BECKLEY ARH
1. Target Overview & Investment Thesis
BECKLEY ARH is a 72-bed under-performing / distressed in RALEIGH, WV with $109.2M in net patient revenue and a -37.8% operating margin. The hospital serves a payer mix of 36.0% Medicare, 4.9% Medicaid, and 59.1% commercial.
Thesis: Turnaround. Our ML models identify $8.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -37.8% to -30.4% (+736bps).
| Net Revenue HCRIS | $109.2M |
| Current EBITDA COMPUTED | $-41.2M |
| Operating Margin COMPUTED | -37.8% |
| Occupancy HCRIS | 84.8% |
| Revenue / Bed COMPUTED | $1.5M |
| Net-to-Gross HCRIS | 25.5% |
| Distress Probability ML | 39.7% |
2. Market Context & Competitive Position
WV has 62 Medicare-certified hospitals with a median operating margin of -0.3%. The target's margin of -37.8% places it below the state median. Among 19 size-comparable peers (36-144 beds), the median margin is 4.1%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (36-144), prioritizing same-state peers. 19 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BECKLEY ARH (Target) | WV | 72 | $109.2M | -37.8% |
| PRINCETON COMMUNITY HOSPITAL | WV | 115 | $290.2M | 12.8% |
| WEIRTON MEDICAL CENTER | WV | 127 | $182.4M | 9.4% |
| REYNOLDS MEMORIAL HOSPITAL | WV | 94 | $123.6M | 3.8% |
| LOGAN REGIONAL MEDICAL CENTER | WV | 132 | $104.0M | 3.4% |
| DAVIS MEMORIAL HOSPITAL | WV | 90 | $100.9M | -20.4% |
| ST FRANCIS HOSPITAL | WV | 40 | $58.5M | 30.5% |
| GREENBRIER VALLEY MEDICAL CENT | WV | 58 | $50.8M | 4.3% |
| ENCOMPASS HEALTH REHABILITATIO | WV | 96 | $47.0M | 15.6% |
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: $8.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.3M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.2M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.2M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $70K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-41.2M |
| + RCM Uplift | +$8.0M |
| Pro Forma EBITDA | $-33.2M |
| Current Margin | -37.8% |
| Pro Forma Margin | -30.4% |
| WC Released (1x) | $4.2M |
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 | $-63.5M | $-191.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-63.5M | $-231.5M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-57.1M | $-225.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-57.1M | $-262.9M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-69.8M | $-211.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-69.8M | $-255.1M | 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 |
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
- 19 hospitals with 36-144 beds
- Same-state prioritization (n=20)
- Comp margins: P25=-7.0% / P50=4.1% / P75=14.9%
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.