PACS Group Q2 Earnings Call Highlights

PACS Group delivered strong Q2 growth with revenue rising 9.1% year over year to $1.43 billion, net income increasing 50% to $76.4 million, and adjusted EBITDA growing 25% to $166.8 million. Same-store occupancy and skilled mix also improved, supporting a 150-basis-point expansion in the adjusted EBITDAR margin. The company highlighted improving quality and performance across its existing facilities and closed on the first 20 of 34 Eduro Healthcare facilities, with the remaining 14 expected to close in the third and fourth quarters. PACS raised its 2026 outlook, increasing full-year revenue guidance to $5.75 billion-$5.85 billion and adjusted EBITDA guidance to $640 million-$660 million. The company had $756.6 million in liquidity, minimal net leverage of 0.1 times, and expects to complete remediation of previously disclosed internal-control weaknesses by year-end. Revenue for the quarter totaled $1.43 billion, up $118.8 million from the prior-year period. Net income rose 50% to $76.4 million, while adjusted EBITDA increased $32.9 million to $166.8 million. Adjusted EBITDAR was $261.5 million, and the adjusted EBITDAR margin expanded 150 basis points year over year to 11.7%. Chief Executive Officer Jason Murray said the company’s earnings growth was primarily driven by its existing portfolio rather than newly acquired operations. Same-store facilities delivered revenue growth of 5.8%, while same-store occupancy increased by 150 basis points. Same-store skilled nursing revenue rose 5.8% to $1.35 billion. Same-store occupancy reached 90.6%, compared with 89.1% a year earlier, while same-store skilled mix increased to 29.7% from 29.2%. Across the total skilled nursing portfolio, occupancy increased 180 basis points to 90.4%, and skilled mix rose 100 basis points to 30%. Chief Financial Officer Carey Hendrickson said total portfolio occupancy remained above the 79.5% industry average cited by the company. At June 30, PACS operated 324 healthcare facilities across 17 states, with 35,631 beds. Its skilled nursing portfolio included 184 mature facilities, 100 ramping facilities and six new facilities. New facilities had occupancy of 78.7% and skilled mix of 27.2%. Ramping facilities had occupancy of 87.7% and skilled mix of 26.9%. Mature facilities had occupancy of 93.8% and skilled mix of 31.9%. President and Chief Operating Officer Josh Jergensen said ramping facilities have been benefiting from stronger leadership, growing community reputations and managed-care contracting. He said that as facilities stabilize, PACS also sees lower overtime, double-time and agency labor use, supporting margin expansion. The company also highlighted its quality measures. As of the end of the quarter, 239 skilled nursing facilities, or 83.6% of those with reported CMS Quality Measure ratings, held four- or five-star ratings. Mature facilities had an average CMS Quality Measure rating of 4.5, compared with an industry average of 3.7 cited by PACS. Murray said quality performance is central to the company’s ability to secure admissions and negotiate with payers. He said some payers use quality thresholds when determining which providers can participate in their plans, while PACS’ ...