ASHLEY REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
ASHLEY REGIONAL MEDICAL CENTER is a 39-bed safety-net/medicaid heavy in UINTAH, UT with $64.5M in net patient revenue and a 15.6% operating margin. The hospital serves a payer mix of 26.7% Medicare, 32.1% Medicaid, and 41.2% commercial.
Thesis: Turnaround. Our ML models identify $4.7M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 15.6% to 23.0% (+736bps).
| Net Revenue HCRIS | $64.5M |
| Current EBITDA COMPUTED | $10.1M |
| Operating Margin COMPUTED | 15.6% |
| Occupancy HCRIS | 20.5% |
| Revenue / Bed COMPUTED | $1.7M |
| Net-to-Gross HCRIS | 37.8% |
| Distress Probability ML | 61.7% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of 15.6% places it above the state median. Among 24 size-comparable peers (20-78 beds), the median margin is 3.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (20-78), prioritizing same-state peers. 24 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| ASHLEY REGIONAL MEDICAL CENTER (Target) | UT | 39 | $64.5M | 15.6% |
| CEDAR CITY HOSPITAL | UT | 48 | $136.8M | 31.4% |
| 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% |
| MOUNTAIN WEST MEDICAL CENTER | UT | 36 | $96.1M | 38.5% |
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: $4.7M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $1.4M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $1.3M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $1.3M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $785K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $41K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $10.1M |
| + RCM Uplift | +$4.7M |
| Pro Forma EBITDA | $14.8M |
| Current Margin | 15.6% |
| Pro Forma Margin | 23.0% |
| WC Released (1x) | $2.5M |
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 | $15.5M | $114.1M | 7.35x | 49.0% |
| Base (11x exit) | 10.0x | 11.0x | $15.5M | $130.5M | 8.41x | 53.1% |
| Bull Case | 9.0x | 11.0x | $14.0M | $151.2M | 10.82x | 61.0% |
| Bull (12x exit) | 9.0x | 12.0x | $14.0M | $169.1M | 12.10x | 64.6% |
| Bear Case | 11.0x | 10.0x | $17.1M | $85.3M | 4.99x | 37.9% |
| Bear (11x exit) | 11.0x | 11.0x | $17.1M | $99.4M | 5.82x | 42.2% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Elevated Medicaid exposure (32.1%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| Medium | Low occupancy | At 20.5%, 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 61.7% 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
- 24 hospitals with 20-78 beds
- Same-state prioritization (n=25)
- Comp margins: P25=-12.6% / P50=3.0% / P75=13.9%
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.