COMPASS BEHAVIORAL HEALTH CNTR ALEXA
1. Target Overview & Investment Thesis
COMPASS BEHAVIORAL HEALTH CNTR ALEXA is a 36-bed safety-net/medicaid heavy in RAPIDES PARISH, LA with $9.4M in net patient revenue and a 9.0% operating margin. The hospital serves a payer mix of 38.7% Medicare, 40.5% Medicaid, and 20.8% commercial.
Thesis: Turnaround. Our ML models identify $695K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.0% to 16.5% (+743bps).
| Net Revenue HCRIS | $9.4M |
| Current EBITDA COMPUTED | $845K |
| Operating Margin COMPUTED | 9.0% |
| Occupancy HCRIS | 69.8% |
| Revenue / Bed COMPUTED | $260K |
| Net-to-Gross HCRIS | 73.3% |
| Distress Probability ML | 59.0% |
2. Market Context & Competitive Position
LA has 212 Medicare-certified hospitals with a median operating margin of -3.5%. The target's margin of 9.0% places it above the state median. Among 131 size-comparable peers (18-72 beds), the median margin is -3.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (18-72), prioritizing same-state peers. 131 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| COMPASS BEHAVIORAL HEALTH CNTR (Target) | LA | 36 | $9.4M | 9.0% |
| UNIVERSITY HOSPITAL & CLINICS | LA | 52 | $158.9M | -33.4% |
| SOUTHERN REGIONAL MEDICAL CORP | LA | 64 | $97.3M | -50.0% |
| NEW ORLEANS EAST HOSPITAL | LA | 60 | $77.6M | -29.7% |
| OCHSNER BAYOU LLC | LA | 25 | $76.5M | -0.9% |
| OUR LADY OF THE ANGELS HOSPITA | LA | 36 | $76.2M | -4.9% |
| CENTRAL LOUISIANA SURGICAL HOS | LA | 24 | $69.1M | 7.7% |
| ABBEVILLE GENERAL HOSPITAL | LA | 44 | $68.5M | 3.4% |
| ST. CHARLES PARISH HOSPITAL | LA | 27 | $64.0M | -5.1% |
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: $695K (743bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $196K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $188K | +201bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $187K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $114K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +10bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $845K |
| + RCM Uplift | +$695K |
| Pro Forma EBITDA | $1.5M |
| Current Margin | 9.0% |
| Pro Forma Margin | 16.5% |
| WC Released (1x) | $359K |
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 | $1.3M | $12.5M | 9.63x | 57.3% |
| Base (11x exit) | 10.0x | 11.0x | $1.3M | $14.2M | 10.92x | 61.3% |
| Bull Case | 9.0x | 11.0x | $1.2M | $16.9M | 14.45x | 70.6% |
| Bull (12x exit) | 9.0x | 12.0x | $1.2M | $18.8M | 16.06x | 74.2% |
| Bear Case | 11.0x | 10.0x | $1.4M | $8.6M | 6.03x | 43.2% |
| Bear (11x exit) | 11.0x | 11.0x | $1.4M | $10.0M | 6.96x | 47.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (40.5%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 59.0% 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
- 131 hospitals with 18-72 beds
- Same-state prioritization (n=132)
- Comp margins: P25=-21.0% / P50=-3.5% / P75=4.8%
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.