Asked about the potential impact of California's healthcare staffing minimum wage increase on PACS's workforce and competitiveness.

Management noted positive labor trends, with increased job applicants and consistent/decreasing premium labor/agency usage. They have strong relationships with labor unions in California and are optimistic about the labor environment. “The labor trends in our space are incredibly positive as well, not only for our company individually, but across the industry, post-acute care, we're starting to see people come back to the space.”

Sought to understand the growth in managed care PPD (per patient day) rates and how 1Q growth was attributed to rate increases, acuity mix, and additive billing services.

Management reported increased managed care census and admissions in Q1. They have successfully renegotiated hundreds of contracts, securing appropriate reimbursement due to their operating model, quality of care, and high bed density, which allows them to take higher acuity patients. “We've renegotiated hundreds of contracts successfully. And what that points to for us as a provider, not only is the strength of our operating model, the quality of care that we provide, which is certainly something that managed your organizations look for, the high density number of beds that we have, which allow those managed care payers access.”

Asked Mark Hancock to reflect on his legacy at PACS and his thoughts on next steps as he transitions from CFO.

Mark emphasized building a platform to support local facilities by reducing administrative burden, investing in systems and technology, and fostering a high-touch care model. He expressed confidence in the leadership team and the company's ability to continue growing, noting PACS represents only 2% of the market. He will continue to serve on the Board as Vice Chairman. “from day 1, Jason and I, I mean, we really went about trying to build a platform and a system that could support these locally led facilities, meaning we've tried to take as much of the clerical administrative burden off the plates of our local teams so that they can focus on what they do best, which is delivering care.”

PACS

PACS Group (PACS) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Health Care· May 12, 2026

Source: earnings call transcript

Executive summary

PACS Group Q1 FY26 — Strong Operational Performance and Increased Adjusted EBITDA Guidance

PACS Group delivered a strong Q1 FY26, driven by consistent operational execution, stable occupancy, and improving skilled mix across its facility cohorts. The company significantly raised its full-year Adjusted EBITDA guidance, reflecting outperformance and a refined methodology excluding future acquisitions. Management emphasized disciplined capital allocation, including a new share repurchase authorization, while navigating ongoing government investigations and internal control remediation efforts.

Highlights

Revenue increased 11% year-over-year to $1.42 billion.
Adjusted EBITDA grew 75% year-over-year to $170.4 million.
Diluted EPS rose to $0.50 from $0.17 in the prior year.
222 facilities rated 4 or 5 stars under CMS Quality Measure ratings, up from 207 at the end of 2025.
Full-year 2026 Adjusted EBITDA guidance increased by $50 million to a range of $605 million to $625 million.

Concerns

Government investigations are ongoing, with timing of resolution uncertain.
Material weaknesses in internal financial reporting controls remediation is ongoing.
The California W-Equip program has been discontinued as of end of 2025, with future payments uncertain.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Adjusted EBITDA	$605 million to $625 million high materiality	FY26 · 2026	High
Full-year 2026 Revenue	$5.65 billion to $5.75 billion high materiality	FY26 · 2026	High

PACS operating KPIs by quarter

PACS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Facilities	321 As of December 31, 2025, PACS operates 321 facilities across 17 states, caring for more than 31,700 patients daily and supported by over 47,000 dedicated team members. Source: earnings call transcript	323 As of March 31, 2026, PACS operated 323 facilities across 17 states with approximately 35,500 total beds, including roughly 32,700 skilled nursing beds and 2,700 assisted living beds -- across this platform, we are caring for approximately 31,900 patients daily. Source: earnings call transcript	324 As of June 30, PACS operated 324 health care facilities across 17 states with 35,631 total beds, including 32,790 skilled nursing beds and 2,841 assisted living beds. Source: earnings call transcript	+0.3%
Patients	31.7K+ As of December 31, 2025, PACS operates 321 facilities across 17 states, caring for more than 31,700 patients daily and supported by over 47,000 dedicated team members. Source: earnings call transcript	~31.9K As of March 31, 2026, PACS operated 323 facilities across 17 states with approximately 35,500 total beds, including roughly 32,700 skilled nursing beds and 2,700 assisted living beds -- across this platform, we are caring for approximately 31,900 patients daily. Source: earnings call transcript	31.9K+ Across this platform, our teams care for more than 31,900 patients each day, supported by approximately 48,000 employees. Source: earnings call transcript	—
Employees	47K+ As of December 31, 2025, PACS operates 321 facilities across 17 states, caring for more than 31,700 patients daily and supported by over 47,000 dedicated team members. Source: earnings call transcript	—	~48K Across this platform, our teams care for more than 31,900 patients each day, supported by approximately 48,000 employees. Source: earnings call transcript	—
Total operating beds	35.379K Today, our portfolio includes 35,379 total operating beds, of which 32,854 are skilled nursing beds and 2,525 are assisted living beds, which span across 17 states, reflecting a scaled and geographically diversified footprint. Source: earnings call transcript	~35.5K As of March 31, 2026, PACS operated 323 facilities across 17 states with approximately 35,500 total beds, including roughly 32,700 skilled nursing beds and 2,700 assisted living beds -- across this platform, we are caring for approximately 31,900 patients daily. Source: earnings call transcript	35.631K As of June 30, PACS operated 324 health care facilities across 17 states with 35,631 total beds, including 32,790 skilled nursing beds and 2,841 assisted living beds. Source: earnings call transcript	—
Total operating beds Skilled Nursing	32.854K Today, our portfolio includes 35,379 total operating beds, of which 32,854 are skilled nursing beds and 2,525 are assisted living beds, which span across 17 states, reflecting a scaled and geographically diversified footprint. Source: earnings call transcript	~32.7K As of March 31, 2026, PACS operated 323 facilities across 17 states with approximately 35,500 total beds, including roughly 32,700 skilled nursing beds and 2,700 assisted living beds -- across this platform, we are caring for approximately 31,900 patients daily. Source: earnings call transcript	32.79K As of June 30, PACS operated 324 health care facilities across 17 states with 35,631 total beds, including 32,790 skilled nursing beds and 2,841 assisted living beds. Source: earnings call transcript	—
Total operating beds Assisted Living	2,525 Today, our portfolio includes 35,379 total operating beds, of which 32,854 are skilled nursing beds and 2,525 are assisted living beds, which span across 17 states, reflecting a scaled and geographically diversified footprint. Source: earnings call transcript	2,700 As of March 31, 2026, PACS operated 323 facilities across 17 states with approximately 35,500 total beds, including roughly 32,700 skilled nursing beds and 2,700 assisted living beds -- across this platform, we are caring for approximately 31,900 patients daily. Source: earnings call transcript	2,841 As of June 30, PACS operated 324 health care facilities across 17 states with 35,631 total beds, including 32,790 skilled nursing beds and 2,841 assisted living beds. Source: earnings call transcript	+5.2%
Occupancy rate	89.1% Total occupancy stands at 89.1% with our mature facilities delivering exceptional 94.9% occupancy, up from 94.4% last year. Source: earnings call transcript	90.9% Total occupancy for all facilities for the quarter was 90.9%, compared to 89.2% in the prior year and continuing to significantly outpace the industry average of approximately 79%. Source: earnings call transcript	—	+1.8 pt
Occupancy rate Mature Facilities	94.9% Total occupancy stands at 89.1% with our mature facilities delivering exceptional 94.9% occupancy, up from 94.4% last year. Source: earnings call transcript	94.8% Our mature facilities remained highly stable, operating at 94.8% occupancy with skilled mix of 33% and which continues to reflect the strength and consistency of our longer-tenured operations. Source: earnings call transcript	93.8% As expected, our occupancy increases as we move across these cohorts with new facilities occupancy at 78.7%, ramping facilities at 87.7% occupancy and mature facilities at 93.8% occupancy. Source: earnings call transcript	-1 pt
Occupancy rate Ramping facilities	—	88.9% Our ramping facilities averaged 88.9% occupancy with skilled mix continuing to improve, reflecting ongoing operational progress as these facilities move toward mature performance levels. Source: earnings call transcript	87.7% As expected, our occupancy increases as we move across these cohorts with new facilities occupancy at 78.7%, ramping facilities at 87.7% occupancy and mature facilities at 93.8% occupancy. Source: earnings call transcript	-1.2 pt
Occupancy rate New facilities	—	82.7% Our new facilities averaged 82.7% occupancy, with skilled mix of 26.5%, reflecting the early stages of integration and stabilization as these facilities continue progressing towards mature performance levels. Source: earnings call transcript	78.7% As expected, our occupancy increases as we move across these cohorts with new facilities occupancy at 78.7%, ramping facilities at 87.7% occupancy and mature facilities at 93.8% occupancy. Source: earnings call transcript	-4 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Not specified Strategic real estate investments within operating footprint. $86.5 million

During the quarter, we deployed $86.5 million in strategic real estate investments within our operating footprint consistent with our long-term approach to selectively increasing ownership.

Not specified Potential future acquisitions

We continue to see a robust and active pipeline of opportunities and are actively evaluating a number of potential transactions that align with our strategic and financial criteria. Based on our current visibility, we expect to remain active on the acquisition front, and are engaged in discussions on several opportunities that we could potentially close during 2026.

Risks & headwinds

Government investigations ongoing

unquantified

Mitigation:remain fully cooperative and engaged with the government throughout the process; confident in our ability to navigate these matters responsibly and thoughtfully

Managed care providers potentially reducing admissions into skilled nursing facilities current

have not seen those concerns impact our business

Mitigation:high-quality operators with strong clinical outcomes, reliable discharge partnerships and proven patient care capabilities will continue to play an essential role

Discontinuation of California's Workforce and Quality Incentive Program (W-Equip) effective end of 2025

discontinued as of the end of 2025

Mitigation:actively advocating for a successor program that aligns reimbursement with quality

Material weaknesses in internal financial reporting controls remediation ongoing, substantial progress expected this year

unquantified

Mitigation:strengthening our leadership team, enhancing our compliance and implementing additional controls across key areas of business, particularly within our revenue processes

What to watch in Q2 FY26

Ohio Quality Incentive Program Payments

sometime in 2026

Current initial indications across the portfolio... all have performed incredibly well

Target Payment receipt and exact quantity

Why it matters

Potential for additional revenue not included in guidance, reflecting quality performance.

Initially, we believe there's substantive opportunity for us to be paid out in those quality programs, and we're actively having conversations with the state about when that payment is going to take place.

Find out whether PACS delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about updates on Ohio's quality incentive program recalculations and general rate trends across states for the rest of 2026.

Management stated that initial indications for their Ohio facilities are strong, and they are actively discussing payment timing with the state. They generally encourage quality-related reimbursement programs and are seeing stability and improvement in rates due to advocacy for post-acute care's importance and higher acuity levels.

“Initial indications across the portfolio that we have, both the stuff that we have had in Ohio for a long time as well as our new acquisitions that we acquired in the past a little bit, all have performed incredibly well across that quality program.”

asked by Raj Kumar · answered by Joshua Jergensen

2 min read 6 chapters

Detailed narrative

Operational Consistency and Growth Strategy

PACS Group reported continued operational consistency and measurable progress across integrated facilities, reflecting the durability of its operating model. The company's strategy focuses on driving performance in the existing portfolio, advancing facilities through their integration life cycle, and disciplined capital allocation. The progression from new to ramping to mature facilities is viewed as a meaningful and embedded source of organic growth within the existing portfolio.

CMS Quality and Clinical Outcomes

The company highlighted strong clinical outcomes, with 222 facilities rated 4 or 5 stars under CMS Quality Measure ratings as of Q1 FY26, an increase from 207 at the end of 2025. Mature facilities maintained an average CMS quality measure star rating of 4.4, consistent with the prior quarter and meaningfully above the industry average of 3.6.

This reflects continued consistency in clinical execution, patient outcomes, and operational discipline across a large and growing platform.

Leadership Development and Operating Model

PACS Group emphasizes its locally led, centrally supported model, empowering facility leaders to make decisions at the point of care while PAC Services provides infrastructure and support. A key component of sustaining this performance is investment in leadership development through the Administrator-in-Training (AIT) program, which currently has 40 participants.

This program builds a scalable bench of operators prepared for leadership roles in existing and newly acquired facilities.

Capital Allocation and Share Repurchase

The company maintains a conservative and flexible balance sheet, ending the quarter with approximately $800 million of available liquidity, including $250 million of cash, and net leverage of 0.1x. The Board recently approved a $250 million share repurchase authorization, providing an additional capital allocation tool and flexibility to repurchase shares opportunistically when conditions warrant, though no fixed expiration date or specific repurchase obligation exists.

Managed Care and Reimbursement Dynamics

Despite ongoing discussions around managed care providers potentially reducing admissions into skilled nursing facilities, PACS Group has not seen these concerns impact its business, with operating metrics, admission trends, and skilled mix remaining strong. The company has successfully renegotiated hundreds of managed care contracts, securing appropriate reimbursement for the higher levels of acuity now seen in skilled nursing, emphasizing its role as a high-quality provider.

Government Investigations and Internal Controls

PACS Group continues to progress through normal course government investigations, remaining fully cooperative, though the timing of resolution is uncertain. Remediation efforts for previously disclosed material weaknesses in internal financial reporting controls are ongoing, with substantial progress expected in 2026. This includes strengthening leadership, enhancing compliance, and implementing additional controls, particularly within revenue processes.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.