EDEN MEDICAL CENTER
1. Target Overview & Investment Thesis
EDEN MEDICAL CENTER is a 126-bed suburban community hospital in ALAMEDA, CA with $389.8M in net patient revenue and a 2.7% operating margin. The hospital serves a payer mix of 31.0% Medicare, 7.1% Medicaid, and 61.9% commercial.
Thesis: Undervalued. Our ML models identify $28.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.7% to 10.0% (+736bps).
| Net Revenue HCRIS | $389.8M |
| Current EBITDA COMPUTED | $10.5M |
| Operating Margin COMPUTED | 2.7% |
| Occupancy HCRIS | 95.6% |
| Revenue / Bed COMPUTED | $3.1M |
| Net-to-Gross HCRIS | 29.2% |
| Distress Probability ML | 36.0% |
2. Market Context & Competitive Position
CA has 414 Medicare-certified hospitals with a median operating margin of -4.9%. The target's margin of 2.7% places it above the state median. Among 192 size-comparable peers (63-252 beds), the median margin is -4.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (63-252), prioritizing same-state peers. 192 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| EDEN MEDICAL CENTER (Target) | CA | 126 | $389.8M | 2.7% |
| CITY OF HOPE NATIONAL MEDICAL | CA | 217 | $1.83B | -10.7% |
| KFH - SOUTH SACRAMENTO | CA | 233 | $803.9M | 5.9% |
| COMMUNITY HOSP. MONTEREY PENIN | CA | 227 | $797.2M | 9.3% |
| KFH - MANTECA | CA | 213 | $796.8M | 15.2% |
| LAC OLIVE VIEW/UCLA MEDICAL CE | CA | 225 | $754.9M | -10.5% |
| MARIAN MEDICAL CENTER | CA | 252 | $751.5M | 4.7% |
| KFH - SAN FRANCISCO | CA | 239 | $734.9M | 2.6% |
| MILLS PENINSULA MEDICAL CENTER | CA | 241 | $704.7M | 3.7% |
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: $28.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $8.2M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $7.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $7.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $249K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $10.5M |
| + RCM Uplift | +$28.7M |
| Pro Forma EBITDA | $39.2M |
| Current Margin | 2.7% |
| Pro Forma Margin | 10.0% |
| WC Released (1x) | $15.0M |
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 | $16.1M | $355.9M | 22.11x | 85.7% |
| Base (11x exit) | 10.0x | 11.0x | $16.1M | $396.8M | 24.65x | 89.8% |
| Bull Case | 9.0x | 11.0x | $14.5M | $496.7M | 34.28x | 102.8% |
| Bull (12x exit) | 9.0x | 12.0x | $14.5M | $546.1M | 37.69x | 106.7% |
| Bear Case | 11.0x | 10.0x | $17.7M | $207.3M | 11.70x | 63.5% |
| Bear (11x exit) | 11.0x | 11.0x | $17.7M | $233.7M | 13.20x | 67.5% |
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
- 192 hospitals with 63-252 beds
- Same-state prioritization (n=193)
- Comp margins: P25=-20.3% / P50=-4.5% / P75=4.8%
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.