PACS Group lifts 2026 guidance after Q2 adjusted EBITDA jumps 25%
PACS Group (NYSE:PACS) raised its full-year 2026 guidance after delivering second-quarter results that showed steady gains from its existing portfolio, with revenue up 9.1% and adjusted EBITDA up 25% from a year earlier. The company credited higher occupancy, an improved skilled nursing patient mix and continued maturation of previously acquired facilities within its operating model.
Revenue for the quarter reached $1.43 billion, an increase of $118.8 million from the prior-year period. Net income rose 50% to $76.4 million, while adjusted EBITDA climbed $32.9 million to $166.8 million. Adjusted EBITDAR came in at $261.5 million, and adjusted EBITDAR margin expanded 150 basis points year over year to 11.7%.
Chief Executive Officer Jason Murray said the earnings growth came primarily from PACS's established facilities rather than new deals. “Our same-store facilities delivered revenue growth of 5.8%, while same-store occupancy increased by 150 basis points,” Murray said on the earnings call.
Same-store skilled nursing revenue rose 5.8% to $1.35 billion. Same-store occupancy reached 90.6%, up from 89.1% a year earlier, and same-store skilled mix improved to 29.7% from 29.2%. Across the entire skilled nursing portfolio, occupancy increased 180 basis points to 90.4%, while skilled mix rose 100 basis points to 30%. Chief Financial Officer Carey Hendrickson noted that total portfolio occupancy remained well above the 79.5% industry average cited by the company.
At June 30, PACS operated 324 healthcare facilities across 17 states, with 35,631 beds. Its skilled nursing portfolio included 184 mature facilities, 100 ramping facilities and six new facilities.
The quarterly results reflect a broader trend in skilled nursing: operators that can stabilize staffing and shift toward higher-acuity patients are starting to see margin recovery. PACS's operating model leans on local leadership, managed-care contracting and disciplined acquisition integration, and the company said those factors are showing up in both occupancy and labor efficiency. The 150-basis-point margin expansion in adjusted EBITDAR also underscores the operating leverage available as same-store occupancy rises.
President and Chief Operating Officer Josh Jergensen said PACS's ramping facilities have benefited from stronger leadership, growing community reputations and managed-care contracting. As those facilities stabilize, he added, PACS also sees lower overtime, double-time and agency labor use, which supports margin expansion.
PACS also highlighted its quality performance. At the end of the quarter, 239 skilled nursing facilities, or 83.6% of those with reported CMS Quality Measure ratings, held four- or five-star ratings. Mature facilities carried an average CMS Quality Measure rating of 4.5, compared with an industry average of 3.7 cited by PACS.
Murray said quality performance is central to PACS's ability to secure admissions and negotiate with payers. Some payers use quality thresholds to determine which providers can participate in their networks, he said, and PACS's market density also strengthens its contracting position.
Murray also detailed the turnaround of a California behavioral-health nursing facility that PACS acquired while it was designated as a Special Focus Facility, a CMS designation for nursing homes with significant quality and regulatory issues. The facility received notice in March 2025 of potential termination of its Medicare and Medi-Cal provider agreements, according to Murray. It later graduated from the Special Focus Facility program on June 29, 2026. The facility serves more than 250 residents and employs more than 500 people; Murray said PACS and local management strengthened clinical, operational and regulatory processes while working with CMS, the California Department of Public Health and technical assistance partners.
PACS is also returning to a more active acquisition period. The company previously agreed to acquire the operations at 34 skilled nursing facilities from Eduro Healthcare, representing 3,633 beds across Texas, Montana, South Dakota, North Dakota, New Mexico and Utah. On Aug. 1, PACS closed on the first 20 facilities in Texas and expects the remaining 14 to close in the third and fourth quarters of 2026, subject to customary conditions and regulatory approvals.
Hendrickson said the updated outlook includes only a modest contribution from the 20 Texas facilities, with revenue expected to contribute more than EBITDA initially because of integration needs. Jergensen said those Texas facilities are operating at occupancy in the mid-60% range with a skilled mix of roughly 10% to 11%, which management believes leaves room for improvement.
On the balance sheet, PACS generated $371.8 million in cash from operating activities during the first half of 2026. It invested $190.8 million in real estate during the period, including $104.3 million in the second quarter. The company said it owned the real estate associated with 64 operated facilities after exercising additional purchase options following quarter-end. At June 30, available liquidity stood at $756.6 million, including $164.5 million in cash and cash equivalents, and PACS had no borrowings under its $600 million credit line. Net leverage was 0.1 times.
General and administrative expense rose to $114.3 million from $100.3 million a year earlier, reflecting investments in personnel, systems and compliance infrastructure, as well as higher stock-based compensation. PACS said it is advancing remediation of previously disclosed material weaknesses in internal control over financial reporting and expects to complete that work by year-end.
For the full year, PACS raised its revenue guidance to $5.75 billion to $5.85 billion, from a prior range of $5.65 billion to $5.75 billion. It also lifted adjusted EBITDA guidance to $640 million to $660 million, from $605 million to $625 million. The guidance excludes the pending 14 Eduro facilities and other potential acquisitions. It also does not include potential Ohio quality incentive payments or certain California WQIP payments because PACS said it does not know the amounts or timing of those payments.
The updated outlook suggests PACS expects the operational momentum from the first half to continue, even as it absorbs newly acquired Texas facilities and works through integration costs. For investors, the guidance increase underscores management's confidence that same-store gains can offset the near-term costs of absorbing new facilities. The company's low leverage and available credit provide flexibility for additional deals, though management has largely framed near-term earnings growth as a function of same-store execution rather than acquisition volume.
Murray also addressed previously disclosed government investigations. He said PACS remains cooperative with the government and cannot estimate when the matters will be resolved.
PACS Group, Inc., through its subsidiaries, operates skilled nursing facilities and assisted living facilities in the United States. The company also provides senior care and independent living facilities. It engages in the acquisition, ownership and leasing of healthcare-related properties. Founded in 2013, PACS is based in Farmington, Utah.