CHI HEALTH IMMANUEL
1. Target Overview & Investment Thesis
CHI HEALTH IMMANUEL is a 177-bed suburban community hospital in DOUGLAS, NE with $187.9M in net patient revenue and a -8.8% operating margin. The hospital serves a payer mix of 19.7% Medicare, 3.8% Medicaid, and 76.5% commercial.
Thesis: Undervalued. Our ML models identify $13.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -8.8% to -1.5% (+736bps).
| Net Revenue HCRIS | $187.9M |
| Current EBITDA COMPUTED | $-16.6M |
| Operating Margin COMPUTED | -8.8% |
| Occupancy HCRIS | 58.0% |
| Revenue / Bed COMPUTED | $1.1M |
| Net-to-Gross HCRIS | 25.0% |
| Distress Probability ML | 45.8% |
2. Market Context & Competitive Position
NE has 98 Medicare-certified hospitals with a median operating margin of -6.3%. The target's margin of -8.8% places it below the state median. Among 11 size-comparable peers (88-354 beds), the median margin is -9.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (88-354), prioritizing same-state peers. 11 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CHI HEALTH IMMANUEL (Target) | NE | 177 | $187.9M | -8.8% |
| CHILDRENS HOSPITAL & MEDICAL C | NE | 186 | $501.1M | -10.3% |
| GREAT PLAINS HEALTH | NE | 96 | $268.8M | 3.9% |
| REGIONAL WEST MEDICAL CENTER | NE | 122 | $218.4M | -12.9% |
| CHI HEALTH LAKESIDE | NE | 125 | $200.3M | 15.3% |
| MARY LANNING MEMORIAL HOSPITAL | NE | 97 | $200.0M | -8.9% |
| FAITH REGIONAL HEALTH SERVICES | NE | 122 | $198.1M | 10.1% |
| CHI HEALTH GOOD SAMARITAN | NE | 182 | $174.5M | -3.3% |
| CHI HEALTH ST. ELIZABETH | NE | 137 | $163.6M | -13.7% |
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: $13.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $120K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.6M |
| + RCM Uplift | +$13.8M |
| Pro Forma EBITDA | $-2.8M |
| Current Margin | -8.8% |
| Pro Forma Margin | -1.5% |
| WC Released (1x) | $7.2M |
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 | $-25.5M | $28.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-25.5M | $23.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-23.0M | $60.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-23.0M | $59.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-28.1M | $-31.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-28.1M | $-44.2M | 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
- 11 hospitals with 88-354 beds
- Same-state prioritization (n=12)
- Comp margins: P25=-13.3% / P50=-9.7% / P75=0.3%
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.