCM Uplift | +$26.6M |
| Pro Forma EBITDA | $164.4M |
| Current Margin | 38.1% |
| Pro Forma Margin | 45.5% |
| WC Released (1x) | $13.9M |
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 | $212.0M | $1.17B | 5.54x | 40.8% |
| Base (11x exit) | 10.0x | 11.0x | $212.0M | $1.36B | 6.42x | 45.1% |
| Bull Case | 9.0x | 11.0x | $190.8M | $1.52B | 7.96x | 51.4% |
| Bull (12x exit) | 9.0x | 12.0x | $190.8M | $1.71B | 8.97x | 55.1% |
| Bear Case | 11.0x | 10.0x | $233.2M | $973.0M | 4.17x | 33.1% |
| Bear (11x exit) | 11.0x | 11.0x | $233.2M | $1.15B | 4.91x | 37.5% |
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
- 115 hospitals with 116-462 beds
- Same-state prioritization (n=116)
- Comp margins: P25=-4.5% / P50=3.9% / P75=16.9%
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.