GULFPORT BEHAVIORAL HEALTH SYSTEM
1. Target Overview & Investment Thesis
GULFPORT BEHAVIORAL HEALTH SYSTEM is a 90-bed safety-net/medicaid heavy in HARRISON, MS with $15.2M in net patient revenue and a 9.6% operating margin. The hospital serves a payer mix of 4.0% Medicare, 44.9% Medicaid, and 51.1% commercial.
Thesis: Turnaround. Our ML models identify $1.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.6% to 16.9% (+736bps).
| Net Revenue HCRIS | $15.2M |
| Current EBITDA COMPUTED | $1.5M |
| Operating Margin COMPUTED | 9.6% |
| Occupancy HCRIS | 55.1% |
| Revenue / Bed COMPUTED | $169K |
| Net-to-Gross HCRIS | 44.2% |
| Distress Probability ML | 59.1% |
2. Market Context & Competitive Position
MS has 110 Medicare-certified hospitals with a median operating margin of -12.5%. The target's margin of 9.6% places it above the state median. Among 35 size-comparable peers (45-180 beds), the median margin is -4.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (45-180), prioritizing same-state peers. 35 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| GULFPORT BEHAVIORAL HEALTH SYS (Target) | MS | 90 | $15.2M | 9.6% |
| BAPTIST MEM HOSPITAL GOLDEN TR | MS | 154 | $221.1M | 6.9% |
| MAGNOLIA HOSPITAL | MS | 158 | $161.6M | -4.7% |
| MERIT HEALTH WESLEY | MS | 121 | $140.9M | 1.3% |
| RIVER OAKS HOSPITAL | MS | 158 | $124.1M | 7.0% |
| SOUTHWEST MS REGIONAL MED CENT | MS | 97 | $123.1M | -16.0% |
| BAPTIST MEM HOSPITAL UNION COU | MS | 83 | $117.9M | 3.7% |
| DELTA HEALTH-THE MEDICAL CENTE | MS | 101 | $112.1M | -26.9% |
| MERIT HEALTH RIVER REGION | MS | 155 | $106.8M | 1.5% |
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: $1.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $320K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $305K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $302K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $185K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $1.5M |
| + RCM Uplift | +$1.1M |
| Pro Forma EBITDA | $2.6M |
| Current Margin | 9.6% |
| Pro Forma Margin | 16.9% |
| WC Released (1x) | $584K |
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 | $2.2M | $20.8M | 9.29x | 56.2% |
| Base (11x exit) | 10.0x | 11.0x | $2.2M | $23.6M | 10.55x | 60.2% |
| Bull Case | 9.0x | 11.0x | $2.0M | $28.1M | 13.91x | 69.3% |
| Bull (12x exit) | 9.0x | 12.0x | $2.0M | $31.2M | 15.47x | 73.0% |
| Bear Case | 11.0x | 10.0x | $2.5M | $14.5M | 5.88x | 42.5% |
| Bear (11x exit) | 11.0x | 11.0x | $2.5M | $16.7M | 6.79x | 46.7% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (44.9%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 59.1% 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
- 35 hospitals with 45-180 beds
- Same-state prioritization (n=36)
- Comp margins: P25=-23.4% / P50=-4.7% / P75=1.5%
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.