Conference Call and Webcast scheduled for tomorrow, May 14,
2024, at 4:00 pm ET.
PACS Group, Inc. (NYSE: PACS) (“PACS” or the “Company”), which
together with its subsidiaries is one of the largest post-acute
healthcare companies in the United States, announced operating
results for the first quarter of 2024, reporting net income of
$49.1 million, Adjusted EBITDA of $88.5 million and Adjusted
EBITDAR of $152.5 million.
Highlights:
- GAAP earnings per share for the quarter was $0.38, an increase
of 31.0% over the prior year quarter.
- GAAP net income was $49.1 million, an increase of 30.7% over
the prior year quarter.
- Consolidated GAAP revenue for the quarter was $934.7 million,
an increase of 31.9% over the prior year quarter.
- EBITDA and Adjusted EBITDA for the quarter was $96.3 million
and $88.5 million, representing increases of 47.0% and 34.0%,
respectively, over the prior year quarter. Adjusted EBITDAR for the
quarter was $152.5 million.
Select KPIs:
- Total Facilities occupancy was 91.1% during the first quarter
of 2024. Ramping and Mature Facilities occupancy increased by 1.8%
and 1.4%, respectively, over the prior year quarter.
- Average Medicare and Medicaid daily rates increased 11.0% and
5.3%, respectively, for the three months ended March 31, 2024, as
compared to the prior year quarter.
- In the three months ended March 31, 2024 we added 10 operating
facilities, including 1,334 and 174 skilled nursing and assisted
living beds, respectively.
“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,”
said Jason Murray, PACS’s Chief Executive Officer. “We had a very
strong quarter, highlighted by 158 of our facilities having a 4 or
5 star CMS Quality Measures rating. 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.”
“Our revenue growth was also driven in significant part by our
adding 5,194 beds to the company over the last year, leading to a
35.3% increase in patient days year-over-year. Additionally, our
occupancy remained strong across all facilities — 91.1% in the
first quarter of 2024,” said Derick Apt, PACS’s Chief Financial
Officer. “We're also 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.”
Business Outlook
Based on information available as of May 13, 2024, PACS is
providing the following guidance for full year 2024:
- Revenue of $3.65 billion to $3.75 billion
- Adjusted EBITDA of $351 million to $361 million
PACS's growing portfolio consists of 218 healthcare operations,
16 of which also include senior living operations, across 9 states.
PACS owns 47 real estate assets with purchase options on an
additional 27 real estate assets, including both wholly owned and
owned in a joint venture. Apt noted that PACS’s overall strategy
will continue to include both leasing and acquiring real estate and
that the Company is actively considering opportunities to acquire
both performing and underperforming operations in several
states.
A discussion of the Company's use of non-GAAP financial measures
and reconciliation to the most directly comparable GAAP measure is
set forth below. A reconciliation of Adjusted EBITDA guidance to
Net Income on a forward-looking basis cannot be provided without
unreasonable efforts, as the Company is unable to provide
reconciling information with respect to provision for income taxes,
interest expense, depreciation and amortization, acquisition
related costs, gain on lease termination, and other adjustment
items all of which are adjustments to Adjusted EBITDA. Further
discussion about the Company's results is contained in its
Quarterly Report on Form 10-Q for the period ended March 31, 2024,
which is expected to be filed with the SEC today and can be viewed
on the Company’s website at https://IR.pacs.com.
Earnings Conference Call Details
A live webcast will be held Tuesday, May 14, 2024, at 4:00 p.m.
Eastern time to discuss PACS’s first quarter financial results. To
listen to the webcast please visit the Investors Relations section
of PACS’s website at https://IR.pacs.com. The webcast will be
recorded and will be available for replay via the website for 30
days following the call.
About PACS™
PACS Group, Inc. is a holding company investing in post-acute
healthcare facilities, professionals, and ancillary services.
Founded in 2013, PACS Group is one of the largest post-acute
platforms in the United States. Its independent subsidiaries
operate over 200 post-acute care facilities across nine states
serving over 22,000 patients daily. References herein to the
consolidated “Company,” as well as the use of the terms “we,” “us,”
“our,” “its” and similar verbiage, refer to PACS Group, Inc. and
its consolidated subsidiaries, taken as a whole. PACS Group, Inc.
and its subsidiaries that are not licensed healthcare providers do
not provide healthcare services to patients, residents or any other
person, and do not direct or control the provision of services
provided or the operations of those provider subsidiaries. All
healthcare services are provided solely by its applicable
subsidiaries that are licensed healthcare providers, under the
direction and control of licensed healthcare professionals in
accordance with applicable law. More information about PACS is
available at https://IR.pacs.com. The information on our website is
not part of this press release.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains, and other communications of the
Company may contain, forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements can be identified by the fact that they do not relate
strictly to historical or current facts. Forward-looking statements
often use words such as “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “project,” “outlook,” “forecast,” “target,”
“trend,” “plan,” “goal,” or other words of comparable meaning or
future-tense or conditional verbs such as “may,” “will,” “should,”
“would,” or “could.”
Statements concerning the Company’s future are forward-looking
statements, and are based on management’s current expectations,
assumptions and beliefs about the Company’s business, financial
performance, operating results, the industry in which we operate
and possible future events. These statements include, but are not
limited to, statements regarding the Company’s anticipated growth
prospects and future operating and financial performance.
Forward-looking statements convey the Company’s expectations,
intentions, or forecasts about future events, circumstances,
results, or aspirations. Forward-looking statements are not
guarantees of future results and are subject to risks,
uncertainties and assumptions, which may change over time and many
of which are beyond the Company’s control, and that could cause the
Company’s actual results to materially and adversely differ from
those expressed in any forward-looking statement, including our
dependence on reimbursement from third-party payors and the impact
of changes in the acuity mix of patients in our facilities and
changes in payor mix and payment methodologies and new cost
containment initiatives; failure to be reimbursed for all services
for which each facility bills; increased competition for, or
shortage of, nurses, nurse assistants or other skilled personnel;
state efforts to regulate or deregulate the healthcare services
industry or the construction expansion, or acquisition of
healthcare facilities; numerous risks related to the expiration of
COVID-19 PHE and surrounding wind-down and uncertainty; failure to
attract patients and residents to compete effectively with other
healthcare providers; risks associated with our review and audit of
the care delivery, recordkeeping and billing processes of our
operating subsidiaries; risks associated with litigation; our
reliance on information technology; our inability to complete
future facility or business acquisitions at attractive prices or at
all; risks associated with undertaking acquisitions; risks
associated with leased real property; our reliance on payments from
third-party payors, including Medicare, Medicaid and other
governmental healthcare programs and private insurance
organizations; reforms to the U.S. healthcare system; various
government and third-party payor reviews, auditors and
investigations; risks associated with being a “controlled company,”
and the other risks described in our Quarterly Report on Form 10-Q
for the three months ended March 31, 2024 and other SEC
filings.
These documents are available in the Investor Relations section
of the Company’s website at www.pacs.com (information on the
website is not incorporated by reference into this presentation and
should not be considered part of this document).
You should not place undue reliance on forward-looking
statements. The information in this press release is provided as of
today’s date only, and, except as required by federal securities
law, we do not undertake to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, changing circumstances or for any other reason after
today.
PACS GROUP, INC. AND
SUBSIDIARIES
CONDENSED
COMBINED/CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for
share values)
(unaudited)
March 31, 2024
December 31,
2023
ASSETS
Current Assets:
Cash and cash equivalents
$
81,213
$
73,416
Accounts receivable, net
622,737
547,807
Other receivables
66,014
52,259
Prepaid expenses and other current
assets
61,761
48,665
Total Current Assets
831,725
722,147
Property and equipment, net
660,157
577,528
Operating lease right-of-use assets
2,175,169
2,007,812
Insurance subsidiary deposits and
investments
25,201
—
Escrow funds
21,456
15,649
Goodwill and other indefinite-lived
assets
65,291
65,291
Other assets
87,329
124,312
Total Assets
$
3,866,328
$
3,512,739
LIABILITIES AND
EQUITY
Current Liabilities:
Accounts payable
$
157,000
$
140,947
Accrued payroll and benefits
143,811
92,234
Current operating lease liabilities
113,617
109,438
Current maturities of long term debt
16,837
16,822
Current portion of accrued self-insurance
liabilities
29,210
27,536
Other accrued expenses
71,073
69,949
Total Current Liabilities
531,548
456,926
Long-term operating lease liabilities
2,123,865
1,961,997
Accrued benefits, less current portion
6,738
6,738
Lines of credit
537,000
520,000
Long-term debt, less current maturities,
net of deferred financing fees
230,855
195,708
Accrued self-insurance liabilities, less
current portion
154,892
146,167
Other liabilities
147,837
123,477
Total Liabilities
$
3,732,735
$
3,411,013
Commitments and contingencies
Equity:
PACS Group, Inc. stockholders' equity:
Common stock - 64,361,693,000 shares
authorized, $0.001 par value, 128,723,386 shares issued and
outstanding as of March 31, 2024 and December 31, 2023
129
129
Accumulated other comprehensive income
201
—
Retained earnings
127,661
95,997
Total stockholders' equity
127,991
96,126
Noncontrolling interest in subsidiary
5,602
5,600
Total Equity
$
133,593
$
101,726
Total Liabilities and Equity
$
3,866,328
$
3,512,739
PACS GROUP, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
COMBINED/CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(dollars in thousands, except for
share and per share values)
Three Months Ended March
31,
2024
2023
Revenue
Patient and resident service revenue
$
934,298
$
707,826
Additional funding
—
375
Other revenues
423
241
Total Revenue
$
934,721
$
708,442
Operating Expenses
Cost of services
735,992
538,772
Rent - cost of services
63,961
45,104
General and administrative expense
46,906
59,442
Depreciation and amortization
7,902
5,829
Total Operating Expenses
$
854,761
$
649,147
Operating Income
$
79,960
$
59,295
Other (Expense) Income
Interest expense
(15,391
)
(10,636
)
Gain on lease termination
8,046
—
Other income, net
440
440
Total Other Expense, net
$
(6,905
)
$
(10,196
)
Income before provision for income
taxes
73,055
49,099
Provision for income taxes
(23,915
)
(11,501
)
Net Income
$
49,140
$
37,598
Less:
Net income attributable to noncontrolling
interest
2
1
Net income attributable to PACS Group,
Inc.
$
49,138
$
37,597
Net income per common share
attributable to PACS Group, Inc.
Basic and diluted
$
0.38
$
0.29
Weighted-average shares
outstanding
Basic and diluted
128,723,386
128,723,386
Other comprehensive income, net of
tax:
Unrealized gain on available-for-sale debt
securities, net of tax
$
201
$
—
Total other comprehensive income
201
—
Comprehensive income
$
49,341
$
37,598
Less:
Comprehensive income attributable to
noncontrolling interest
2
1
Comprehensive income attributable to
PACS Group, Inc.
$
49,339
$
37,597
PACS GROUP, INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
COMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
The following table presents selected data
from our condensed consolidated statements of cash flows for the
periods presented:
Three Months Ended March
31,
2024
2023
Net cash provided by/(used in):
Operating activities
$
58,787
$
79,290
Investing activities
(118,669
)
(57,554
)
Financing activities
34,453
14,915
Net change in cash
(25,429
)
36,651
Cash, cash equivalents, and restricted
cash - beginning of period
118,704
98,206
Cash, cash equivalents, and restricted
cash - end of period
$
93,275
$
134,857
PACS GROUP, INC. AND
SUBSIDIARIES
UNAUDITED KEY SKILLED SERVICES
METRICS
Three Months Ended March
31,
2024
2023
Change
% Change
(Dollars in thousands)
Total facility results:
Skilled nursing services revenue
$
927,456
$
705,574
$
221,881
31.4
%
Skilled mix by revenue
52.0
%
63.7
%
(11.7
)%
Skilled mix by nursing patient days
29.8
%
40.3
%
(10.5
)%
Occupancy for skilled nursing
services:
Available patient days
2,164,061
1,586,384
577,677
36.4
%
Actual patient days
1,970,602
1,456,412
514,190
35.3
%
Occupancy rate (operational beds)
91.1
%
91.8
%
(0.7
)%
Number of facilities at period end
212
174
38
21.8
%
Number of operational beds at period
end
24,315
19,121
5,194
27.2
%
Three Months Ended March
31,
2024
2023
Change
% Change
(Dollars in thousands)
Mature facility(1) results:
Skilled nursing services revenue
$
286,419
$
271,541
$
14,877
5.5
%
Skilled mix by revenue
55.6
%
65.8
%
(10.2
)%
Skilled mix by nursing patient days
32.5
%
42.0
%
(9.5
)%
Occupancy for skilled nursing
services:
Available patient days
634,543
596,042
38,501
6.5
%
Actual patient days
600,003
555,494
44,509
8.0
%
Occupancy rate (operational beds)
94.6
%
93.2
%
1.4
%
Number of facilities at period end
65
63
2
3.2
%
Number of operational beds at period
end
6,973
6,665
308
4.6
%
(1)
Mature facilities represent facilities
purchased more than 36 months before the date presented.
Three Months Ended March
31,
2024
2023
Change
% Change
(Dollars in thousands)
Ramping facility(1) results:
Skilled nursing services revenue
$
403,938
$
33,207
$
370,731
1116.4
%
Skilled mix by revenue
57.6
%
63.3
%
(5.7
)%
Skilled mix by nursing patient days
34.1
%
38.0
%
(3.9
)%
Occupancy for skilled nursing
services:
Available patient days
825,990
82,025
743,965
907.0
%
Actual patient days
784,834
76,478
708,356
926.2
%
Occupancy rate (operational beds)
95.0
%
93.2
%
1.8
%
Number of facilities at period end
84
18
66
366.7
%
Number of operational beds at period
end
9,380
1,838
7,542
410.3
%
(1)
Ramping facilities represent facilities
purchased within 18-36 months of the date presented.
Three Months Ended March
31,
2024
2023
Change
% Change
(Dollars in thousands)
New facility(1) results:
Skilled nursing services revenue
$
237,099
$
400,826
$
(163,727
)
(40.8
)%
Skilled mix by revenue
38.4
%
62.4
%
(24.0
)%
Skilled mix by nursing patient days
21.4
%
39.3
%
(17.9
)%
Occupancy for skilled nursing
services:
Available patient days
703,528
908,317
(204,789
)
(22.5
)%
Actual patient days
585,765
824,440
(238,675
)
(28.9
)%
Occupancy rate (operational beds)
83.3
%
90.8
%
(7.5
)%
Number of facilities at period end
63
93
(30
)
(32.3
)%
Number of operational beds at period
end
7,962
10,618
(2,656
)
(25.0
)%
(1)
New facilities represent facilities
purchased less than 18 months from the date presented.
Three Months Ended March
31,
Skilled mix by revenue
Mature
Ramping
New
Total
2024
2023
2024
2023
2024
2023
2024
2023
Medicare
37.6
%
50.3
%
39.2
%
42.4
%
22.1
%
46.3
%
34.3
%
47.6
%
Managed care
18.0
15.5
18.4
20.9
16.3
16.1
17.7
16.1
Skilled mix
55.6
65.8
57.6
63.3
38.4
62.4
52.0
63.7
Medicaid
37.8
29.4
35.2
29.8
52.7
31.7
40.5
30.7
Private and other
6.6
4.8
7.2
6.9
8.9
5.9
7.5
5.6
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Three Months Ended March
31,
Skilled mix by nursing patient
days
Mature
Ramping
New
Total
2024
2023
2024
2023
2024
2023
2024
2023
Medicare
18.6
%
28.8
%
20.2
%
22.3
%
9.7
%
26.2
%
16.6
%
27.0
%
Managed care
13.9
13.2
13.9
15.7
11.7
13.1
13.2
13.3
Skilled mix
32.5
42.0
34.1
38.0
21.4
39.3
29.8
40.3
Medicaid
59.4
50.2
56.9
51.1
68.6
52.4
61.2
51.5
Private and other
8.1
7.8
9.0
10.9
10.0
8.3
9.0
8.2
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Three Months Ended March
31,
Mature
Ramping
New
Total
2024
2023
2024
2023
2024
2023
2024
2023
Medicare
$
937.66
$
845.94
$
968.59
$
836.27
$
917.80
$
863.92
$
949.23
$
855.41
Managed care
601.48
569.00
660.85
587.46
558.19
604.14
614.99
589.76
Total for skilled patient payors (1)
794.16
758.81
843.08
733.66
721.10
777.52
800.91
767.90
Medicaid
295.05
283.07
308.88
256.67
308.60
296.15
304.70
289.23
Private and other
380.32
299.68
408.15
278.98
354.26
350.11
382.61
326.93
Total (2)
$
464.08
$
484.08
$
500.21
$
440.48
$
401.37
$
489.75
$
459.83
$
485.00
(1)
Represents weighted average of revenue
generated by Medicare and managed care payor sources.
(2)
Represents weighted average.
Key Skilled Services Metrics
We monitor the below key skilled services metrics across all of
our facilities and by Mature facilities, Ramping facilities, and
New facilities. Mature facilities are defined as facilities
purchased more than 36 months prior to a respective measurement
date. Ramping facilities are defined as facilities purchased within
18 to 36 months prior to a respective measurement date. New
facilities are defined as facilities purchased less than 18 months
prior to a respective measurement date.
- Skilled nursing services revenue —
Skilled nursing services revenue reflects the portion of patient
and resident service revenue generated from all patients in skilled
nursing facilities, excluding revenue generated from our assisted
and independent living services.
- Skilled mix — We measure
both revenue and nursing patient days by payor. Medicare and
managed care patients, whom we refer to as high acuity patients,
typically require a higher level of skilled nursing care. As a
result, Medicare and managed care reimbursement rates are typically
higher than those from other payors. In most states, Medicaid
reimbursement rates are generally the lowest of all payor types.
Changes in the payor mix can significantly affect our revenue and
profitability. To monitor this performance, we evaluate two
different measures of skilled mix:
- Skilled mix by revenue — Skilled
mix by revenue represents the portion of routine revenue generated
from treating high acuity Medicare and managed care patients.
Routine revenue refers to skilled nursing services revenue
generated by contracted daily rates charged for skilled nursing
services. Services provided outside of routine contractual
agreements are recorded separately as ancillary revenue, including
Medicare Part B therapy services, and are not routine revenue. The
inclusion of therapy and other ancillary treatments in the
contracted daily rate varies by payor source and by contract.
Revenue associated with calculating skilled mix is based on
contractually agreed-upon amounts or rates, excluding the estimates
of variable consideration under the revenue recognition standard,
Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 606.
- Skilled mix by nursing patient
days — Skilled mix by nursing patient days represents the
number of days our high acuity Medicare and managed care patients
receive skilled nursing services at skilled nursing facilities as a
percentage of the total number of days that patients from all payor
sources receive skilled nursing services at skilled nursing
facilities for any given period.
- Occupancy — The total number of
patients occupying a bed in a skilled nursing facility as a
percentage of the beds in such facility that are available for
occupancy during the period.
- Number of facilities — The total
number of skilled nursing facilities that we operate.
- Number of operational beds — The
total number of operational beds associated with the skilled
nursing facilities that we own.
PACS GROUP, INC. AND
SUBSIDIARIES
UNAUDITED RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL INFORMATION
(dollars in thousands)
Three Months Ended March
31,
2024
2023
Net income
$
49,140
$
37,598
Less: net income attributable to
noncontrolling interest
2
1
Add: Interest expense
15,391
10,636
Provision for income taxes
23,915
11,501
Depreciation and amortization
7,902
5,829
EBITDA
$
96,346
$
65,563
Acquisition related costs
207
503
Gain on lease termination
(8,046
)
—
Adjusted EBITDA
$
88,507
$
66,066
Rent - cost of services
63,961
45,104
Adjusted EBITDAR
$
152,468
Non-GAAP Financial Measures
In addition to our results provided throughout that are
determined in accordance with GAAP, we also present the following
non-GAAP financial measures: EBITDA, Adjusted EBITDA and Adjusted
EBITDAR (collectively, Non-GAAP Financial Measures). EBITDA and
Adjusted EBITDA are performance measures. Adjusted EBITDAR is a
valuation measure. These Non-GAAP Financial Measures have no
standardized meaning defined by GAAP, and therefore have
limitations as analytical tools, and they should not be considered
in isolation, or as a substitute for analysis of our results as
reported in accordance with GAAP. You should review the
reconciliation of net income to the Non-GAAP Financial Measures in
the table below, together with our audited combined/consolidated
financial statements and the related notes in their entirety, and
should not rely on any single financial measure. Additionally,
other companies may define these or similar Non-GAAP Financial
Measures with the same or similar names differently, and because
these Non-GAAP Financial Measures are not standardized, it may not
be possible to compare these financial measures to those of other
companies.
Performance Measures
We use EBITDA and Adjusted EBITDA to facilitate internal
comparisons of our historical operating performance on a more
consistent basis, as well as for business planning and forecasting
purposes. In addition, we believe the presentation of EBITDA and
Adjusted EBITDA is useful to investors, analysts and other
interested parties in comparing our operating performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our ongoing operating
performance.
EBITDA – We calculate EBITDA as net income, adjusted for net
losses attributable to noncontrolling interest, before: other
expense, net; provision for income taxes; and depreciation and
amortization.
Adjusted EBITDA – We calculate Adjusted EBITDA as EBITDA further
adjusted for non-core business items, which for the reported
periods includes, to the extent applicable, costs incurred to
acquire operations that are not capitalizable, gains on lease
termination, and certain one-time expenses that are not
representative of our underlying operating performance. Costs
related to acquisitions include costs related to our acquisition of
SNF facilities and providers, including related costs such as legal
fees, financial and tax due diligence, consulting and escrow
fees.
Valuation Measure
We use Adjusted EBITDAR as a measure to determine the value of
prospective acquisitions and to assess the enterprise value of our
business without regard to differences in capital structures and
leasing arrangements. In addition, we believe that Adjusted EBITDAR
is also a commonly used measure by investors, analysts and other
interested parties to compare the enterprise value of different
companies in the healthcare industry without regard to differences
in capital structures and leasing arrangements, particularly for
companies with operating and finance leases. For example, finance
lease expenditures are recorded in depreciation and interest and
are therefore removed from Adjusted EBITDA, whereas operating lease
expenditures are recorded in rent expense and are therefore
retained in Adjusted EBITDA. Adjusted EBITDAR is a financial
valuation measure that is not specified in GAAP, and is not
displayed as a performance measure as it excludes rent expense,
which is a normal and recurring cash operating expense, and is
therefore presented only for the current period. While we believe
that Adjusted EBITDAR provides useful insight regarding our
underlying operations, excluding the impact of our operating
leases, we must still incur cash operating expenses related to our
operating leases and rent and such expenses are necessary to
operate our leased operations. As a result, Adjusted EBITDAR may
understate the extent of our cash operating expenses for the
respective period relative to our actual cash needs to operate our
leased operations and business.
Adjusted EBITDAR – We calculate Adjusted EBITDAR as Adjusted
EBITDA less rent-cost of services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240513066996/en/
Investor/Media Relations, PACS Group, Inc., 385-988-3596,
IR@pacs.com
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