CODY REGIONAL HEALTH
1. Target Overview & Investment Thesis
CODY REGIONAL HEALTH is a 25-bed suburban community hospital in PARK, WY with $122.8M in net patient revenue and a -0.9% operating margin. The hospital serves a payer mix of 51.2% Medicare, 5.5% Medicaid, and 43.3% commercial.
Thesis: Turnaround. Our ML models identify $9.0M in annual EBITDA improvement potential from RCM optimization across 5 levers, lifting margin from -0.9% to 6.4% (+736bps).
| Net Revenue HCRIS | $122.8M |
| Current EBITDA COMPUTED | $-1.2M |
| Operating Margin COMPUTED | -0.9% |
| Occupancy HCRIS | 59.6% |
| Revenue / Bed COMPUTED | $4.9M |
| Net-to-Gross HCRIS | 57.8% |
| Distress Probability ML | 44.7% |
2. Market Context & Competitive Position
WY has 29 Medicare-certified hospitals with a median operating margin of -7.5%. The target's margin of -0.9% places it above the state median. Among 17 size-comparable peers (12-50 beds), the median margin is -11.0%. The target performs in line with or above peers.
3. RCM Performance Analysis — Comparable Hospitals
Comps selected by bed count (12-50), prioritizing same-state peers. 17 hospitals in the comp set.
| Hospital | State | Beds | Revenue | Margin |
|---|---|---|---|---|
| CODY REGIONAL HEALTH (Target) | WY | 25 | $122.8M | -0.9% |
| ST. JOHNS HOSPITAL | WY | 48 | $169.8M | -7.8% |
| MEMORIAL HOSPITAL OF CONVERSE | WY | 25 | $92.7M | -1.9% |
| STAR VALLEY HOSPITAL | WY | 22 | $82.0M | -0.5% |
| POWELL VALLEY HEALTH CARE | WY | 25 | $69.6M | -2.6% |
| COMMUNITY HOSPITAL | WY | 25 | $35.7M | -7.5% |
| EVANSTON REGIONAL | WY | 32 | $35.3M | 17.6% |
| HOT SPRINGS COUNTY MEMORIAL | WY | 15 | $31.6M | -15.0% |
| MEMORIAL HOSPITAL OF CARBON CO | WY | 25 | $30.5M | -27.8% |
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: $9.0M (736bps margin improvement).
| Lever | Current | Target | EBITDA Impact | Margin | Ramp |
|---|---|---|---|---|---|
| Net Collection Rate | 93.5% | 97.0% | $2.6M | +210bp | 18mo |
| Cost to Collect | 4.5% | 2.5% | $2.5M | +200bp | 12mo |
| Denial Rate Reduction | 12.0% | 6.5% | $2.4M | +198bp | 12mo |
| A/R Days Reduction | 5200.0% | 3800.0% | $1.5M | +122bp | 9mo |
| Clean Claim Rate | 88.0% | 96.0% | $79K | +6bp | 6mo |
5. EBITDA Bridge
| Current EBITDA | $-1.2M |
| + RCM Uplift | +$9.0M |
| Pro Forma EBITDA | $7.9M |
| Current Margin | -0.9% |
| Pro Forma Margin | 6.4% |
| WC Released (1x) | $4.7M |
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 | $-1.8M | $82.7M | 0.00x | -100.0% |
| Base (11x exit) | 10.0x | 11.0x | $-1.8M | $90.4M | 0.00x | -100.0% |
| Bull Case | 9.0x | 11.0x | $-1.6M | $119.6M | 0.00x | -100.0% |
| Bull (12x exit) | 9.0x | 12.0x | $-1.6M | $130.1M | 0.00x | -100.0% |
| Bear Case | 11.0x | 10.0x | $-2.0M | $38.1M | 0.00x | -100.0% |
| Bear (11x exit) | 11.0x | 11.0x | $-2.0M | $41.3M | 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 |
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
- 17 hospitals with 12-50 beds
- Same-state prioritization (n=18)
- Comp margins: P25=-21.1% / P50=-11.0% / P75=-1.9%
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.