ST. ROSE DOMINICAN - SAN MARTIN
1. Target Overview & Investment Thesis
ST. ROSE DOMINICAN - SAN MARTIN is a 130-bed suburban community hospital in CLARK, NV with $179.5M in net patient revenue and a -18.6% operating margin. The hospital serves a payer mix of 23.8% Medicare, 12.1% Medicaid, and 64.0% commercial.
Thesis: Undervalued. Our ML models identify $13.2M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -18.6% to -11.2% (+736bps).
| Net Revenue HCRIS | $179.5M |
| Current EBITDA COMPUTED | $-33.4M |
| Operating Margin COMPUTED | -18.6% |
| Occupancy HCRIS | 69.8% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 12.3% |
| Distress Probability ML | 43.3% |
2. Market Context & Competitive Position
NV has 58 Medicare-certified hospitals with a median operating margin of 0.4%. The target's margin of -18.6% places it below the state median. Among 19 size-comparable peers (65-260 beds), the median margin is 0.1%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (65-260), prioritizing same-state peers. 19 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ST. ROSE DOMINICAN - SAN MARTI (Target) | NV | 130 | $179.5M | -18.6% |
| CARSON TAHOE REGIONAL HEALTHCA | NV | 175 | $365.4M | 3.0% |
| SOUTHERN HILLS HOSPITAL & MEDI | NV | 205 | $317.7M | 11.7% |
| DESERT SPRINGS HOSPITAL MEDICA | NV | 190 | $182.8M | -39.4% |
| NORTHERN NEVADA MEDICAL CENTER | NV | 88 | $150.8M | 10.5% |
| NORTH VISTA HOSPITAL | NV | 163 | $117.3M | 9.5% |
| RENOWN SOUTH MEADOWS MED CTR | NV | 78 | $91.0M | 4.0% |
| NORTHERN NEVADA SIERRA MEDICAL | NV | 158 | $61.7M | -50.0% |
| KINDRED HOSPITAL LAS VEGAS | NV | 118 | $52.3M | -10.6% |
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: $13.2M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $3.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $3.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $115K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-33.4M |
| + RCM Uplift | +$13.2M |
| Pro Forma EBITDA | $-20.2M |
| Current Margin | -18.6% |
| Pro Forma Margin | -11.2% |
| WC Released (1x) | $6.9M |
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 | $-51.3M | $-87.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-51.3M | $-113.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-46.2M | $-86.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-46.2M | $-108.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-56.5M | $-137.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-56.5M | $-169.4M | 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 |
| 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
- 19 hospitals with 65-260 beds
- Same-state prioritization (n=20)
- Comp margins: P25=-21.8% / P50=0.1% / P75=6.8%
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.