As PACS Group (NYSE: PACS) continues its aggressive expansion strategy, executives said they choose markets and states with favorable regulatory conditions, strong occupancy trends and a positive labor environment.
And while newer properties may have lower consolidated occupancy and modest skilled mix averages, they cited confidence in PACS’ proven performance formula to achieve results in utilizing strong local leadership and clinical support.
PACS closed on 31 of 34 nursing home operations associated with the previously announced Eduro Healthcare transaction, including 20 properties in Texas and another 11 across South Dakota, North Dakota, New Mexico and Montana.
After the close of the third quarter, PACS completed the acquisition of 32 nursing homes in Florida, adding 4,049 skilled nursing beds to its footprint and establishing its presence in a new state.
“We’re particularly excited about this expansion,” said PACS CEO Jason Murray during PACS’ 3Q earnings call on Wednesday. “Entering Florida with 32 facilities gives us a meaningful presence from the outset and an opportunity to build regional leadership, clinical support and operating resources around a substantial group of local teams.”
The regulatory and reimbursement landscape in Florida has become more favorable in the past few years, Murray said, while state average occupancy and skilled mix are relatively high.
Florida is also a desirable place to live for staff, making it easier to attract leaders to the state, Murray said.
PACS also deepened its presence in a state the team knows well, adding 10 nursing homes and one assisted living facility in Texas on Nov. 1.
“Across both new and existing markets, our approach to growth remains disciplined,” said Murray. “We pursue facilities where we believe our people and operating model can make a meaningful difference, and we evaluate opportunities with a focus on clinical capability, integration capacity and long-term value creation.”
Texas and Florida also have great labor environments, PACS COO Josh Jergensen said, with low usage of agency staff that indicates people are willing and wanting to enter the nursing home sector in these states. It helps to invest in infrastructure too, to make PACS properties in these states extra enticing prospective staff to choose them as an employer of choice.
Prepping for a new phase of growth
PACS has been preparing its people and infrastructure for the next phase of growth, Murray said, and that 3Q results demonstrate the value of that work.
Operating capabilities and financial strength are closely connected, Murray added, as PACS generates meaningful organic growth from existing properties and welcomes new facilities, entering new communities and states.
“The same leadership, clinical resources and operating discipline that support performance in our established facilities provide the foundation for improving acquired operations over time,” said Murray.
As PACS executives look at the acquisition pipeline, they’re seeing as many deals as they’ve ever seen historically, Jergensen said, causing the team to be very disciplined in the way they underwrite deals, looking for specific assets that are moderately performing or are distressed, underperforming facilities.
“Not only are we seeing people who recognize our ability to do larger portfolio type acquisitions, but I believe that as we continue to grow, the tuck-in opportunities continue to exist as we establish ourselves as a key player in each of these individual communities,” said Jergensen.
Across its 284 nursing homes, revenue increased 6.4% year over year, and occupancy increased to 91.3%. About 250 of PACS SNFs, or 78.9%, hold 4- and 5-star ratings with CMS.
New properties brought down certain consolidated averages this quarter, Murray said, coming in with lower occupancy and unfavorable skilled mix levels.
“Our objective is to advance their occupancy and skilled mix toward the levels demonstrated by our mature facilities through strong local leadership, clinical support and consistent execution,” said Murray. “We’ve seen this progression across prior acquisitions, and the opportunity to repeat that work is central to our growth strategy.”
With each transaction, PACS’ acquisitions team continues to refine its process on evaluating opportunities, and recognize meaningful potential for improvement in new properties based on growth patterns from previous M&A.
PACS reported $1.5 billion in revenue during 3Q, an increase of 11.5% compared to $1.31 billion in 3Q 2025. New income was $60.8 million, an increase of $8.5 million or 16.2% increase compared to $52.3 million during 3Q 2025.
Diluted earnings per share was 37 cents, an increase of 15.6% compared to 32 cents in 3Q 2025.
PACS beat analyst expectations for the fourth quarter in a row, this time by 5 cents at 63 cents adjusted earnings per share in 3Q compared to analysts’ estimate of 58 cents; The statistic is a 37% increase compared to 3Q 2025 adjusted earnings per share of 46 cents.
PACS shares on Wednesday closed up 7.67%, or $3.58, to $50.26.
Handling government scrutiny
Murray addressed ongoing government investigations into PACS, stating the matter is ongoing and that they can’t predict the timing or outcomes, but that the process is fortunately happening while PACS is in a position of strength.
And as for the midterm election results, Murray said PACS is well positioned for any extra scrutiny that may come from a Democratically-controlled Congress. A Republican Congress usually has a favorable regulatory environment but challenging rates, and a Democratic Congress is just the opposite, he said.
“The Democrats have traditionally been very good at making sure the entitlement programs are funded from Medicaid and Medicare and the different states where we operate. We look forward to seeing that trend continue,” said Murray.
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