PAM SPECIALTY HOSP. OF ROCKY MOUNT
1. Target Overview & Investment Thesis
PAM SPECIALTY HOSP. OF ROCKY MOUNT is a 50-bed community hospital in NASH, NC with $27.1M in net patient revenue and a 16.1% operating margin. The hospital serves a payer mix of 42.3% Medicare, 0.0% Medicaid, and 57.7% commercial.
Thesis: Turnaround. Our ML models identify $2.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 16.1% to 23.4% (+736bps).
| Net Revenue HCRIS | $27.1M |
| Current EBITDA COMPUTED | $4.4M |
| Operating Margin COMPUTED | 16.1% |
| Occupancy HCRIS | 71.4% |
| Revenue / Bed COMPUTED | $543K |
| Net-to-Gross HCRIS | 22.1% |
| Distress Probability ML | nan% |
2. Market Context & Competitive Position
NC has 129 Medicare-certified hospitals with a median operating margin of -2.0%. The target's margin of 16.1% places it above the state median. Among 55 size-comparable peers (25-100 beds), the median margin is -3.7%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (25-100), prioritizing same-state peers. 55 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PAM SPECIALTY HOSP. OF ROCKY M (Target) | NC | 50 | $27.1M | 16.1% |
| ADVENTHEALTH HENDERSONVILLE | NC | 73 | $227.1M | -4.1% |
| THOMASVILLE MEDICAL CENTER | NC | 73 | $220.3M | -14.3% |
| WATAUGA MEDICAL CENTER | NC | 95 | $187.3M | 2.4% |
| CARTERET COUNTY GENERAL HOSPIT | NC | 99 | $187.2M | 6.4% |
| BRUNSWICK COMMUNITY HOSPITAL | NC | 65 | $143.2M | 12.9% |
| SENTARA ALBEMARLE REGL MED CTR | NC | 98 | $140.3M | -1.3% |
| WILSON MEDICAL CENTER | NC | 100 | $138.4M | -3.8% |
| LEXINGTON MEMORIAL HOSPITAL I | NC | 70 | $138.3M | 6.9% |
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% | $570K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $543K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $537K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $330K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $17K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $4.4M |
| + RCM Uplift | +$2.0M |
| Pro Forma EBITDA | $6.4M |
| Current Margin | 16.1% |
| Pro Forma Margin | 23.4% |
| WC Released (1x) | $1.0M |
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 | $6.7M | $48.7M | 7.27x | 48.7% |
| Base (11x exit) | 10.0x | 11.0x | $6.7M | $55.8M | 8.32x | 52.8% |
| Bull Case | 9.0x | 11.0x | $6.0M | $64.5M | 10.70x | 60.6% |
| Bull (12x exit) | 9.0x | 12.0x | $6.0M | $72.2M | 11.96x | 64.3% |
| Bear Case | 11.0x | 10.0x | $7.4M | $36.6M | 4.96x | 37.7% |
| Bear (11x exit) | 11.0x | 11.0x | $7.4M | $42.6M | 5.78x | 42.0% |
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
- 55 hospitals with 25-100 beds
- Same-state prioritization (n=56)
- Comp margins: P25=-14.3% / P50=-3.7% / P75=5.3%
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.