ATRIUM HEALTH STANLY
1. Target Overview & Investment Thesis
ATRIUM HEALTH STANLY is a 97-bed suburban community hospital in STANLY, NC with $113.0M in net patient revenue and a 12.9% operating margin. The hospital serves a payer mix of 28.1% Medicare, 6.0% Medicaid, and 65.9% commercial.
Thesis: Turnaround. Our ML models identify $8.3M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 12.9% to 20.3% (+736bps).
| Net Revenue HCRIS | $113.0M |
| Current EBITDA COMPUTED | $14.6M |
| Operating Margin COMPUTED | 12.9% |
| Occupancy HCRIS | 48.1% |
| Revenue / Bed COMPUTED | $1.2M |
| Net-to-Gross HCRIS | 23.5% |
| Distress Probability ML | 48.4% |
2. Market Context & Competitive Position
NC has 129 Medicare-certified hospitals with a median operating margin of -2.0%. The target's margin of 12.9% places it above the state median. Among 59 size-comparable peers (48-194 beds), the median margin is -1.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (48-194), prioritizing same-state peers. 59 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ATRIUM HEALTH STANLY (Target) | NC | 97 | $113.0M | 12.9% |
| DUKE RALEIGH HOSPITAL | NC | 186 | $683.0M | 3.7% |
| MARGARET R. PARDEE MEMORIAL HO | NC | 160 | $341.3M | -5.7% |
| JOHNSTON HEALTH | NC | 179 | $331.7M | 9.6% |
| WAKE MED CARY HOSPITAL | NC | 189 | $318.1M | -3.6% |
| ATRIUM HEALTH UNION | NC | 183 | $302.3M | 7.0% |
| S.E. REGL MEDICAL CENTER | NC | 179 | $298.1M | -25.3% |
| ATRIUM HEALTH UNIVERSITY CITY | NC | 104 | $286.9M | 28.6% |
| ALAMANCE REGIONAL MEDICAL CENT | NC | 176 | $286.2M | 4.8% |
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: $8.3M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.4M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $72K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $14.6M |
| + RCM Uplift | +$8.3M |
| Pro Forma EBITDA | $22.9M |
| Current Margin | 12.9% |
| Pro Forma Margin | 20.3% |
| WC Released (1x) | $4.3M |
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 | $22.5M | $179.6M | 7.98x | 51.5% |
| Base (11x exit) | 10.0x | 11.0x | $22.5M | $204.8M | 9.11x | 55.5% |
| Bull Case | 9.0x | 11.0x | $20.2M | $239.6M | 11.84x | 63.9% |
| Bull (12x exit) | 9.0x | 12.0x | $20.2M | $267.3M | 13.21x | 67.6% |
| Bear Case | 11.0x | 10.0x | $24.7M | $130.7M | 5.28x | 39.5% |
| Bear (11x exit) | 11.0x | 11.0x | $24.7M | $151.8M | 6.14x | 43.7% |
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
- 59 hospitals with 48-194 beds
- Same-state prioritization (n=60)
- Comp margins: P25=-8.6% / P50=-1.7% / P75=7.0%
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.