ADVENTHEALTH WESLEY CHAPEL
1. Target Overview & Investment Thesis
ADVENTHEALTH WESLEY CHAPEL is a 169-bed suburban community hospital in nan, FL with $360.1M in net patient revenue and a 17.0% operating margin. The hospital serves a payer mix of 23.8% Medicare, 1.5% Medicaid, and 74.6% commercial.
Thesis: Turnaround. Our ML models identify $26.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 17.0% to 24.4% (+736bps).
| Net Revenue HCRIS | $360.1M |
| Current EBITDA COMPUTED | $61.2M |
| Operating Margin COMPUTED | 17.0% |
| Occupancy HCRIS | 68.2% |
| Revenue / Bed COMPUTED | $2.1M |
| Net-to-Gross HCRIS | 18.6% |
| Distress Probability ML | 40.8% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 17.0% places it above the state median. Among 121 size-comparable peers (84-338 beds), the median margin is 2.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (84-338), prioritizing same-state peers. 121 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ADVENTHEALTH WESLEY CHAPEL (Target) | FL | 169 | $360.1M | 17.0% |
| 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: $26.5M (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% | $7.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $230K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $61.2M |
| + RCM Uplift | +$26.5M |
| Pro Forma EBITDA | $87.7M |
| Current Margin | 17.0% |
| Pro Forma Margin | 24.4% |
| WC Released (1x) | $13.8M |
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 | $94.2M | $668.8M | 7.10x | 48.0% |
| Base (11x exit) | 10.0x | 11.0x | $94.2M | $766.2M | 8.14x | 52.1% |
| Bull Case | 9.0x | 11.0x | $84.7M | $884.3M | 10.43x | 59.8% |
| Bull (12x exit) | 9.0x | 12.0x | $84.7M | $989.7M | 11.68x | 63.5% |
| Bear Case | 11.0x | 10.0x | $103.6M | $505.7M | 4.88x | 37.3% |
| Bear (11x exit) | 11.0x | 11.0x | $103.6M | $589.9M | 5.69x | 41.6% |
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 84-338 beds
- Same-state prioritization (n=122)
- Comp margins: P25=-6.5% / P50=2.7% / P75=14.4%
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.