One-glance verdict
Within fair range
$28.25 our estimate vs market $42.06
Wall Street consensus: $59.00 (108.9% higher than our fair-value estimate)
49% above our estimate
Fundamentals snapshot
PACS Group, Inc.
PACS · NYQ · Healthcare · Medical Care Facilities
Current price
$42.06
52-week range
$10.31 - $49.49
Market cap
$6.66B
Balance sheet
Distressed
10.92x Adequate
Net debt $3.24B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 5.0% last year.
- Reward Returns 27.9% on equity, ahead of 83% of its peers.
- Risk Net debt grew 75.3% over 3 years.
- Risk Operating margin compressed from 9.5% to 7.7% over 3 years.
What this company does
PACS Group, Inc.
PACS Group operates nursing homes and assisted living facilities for seniors across the United States. The company makes money by both owning the buildings and running the day-to-day care services for residents. This is significant because the demand for senior care is expected to increase as the population gets older.
How the company got here
PACS Group started in 2013 with just two skilled nursing facilities in San Diego, California. The company was founded by experienced operators in post-acute care, which is the support patients receive to continue their recovery after a hospital stay. Its growth has been driven by acquiring and taking over the operations of other care facilities, often ones that were not performing well, and then working to improve them. This strategy of buying and turning around facilities has allowed the company to expand rapidly across the United States. A major growth period occurred in the early 2020s, and the company became publicly traded through an initial public offering (IPO), which is when a private company first sells shares of stock to the public, in 2024.
What it actually does
PACS Group operates a large network of healthcare facilities for people who need care after leaving a hospital or for those who require long-term nursing support. Think of it as a company that runs different types of senior living and recovery centers. Their main service is providing skilled nursing care, which involves 24-hour medical supervision and support for patients with complex health needs. They also run assisted living communities, which help seniors with daily activities, and memory care facilities for individuals with conditions like Alzheimer's. Essentially, PACS provides the housing, meals, and medical care that residents and patients need to recover or live safely.
Skilled Nursing Facilities
This is the company's core business and makes up the vast majority of its revenue (the money it earns from sales). These facilities provide intensive, round-the-clock nursing care and rehabilitation for patients recovering from major surgeries, illnesses, or injuries after they've been discharged from a hospital. The customers are the patients themselves, but payment for their stay typically comes from government programs like Medicare and Medicaid, or from private insurance companies. The goal is to help these short-term patients get well enough to return home. This segment also serves long-term residents who need ongoing nursing care for chronic conditions.
Senior Living and Other Services
This is a much smaller part of the company's business. It includes assisted living, independent living, and memory care communities. Assisted living is for seniors who need help with daily tasks like meals and medication but don't require constant medical supervision. Independent living is for more active seniors, while memory care provides specialized and secure environments for residents with dementia. In this segment, the residents or their families are often the ones paying for the housing and services. The company also has a support division called PACS Services, which provides administrative help like accounting, human resources, and technology support to all the facilities in its network.
What management is betting on now
The company's main strategy is to continue growing by acquiring more post-acute care facilities, particularly skilled nursing centers. They focus on expanding in markets where there is strong demand for these services, often due to an aging population. A key part of their plan is what they call a "locally led, centrally supported" model, where local managers run the facilities with significant back-office support from the main company. Management is betting that by buying underperforming facilities and applying this operational playbook, they can improve the quality of care, increase the number of residents (a term called occupancy), and make the facilities more profitable. Recent major acquisitions in states like Florida and Texas show this strategy in action.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$1.43B
Net income
$76.37M
Diluted EPS
0.47
Operating cash flow
$135.51M
Free cash flow
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Revenue
$1.42B
Net income
$80.69M
Diluted EPS
0.50
Operating cash flow
$236.34M
Free cash flow
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Revenue
$1.36B
Net income
$59.70M
Diluted EPS
0.42
Operating cash flow
$-3.39M
Free cash flow
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Revenue
$1.34B
Net income
$52.41M
Diluted EPS
0.32
Operating cash flow
$204.80M
Free cash flow
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Revenue
$1.31B
Net income
$50.96M
Diluted EPS
0.31
Operating cash flow
$52.57M
Free cash flow
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Revenue
$1.28B
Net income
$28.47M
Diluted EPS
0.17
Operating cash flow
$150.24M
Free cash flow
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Revenue
$1.15B
Net income
$1.91M
Diluted EPS
-0.03
Operating cash flow
$64.59M
Free cash flow
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Revenue
$1.03B
Net income
$15.62M
Diluted EPS
0.10
Operating cash flow
$209.15M
Free cash flow
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Is it cheap or expensive?
Fair value $28.25 vs current price $42.06
Wall Street consensus is the average analyst price target: $59.00 (108.9% higher than our fair-value estimate).
Our most-likely fair value is $28.25 a share — about 32.8% away from today's price of $42.06, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $3.2B. Interest coverage 10.9x.
Net debt
$3.24B
Interest coverage
10.92x
PACS Group, Inc.'s profit covers its interest bill about 10.9 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
PACS
BASELINE
PACS Group, Inc.
Total debt $3.40B Interest coverage 10.92x This is the baseline the peer rows are being compared against.
Total debt $2.25B Interest coverage 53.24x +388% vs PACS Carries about 4.9x more debt cushion than PACS.
Total debt $1.21B Interest coverage 4.91x -55% vs PACS Carries about 2.2x less debt cushion than PACS.
Total debt $2.63B Interest coverage 2.35x -79% vs PACS Carries about 4.7x less debt cushion than PACS.
Total debt $1.28B Interest coverage 3.53x -68% vs PACS Carries about 3.1x less debt cushion than PACS.
Total debt $5.49B Interest coverage 0.36x -97% vs PACS Carries about 30.0x less debt cushion than PACS.
What you should know
The case for and against PACS
3 Rewards
2 Risks
Rewards
-
Revenue grew 5.0% last year.
-
Returns 27.9% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Net debt grew 75.3% over 3 years.
-
Operating margin compressed from 9.5% to 7.7% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
24.60x
Forward P/E
15.50x
P/B
6.00x
P/S
1.20x
EV/EBITDA
20.93x
PEG ratio
1.08x
Profitability
How much profit each dollar creates
Gross margin
17.3%
Operating margin
7.7%
Net margin
4.8%
ROE
27.9%
ROA
4.6%
Health
Liquidity and balance-sheet strength
Debt / equity
3.05x
Current ratio
0.91x
Quick ratio
0.84x
Total debt
$3.40B
Total cash
$164.45M
Growth
How the business has been compounding
Revenue TTM
$5.55B
Revenue 5Y CAGR
29.7%
EPS TTM
1.71
EPS 5Y CAGR
6.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$573.25M
Free CF TTM
$155.07M
FCF margin
2.8%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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