PACS Group, Inc. (PACS)·Q3 2025 Earnings Summary

Executive Summary

• Strong top-line with $1.34B revenue (+31.0% YoY) and record YTD performance; normalized EPS was slightly below S&P Global consensus, while revenue materially exceeded consensus . Q3 revenue: $1,344.6M vs S&P consensus $1,157.5M (beat); S&P Primary EPS actual $0.452 vs $0.47 consensus (slight miss)* .
• Company-reported Adjusted EBITDA was $131.5M and Adjusted EBITDAR $226.6M; note the call remarks appeared inverted vs the 8‑K (call: “Adj. EBITDA $226.6M; Adj. EBITDAR $131.5M”), while the 8‑K reconciliation shows the opposite—clarified here .
• FY2025 guidance introduced: revenue $5.25–$5.35B and Adjusted EBITDA $480–$490M, implying continued double-digit growth; restatement and Audit Committee investigation completed, and the company is current with SEC filings—removing a major overhang .
• Operations remain resilient: total occupancy ~89% (mature 94.8%) and 68.6% of facilities at 4–5 stars; cash grew to $355.7M with $407.6M YTD operating cash flow, strengthening financial flexibility .
• Potential stock catalysts: completion of restatement/investigation, solid FY25 guide, and improving quality metrics/occupancy; watch for trajectory of integration of large 2024 acquisitions and conversion of ramping/new cohorts to mature performance .

What Went Well and What Went Wrong

• What Went Well

  • Revenue growth and demand: Q3 revenue rose 31.0% YoY to $1.34B, reflecting strong occupancy and expanded footprint; YTD revenue $3.93B (+36.4% YoY) .
  • Quality and operations: 192 facilities (68.6%) at 4–5 star CMS QM ratings; mature facilities at 94.8% occupancy vs ~79% industry average, supporting sustained pricing/mix strength .
  • Governance overhang resolved and visibility improved: Restatement and Audit Committee investigation completed; company current with SEC filings (key step toward credibility and listing compliance) .

• What Went Wrong

  • Normalized earnings and EBITDA vs consensus: S&P Primary EPS $0.452 was slightly below $0.47 consensus; S&P EBITDA of $100.7M came in below $117.8M consensus despite company-reported Adjusted EBITDA of $131.5M (definition differences matter)* .
  • Ramping/new cohort headwinds: Ramping facilities occupancy 86.1% (down YoY) and skilled mix by revenue 40.6% (down vs 54.2%), indicating still-ongoing integration and mix improvement workstreams .
  • Elevated costs and compliance investments: Cost of services +32% YoY in 2025 as PACS invests in staffing/quality and integrates large 2024 acquisitions; legal and other costs also present in non-GAAP adjustments .

Financial Results

Quarterly trend (oldest → newest)

YoY snapshot

Reported vs S&P Global consensus (Q3 2025)

Notes: Company-reported Adjusted EBITDA was $131.5M and Adjusted EBITDAR $226.6M; the call remarks appeared inverted vs the 8‑K reconciliation .

• Values retrieved from S&P Global.

Segment/cohort operating snapshot (Q3 2025)

Additional KPIs and balance sheet highlights

• 192 facilities at 4–5 star CMS QM (68.6% of skilled nursing portfolio) .
• Total facilities at period end: 290 skilled nursing facilities; operational beds 32,677 .
• Cash and cash equivalents: $355.7M (Sep 30, 2025) vs $157.7M (Dec 31, 2024) .
• YTD cash from operations: $407.6M for the nine months ended Sep 30, 2025 .

Guidance Changes

No explicit guidance provided for EPS, margins, OpEx, OI&E, tax rate, or dividends in the 8‑K or call .

Earnings Call Themes & Trends

Management Commentary

• “Our strong third quarter and year-to-date results demonstrate the underlying strength of our business model… With the Restatement and Audit Committee investigation now complete, we are moving forward with a strong financial foundation, enhanced controls…” — CEO Jason Murray .
• “We remain confident that our locally-led, centrally-supported model, coupled with enhanced compliance and controls, will increase our ability to deliver high-touch, high-quality care…” — Interim CFO Mark Hancock .
• “Total occupancy stands at 89%, with our mature facilities delivering exceptional 95% occupancy… As these [new] facilities progress through stabilization… we expect to see continued improvement in both occupancy and skilled mix over time.” — CEO Jason Murray .
• “As of the end of the third quarter, we now wholly own or partially own… the real estate interests in 100 of the facilities that we operate… average remaining tenor of our operating leases… 13 years… finance leases… 19 years.” — Interim CFO Mark Hancock .

Q&A Highlights

• Occupancy and skilled mix conversion in new/ramping cohorts: Management expects continued improvement as systems and clinical capabilities are deployed; large 2024 intake requires time and support to converge toward mature cohort performance .
• Compliance and controls: Strengthening compliance is the most impactful internal change; additional support mechanisms reinforce local decision-making aligned with the operating model .
• Cash flow and balance sheet: YTD operating cash flow of $407M; quarter-end cash >$350M after paying down the line of credit, reinforcing liquidity for growth .
• Growth algorithm and M&A cadence: Long-term framing of low-double-digit growth described as consistent with historical models; 20 facilities/year remains a reference point, with opportunistic flexibility after outsized 2024; embedded margin uplift as cohorts mature .
• Medicaid rate development: Targeting states where case-mix and quality incentive structures reward high-acuity care; selective expansion aligned with reimbursement frameworks (e.g., CA, WA, OR, TX, KY, OH) .
• Local market relationships: The locally-led model preserved strong referral dynamics through the audit process; census strength viewed as evidence PACS remains provider of choice in key markets .

Estimates Context

• Q3 2025 vs S&P Global consensus: Revenue beat (reported $1,344.6M vs $1,157.5M consensus), normalized Primary EPS slight miss ($0.452 vs $0.47), and S&P EBITDA below consensus ($100.7M vs $117.8M)* .
• Definitions matter: Company-reported Adjusted EBITDA was $131.5M (non-GAAP), which differs from SPGI’s EBITDA construct; investors should anchor to like-for-like definitions when comparing to consensus .
• Coverage breadth: Only one estimate was available for revenue and EPS in S&P Global for the quarter; revisions/coverage expansion could alter consensus anchors going forward (Primary EPS - # of Estimates = 1; Revenue - # of Estimates = 1)*.

• Values retrieved from S&P Global.

Key Takeaways for Investors

• Top-line momentum intact with 31% YoY revenue growth and strong occupancy/quality metrics; scale and mix support ongoing demand .
• Normalized EPS and SPGI EBITDA were below consensus, but company-reported Adjusted EBITDA was solid; reconcile definitions before drawing margin conclusions .
• FY2025 guide (revenue $5.25–$5.35B; Adjusted EBITDA $480–$490M) introduces visibility post-restatement and supports a “back-to-business” narrative .
• Governance overhang addressed: Restatement and investigation completed; company current with SEC—reducing listing/credibility risk .
• Integration runway: Ramping/new cohorts show room for occupancy and skilled-mix uplift; maturation toward mature-cohort economics is a key medium-term earnings lever .
• Liquidity and optionality: $355.7M cash and strong YTD operating cash flow support selective M&A and continued real estate ownership expansion .
• Watch items: Cohort conversion pace, cost inflation in staffing, and policy dynamics; reconciliation of non-GAAP measures vs consensus will drive estimate resets and narrative .

References:

• Q3 2025 8‑K earnings press release, including financial statements, KPIs, non‑GAAP reconciliations, and FY25 guidance .
• Q3 2025 earnings call transcript (prepared remarks and Q&A) .
• Sept 11, 2025 8‑K/press release (NYSE listing extension; preliminary H1 2025 operating metrics; compliance updates) .

S&P Global data: Tables and values marked with an asterisk (*) are retrieved from S&P Global.