RALEIGH GENERAL HOSPITAL
1. Target Overview & Investment Thesis
RALEIGH GENERAL HOSPITAL is a 300-bed under-performing / distressed in RALEIGH, WV with $181.8M in net patient revenue and a -6.5% operating margin. The hospital serves a payer mix of 33.1% Medicare, 22.6% Medicaid, and 44.3% commercial.
Thesis: Undervalued. Our ML models identify $13.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -6.5% to 0.9% (+736bps).
| Net Revenue HCRIS | $181.8M |
| Current EBITDA COMPUTED | $-11.8M |
| Operating Margin COMPUTED | -6.5% |
| Occupancy HCRIS | 38.9% |
| Revenue / Bed COMPUTED | $606K |
| Net-to-Gross HCRIS | 23.0% |
| Distress Probability ML | 56.3% |
2. Market Context & Competitive Position
WV has 62 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -6.5% places it below the state median. Among 9 size-comparable peers (150-600 beds), the median margin is -5.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (150-600), prioritizing same-state peers. 9 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| RALEIGH GENERAL HOSPITAL (Target) | WV | 300 | $181.8M | -6.5% |
| CABELL HUNTINGTON HOSPITAL | WV | 330 | $718.8M | -1.8% |
| UNITED HOSPITAL CENTER | WV | 232 | $516.4M | 9.4% |
| ST. MARYS MEDICAL CENTER INC. | WV | 350 | $507.8M | -9.8% |
| WHEELING HOSPITAL | WV | 189 | $411.4M | -8.5% |
| CAMDEN-CLARK MEMORIAL HOSPITAL | WV | 256 | $357.5M | -8.0% |
| CITY HOSPITAL INC. | WV | 163 | $304.2M | -2.8% |
| THOMAS MEMORIAL HOSPITAL | WV | 176 | $209.0M | 26.7% |
| MONONGALIA GENERAL HOSPITAL | WV | 160 | $155.1M | -5.3% |
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: $13.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $116K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-11.8M |
| + RCM Uplift | +$13.4M |
| Pro Forma EBITDA | $1.6M |
| Current Margin | -6.5% |
| Pro Forma Margin | 0.9% |
| WC Released (1x) | $7.0M |
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 | $-18.1M | $56.1M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-18.1M | $55.8M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-16.3M | $94.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-16.3M | $97.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-19.9M | $-4.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-19.9M | $-11.9M | 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 |
| Medium | Elevated Medicaid exposure (22.6%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 56.3% 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
- 9 hospitals with 150-600 beds
- Same-state prioritization (n=10)
- Comp margins: P25=-8.5% / P50=-5.3% / P75=-1.8%
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.