AM 1 MENORAH MEDICAL CENTER
1. Target Overview & Investment Thesis
AM 1 MENORAH MEDICAL CENTER is a 137-bed suburban community hospital in JOHNSON, KS with $289.4M in net patient revenue and a 8.5% operating margin. The hospital serves a payer mix of 37.2% Medicare, 0.1% Medicaid, and 62.7% commercial.
Thesis: Turnaround. Our ML models identify $21.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 8.5% to 15.8% (+736bps).
| Net Revenue HCRIS | $289.4M |
| Current EBITDA COMPUTED | $24.5M |
| Operating Margin COMPUTED | 8.5% |
| Occupancy HCRIS | 73.2% |
| Revenue / Bed COMPUTED | $2.1M |
| Net-to-Gross HCRIS | 17.6% |
| Distress Probability ML | 39.7% |
2. Market Context & Competitive Position
KS has 152 Medicare-certified hospitals with a median operating margin of -17.7%. The target's margin of 8.5% places it above the state median. Among 16 size-comparable peers (68-274 beds), the median margin is -8.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (68-274), prioritizing same-state peers. 16 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| AM 1 MENORAH MEDICAL CENTER (Target) | KS | 137 | $289.4M | 8.5% |
| OVERLAND PARK REGIONAL MED CTR | KS | 271 | $452.2M | 35.9% |
| LAWRENCE MEMORIAL HOSPITAL | KS | 110 | $346.7M | -4.0% |
| ST.FRANCIS HEALTH CENTER | KS | 228 | $276.6M | -13.7% |
| OLATHE MEDICAL CENTER | KS | 237 | $272.8M | -6.5% |
| SALINA REGIONAL HEALTH CENTER | KS | 177 | $226.7M | -39.5% |
| ST. LUKES SOUTH | KS | 91 | $218.2M | -13.1% |
| HAYS MEDICAL CENTER INC. | KS | 136 | $215.1M | -12.3% |
| HUTCHINSON REGIONAL MEDICAL CE | KS | 147 | $132.3M | -50.0% |
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: $21.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $6.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $185K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $24.5M |
| + RCM Uplift | +$21.3M |
| Pro Forma EBITDA | $45.8M |
| Current Margin | 8.5% |
| Pro Forma Margin | 15.8% |
| WC Released (1x) | $11.1M |
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 | $37.7M | $374.7M | 9.94x | 58.3% |
| Base (11x exit) | 10.0x | 11.0x | $37.7M | $424.4M | 11.25x | 62.3% |
| Bull Case | 9.0x | 11.0x | $33.9M | $507.0M | 14.94x | 71.7% |
| Bull (12x exit) | 9.0x | 12.0x | $33.9M | $563.1M | 16.59x | 75.4% |
| Bear Case | 11.0x | 10.0x | $41.5M | $256.0M | 6.17x | 43.9% |
| Bear (11x exit) | 11.0x | 11.0x | $41.5M | $295.0M | 7.11x | 48.0% |
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
- 16 hospitals with 68-274 beds
- Same-state prioritization (n=17)
- Comp margins: P25=-14.1% / P50=-8.0% / P75=0.1%
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.