PACS Group (NYSE:PACS) Q4 2025 Earnings call February 26, 2026 05:30 PM ET Speaker5Greetings. Welcome to PACS Group Fourth Quarter, Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and the number 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to ...

Core Insights - Brookdale Senior Living has shown significant occupancy improvements, with consolidated weighted average occupancy reaching 82.5% to 83.7% in the fourth quarter of 2025, marking the highest level since early 2020 [3][7] - The company reported three consecutive quarters with occupancy above 80%, indicating a positive trend in operational performance [2][7] - Financial results for 2025 included a 5.7% growth in revenue per available room (RevPAR) and an Adjusted EBITDA of $458 million, exceeding initial guidance [6][9] Occupancy and Performance - Management noted that occupancy around 80% is a critical inflection point for Brookdale's business model due to fixed-cost leverage [1] - The percentage of communities below 70% occupancy decreased from 23% in Q1 2025 to 15% in Q4 2025, while those above 90% occupancy increased from 25% to 34% [1] - In Q4 2025, consolidated occupancy improved by 310 basis points year-over-year and 70 basis points sequentially [3] Financial Highlights - For the full year 2025, consolidated weighted average occupancy was reported at 80.9%, with same-community occupancy at 82.3% [2] - Adjusted EBITDA for Q4 2025 was $106 million, a 7% increase from the prior year [10] - The company generated $23 million in adjusted free cash flow for 2025, marking its first positive cash flow year since 2020 [12] Strategic Initiatives - Brookdale plans to sell or remediate lower-performing communities, with 14 communities expected to be sold in the first half of 2026 [8][7] - The company is focusing on portfolio streamlining, having exited 58 communities through lease terminations in 2025 [16] - Capital expenditures for 2025 totaled $170.7 million, with projections for 2026 between $175 million and $195 million [18] 2026 Outlook - Brookdale anticipates 8% to 9% growth in RevPAR and Adjusted EBITDA between $502 million and $516 million for 2026, indicating mid-teen growth from a $445 million baseline [20] - The company expects demographic trends to support growth, with the first baby boomers reaching age 80 in 2026 [21][22] - Brookdale HealthPlus was expanded to 58 additional communities in 2025, enhancing resident retention and reducing hospital visits [23]

Core Points - Genesis Healthcare, Inc. is committed to a financial restructuring process through Chapter 11 bankruptcy proceedings to ensure long-term stability for its patients, residents, and staff [1][2] - The company has made significant operational improvements over the past two years by shifting to local market-based operations [2] - Genesis previously avoided bankruptcy in 2021 due to a $100 million investment from ReGen Healthcare, which allowed for a transformation in leadership and operational strategy [2][3] Operational Performance - Genesis has reported a 91% favorable rating for staff relationships, 89% for leadership safety measures, and 87% for staff interaction based on a 2025 patient satisfaction survey [6] - The company has reduced employee turnover by 6% year-over-year and maintains a Google rating of 4.3 out of 5 stars [7] Historical Context - The decision to transfer skilled nursing facilities to Welltower, Inc. occurred in 2011, long before ReGen's involvement in 2021 [3][4] - Current leadership emphasizes that none of the officers or board members from 2011 are still with Genesis today [4] Community Engagement - Genesis operates over 170 skilled nursing centers and assisted living communities across 17 states, focusing on high-quality post-acute care [5] - The company invites local, state, and federal legislative parties to tour its facilities to understand the care provided [7]

Financial Data and Key Metrics Changes - The company reported GAAP diluted earnings per share of $1.44, an increase of 18% year-over-year, and adjusted diluted earnings per share of $1.59, an increase of 20.5% [31] - Consolidated GAAP revenue and adjusted revenue were both $1,200,000,000, reflecting an increase of 18.5% [31] - GAAP net income was $84,400,000, an increase of 18.9%, while adjusted net income was $93,300,000, an increase of 22.1% [31] - Cash and cash equivalents stood at $364,000,000, with cash flow from operations at $228,000,000 [31] - The company raised its annual 2025 earnings guidance to between $6.34 and $6.46 per diluted share, up from a previous range of $6.22 to $6.38 [10] Business Line Data and Key Metrics Changes - Same store and transitioning occupancy increased by 24.6% to 82.184% year-over-year [7] - Skilled census increased for both same store and transitioning operations by 7.4% and 13.5% respectively [8] - The company added eight new operations during the quarter, including three real estate assets, bringing the total number of operations acquired in 2024 to 52 [12] Market Data and Key Metrics Changes - The skilled nursing population was carved out of provider tax reduction in a recent reconciliation bill, which is seen as a positive development for the industry [9] - The company continues to see improvements in turnover and lower staffing agency labor despite increased occupancy [8] Company Strategy and Development Direction - The company is focused on organic growth stemming from stronger occupancy and skilled mix, with a commitment to maintaining disciplined growth [11] - The strategy includes a decentralized transition model that allows for growth without typical corporate bottlenecks, enabling the company to handle larger acquisitions effectively [14][19] - The company is also expanding its presence in established markets while exploring new states for growth opportunities [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong occupancy trends, labor trends, and growth opportunities [34] - The company is confident in its ability to advocate for proper funding for skilled nursing at the state level, especially in light of recent legislative developments [51] - Management noted that the current environment allows for productive conversations regarding funding for seniors, indicating a positive outlook for the industry [52] Other Important Information - The company has a lease adjusted net debt to EBITDA ratio of 1.97x, indicating low leverage even during significant growth [32] - Standard Bear, the company's real estate investment trust, generated rental revenue of $31,500,000 for the quarter, with an EBITDAR to rent coverage ratio of 2.5x [20] Q&A Session Summary Question: Changes in strategy regarding larger multistate portfolio deals - Management clarified that there has not been a strategy shift but highlighted the success of recent portfolio deals and the importance of local execution in managing larger acquisitions [37][39] Question: Impact of the "one big beautiful bill" on the skilled nursing industry - Management noted that skilled nursing was protected from direct impacts and emphasized the importance of maintaining relationships with state legislators to ensure funding for seniors [50][51] Question: Valuation trends for acquisitions - Management indicated that valuations are moderately increasing, particularly post-COVID, but emphasized a disciplined approach to acquisitions based on local market fundamentals [54][56] Question: Contribution from California's Workforce and Quality Incentive Program - Management expects the program to continue through 2026 and is actively working with the state to ensure adequate funding [62][63] Question: Engagement with payers around value-based care reimbursement models - Management confirmed ongoing discussions with managed care organizations to develop value-based care programs that benefit both the company and the payers [66]

Summary of The Ensign Group (ENSG) 2025 Conference Call Company Overview - The Ensign Group operates in the healthcare services sector, focusing on post-acute care, primarily skilled nursing facilities [4][5]. Key Industry Insights - The company has experienced record-setting occupancy rates, with same-store and transitioning occupancy at all-time highs [3][4]. - The skilled census growth remains strong, supported by favorable demographic trends, with approximately 11,000 individuals turning 65 daily [5]. - The company maintains a consolidated occupancy rate of 81%, indicating significant growth potential [5][6]. Growth Strategy - Ensign Group's growth strategy involves acquiring underperforming post-acute assets and leveraging organic growth opportunities [4][10]. - The company emphasizes the importance of local leadership to align with hospital needs and managed care networks, enhancing operational efficiency [15][30]. - The acquisition strategy has led to 47 new operations added since January of the previous year, expanding into states like Alabama and Oregon [18][24]. Market Dynamics - The company is selective in its acquisition process, evaluating around 500 opportunities to complete 47 deals, indicating a disciplined approach to growth [19][20]. - Ensign Group prioritizes expanding in familiar markets while also exploring new states driven by local leaders with connections [21][22]. Regulatory and Policy Environment - The company has engaged with Congress to educate members on the implications of policy changes on reimbursement, indicating a proactive approach to regulatory challenges [31][32]. - Current legislative efforts have addressed the company's major concerns, positioning it favorably in the ongoing policy discussions [33][34]. Real Estate Strategy - Ensign Group aims to own and operate its facilities, with a focus on acquiring real estate assets that align with its operational strategy [36][39]. - The company has adapted its approach to real estate acquisitions, allowing for the purchase of entire portfolios while selectively operating only the facilities that fit its model [40][41]. Operational Efficiency - The company is exploring advanced clinical capabilities, such as behavioral health and complex care programs, to enhance service offerings and improve margins [12][14][17]. - Ensign Group's operational decisions are influenced by local market conditions, labor dynamics, and regulatory environments, ensuring a tailored approach to each new state [28][30]. Conclusion - The Ensign Group is well-positioned for continued growth in the post-acute care sector, leveraging a combination of strategic acquisitions, organic growth, and a strong focus on local leadership and operational efficiency [4][5][18].