EVEREST REHABILITATION HOSPITAL NORT
1. Target Overview & Investment Thesis
EVEREST REHABILITATION HOSPITAL NORT is a 36-bed rural/critical access in BUTLER, OH with $2.7M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 58.9% Medicare, 1.1% Medicaid, and 40.0% commercial.
Thesis: Turnaround. Our ML models identify $216K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -131.1% (+789bps).
| Net Revenue HCRIS | $2.7M |
| Current EBITDA COMPUTED | $-3.8M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 26.0% |
| Revenue / Bed COMPUTED | $76K |
| Net-to-Gross HCRIS | 47.2% |
| Distress Probability ML | 57.6% |
2. Market Context & Competitive Position
OH has 235 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -100.0% places it below the state median. Among 104 size-comparable peers (18-72 beds), the median margin is -1.7%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (18-72), prioritizing same-state peers. 104 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| EVEREST REHABILITATION HOSPITA (Target) | OH | 36 | $2.7M | -100.0% |
| KNOX COMMUNITY HOSPITAL | OH | 64 | $196.0M | -16.7% |
| CRYSTAL CLINIC ORTHOPAEDIC CEN | OH | 59 | $173.3M | -14.9% |
| THE SURGICAL HOSPITAL AT SOUTH | OH | 24 | $166.6M | -3.1% |
| OBLENESS MEMORIAL HOSPITAL | OH | 67 | $160.9M | 29.9% |
| MEMORIAL HOSPITAL OF UNION COU | OH | 51 | $151.0M | 8.0% |
| GRADY MEMORIAL HOSPITAL | OH | 60 | $146.7M | 16.5% |
| GALION COMMUNITY HOSPITAL | OH | 25 | $128.2M | 16.6% |
| MARY RUTAN HOSPITAL | OH | 39 | $113.0M | -12.5% |
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: $216K (789bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Denial Rate Reduction | 12.0% | 6.5% | $61K | +223bp | 12mo |
| Net Collection Rate | 93.5% | 97.0% | $58K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $55K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $33K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +35bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-3.8M |
| + RCM Uplift | +$216K |
| Pro Forma EBITDA | $-3.6M |
| Current Margin | -100.0% |
| Pro Forma Margin | -131.1% |
| WC Released (1x) | $105K |
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 | $-5.9M | $-23.0M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-5.9M | $-27.2M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-5.3M | $-28.4M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-5.3M | $-32.5M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-6.4M | $-22.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-6.4M | $-26.5M | 0.00x | -100.0% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| High | Negative operating margin | RCM uplift bridge shows clear path to profitability; working capital release provides near-term cash cushion |
| Medium | Heavy Medicare dependence | Medicare comprises 58.9% of days; rate updates may lag inflation. Mitigant: CDI/CMI lever directly increases Medicare reimbursement |
| Medium | Low occupancy | At 26.0%, fixed costs are spread over fewer patient days. Mitigant: volume growth is an additional upside lever not modeled in base case |
| High | Elevated distress probability | Model estimates 57.6% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 104 hospitals with 18-72 beds
- Same-state prioritization (n=105)
- Comp margins: P25=-11.1% / P50=-1.7% / P75=12.2%
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.