ADENA REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
ADENA REGIONAL MEDICAL CENTER is a 209-bed suburban community hospital in ROSS, OH with $470.7M in net patient revenue and a 3.5% operating margin. The hospital serves a payer mix of 26.8% Medicare, 3.0% Medicaid, and 70.1% commercial.
Thesis: Undervalued. Our ML models identify $34.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 3.5% to 10.8% (+736bps).
| Net Revenue HCRIS | $470.7M |
| Current EBITDA COMPUTED | $16.4M |
| Operating Margin COMPUTED | 3.5% |
| Occupancy HCRIS | 59.5% |
| Revenue / Bed COMPUTED | $2.3M |
| Net-to-Gross HCRIS | 26.6% |
| Distress Probability ML | 44.1% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of 3.5% places it above the state median. Among 76 size-comparable peers (104-418 beds), the median margin is 1.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (104-418), prioritizing same-state peers. 76 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ADENA REGIONAL MEDICAL CENTER (Target) | OH | 209 | $470.7M | 3.5% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| ARTHUR G JAMES CANCER HOSPITAL | OH | 356 | $1.95B | 21.0% |
| GOOD SAMARITAN HOSPITAL | OH | 361 | $870.9M | 3.5% |
| BETHESDA HOSPITAL | OH | 416 | $829.8M | -0.3% |
| AKRON GENERAL MEDICAL CENTER | OH | 401 | $773.8M | 13.1% |
| KETTERING HEALTH MAIN CAMPUS | OH | 383 | $722.7M | -0.7% |
| KETTERING HEALTH DAYTON | OH | 317 | $667.6M | 3.3% |
| AULTMAN HOSPITAL | OH | 365 | $586.2M | -5.6% |
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: $34.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $9.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $9.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $9.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $5.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $301K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $16.4M |
| + RCM Uplift | +$34.6M |
| Pro Forma EBITDA | $51.1M |
| Current Margin | 3.5% |
| Pro Forma Margin | 10.8% |
| WC Released (1x) | $18.1M |
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 | $25.2M | $454.7M | 18.02x | 78.3% |
| Base (11x exit) | 10.0x | 11.0x | $25.2M | $508.3M | 20.14x | 82.3% |
| Bull Case | 9.0x | 11.0x | $22.7M | $630.9M | 27.77x | 94.4% |
| Bull (12x exit) | 9.0x | 12.0x | $22.7M | $694.9M | 30.59x | 98.2% |
| Bear Case | 11.0x | 10.0x | $27.8M | $273.2M | 9.84x | 58.0% |
| Bear (11x exit) | 11.0x | 11.0x | $27.8M | $309.6M | 11.15x | 62.0% |
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
- 76 hospitals with 104-418 beds
- Same-state prioritization (n=77)
- Comp margins: P25=-5.8% / P50=1.4% / P75=7.9%
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.