STEPHENS COUNTY HOSPITAL
1. Target Overview & Investment Thesis
STEPHENS COUNTY HOSPITAL is a 40-bed suburban community hospital in STEPHENS, GA with $49.4M in net patient revenue and a 6.0% operating margin. The hospital serves a payer mix of 36.1% Medicare, 7.0% Medicaid, and 56.9% commercial.
Thesis: Turnaround. Our ML models identify $3.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 6.0% to 13.4% (+736bps).
| Net Revenue HCRIS | $49.4M |
| Current EBITDA COMPUTED | $3.0M |
| Operating Margin COMPUTED | 6.0% |
| Occupancy HCRIS | 38.0% |
| Revenue / Bed COMPUTED | $1.2M |
| Net-to-Gross HCRIS | 55.5% |
| Distress Probability ML | 54.6% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of 6.0% places it above the state median. Among 85 size-comparable peers (20-80 beds), the median margin is -3.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-80), prioritizing same-state peers. 85 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| STEPHENS COUNTY HOSPITAL (Target) | GA | 40 | $49.4M | 6.0% |
| TANNER MEDICAL CENTER-VILLA RI | GA | 58 | $289.8M | 33.3% |
| ADVENTHEALTH GORDON | GA | 69 | $188.5M | -3.4% |
| KENNESTONE HOSPITAL AT WINDY H | GA | 55 | $160.5M | 0.7% |
| PIEDMONT COLUMBUS REGIONAL NOR | GA | 71 | $135.5M | 21.7% |
| PIEDMONT MOUNTAINSIDE HOSPITAL | GA | 52 | $131.2M | 10.5% |
| PIEDMONT WALTON HOSPITAL | GA | 76 | $128.6M | 29.1% |
| CRISP REGIONAL HOSPITAL INC. | GA | 65 | $115.2M | -8.7% |
| UNION GENERAL HOSPITAL | GA | 39 | $108.6M | 2.4% |
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: $3.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $987K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $977K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $601K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $32K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.0M |
| + RCM Uplift | +$3.6M |
| Pro Forma EBITDA | $6.6M |
| Current Margin | 6.0% |
| Pro Forma Margin | 13.4% |
| WC Released (1x) | $1.9M |
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 | $4.6M | $55.9M | 12.27x | 65.1% |
| Base (11x exit) | 10.0x | 11.0x | $4.6M | $62.9M | 13.82x | 69.1% |
| Bull Case | 9.0x | 11.0x | $4.1M | $76.4M | 18.64x | 79.5% |
| Bull (12x exit) | 9.0x | 12.0x | $4.1M | $84.6M | 20.63x | 83.2% |
| Bear Case | 11.0x | 10.0x | $5.0M | $36.2M | 7.23x | 48.5% |
| Bear (11x exit) | 11.0x | 11.0x | $5.0M | $41.5M | 8.28x | 52.6% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Elevated distress probability | Model estimates 54.6% 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
- 85 hospitals with 20-80 beds
- Same-state prioritization (n=86)
- Comp margins: P25=-17.1% / P50=-3.4% / P75=7.5%
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.