What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-11-19 · 102 added, 403 removed, 397 unchanged (56% of the section changed)

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Our historical results are not necessarily indicative of the results to be expected in the future.

For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2023, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” found in our final prospectus for our initial public offering filed pursuant to Rule 424(b)(4) on April 12, 2024.

For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2024, refer to “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” found in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the Securities and Exchange Commission on November 19, 2025.

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We are a leading post-acute healthcare company primarily focused on delivering high-quality skilled nursing care through a portfolio of independently operated facilities.

Founded in 2013, we are one of the largest skilled nursing

providers in the United States based on number of facilities.

Founded in 2013, we are one of the largest skilled nursing providers in the United States based on number of facilities.

We also provide senior care, assisted living, and independent living options in some of our communities.

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We believe our significant historical growth has been primarily driven by our expertise in acquiring underperforming long-term custodial care skilled nursing facilities and transforming them into higher acuity, high value-add short-term transitional care skilled nursing facilities.

We believe our success is driven in significant part by our decentralized, local operating model, through which we empower local leaders at each facility to operate their facility autonomously and deliver excellence in clinical quality and a superior experience for our patients.

We believe our success is driven in significant part by our locally led, centrally supported operating model, through which we empower local leaders at each facility to operate their facility autonomously and deliver excellence in clinical quality and a superior experience for our patients.

We provide our independently operated facilities with a comprehensive suite of technology, support, and back-office services that enable local leadership teams to focus more of their time and effort on providing quality care to patients.

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As of December 31, 2025, the average QM Star rating and occupancy rate for New facilities was 3.5 and 81%, respectively.

Restatement of Prior Period Financial Statements

Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q filed on August 12, 2024, we received information that indicated certain ancillary services, including respiratory, sensory integration and wound care ultrasound mist therapy, may not be eligible for reimbursement under Medicare Part B.

We determined that due to the underlying regulatory ambiguity those certain ancillary services revenue may be subject to significant reversal in the future.

As such, we have concluded that such revenue should not be recognized until definitive conclusions regarding the eligibility of billing those certain ancillary services under Medicare Part B is permissible.

In accordance with ASC 250 - Accounting Changes and Error Corrections , SEC Staff Accounting Bulletin ("SAB") No.

99 - Materiality , and SAB No.

108 - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , management concluded the unaudited Condensed Combined/Consolidated financial statements for the three months ended March 31, 2024, and the three and six months ended June 30, 2024 (the "Restatement Periods") required restatement.

The error has been corrected in the unaudited restated condensed combined/consolidated financial statements for the Restatement Periods, whereby the amount of ancillary services billable under Medicare Part B revenue at each relevant reporting date for those certain services has been recognized as a reduction to accounts receivable outstanding or as a refund liability, for cash received, with the corresponding impact of the resulting change as a decrease in the amount of revenue in the unaudited condensed combined/consolidated statements of income (loss) and comprehensive income (loss).

As a result of the adjustments to revenue, additional financial statement lines were impacted by the restatement on the unaudited condensed combined/consolidated balance sheets and statements of income (loss) and comprehensive income (loss) for the Restatement Periods related to the associated claw-back of certain bonuses and any related tax impact of the adjustments.

In addition to matters that were the subject of the Audit Committee’s independent investigation, the Company determined that certain of its leases were incorrectly classified as operating leases instead of finance leases.

The Company corrected this classification as part of the restatement.

Refer to Note 22, “Restatement of Previously Issued Quarterly Financial Statements (Unaudited),” in the notes to the combined/consolidated financial statements in this Annual Report on Form 10-K, as well as our Explanatory Note, for additional information, including a summary of the impacts of these adjustments.

In addition, under the heading “Results of Operations”, we are providing an updated discussion for each of the following periods:

the three months ended March 31, 2024 (restated) compared to the three months ended March 31, 2023;

the three months ended June 30, 2024 (restated)

compared to the three months ended June 30, 2023;

and the six months ended June 30, 2024 (restated) compared to the six months ended June 30, 2023.

Material Weakness

In connection with the preparation of our combined/consolidated financial statements for the year ended December 31, 2024, together with facts learned during the course of the Audit Committee’s independent investigation, our management identified control deficiencies that, individually or in the aggregate, constitute material weaknesses in our internal control over financial reporting.

The material weaknesses identified by management were that we did not design and maintain an effective internal control environment commensurate with the financial reporting requirements of a public company.

Specifically, we did not design and maintain sufficient processes to identify, assess, and communicate relevant risks to appropriate levels of the organization, including potential compliance issues received through the hotline process.

In addition, we did not design and maintain adequate controls within the revenue process to appropriately recognize revenue for new services in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts With Customers.

These material weaknesses resulted in the restatement of our previously issued interim condensed combined/consolidated financial statements for the Impacted Periods.

As previously disclosed on our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on November 19, 2025, we identified material weaknesses in our internal control over financial reporting where we did not design and maintain sufficient processes to identify, assess, and communicate relevant risks to appropriate levels of the organization, including potential compliance issues received through the hotline process and we did not design and maintain adequate controls within the revenue process to appropriately recognize revenue for new services in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts With Customers.

In addition, in connection with the preparation of our combined/consolidated financial statements for the year ended December 31, 2025, our management identified control deficiencies that, individually or in the aggregate, constitute material weaknesses in our internal control over financial reporting.

The material weaknesses identified by management were that we did not design and maintain effective controls within the revenue process to address the completeness and accuracy of underlying data used to determine routine revenue.

We also did not design controls to timely assess operational trends that could materially impact variable consideration estimates related to revenue recognition.

In addition, our Chief Executive Officer and our Interim Chief Financial Officer have concluded that, due to the material weaknesses, our disclosure controls and procedures were not effective, as such term is defined under Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act, as of December 31, 2025.

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Accordingly, management believes that the combined/consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S.

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Key Skilled Services Metrics and Non-GAAP Financial Measures

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Services provided outside of routine contractual agreements are recorded separately as ancillary revenue, including Medicare Part B therapy services, and are not routine revenue.

The inclusion of therapy and other ancillary treatments in the

contracted daily rate varies by payor source and by contract.

The inclusion of therapy and other ancillary treatments in the contracted daily rate varies by payor source and by contract.

Revenue associated with calculating skilled mix is based on contractually agreed-upon amounts or rates, excluding the estimates of variable consideration under the revenue recognition standard, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606).

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• Number of facilities — The total number of skilled nursing facilities that we operate.

Excludes 27 and five assisted living and independent living facilities for the years ended December 31, 2024 and 2023, respectively.

Excludes 30 and 27 assisted living and independent living facilities for the years ended December 31, 2025 and 2024, respectively.

• Number of operational beds — The total number of operational beds associated with the skilled nursing facilities that we own.

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The following tables present the above key skilled services metrics by category for all skilled nursing facilities, and for the skilled nursing facilities in each of the three facility cohorts, as of and for the years ended December 31, 2025 and 2024:

Year ended December 31,

2025 2024 Change

Total Facility Results

Year ended December 31, Change for the year ended December 31,

2024 2023 2022 2024 2023

(Dollars in thousands)

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Number of operational beds at period end 32,854 32,016 838 2.6 %

Year ended December 31,

2025 2024 Change

Mature Facility Results

Year ended December 31, Change for the year ended December 31,

2024 2023 2022 2024 2023

(Dollars in thousands)

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Number of operational beds at period end 16,415 14,893 1,522 10.2 %

Year ended December 31,

2025 2024 Change

Ramping Facility Results

Year ended December 31, Change for the year ended December 31,

2024 2023 2022 2024 2023

(Dollars in thousands)

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Number of operational beds at period end 8,286 5,737 2,549 44.4 %

Year ended December 31,

2025 2024 Change

New Facility Results

Year ended December 31, Change for the year ended December 31,

2024 2023 2022 2024 2023

(Dollars in thousands)

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8,153 11,386 (3,233) (28.4) %

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The following tables present additional detail regarding our skilled mix, including our percentage of nursing patient days and revenue by payor source for all facilities, and for each of the three facility cohorts, for the years ended December 31, 2025 and 2024:

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• Average daily rates — The routine revenue by payor source for a period at the skilled nursing facilities divided by actual patient days for that revenue source for that given period.

Revenue associated with calculating average daily rates is based on contractually agreed-upon amounts or rates, excluding the estimates of variable

consideration under ASC 606.

Revenue associated with calculating average daily rates is based on contractually agreed-upon amounts or rates, excluding the estimates of variable consideration under ASC 606.

These rates also exclude additional state relief funding, which includes payments we recognized as part of The Families First Coronavirus Response Act (FFCRA).

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(2) Represents weighted average.

The following tables present the skilled nursing services revenue for all facilities, Mature facilities, Ramping facilities, and New facilities for the three months ended March 31, 2024 (restated) and 2023, and for the three and six months ended June 30, 2024 (restated) and 2023:

Three Months Ended March 31,

2024 (restated)

(Dollars in thousands)

Skilled nursing services revenue

Total facility results

$ 912,575 $ 705,574 $ 207,001 29.3 %

Mature facility results:

$ 282,038 $ 271,541 $ 10,497 3.9 %

Ramping facility results:

$ 397,861 $ 33,207 $ 364,654 1,098.1 %

New facility results:

$ 232,676 $ 400,826 1 $ (168,150) (42.0) %

Three Months Ended June 30,

2024 (restated)

(Dollars in thousands)

Skilled nursing services revenue

Total facility results

$ 926,955 $ 755,994 $ 170,961 22.6 %

Mature facility results:

$ 280,611 $ 272,629 $ 7,982 2.9 %

Ramping facility results:

$ 397,195 $ 237,944 $ 159,251 66.9 %

New facility results:

$ 249,149 $ 245,421 $ 3,728 1.5 %

Six Months Ended June 30,

2024 (restated)

(Dollars in thousands)

Skilled nursing services revenue

Total facility results

$ 1,839,529 $ 1,461,568 $ 377,961 25.9 %

Mature facility results:

$ 562,649 $ 544,170 $ 18,479 3.4 %

Ramping facility results:

$ 795,056 $ 271,152 $ 523,904 193.2 %

New facility results:

$ 481,824 $ 646,246 $ (164,422) (25.4) %

Non-GAAP Financial Measures

In addition to our results provided throughout that are determined in accordance with GAAP, we also present the following non-GAAP financial measures:

EBITDA, Adjusted EBITDA and Adjusted EBITDAR (collectively, Non-GAAP

Financial Measures).

EBITDA, Adjusted EBITDA and Adjusted EBITDAR (collectively, Non-GAAP Financial Measures).

EBITDA and Adjusted EBITDA are performance measures.

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You should review the reconciliation of net income to the Non-GAAP Financial Measures in the table below, together with our audited combined/consolidated financial statements and the related notes in their entirety, and should not rely on any single financial measure.

Additionally, other companies may define these or similar Non-GAAP Financial Measures with the same or similar names differently, and because these Non-GAAP Financial Measures are not standardized, it may not be possible to compare these financial measures to those of other companies.

Additionally, other companies may define these or similar Non-GAAP Financial Measures with the same or similar names differently, and because these Non-GAAP

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Financial Measures are not standardized, it may not be possible to compare these financial measures to those of other companies.

Performance Measures

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EBITDA – We calculate EBITDA as net income, adjusted for net losses attributable to noncontrolling interest, before:

interest expense, net;

interest expense;

provision for income taxes;

and depreciation and amortization.

Adjusted EBITDA – We calculate Adjusted EBITDA as EBITDA further adjusted for non-core business items, which for the reported periods includes, to the extent applicable, costs incurred to acquire operations that are not capitalizable, lease termination fees, losses incurred from debt restructuring, gains on lease termination, stock-based compensation expense, loss from equity method investment, forfeiture of a seller’s note, recognition of a bargain purchase gain, legal and other costs, recognition of Employee Retention Tax Credit (ERTC), disaster relief payment, and certain one-time expenses that are not representative of our underlying operating performance.

Adjusted EBITDA – We calculate Adjusted EBITDA as EBITDA further adjusted for non-core business items, which for the reported periods includes, to the extent applicable, costs incurred to acquire operations that are not capitalizable, losses incurred from debt restructuring, gains on lease termination, stock-based compensation expense, loss from equity method investment, forfeiture of a seller’s note, recognition of a bargain purchase gain, legal and other costs, recognition of Employee Retention Tax Credit (ERTC), disaster relief payment, and certain one-time expenses that are not representative of our underlying operating performance.

Costs related to acquisitions include costs related to our acquisition of SNF facilities and providers, including related costs such as legal fees, financial and tax due diligence, consulting and escrow fees.

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As a result, Adjusted EBITDAR may understate the extent of our cash operating expenses for the respective period relative to our actual cash needs to operate our leased operations and business.

Adjusted EBITDAR – We calculate Adjusted EBITDAR as Adjusted EBITDA less rent-cost of services.

Adjusted EBITDAR – We calculate Adjusted EBITDAR as Adjusted EBITDA plus rent-cost of services.

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The table below presents a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDAR to net income, the most directly comparable financial measure calculated in accordance with GAAP, on a combined/consolidated basis for the periods presented:

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Acquisition related costs 310 2,506 998

Lease termination fees — — 421

Loss resulting from debt restructuring — — 3,628

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Adjusted EBITDAR $ 883,931

The additional table below presents a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with GAAP, on a condensed combined/consolidated basis for the periods presented:

Three months ended

March 31, 2024

Three months ended

June 30, 2024

Three months ended

September 30, 2024

Three months ended

December 31, 2024

(in thousands)

Net income (loss) $ 34,819 $ (31,876) $ 16,210 $ 36,191

Net income (loss) attributable to noncontrolling interest 2 2 590 (1,010)

Interest expense 16,096 9,915 9,029 9,301

Provision (benefit) for income taxes 22,880 (19,123) 17,446 25,007

Depreciation and amortization 8,116 9,254 10,523 12,916

EBITDA $ 81,909 $ (31,832) $ 52,618 $ 84,425

Adjustments to EBITDA:

Acquisition related costs 207 486 845 968

Gain on lease termination (8,046) — — —

Stock-based compensation — 90,936 12,304 12,304

Loss from equity method investment — 2,736 — —

Forfeiture of seller's note — — 500 —

Bargain purchase gain — — (17,185) —

Legal and other costs — — — 9,727

Employee Retention Tax Credit — — — (14,599)

Disaster relief payment — — — 1,154

Adjusted EBITDA $ 74,070 $ 62,326 $ 49,082 $ 93,979

Components of Results of Operations

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We expect patient and resident service revenue to continue to represent the vast majority of our total revenue and that such revenue will continue to increase to the extent we successfully execute on our acquisition strategy.

Additional Funding

We received funding from the U.S.

Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) as we were the healthcare providers who diagnosed, tested, or cared for individuals with cases of COVID-19 and had health care related expenses and lost revenues attributable to COVID-19.

In 2023, this program ended and we do not expect to recognize any revenue based on funding through the PRF in the future.

Other Revenue

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Other revenue typically represents an immaterial portion of our total revenue and we expect this to continue for the foreseeable future.

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Cost of Services (exclusive of rent and depreciation and amortization shown separately)

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Provision for income taxes consists primarily of income taxes in certain jurisdictions in which we conduct business.

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Results of Operations

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$ 5,287,885 $ 4,086,655 $ 1,201,230 29.4 %

Additional funding

— 375 (375) (100.0) %

Other revenues

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— 8,046 (8,046) (100.0) %

Other income (expense), net

14,776 (536) 15,312 N.M.

Other income, net

3,218 14,776 (11,558) (78.2) %

Total Other Expense, net

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$ 191,461 $ 55,344 $ 136,117 245.9 %

__________________

Not meaningful

Patient and resident service revenue - Patient and resident service revenue increased by $1,201.2 million or 29.4% to $5.3 billion, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

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Skilled nursing services revenue increased by $1,164.0 million, or 29.0%, to $5.2 billion for the year ended December 31, 2025, compared to the year ended December 31, 2024.

This change was driven by an increase in patient days of 1,810,591 or 26.7% primarily due to an increase in operational beds of 9,066, or 39.5%, from December 31, 2023 to December 31, 2024.

Additionally we experienced a higher occupancy rate across Mature and Ramping facility cohorts of 94.4% and 93.9%, respectively, for the year ended December 31, 2024, compared to 93.4% occupancy for both Mature and Ramping facilities for the year ended December 31, 2023, due to increased demand as a result of continued execution on our business model.

Total facility occupancy decreased slightly year-over-year from 90.9% for the year ended December 31, 2023 compared to 90.4% for the year ended December 31, 2024 due to a decrease in the New facility cohort occupancy as a result of the significant number of acquisitions during 2024.

This change was driven by an increase in patient days of 1,955,803, or 22.8%.

The increase in patient days for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to large acquisitions in the second half of the year ended December 31, 2024, primarily driven by the Prestige acquisition, plus an additional increase during the year ended December 31, 2025, leading to a combined increase of 8,371 or 34%.

Additionally we experienced a higher occupancy rate within the Mature facility cohorts of 94.9% for the year ended December 31, 2025, compared to 94.4% occupancy for Mature facilities for the year ended December 31, 2024, due to increased demand as a result of continued execution on our business model.

Total facility occupancy decreased slightly year-over-year from 90.4% for the year ended December 31, 2024 compared to 89.1% for the year ended December 31, 2025 due to a decrease in the New and Ramping facility cohort occupancy as a result of the significant number of acquisitions during the last quarter of the year ended December 31, 2024 and into the year ended December 31, 2025.

Our skilled nursing services revenue was impacted by developments in our average daily rates and fluctuations in our payor sources.

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Medicaid rates exclude the amount of state relief revenue we recorded.

Additional funding - Additional funding revenue was $0 for the year ended December 31, 2024, compared to $0.4 million for the year ended December 31, 2023.

The decrease was due to the termination of additional funding from the HHS under the Pandemic PHE in 2023.

Other revenue - Other revenue increased to $3.1 million for the year ended December 31, 2024, compared to $1.0 million for the year ended December 31, 2023 due to an increase in lease income during the extended execution of our acquisition from the former operator Prestige.

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Other revenue - Other revenue decreased to $1.0 million for the year ended December 31, 2025, compared to $3.1 million for the year ended December 31, 2024 due to a decrease in lease income compared to the prior year in which we had the extended execution of our acquisition from the former operator Prestige.

See Note 16, “Operation Expansions”, to our audited combined/consolidated financial statements for more information related to the 2024 acquisition.

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The increase was primarily driven by an increase of $536.0 million in salaries and wages.

Of the salaries and wages increase, facilities acquired within the past year accounted for $241.7 million or 47.9% of the increase.

Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased from 208 as of December 31, 2023 to 314 as of December 31, 2024, an increase of 51.0%.

This increase in operations and employees led to the increase in labor cost for new facilities as they were acquired throughout the year.

Of the salaries and wages increase, facilities classified within the New facilities cohort accounted for $204.8 million or 38.2% of the increase.

Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased throughout the second half of 2024 and through 2025, from 220 as of June 30, 2024, to 314 as of December 31, 2024, to 321 as of December 31, 2025, an increase of 45.9% and 2.2%, respectively.

This increase in operations and employees led to the increase in labor cost for new facilities as they were acquired throughout the year ended December 31, 2024 and into the year ended December 31, 2025.

The increase in salaries and wages was primarily driven by an increase in nursing salaries and wages driven by market needs, increases in administration wages and payroll taxes.

Aside from labor costs, the increase in cost of services was primarily due to increases of $257.1 million in administrative and ancillary expenses for facility increases, driven by a $93.5 million increase in contracted services, a $80.3 million increase in liability insurance, a $35.2 million increase in quality assurance fees, an $8.6 million increase in professional fees, an $8.2 million increase in licenses with the remaining $31.3 million of the administrative and ancillary expense increase spread out across various expense types.

Of the non-labor administrative and ancillary costs, $98.4 million, or 38.3%, is attributable to facilities acquired during 2024, the remaining costs were spread across Mature and Ramping cohorts.

Nursing and dietary expenses drove an additional $53.4 million of the increase, of which $28.1 million or 52.6% was due to facilities acquired within the past year.

Aside from labor costs, the increase in cost of services was primarily due to increases of $167.6 million in administrative and ancillary expenses for facility increases, driven by a $111.0 million increase in contracted services, a $56.3 million increase in quality assurance fees, a $5.2 million increase in software support and upgrades, and a $4.8 million increase in professional fees, offset by a decrease in liability insurance of $38.4 million.

The remaining $28.6 million change in administrative and ancillary expenses were spread out across various expense types.

Of the increase in non-labor administrative and ancillary costs, $82.2 million, or 49.1%, is attributable to the New facilities cohort, the remaining costs were spread across Mature and Ramping cohorts.

Nursing and dietary expenses drove an additional $59.1 million of the increase, of which $23.5 million or 39.8% was due to facilities acquired within the past 18 months.

The remaining $69.9 million increase is spread over various expense categories.

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General and administrative expense increased by $71.3 million, or 20.7% to $415.1 million, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

This increase was primarily due to the increase in stock compensation expense recognized during the year, associated with restricted stock units that were granted at the time of our IPO, which accounts for an increase of $115.5 million.

The change was also impacted by an increase in salaries and wages of $39.3 million, or 33.3%, attributable to an increase in personnel to help integrate and facilitate the operational growth from acquisitions in the current year, and an increase in legal and professional fees incurred associated with the Audit Committee’s independent investigation and with ongoing government investigations of $9.7 million.

These increases were offset by a decrease in costs associated with professional and general liability insurance within general and administrative expense of $36.0 million.

This increase was primarily due to an increase in legal and professional fees incurred associated with the Audit Committee’s independent investigation and with ongoing government investigations of $87.3 million, over the previous year.

The change was also impacted by an increase in salaries and wages of $28.7 million, or 18.3%, attributable to an increase in personnel to help integrate and facilitate the operational growth.

These increases were offset by a decrease in stock compensation expense recognized during the year of $61.5 million, as the prior year had significant stock compensation expense associated with restricted stock units that were granted at the time of our IPO.

The remaining change was spread over various expense categories.

Depreciation and amortization

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Other expense, net

Other expense, net decreased by $28.9 million, or 57.4% to $21.5 million, for the year ended December 31, 2024, compared to the year ended December 31, 2023.

Other expense, net increased by $3.6 million, or 16.9% to $25.1 million, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Other expense, net primarily consists of interest expense which decreased by $16.0 million, to $28.4 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, due to a decrease in amounts drawn on lines of credit and long-term debt of $58.6 million during the year.

During the year ended December 31, 2024, other expense, net also included a gain of $8.0 million recognized upon the termination of a lease.

Additionally, during the year ended December 31, 2024, other expense, net included other income of $14.8 million, an increase of $15.3 million from the year ended December 31, 2023.

This increase was driven by the recognition of a $17.2 million bargain purchase gain following our acquisition from the former operator Prestige during the year ended December 31, 2024 offset by a $2.7 million loss allocated to us from a discrete disposal recognized by one of our equity method investments and a $0.5 million forfeiture of a seller’s note during the same period.

Additionally, during the year ended December 31, 2025, other expense, net included other income of $3.2 million, a decrease of $11.6 million from the year ended December 31, 2024.

This decrease was driven by the recognition of a $17.2

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million bargain purchase gain following our acquisition from the former operator Prestige during the year ended December 31, 2024 offset by a $2.7 million loss allocated to us from a discrete disposal recognized by one of our equity method investments and a $0.5 million forfeiture of a seller’s note during the same period compared to the activity during the year ended December 31, 2025 which primarily consisted of gains from our investments.

Provision for income taxes

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The difference in the effective tax rate from the statutory rate is mainly due to state taxes, permanent book-tax differences, and other adjustments.

The change in effective tax rate for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to an increase in non-deductible expenses, including non-deductible compensation in 2024.

The change in effective tax rate for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to an increase in pre-tax book income, which reduced the overall impact on non-deductible expenses, including non-deductible compensation.

See Note 12, “Income Taxes”, to our audited combined/consolidated financial statements for more information.

Three Months Ended March 31, 2024 (restated) Compared to the Three Months ended March 31, 2023

Three Months Ended March 31, Change

2024 (restated)

(in thousands)

Patient and resident service revenue

$ 919,413 $ 707,826 $ 211,587 29.9 %

Additional funding

— 375 (375) (100.0) %

Other revenue

423 241 182 75.5 %

Total Revenue

$ 919,836 $ 708,442 $ 211,394 29.8 %

Operating expenses

Cost of services 735,992 538,772 197,220 36.6 %

Rent - cost of services 63,513 45,104 18,409 40.8 %

General and administrative expense 46,906 59,442 (12,536) (21.1) %

Depreciation and amortization 8,116 5,829 2,287 39.2 %

Total Operating Expenses

$ 854,527 $ 649,147 $ 205,380 31.6 %

Operating income 65,309 59,295 6,014 10.1 %

Other (Expense) Income

Interest expense

(16,096) (10,636) (5,460) 51.3 %

Gain on lease termination

8,046 — 8,046 100.0 %

Other income, net

440 440 — — %

Total Other Expense, net

$ (7,610) $ (10,196) $ 2,586 (25.4) %

Income before provision for income taxes 57,699 49,099 8,600 17.5 %

Provision for income taxes (22,880) (11,501) (11,379) 98.9 %

$ 34,819 $ 37,598 $ (2,779) (7.4) %

Patient and resident service revenue - Patient and resident service revenue increased by $211.6 million to $919.4 million for the three months ended March 31, 2024, a 29.9% increase compared to the three months ended March 31, 2023.

For the three months ended March 31, 2024 and 2023, skilled nursing services revenue represented more than 99% of patient and resident service revenue.

Skilled nursing services revenue increased by 29.3%, or $207.0 million, to $912.6 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This change was driven by an increase in patient days of 514,190 or 35.3% primarily due to an increase in operational beds of 5,194 from March 31, 2023 to March 31, 2024.

Additionally we experienced a high occupancy rate across all facilities of 91.1% for the three months ended March 31, 2024, driven by increases in Ramping and Mature facility cohorts following continued execution on our business model.

Our skilled nursing services revenue was impacted by developments in our average daily rates and fluctuations in our payor source mix.

Our average Medicare daily rates increased by 11.0%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase in the Medicare daily rate is attributable, in part, to the 6.4% Medicare Part A increase that became effective in October 2023, as well as a higher mix of patients requiring a higher acuity level.

Our average Medicaid rates increased 5.3% due to state reimbursement increases and our participation in supplemental Medicaid payment programs and quality improvement programs in various states.

Medicaid rates exclude the amount of state relief revenue we recorded.

Additional funding - Additional funding revenue was $0 for the three months ended March 31, 2024, compared to $0.4 million for the three months ended March 31, 2023.

The decrease was due to the termination of additional funding from the HHS under the Pandemic PHE after March 31, 2023.

Other revenue - Other revenue increased by 75.5% to $0.4 million for the three months ended March 31, 2024, compared to the same period in the prior year.

Cost of services

Cost of services increased by $197.2 million to $736.0 million, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

The 36.6% increase was primarily driven by an increase of $119.4 million in salaries and wages.

Of the salaries and wages increase, those attributable to New facilities purchased after March 31, 2023 accounted for $76.0 million or 63.7% of the increase.

Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased from 177 as of March 31, 2023 to 218 as of March 31, 2024, an increase of 23.2%.

This increase in operations and employees led to the increase in labor cost for New facilities as they were acquired throughout the year.

Headcount and operational changes attributable to other facilities accounted for the remaining change in salaries and wages.

Aside from labor costs, the increase in cost of services was due to increases of $36.8 million in administrative expenses for facilities made up of $19.5 million from New facilities and $17.3 million from Ramping and Mature facilities, $19.5 million in contracted services, and $11.8 million in nursing and dietary expenses with the remainder spread out across various expense types.

Rent - cost of services

Rent - cost of services increased to $63.5 million for the three months ended March 31, 2024, compared to $45.1 million for the three months ended March 31, 2023.

The increase was primarily attributable to the addition of 41 new facilities, which accounted for approximately 63% of the increase, with the remaining $7.0 million attributable to annual escalators on Mature and Ramping facilities' rent.

General and administrative expense

General and administrative expense decreased by $12.5 million, to $46.9 million for the three months ended March 31, 2024, compared to $59.4 million for the three months ended March 31, 2023.

This decrease was primarily due to the expansion of the company and a decrease in acquisitions completed as compared to the same period in the prior year.

Of the $12.5 million decrease, $19.4 million was in administrative costs, driven by a reduction of $17.3 million of costs associated with professional and general liability insurance.

This was offset by an increase of $6.5 million over the three months ended March 31, 2023, in salaries and wages.

Depreciation and amortization

Depreciation and amortization increased by $2.3 million to $8.1 million, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase is directly attributable to new facilities acquired.

Other expense, net

Other expense, net was $7.6 million for the three months ended March 31, 2024, a decrease of $2.6 million compared to the three months ended March 31, 2023.

Other expense, net consists of interest expense related to our debt, which increased by $5.5 million, to $16.1 million for the three months ended March 31, 2024, driven by an increase in amounts drawn on lines of credit and long-term debt of $246.7 million from March 31, 2023 to March 31, 2024.

Additionally, in the three months ended March 31, 2024, other expense, net also included a gain of $8.0 million recognized upon the termination of a lease.

Provision for income taxes

Provision for income taxes totaled $22.9 million for the three months ended March 31, 2024, representing an effective tax rate of 39.7%, compared to a provision for income tax of $11.5 million and an effective tax rate of 23.4% for the three months ended March 31, 2023.

The change in effective tax rate in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to an increase in non-deductible expenses, including non-deductible compensation in 2024.

Three Months Ended June 30, 2024 (restated) Compared to the Three Months ended June 30, 2023

Three Months Ended June 30, Change

2024 (restated)

( in thousands)

Patient and resident service revenue

$ 935,257 $ 760,424 $ 174,833 23.0 %

Other revenue

448 240 208 86.7 %

Total Revenue

$ 935,705 $ 760,664 $ 175,041 23.0 %

Operating expenses

Cost of services 762,147 590,815 171,332 29.0 %

Rent - cost of services 64,809 51,456 13,353 26.0 %

General and administrative expense 136,674 62,695 73,979 118.0 %

Depreciation and amortization 9,254 6,159 3,095 50.3 %

Total Operating Expenses

$ 972,884 $ 711,125 $ 261,759 36.8 %

Operating (loss) income

(37,179) 49,539 (86,718) (175.0) %

Other (expense) income

Interest expense

(9,915) (15,306) 5,391 (35.2) %

Other expense, net

(3,905) (2,643) (1,262) 47.7 %

Total Other Expense, net

$ (13,820) $ (17,949) $ 4,129 (23.0) %

(Loss) income before provision for income taxes

(50,999) 31,590 (82,589) (261.4) %

Benefit (provision) for income taxes

19,123 (10,370) 29,493 (284.4) %

Net (Loss) Income

$ (31,876) $ 21,220 $ (53,096) (250.2) %

Patient and resident service revenue - Patient and resident service revenue increased by $174.8 million to $935.3 million for the three months ended June 30, 2024, a 23.0% increase compared to the three months ended June 30, 2023.

For the three months ended June 30, 2024 and 2023, skilled nursing services revenue represented more than 99% of patient and resident service revenue.

Skilled nursing services revenue increased by 22.6%, or $171.0 million, to $927.0 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This change was driven by an increase in patient days of 401,997 or 24.8% primarily due to an increase in operational beds of 3,947 from June 30, 2023 to June 30, 2024.

Additionally, we experienced high occupancy across all facilities of 91.0% for the three months ended June 30, 2024, a slight decrease as compared to 91.5% for the three months ended June 30, 2023.

The decrease in occupancy across all facilities can be attributed to our New facilities only being 84.2% occupied for the three months ended June 30, 2024 compared to 88.3% for the three months ended June 30, 2023.

Our skilled nursing services revenue was impacted by developments in our average daily rates and fluctuations in our payor source mix.

Our average Medicare daily rates increased by 9.5%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Our average Medicaid rates increased 3.5% due to state reimbursement increases and our participation in supplemental Medicaid payment programs and quality improvement programs in various states.

Medicaid rates exclude the amount of state relief revenue we recorded.

Other revenue - Other revenue increased by 86.7% to $0.4 million for the three months ended June 30, 2024, compared to the same period in the prior year.

Cost of services

Cost of services increased by $171.3 million to $762.1 million, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

The 29.0% increase was primarily driven by an increase of $100.6 million in salaries and wages.

Of the salaries and wages increase, those attributable to New facilities purchased after June 30, 2023 accounted for $61.7 million or 61.3% of the increase.

Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased from 188 as of June 30, 2023 to 220 as of June 30, 2024, an increase of 17.0%.

This increase in operations and employees led to the increase in labor cost for New facilities as they were acquired throughout the year.

Headcount and operational changes attributable to Ramping and Mature facilities accounted for the remaining change in salaries and wages.

Aside from labor costs, the increase in cost of services was due to increases of $37.8 million in administrative expenses for facilities driven by a $23.7 million increase in professional and general liability insurance;

$19.0 million in contracted services made up of $9.8 million from New facilities, or 51.4%, and the remaining $9.2 million from Ramping and Mature facilities;

and $11.3 million in nursing and dietary expenses, $7.8 million from New facilities, with the remainder spread out across various expense types.

Rent - cost of services

Rent - cost of services increased to $64.8 million for the three months ended June 30, 2024, compared to $51.5 million for the three months ended June 30, 2023.

The increase was primarily attributable to the addition of new facilities throughout the year, as well as to annual escalators on existing facilities' rent.

General and administrative expense

General and administrative expense increased by $74.0 million, to $136.7 million for the three months ended June 30, 2024, compared to $62.7 million for the three months ended June 30, 2023.

This increase was primarily due to stock compensation expense associated with restricted stock units that were granted at the time of our IPO during the quarter, which accounted for $90.9 million of the increase.

This was offset by a decrease in costs associated with professional and general liability insurance within general and administrative expense in 2023 of $17.5 million.

Depreciation and amortization

Depreciation and amortization increased by $3.1 million to $9.3 million, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This increase is directly attributable to new real estate obtained through acquisitions.

Other expense, net

Other expense, net was $13.8 million for the three months ended June 30, 2024, a decrease of $4.1 million compared to the three months ended June 30, 2023.

Other expense, net consists of interest expense related to our debt, which decreased by $5.4 million, to $9.9 million for the three months ended June 30, 2024, driven by a decrease in amounts

drawn on lines of credit and long-term debt of $55.1 million from June 30, 2023 to June 30, 2024.

This was offset by an increase in other expense of $1.3 million compared to the three months ended June 30, 2023, driven by a loss on a joint venture disposal.

Benefit (provision) for income taxes

Our income tax benefit totaled $19.1 million for the three months ended June 30, 2024, representing an effective tax rate of 37.5%, compared to a provision for income tax of $10.4 million and an effective tax rate of 32.8% for the three months ended June 30, 2023.

The change in effective tax rate in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to a change in forecasted pre-tax book income and a decrease in earnings before tax related to stock-based compensation, resulting in a loss for the three months ended June 30, 2024.

Six Months Ended June 30, 2024 (restated) Compared to the Six Months June 30, 2023

Six Months Ended June 30, Change

2024 (restated)

( in thousands)

Patient and resident service revenue

$ 1,854,670 $ 1,468,250 $ 386,420 26.3 %

Additional funding

— 375 (375) (100.0) %

Other revenue

871 481 390 81.1 %

Total Revenue

$ 1,855,541 $ 1,469,106 $ 386,435 26.3 %

Operating expenses

Cost of services 1,498,139 1,129,587 368,552 32.6 %

Rent - cost of services 128,322 96,560 31,762 32.9 %

General and administrative expense 183,580 122,137 61,443 50.3 %

Depreciation and amortization 17,370 11,988 5,382 44.9 %

Total Operating Expenses

$ 1,827,411 $ 1,360,272 $ 467,139 34.3 %

Operating income 28,130 108,834 (80,704) (74.2) %

Other (Expense) Income

Interest expense

(26,011) (25,942) (69) 0.3 %

Gain on lease termination

8,046 — 8,046 100.0 %

Other expense, net

(3,465) (2,203) (1,262) 57.3 %

Total Other Expense, net

$ (21,430) $ (28,145) $ 6,715 (23.9) %

Income before provision for income taxes 6,700 80,689 (73,989) (91.7) %

Provision for income taxes (3,757) (21,871) 18,114 (82.8) %

$ 2,943 $ 58,818 $ (55,875) (95.0) %

Patient and resident service revenue - Patient and resident service revenue increased by $386.4 million to $1.9 billion for the six months ended June 30, 2024, a 26.3% increase compared to the six months ended June 30, 2023.

For the six months ended June 30, 2024 and 2023, skilled nursing services revenue represented more than 99% of patient and resident service revenue.

Skilled nursing services revenue increased by 25.9%, or $378.0 million, to $1.8 billion for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

This change was driven by an increase in patient days of 916,187 or 29.8% primarily due to an increase in operational beds of 3,947 from June 30, 2023 to June 30, 2024.

Additionally, we experienced high occupancy across all facilities of 91.0% for the six months ended June 30, 2024, a slight decrease as compared to 91.6% for the six months ended June 30, 2023.

The decrease in occupancy across all facilities can be attributed to our New facilities only being 83.7% occupied for the six months ended June 30, 2024, compared to 89.8% for the six months ended June 30, 2023.

Our skilled nursing services revenue was impacted by developments in our average daily rates and fluctuations in our payor source mix.

Our average Medicare daily rates increased by 10.3%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Our average Medicaid rates increased 4.3% due to state reimbursement increases and our participation in supplemental Medicaid payment programs and quality improvement programs in various states.

Medicaid rates exclude the amount of state relief revenue we recorded.

Additional funding - Additional funding revenue was $0 for the six months ended June 30, 2024, compared to $0.4 million for the six months ended June 30, 2023.

The decrease was due to the termination of additional funding from the HHS under the Pandemic PHE in 2023.

Other revenue - Other revenue increased by 81.1% to $0.9 million for the six months ended June 30, 2024, compared to the same period in the prior year.

Cost of services

Cost of services increased by $368.6 million to $1.5 billion, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

The 32.6% increase was primarily driven by an increase of $220.1 million in salaries and wages.

Of the salaries and wages increase, those attributable to New facilities purchased after June 30, 2023 accounted for $110.2 million or 50.1% of the increase.

This increase in operations and employees led to the increase in labor cost for New facilities as they were acquired throughout the year.

Headcount and operational changes attributable to Ramping and Mature facilities accounted for the remaining change in salaries and wages.

Aside from labor costs, the increase in cost of services was due to increases of $74.6 million in administrative expenses for facilities driven by a $41.3 million increase in professional and general liability insurance;

$38.5 million in contracted services made up of $20.9 million from New facilities, or 54.2%, and $17.6 million from Ramping and Mature facilities;

and $23.0 million in nursing and dietary expenses, $16.3 million from New facilities, with the remainder spread out across various expense types.

Rent - cost of services

Rent - cost of services increased to $128.3 million for the six months ended June 30, 2024, compared to $96.6 million for the six months ended June 30, 2023.

The increase was primarily attributable to the addition of new facilities throughout the year, as well as to annual escalators on existing facilities' rent.

General and administrative expense

General and administrative expense increased by $61.4 million, to $183.6 million for the six months ended June 30, 2024, compared to $122.1 million for the six months ended June 30, 2023.

This increase was primarily due to the increase in stock compensation expense associated with restricted stock units that were granted at the time of our IPO during the quarter, which accounted for $90.9 million of the increase.

The remainder was driven by an increase in salaries and wages of $7.4 million, offset by a decrease in costs associated with professional and general liability insurance within general and administrative expense in 2023 of $34.8 million.

The remainder was spread out across various expense types.

Depreciation and amortization

Depreciation and amortization increased by $5.4 million to $17.4 million, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

This increase is directly attributable to new real estate obtained through acquisitions.

Other expense, net

Other expense, net was $21.4 million for the six months ended June 30, 2024, a decrease of $6.7 million compared to the six months ended June 30, 2023.

Other expense, net consists of interest expense related to our debt, which decreased by $(0.1) million, to $26.0 million for the six months ended June 30, 2024, driven by a decrease in lines of credit and long-

term debt of $55.1 million from June 30, 2023 to June 30, 2024.

Additionally, in the six months ended June 30, 2024, other expense, net included a gain of $8.0 million recognized upon the termination of a lease.

These changes were offset by a loss of $2.7 million on a joint venture disposal during the six months ended June 30, 2024.

The remaining changes were spread out across various other expense types.

Provision for income taxes

Provision for income taxes totaled $3.8 million for the six months ended June 30, 2024, representing an effective tax rate of 56.1%, compared to a provision for income tax of $21.9 million and an effective tax rate of 27.1% for the six months ended June 30, 2023.

The change in effective tax rate in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to the change in forecasted pre-tax book income and an increase in non-deductible expenses, including non-deductible compensation in 2024.

Holding Company Status

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On September 9, 2024, we completed an underwritten follow-on offering receiving initial net proceeds of $96.4 million, of which we used $95.3 million to repay amounts outstanding under our Amended and Restated Credit Facility.

As of December 31, 2024 and September 30, 2025, we had cash and cash equivalents (which include short-term investments with original maturities of three months or less at the time of purchase) of $157.7 million, and $355.7 million, respectively.

The total principal amount outstanding under our Amended and Restated 2023 Credit Facility as of December 31, 2024 and September 30, 2025, was $142.0 million and $100.0 million, respectively.

In addition, we had outstanding letters of credit of $13.9 million as of both December 31, 2024 and September 30, 2025, respectively.

As described in more detail below, we are in a state of forbearance with the lenders associated with the Amended and Restated 2023 Credit Facility and as a result, we are currently unable to borrow additional amounts.

We are in active discussions with the Required Lenders (as defined in the Amended and Restated Credit Agreement) regarding the terms of an amendment and waiver to our Amended and Restated 2023 Credit Facility and expect to reach an agreement before the end of the forbearance period to be able to borrow additional amounts.

As of December 31, 2025, we had cash and cash equivalents (which include short-term investments with original maturities of three months or less at the time of purchase) of $197.0 million.

The total principal amount outstanding under our Amended and Restated Credit Facility as of December 31, 2025 was $100.0 million.

In addition, we had outstanding letters of credit of $7.9 million as of December 31, 2025.

The terms of our Amended and Restated Credit Facility permit optional prepayments from time to time without premium or penalty.

We expect to continue to use the Amended and Restated 2023 Credit Facility, subject to entrance into the agreement described above, as our single line of credit and to fund the potential acquisition of additional property and operations, as well as for working capital and for general corporate purposes.

We expect to continue to use the Amended and Restated Credit Facility as our single line of credit and to fund the potential acquisition of additional property and operations, as well as for working capital and for general corporate purposes.

Cash paid to fund acquisitions was $143.8 million and $283.3 million for the years ended December 31, 2025 and 2024, respectively.

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We believe our current cash balances and our cash flow from operations will be sufficient to cover our operating needs for at least the next 12 months.

We may, in the future, seek to raise additional capital to fund growth, capital renovations,

operations and other business activities, but such additional capital may not be available on acceptable terms, on a timely basis, or at all.

We may, in the future, seek to raise additional capital to fund growth, capital renovations, operations and other business activities, but such additional capital may not be available on acceptable terms, on a timely basis, or at all.

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The following table presents selected data from our combined/consolidated statement of cash flows for the periods presented:

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Net cash provided by operating activities for the year ended December 31, 2025 of $404.2 million increased by $36.9 million as compared with the same period in 2024.

The increase was primarily driven by improved operational performance across our existing portfolio as well as the incremental operational performance across our 106 facilities acquired since December 31, 2023.

This increase was further driven by an increase in cash flows from the change in operating assets and liabilities of $252.9 million due to the timing of payables and other accrued liabilities.

The increase was primarily driven by improved operational performance across our existing portfolio as well as the incremental operational performance across our 101 facilities acquired in the latter half of 2024 and throughout 2025.

This increase was offset by a decrease in cash flows from the change in operating assets and liabilities of $85.5 million due to the timing of payables and other accrued liabilities.

Investing activities

Investing cash flows consist primarily of capital expenditures, investment activities, proceeds from sale of property and equipment and cash used for acquisitions.

Net cash used in investing activities for the year ended December 31, 2024 of $442.7 million increased by $269.9 million as compared with the same period in 2023.

The increase in cash used was primarily attributable to an increase of $156.3 million in cash used to acquire real estate facilities and an increase of $20.7 million in cash used to purchase property and equipment, in excess of cash used for these purposes in 2023.

Further, in 2024 we also purchased investments, consisting of holdings in investment grade bond mutual funds, of $90.9 million through our captive insurance subsidiary with long-term restricted cash previously held in other assets on our combined/consolidated balance sheets included in Part II, Item 8 of this Annual Report on Form 10-K (see Note 8, “Fair Value Measurement”) offset by a sale of investments of $25.9 million.

We also made an additional $30.3 million investment in partnerships compared to $2.6 million used for this purpose in 2023.

Net cash used in investing activities for the year ended December 31, 2025 of $264.0 million decreased by $178.7 million as compared with the same period in 2024.

The decrease in cash used was primarily attributable to a decrease of $139.6 million in cash used to acquire real estate facilities offset by an increase of $38.9 million in cash used to purchase property and equipment, in excess of cash used for these purposes in 2024.

Further, in 2025 investments purchased through our captive insurance subsidiary, consisting of holdings in investment grade bond mutual funds, decreased by $69.7 million, and cash used to purchase investments in partnerships decreased by $32.9 million, as compared to the same period in 2024.

These changes were offset by a decrease in sales of investments of $25.9 million as compared to 2024.

Financing activities

Financing cash flows consist primarily of payments and draws on lines of credit, distributions and repayment of short-term and long-term debt, borrowings on lines of credit, contributions from noncontrolling interest, and proceeds from equity offerings.

Net cash provided by financing activities for the year ended December 31, 2024 of $117.5 million decreased by $12.1 million as compared with the same period in 2023.

Cash provided by financing activities was driven by a year-over-year increase in cash inflows from net IPO proceeds and follow on offering proceeds of $414.2 million and $95.3 million, respectively.

Offsetting these inflows was a net decrease in cash flows of $534.5 million from lines of credit and long-term debt consisting of a decrease of $735.7 million and an increase of $201.2 million in net cash flow on lines of credit and long-term debt, respectively.

The total long-term debt additions of $72.3 million during the year ended December 31, 2024 had more favorable terms as compared to our then existing debt, including the additions to the HUD-insured mortgage loans of $252.9 million with interest rates ranging from 2.4% to 6.3% and remaining terms of 24 to 37 years.

Net cash used in financing activities for the year ended December 31, 2025 of $69.0 million consisted of $42.0 million of payments on lines of credit and $18.2 million of payments on long-term debt.

Additionally, the Company paid $8.4 million in taxes related to net share settlement of equity awards.

This is a decrease of $186.5 million as compared with the same period in 2024 in which we had $117.5 million of cash provided by financing activities.

In the year-ended December 31, 2024, cash provided by financing activities consisted of $509.4 million in proceeds from equity offerings, and $52.9 million of net borrowings on long-term debt.

This activity during the year-ended December 31, 2024, was offset by $378.0 million in net payments on lines of credit, dividends paid of $33.7 million, and taxes paid related to net share settlement of equity awards of $33.6 million.

Credit facility

On June 30, 2023, PACS Group, Inc., as holdings, PACS Holdings, LLC, as borrower, and certain of their subsidiaries entered into a credit agreement with Truist Bank, as administrative agent (the “Administrative Agent”), and a syndicate of lenders (the “Original Credit Facility”).

The Original Credit Facility provided PACS Holdings, LLC with a $275.0 million term loan and $150.0 million of revolving credit commitments (including a $30.0 million letter of credit sub-facility and a $20.0 million swingline sub-facility).

On December 7, 2023, we amended and restated the Original Credit Facility (the “Amended and Restated 2023 Credit Facility”), pursuant to an amended and restated credit agreement (the “Amended and Restated Credit Agreement”), repaying the term loans and eliminating the term loan facility and increasing the aggregate amount of Revolving Commitments (as defined in the Amended and Restated 2023 Credit Facility) to $600.0 million (including a $50.0 million letter of credit sub-facility and a $20.0 million swingline sub-facility).

Borrowings under the Amended and Restated 2023 Credit Facility bear interest, at our option, at either (a) SOFR (subject to a 0.10% credit spread adjustment), plus a margin ranging from 2.25% to 3.25% per annum;

We maintain a revolving credit facility between PACS Group, Inc., as holdings, PACS Holdings, LLC, as borrower, and certain of our subsidiaries with Truist Bank, as administrative agent (the “Administrative Agent”), and a syndicate of

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lenders (the “Amended and Restated Credit Facility”).

The Amended and Restated Credit Facility provides for a Revolving Commitment (as defined in the Amended and Restated Credit Facility) of up to $600.0 million (including a $50.0 million letter of credit sub-facility and a $20.0 million swingline sub-facility).

Outstanding borrowings under the Amended and Restated Credit Facility bear interest, at our option, at either (a) SOFR (subject to a 0.10% credit spread adjustment), plus a margin ranging from 2.25% to 3.25% per annum;

or (b) the Base Rate (as defined in the Amended and Restated Credit Agreement), plus a margin ranging from 1.25% to 2.25% per annum, with such margins, in each case, determined by reference to our Total Leverage Ratio (as defined in the Amended and Restated Credit Agreement).

We are required to pay a commitment fee ranging from 0.25% to 0.45% per annum on the unused portion of the Revolving Commitments, based upon our Total Leverage Ratio and other customary fees.

Upon the closing of the Amended and Restated 2023 Credit Facility, we borrowed $460.0 million of revolving loans to repay and refinance all then-outstanding loans (including the term loans) under the Original Credit Facility, repay certain other outstanding indebtedness, and pay transaction costs.

The Amended and Restated Credit Facility includes customary affirmative and negative covenants and two financial covenants:

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The Amended and Restated Credit Agreement matures on December 7, 2028.

Additionally, the Amended and Restated Credit Facility, as amended by the Sixth Amendment and Waiver, contains a Liquidity Requirement, as described in further detail below, which will apply until the Liquidity Requirement Termination Date.

On May 16, 2024, we entered into an amendment to the Amended and Restated Credit Facility that, among other things, waived an event of default that had occurred and was then continuing under the Amended and Restated Credit Facility and modified the affirmative covenants thereunder requiring the joinder of certain subsidiaries of PACS Group, Inc.

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On March 27, 2025, and May 29, 2025, we entered into further amendments to the Amended and Restated Credit Facility that, among other things, extended the deadline for delivery of audited annual financial statements for the fiscal year ended December 31, 2024.

The May 29, 2025 amendment also supplemented the Amended and Restated Credit Agreement’s financial covenants requiring us to maintain unrestricted cash and certain permitted investments of at least $100 million until we deliver audited financial statements for the fiscal year ended December 31, 2024 (the “Liquidity Requirement”).

The May 29, 2025 amendment also supplemented the Amended and Restated Credit Agreement’s financial covenants requiring us to maintain unrestricted cash and certain permitted investments of at least $100 million until delivery of audited financial statements for the fiscal year ended December 31, 2024 (the “Liquidity Requirement”).

On July 24, 2025 and August 13, 2025 we entered into two separate forbearance agreements with the Administrative Agent and the lenders, pursuant to which the lenders agreed to temporarily forbear from exercising remedies under the Amended and Restated Credit Facility with respect to certain technical events of default, including without limitation matters relating to inaccuracies in certain representations and warranties made, which inaccuracies also triggered an event of default under the Third Consolidated Master Lease, dated June 30, 2023 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Omega Master Lease”), which in turn triggered an additional event of default under the Amended and Restated Credit Facility.

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The August 13, 2025 Forbearance Agreement and Fifth Amendment Credit Agreement required that the Liquidity Requirement remain in place for the entirety of the forbearance period and further extended the delivery period with respect to the fiscal year 2024 financial statements.

The forbearance period was scheduled to run until October 31, 2025, subject to extension by the Administrative Agent through November 30, 2025, or by the Required Lenders thereafter, or earlier termination upon the occurrence of certain specified events of default.

On October 21, 2025, we entered into a third forbearance agreement (the “October Forbearance Agreement”).

certain additional technical events of default including without limitation matters relating to the designation of certain immaterial conflicted subsidiaries;

Under the October Forbearance Agreement, the lenders again agreed to temporarily forbear from exercising rights and remedies under the Amended and Restated Credit Agreement with respect to the Initial Technical Events of Default, as well as certain additional technical events of default including without limitation matters relating to the designation of certain immaterial conflicted subsidiaries;

failure to join certain subsidiaries to the loan documents;

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The Technical Events of Default also triggered an event of default under the Omega Master Lease, which in turn triggered an additional event of default under the Amended and Restated Credit Agreement.

The October Forbearance Agreement provides for the same forbearance period as the prior forbearance agreements.

Following the October Forbearance Agreement, the Administrative Agent agreed to extend the forbearance period thereunder through November 30, 2025.

During the forbearance period, we are required to comply with certain additional specified conditions, including the continued maintenance of minimum liquidity of $100 million, limitations on certain investments and acquisitions, and a prohibition on the borrowing of new loans under the Amended and Restated 2023 Credit Facility.

The October Forbearance Agreement is intended to provide us with temporary relief while addressing the Technical Events of Default and does not constitute a waiver of the Technical Events of Default or amendment to the Amended and Restated Credit Agreement beyond the amended terms specified therein.

We are in active discussions with the Required Lenders regarding the terms of an amendment and waiver to our Amended and Restated 2023 Credit Facility and expect to reach an agreement following the end of the forbearance period.

On November 26, 2025, we entered into another amendment to and waiver (the “Sixth Amendment and Waiver”) under the Amended and Restated Credit Facility that, among other things, waived all Technical Events of Default.

The Sixth Amendment and Waiver also amended the Amended and Restated Credit Agreement to, among other things, require that the Liquidity Requirement remain in place until we deliver to the Administrative Agent financial statements and a

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corresponding compliance certificate for the fiscal quarter ended June 30, 2026 (the “Liquidity Requirement Termination Date”).

Long-term debt

During the years ended December 31, 2024 and 2023, some of our subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $68.3 million and $88.8 million, respectively.

During the year ended December 31, 2025, none of our subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans, whereas in the year ended December 31, 2024, certain of our subsidiaries entered into HUD-insured mortgage loans in the aggregate amount of $68.3 million.

Additionally, we converted a $22.5 million construction loan to a HUD-insured mortgage loan during the year ended December 31, 2024.

As a result, thirteen of our subsidiaries had mortgage loans insured with HUD in the aggregate amount of $252.9 million as of December 31, 2024, of which $4.0 million is classified as current and the remaining $248.9 million is classified as non-current.

As of December 31, 2023, our subsidiaries had HUD-insured mortgage loans in the aggregate amount of $166.2 million of which $2.4 million was classified as current and the remaining $163.8 million was classified as non-current.

As of December 31, 2025, 13 of our subsidiaries had mortgage loans insured with HUD in the aggregate amount of $248.9 million as of December 31, 2025, of which $4.2 million was classified as current and the remaining $244.7 million was classified as non-current.

As of December 31, 2024, 13 of our subsidiaries had HUD-insured mortgage loans in the aggregate amount of $252.9 million of which $4.0 million was classified as current and the remaining $248.9 million was classified as non-current.

These subsidiaries are subject to HUD-mortgage oversight and periodic inspections.

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The original terms for all the HUD-insured mortgage loans are 24 to 37 years.

In addition to the HUD-insured mortgage loans above, our subsidiaries have eight other mortgage loans or promissory notes.

In addition to the HUD-insured mortgage loans above, our subsidiaries have four other mortgage loans or promissory notes.

The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 7.5% per annum with various maturity dates through June 1, 2027.

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We lease most of our skilled nursing and assisted living facilities, as well as office space and certain vehicles and equipment, under various non-cancelable operating lease agreements.

These operating leases expire at various dates throughout 2049.

These operating leases expire at various dates through 2050.

Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by us and/or our stockholders.

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At lease inception it was determined that the exercise of these purchase options was not reasonably assured.

Options on three of the leases have become subject to disagreement with the landlord regarding whether the option exercise window has closed, and the Company will be working with the landlord to resolve the disagreement.

Options on three leases have become subject to disagreement with the landlord regarding whether the option exercise window has closed, and the Company will be working with the landlord to resolve the disagreement.

At our option, the facility leases are generally renewable for additional terms ranging from 5 to 20 years.

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We also lease certain skilled nursing and assisted living facilities under finance lease agreements.

The lease terms of two of the facility finance leases allow for a purchase option during a specified window.

We have determined that we are reasonably certain to exercise the purchase option at the end of each purchase option window.

Therefore, we have calculated the lease term through the end of the purchase option window for each such lease.

In addition, for six of the facility finance leases, the lessor holds an option which could require us to purchase the associated real estate.

The lease terms of one of the facility finance leases allow for a purchase option during a specified window.

We have determined that we are reasonably certain to exercise the purchase option at the end of the purchase option window.

Therefore, we have calculated the lease term through the end of the purchase option window for such lease.

In addition, for one of the facility finance leases, the lessor holds an option which could require us to purchase the associated real estate.

The total obligation to purchase such real estate is approximately $32,000 and can be exercised by the lessor through June 30, 2026.

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We also derive revenue from state Medicaid and similar reimbursement programs.

Payments under these programs generally provide for reimbursement levels that are adjusted for inflation annually based upon the state’s fiscal year for the Medicaid programs and in each October for the Medicare program.

Payments under these programs generally provide for

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reimbursement levels that are adjusted for inflation annually based upon the state’s fiscal year for the Medicaid programs and in each October for the Medicare program.

These adjustments may not continue in the future, and even if received, such adjustments may not reflect the actual increase in our costs for providing healthcare services.

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If actual amounts of consideration ultimately received differ from the estimates, we adjust these estimates, which would affect net service revenue in the period such variances become known.

Accrued Risk Reserves - We are principally self-insured for risks related to professional and general liability.

Professional Liability and General Liability Self-Insurance Liabilities - We are principally self-insured for risks related to professional and general liability.

Accrued risk reserves include the accrual for risks associated with professional liability claims and include a liability for unpaid reported claims and estimates for incurred but unreported claims.

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See Note 2, “Summary of Significant Accounting Policies”, to our combined/consolidated financial statements for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis