PACS Group (NYSE:PACS) reported second-quarter 2026 revenue growth of 9.1% and adjusted EBITDA growth of 25% from a year earlier, citing higher occupancy, improved skilled nursing patient mix and continued progress across acquired facilities as they mature within its operating model.
Revenue for the quarter totaled $1.43 billion, up $118.8 million from the prior-year period. Net income rose 50% to $76.4 million, while adjusted EBITDA increased $32.9 million to $166.8 million. Adjusted EBITDAR was $261.5 million, and the adjusted EBITDAR margin expanded 150 basis points year over year to 11.7%.
Occupancy, Mix and Quality Metrics Improve
Same-store skilled nursing revenue rose 5.8% to $1.35 billion. Same-store occupancy reached 90.6%, compared with 89.1% a year earlier, while same-store skilled mix increased to 29.7% from 29.2%.
Across the total skilled nursing portfolio, occupancy increased 180 basis points to 90.4%, and skilled mix rose 100 basis points to 30%. Chief Financial Officer Carey Hendrickson said total portfolio occupancy remained 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.
- New facilities had occupancy of 78.7% and skilled mix of 27.2%.
- Ramping facilities had occupancy of 87.7% and skilled mix of 26.9%.
- Mature facilities had occupancy of 93.8% and skilled mix of 31.9%.
President and Chief Operating Officer Josh Jergensen said ramping facilities have been benefiting from stronger leadership, growing community reputations and managed-care contracting. He said that as facilities stabilize, PACS also sees lower overtime, double-time and agency labor use, supporting margin expansion.
The company also highlighted its quality measures. As of 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 had 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 the company’s ability to secure admissions and negotiate with payers. He said some payers use quality thresholds when determining which providers can participate in their plans, while PACS’ market density also supports contracting discussions.
Turnaround Effort and Eduro Acquisition
Murray described 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 the potential termination of its Medicare and Medi-Cal provider agreements, according to Murray.
The facility, which serves more than 250 residents and employs more than 500 people, graduated from the Special Focus Facility program on June 29, 2026. 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 also said it is returning to a more active acquisition period. The company previously announced an agreement to acquire 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 facilities to close in the third and fourth quarters, 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 the Texas facilities operate at occupancy in the mid-60% range and skilled mix of roughly 10% to 11%, which the company believes presents improvement opportunities.
Cash Flow, Controls and Updated Outlook
Cash from operating activities totaled $371.8 million in the first six months of 2026. PACS invested $190.8 million in real estate during the first half, including $104.3 million during 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, PACS had $756.6 million in available liquidity, including $164.5 million in cash and cash equivalents, and had no borrowings under its $600 million credit line. Net leverage was 0.1 times.
The company said general and administrative expense increased 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 remediation to be completed by year-end.
PACS raised its full-year 2026 revenue guidance to $5.75 billion to $5.85 billion, from a prior range of $5.65 billion to $5.75 billion. It also increased adjusted EBITDA guidance to $640 million to $660 million, from $605 million to $625 million previously.
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.
Murray also addressed previously disclosed government investigations, stating that PACS remains cooperative with the government and cannot estimate when the matters will be resolved.
About PACS Group (NYSE:PACS)
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 facilities. It engages in the acquisition, ownership, and leasing of health care-related properties. The company was founded in 2013 and is based in Farmington, Utah.
