PACS Group, Inc. Q4 FY2025 earnings call

Company Overview - PACS Group is a leading post - acute healthcare company focused on delivering high - quality skilled nursing care through a locally operated facility portfolio. - Mission is to be a leading provider of post - acute clinical care across the country and elevate care for America's most vulnerable. ### Operational Advances - Prioritize exceptional clinical outcomes with 192 facilities (68.6% of skilled nursing portfolio) rated four or five stars based on CMS quality measure star ratings. - Example of a facility in Colorado that was on the special focus facility list but was turned around, graduating from the list and achieving a four - star overall CMS rating. Five additional acquired facilities on the special focus facility candidate list also graduated. ### Portfolio Expansion - 2024 was an extraordinary year of growth with 106 facility acquisitions, including 94 in the second half of 2024. 2025 saw seven additional facility acquisitions. - Portfolio includes 35,202 total operating beds, 32,677 skilled nursing beds, and 2,525 assisted living beds across 17 states. - Locally led, centrally supported model empowers local leaders and has regional/central support systems for compliance and resources. - Invest in leadership development through administrator and training (AIT) program with 261 AITs hired since founding, 203 currently in leadership roles.

In the third quarter of 2025, PACS Group realized $1.3 billion of revenue, a 31% increase over the same period of the prior year. Adjusted EBITDA for the third quarter was $226.6 million, while adjusted EBITDA for the first nine months of 2025 was $646.2 million. Total facility occupancy across the portfolio was 89% for the first three quarters of 2025, with mature facilities achieving 95% occupancy, new facilities ending the third quarter at 81% occupancy. Skilled mix in mature facilities increased from 32% to 34% in 2025, while new facilities' skilled mix improved to 25% from 22% last year.

PACS Group expects annual revenue in 2025 to be between $5.25 billion and $5.35 billion, with the midpoint being a 30% increase over 2024 revenue. Adjusted EBITDA for the full year 2025 is expected to be between $480 and $490 million, with full - year 2025 expected to deliver record results.

Q: Can you talk about momentum in the business, occupancy and skilled mix opportunity, and areas of disproportionate investments?

A: Josh mentioned mature facilities have strong occupancy and skilled mix. It takes time to implement policies in new and ramping facilities to increase skilled mix and occupancy. Mark added on disproportionate investments, emphasizing the large number of new facilities and potential for organic growth.

Q: What are the most impactful changes relative to controls?

A: Jason pointed to strengthening compliance within the organization, which supports the locally led and centrally supported model.

Q: Talk about year - to - date cash flow generation and M&A pipeline.

A: Cash provided by operations for the first nine months was $407 million. Mark mentioned historical acquisition averages and being selective in M&A, with plans to be more strategic and continue evaluating deals.

Q: About long - term growth algorithm and M&A, how to think about it?

A: Ben was told growth models are in line with current performance. They have historically outpaced 20 - facility acquisition guidance and will continue to be opportunistic.

Q: Embedded EBITDA opportunity across cohorts?

A: New facilities usually around 2 - 3% margin, mature facilities between six and eight percent, low double digits and sometimes low teens as they mature.

Q: Medicaid rate development?

A: Evaluate states from multiple perspectives including Medicaid reimbursement, targeting opportunities where higher acuity patients are rewarded.

Q: Local market strategy and payer relationships?

A: Jason said the locally led, centrally supported model works, with strong census numbers indicating being the provider of choice.

Q: Balancing M&A targets between turnaround opportunities and performing well facilities?

A: Continue to use the same disciplined process with an investment committee evaluating deals, and will continue to take deep turnaround opportunities in a disciplined manner