MMO REHAB AND WELLNESS CENTER
1. Target Overview & Investment Thesis
MMO REHAB AND WELLNESS CENTER is a 10-bed rural/critical access in E. BATON ROUGE PARISH, LA with $6.6M in net patient revenue and a 35.9% operating margin. The hospital serves a payer mix of 88.7% Medicare, 9.4% Medicaid, and 1.9% commercial.
Thesis: Turnaround. Our ML models identify $495K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 35.9% to 43.4% (+751bps).
| Net Revenue HCRIS | $6.6M |
| Current EBITDA COMPUTED | $2.4M |
| Operating Margin COMPUTED | 35.9% |
| Occupancy HCRIS | 51.5% |
| Revenue / Bed COMPUTED | $658K |
| Net-to-Gross HCRIS | 52.1% |
| Distress Probability ML | 54.6% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of 35.9% places it above the state median. Among 36 size-comparable peers (5-20 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 (5-20), prioritizing same-state peers. 36 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MMO REHAB AND WELLNESS CENTER (Target) | LA | 10 | $6.6M | 35.9% |
| SPECIALISTS HOSPITAL OF SHREVE | LA | 15 | $79.1M | 21.3% |
| PARK PLACE SURGERY CENTER | LA | 10 | $51.6M | 15.4% |
| SURGICAL SPECIALTY CENTER BATO | LA | 16 | $49.8M | 16.9% |
| LAFAYETTE SURGICAL SPECIALTY H | LA | 20 | $48.9M | 9.1% |
| REEVES MEMORIAL MEDICAL CENTER | LA | 15 | $34.0M | 64.5% |
| MONROE SURGICAL HOSPITAL | LA | 10 | $25.8M | -11.9% |
| DOCTORS HOSPITAL OF SLIDELL LL | LA | 10 | $20.7M | 21.0% |
| UNION GENERAL HOSPITAL INC. | LA | 20 | $20.4M | 2.2% |
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: $495K (751bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $138K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $135K | +205bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $132K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $80K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +15bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $2.4M |
| + RCM Uplift | +$495K |
| Pro Forma EBITDA | $2.9M |
| Current Margin | 35.9% |
| Pro Forma Margin | 43.4% |
| WC Released (1x) | $253K |
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 | $3.6M | $20.5M | 5.65x | 41.4% |
| Base (11x exit) | 10.0x | 11.0x | $3.6M | $23.8M | 6.54x | 45.6% |
| Bull Case | 9.0x | 11.0x | $3.3M | $26.6M | 8.13x | 52.0% |
| Bull (12x exit) | 9.0x | 12.0x | $3.3M | $29.9M | 9.16x | 55.7% |
| Bear Case | 11.0x | 10.0x | $4.0M | $16.9M | 4.22x | 33.4% |
| Bear (11x exit) | 11.0x | 11.0x | $4.0M | $19.9M | 4.97x | 37.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Heavy Medicare dependence | Medicare comprises 88.7% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| 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
- 36 hospitals with 5-20 beds
- Same-state prioritization (n=38)
- Comp margins: P25=-4.8% / P50=3.4% / P75=16.5%
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.