EMORY UNIVERSITY HOSPITAL MIDTOWN
1. Target Overview & Investment Thesis
EMORY UNIVERSITY HOSPITAL MIDTOWN is a 548-bed large academic medical center in nan, GA with $1.37B in net patient revenue and a -15.4% operating margin. The hospital serves a payer mix of 13.3% Medicare, 14.7% Medicaid, and 72.0% commercial.
Thesis: Undervalued. Our ML models identify $100.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -15.4% to -8.0% (+736bps).
| Net Revenue HCRIS | $1.37B |
| Current EBITDA COMPUTED | $-210.5M |
| Operating Margin COMPUTED | -15.4% |
| Occupancy HCRIS | 83.2% |
| Revenue / Bed COMPUTED | $2.5M |
| Net-to-Gross HCRIS | 32.5% |
| Distress Probability ML | 42.4% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of -15.4% places it below the state median. Among 27 size-comparable peers (274-1096 beds), the median margin is -1.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (274-1096), prioritizing same-state peers. 27 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| EMORY UNIVERSITY HOSPITAL MIDT (Target) | GA | 548 | $1.37B | -15.4% |
| NORTHSIDE HOSPITAL | GA | 719 | $2.58B | -7.9% |
| NORTHEAST GEORGIA MEDICAL CENT | GA | 645 | $1.55B | 4.4% |
| KENNESTONE HOSPITAL | GA | 642 | $1.50B | 15.3% |
| EMORY UNIVERSITY HOSPITAL | GA | 639 | $1.42B | 5.4% |
| PIEDMONT HOSPITAL INC. | GA | 569 | $1.32B | 4.0% |
| GRADY MEMORIAL HOSPITAL | GA | 694 | $1.19B | -39.6% |
| NORTHSIDE HOSPITAL - GWINNETT | GA | 404 | $1.07B | -2.5% |
| EGLESTON CHILDRENS HOSPITAL AT | GA | 330 | $941.9M | 41.5% |
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: $100.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $28.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $27.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $27.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $16.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $877K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-210.5M |
| + RCM Uplift | +$100.8M |
| Pro Forma EBITDA | $-109.7M |
| Current Margin | -15.4% |
| Pro Forma Margin | -8.0% |
| WC Released (1x) | $52.5M |
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 | $-323.8M | $-380.2M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-323.8M | $-523.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-291.4M | $-295.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-291.4M | $-408.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-356.2M | $-779.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-356.2M | $-972.7M | 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
- 27 hospitals with 274-1096 beds
- Same-state prioritization (n=28)
- Comp margins: P25=-7.7% / P50=-1.0% / P75=5.8%
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.