ST MARYS REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
ST MARYS REGIONAL MEDICAL CENTER is a 356-bed under-performing / distressed in WASHOE, NV with $219.5M in net patient revenue and a -26.7% operating margin. The hospital serves a payer mix of 29.7% Medicare, 12.5% Medicaid, and 57.8% commercial.
Thesis: Undervalued. Our ML models identify $16.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -26.7% to -19.3% (+736bps).
| Net Revenue HCRIS | $219.5M |
| Current EBITDA COMPUTED | $-58.6M |
| Operating Margin COMPUTED | -26.7% |
| Occupancy HCRIS | 45.4% |
| Revenue / Bed COMPUTED | $617K |
| Net-to-Gross HCRIS | 18.5% |
| Distress Probability ML | 51.8% |
2. Market Context & Competitive Position
NV has 58 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of -26.7% places it below the state median. Among 13 size-comparable peers (178-712 beds), the median margin is 2.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (178-712), prioritizing same-state peers. 13 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST MARYS REGIONAL MEDICAL CENT (Target) | NV | 356 | $219.5M | -26.7% |
| UNIVERSITY MEDICAL CENTER | NV | 537 | $849.0M | -1.5% |
| MOUNTAIN VIEW HOSPITAL | NV | 363 | $583.9M | 12.7% |
| ST. ROSE DOMINICAN - SIENA | NV | 326 | $496.0M | -3.6% |
| RENOWN REGIONAL MEDICAL CENTER | NV | 558 | $487.8M | -2.7% |
| SUMMERLIN HOSPITAL MEDICAL CEN | NV | 391 | $449.9M | 16.9% |
| SPRING VALLEY HOSPITAL MEDICAL | NV | 301 | $397.8M | 8.4% |
| HENDERSON HOSPITAL | NV | 288 | $358.3M | 21.5% |
| CENTENNIAL HILLS HOSPITAL | NV | 326 | $318.5M | 10.2% |
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: $16.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $140K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-58.6M |
| + RCM Uplift | +$16.2M |
| Pro Forma EBITDA | $-42.4M |
| Current Margin | -26.7% |
| Pro Forma Margin | -19.3% |
| WC Released (1x) | $8.4M |
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 | $-90.1M | $-224.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-90.1M | $-276.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-81.1M | $-252.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-81.1M | $-299.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-99.2M | $-276.4M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-99.2M | $-336.3M | 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 51.8% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 13 hospitals with 178-712 beds
- Same-state prioritization (n=14)
- Comp margins: P25=-3.6% / P50=2.9% / P75=11.7%
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.