CHEYENNE REGIONAL MEDICAL CENTER
1. Target Overview & Investment Thesis
CHEYENNE REGIONAL MEDICAL CENTER is a 147-bed suburban community hospital in LARAMIE, WY with $372.4M in net patient revenue and a 4.5% operating margin. The hospital serves a payer mix of 43.0% Medicare, 9.6% Medicaid, and 47.3% commercial.
Thesis: Undervalued. Our ML models identify $27.4M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from 4.5% to 11.9% (+736bps).
| Net Revenue HCRIS | $372.4M |
| Current EBITDA COMPUTED | $16.9M |
| Operating Margin COMPUTED | 4.5% |
| Occupancy HCRIS | 62.3% |
| Revenue / Bed COMPUTED | $2.5M |
| Net-to-Gross HCRIS | 35.7% |
| Distress Probability ML | 46.2% |
2. Market Context & Competitive Position
WY has 29 Medicare-certified hospitals with a median operating margin of -7.5%. The target's margin of 4.5% places it above the state median. Among 2055 size-comparable peers (74-294 beds), the median margin is -3.4%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (74-294), prioritizing same-state peers. 2055 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CHEYENNE REGIONAL MEDICAL CENT (Target) | WY | 147 | $372.4M | 4.5% |
| RAINBOW BABIES & CHILDRENS HOS | OH | 231 | $2.22B | -5.0% |
| MOFFITT CANCER CENTER | FL | 218 | $1.91B | 16.0% |
| CITY OF HOPE NATIONAL MEDICAL | CA | 217 | $1.83B | -10.7% |
| HOSPITAL FOR SPECIAL SURGERY | NY | 200 | $1.12B | -29.3% |
| VIRGINIA MASON MEDICAL CENTER | WA | 222 | $1.11B | -23.2% |
| CALIFORNIA PACIFIC MEDICAL CEN | CA | 274 | $987.8M | -18.5% |
| ENGLEWOOD HOSPITAL & MED CTR | NJ | 292 | $967.3M | 0.1% |
| DELL CHILDRENS MEDICAL CENTER | TX | 262 | $901.9M | 25.5% |
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: $27.4M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $7.8M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $7.4M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $7.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $4.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $238K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $16.9M |
| + RCM Uplift | +$27.4M |
| Pro Forma EBITDA | $44.3M |
| Current Margin | 4.5% |
| Pro Forma Margin | 11.9% |
| WC Released (1x) | $14.3M |
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 | $385.2M | 14.86x | 71.6% |
| Base (11x exit) | 10.0x | 11.0x | $25.9M | $432.2M | 16.67x | 75.5% |
| Bull Case | 9.0x | 11.0x | $23.3M | $531.1M | 22.76x | 86.8% |
| Bull (12x exit) | 9.0x | 12.0x | $23.3M | $586.2M | 25.13x | 90.6% |
| Bear Case | 11.0x | 10.0x | $28.5M | $239.8M | 8.41x | 53.1% |
| Bear (11x exit) | 11.0x | 11.0x | $28.5M | $273.0M | 9.57x | 57.1% |
7. Key Risks & Mitigants
| Severity | Risk Factor | Mitigant |
|---|---|---|
| Medium | Standard execution risk | RCM improvement requires management buy-in and 12-18 month implementation timeline |
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
- 2055 hospitals with 74-294 beds
- Same-state prioritization (n=6)
- Comp margins: P25=-13.7% / P50=-3.4% / P75=7.1%
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.