MARIANJOY REHAB HOSPITAL & CLINIC
1. Target Overview & Investment Thesis
MARIANJOY REHAB HOSPITAL & CLINIC is a 125-bed suburban community hospital in DUPAGE, IL with $86.3M in net patient revenue and a -10.0% operating margin. The hospital serves a payer mix of 48.4% Medicare, 5.2% Medicaid, and 46.3% commercial.
Thesis: Undervalued. Our ML models identify $6.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -10.0% to -2.6% (+736bps).
| Net Revenue HCRIS | $86.3M |
| Current EBITDA COMPUTED | $-8.6M |
| Operating Margin COMPUTED | -10.0% |
| Occupancy HCRIS | 85.8% |
| Revenue / Bed COMPUTED | $691K |
| Net-to-Gross HCRIS | 48.7% |
| Distress Probability ML | 43.9% |
2. Market Context & Competitive Position
IL has 208 Medicare-certified hospitals with a median operating margin of -5.3%. The target's margin of -10.0% places it below the state median. Among 90 size-comparable peers (62-250 beds), the median margin is -7.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (62-250), prioritizing same-state peers. 90 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MARIANJOY REHAB HOSPITAL & CLI (Target) | IL | 125 | $86.3M | -10.0% |
| MIDWESTERN REGIONAL MEDICAL CE | IL | 73 | $1.38B | 80.5% |
| ADVOCATE NORTHSIDE HEALTH SYST | IL | 233 | $713.2M | 18.5% |
| NORTHWESTERN LAKE FOREST HOSPI | IL | 124 | $494.3M | -13.8% |
| SARAH BUSH LINCOLN HEALTH CENT | IL | 100 | $448.6M | -18.1% |
| DELNOR-COMMUNITY HOSPITAL | IL | 149 | $441.4M | 6.4% |
| SAINT ANTHONY MEDICAL CENTER | IL | 241 | $407.4M | 3.1% |
| METHODIST MEDICAL CTR OF ILLIN | IL | 203 | $381.6M | -7.8% |
| GOOD SHEPHERD HOSPITAL | IL | 176 | $375.2M | 20.0% |
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: $6.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.1M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $55K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-8.6M |
| + RCM Uplift | +$6.4M |
| Pro Forma EBITDA | $-2.2M |
| Current Margin | -10.0% |
| Pro Forma Margin | -2.6% |
| WC Released (1x) | $3.3M |
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 | $-13.2M | $6.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-13.2M | $3.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-11.9M | $19.9M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-11.9M | $18.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-14.5M | $-20.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-14.5M | $-27.4M | 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 |
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
- 90 hospitals with 62-250 beds
- Same-state prioritization (n=91)
- Comp margins: P25=-21.2% / P50=-7.8% / P75=5.1%
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.