Farmington, Utah — PACS Group just made its biggest move yet into the Southeast.
The operator, the country’s second-largest skilled nursing company, closed on 32 nursing homes in Florida shortly after the third quarter ended, adding 4,049 skilled nursing beds and establishing its first footprint in the state. On Nov. 1, it also deepened its Texas presence with 10 nursing homes and one assisted living facility.
“Entering Florida with 32 facilities gives us a meaningful presence from the outset,” CEO Jason Murray said on the company’s third-quarter earnings call Wednesday, “and an opportunity to build regional leadership, clinical support and operating resources around a substantial group of local teams.”
Why Florida, why now
Murray said Florida’s regulatory and reimbursement climate has grown more favorable in recent years, and the state’s relatively high occupancy and skilled-mix averages make the math work. Recruiting leaders there isn’t a struggle either, he added, because Florida remains a place people actually want to move to.
Chief operating officer Josh Jergensen pointed to labor conditions in both states, noting their low reliance on agency staffing — a sign, he argued, that workers want to be in the sector there.
The numbers behind the spree
The expansion follows the previously announced Eduro Healthcare deal, of which PACS has closed 31 of 34 operations — 20 properties in Texas and 11 spread across South Dakota, North Dakota, New Mexico and Montana.
The growth is showing up in results. Across 284 nursing homes, third-quarter revenue hit $1.5 billion, up 11.5% from $1.31 billion a year earlier. Net income came in at $60.8 million, a 16.2% increase, and diluted earnings per share reached 37 cents. Adjusted EPS of 63 cents beat analyst expectations by 5 cents — the fourth straight quarterly beat. Shares closed up 7.67% at $50.26 on Wednesday.
Occupancy across the portfolio climbed to 91.3%, and roughly 250 of the company’s facilities — 78.9% — hold four- or five-star ratings from CMS. Newer acquisitions drag those averages down for now, Murray acknowledged, but he said the playbook that improved past purchases will do the same here.
Watchdogs are still watching
Murray also addressed ongoing government investigations into the company, saying the process continues while PACS operates from “a position of strength.” He added that the company is prepared for whatever extra scrutiny a Democratically-controlled Congress might bring after the midterms.
PACS isn’t the only operator growing aggressively. Rival Ensign Group recently detailed plans for 50 to 60 acquisitions a year, as consolidation keeps accelerating across the industry.
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