PACS Group (NYSE:PACS) outlined continued platform growth and “record performance” in its fourth-quarter and full-year 2025 earnings call, pointing to strong occupancy at mature facilities, improving clinical quality metrics, and a conservative balance sheet position as the company enters 2026. Management also provided 2026 revenue and adjusted EBITDA guidance and discussed acquisition expectations, payer dynamics, and emerging Medicare quality programs.
Fourth-quarter and full-year results
Interim CFO Mark Hancock said fourth-quarter revenue rose approximately 12% year over year to $1.36 billion. Net income was $59.8 million, with adjusted EBITDAR of $237.7 million and adjusted EBITDA of $142.1 million.
Hancock attributed performance to occupancy strength, stable skilled mix trends, and what he called disciplined execution across an expanded portfolio. He also noted that expenses rose alongside growth and investment: cost of services increased 25% year over year and general and administrative expenses increased 21%, reflecting investments in PACS Services and regional infrastructure, including compliance, risk management, accounting, and technology.
Portfolio growth, footprint, and occupancy trends
CEO Jason Murray said 2025 was focused on integration and performance following “transformative” acquisition activity in 2024, while PACS also completed eight strategic acquisitions during 2025 in existing markets. As of Dec. 31, 2025, the company operated 321 facilities across 17 states, cared for more than 31,700 patients daily, and employed over 47,000 team members.
Management said the portfolio includes 35,379 total operating beds, comprised of 32,854 skilled nursing beds and 2,525 assisted living beds. Total occupancy was reported at 89.1%, while mature facilities posted 94.9% occupancy, up from 94.4% in the prior year.
Hancock said the company’s cohort framework categorizes facilities as “new” during the first 18 months of ownership, “ramping” during months 19 through 36, and “mature” thereafter. Ramping facilities averaged 86.3% occupancy, down from over 93% in the prior year, which he said reflected cohort “graduation” and the movement of lower-occupancy facilities into ramping status as acquisitions from late 2023 and early 2024 progressed. New facilities averaged 81.1% occupancy versus 82.8% in 2024. Management described the progression from new to ramping to mature as an “embedded organic growth” opportunity as facilities stabilize and improve occupancy and skilled mix.
Quality metrics, surveys, and facility-level examples
Murray emphasized clinical outcomes and regulatory execution as central to PACS’ operating model. He said that based on CMS Quality Measure Star ratings, 207 facilities—representing 73.4% of the skilled nursing portfolio—are rated four or five stars for quality measures. He added that the average CMS Quality Measure star rating for mature facilities was 4.4 in 2025, up from 4.3 in 2024, and above the industry average he cited as approximately 3.5.
Management highlighted two examples intended to illustrate execution at the facility level:
- Kentucky facility quality improvement: Murray said a facility that began 2025 with a 2-star CMS Quality Measure rating implemented targeted, data-driven action plans around fall prevention, pressure ulcer prevention, mobility, medication management, and discharge planning. By year-end, the facility reached a 5-star CMS Quality Measure rating.
- Zero-deficiency surveys: Murray said PACS recorded seven total Zero Deficiency Surveys in 2025. He cited a newly built facility in Oceanside, California, which received a certificate of occupancy in January 2024 and completed its initial certification survey in April 2025 with zero deficiencies. He added that PACS invested “millions of dollars” pre-revenue for licensing preparation, staffing, equipment, and clinical infrastructure; that census increased steadily; that the facility reached profitability within its first year; and that it recorded over 250 admissions from acute hospital partners in San Diego County during 2025.
Murray said PACS has completed eight de novo projects since the company’s inception, while also reiterating that acquisitions remain the primary growth strategy.
Balance sheet, real estate ownership, and 2026 guidance
Management characterized capital allocation as disciplined in 2025, with increased attention to selectively owning real estate. Hancock said that as of year-end, PACS wholly or partially owned real estate interests (including through joint ventures) in 102 of its operated facilities. The company’s lease profile included average remaining terms of approximately 13 years for operating leases and 22 years for finance leases.
Hancock said cash usage during the quarter included purchases of owned properties, acquisition of a new PACS Services office in Salt Lake City, and funds placed in escrow for acquisitions that closed in early January 2026. He said these investments exceeded $145 million during the quarter and were funded from existing liquidity. The company ended 2025 with net leverage of approximately 0.3x, which management described as conservative and supportive of flexibility.
For 2026, PACS guided to revenue of $5.65 billion to $5.75 billion and adjusted EBITDA of $555 million to $575 million. Hancock said the outlook assumes steady organic growth and margin expansion tied to improved occupancy and skilled mix, stable reimbursement assumptions, and continued disciplined capital allocation to support acquisition activity.
In the Q&A, management said its 2026 guidance includes a “nominal number” of acquisitions—about five facilities per quarter—and noted that the company typically acquires underperforming assets at 60% to 70% occupancy with “nominal revenue and effectively 0 margin” initially. Executives described the M&A pipeline as “very robust,” said PACS remains selective, and indicated the company will continue evaluating opportunities to acquire real estate alongside operations when it strengthens alignment and the balance sheet. They also said pricing has risen in recent years but is beginning to “plateau” relative to prior accelerated increases.
Management also addressed payer discussions, saying improved quality metrics and local market density support contract negotiations and could expand managed care skilled mix over time. On policy topics, PACS said it expects to be well-positioned when reimbursement is tied to quality metrics, and described both value-based purchasing changes and the TEAM model as in early stages, while emphasizing that care quality and bed access remain central to referral relationships.
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.
