CORONA REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
CORONA REGIONAL MEDICAL CENTER is a 160-bed suburban community hospital in RIVERSIDE, CA with $223.1M in net patient revenue and a -1.4% operating margin. The hospital serves a payer mix of 19.5% Medicare, 7.3% Medicaid, and 73.2% commercial.
Thesis: Undervalued. Our ML models identify $16.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -1.4% to 6.0% (+736bps).
| Net Revenue HCRIS | $223.1M |
| Current EBITDA COMPUTED | $-3.1M |
| Operating Margin COMPUTED | -1.4% |
| Occupancy HCRIS | 66.0% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 13.8% |
| Distress Probability ML | 43.0% |
2. Market Context & Competitive Position
CA has 414 Medicare-certified hospitals with a median operating margin of -4.9%. The target's margin of -1.4% places it above the state median. Among 209 size-comparable peers (80-320 beds), the median margin is -4.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (80-320), prioritizing same-state peers. 209 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CORONA REGIONAL MEDICAL CENTER (Target) | CA | 160 | $223.1M | -1.4% |
| CITY OF HOPE NATIONAL MEDICAL | CA | 217 | $1.83B | -10.7% |
| KECK HOSPITAL OF USC | CA | 301 | $1.11B | -20.8% |
| SUTTER ROSEVILLE MEDICAL CENTE | CA | 318 | $1.07B | 12.1% |
| CALIFORNIA PACIFIC MEDICAL CEN | CA | 274 | $987.8M | -18.5% |
| ZUCKERBERG SAN FRANCISCO GENER | CA | 284 | $889.5M | -41.7% |
| SANTA MONICA UCLA MEDICAL CENT | CA | 281 | $835.9M | 2.8% |
| ENLOE MEDICAL CENTER | CA | 258 | $834.4M | -0.5% |
| KFH - SOUTH SACRAMENTO | CA | 233 | $803.9M | 5.9% |
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: $16.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $143K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.1M |
| + RCM Uplift | +$16.4M |
| Pro Forma EBITDA | $13.3M |
| Current Margin | -1.4% |
| Pro Forma Margin | 6.0% |
| WC Released (1x) | $8.6M |
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 | $-4.8M | $143.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-4.8M | $156.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-4.3M | $208.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-4.3M | $226.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-5.3M | $63.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-5.3M | $67.5M | 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
- 209 hospitals with 80-320 beds
- Same-state prioritization (n=210)
- Comp margins: P25=-17.0% / P50=-4.4% / P75=4.4%
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.