SAN JUAN REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
SAN JUAN REGIONAL MEDICAL CENTER is a 191-bed suburban community hospital in SAN JUAN, NM with $346.9M in net patient revenue and a -4.6% operating margin. The hospital serves a payer mix of 34.1% Medicare, 7.4% Medicaid, and 58.5% commercial.
Thesis: Undervalued. Our ML models identify $25.5M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -4.6% to 2.7% (+736bps).
| Net Revenue HCRIS | $346.9M |
| Current EBITDA COMPUTED | $-16.1M |
| Operating Margin COMPUTED | -4.6% |
| Occupancy HCRIS | 51.8% |
| Revenue / Bed COMPUTED | $1.8M |
| Net-to-Gross HCRIS | 32.6% |
| Distress Probability ML | 48.5% |
2. Market Context & Competitive Position
NM has 55 Medicare-certified hospitals with a median operating margin of -2.7%. The target's margin of -4.6% places it below the state median. Among 8 size-comparable peers (96-382 beds), the median margin is 8.3%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (96-382), prioritizing same-state peers. 8 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAN JUAN REGIONAL MEDICAL CENT (Target) | NM | 191 | $346.9M | -4.6% |
| ST. VINCENT HOSPITAL | NM | 189 | $554.3M | -0.6% |
| LOVELACE MEDICAL CENTER- DOWNT | NM | 286 | $338.4M | -11.2% |
| MEMORIAL MEDICAL CENTER | NM | 199 | $322.7M | 8.7% |
| MOUNTAIN VIEW REG MED CTR | NM | 166 | $262.2M | 25.7% |
| LOVELACE WOMENS HOSPITAL | NM | 162 | $198.8M | 7.9% |
| EASTERN NEW MEXICO MEDICAL CEN | NM | 120 | $117.8M | 54.3% |
| PLAINS REGIONAL MEDICAL CTR - | NM | 100 | $113.3M | -1.4% |
| BHC MESILLA VALLEY HOSPITAL LL | NM | 120 | $25.2M | 16.8% |
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: $25.5M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $6.9M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $6.9M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.2M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $222K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.1M |
| + RCM Uplift | +$25.5M |
| Pro Forma EBITDA | $9.5M |
| Current Margin | -4.6% |
| Pro Forma Margin | 2.7% |
| WC Released (1x) | $13.3M |
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 | $-24.7M | $149.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-24.7M | $156.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-22.3M | $232.5M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-22.3M | $247.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-27.2M | $29.7M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-27.2M | $23.8M | 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 |
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
- 8 hospitals with 96-382 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-0.8% / P50=8.3% / P75=19.0%
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.