TRISTAR HENDERSONVILLE MEDICAL CENTE
1. Target Overview & Investment Thesis
TRISTAR HENDERSONVILLE MEDICAL CENTE is a 129-bed suburban community hospital in nan, TN with $208.6M in net patient revenue and a 41.5% operating margin. The hospital serves a payer mix of 21.3% Medicare, 5.7% Medicaid, and 72.9% commercial.
Thesis: Turnaround. Our ML models identify $15.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 41.5% to 48.8% (+736bps).
| Net Revenue HCRIS | $208.6M |
| Current EBITDA COMPUTED | $86.5M |
| Operating Margin COMPUTED | 41.5% |
| Occupancy HCRIS | 71.3% |
| Revenue / Bed COMPUTED | $1.6M |
| Net-to-Gross HCRIS | 12.3% |
| Distress Probability ML | 40.9% |
2. Market Context & Competitive Position
TN has 141 Medicare-certified hospitals with a median operating margin of -0.6%. The target's margin of 41.5% places it above the state median. Among 43 size-comparable peers (64-258 beds), the median margin is 1.8%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (64-258), prioritizing same-state peers. 43 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| TRISTAR HENDERSONVILLE MEDICAL (Target) | TN | 129 | $208.6M | 41.5% |
| COOKEVILLE REGIONAL MEDICAL CE | TN | 212 | $372.5M | 2.1% |
| MAURY REGIONAL HOSPITAL | TN | 244 | $334.0M | -9.7% |
| TENNOVA HEALTHCARE - TURKEY CR | TN | 219 | $326.2M | 8.1% |
| BLOUNT MEMORIAL HOSPITAL | TN | 145 | $326.0M | -8.5% |
| SUMMIT MEDICAL CENTER | TN | 188 | $298.0M | 40.6% |
| BRISTOL REGIONAL MEDICAL CENTE | TN | 244 | $293.9M | 3.2% |
| METRO NASHVILLE GENERAL HOSPIT | TN | 114 | $287.4M | 48.9% |
| WILLIAMSON HEALTH | TN | 203 | $271.4M | -3.3% |
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: $15.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $4.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $4.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $4.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $2.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $134K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $86.5M |
| + RCM Uplift | +$15.4M |
| Pro Forma EBITDA | $101.8M |
| Current Margin | 41.5% |
| Pro Forma Margin | 48.8% |
| WC Released (1x) | $8.0M |
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 | $133.1M | $724.1M | 5.44x | 40.3% |
| Base (11x exit) | 10.0x | 11.0x | $133.1M | $839.7M | 6.31x | 44.5% |
| Bull Case | 9.0x | 11.0x | $119.8M | $933.6M | 7.80x | 50.8% |
| Bull (12x exit) | 9.0x | 12.0x | $119.8M | $1.05B | 8.80x | 54.5% |
| Bear Case | 11.0x | 10.0x | $146.4M | $604.1M | 4.13x | 32.8% |
| Bear (11x exit) | 11.0x | 11.0x | $146.4M | $712.0M | 4.86x | 37.2% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| 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
- 43 hospitals with 64-258 beds
- Same-state prioritization (n=44)
- Comp margins: P25=-7.2% / P50=1.8% / P75=12.7%
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.