THE PEAK HOSPITAL
1. Target Overview & Investment Thesis
THE PEAK HOSPITAL is a 88-bed suburban community hospital in DONA ANA, NM with $27.6M in net patient revenue and a 12.1% operating margin. The hospital serves a payer mix of 4.8% Medicare, 2.0% Medicaid, and 93.2% commercial.
Thesis: Turnaround. Our ML models identify $2.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 12.1% to 19.5% (+736bps).
| Net Revenue HCRIS | $27.6M |
| Current EBITDA COMPUTED | $3.3M |
| Operating Margin COMPUTED | 12.1% |
| Occupancy HCRIS | 64.3% |
| Revenue / Bed COMPUTED | $314K |
| Net-to-Gross HCRIS | 33.1% |
| Distress Probability ML | 44.9% |
2. Market Context & Competitive Position
NM has 55 Medicare-certified hospitals with a median operating margin of -2.7%. The target's margin of 12.1% places it above the state median. Among 21 size-comparable peers (44-176 beds), the median margin is 5.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (44-176), prioritizing same-state peers. 21 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| THE PEAK HOSPITAL (Target) | NM | 88 | $27.6M | 12.1% |
| MOUNTAIN VIEW REG MED CTR | NM | 166 | $262.2M | 25.7% |
| GERALD CHAMPION REGIONAL MEDIC | NM | 66 | $245.9M | -11.6% |
| 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% |
| UNM SANDOVAL REGIONAL MEDICAL | NM | 60 | $104.5M | -11.9% |
| CARLSBAD MEDICAL CENTER | NM | 53 | $97.1M | 19.9% |
| ESPANOLA HOSPITAL | NM | 70 | $84.1M | -2.3% |
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: $2.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $580K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $552K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $546K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $336K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $18K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $3.3M |
| + RCM Uplift | +$2.0M |
| Pro Forma EBITDA | $5.4M |
| Current Margin | 12.1% |
| Pro Forma Margin | 19.5% |
| WC Released (1x) | $1.1M |
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 | $5.1M | $42.4M | 8.24x | 52.5% |
| Base (11x exit) | 10.0x | 11.0x | $5.1M | $48.3M | 9.39x | 56.5% |
| Bull Case | 9.0x | 11.0x | $4.6M | $56.6M | 12.24x | 65.0% |
| Bull (12x exit) | 9.0x | 12.0x | $4.6M | $63.2M | 13.65x | 68.7% |
| Bear Case | 11.0x | 10.0x | $5.7M | $30.5M | 5.40x | 40.1% |
| Bear (11x exit) | 11.0x | 11.0x | $5.7M | $35.4M | 6.26x | 44.3% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 21 hospitals with 44-176 beds
- Same-state prioritization (n=22)
- Comp margins: P25=-7.9% / P50=5.0% / P75=12.9%
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.