ST. PETERS HOSPITAL
1. Target Overview & Investment Thesis
ST. PETERS HOSPITAL is a 125-bed suburban community hospital in LEWIS AND CLARK, MT with $289.2M in net patient revenue and a -10.8% operating margin. The hospital serves a payer mix of 40.9% Medicare, 18.7% Medicaid, and 40.4% commercial.
Thesis: Undervalued. Our ML models identify $21.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -10.8% to -3.4% (+736bps).
| Net Revenue HCRIS | $289.2M |
| Current EBITDA COMPUTED | $-31.2M |
| Operating Margin COMPUTED | -10.8% |
| Occupancy HCRIS | 56.8% |
| Revenue / Bed COMPUTED | $2.3M |
| Net-to-Gross HCRIS | 46.5% |
| Distress Probability ML | 51.0% |
2. Market Context & Competitive Position
MT has 66 Medicare-certified hospitals with a median operating margin of -9.6%. The target's margin of -10.8% places it below the state median. Among 2081 size-comparable peers (62-250 beds), the median margin is -3.5%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (62-250), prioritizing same-state peers. 2081 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. PETERS HOSPITAL (Target) | MT | 125 | $289.2M | -10.8% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| MOFFITT CANCER CENTER | FL | 218 | $1.91B | 16.0% |
| CITY OF HOPE NATIONAL MEDICAL | CA | 217 | $1.83B | -10.7% |
| MIDWESTERN REGIONAL MEDICAL CE | IL | 73 | $1.38B | 80.5% |
| HOSPITAL FOR SPECIAL SURGERY | NY | 200 | $1.12B | -29.3% |
| VIRGINIA MASON MEDICAL CENTER | WA | 222 | $1.11B | -23.2% |
| KFH - SOUTH SACRAMENTO | CA | 233 | $803.9M | 5.9% |
| COMMUNITY HOSP. MONTEREY PENIN | CA | 227 | $797.2M | 9.3% |
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: $21.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $6.1M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $5.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $5.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $185K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-31.2M |
| + RCM Uplift | +$21.3M |
| Pro Forma EBITDA | $-9.9M |
| Current Margin | -10.8% |
| Pro Forma Margin | -3.4% |
| WC Released (1x) | $11.1M |
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 | $-48.0M | $7.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-48.0M | $-7.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-43.2M | $46.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-43.2M | $38.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-52.8M | $-83.8M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-52.8M | $-109.4M | 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 |
| High | Elevated distress probability | Model estimates 51.0% 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
- 2081 hospitals with 62-250 beds
- Same-state prioritization (n=8)
- Comp margins: P25=-14.1% / P50=-3.5% / P75=7.4%
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.