ST. ROSE DOMINICAN - DELIMA
1. Target Overview & Investment Thesis
ST. ROSE DOMINICAN - DELIMA is a 10-bed safety-net/medicaid heavy in CLARK, NV with $21.8M in net patient revenue and a -45.3% operating margin. The hospital serves a payer mix of 8.3% Medicare, 35.3% Medicaid, and 56.3% commercial.
Thesis: Turnaround. Our ML models identify $1.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -45.3% to -37.9% (+736bps).
| Net Revenue HCRIS | $21.8M |
| Current EBITDA COMPUTED | $-9.9M |
| Operating Margin COMPUTED | -45.3% |
| Occupancy HCRIS | 41.7% |
| Revenue / Bed COMPUTED | $2.2M |
| Net-to-Gross HCRIS | 10.5% |
| Distress Probability ML | 53.1% |
2. Market Context & Competitive Position
NV has 58 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of -45.3% places it below the state median. Among 616 size-comparable peers (5-20 beds), the median margin is -8.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (5-20), prioritizing same-state peers. 616 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. ROSE DOMINICAN - DELIMA (Target) | NV | 10 | $21.8M | -45.3% |
| FRED HUTCHINSON CANCER CENTER | WA | 20 | $1.17B | -50.0% |
| WENATCHEE VALLEY HOSPITAL | WA | 11 | $277.5M | -4.9% |
| PORTERVILLE DEVELOPMENTAL CENT | CA | 17 | $193.6M | -6.0% |
| NATIONAL JEWISH HEALTH | CO | 13 | $150.4M | -50.0% |
| NORTON SOUND REGIONAL HOSPITAL | AK | 18 | $148.7M | -28.6% |
| TEXAS SPINE AND JOINT HOSPITAL | TX | 20 | $147.3M | 30.3% |
| GREAT FALLS CLINIC MEDICAL CEN | MT | 20 | $132.1M | 21.0% |
| MARSHFIELD MEDICAL CENTER-MINO | WI | 19 | $129.6M | -12.4% |
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: $1.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $457K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $435K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $431K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $265K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $14K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-9.9M |
| + RCM Uplift | +$1.6M |
| Pro Forma EBITDA | $-8.3M |
| Current Margin | -45.3% |
| Pro Forma Margin | -37.9% |
| WC Released (1x) | $835K |
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 | $-15.2M | $-49.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-15.2M | $-58.9M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-13.7M | $-58.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-13.7M | $-67.8M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-16.7M | $-52.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-16.7M | $-62.7M | 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 | Elevated Medicaid exposure (35.3%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 53.1% 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
- 616 hospitals with 5-20 beds
- Same-state prioritization (n=6)
- Comp margins: P25=-24.1% / P50=-8.7% / P75=2.2%
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.