PACS COMES BACK FROM THE DEAD
Record revenue, full compliance, and a stock that's not totally worthless anymore.
Remember when PACS Group looked like it was heading for the SNF graveyard? The Hindenburg short-seller report, the compliance disaster, the cancelled earnings calls, the radio silence? Yeah, that was fun.
Well, they're back. And they're claiming victory.
PACS dropped Q3 earnings Wednesday showing $1.34 billion in revenue (up 31% year-over-year) and—here's the kicker—they're finally current on all their SEC filings. Translation: they survived the audit, fixed the compliance mess, and lived to tell about it.
The Comeback Stats
Third quarter revenues: $1.34 billion
Year-to-date: $3.93 billion (up 36.4%)
Net income: $131.7 million
Occupancy at mature facilities: 94.8%
Cash on hand: $355.7 million (more than double what they had at year-end 2024)
CEO Jason Murray called it "the start of a new chapter." Which is corporate-speak for "please forget about last year's dumpster fire."
What Actually Happened
In case you missed the drama: Last year, Hindenburg Research published a scathing report accusing PACS of Medicare fraud through COVID-era respiratory and therapy billing. PACS' stock tanked. They went silent. They restated financials. The CFO "resigned."
The audit committee spent months investigating and concluded... yeah, there were problems. PACS admitted they "did not design and maintain an effective internal control environment commensurate with the financial reporting requirements of a public company." Which is SEC-filing language for "we didn't have our shit together."
They also acknowledged "ethics concerns" involving personnel (including former CFO Derick Apt, who got shown the door). Co-founder Mark Hancock came back as interim CFO to clean up the mess.
The Good News (Sort Of)
The audit didn't find "any additional material financial misstatements or financial irregularities" beyond what they already restated. So the damage was limited to the respiratory/therapy billing issues they acknowledged, plus some internal control failures.
PACS says they've now implemented "enhanced controls," a beefed-up compliance team, and better processes for ground-level administrators to flag issues before they become federal cases.
The Market Reaction
PACS stock closed at $16.83 on Thursday—a 2025 high. Still well below their IPO peak from early 2024, but better than the death spiral it was on a few months ago. Investors are apparently willing to believe in the comeback story.
Murray pointed to their 89% portfolio-wide occupancy (81% even at newly acquired facilities) as proof that referral sources and payers aren't holding grudges. "We are the provider of choice in the markets where we operate," he said. Which is what you say when someone asks if hospitals still trust you after a fraud investigation.
The Bottom Line
PACS survived what could have been a company-killing scandal. They're one of the nation's largest SNF operators (310 facilities across 17 states), and they're back to growing—seven properties added this year, 96 in the second half of 2024.
Whether they've actually fixed the underlying compliance culture or just passed the audit remains to be seen. But for now, they're alive, they're current with the SEC, and they're claiming "record performance."
The lesson? Even when a short-seller publishes a damning report and your stock collapses and you have to restate financials and fire your CFO... if you're big enough and have enough cash, you can still survive.
Of course, smaller operators who make the same billing mistakes? They get shut down and prosecuted. But PACS gets to call it "a new chapter" and keep operating 310 facilities.
Must be nice.
Are They Celebrating Too Early?
Here's what's conspicuously missing from PACS' victory lap: any mention of fines, penalties, repayments, or DOJ settlements. They admitted to improper Medicare billing during COVID, forced out their CFO over "ethics concerns," and restated financials—but there's zero discussion of actual financial consequences.
Either those penalties are buried somewhere in the restated numbers, or they haven't been announced yet. Because federal investigations into Medicare billing fraud don't typically end with "we promise to do better" and everyone moves on. These things take years to resolve, and settlements often come long after the internal audit wraps up.
PACS is acting like they're in the clear. Their stock is rallying. But it's worth remembering that compliance disasters have two phases: surviving the audit, and surviving the government. They've cleared phase one. Phase two might still be coming—probably with a bill attached that makes that $355 million cash cushion look a lot less comfortable.
For now though? They're printing money, filling beds, and telling investors the nightmare is over. Let's see if CMS and the DOJ agree.
Full earnings report and restated financials are now on PACS' investor relations page. If you enjoy reading auditor reports about "material weaknesses in internal control," it's riveting stuff.
