PACS Q3 2026 Revenue Rises 11.5% as Acquisitions Expand Footprint

PACS Group reported double-digit revenue growth and a one-third increase in adjusted EBITDA for the third quarter of 2026, while setting a full-year outlook that incorporates recently acquired operations in Florida and Texas. The post-acute care provider also continued deploying capital toward facility acquisitions and real estate while maintaining net leverage of 0.2 times.

Revenue rose 11.5% year over year to $1.50 billion for the three months ended September 30, from $1.34 billion a year earlier. Adjusted EBITDA increased 33.6% to $175.7 million from $131.5 million, including a $4.4 million contribution from California’s Workforce and Quality Incentive Program.

Net income attributable to PACS Group increased to $60.8 million from $52.4 million. GAAP diluted earnings per share rose to $0.37 from $0.32, while adjusted EPS increased to $0.63 from $0.46. Operating income was $99.7 million, compared with $86.3 million in the prior-year quarter.

The difference between GAAP and adjusted results included $45.3 million of stock-based compensation expense, $9.5 million of legal and other costs, and $4.4 million of acquisition-related costs.

For the first nine months of 2026, revenue increased to $4.35 billion from $3.93 billion. Adjusted EBITDA reached $512.8 million, up from $363.0 million, while net income attributable to PACS Group rose to $217.9 million from $131.8 million.

Same-store occupancy and patient mix improve

PACS’s same-store skilled nursing facilities recorded occupancy of 91.3% in the quarter, up from 89.3% a year earlier. Average daily revenue increased to $506 from $486, while skilled nursing patient days represented 29.5% of the mix, compared with 28.3%. Skilled services accounted for 49.1% of same-store revenue, up from 48.1%.

The company’s cohort data continued to show a performance gap between recently acquired and established facilities. Mature skilled nursing facilities had occupancy of 93.1%, compared with 87.0% for ramping facilities and 76.2% for new facilities. Mature properties also generated an average daily revenue rate of $521 and a skilled nursing patient-day mix of 31.3%, both above the levels reported by newer cohorts.

As of September 30, PACS operated 355 facilities across 20 states, serving more than 34,700 patients daily with about 50,000 employees. Mature facilities had an average CMS Quality Measure star rating of 4.5, and 78.9% of rated PACS facilities held four- or five-star ratings.

Acquisitions extend the operating footprint

PACS deployed $213.0 million for mergers and acquisitions during the third quarter. The company completed the acquisition of operations at 31 of 34 former Eduro facilities across Texas, Montana, South Dakota, New Mexico and North Dakota. It also acquired the underlying real estate for six properties in Oregon, Nevada, Texas and Montana.

After the quarter ended, PACS completed its acquisition of operations at 32 Florida skilled nursing facilities on October 1, marking its entry into the state. The portfolio includes 4,049 skilled nursing beds and is leased from subsidiaries of Omega Healthcare Investors. PACS said the facilities will form three operating regions with dedicated regional leadership and clinical resources.

The company also completed an acquisition involving 11 Texas facilities and 1,285 skilled nursing beds on November 1. On a pro forma basis for the Florida and Texas transactions, PACS would operate 398 facilities in 21 states with 41,267 skilled nursing beds. Those figures exclude three previously announced Eduro facilities that had not yet closed.

2026 outlook includes recent transactions

PACS expects 2026 revenue of $5.95 billion to $6.05 billion and adjusted EBITDA of $685 million to $695 million. At the midpoint, the ranges represent growth of about 13% and 37%, respectively, from 2025.

The outlook includes the expected contribution from the Florida facilities from October 1 and the 11 Texas facilities from November 1. PACS did not provide a forward-looking reconciliation of adjusted EBITDA to net income, citing uncertainty around taxes, interest, depreciation, amortization and other adjustments.

The company ended September with $115.3 million of cash and cash equivalents and reported $707.4 million of total cash and available liquidity. Net debt was $157.1 million, compared with last-12-month adjusted EBITDA of $654.9 million. Operating cash flow for the first nine months was $583.1 million, while investing activities used $538.3 million.

PACS identified reimbursement changes, labor shortages and rising staffing costs, regulatory compliance, litigation, internal-control weaknesses and acquisition integration as material risks. The company also noted uncertainty surrounding payments under California’s WQIP, Ohio’s quality incentive program and similar state initiatives. Its expansion into Florida adds integration risk because PACS had not previously operated in the state.