SSM SELECT REHAB ST LOUIS LLC
1. Target Overview & Investment Thesis
SSM SELECT REHAB ST LOUIS LLC is a 125-bed suburban community hospital in ST LOUIS, MO with $126.5M in net patient revenue and a 39.0% operating margin. The hospital serves a payer mix of 38.6% Medicare, 10.3% Medicaid, and 51.1% commercial.
Thesis: Turnaround. Our ML models identify $9.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 39.0% to 46.4% (+736bps).
| Net Revenue HCRIS | $126.5M |
| Current EBITDA COMPUTED | $49.3M |
| Operating Margin COMPUTED | 39.0% |
| Occupancy HCRIS | 91.3% |
| Revenue / Bed COMPUTED | $1.0M |
| Net-to-Gross HCRIS | 31.3% |
| Distress Probability ML | 41.2% |
2. Market Context & Competitive Position
MO has 138 Medicare-certified hospitals with a median operating margin of -6.2%. The target's margin of 39.0% places it above the state median. Among 37 size-comparable peers (62-250 beds), the median margin is -1.3%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (62-250), prioritizing same-state peers. 37 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SSM SELECT REHAB ST LOUIS LLC (Target) | MO | 125 | $126.5M | 39.0% |
| SOUTHEASTHEALTH | MO | 232 | $335.2M | -15.2% |
| ST. LUKES EAST - LEES SUMMIT | MO | 216 | $318.1M | -5.8% |
| LIBERTY HOSPITAL | MO | 199 | $303.2M | -3.1% |
| PHELPS COUNTY REGIONAL MEDICAL | MO | 196 | $270.3M | 33.1% |
| MERCY HOSPITAL JOPLIN | MO | 242 | $269.3M | 5.3% |
| LAKE REGIONAL HEALTH SYSTEM | MO | 105 | $226.8M | -2.7% |
| HANNIBAL REGIONAL HOSPITAL | MO | 86 | $226.2M | -6.8% |
| SSM HEALTH ST CLARE HOSPITAL | MO | 180 | $225.5M | 2.8% |
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: $9.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.7M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.5M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $81K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $49.3M |
| + RCM Uplift | +$9.3M |
| Pro Forma EBITDA | $58.7M |
| Current Margin | 39.0% |
| Pro Forma Margin | 46.4% |
| WC Released (1x) | $4.9M |
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 | $75.9M | $418.7M | 5.51x | 40.7% |
| Base (11x exit) | 10.0x | 11.0x | $75.9M | $485.2M | 6.39x | 44.9% |
| Bull Case | 9.0x | 11.0x | $68.3M | $540.6M | 7.91x | 51.2% |
| Bull (12x exit) | 9.0x | 12.0x | $68.3M | $609.9M | 8.93x | 54.9% |
| Bear Case | 11.0x | 10.0x | $83.5M | $347.4M | 4.16x | 33.0% |
| Bear (11x exit) | 11.0x | 11.0x | $83.5M | $409.3M | 4.90x | 37.4% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 37 hospitals with 62-250 beds
- Same-state prioritization (n=38)
- Comp margins: P25=-12.6% / P50=-1.3% / P75=6.9%
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.