WILSON N JONES REGIONAL MEDICAL CTR
1. Target Overview & Investment Thesis
WILSON N JONES REGIONAL MEDICAL CTR is a 214-bed under-performing / distressed in GRAYSON, TX with $38.4M in net patient revenue and a -53.6% operating margin. The hospital serves a payer mix of 29.3% Medicare, 1.9% Medicaid, and 68.8% commercial.
Thesis: Undervalued. Our ML models identify $2.8M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -53.6% to -46.2% (+736bps).
| Net Revenue HCRIS | $38.4M |
| Current EBITDA COMPUTED | $-20.5M |
| Operating Margin COMPUTED | -53.6% |
| Occupancy HCRIS | 22.9% |
| Revenue / Bed COMPUTED | $179K |
| Net-to-Gross HCRIS | 18.2% |
| Distress Probability ML | 54.5% |
2. Market Context & Competitive Position
TX has 583 Medicare-certified hospitals with a median operating margin of -0.7%. The target's margin of -53.6% places it below the state median. Among 148 size-comparable peers (107-428 beds), the median margin is 5.4%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (107-428), prioritizing same-state peers. 148 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WILSON N JONES REGIONAL MEDICA (Target) | TX | 214 | $38.4M | -53.6% |
| CHILDRENS MEDICAL CENTER OF DA | TX | 377 | $1.56B | 10.3% |
| COOK CHILDRENS MEDICAL CENTER | TX | 423 | $1.51B | 16.5% |
| DELL CHILDRENS MEDICAL CENTER | TX | 262 | $901.9M | 25.5% |
| DOCTORS HOSPITAL AT RENAISSANC | TX | 394 | $847.8M | 9.2% |
| ASCENSION SETON MEDICAL CENTER | TX | 391 | $702.5M | 12.6% |
| DRISCOLL CHILDRENS HOSPITAL | TX | 215 | $694.3M | 29.4% |
| ROUND ROCK HOSPITAL | TX | 165 | $681.4M | 8.7% |
| METHODIST SUGAR LAND HOSPITAL | TX | 337 | $679.6M | 12.6% |
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: $2.8M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $805K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $767K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $759K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $467K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $25K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-20.5M |
| + RCM Uplift | +$2.8M |
| Pro Forma EBITDA | $-17.7M |
| Current Margin | -53.6% |
| Pro Forma Margin | -46.2% |
| WC Released (1x) | $1.5M |
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 | $-31.6M | $-107.3M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-31.6M | $-128.3M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-28.4M | $-129.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-28.4M | $-149.4M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-34.8M | $-111.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-34.8M | $-133.5M | 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 | Low occupancy | At 22.9%, 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 54.5% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
| 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
- 148 hospitals with 107-428 beds
- Same-state prioritization (n=149)
- Comp margins: P25=-6.5% / P50=5.4% / P75=14.1%
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.