0002001184-26-000005
SEC filingPACS Group, Inc. reported strong financial results for fiscal year 2025, with total revenue of $5.29 billion, a 29.3% increase from $4.09 billion in 2024. Net income attributable to PACS Group, Inc. was $191.5 million, a significant increase from $55.8 million in the prior year. The company's operating income grew to $309.6 million from $123.1 million in 2024, driven by revenue growth and operational improvements. Key performance indicators include a skilled mix by nursing patient days of 29% for the year ended December 31, 2025, and an average occupancy rate across mature facilities of 95% as of December 31, 2025. The company operates 321 post-acute care facilities across 17 states serving over 31,700 patients daily. Management identified material weaknesses in internal control over financial reporting related to revenue recognition processes, which are being remediated.
PACS Group, Inc. delivered strong financial performance in fiscal year 2025 with total revenue of $5.29 billion, representing 29.3% growth from $4.09 billion in 2024. Net income attributable to PACS Group, Inc. increased significantly to $191.5 million from $55.8 million in the prior year. Operating income improved to $309.6 million from $123.1 million in 2024. The company's basic earnings per share was $1.23, and diluted earnings per share was $1.22 for the year ended December 31, 2025, compared to $0.38 for both basic and diluted EPS in 2024. The company operates 321 post-acute care facilities across 17 states serving over 31,700 patients daily. As of December 31, 2025, the company operated 32,854 skilled nursing beds and 2,525 assisted living beds.
Patient and resident service revenue was $5.29 billion for the year ended December 31, 2025, representing the primary revenue source. Other revenues were $1.0 million. The company's revenue composition by primary payors for 2025 was: Medicare 33.7% ($1.78 billion), Medicaid 40.5% ($2.14 billion), managed care 18.7% ($989.1 million), and private and other 7.1% ($375.5 million). The company's growth has been driven by its expertise in acquiring underperforming long-term custodial care skilled nursing facilities and transforming them into higher acuity, high value-add short-term transitional care skilled nursing facilities. The skilled nursing industry is expected to grow from $193.6 billion in 2022 to $283.3 billion in 2031, representing a compound annual growth rate of 4.3%.
Gross profit was $1.16 billion for the year ended December 31, 2025, representing a gross margin of 21.9%, compared to 19.4% in 2024. Operating margin was 5.9% for 2025, up from 3.0% in the prior year. Cost of services was $4.13 billion, rent - cost of services was $378.9 million, general and administrative expense was $415.1 million, and depreciation and amortization was $55.7 million. The company's operating model focuses on delivering excellence in clinical quality, with average Quality Measures Star rating across mature facilities of 4.4 as of December 31, 2025, compared to the industry average of 3.5 Stars.
Net cash provided by operating activities was $404.2 million for the year ended December 31, 2025. Net cash used in investing activities was $264.0 million, primarily for acquisition of facilities ($143.8 million) and purchase of property and equipment ($105.4 million). Net cash used in financing activities was $69.0 million. Free cash flow (operating cash flow minus capital expenditures) was $140.2 million. Total assets were $5.58 billion as of December 31, 2025, with current assets of $1.07 billion including cash and cash equivalents of $197.0 million. Total liabilities were $4.63 billion, with total equity of $952.4 million. The company had long-term debt of $244.8 million and a line of credit of $100.0 million outstanding.
The company continues to execute its growth strategy through acquisitions and operational improvements. Management identified material weaknesses in internal control over financial reporting related to revenue recognition processes, specifically that the company did not design and maintain effective controls within the revenue process to address the completeness and accuracy of underlying data used to determine routine revenue, and did not design controls to timely assess operational trends that could materially impact variable consideration estimates. Management is taking comprehensive actions to remediate these material weaknesses with oversight from the Audit Committee. The company faces ongoing regulatory investigations from the Department of Justice related to potential False Claims Act violations and an SEC investigation into accounting and financial reporting matters.