Fresh off an initial public offering yielding net proceeds of $423 million, PACS Group is looking for opportunities to expand, CEO Jason Murray said Tuesday during the Farmington, UT-based holding company’s first-ever earnings call.
The outlook for the company “remains strong, with a robust acquisition pipeline and continued improvement both clinically and financially in the operations we’ve recently acquired,” he said. “We’ll continue to seek out the right facilities and the right markets for acquisition to expand our operational reach.”
PACS Group already is one of the nation’s largest nursing home operators. Founded in 2013, the company’s portfolio includes more than 200 facilities, mostly skilled nursing facilities but also some assisted living communitie.
Of the total, most (109) are located in California, with others in Arizona, Colorado, Kentucky, Missouri, Nevada, Ohio, South Carolina and Texas. Among its more recent transactions was the late 2023 takeover of seven former ProMedica facilities in California, which added to the group’s extensive California footprint that already included more than 10,000 beds.
Chief Financial Officer Derick Apt said in a press release issued in conjunction with the call that the company is “proud of our teams for adding 68 facilities and 12 real estate acquisitions over the last 15 months, bringing total operated facilities to 218 and wholly owned properties to 35.”
Quality drives results
A highlight of the first quarter, Murray said, was that 158 of the provider’s facilities received 4 or 5 stars on the quality measures of the Centers for Medicare & Medicaid Services ratings. Two facilities, Santa Rosa Post-Acute in California and Presidential Post-Acute in Marion, OH, passed the review with zero deficiencies, he noted.
“We believe this is a key driver of our revenue growth year over year of 31.9%, or $226.3 million on a same-quarter basis,” the CEO said.
“We’re proud of our teams across the country and their continued dedication to the clinical excellence that drives our financial results. We look forward to carrying that momentum through 2024,” Murray said.
Financial highlights
Revenue growth for the quarter was “driven in significant part” by the addition of 5,194 beds over the past year, according to Apt. The added beds, he said, led to a 35.3% increase in patient days year over year.
PACS earnings per share for the quarter was $0.38 cents, representing an increase of 31% over the first quarter of 2023.
In connection with PACS’ real estate acquisitions in the quarter, the company added $39.8 million to its total long-term debt. Of that amount, Apt said, $34.7 million was the assumption of HUD mortgages as part of acquisition of a three-property portfolio in Missouri. The mortgages have interest rates ranging from 2.9% to 3.6% in remaining terms of 24 to 26 years, he said.
Turning to guidance, Apt said, the company is looking forward to a strong 2024.
“We expect annual revenue to be between $3.65 and $3.75 billion,” he said. “The midpoint of this is a 19% increase over 2023 revenue. And we expected just EBITDA [earnings before interest, taxes, depreciation and amortization] to be between $351 and $361 million.”
