Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $1.36 billion, up approximately 12% year-over-year, while total revenue for the full year 2025 was $5.29 billion, representing a 29% increase over 2024 [23][24] - Net income for Q4 was $59.8 million, and for the full year, it was $191.5 million, with diluted earnings per share at $1.22 [23][24] - Adjusted EBITDAR for Q4 was $237.7 million, and adjusted EBITDA was $142.1 million, with full-year adjusted EBITDAR at $883.9 million and adjusted EBITDA at $505 million [23][24] Business Line Data and Key Metrics Changes - Total occupancy for the year averaged 89.1%, with mature facilities averaging 94.9% occupancy, up from 94.4% the previous year [24][26] - Ramping facilities averaged 86.3% occupancy, down from over 93% in the prior year, reflecting the transition of facilities into ramping status [24][26] - New facilities averaged 81.1% occupancy compared to 82.8% in 2024, indicating ongoing stabilization efforts [25][26] Market Data and Key Metrics Changes - PACS operates 321 facilities across 17 states, caring for over 31,700 patients daily, supported by over 47,000 team members [7][18] - The company has a total of 35,379 operating beds, including 32,854 skilled nursing beds and 2,525 assisted living beds [18] Company Strategy and Development Direction - The company aims to continue integrating and optimizing its expanded portfolio while investing in people and clinical capabilities [9][22] - PACS plans to pursue selective acquisitions and maintain a disciplined capital allocation strategy to support long-term shareholder value [8][9] - The company is positioned as a consolidator in the fragmented skilled nursing industry, focusing on quality care and operational excellence [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, expecting steady organic growth and disciplined execution [5][30] - The company anticipates revenue for 2026 to be in the range of $5.65 billion to $5.75 billion, representing nearly an 8% growth over 2025 [29][30] - Adjusted EBITDA for 2026 is expected to be between $555 million and $575 million, indicating a projected growth of almost 12% over 2025 [29][30] Other Important Information - The company maintains a strong balance sheet with a net leverage of approximately 0.3x, providing financial flexibility for growth strategies [8][28] - PACS has invested significantly in its administrator-in-training program to ensure a strong leadership pipeline [8][21] Q&A Session Summary Question: Discussion on payer conversations and share gain opportunities - Management highlighted that as facilities improve quality metrics, they become attractive partners for insurers, leading to stronger contract negotiations [34][35] Question: Details on the M&A pipeline - The company expects to acquire about 5 facilities per quarter in 2026, focusing on underperforming assets [37] - The pipeline is robust, with a strategic approach to evaluating deals [38] Question: Potential for more de novo activity - While acquisitions remain the primary growth strategy, management acknowledged opportunities for de novo developments in certain states [41][42] Question: Observations on pricing in M&A opportunities - Management noted that while prices have increased due to inflation, they are starting to plateau, allowing for selective acquisitions [43][44]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported revenue of $1.3 billion, a 31% increase year-over-year [24] - Year-to-date revenue for 2025 reached $3.9 billion, representing a 36% increase compared to the same period in 2024 [25] - Adjusted EBITDA for Q3 was $226.6 million, while year-to-date adjusted EBITDA was $646.2 million [24][25] - Net income for Q3 was $52.3 million, with diluted earnings per share of $0.32 [24] - Total facility occupancy across the portfolio was 89%, with mature facilities achieving 95% occupancy [25] Business Line Data and Key Metrics Changes - The company operates 320 facilities, with a total of 35,202 operating beds, including 32,677 skilled nursing beds and 2,525 assisted living beds [18] - Occupancy in new facilities was 81%, down from 83% the previous year, while skilled mix improved to 25% from 22% [26] - Mature facilities reported a skilled mix increase from 32% to 34% in 2025 [25] Market Data and Key Metrics Changes - The skilled nursing industry is projected to grow, with total expenditures expected to reach $337.4 billion by 2032 [11] - The demographic shift indicates that nearly 20% of the U.S. population will be aged 65 or older by 2030, increasing demand for post-acute care services [11] Company Strategy and Development Direction - The company aims to be the leading provider of post-acute clinical care, focusing on high-quality skilled nursing care [9] - The operational model is locally led and centrally supported, allowing for tailored care while maintaining compliance and oversight [10] - The company plans to continue executing its growth strategy through both organic growth and acquisitions, with a disciplined approach to capital allocation [12][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's renewed commitment to transparency and operational excellence following recent challenges [5][6] - The company anticipates record revenue and adjusted EBITDA for the full year 2025, with guidance indicating annual revenue between $5.25 billion and $5.35 billion [29][31] Other Important Information - The company has strengthened its internal controls and compliance measures following an independent investigation [7][23] - The company has acquired the underlying real estate of five facilities, enhancing its ownership position [28] Q&A Session Summary Question: Can you discuss the momentum in occupancy and skilled mix? - Management noted strong occupancy in mature facilities and emphasized the need for time to implement systems in new and ramping facilities [33][34] Question: What impactful changes have been made regarding controls? - Management highlighted improvements in compliance as a key area of focus, enhancing support for local administrators [36][37] Question: Can you provide insights on cash flow generation and M&A activity? - Cash provided by operations for the first nine months was $407 million, with a strong cash position at the end of Q3 [39] - Management indicated a selective approach to M&A, with a focus on supporting newly acquired facilities [40][42] Question: How should long-term growth be modeled? - Management confirmed that historical growth models remain applicable, with a focus on maintaining a disciplined approach to acquisitions [47][49] Question: What is the embedded EBITDA opportunity across new and ramping cohorts? - Management indicated that new facilities typically operate at a 2-3% margin, improving as they mature [50][51] Question: How is Medicaid rate development being modeled? - Management emphasized the importance of evaluating state Medicaid programs during acquisitions to ensure appropriate reimbursement [52][54] Question: How have local market relationships fared through the audit process? - Management reported strong relationships with local markets, indicating that the operational model has proven effective [59][61] Question: Are there changes in M&A target strategy post-audit? - Management confirmed that the evaluation process for M&A targets remains disciplined, focusing on both turnaround opportunities and well-performing facilities [62][63]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported revenue of $1.3 billion, a 31% increase year-over-year [22] - Year-to-date revenue for the first nine months of 2025 reached $3.9 billion, representing a 36% increase compared to the same period in 2024 [22] - Adjusted EBITDA for Q3 was $226.6 million, while year-to-date adjusted EBITDA was $646.2 million [22] - Net income for Q3 was $52.3 million, with diluted earnings per share of $0.32 [22] - Total occupancy across the portfolio was 89%, with mature facilities achieving 95% occupancy, up from 94% the previous year [23] Business Line Data and Key Metrics Changes - The company operates 320 facilities across the country, providing care to over 30,000 residents daily [8] - The skilled mix in mature facilities increased from 32% to 34% in 2025 [23] - New facilities ended Q3 2025 with 81% occupancy, down from 83% in 2024, while skilled mix improved to 25% from 22% [24] Market Data and Key Metrics Changes - The skilled nursing industry is projected to grow, with total expenditures expected to reach $337.4 billion by 2032 [10] - The demographic shift indicates that nearly 20% of the U.S. population will be aged 65 or older by 2030, increasing demand for post-acute care services [10] Company Strategy and Development Direction - The company aims to be the leading provider of post-acute clinical care, focusing on high-quality skilled nursing care [8] - The operational model is locally led and centrally supported, allowing local leaders to make decisions while maintaining compliance and oversight [9] - The company plans to continue executing its growth strategy through both organic growth and acquisitions, having completed 106 acquisitions in 2024 [16][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver exceptional value and improve clinical outcomes, emphasizing a renewed commitment to transparency and governance [6][11] - The company expects record revenue and adjusted EBITDA for the full year 2025, with guidance indicating annual revenue between $5.25 billion and $5.35 billion [26] Other Important Information - The company has strengthened its compliance and internal controls following an independent investigation, enhancing its operational framework [6][21] - The company has invested in leadership development through its Administrator in Training program, with a retention rate of approximately 78% [19] Q&A Session Summary Question: Can you discuss the momentum in the business regarding occupancy and skilled mix? - Management noted strong occupancy in mature facilities and expressed confidence in improving occupancy and skilled mix in new and ramping facilities as they integrate into the company's operational model [31][32] Question: What are the most impactful changes made regarding controls? - The focus has been on strengthening compliance within the organization, which supports the locally led and centrally supported model [34][35] Question: Can you provide insights on cash flow generation and M&A activity? - Cash provided by operations for the first nine months was $407 million, with a significant increase in cash and cash equivalents compared to the previous year [38] - The company plans to continue being selective in M&A, focusing on supporting and integrating newly acquired facilities [40][41] Question: How should long-term growth be viewed in light of recent changes? - Management indicated that the previous growth models remain applicable, with expectations of continued strong performance and opportunistic acquisitions [45][46] Question: What is the current embedded EBITDA opportunity across new and ramping cohorts? - New facilities typically operate at a 2-3% margin, which can increase to low double digits as they mature [48][49] Question: How is the company modeling growth for Medicaid rates? - The company closely evaluates state Medicaid programs during acquisitions, targeting states with favorable reimbursement structures for higher acuity patients [50][51]