WAKEMED RALEIGH CAMPUS
1. Target Overview & Investment Thesis
WAKEMED RALEIGH CAMPUS is a 609-bed large academic medical center in WAKE, NC with $1.15B in net patient revenue and a -1.4% operating margin. The hospital serves a payer mix of 19.4% Medicare, 9.7% Medicaid, and 70.9% commercial.
Thesis: Undervalued. Our ML models identify $84.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -1.4% to 5.9% (+736bps).
| Net Revenue HCRIS | $1.15B |
| Current EBITDA COMPUTED | $-16.5M |
| Operating Margin COMPUTED | -1.4% |
| Occupancy HCRIS | 92.3% |
| Revenue / Bed COMPUTED | $1.9M |
| Net-to-Gross HCRIS | 24.6% |
| Distress Probability ML | 39.6% |
2. Market Context & Competitive Position
NC has 129 Medicare-certified hospitals with a median operating margin of -2.0%. The target's margin of -1.4% places it above the state median. Among 22 size-comparable peers (304-1218 beds), the median margin is -2.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (304-1218), prioritizing same-state peers. 22 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WAKEMED RALEIGH CAMPUS (Target) | NC | 609 | $1.15B | -1.4% |
| DUKE UNIVERSITY HOSPITAL | NC | 1048 | $3.16B | -4.5% |
| CAROLINAS MEDICAL CENTER | NC | 1142 | $3.03B | -5.5% |
| UNIVERSITY OF NORTH CAROLINA H | NC | 799 | $2.88B | 13.3% |
| NORTH CAROLINA BAPTIST HOSPITA | NC | 800 | $2.19B | -4.7% |
| REX HOSPITAL | NC | 489 | $1.51B | -0.8% |
| PITT COUNTY MEMORIAL HOSPITAL | NC | 1013 | $1.38B | -3.0% |
| FORSYTH MEMORIAL HOSPITAL INC | NC | 906 | $1.36B | -7.1% |
| PRESBYTERIAN HOSPITAL | NC | 561 | $1.33B | 1.0% |
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: $84.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $24.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $22.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $22.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $14.0M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $734K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.5M |
| + RCM Uplift | +$84.4M |
| Pro Forma EBITDA | $68.0M |
| Current Margin | -1.4% |
| Pro Forma Margin | 5.9% |
| WC Released (1x) | $44.0M |
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 | $-25.3M | $735.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-25.3M | $800.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-22.8M | $1.07B | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-22.8M | $1.16B | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-27.9M | $321.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-27.9M | $344.8M | 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
- 22 hospitals with 304-1218 beds
- Same-state prioritization (n=23)
- Comp margins: P25=-5.5% / P50=-2.9% / P75=7.4%
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.