PACS Group (NYSE:PACS) raised its full-year revenue and adjusted EBITDA guidance after reporting third-quarter earnings growth and higher occupancy across its established skilled nursing facilities.
The company reported revenue of $1.5 billion, up 11.5% from a year earlier, while net income rose 16.2% to $60.8 million. Diluted earnings per share increased to $0.37 from $0.32.
Adjusted EBITDA rose 33.6% to $175.7 million, including approximately $4.4 million in net benefit from a California Workforce and Quality Incentive Program payment. The adjusted EBITDA margin expanded to 11.7% from 9.8%. Adjusted earnings per share increased to $0.63 from $0.46.
Existing Facilities Drive Growth
Chief Executive Officer Jason Murray pointed to the company’s same-store portfolio as evidence of its underlying progress. Revenue at the 284 skilled nursing facilities in that group rose 6.4% year over year to $1.38 billion, accelerating from 5.8% growth in the second quarter.
Same-store occupancy rose to 91.3% from 89.3%, while skilled mix by nursing patient days increased to 29.5% from 28.3%. Chief Financial Officer Carey Hendrickson said occupancy and skilled mix continued to improve even among mature facilities.
Across the total skilled nursing portfolio, occupancy was 90.2%, up from 89.0% a year earlier. Hendrickson said 31 facilities acquired through the Eduro transaction during August and September entered the portfolio with lower occupancy and skilled mix. Excluding those facilities, third-quarter occupancy would have been 91.0%, and skilled mix by nursing patient days would have been 29.9%, compared with the reported 29.1%.
At quarter-end, PACS had 196 mature skilled nursing facilities, 90 ramping facilities and 35 new facilities. Occupancy ranged from 76.2% in the new group to 93.1% among mature facilities. Management said it expects to improve the newly acquired operations over time, although Hendrickson cautioned that the pace and extent of improvement will vary by facility.
Expansion Into Florida and Texas
After the quarter ended, PACS acquired 32 skilled nursing operations in Florida on Oct. 1, adding 4,049 skilled nursing beds and entering a new state. On Nov. 1, it acquired 10 skilled nursing operations and one assisted living operation in Texas.
Murray said PACS had studied Florida for several years but had not previously found an opportunity that made sense economically or from a facility-condition standpoint. He said the state’s regulatory and reimbursement environment had improved and that the acquired facilities offered room to increase occupancy and skilled mix.
President and Chief Operating Officer Josh Jergensen said PACS is seeing a large volume of potential deals but will remain selective. The company generally looks for moderately performing, underperforming or distressed facilities where it believes it can make improvements, he said.
Jergensen also described the labor environment as favorable. He said PACS was ahead of schedule in reducing premium labor in the Eduro and Florida acquisitions. Hendrickson added that agency staffing costs had trended down during the year.
Higher Outlook Includes Incentive Payments
PACS raised its 2026 revenue outlook by $200 million to a range of $5.95 billion to $6.05 billion. It also increased the midpoint of its adjusted EBITDA guidance by $40 million, to a range of $685 million to $695 million.
Hendrickson said the outlook reflects strength in existing operations and includes $5 million in EBITDA from retroactive Ohio quality incentive payments received in October. Revenue guidance also includes the contribution from the Florida and newly acquired Texas facilities for the portion of the year PACS operates them. The outlook incorporates planned near-term integration spending for those facilities.
Asked about 2027, Hendrickson said it was too early to provide detailed commentary. He said another California incentive payment related to 2025 is expected, likely in the first quarter of 2027, but the amount is unknown. The Ohio payment was a one-time payment, he said, though the associated quality payments have been incorporated into the state’s rates.
Cash Flow and Ongoing Investigations
PACS generated $583.1 million in operating cash flow during the first nine months of 2026. It ended September with $707.4 million of available liquidity, including $115.3 million in cash and equivalents, and net leverage of 0.2 times. Hendrickson said improved collections contributed to cash generation, with days sales outstanding falling by two to three days.
Murray said previously disclosed government investigations remain ongoing and that PACS continues to cooperate. He said the company could not predict their timing or outcome.
Hendrickson said PACS had substantially completed implementation of its plan to remediate material weaknesses in internal controls and that redesigned controls were functioning as expected. The company still needs the controls to operate long enough to complete effectiveness testing, which it expects to finish by year-end.
About PACS Group (NYSE:PACS)
PACS Group, Inc is a U.S.-based healthcare services company that owns and operates post-acute care facilities. Its platform focuses primarily on skilled nursing and transitional care, serving patients who require rehabilitation, recovery support, long-term care, and other services following hospitalization or acute medical treatment.
The company’s operations also include assisted living, independent living, and behavioral health services in select locations. Through its facilities and related healthcare capabilities, PACS Group provides services such as nursing care, physical and occupational therapy, speech therapy, medical treatment, and support for patients with complex or extended care needs.
Founded in 2013 and headquartered in Farmington, Utah, PACS Group serves communities across multiple U.S.
