REBOUND BEHAVIORAL HEALTH
1. Target Overview & Investment Thesis
REBOUND BEHAVIORAL HEALTH is a 63-bed under-performing / distressed in LANCASTER, SC with $11.3M in net patient revenue and a -20.0% operating margin. The hospital serves a payer mix of 12.0% Medicare, 0.6% Medicaid, and 87.4% commercial.
Thesis: Turnaround. Our ML models identify $834K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -20.0% to -12.6% (+740bps).
| Net Revenue HCRIS | $11.3M |
| Current EBITDA COMPUTED | $-2.3M |
| Operating Margin COMPUTED | -20.0% |
| Occupancy HCRIS | 70.3% |
| Revenue / Bed COMPUTED | $179K |
| Net-to-Gross HCRIS | 15.8% |
| Distress Probability ML | 41.8% |
2. Market Context & Competitive Position
SC has 85 Medicare-certified hospitals with a median operating margin of 1.3%. The target's margin of -20.0% places it below the state median. Among 47 size-comparable peers (32-126 beds), the median margin is 3.9%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (32-126), prioritizing same-state peers. 47 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| REBOUND BEHAVIORAL HEALTH (Target) | SC | 63 | $11.3M | -20.0% |
| PH PATEWOOD HOSPITAL | SC | 64 | $229.8M | 38.0% |
| EAST COOPER REGIONAL MEDICAL C | SC | 120 | $206.1M | 28.3% |
| WACCAMAW COMMUNITY HOSPITAL | SC | 124 | $182.8M | 2.7% |
| GEORGETOWN MEMORIAL HOSPITAL | SC | 68 | $168.0M | -4.6% |
| HILTON HEAD HOSPITAL | SC | 109 | $165.7M | 29.2% |
| PH GREER MEMORIAL HOSPITAL | SC | 66 | $161.3M | 31.3% |
| PH BAPTIST PARKRIDGE HOSPITAL | SC | 78 | $159.8M | 18.1% |
| PELHAM MEDICAL CENTER | SC | 48 | $137.2M | 17.1% |
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: $834K (740bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $237K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $226K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $225K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $137K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +9bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-2.3M |
| + RCM Uplift | +$834K |
| Pro Forma EBITDA | $-1.4M |
| Current Margin | -20.0% |
| Pro Forma Margin | -12.6% |
| WC Released (1x) | $432K |
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 | $-3.5M | $-6.5M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-3.5M | $-8.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-3.1M | $-6.7M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-3.1M | $-8.2M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-3.8M | $-9.6M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-3.8M | $-11.8M | 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 |
| Low | Low net-to-gross ratio | Large contractual allowances suggest pricing discipline issues. Mitigant: payer renegotiation is an additional upside lever |
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
- 47 hospitals with 32-126 beds
- Same-state prioritization (n=48)
- Comp margins: P25=-6.7% / P50=3.9% / P75=17.4%
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.