Why PACS Group Stock Surged Today
Key Points
Demand for skilled-nursing and rehabilitative services is rising.
PACS is consolidating a fragmented industry.
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Shares of PACS Group (NYSE: PACS) rose sharply on Tuesday after the healthcare facility operator reported a steep rise in adjusted earnings.
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A proven growth model
PACS Group's revenue climbed 11% year over year to $1.4 billion in the first quarter.
As a leader in post-acute care, PACS provides skilled-nursing and rehabilitative services to patients after a hospital stay. It also offers long-term senior living facilities. Demand for these services is rising as the U.S. population ages.
PACS' portfolio possesses over 320 healthcare operations across 17 states, serving nearly 32,000 patients. It seeks to acquire underperforming facilities and strengthen them through its proven operating model. Overall occupancy for PACS' sites was 90.8%, vastly exceeding the industry average of 79%.
All told, PACS' earnings before interest, taxes, depreciation, and amortization (EBITDA) soared 75% to $170 million.
"Our performance reflects PACS's core strengths -- our commitment to care, clinical excellence, operational quality, industry-leading talent, and a strategy built for sustainable growth," CEO Jason Murray said.
A long runway for expansion
Management now sees the company's full-year adjusted EBITDA growing approximately 22% to $605 million to $625 million in 2026. That's up from a prior estimate of $555 million to $575 million.
PACS noted that 89% of the roughly 15,000 skilled nursing facilities in the U.S. are run by smaller operators.
"We continue to see a healthy pipeline of acquisition opportunities and are actively engaged in evaluating potential transactions that align with our strategic and financial criteria," chief financial officer Carey Hendrickson said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pacs Group. The Motley Fool has a disclosure policy.
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