HOLZER
1. Target Overview & Investment Thesis
HOLZER is a 148-bed suburban community hospital in GALLIA, OH with $204.1M in net patient revenue and a 16.9% operating margin. The hospital serves a payer mix of 27.0% Medicare, 3.2% Medicaid, and 69.8% commercial.
Thesis: Turnaround. Our ML models identify $15.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 16.9% to 24.3% (+736bps).
| Net Revenue HCRIS | $204.1M |
| Current EBITDA COMPUTED | $34.5M |
| Operating Margin COMPUTED | 16.9% |
| Occupancy HCRIS | 28.1% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 33.5% |
| Distress Probability ML | 53.2% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of 16.9% places it above the state median. Among 89 size-comparable peers (74-296 beds), the median margin is 0.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (74-296), prioritizing same-state peers. 89 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| HOLZER (Target) | OH | 148 | $204.1M | 16.9% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| DAYTON CHILDRENS HOSPITAL | OH | 181 | $569.1M | 7.9% |
| GENESIS HEALTHCARE SYSTEM | OH | 282 | $527.6M | 0.6% |
| MARIETTA MEMORIAL HOSPITAL | OH | 188 | $475.8M | -12.4% |
| ADENA REGIONAL MEDICAL CENTER | OH | 209 | $470.7M | 3.5% |
| SOUTHERN OHIO MEDICAL CENTER | OH | 192 | $424.3M | -4.9% |
| SOUTHWEST GENERAL HEALTH CENTE | OH | 191 | $406.9M | 2.5% |
| MEDCENTRAL HEALTH SYSTEM | OH | 240 | $382.6M | 0.2% |
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: $15.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.0M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $131K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $34.5M |
| + RCM Uplift | +$15.0M |
| Pro Forma EBITDA | $49.5M |
| Current Margin | 16.9% |
| Pro Forma Margin | 24.3% |
| WC Released (1x) | $7.8M |
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 | $53.1M | $377.9M | 7.12x | 48.1% |
| Base (11x exit) | 10.0x | 11.0x | $53.1M | $433.0M | 8.15x | 52.1% |
| Bull Case | 9.0x | 11.0x | $47.8M | $499.8M | 10.46x | 59.9% |
| Bull (12x exit) | 9.0x | 12.0x | $47.8M | $559.4M | 11.70x | 63.5% |
| Bear Case | 11.0x | 10.0x | $58.4M | $285.6M | 4.89x | 37.4% |
| Bear (11x exit) | 11.0x | 11.0x | $58.4M | $333.1M | 5.70x | 41.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 28.1%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 53.2% 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
- 89 hospitals with 74-296 beds
- Same-state prioritization (n=90)
- Comp margins: P25=-9.7% / P50=0.3% / P75=7.1%
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.