PACS Group Q1 Earnings Call Highlights
PACS Group (NYSE:PACS) reported a strong start to 2026, with executives citing higher occupancy, improved skilled mix and continued progress integrating acquired facilities as drivers of first-quarter performance.
On the company’s earnings call, Chairman and CEO Jason Murray said PACS entered the year focused on driving performance across its existing portfolio, moving facilities through its integration lifecycle and allocating capital in a disciplined way. As of March 31, 2026, PACS operated 323 facilities across 17 states, with approximately 35,500 total beds, including about 32,700 skilled nursing beds and 2,700 assisted living beds. Murray said the company was caring for about 31,900 patients daily.
“We believe the scale and geographic diversity of our platform, combined with the consistency of our operating model, position us to deliver reliable performance while continuing to grow thoughtfully over time,” Murray said.
Revenue rises 11% as earnings improve
Chief Financial Officer Carey Hendrickson said first-quarter revenue totaled $1.42 billion, up 11% from the prior year. Net income rose to $80.7 million, compared with $28.5 million in the first quarter of last year. Diluted earnings per share increased to $0.50 from $0.17.
Adjusted EBITDA was $170.4 million, up $72.8 million, or 75%, from the prior-year period. Adjusted EBITDAR totaled $265.9 million. Hendrickson said the quarter reflected “continued strength across our portfolio, driven by stable occupancy, improving skilled mix, and continued progression across our ramping facilities.”
Adjusted EBITDA included approximately $16.3 million of net EBITDA benefit from payments under California’s Workforce and Quality Incentive Program, known as WQIP. Hendrickson said the payment was tied to the 2024 program year and was not included in the company’s original guidance because of uncertainty around timing and amount. He said PACS expects two additional payments tied to the 2025 program year, with at least one anticipated in 2026 and the other expected in late 2026 or early 2027, but those payments are also excluded from guidance.
Occupancy remains above industry average
PACS introduced same-store metrics for the first time, which Hendrickson said were intended to provide additional insight into the underlying health of the business. Same-store revenue, based on 284 skilled nursing facilities in operation since the beginning of 2025, increased 8% year over year. Same-store occupancy improved to 90.8% from 89.6%.
Total occupancy across all facilities was 90.9%, compared with 89.2% a year earlier. Hendrickson said that significantly outpaced an industry average of approximately 79%. Skilled mix rose to 30.5%, an improvement of 90 basis points year over year.
- Mature facilities operated at 94.8% occupancy, with skilled mix of 33%.
- Ramping facilities averaged 88.9% occupancy, with skilled mix continuing to improve.
- New facilities averaged 82.7% occupancy, with skilled mix of 26.5%.
Hendrickson said the performance across the cohorts reflected “internally driven improvement within our existing portfolio rather than reliance on external growth.”
Cost of services totaled $1.07 billion, up 5% year over year. General and administrative expense was approximately $112 million, reflecting investments in infrastructure, systems and personnel. Total operating expenses increased approximately 5.8% year over year.
Guidance raised for Adjusted EBITDA
PACS raised its full-year 2026 Adjusted EBITDA guidance to a range of $605 million to $625 million, an increase of $50 million across the range from prior expectations. At the midpoint, Hendrickson said the outlook represents approximately 22% growth over 2025.
The company reaffirmed its full-year revenue guidance range of $5.65 billion to $5.75 billion. Hendrickson said PACS refined its guidance methodology to exclude future acquisitions, which previously accounted for approximately $120 million of assumed revenue but no incremental EBITDA. He emphasized that the change does not reflect a shift in acquisition strategy or pipeline.
“We continue to see a robust and active pipeline of opportunities and are actively evaluating a number of potential transactions that align with our strategic and financial criteria,” Hendrickson said.
The company ended the quarter with approximately $800 million of available liquidity, including about $250 million of cash, and net leverage of 0.1 times. During the quarter, PACS deployed $86.5 million into strategic real estate investments within its operating footprint. Hendrickson also noted that the board approved a $250 million share repurchase authorization, which gives the company flexibility to repurchase shares opportunistically.
Quality metrics and managed care trends in focus
Murray said PACS continued to improve clinical quality measures. As of the end of the first quarter, 222 facilities were rated four or five stars under CMS quality measure ratings, up from 207 at the end of 2025. Among mature facilities, the average CMS quality measure star rating remained 4.4, compared with an industry average of 3.6.
In response to an analyst question, Murray attributed the increase in higher-rated facilities to the maturation of PACS’ new and ramping facilities and to local teams taking ownership of clinical processes and outcomes.
Executives also addressed questions about managed care and reimbursement. President and COO Josh Jergensen said PACS has not seen concerns about managed care providers reducing admissions affect its business. He said managed care census and admissions increased in the first quarter compared with 2025, and that PACS has successfully renegotiated “hundreds of contracts.”
Jergensen said the company continues to see opportunities in state quality programs, including in Ohio, but does not include such payments in guidance because of uncertainty over timing and amount.
Leadership transition and ongoing investigations
PACS also discussed a finance leadership transition. Murray welcomed Hendrickson as CFO and thanked Mark Hancock, the company’s co-founder and longtime CFO, who is retiring from that role. Hancock will continue to work with the company’s board as vice chairman.
Hancock said PACS was built to support locally led facilities by reducing administrative burdens on local teams so they can focus on care delivery. He said he remained confident in the company’s leadership, systems and strategy.
Murray also briefly addressed previously disclosed government investigations, saying the matters continue to progress and that PACS remains cooperative and engaged with the government. He said the company is unable to estimate the timing of resolution.
Hendrickson said remediation of previously disclosed material weaknesses in internal control over financial reporting remains ongoing, but that PACS expects to make substantial progress this year. He said the company has strengthened its leadership team, enhanced compliance and implemented additional controls, particularly within revenue processes.
About PACS Group (NYSE:PACS)
PACS Group, Inc, through its subsidiaries, operates skilled nursing facilities and assisted living facilities in the United States. The company also provides senior care and independent facilities. It engages in the acquisition, ownership, and leasing of health care-related properties. The company was founded in 2013 and is based in Farmington, Utah.
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