PACS Group, Inc.(PACS) - 2025 Q1 - Quarterly Report

Operations and Facilities - As of March 31, 2025, the company operates 315 facilities across 17 states, serving over 30,400 patients daily[186] - The company added one skilled nursing facility during the three months ended March 31, 2025, increasing total skilled nursing beds by 119[193] - Subsequent to March 31, 2025, the company expanded operations by adding six facilities, contributing 376 skilled nursing beds and 271 assisted living beds[194] - The number of facilities at the end of Q1 2025 increased to 139 from 65 in Q1 2024, a growth of 113.8%[200] Revenue and Financial Performance - Skilled nursing services revenue for the three months ended March 31, 2025, was $1,254,075, reflecting a 37.4% increase from $912,575 in the same period of 2024[198] - Skilled nursing services revenue for mature facilities increased to $692,159,000 in Q1 2025 from $282,038,000 in Q1 2024, a growth of 145.4%[200] - Patient and resident service revenue increased by $357.6 million to $1.3 billion for the three months ended March 31, 2025, a 38.9% increase compared to the same period in 2024[226] - Skilled nursing services revenue rose by 37.4%, or $341.5 million, to $1.3 billion, driven by an increase in patient days of 615,117, or 31.2%[227] Occupancy and Quality Metrics - The occupancy rate for skilled nursing services was 89.2% for the three months ended March 31, 2025, down from 91.1% in 2024[198] - The average Quality Measure (QM) Star rating for Mature facilities was 4.1 with an occupancy rate of 96% as of March 31, 2025[187] - The occupancy rate for mature facilities improved to 95.5% in Q1 2025 from 94.6% in Q1 2024, an increase of 0.9%[200] Cost and Expenses - Cost of services increased by $287.8 million to $1.0 billion, a 39.1% increase, primarily due to a $170.9 million rise in salaries and wages[230] - General and administrative expense increased by $51.8 million to $98.7 million, primarily due to a $22.8 million rise in legal fees and $12.2 million in stock compensation expense[232] - Rent - cost of services increased to $93.8 million, compared to $63.5 million, driven by new facilities and annual rent escalators[231] Income and Taxation - Net income for the three months ended March 31, 2025, was $28.4 million, a decrease of 18.5% compared to $34.8 million in the same period in 2024[225] - The effective tax rate decreased to 33.6% for the three months ended March 31, 2025, compared to 39.7% for the same period in 2024[235] Cash Flow and Liquidity - Net cash provided by operating activities for Q1 2025 was $150.2 million, an increase of $91.5 million compared to Q1 2024, driven by a $100.4 million increase in cash flows from changes in operating assets and liabilities[245] - Cash used in investing activities for Q1 2025 was $16.4 million, a decrease of $102.3 million compared to Q1 2024, primarily due to no cash used for investments in partnerships or acquisitions[247] - Cash, cash equivalents, and restricted cash at the end of Q1 2025 totaled $290.6 million, up from $93.3 million at the end of Q1 2024[243] Debt and Interest Rate Exposure - The company had $142.0 million of variable rate debt as of March 31, 2025, with no interest rate hedge in place, exposing it to interest rate fluctuations[261] - A hypothetical 10% increase in interest rates would increase annual interest expense by approximately $0.9 million, while a 10% decrease would decrease it by the same amount[261] - The company had $259.5 million in outstanding indebtedness under mortgage loans and promissory notes, all at fixed interest rates as of March 31, 2025[263] Regulatory and Compliance - The company is required to maintain a minimum liquidity of $100 million during the forbearance period, which is set to run until October 31, 2025[254] - The company has entered into multiple forbearance agreements with lenders regarding technical events of default under its credit facility[251] - The company has historically derived a substantial portion of its revenue from Medicare and Medicaid programs, which are subject to inflation adjustments[256]