Touting Local Care, Robust Pipeline, Nursing Home Giant PACS Group Shines in Q1 After IPO Debut

During its inaugural earnings call following an April debut on Wall Street, executives for PACS Group (NYSE: PACS) projected a strong year of growth ahead amid a robust pipeline as they touted the success of their company’s localized business model – one that has enabled it to successfully transform scores of struggling facilities into high achieving ones.

“We had a very strong quarter, both clinically and financially, thanks to the hard work of our teams around the country,” said Jason Murray, chairman and CEO of the Farmington, Utah-based company, which employs 34,000 employees.

Murray lauded his company’s localized clinical care model.


“Our local leaders remain laser focused on our clinical measures and clinical outcomes, which have helped drive our overall performance,” Murray said during the call.

PACS occupancy and revenue growth shows no signs of slowing.

During the first quarter of 2024, PACS registered a total occupancy of 91.1%, with occupancy levels for “Ramping” and “Mature” facilities – terms used to describe the intermediate and final stages of transformation – increasing by 1.8% and 1.4%, respectively, over the prior year quarter.


PACS Group’s financial strength was reflected in a staggering year-over-year revenue growth of 32%, with revenue reaching $226.5 million for the quarter.

Along with its model’s success, Murray attributed the company’s revenue growth to state reimbursement increases and participation in supplemental Medicaid payment and quality improvement programs.

Localized care model

One of the key drivers of revenue growth was PACS Group’s ability to keep health care local, catering to the needs of patients in their communities. The company’s focus on serving higher acuity patients discharged from acute care settings underscored its vital role in the healthcare continuum, he said.

Meanwhile, average Medicare increased by 11.0% and Medicaid daily rates rose by 5.3%, respectively, for the three months ended March 31, 2024, as compared to the prior year’s quarter, company executives said.

“Both increases come from our efforts to keep healthcare local by recognizing and serving patients’ acuity needs locally. This also allows us to properly meet the continuing shift of higher acuity patients being discharged from acute-care settings into skilled nursing facilities,” Murray said.

During the quarter, PACS added 10 operating facilities, including 1,334 SNFs and 174 assisted living beds, and expects to add more.

“As many of you know, the demographics remain strong for increased demand for skilled nursing care across the country. We’ll continue to seek out the right facilities and the right markets for acquisition to expand our operational reach,” he said, noting that the Centers for Medicare & Medicaid Services’ (CMS) large amount of spending – about 43% of its budget – on skilled nursing. “We’re confident we can continue to play a vital role in our country’s health care continuum.

Looking ahead, PACS Group remained bullish on growth prospects, with a robust acquisition pipeline and continued improvement both clinically and financially.

Among other financial highlights of the quarter was PACS Group’s successful completion of its initial public offering (IPO), which netted proceeds of $423 million, said CFO Derek Apt.

With revenue soaring, adjusted EBITDA reached $88.5 million, and GAAP earnings per share for the quarter was 38 cents, climbing 31.0% over the prior year’s quarter.

Consolidated GAAP revenue for the quarter was $934.7 million, an increase of 31.9% over the prior year’s quarter.

PACS Group also excelled clinically with a footprint of 158 skilled nursing facilities achieving a four or five-star CMS Quality Measure rating, Murray said.

Following the strong earnigns result, PACS Group shares closed at $26.91, up $1.88, or 7.30%.

Prepping for minimum staffing standards

Despite industry challenges, including the impending CMS staffing rule, PACS Group executives remained optimistic about their company’s ability to adapt.

“In light of the legislative and other opposition to the new rule, we can’t predict whether the new staffing requirements will in fact ultimately take effect in their current form. However, our operating teams are planning for and taking the necessary steps to prepare.”

That said, company executives recognized the need for additional caregivers and funding to meet the minimum staffing requirements. These issues, which could pose problems in preventing a smooth roll out, are particularly tough for smaller providers grappling with workforce shortages and cost burdens, executives said.

“The way we see it, there are two major hurdles with the current staffing mandate that need to be overcome. First, there’s a significant lack of caregivers to fulfill the workforce shortage within the skilled nursing sector,” Murray said, noting data that more than half of the almost 250,000 nursing home workers that left the industry during the pandemic have not returned. Second, without additional funding, the mandate will impose a significant cost burden which many providers will be unable to shoulder.

The rule mandates a minimum of 3.48 hours per resident per day (HPRD) of total staffing, with specific allocations for registered nurses (RN) and nurse aides.

This standard encompasses 0.55 HPRD of direct RN care and 2.45 HPRD of direct nurse aide care. CMS said that facilities can use a mix of nurse staff, including RNs, LPNs/LVNs, or nurse aides, to meet this standard.

A key to strong staffing for the PACS Group has been an investment in talent development, exemplified by its administrator training program, executives said. Meanwhile, technology has also played a pivotal role in empowering clinicians and administrators to make data-driven decisions rapidly, executives said. Real-time data and allows teams to prioritize regionally unique factors that have led to improved clinical outcomes and financial performance.

All this has meant the addition of a lot of SNF beds.

“We attribute our revenue growth to the adding 5,194 beds to the company over the past year, which represents 35.3% increase in patient days,said Joshua Jergensen, president and COO of PACS.

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