PACS Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $1.50 billion, an 11.5% increase year-over-year.
• Net income was $60.8 million, a 16.2% increase from $52.3 million in the prior-year period.
• Diluted EPS was $0.37, up 15.6% year-over-year; Adjusted EPS was $0.63, up 37.0% year-over-year.
• Adjusted EBITDA was $175.7 million, a 33.6% increase from $131.5 million in the prior-year period.
• Adjusted EBITDAR was $273.9 million.
• Cash provided by operating activities was $583.1 million for the nine months ended September 30, 2026.
• Net leverage was 0.2x at quarter-end.
• Available liquidity was $707.4 million as of September 30, 2026, including $115.3 million in cash and cash equivalents.

Guidance and Future Outlook:

• Full-year 2026 Adjusted EBITDA guidance increased to $685 million–$695 million (prior range: $640 million–$660 million).
• Full-year 2026 revenue guidance increased to $5.95 billion–$6.05 billion (prior range: $5.75 billion–$5.85 billion).
• The revised guidance includes approximately $5 million of EBITDA contribution from retroactive quality incentive payments received in Ohio in October.
• Management expects a robust pipeline of acquisition opportunities and remains actively engaged in evaluating transactions.

Business Segments and Product Lines:

• Same-store SNF revenue increased 6.4% year-over-year.
• Same-store SNF occupancy improved to 91.3% from 89.3% in the prior-year period.
• Overall occupancy was 90.2% (industry average 80.2%); mature facility occupancy was 93.1%.
• Skilled mix by nursing patient days increased to 29.1% (up 90 basis points from 28.2% in the prior year).
• Mature facilities skilled mix was 31.3%.
• 78.9% of the skilled nursing portfolio achieved a 4 or 5-star CMS Quality Measure Star rating; mature facilities averaged 4.5 stars.
• The portfolio comprises 398 healthcare operations across 21 states, including 66 owned facilities and 49 leased facilities with partial real estate ownership.
• The company holds 37 purchase options on leased facilities and 20 purchase options through partnerships.

Market and Competitive Landscape:

• The company is expanding geographic reach with recent entries into Florida and continued growth in Texas.
• PACS closed the acquisition of 32 skilled nursing facilities (4,049 beds) in Florida on October 1, 2026.
• PACS closed the acquisition of 10 skilled nursing facilities and one assisted living facility in Texas on November 1, 2026.
• Total M&A investment for the first nine months of 2026 was $403.8 million, including $213.0 million deployed in the third quarter.

Risks and Challenges:

• Risks include dependence on third-party payor reimbursement, changes in patient acuity or payor mix, and new cost-containment initiatives.
• Potential for reduced reimbursement under consolidated billing or bundled payments.
• Labor shortages and rising costs for skilled personnel could lead to fines or increased expenses.
• Regulatory changes, state-level deregulation, or construction restrictions could impair expansion or increase competition.
• Risks associated with non-compliance, litigation, self-insurance costs, and internal control weaknesses.
• Potential inability to successfully integrate acquired facilities or achieve expected benefits.
• Geographic concentration risks, particularly in California, regarding local economic downturns or natural disasters.
• Lease termination risks and potential inability to obtain or maintain insurance at favorable rates.

Management Commentary and Tone:

• CEO Jason Murray stated results reflect continued progress in care quality and facility performance, highlighting same-store revenue growth, occupancy improvements, and strengthened skilled mix.
• CFO Carey Hendrickson noted that Adjusted EBITDA growth (33.6%) significantly outpaced revenue growth (11.5%), reflecting disciplined operating execution and the ability to translate revenue into profitability.
• Management emphasized a focus on empowering local leaders, improving clinical outcomes, and building strong operations to create long-term value.
• The tone indicates confidence in the operating model's earnings power and financial flexibility to support strategic acquisitions and real estate investments.

Other Key Points:

• The company acquired 11 facilities in Texas and 32 facilities in Florida, marking entry into a new state.
• The company owns 66 facilities and leases an additional 49 facilities, with partial ownership in real estate for some leased locations.
• Non-GAAP measures (Adjusted EPS, Adjusted EBITDA, Adjusted EBITDAR) are used to exclude non-core items such as acquisition costs, stock-based compensation, and legal fees.
• The company operates 398 facilities serving over 38,900 patients daily.