SAN LUCAS PONCE
1. Target Overview & Investment Thesis
SAN LUCAS PONCE is a 348-bed safety-net/medicaid heavy in nan, PR with $141.1M in net patient revenue and a 9.2% operating margin. The hospital serves a payer mix of 6.4% Medicare, 39.5% Medicaid, and 54.1% commercial.
Thesis: Platform Growth. Our ML models identify $10.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 9.2% to 16.6% (+736bps).
| Net Revenue HCRIS | $141.1M |
| Current EBITDA COMPUTED | $13.0M |
| Operating Margin COMPUTED | 9.2% |
| Occupancy HCRIS | 61.8% |
| Revenue / Bed COMPUTED | $405K |
| Net-to-Gross HCRIS | 69.0% |
| Distress Probability ML | 59.5% |
2. Market Context & Competitive Position
PR has 61 Medicare-certified hospitals with a median operating margin of -8.8%. The target's margin of 9.2% places it above the state median. Among 13 size-comparable peers (174-696 beds), the median margin is -1.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (174-696), prioritizing same-state peers. 13 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| SAN LUCAS PONCE (Target) | PR | 348 | $141.1M | 9.2% |
| AUXILIO MUTUO HOSPITAL | PR | 481 | $232.1M | -1.7% |
| HOSPITAL MENONITA DE CAYEY | PR | 225 | $186.2M | 15.0% |
| HOSPITAL DR. ALEJANDRO OTERO | PR | 263 | $129.0M | -1.0% |
| HOSPITAL HIMA SAN PABLO CAGUAS | PR | 421 | $120.1M | -23.4% |
| HOSPITAL MENONITA CAGUAS INC | PR | 232 | $114.1M | 6.8% |
| DOCTOR CENTER HOSPITAL MANATI | PR | 258 | $103.4M | 1.6% |
| MAYAGUEZ MEDICAL CENTER | PR | 210 | $102.8M | 7.6% |
| UNIVERSITY DISCTRICT HOSPITAL | PR | 210 | $97.4M | -43.2% |
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: $10.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $3.0M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.8M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.8M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $90K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $13.0M |
| + RCM Uplift | +$10.4M |
| Pro Forma EBITDA | $23.4M |
| Current Margin | 9.2% |
| Pro Forma Margin | 16.6% |
| WC Released (1x) | $5.4M |
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 | $20.0M | $189.4M | 9.49x | 56.8% |
| Base (11x exit) | 10.0x | 11.0x | $20.0M | $214.8M | 10.76x | 60.8% |
| Bull Case | 9.0x | 11.0x | $18.0M | $255.6M | 14.23x | 70.1% |
| Bull (12x exit) | 9.0x | 12.0x | $18.0M | $284.1M | 15.82x | 73.7% |
| Bear Case | 11.0x | 10.0x | $22.0M | $131.0M | 5.97x | 42.9% |
| Bear (11x exit) | 11.0x | 11.0x | $22.0M | $151.2M | 6.89x | 47.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (39.5%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 59.5% 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
- 13 hospitals with 174-696 beds
- Same-state prioritization (n=14)
- Comp margins: P25=-19.8% / P50=-1.0% / P75=5.2%
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.