WILLIAMSON HEALTH
1. Target Overview & Investment Thesis
WILLIAMSON HEALTH is a 203-bed suburban community hospital in WILLIAMSON, TN with $271.4M in net patient revenue and a -3.3% operating margin. The hospital serves a payer mix of 28.8% Medicare, 5.7% Medicaid, and 65.5% commercial.
Thesis: Undervalued. Our ML models identify $20.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -3.3% to 4.1% (+736bps).
| Net Revenue HCRIS | $271.4M |
| Current EBITDA COMPUTED | $-8.9M |
| Operating Margin COMPUTED | -3.3% |
| Occupancy HCRIS | 50.8% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 28.2% |
| Distress Probability ML | 48.4% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of -3.3% places it below the state median. Among 34 size-comparable peers (102-406 beds), the median margin is 2.1%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (102-406), prioritizing same-state peers. 34 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WILLIAMSON HEALTH (Target) | TN | 203 | $271.4M | -3.3% |
| SAINT THOMAS RUTHERFORD HOSPIT | TN | 354 | $447.4M | 1.3% |
| PARKRIDGE MEDICAL CENTER | TN | 396 | $433.4M | 30.1% |
| REGIONAL ONE HEALTH | TN | 291 | $407.9M | -50.0% |
| PARKWEST MEDICAL CENTER | TN | 361 | $396.4M | -5.5% |
| COOKEVILLE REGIONAL MEDICAL CE | TN | 212 | $372.5M | 2.1% |
| SKYLINE MEDICAL CENTER | TN | 350 | $360.4M | 15.1% |
| FORT SANDERS REGIONAL MEDICAL | TN | 304 | $346.2M | -9.4% |
| HOLSTON VALLEY HOSP & MED CTR | TN | 286 | $344.6M | -7.4% |
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: $20.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $5.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $174K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-8.9M |
| + RCM Uplift | +$20.0M |
| Pro Forma EBITDA | $11.1M |
| Current Margin | -3.3% |
| Pro Forma Margin | 4.1% |
| WC Released (1x) | $10.4M |
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 | $-13.7M | $141.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-13.7M | $150.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-12.3M | $212.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-12.3M | $227.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-15.1M | $45.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-15.1M | $45.3M | 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
- 34 hospitals with 102-406 beds
- Same-state prioritization (n=35)
- Comp margins: P25=-8.0% / P50=2.1% / P75=12.0%
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.