WESTON COUNTY HEALTH SERVICES
1. Target Overview & Investment Thesis
WESTON COUNTY HEALTH SERVICES is a 12-bed rural/critical access in WESTON, WY with $21.6M in net patient revenue and a -25.8% operating margin. The hospital serves a payer mix of 49.2% Medicare, 0.5% Medicaid, and 50.3% commercial.
Thesis: Turnaround. Our ML models identify $1.6M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -25.8% to -18.4% (+736bps).
| Net Revenue HCRIS | $21.6M |
| Current EBITDA COMPUTED | $-5.6M |
| Operating Margin COMPUTED | -25.8% |
| Occupancy HCRIS | 39.9% |
| Revenue / Bed COMPUTED | $1.8M |
| Net-to-Gross HCRIS | 70.1% |
| Distress Probability ML | 53.8% |
2. Market Context & Competitive Position
WY has 29 Medicare-certified hospitals with a median operating margin of -7.5%. The target's margin of -25.8% places it below the state median. Among 9 size-comparable peers (6-24 beds), the median margin is -15.0%. The target's below-peer margin suggests operational improvement opportunity.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (6-24), prioritizing same-state peers. 9 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| WESTON COUNTY HEALTH SERVICES (Target) | WY | 12 | $21.6M | -25.8% |
| STAR VALLEY HOSPITAL | WY | 22 | $82.0M | -0.5% |
| HOT SPRINGS COUNTY MEMORIAL | WY | 15 | $31.6M | -15.0% |
| WASHAKIE MEDICAL CENTER | WY | 18 | $28.1M | -1.7% |
| NORTH BIG HORN HOSPITAL | WY | 14 | $24.7M | -11.0% |
| SUMMIT MEDICAL CENTER LLC | WY | 16 | $23.8M | -29.3% |
| SOUTH LINCOLN HOSPITAL DISTRIC | WY | 14 | $17.7M | -29.0% |
| CROOK COUNTY MEDICAL SERVICES | WY | 16 | $11.4M | -21.1% |
| NIOBRARA HEALTH AND LIFE CENTE | WY | 24 | $9.3M | -12.4% |
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: $1.6M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $453K | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $432K | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $428K | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $263K | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $14K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-5.6M |
| + RCM Uplift | +$1.6M |
| Pro Forma EBITDA | $-4.0M |
| Current Margin | -25.8% |
| Pro Forma Margin | -18.4% |
| WC Released (1x) | $828K |
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 | $-8.6M | $-20.8M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-8.6M | $-25.7M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-7.7M | $-23.2M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-7.7M | $-27.6M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-9.4M | $-26.0M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-9.4M | $-31.6M | 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 |
| High | Elevated distress probability | Model estimates 53.8% 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
- 9 hospitals with 6-24 beds
- Same-state prioritization (n=10)
- Comp margins: P25=-29.0% / P50=-15.0% / P75=-11.0%
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.