PACS Group (NYSE:PACS) reported a strong second quarter for 2026, delivering a 9.1% increase in revenue and a 25% surge in adjusted EBITDA compared to the same period last year, driven by high occupancy rates and improved patient mix across its portfolio.
Financial Performance and Revenue Growth
For the quarter, PACS generated $1.43 billion in revenue, marking an increase of $118.8 million year-over-year. Net income saw a substantial 50% jump to $76.4 million, while adjusted EBITDA climbed $32.9 million to reach $166.8 million. The company’s adjusted EBITDAR rose to $261.5 million, with margins expanding 150 basis points to 11.7%.
Operational Success in Same-Store Facilities
CEO Jason Murray highlighted that the growth was primarily organic rather than acquisition-led. Same-store facilities achieved a 5.8% revenue increase, bolstered by a 150-basis-point rise in occupancy. Specifically, same-store skilled nursing revenue reached $1.35 billion, with occupancy hitting 90.6% and the skilled mix rising to 29.7%.
Across the entire portfolio, occupancy reached 90.4%, significantly outpacing the industry average of 79.5%. As of June 30, PACS operated 324 facilities across 17 states, encompassing 35,631 beds, with 184 facilities classified as mature.
Improving Efficiency and Quality Standards
COO Josh Jergensen noted that as facilities stabilize, the company has successfully reduced reliance on overtime, double-time, and agency labor. This operational efficiency is paired with a strong focus on quality: 83.6% of the company’s facilities with CMS ratings hold four- or five-star statuses. Mature facilities boast an average CMS Quality Measure rating of 4.5, well above the 3.7 industry average.
Murray also emphasized the successful turnaround of a California behavioral-health facility. Previously designated as a “Special Focus Facility” by the CMS, the location successfully graduated from the program on June 29, 2026, after major improvements to clinical and regulatory processes.
Strategic Acquisitions and Future Outlook
PACS is entering a new phase of expansion. The company has moved to acquire operations for 34 facilities from Eduro Healthcare. The first 20 locations in Texas were closed on August 1, with the remaining 14 expected to finalize in the coming quarters. While these facilities currently operate at lower occupancy levels, management views them as prime opportunities for performance improvement.
The company remains in a strong financial position with $756.6 million in available liquidity and no borrowings on its $600 million credit line. Given the current momentum, PACS has raised its full-year 2026 revenue guidance to a range of $5.75 billion to $5.85 billion, with adjusted EBITDA expectations increased to between $640 million and $660 million.
Regarding ongoing government investigations, Murray stated that PACS continues to cooperate fully with authorities, though no specific timeline for a resolution was provided.
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