DAVIE MEDICAL CENTER
1. Target Overview & Investment Thesis
DAVIE MEDICAL CENTER is a 42-bed suburban community hospital in DAVIE, NC with $108.5M in net patient revenue and a 27.5% operating margin. The hospital serves a payer mix of 24.5% Medicare, 4.3% Medicaid, and 71.3% commercial.
Thesis: Turnaround. Our ML models identify $8.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 27.5% to 34.8% (+736bps).
| Net Revenue HCRIS | $108.5M |
| Current EBITDA COMPUTED | $29.8M |
| Operating Margin COMPUTED | 27.5% |
| Occupancy HCRIS | 32.7% |
| Revenue / Bed COMPUTED | $2.6M |
| Net-to-Gross HCRIS | 22.3% |
| Distress Probability ML | 48.9% |
2. Market Context & Competitive Position
NC has 129 Medicare-certified hospitals with a median operating margin of -2.0%. The target's margin of 27.5% places it above the state median. Among 52 size-comparable peers (21-84 beds), the median margin is -3.9%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (21-84), prioritizing same-state peers. 52 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| DAVIE MEDICAL CENTER (Target) | NC | 42 | $108.5M | 27.5% |
| ADVENTHEALTH HENDERSONVILLE | NC | 73 | $227.1M | -4.1% |
| THOMASVILLE MEDICAL CENTER | NC | 73 | $220.3M | -14.3% |
| BRUNSWICK COMMUNITY HOSPITAL | NC | 65 | $143.2M | 12.9% |
| LEXINGTON MEMORIAL HOSPITAL I | NC | 70 | $138.3M | 6.9% |
| WRMC HOSPITAL OPERATING CORPOR | NC | 77 | $120.6M | 0.7% |
| HUGH CHATHAM MEMORIAL HOSPITAL | NC | 81 | $115.6M | -10.7% |
| HARRIS REGIONAL HOSPITAL | NC | 82 | $113.2M | -6.1% |
| NOVANT HEALTH MINT HILL MEDICA | NC | 36 | $107.8M | 9.7% |
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: $8.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $69K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $29.8M |
| + RCM Uplift | +$8.0M |
| Pro Forma EBITDA | $37.8M |
| Current Margin | 27.5% |
| Pro Forma Margin | 34.8% |
| WC Released (1x) | $4.2M |
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 | $45.8M | $276.4M | 6.03x | 43.2% |
| Base (11x exit) | 10.0x | 11.0x | $45.8M | $318.9M | 6.96x | 47.4% |
| Bull Case | 9.0x | 11.0x | $41.3M | $360.1M | 8.73x | 54.2% |
| Bull (12x exit) | 9.0x | 12.0x | $41.3M | $405.1M | 9.82x | 57.9% |
| Bear Case | 11.0x | 10.0x | $50.4M | $221.6M | 4.39x | 34.5% |
| Bear (11x exit) | 11.0x | 11.0x | $50.4M | $260.1M | 5.16x | 38.8% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 32.7%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
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
- 52 hospitals with 21-84 beds
- Same-state prioritization (n=53)
- Comp margins: P25=-15.6% / P50=-3.9% / P75=4.9%
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.