WILKES-BARRE GENERAL HOSPITAL
1. Target Overview & Investment Thesis
WILKES-BARRE GENERAL HOSPITAL is a 188-bed suburban community hospital in LUZERNE, PA with $262.1M in net patient revenue and a -13.0% operating margin. The hospital serves a payer mix of 42.4% Medicare, 2.6% Medicaid, and 54.9% commercial.
Thesis: Undervalued. Our ML models identify $19.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -13.0% to -5.6% (+736bps).
| Net Revenue HCRIS | $262.1M |
| Current EBITDA COMPUTED | $-34.0M |
| Operating Margin COMPUTED | -13.0% |
| Occupancy HCRIS | 53.7% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 14.1% |
| Distress Probability ML | 45.8% |
2. Market Context & Competitive Position
PA has 225 Medicare-certified hospitals with a median operating margin of -4.4%. The target's margin of -13.0% places it below the state median. Among 100 size-comparable peers (94-376 beds), the median margin is -7.6%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (94-376), prioritizing same-state peers. 100 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WILKES-BARRE GENERAL HOSPITAL (Target) | PA | 188 | $262.1M | -13.0% |
| PRESBYTERIAN MEDICAL CENTER | PA | 328 | $988.5M | -18.9% |
| UPMC MAGEE-WOMENS HOSPITAL | PA | 347 | $910.8M | -23.9% |
| UPMC CHILDRENS HOSPITAL OF PGH | PA | 317 | $816.7M | -2.5% |
| GEISINGER WYOMING VALLEY MED C | PA | 309 | $782.7M | 5.9% |
| WESTERN PENNSYLVANIA HOSPITAL | PA | 255 | $776.4M | 11.1% |
| LANKENAU MEDICAL CENTER | PA | 370 | $621.6M | -16.4% |
| UPMC ALTOONA | PA | 337 | $526.8M | -4.8% |
| COMMUNITY MEDICAL CENTER | PA | 266 | $474.1M | 3.1% |
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: $19.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.5M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $168K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-34.0M |
| + RCM Uplift | +$19.3M |
| Pro Forma EBITDA | $-14.7M |
| Current Margin | -13.0% |
| Pro Forma Margin | -5.6% |
| WC Released (1x) | $10.1M |
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 | $-52.3M | $-31.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-52.3M | $-51.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-47.1M | $-4.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-47.1M | $-19.1M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-57.5M | $-110.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-57.5M | $-140.6M | 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 |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 100 hospitals with 94-376 beds
- Same-state prioritization (n=101)
- Comp margins: P25=-18.9% / P50=-7.6% / P75=2.1%
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.