MEMORIAL HEALTH UNIV MED CENTER
1. Target Overview & Investment Thesis
MEMORIAL HEALTH UNIV MED CENTER is a 564-bed suburban community hospital in CHATHAM, GA with $708.4M in net patient revenue and a -1.0% operating margin. The hospital serves a payer mix of 15.1% Medicare, 7.9% Medicaid, and 76.9% commercial.
Thesis: Undervalued. Our ML models identify $52.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -1.0% to 6.3% (+736bps).
| Net Revenue HCRIS | $708.4M |
| Current EBITDA COMPUTED | $-7.4M |
| Operating Margin COMPUTED | -1.0% |
| Occupancy HCRIS | 95.3% |
| Revenue / Bed COMPUTED | $1.3M |
| Net-to-Gross HCRIS | 17.2% |
| Distress Probability ML | 38.3% |
2. Market Context & Competitive Position
GA has 165 Medicare-certified hospitals with a median operating margin of -2.8%. The target's margin of -1.0% places it above the state median. Among 26 size-comparable peers (282-1128 beds), the median margin is -1.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (282-1128), prioritizing same-state peers. 26 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MEMORIAL HEALTH UNIV MED CENTE (Target) | GA | 564 | $708.4M | -1.0% |
| NORTHSIDE HOSPITAL | GA | 719 | $2.58B | -7.9% |
| NORTHEAST GEORGIA MEDICAL CENT | GA | 645 | $1.55B | 4.4% |
| KENNESTONE HOSPITAL | GA | 642 | $1.50B | 15.3% |
| EMORY UNIVERSITY HOSPITAL | GA | 639 | $1.42B | 5.4% |
| EMORY UNIVERSITY HOSPITAL MIDT | GA | 548 | $1.37B | -15.4% |
| PIEDMONT HOSPITAL INC. | GA | 569 | $1.32B | 4.0% |
| GRADY MEMORIAL HOSPITAL | GA | 694 | $1.19B | -39.6% |
| NORTHSIDE HOSPITAL - GWINNETT | GA | 404 | $1.07B | -2.5% |
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: $52.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $14.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $14.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $14.0M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $8.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $453K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-7.4M |
| + RCM Uplift | +$52.1M |
| Pro Forma EBITDA | $44.8M |
| Current Margin | -1.0% |
| Pro Forma Margin | 6.3% |
| WC Released (1x) | $27.2M |
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 | $-11.3M | $472.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-11.3M | $516.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-10.2M | $684.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-10.2M | $744.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-12.5M | $215.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-12.5M | $233.4M | 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
- 26 hospitals with 282-1128 beds
- Same-state prioritization (n=27)
- Comp margins: P25=-8.4% / P50=-1.8% / P75=5.9%
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.