PARIS REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
PARIS REGIONAL MEDICAL CENTER is a 131-bed suburban community hospital in LAMAR, TX with $131.0M in net patient revenue and a 4.8% operating margin. The hospital serves a payer mix of 39.8% Medicare, 0.5% Medicaid, and 59.7% commercial.
Thesis: Undervalued. Our ML models identify $9.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 4.8% to 12.2% (+736bps).
| Net Revenue HCRIS | $131.0M |
| Current EBITDA COMPUTED | $6.3M |
| Operating Margin COMPUTED | 4.8% |
| Occupancy HCRIS | 49.2% |
| Revenue / Bed COMPUTED | $1.0M |
| Net-to-Gross HCRIS | 20.8% |
| Distress Probability ML | 47.3% |
2. Market Context & Competitive Position
TX has 583 Medicare-certified hospitals with a median operating margin of -0.7%. The target's margin of 4.8% places it above the state median. Among 173 size-comparable peers (66-262 beds), the median margin is 2.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (66-262), prioritizing same-state peers. 173 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| PARIS REGIONAL MEDICAL CENTER (Target) | TX | 131 | $131.0M | 4.8% |
| DELL CHILDRENS MEDICAL CENTER | TX | 262 | $901.9M | 25.5% |
| DRISCOLL CHILDRENS HOSPITAL | TX | 215 | $694.3M | 29.4% |
| ROUND ROCK HOSPITAL | TX | 165 | $681.4M | 8.7% |
| HILLCREST BAPTIST MEDICAL CENT | TX | 236 | $464.8M | -6.7% |
| THE HEART HOSPITAL BAYLOR PLAN | TX | 109 | $464.6M | 25.7% |
| METHODIST RICHARDSON MEDICAL C | TX | 247 | $449.2M | 14.6% |
| DELL SETON MEDICAL CENTER AT T | TX | 225 | $438.6M | -4.2% |
| WOMANS HOSPITAL OF TEXAS | TX | 252 | $435.4M | 67.9% |
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: $9.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.6M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.6M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.6M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $84K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $6.3M |
| + RCM Uplift | +$9.6M |
| Pro Forma EBITDA | $15.9M |
| Current Margin | 4.8% |
| Pro Forma Margin | 12.2% |
| WC Released (1x) | $5.0M |
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 | $9.7M | $138.0M | 14.24x | 70.1% |
| Base (11x exit) | 10.0x | 11.0x | $9.7M | $154.9M | 15.99x | 74.1% |
| Bull Case | 9.0x | 11.0x | $8.7M | $189.9M | 21.78x | 85.2% |
| Bull (12x exit) | 9.0x | 12.0x | $8.7M | $209.7M | 24.05x | 88.9% |
| Bear Case | 11.0x | 10.0x | $10.7M | $86.6M | 8.13x | 52.0% |
| Bear (11x exit) | 11.0x | 11.0x | $10.7M | $98.7M | 9.26x | 56.1% |
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
- 173 hospitals with 66-262 beds
- Same-state prioritization (n=174)
- Comp margins: P25=-8.8% / P50=2.4% / P75=13.3%
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.