LARABIDA CHILDRENS HOSPITAL
1. Target Overview & Investment Thesis
LARABIDA CHILDRENS HOSPITAL is a 39-bed community hospital in COOK, IL with $30.6M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 0.0% Medicare, 58.6% Medicaid, and 41.4% commercial.
Thesis: Turnaround. Our ML models identify $2.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -120.0% (+736bps).
| Net Revenue HCRIS | $30.6M |
| Current EBITDA COMPUTED | $-39.0M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 89.6% |
| Revenue / Bed COMPUTED | $785K |
| Net-to-Gross HCRIS | 29.7% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
IL has 208 Medicare-certified hospitals with a median operating margin of -5.3%. The target's margin of -100.0% places it below the state median. Among 75 size-comparable peers (20-78 beds), the median margin is -3.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-78), prioritizing same-state peers. 75 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| LARABIDA CHILDRENS HOSPITAL (Target) | IL | 39 | $30.6M | -100.0% |
| MIDWESTERN REGIONAL MEDICAL CE | IL | 73 | $1.38B | 80.5% |
| KATHERINE SHAW BETHEA HOSPITAL | IL | 66 | $136.9M | -12.8% |
| PROCTOR HOSPITAL | IL | 72 | $133.9M | 34.9% |
| GIBSON AREA HOSPITAL AND HEALT | IL | 25 | $125.0M | -6.7% |
| GRAHAM HOSPITAL ASSOCIATION | IL | 43 | $105.0M | -4.7% |
| PARIS COMMUNITY HOSPITAL | IL | 25 | $100.7M | -4.2% |
| OSF SAINT ANTHONYS HEALTH CENT | IL | 49 | $91.4M | -9.8% |
| ST. MARGARETS HEALTH - SPRING | IL | 44 | $88.1M | -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: $2.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $643K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $612K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $606K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $373K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $20K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-39.0M |
| + RCM Uplift | +$2.3M |
| Pro Forma EBITDA | $-36.8M |
| Current Margin | -100.0% |
| Pro Forma Margin | -120.0% |
| WC Released (1x) | $1.2M |
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 | $-60.0M | $-234.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-60.0M | $-277.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-54.0M | $-289.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-54.0M | $-332.1M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-66.0M | $-226.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-66.0M | $-270.7M | 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 |
| Medium | Elevated Medicaid exposure (58.6%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
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
- 75 hospitals with 20-78 beds
- Same-state prioritization (n=76)
- Comp margins: P25=-9.1% / P50=-3.3% / P75=7.8%
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.