THE WILLOUGH AT NAPLES
1. Target Overview & Investment Thesis
THE WILLOUGH AT NAPLES is a 87-bed community hospital in nan, FL with $11.2M in net patient revenue and a 5.5% operating margin. The hospital serves a payer mix of 61.8% Medicare, 0.0% Medicaid, and 38.2% commercial.
Thesis: Turnaround. Our ML models identify $830K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 5.5% to 12.9% (+740bps).
| Net Revenue HCRIS | $11.2M |
| Current EBITDA COMPUTED | $620K |
| Operating Margin COMPUTED | 5.5% |
| Occupancy HCRIS | 48.7% |
| Revenue / Bed COMPUTED | $129K |
| Net-to-Gross HCRIS | 44.9% |
| 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 5.5% places it above the state median. Among 120 size-comparable peers (44-174 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 (44-174), prioritizing same-state peers. 120 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| THE WILLOUGH AT NAPLES (Target) | FL | 87 | $11.2M | 5.5% |
| WEST KENDALL BAPTIST HOSPITAL | FL | 127 | $361.6M | 18.5% |
| ADVENTHEALTH WESLEY CHAPEL | FL | 169 | $360.1M | 17.0% |
| ORLANDO HEALTH SOUTH LAKE HOSP | FL | 167 | $331.8M | 7.2% |
| ADVENTHEALTH PALM COAST | FL | 99 | $285.7M | 8.1% |
| HOMESTEAD HOSPITAL | FL | 159 | $270.4M | -11.1% |
| NEMOURS CHILDRENS HOSPITAL | FL | 130 | $268.7M | -10.2% |
| DOCTORS HOSPITAL | FL | 130 | $250.0M | 0.9% |
| ADVENTHEALTH ZEPHYRHILLS | FL | 149 | $207.1M | -0.8% |
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: $830K (740bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $236K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $224K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $224K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $136K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +9bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $620K |
| + RCM Uplift | +$830K |
| Pro Forma EBITDA | $1.5M |
| Current Margin | 5.5% |
| Pro Forma Margin | 12.9% |
| WC Released (1x) | $430K |
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 | $954K | $12.4M | 12.98x | 67.0% |
| Base (11x exit) | 10.0x | 11.0x | $954K | $13.9M | 14.61x | 71.0% |
| Bull Case | 9.0x | 11.0x | $859K | $17.0M | 19.78x | 81.7% |
| Bull (12x exit) | 9.0x | 12.0x | $859K | $18.8M | 21.87x | 85.4% |
| Bear Case | 11.0x | 10.0x | $1.0M | $7.9M | 7.56x | 49.9% |
| Bear (11x exit) | 11.0x | 11.0x | $1.0M | $9.1M | 8.64x | 53.9% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 61.8% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
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
- 120 hospitals with 44-174 beds
- Same-state prioritization (n=121)
- Comp margins: P25=-8.9% / P50=2.8% / P75=12.3%
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.