LDS HOSPITAL
1. Target Overview & Investment Thesis
LDS HOSPITAL is a 216-bed suburban community hospital in SALT LAKE, UT with $307.0M in net patient revenue and a -5.5% operating margin. The hospital serves a payer mix of 14.1% Medicare, 11.2% Medicaid, and 74.8% commercial.
Thesis: Undervalued. Our ML models identify $22.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -5.5% to 1.9% (+736bps).
| Net Revenue HCRIS | $307.0M |
| Current EBITDA COMPUTED | $-16.8M |
| Operating Margin COMPUTED | -5.5% |
| Occupancy HCRIS | 39.7% |
| Revenue / Bed COMPUTED | $1.4M |
| Net-to-Gross HCRIS | 39.2% |
| Distress Probability ML | 52.8% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of -5.5% places it below the state median. Among 13 size-comparable peers (108-432 beds), the median margin is 23.2%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (108-432), prioritizing same-state peers. 13 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| LDS HOSPITAL (Target) | UT | 216 | $307.0M | -5.5% |
| PRIMARY CHILDRENS HOSPITAL | UT | 287 | $895.5M | 5.6% |
| ST GEORGE REGIONAL HOSPITAL | UT | 256 | $790.1M | 12.0% |
| UTAH VALLEY HOSPITAL | UT | 338 | $707.3M | 7.6% |
| MCKAY-DEE HOSPITAL | UT | 236 | $629.9M | 12.6% |
| ST MARKS HOSPITAL | UT | 263 | $539.0M | 44.0% |
| LOGAN REGIONAL HOSPITAL | UT | 114 | $320.1M | 29.3% |
| OGDEN REGIONAL MEDICAL CENTER | UT | 174 | $299.3M | 47.4% |
| JORDAN VALLEY MEDICAL CENTER | UT | 267 | $274.2M | 17.2% |
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: $22.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $6.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $6.1M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $6.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $3.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $197K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-16.8M |
| + RCM Uplift | +$22.6M |
| Pro Forma EBITDA | $5.8M |
| Current Margin | -5.5% |
| Pro Forma Margin | 1.9% |
| WC Released (1x) | $11.8M |
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 | $-25.9M | $114.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-25.9M | $118.0M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-23.3M | $184.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-23.3M | $194.0M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-28.5M | $10.3M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-28.5M | $2.1M | 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 |
| High | Elevated distress probability | Model estimates 52.8% probability of financial distress. Mitigant: distressed entry pricing (7-9x) compensates for risk |
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
- 13 hospitals with 108-432 beds
- Same-state prioritization (n=14)
- Comp margins: P25=10.9% / P50=23.2% / P75=34.6%
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.