BMH - CALHOUN
1. Target Overview & Investment Thesis
BMH - CALHOUN is a 25-bed rural/critical access in CALHOUN, MS with $20.9M in net patient revenue and a -11.5% operating margin. The hospital serves a payer mix of 89.2% Medicare, 0.7% Medicaid, and 10.1% commercial.
Thesis: Turnaround. Our ML models identify $1.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -11.5% to -4.1% (+736bps).
| Net Revenue HCRIS | $20.9M |
| Current EBITDA COMPUTED | $-2.4M |
| Operating Margin COMPUTED | -11.5% |
| Occupancy HCRIS | 41.3% |
| Revenue / Bed COMPUTED | $834K |
| Net-to-Gross HCRIS | 62.4% |
| Distress Probability ML | 55.8% |
2. Market Context & Competitive Position
MS has 110 Medicare-certified hospitals with a median operating margin of -12.5%. The target's margin of -11.5% places it above the state median. Among 69 size-comparable peers (12-50 beds), the median margin is -14.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 69 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BMH - CALHOUN (Target) | MS | 25 | $20.9M | -11.5% |
| KINGS DAUGHTERS MEDICAL CENTER | MS | 22 | $91.5M | -8.4% |
| NORTH SUNFLOWER COUNTY HOSPITA | MS | 25 | $70.1M | -7.2% |
| MISSISSIPPI METHODIST REHAB CE | MS | 31 | $68.1M | -0.5% |
| UMMC-GRENADA | MS | 49 | $63.7M | 7.1% |
| NESHOBA COUNTY GENERAL HOSPITA | MS | 38 | $47.6M | -19.7% |
| MONROE REGIONAL HOSPITAL | MS | 25 | $45.6M | 0.9% |
| CLAY COUNTY MEDICAL CORPORATIO | MS | 49 | $45.4M | 0.5% |
| HIGHLAND COMMUNITY HOSPITAL | MS | 49 | $42.4M | -27.5% |
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: $1.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $438K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $417K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $413K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $254K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $13K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.4M |
| + RCM Uplift | +$1.5M |
| Pro Forma EBITDA | $-864K |
| Current Margin | -11.5% |
| Pro Forma Margin | -4.1% |
| WC Released (1x) | $800K |
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 | $-3.7M | $-473K | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.7M | $-1.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.3M | $2.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.3M | $1.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-4.1M | $-6.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-4.1M | $-9.0M | 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 |
| Medium | Heavy Medicare dependence | Medicare comprises 89.2% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| High | Elevated distress probability | Model estimates 55.8% 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
- 69 hospitals with 12-50 beds
- Same-state prioritization (n=70)
- Comp margins: P25=-25.8% / P50=-14.9% / P75=-5.7%
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.