MEM. HOSPT. OF SWEETWATER COUNTY
1. Target Overview & Investment Thesis
MEM. HOSPT. OF SWEETWATER COUNTY is a 58-bed under-performing / distressed in SWEETWATER, WY with $107.7M in net patient revenue and a -8.9% operating margin. The hospital serves a payer mix of 35.0% Medicare, 14.6% Medicaid, and 50.5% commercial.
Thesis: Turnaround. Our ML models identify $7.9M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -8.9% to -1.6% (+736bps).
| Net Revenue HCRIS | $107.7M |
| Current EBITDA COMPUTED | $-9.6M |
| Operating Margin COMPUTED | -8.9% |
| Occupancy HCRIS | 26.9% |
| Revenue / Bed COMPUTED | $1.9M |
| Net-to-Gross HCRIS | 46.9% |
| Distress Probability ML | 57.1% |
2. Market Context & Competitive Position
WY has 29 Medicare-certified hospitals with a median operating margin of -7.5%. The target's margin of -8.9% places it below the state median. Among 8 size-comparable peers (29-116 beds), the median margin is 5.6%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (29-116), prioritizing same-state peers. 8 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| MEM. HOSPT. OF SWEETWATER COUN (Target) | WY | 58 | $107.7M | -8.9% |
| CAMPBELL COUNTY MEMORIAL HOSPI | WY | 66 | $179.4M | -22.8% |
| ST. JOHNS HOSPITAL | WY | 48 | $169.8M | -7.8% |
| MEM. HOSPITAL OF SHERIDAN CTY. | WY | 88 | $139.0M | -4.0% |
| IVINSON MEMORIAL HOSPITAL | WY | 76 | $128.5M | 9.0% |
| WYOMING STATE HOSPITAL | WY | 72 | $37.5M | 4.6% |
| EVANSTON REGIONAL | WY | 32 | $35.3M | 17.6% |
| WYOMNG BEHAVIORAL INSTITUTE | WY | 85 | $20.9M | 6.5% |
| ELKHORN VALLEY REHABILITATION | WY | 40 | $17.0M | 10.2% |
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: $7.9M (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% | $2.1M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.3M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $69K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-9.6M |
| + RCM Uplift | +$7.9M |
| Pro Forma EBITDA | $-1.7M |
| Current Margin | -8.9% |
| Pro Forma Margin | -1.6% |
| WC Released (1x) | $4.1M |
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 | $-14.8M | $15.9M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-14.8M | $12.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-13.3M | $34.1M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-13.3M | $33.3M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-16.3M | $-18.9M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-16.3M | $-26.1M | 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 |
| Medium | Low occupancy | At 26.9%, 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 57.1% 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
- 8 hospitals with 29-116 beds
- Same-state prioritization (n=9)
- Comp margins: P25=-5.0% / P50=5.6% / P75=9.3%
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.