PACS Group, Inc. (PACS) Business Profile

What it does

PACS Group is a post-acute healthcare company focused on skilled nursing care. Its facilities serve people who need nursing and other inpatient services after a hospital stay, as well as people who need longer-term custodial care. Some communities also offer senior care, assisted living and independent living.

Skilled nursing facilities sit between hospitals and lower-acuity settings such as assisted living or care at home. They can provide around-the-clock inpatient services to patients recovering from illnesses, acute conditions or medical procedures. PACS primarily focuses on short-term transitional care for patients with more complex needs.

The company operates through independently run facilities. Each facility has a local administrator and a team that can include medical directors, nurses, therapists, consultants and other staff. Local leaders make operational decisions within company policies and procedures.

PACS supplies central services to those teams, including finance, payroll, human resources, legal and compliance support. Its technology tools give facility leaders access to information on admissions, occupancy, staffing and other operating measures. Regional teams provide clinical and non-clinical support.

Founded in 2013, PACS is headquartered in Salt Lake City, Utah. Jason Murray is its chairman and chief executive officer. At the end of the second quarter, PACS operated 324 healthcare facilities across 17 states and cared for more than 31,900 patients each day.

How it makes money

PACS earns patient and resident service revenue by providing skilled nursing and other care through its facilities. It has one reportable segment. Skilled nursing services revenue includes care for patients in skilled nursing facilities; it excludes revenue from assisted and independent living services.

Routine skilled nursing revenue comes from contracted daily rates. The services included in a daily rate vary by payor and contract. Services outside those routine contractual agreements, including Medicare Part B therapy services, are recorded separately as ancillary revenue. The facility-based model generates revenue as patients occupy beds and receive care, although the length of a patient’s stay and the services provided can vary.

Revenue was $5.3 billion for FY2025 and $1.43 billion for the second quarter of 2026.

Medicare and managed care patients typically require a higher level of skilled nursing care, and their reimbursement rates are typically higher than those from other payors. In most states, Medicaid reimbursement rates are generally the lowest among payor types. Changes in the mix of patients and payors can therefore affect revenue and profitability.

PACS tracks occupancy and the proportion of care provided to Medicare and managed care patients, which it calls skilled mix. It measures that mix both by revenue and by nursing patient days. It also groups facilities by how long they have been in the portfolio, allowing it to follow performance as acquired facilities move through their integration period.

PACS generated net income of $191.5 million for the year ended December 31, 2025. Its total operating expenses were $5.0 billion for the same period.

Customers and how it sells

PACS serves patients who need skilled nursing after a hospital discharge and residents who need longer-term care. Its primary patient demographic is adults aged 65 and older. Patients and families interact with facility teams before admission, during a stay and when planning a transition home or to another care setting.

Hospitals and other referring providers are an important channel. Facility administrators and their teams work with hospital discharge planners, physicians and other providers to arrange admissions and coordinate care. PACS also works with home health agencies and other downstream providers as patients leave its facilities.

Third-party payors fund a substantial portion of care. For the year ended December 31, 2025, Medicaid accounted for 40.5% and Medicare for 33.7% of routine revenue. PACS also receives payments from managed care and private sources. It contracts with payors, and the mix of payors and patients affects the rates it receives.

At December 31, 2025, the portfolio was in 17 states, including California, Texas, Pennsylvania and Washington. The majority of the company’s leased facilities and the majority of its owned real-estate properties were in California. PACS closed on the operations of the first 20 facilities in Texas under its agreement with Eduro Healthcare.

Suppliers and costs

PACS’s operations depend on clinicians, administrators and other employees, as well as facilities, equipment and technology. At December 31, 2025, it had 47,455 employees, including 27,696 clinicians. Its workforce included registered nurses, licensed practical nurses and certified nursing assistants, alongside administrative and support staff.

The company uses both internally developed and third-party technology. PACS Services includes a third-party electronic health record system and an enterprise resource program, as well as an internally developed operating dashboard. The company also invests in equipment, training, staffing and facility upgrades when integrating acquired operations.

Real estate is another part of the cost structure. PACS operates facilities in leased buildings, wholly owned buildings and properties in which it holds partial interests through partnerships. As of December 31, 2025, its average monthly lease expense was $954 per bed and its average remaining lease term across the portfolio was approximately 13 years.

In the second quarter of 2026, cost of services totaled $1.09 billion and general and administrative expense was $114.3 million. The latter included investment in personnel, systems and compliance infrastructure, as well as higher stock-based compensation expense.

Competitive position

PACS competes in a fragmented post-acute care market against local, regional and national providers. Its facilities also compete with inpatient rehabilitation facilities and long-term acute care hospitals. Home health and community-based providers offer services outside a facility setting and can reduce the time patients need in a skilled nursing facility. No individual competitors are named.

Competition varies by location. Factors include the number of nearby facilities, available services, staff expertise, prices, quality outcomes and the appearance and amenities of facilities. PACS seeks to build a local reputation with patients, payors and referral sources through its facility administrators and their teams.

PACS’s model combines local decision-making with central technology, administrative and clinical support. At December 31, 2025, its mature facilities had an average quality-measure star rating of 4.4, compared with the industry average of 3.5. Mature facilities are those purchased more than 36 months before the measurement date.

Our reading: The local model and central support provide a possible operating advantage, but their strength depends on recruiting and retaining capable facility leaders and clinicians. Our reading: Quality results at mature facilities can support relationships with referral sources and payors, though competition and regulatory performance remain local. PACS says some payors use quality thresholds to decide whether providers can participate in their plans.

Growth opportunities

PACS has historically grown primarily by acquiring underperforming skilled nursing facilities focused on long-term custodial care. It seeks to convert them toward short-term transitional care by investing in clinical teams and processes, technology, equipment, training, staffing and facility improvements. Facilities generally undergo an up to three-year transition after acquisition.

The company also seeks growth within its existing portfolio as facilities progress through that process. For the year ended December 31, 2025, average occupancy at mature facilities was 95%, compared with 81% at new facilities. New facilities are those purchased less than 18 months before the measurement date. PACS monitors occupancy, quality and payor mix as facilities mature.

In the second quarter of 2026, same-store skilled nursing revenue increased 5.8% to $1.35 billion compared with the prior year. The same-store portfolio comprised 284 skilled nursing facilities operated at the beginning of 2025.

PACS agreed to acquire the operations of 34 skilled nursing facilities from Eduro Healthcare. It closed on the first 20 facilities in Texas and expects the remaining facilities to close during the third and fourth quarters, subject to closing conditions and regulatory approvals. The company also intends to explore further real-estate purchases and construction of purpose-built facilities.

PACS expects available acquisition opportunities to enable it to deepen its presence in existing states and enter new states. It evaluates potential targets for their operational, clinical, financial and administrative characteristics.

Structural risks

• Reimbursement: PACS depends on third-party payors. Changes in patient acuity, payor mix, payment methods or cost-containment initiatives could affect revenue and results. Government programs and managed care contracts can also change rates, coverage or payment timing.

• Regulation and care: Facilities face requirements covering billing, staffing, licensing and quality of care. Deficiencies can lead to fines, payment bans, license action or loss of Medicare or Medicaid certification. Reviews can also require repayment of amounts previously received.

• Investigations: PACS’s previously disclosed government investigations continue. The company says it cannot estimate when they will be resolved and remains cooperative with the government.

• Financial controls: PACS identified material weaknesses in internal control over financial reporting, including controls over the completeness and accuracy of data used to determine routine revenue. Its disclosure controls and procedures were not effective as of December 31, 2025. PACS expects to remediate the weaknesses by the end of 2026.

• Competition and staffing: Increased competition could limit the company’s ability to attract patients, qualified management and caregivers, maintain or increase rates, or expand. Some competitors have greater financial resources or are more established in their communities.

• Financing and insurance: Obtaining insurance coverage may become more difficult or costly. Financing restrictions and facility-level mortgage covenants can also constrain business activities or growth.

Bottom line

Our reading

Our reading: PACS is a facility-based care operator whose model rests on local leadership, central support and improving acquired nursing facilities over time. Its mature-facility results give investors a way to assess that model, while newer acquisitions require integration and investment. Exposure to government reimbursement, regulatory enforcement and unresolved financial-control weaknesses makes execution and compliance important alongside growth.