WOMANS HOSPITAL
1. Target Overview & Investment Thesis
WOMANS HOSPITAL is a 228-bed safety-net/medicaid heavy in nan, LA with $345.8M in net patient revenue and a -8.8% operating margin. The hospital serves a payer mix of 0.7% Medicare, 57.7% Medicaid, and 41.6% commercial.
Thesis: Undervalued. Our ML models identify $25.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -8.8% to -1.5% (+736bps).
| Net Revenue HCRIS | $345.8M |
| Current EBITDA COMPUTED | $-30.5M |
| Operating Margin COMPUTED | -8.8% |
| Occupancy HCRIS | 76.4% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 51.8% |
| Distress Probability ML | 56.6% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of -8.8% places it below the state median. Among 37 size-comparable peers (114-456 beds), the median margin is -6.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (114-456), prioritizing same-state peers. 37 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WOMANS HOSPITAL (Target) | LA | 228 | $345.8M | -8.8% |
| UNIVERSITY MEDICAL CTR. AT NEW | LA | 310 | $671.3M | -22.4% |
| CHILDRENS HOSPITAL | LA | 189 | $523.4M | 6.7% |
| OUR LADY OF LOURDES RMC | LA | 363 | $509.6M | 8.9% |
| TULANE UNIVERSITY HOSPITAL & C | LA | 431 | $490.2M | -14.1% |
| LAFAYETTE GENERAL MEDICAL CENT | LA | 390 | $480.2M | -16.4% |
| BATON ROUGE GENERAL | LA | 251 | $445.5M | -6.7% |
| ST. TAMMANY PARISH HOSPITAL | LA | 213 | $434.6M | 4.5% |
| OCHSNER LSU HEALTH SHREVEPORT | LA | 273 | $395.6M | -50.0% |
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: $25.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $6.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $6.8M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $221K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-30.5M |
| + RCM Uplift | +$25.5M |
| Pro Forma EBITDA | $-5.1M |
| Current Margin | -8.8% |
| Pro Forma Margin | -1.5% |
| WC Released (1x) | $13.3M |
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 | $-47.0M | $53.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-47.0M | $43.1M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-42.3M | $111.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-42.3M | $109.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-51.7M | $-59.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-51.7M | $-81.6M | 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 (57.7%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 56.6% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 37 hospitals with 114-456 beds
- Same-state prioritization (n=38)
- Comp margins: P25=-16.8% / P50=-6.3% / P75=-0.5%
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.