CEDAR CITY HOSPITAL
1. Target Overview & Investment Thesis
CEDAR CITY HOSPITAL is a 48-bed suburban community hospital in IRON, UT with $136.8M in net patient revenue and a 31.4% operating margin. The hospital serves a payer mix of 21.2% Medicare, 11.8% Medicaid, and 67.0% commercial.
Thesis: Turnaround. Our ML models identify $10.1M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 31.4% to 38.8% (+736bps).
| Net Revenue HCRIS | $136.8M |
| Current EBITDA COMPUTED | $43.0M |
| Operating Margin COMPUTED | 31.4% |
| Occupancy HCRIS | 32.9% |
| Revenue / Bed COMPUTED | $2.9M |
| Net-to-Gross HCRIS | 45.1% |
| 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 31.4% places it above the state median. Among 27 size-comparable peers (24-96 beds), the median margin is 9.5%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (24-96), prioritizing same-state peers. 27 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CEDAR CITY HOSPITAL (Target) | UT | 48 | $136.8M | 31.4% |
| AMERICAN FORK HOSPITAL | UT | 88 | $216.8M | 25.3% |
| RIVERTON HOSPITAL | UT | 87 | $195.8M | 18.0% |
| LONE PEAK HOSPITAL | UT | 61 | $133.1M | 25.2% |
| ALTA VIEW HOSPITAL | UT | 57 | $130.9M | -0.6% |
| GUNNISON VALLEY HOSPITAL | UT | 25 | $130.4M | -6.4% |
| LAYTON HOSPITAL | UT | 37 | $121.1M | 9.5% |
| PARK CITY HOSPITAL | UT | 37 | $120.8M | 13.7% |
| UINTAH BASIN MEDICAL CENTER | UT | 33 | $119.9M | 1.8% |
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: $10.1M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.9M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.7M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.7M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.7M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $88K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $43.0M |
| + RCM Uplift | +$10.1M |
| Pro Forma EBITDA | $53.1M |
| Current Margin | 31.4% |
| Pro Forma Margin | 38.8% |
| WC Released (1x) | $5.2M |
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 | $66.2M | $384.4M | 5.81x | 42.2% |
| Base (11x exit) | 10.0x | 11.0x | $66.2M | $444.3M | 6.72x | 46.4% |
| Bull Case | 9.0x | 11.0x | $59.5M | $499.0M | 8.38x | 53.0% |
| Bull (12x exit) | 9.0x | 12.0x | $59.5M | $561.9M | 9.44x | 56.7% |
| Bear Case | 11.0x | 10.0x | $72.8M | $312.5M | 4.29x | 33.8% |
| Bear (11x exit) | 11.0x | 11.0x | $72.8M | $367.4M | 5.05x | 38.2% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Low occupancy | At 32.9%, 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 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
- 27 hospitals with 24-96 beds
- Same-state prioritization (n=28)
- Comp margins: P25=-7.6% / P50=9.5% / P75=19.3%
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.