WINDMOOR HEALTHCARE
1. Target Overview & Investment Thesis
WINDMOOR HEALTHCARE is a 144-bed community hospital in PINELLAS, FL with $20.5M in net patient revenue and a -14.1% operating margin. The hospital serves a payer mix of 7.9% Medicare, 0.0% Medicaid, and 92.1% commercial.
Thesis: Undervalued. Our ML models identify $1.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -14.1% to -6.7% (+736bps).
| Net Revenue HCRIS | $20.5M |
| Current EBITDA COMPUTED | $-2.9M |
| Operating Margin COMPUTED | -14.1% |
| Occupancy HCRIS | 44.7% |
| Revenue / Bed COMPUTED | $142K |
| Net-to-Gross HCRIS | 32.9% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of -14.1% places it below the state median. Among 127 size-comparable peers (72-288 beds), the median margin is 3.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (72-288), prioritizing same-state peers. 127 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WINDMOOR HEALTHCARE (Target) | FL | 144 | $20.5M | -14.1% |
| MOFFITT CANCER CENTER | FL | 218 | $1.91B | 16.0% |
| 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% |
| CCF HOSPITAL - WESTON | FL | 258 | $465.4M | -3.8% |
| BAPTIST HOSPITAL | FL | 279 | $445.0M | -26.4% |
| LARGO MEDICAL CENTER | FL | 245 | $386.4M | 24.1% |
| PHYSICIANS REGIONAL MEDICAL CE | FL | 259 | $378.5M | 12.6% |
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% | $430K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $409K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $405K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $249K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $13K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.9M |
| + RCM Uplift | +$1.5M |
| Pro Forma EBITDA | $-1.4M |
| Current Margin | -14.1% |
| Pro Forma Margin | -6.7% |
| WC Released (1x) | $785K |
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 | $-4.4M | $-4.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.4M | $-5.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.0M | $-2.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.0M | $-3.7M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-4.9M | $-10.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-4.9M | $-12.7M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
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
- 127 hospitals with 72-288 beds
- Same-state prioritization (n=128)
- Comp margins: P25=-5.3% / P50=3.9% / P75=14.0%
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.