BEAVER VALLEY HOSPITAL
1. Target Overview & Investment Thesis
BEAVER VALLEY HOSPITAL is a 25-bed safety-net/medicaid heavy in BEAVER, UT with $10.9M in net patient revenue and a -100.0% operating margin. The hospital serves a payer mix of 9.6% Medicare, 55.6% Medicaid, and 34.8% commercial.
Thesis: Turnaround. Our ML models identify $811K in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -100.0% to -99.3% (+740bps).
| Net Revenue HCRIS | $10.9M |
| Current EBITDA COMPUTED | $-11.7M |
| Operating Margin COMPUTED | -100.0% |
| Occupancy HCRIS | 38.9% |
| Revenue / Bed COMPUTED | $438K |
| Net-to-Gross HCRIS | 73.6% |
| Distress Probability ML | 67.7% |
2. Market Context & Competitive Position
UT has 59 Medicare-certified hospitals with a median operating margin of 8.0%. The target's margin of -100.0% places it below the state median. Among 28 size-comparable peers (12-50 beds), the median margin is 4.8%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 28 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| BEAVER VALLEY HOSPITAL (Target) | UT | 25 | $10.9M | -100.0% |
| CEDAR CITY HOSPITAL | UT | 48 | $136.8M | 31.4% |
| 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% |
| THE ORTHOPEDIC SPECIALTY HOSPI | UT | 40 | $88.7M | 12.4% |
| CASTLEVIEW HOSPITAL | UT | 39 | $84.5M | 21.5% |
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: $811K (740bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $230K | +210bp | 18mo |
| Denial Rate Reduction | 12.0% | 6.5% | $219K | +200bp | 12mo |
| Cost to Collect | 4.5% | 2.5% | $219K | +200bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $133K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $10K | +9bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-11.7M |
| + RCM Uplift | +$811K |
| Pro Forma EBITDA | $-10.9M |
| Current Margin | -100.0% |
| Pro Forma Margin | -99.3% |
| WC Released (1x) | $420K |
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 | $-18.0M | $-68.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-18.0M | $-81.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-16.2M | $-84.8M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-16.2M | $-97.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-19.8M | $-67.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-19.8M | $-80.3M | 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 | Elevated Medicaid exposure (55.6%) | Medicaid reimburses below cost in most states. Mitigant: denial reduction lever has highest impact on Medicaid claims |
| High | Elevated distress probability | Model estimates 67.7% 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
- 28 hospitals with 12-50 beds
- Same-state prioritization (n=29)
- Comp margins: P25=-6.8% / P50=4.8% / P75=12.7%
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.