YUMA REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
YUMA REGIONAL MEDICAL CENTER is a 406-bed suburban community hospital in YUMA, AZ with $670.8M in net patient revenue and a 6.3% operating margin. The hospital serves a payer mix of 27.9% Medicare, 24.9% Medicaid, and 47.2% commercial.
Thesis: Platform Growth. Our ML models identify $49.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 6.3% to 13.6% (+736bps).
| Net Revenue HCRIS | $670.8M |
| Current EBITDA COMPUTED | $42.0M |
| Operating Margin COMPUTED | 6.3% |
| Occupancy HCRIS | 41.7% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 24.4% |
| Distress Probability ML | 55.0% |
2. Market Context & Competitive Position
AZ has 124 Medicare-certified hospitals with a median operating margin of -0.8%. The target's margin of 6.3% places it above the state median. Among 25 size-comparable peers (203-812 beds), the median margin is -1.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (203-812), prioritizing same-state peers. 25 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| YUMA REGIONAL MEDICAL CENTER (Target) | AZ | 406 | $670.8M | 6.3% |
| MAYO CLINIC HOSPITAL | AZ | 315 | $2.25B | 1.4% |
| BANNER ESTRELLA MEDICAL CENTER | AZ | 317 | $1.84B | 79.2% |
| BANNER BAYWOOD MEDICAL CENTER | AZ | 323 | $1.39B | 79.1% |
| ST. JOSEPHS HOSPITAL & MEDICAL | AZ | 515 | $1.31B | -17.7% |
| PHOENIX CHILDRENS HOSPITAL | AZ | 352 | $1.26B | 6.0% |
| BANNER UNIVERSITY MEDICAL CENT | AZ | 656 | $1.09B | -5.9% |
| BANNER UNIVERSITY MED CENTER T | AZ | 533 | $1.03B | -4.6% |
| BANNER DESERT MEDICAL CENTER | AZ | 629 | $833.1M | 12.6% |
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: $49.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $14.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $13.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $13.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $8.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $429K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $42.0M |
| + RCM Uplift | +$49.4M |
| Pro Forma EBITDA | $91.4M |
| Current Margin | 6.3% |
| Pro Forma Margin | 13.6% |
| WC Released (1x) | $25.7M |
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 | $64.6M | $770.9M | 11.93x | 64.2% |
| Base (11x exit) | 10.0x | 11.0x | $64.6M | $868.9M | 13.44x | 68.2% |
| Bull Case | 9.0x | 11.0x | $58.2M | $1.05B | 18.10x | 78.5% |
| Bull (12x exit) | 9.0x | 12.0x | $58.2M | $1.17B | 20.04x | 82.1% |
| Bear Case | 11.0x | 10.0x | $71.1M | $503.0M | 7.08x | 47.9% |
| Bear (11x exit) | 11.0x | 11.0x | $71.1M | $576.4M | 8.11x | 52.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (24.9%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 55.0% 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
- 25 hospitals with 203-812 beds
- Same-state prioritization (n=26)
- Comp margins: P25=-4.6% / P50=-1.0% / P75=6.0%
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.