BAPTIST MEDICAL CENTER-BEACHES
1. Target Overview & Investment Thesis
BAPTIST MEDICAL CENTER-BEACHES is a 135-bed suburban community hospital in DUVAL, FL with $173.6M in net patient revenue and a 2.2% operating margin. The hospital serves a payer mix of 34.4% Medicare, 1.0% Medicaid, and 64.6% commercial.
Thesis: Undervalued. Our ML models identify $12.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 2.2% to 9.6% (+736bps).
| Net Revenue HCRIS | $173.6M |
| Current EBITDA COMPUTED | $3.8M |
| Operating Margin COMPUTED | 2.2% |
| Occupancy HCRIS | 71.2% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 18.5% |
| Distress Probability ML | 41.5% |
2. Market Context & Competitive Position
FL has 261 Medicare-certified hospitals with a median operating margin of 3.2%. The target's margin of 2.2% places it below the state median. Among 122 size-comparable peers (68-270 beds), the median margin is 5.4%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (68-270), prioritizing same-state peers. 122 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BAPTIST MEDICAL CENTER-BEACHES (Target) | FL | 135 | $173.6M | 2.2% |
| MOFFITT CANCER CENTER | FL | 218 | $1.91B | 16.0% |
| NICKLAUS CHILDRENS HOSPITAL | FL | 259 | $769.3M | 5.5% |
| JOHNS HOPKINS ALL CHILDRENS HO | FL | 259 | $584.5M | -10.3% |
| CCF HOSPITAL - WESTON | FL | 258 | $465.4M | -3.8% |
| LARGO MEDICAL CENTER | FL | 245 | $386.4M | 24.1% |
| PHYSICIANS REGIONAL MEDICAL CE | FL | 259 | $378.5M | 12.6% |
| WEST KENDALL BAPTIST HOSPITAL | FL | 127 | $361.6M | 18.5% |
| HCA FL FT WALTON-DESTIN HOSP | FL | 231 | $361.3M | 38.1% |
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: $12.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $111K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.8M |
| + RCM Uplift | +$12.8M |
| Pro Forma EBITDA | $16.6M |
| Current Margin | 2.2% |
| Pro Forma Margin | 9.6% |
| WC Released (1x) | $6.7M |
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 | $5.9M | $153.1M | 25.93x | 91.8% |
| Base (11x exit) | 10.0x | 11.0x | $5.9M | $170.4M | 28.84x | 95.9% |
| Bull Case | 9.0x | 11.0x | $5.3M | $214.5M | 40.34x | 109.5% |
| Bull (12x exit) | 9.0x | 12.0x | $5.3M | $235.5M | 44.31x | 113.5% |
| Bear Case | 11.0x | 10.0x | $6.5M | $87.3M | 13.44x | 68.1% |
| Bear (11x exit) | 11.0x | 11.0x | $6.5M | $98.2M | 15.11x | 72.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| 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
- 122 hospitals with 68-270 beds
- Same-state prioritization (n=123)
- Comp margins: P25=-5.0% / P50=5.4% / P75=15.8%
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.