OASIS BEHAVIORAL HEALTH
1. Target Overview & Investment Thesis
OASIS BEHAVIORAL HEALTH is a 158-bed suburban community hospital in MARICOPA, AZ with $42.6M in net patient revenue and a 23.5% operating margin. The hospital serves a payer mix of 1.4% Medicare, 3.4% Medicaid, and 95.2% commercial.
Thesis: Turnaround. Our ML models identify $3.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 23.5% to 30.9% (+736bps).
| Net Revenue HCRIS | $42.6M |
| Current EBITDA COMPUTED | $10.0M |
| Operating Margin COMPUTED | 23.5% |
| Occupancy HCRIS | 93.1% |
| Revenue / Bed COMPUTED | $270K |
| Net-to-Gross HCRIS | 41.8% |
| Distress Probability ML | 39.9% |
2. Market Context & Competitive Position
AZ has 124 Medicare-certified hospitals with a median operating margin of -0.8%. The target's margin of 23.5% places it above the state median. Among 43 size-comparable peers (79-316 beds), the median margin is -0.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (79-316), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| OASIS BEHAVIORAL HEALTH (Target) | AZ | 158 | $42.6M | 23.5% |
| MAYO CLINIC HOSPITAL | AZ | 315 | $2.25B | 1.4% |
| HONORHEALTH JOHN C. LINCOLN ME | AZ | 258 | $618.4M | -7.9% |
| BANNER GATEWAY MEDICAL CENTER | AZ | 185 | $573.8M | 5.2% |
| VALLEYWISE HEALTH MEDICAL CENT | AZ | 301 | $509.4M | -50.0% |
| FLAGSTAFF MEDICAL CENTER | AZ | 242 | $477.9M | -0.8% |
| YAVAPAI REGIONAL MEDICAL CENTE | AZ | 218 | $456.9M | -2.2% |
| ABRAZO ARROWHEAD CAMPUS | AZ | 270 | $406.4M | 11.7% |
| MERCY GILBERT MEDICAL CENTER | AZ | 197 | $381.9M | 6.3% |
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: $3.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $895K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $852K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $844K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $519K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $27K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $10.0M |
| + RCM Uplift | +$3.1M |
| Pro Forma EBITDA | $13.2M |
| Current Margin | 23.5% |
| Pro Forma Margin | 30.9% |
| WC Released (1x) | $1.6M |
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 | $15.4M | $97.5M | 6.32x | 44.6% |
| Base (11x exit) | 10.0x | 11.0x | $15.4M | $112.2M | 7.28x | 48.7% |
| Bull Case | 9.0x | 11.0x | $13.9M | $127.6M | 9.20x | 55.9% |
| Bull (12x exit) | 9.0x | 12.0x | $13.9M | $143.3M | 10.33x | 59.5% |
| Bear Case | 11.0x | 10.0x | $17.0M | $76.8M | 4.53x | 35.3% |
| Bear (11x exit) | 11.0x | 11.0x | $17.0M | $90.0M | 5.31x | 39.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 43 hospitals with 79-316 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-7.9% / P50=-0.8% / P75=10.6%
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.