WILLIAM R SHARPE JR HOSPITAL
1. Target Overview & Investment Thesis
WILLIAM R SHARPE JR HOSPITAL is a 200-bed under-performing / distressed in LEWIS, WV with $7.2M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 3.3% Medicare, 2.3% Medicaid, and 94.5% commercial.
Thesis: Undervalued. Our ML models identify $541K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -1533.9% (+749bps).
| Net Revenue HCRIS | $7.2M |
| Current EBITDA COMPUTED | $-111.5M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 89.5% |
| Revenue / Bed COMPUTED | $36K |
| Net-to-Gross HCRIS | 13.4% |
| Distress Probability ML | 37.9% |
2. Market Context & Competitive Position
WV has 62 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -100.0% places it below the state median. Among 15 size-comparable peers (100-400 beds), the median margin is -2.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (100-400), prioritizing same-state peers. 15 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WILLIAM R SHARPE JR HOSPITAL (Target) | WV | 200 | $7.2M | -100.0% |
| 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% |
| PRINCETON COMMUNITY HOSPITAL | WV | 115 | $290.2M | 12.8% |
| THOMAS MEMORIAL HOSPITAL | WV | 176 | $209.0M | 26.7% |
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: $541K (749bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $152K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $147K | +204bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $145K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $88K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +13bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-111.5M |
| + RCM Uplift | +$541K |
| Pro Forma EBITDA | $-110.9M |
| Current Margin | -100.0% |
| Pro Forma Margin | -1533.9% |
| WC Released (1x) | $277K |
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 | $-171.5M | $-729.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-171.5M | $-858.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-154.3M | $-912.3M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-154.3M | $-1.04B | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-188.6M | $-676.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-188.6M | $-805.7M | 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
- 15 hospitals with 100-400 beds
- Same-state prioritization (n=16)
- Comp margins: P25=-7.6% / P50=-2.3% / P75=9.4%
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.