3 unchanged sentences
INDEX TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: R eport of Independent Registered Public Accounting Firm PCAOB ID No.
−Removed: C ombined/Cons olidated Financial Statements
−Removed: C ombined /Consolidated Balance Sheets as of December 31, 2024 and 2023
−Removed: C ombined/Consolidated Statements of Income for the Years Ended December 31, 2024, 2023, and 2022
−Removed: C ombined/Consolidated Statements of S tockholders ’ Equi ty/(Deficit) for the Years Ended December 31, 2024, 2023, and 2022
−Removed: C ombined/Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022
−Removed: N otes to Combined/Consolidated Financial Statements
+Added: Report of Independent Registered Public Accounting Firm PCAOB ID No.
+Added: Combined/Consolidated Financial Statements
+Added: Combined/Consolidated Balance Sheets as of December 31, 2025 and 2024
+Added: Combined/Consolidated Statements of Income for the Years Ended December 31, 2025, 2024, and 2023
+Added: Combined/Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024, and 2023
+Added: Combined/Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023
+Added: Notes to Combined/Consolidated Financial Statements
+Added: Table of Content s
Report of Independent Registered Public Accounting Firm
2 unchanged sentences
We have audited the accompanying combined/consolidated balance sheets of PACS Group, Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2024 and 2023, the related combined/consolidated statements of income, stockholders' equity/(deficit) and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “combined/consolidated financial statements”).
+Added: and subsidiaries (the Company) as of December 31, 2025 and 2024, the related combined/consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “combined/consolidated financial statements”).
In our opinion, the combined/consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.
generally accepted accounting principles.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2026 expressed an adverse opinion thereon.
Basis for Opinion
1 unchanged sentence
Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
1 unchanged sentence
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
6 unchanged sentences
The communication of the critical audit matter does not alter in any way our opinion on the combined/consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
+Added: Table of Content s
Professional liability and general liability claims reserve
−Removed: Description of the Matter At December 31, 2024, the Company’s professional liability and general liability claims reserve was $217 million.
−Removed: As further described in Note 18 to the combined/consolidated financial statements, the professional liability and general liability claims reserve includes an estimate of the Company’s liability for professional claims that have been reported as well as claims that have been incurred but not reported.
+Added: Description of the Matter At December 31, 2025, the Company’s professional liability and general liability self-insurance liabilities were $296 million.
+Added: As further described in Note 18 to the combined/consolidated financial statements, the professional liability and general liability self-insurance liabilities include an estimate of the Company’s liability for professional claims that have been reported as well as claims that have been incurred but not reported.
The Company utilizes an external actuary to assist management in estimating the exposure for claims obligations, both asserted and unasserted.
−Removed: Auditing the professional liability and general liability claims reserve is complex and highly judgmental due to the significant estimation required in determining the claims reserve, particularly the assumptions regarding the severity and frequency of claims.
−Removed: The Company develops information relating to the ultimate size of the claims based on historical experience and current industry information which is used in the actuarial analysis.
−Removed: How We Addressed the Matter in Our Audit To test the professional liability and general liability claims reserve, our audit procedures included, among others, obtaining an understanding of the factors considered and assumptions made by management and its external actuary in developing the estimate of the professional liability and general liability claims reserve, including the sources of data relevant to these factors and assumptions.
+Added: Auditing the professional liability and general liability self-insurance liabilities involved significant judgment in estimating the projected settlement value of reported and unreported claims.
+Added: This assessment required a high degree of auditor judgment and an increased audit effort, including the involvement of our actuarial specialists, to evaluate whether the reserves were appropriately recorded.
+Added: How We Addressed the Matter in Our Audit To test the professional liability and general liability self-insurance liabilities, our audit procedures included, among others, obtaining an understanding of the factors considered and assumptions made by management and its external actuary in developing the estimate of the professional liability and general liability self-insurance liabilities, including the sources of data relevant to these factors and assumptions.
We tested underlying claims data, including the completeness and accuracy of open and settled cases.
1 unchanged sentence
We also involved our actuaries to assist in evaluating the methodologies and key assumptions used in the actuarial report.
−Removed: We compared the Company’s professional liability and general liability claims reserve to an independent range calculated by our actuaries.
+Added: We compared the Company’s professional liability and general liability self-insurance liabilities to an independent range calculated by our actuaries.
/s/ Ernst & Young LLP
1 unchanged sentence
Salt Lake City, Utah
−Removed: November 19, 2025
+Added: February 26, 2026
+Added: Table of Content s
PACS GROUP, INC.
27 unchanged sentences
Long-term operating lease liabilities 2,939,854 2,935,773
−Removed: Lines of credit — 520,000
+Added: Line of credit 100,000 —
Long-term debt, less current maturities, net of deferred financing fees 244,803 250,984
7 unchanged sentences
$ 0.001 par value;
−Removed: 1,250,000,000 shares authorized, 155,177,511 shares issued and outstanding as of December 31, 2024, and 64,361,693,000 shares authorized, 128,723,386 shares issued and outstanding as of December 31, 2023
+Added: 1,250,000,000 shares authorized;
+Added: 156,615,144 shares issued and outstanding as of December 31, 2025, and 155,177,511 shares issued and outstanding as of December 31, 2024
Additional paid-in capital 637,035 591,363
6 unchanged sentences
See accompanying notes to combined/consolidated financial statements.
+Added: Table of Content s
PACS GROUP, INC.
37 unchanged sentences
See accompanying notes to combined/consolidated financial statements.
+Added: Table of Content s
PACS GROUP, INC.
AND SUBSIDIARIES
−Removed: COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
+Added: COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands, except for share values)
−Removed: Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Noncontrolling Interest Total Stockholders' Equity (Deficit)
+Added: Common Stock Additional Paid-in Capital Retained Earnings Noncontrolling Interest Total
Shares Amount
3 unchanged sentences
— — — ( 80,394 ) — ( 80,394 )
−Removed: Net Income — — — 150,496 — 150,496
−Removed: Balance December 31, 2022 128,723,386 $ 129 $ — $ 63,517 $ 5,005 $ 68,651
−Removed: Contributions — — — — 587 587
−Removed: Dividends on common stock ($ 0.6246 per share)
−Removed: — — — ( 80,394 ) — ( 80,394 )
Net income attributable to noncontrolling interest — — — — 8 8
12 unchanged sentences
Balance December 31, 2024 155,177,511 $ 155 $ 591,363 $ 118,036 $ 6,137 $ 715,691
+Added: Employee stock-based compensation — — 54,069 — — 54,069
+Added: Issuance of common stock to employees and directors resulting from the vesting of restricted stock unit awards 2,325,126 3 ( 3 ) — — —
+Added: Tax withholdings related to net share settlement of equity awards ( 887,493 ) ( 1 ) ( 8,394 ) — — ( 8,395 )
+Added: Noncontrolling interest distribution — — — — ( 377 ) ( 377 )
+Added: Net loss attributable to noncontrolling interest — — — — ( 82 ) ( 82 )
+Added: Net income attributable to PACS Group, Inc.
+Added: — — — 191,543 — 191,543
+Added: Balance December 31, 2025 156,615,144 $ 157 $ 637,035 $ 309,579 $ 5,678 $ 952,449
See accompanying notes to combined/consolidated financial statements.
+Added: Table of Content s
PACS GROUP, INC.
14 unchanged sentences
Noncash lease expense 48,454 34,647 22,727
−Removed: Other noncash operating activities, net 843 581 4
+Added: Other noncash operating activities 573 843 581
Change in operating assets and liabilities
26 unchanged sentences
Payments on long-term debt ( 18,218 ) ( 19,455 ) ( 559,632 )
+Added: Noncontrolling interest distribution ( 377 ) — —
Contributions from noncontrolling interest — 502 587
2 unchanged sentences
Proceeds from common stock offering, net of issuance costs — 95,285 —
−Removed: Taxes paid related to net share settlement of stock-based compensation awards ( 33,597 ) — —
−Removed: NET CASH PROVIDED BY FINANCING ACTIVITIES $ 117,476 $ 129,592 $ 12,350
+Added: Taxes paid related to net share settlement of equity awards ( 8,395 ) ( 33,597 ) —
+Added: NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES $ ( 68,990 ) $ 117,476 $ 129,592
Net change in cash 71,209 42,138 20,498
−Removed: Cash, cash equivalents, and restricted cash - beginning of year 118,704 98,206 68,562
−Removed: Cash, cash equivalents, and restricted cash - end of year $ 160,842 $ 118,704 $ 98,206
+Added: Cash, cash equivalents, and restricted cash - beginning of period 160,842 118,704 98,206
+Added: Cash, cash equivalents, and restricted cash - end of period $ 232,051 $ 160,842 $ 118,704
+Added: Cash and cash equivalents $ 197,016 $ 157,674 $ 73,416
+Added: Restricted cash (included in prepaid expenses and other current assets) 35,035 3,168 4,977
+Added: Restricted cash (included in other assets) — — 40,311
+Added: Cash, cash equivalents, and restricted cash $ 232,051 $ 160,842 $ 118,704
Supplemental disclosures of cash flow information
21 unchanged sentences
As of December 31, 2025, PACS Group subsidiaries operated 268 facilities under long-term lease arrangements and had options to purchase 37 of those facilities.
−Removed: PACS Group owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities and one non-affiliated ALF operating entity.
+Added: PACS Group owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities.
PACS Group’s real estate portfolio includes 53 properties which are operated and managed by applicable PACS Group subsidiaries.
−Removed: PACS Group subsidiaries also have equity method investments in partnerships that own the underlying real estate and related improvements of 49 post-acute care facilities that are operated by other PACS Group subsidiaries and three post-acute care facilities that are operated by non-affiliated operating entities.
+Added: PACS Group subsidiaries also have equity method investments in partnerships that own the underlying real estate and related improvements of 49 post-acute care facilities that are operated by other PACS Group subsidiaries.
Providence Administrative Consulting Services, Inc.
9 unchanged sentences
PACS Group and its consolidated subsidiaries subsequent to the Reorganization are collectively referred to herein as the Company.
−Removed: The New Credit Agreement is described in Note 10, “Credit Facilities”.
+Added: The credit agreement, as amended and restated over time, is described in Note 10, “Credit Facilities”.
The Reorganization was effected by the two then-existing stockholders of PGI (which at the time was the direct or indirect parent company of all consolidated entities comprising the Company), contributing their respective shares in PGI to newly-formed PACS Holdings, in exchange for a proportionate interest of shares in newly-formed PACS Group (via issuance of shares of PACS Group), and thus became the sole stockholders of PACS Group.
25 unchanged sentences
The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions.
−Removed: Included in restricted cash are funds held for PLGL and, prior to 2023, workers’ compensation (WC) claims.
−Removed: Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding WC and PLGL claims.
+Added: Included in restricted cash are funds held for PLGL.
+Added: Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding PLGL claims.
See Note 8, “Fair Value Measurement”, for information on the use of restricted cash in other assets to purchase investments in the period.
1 unchanged sentence
While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets.
−Removed: The following presents all cash and cash equivalents and restricted cash on the combined/consolidated balance sheets and reconcile to total cash included on the combined/consolidated statement of cash flows as of December 31, 2024, 2023 and 2022:
−Removed: Year Ended December 31,
−Removed: 2024 2023 2022
−Removed: Cash and cash equivalents
−Removed: $ 157,674 $ 73,416 $ 58,269
−Removed: Restricted cash (included in prepaid expenses and other current assets)
−Removed: 3,168 4,977 7,847
−Removed: Restricted cash (included in other assets)
−Removed: — 40,311 32,090
−Removed: Total cash, cash equivalents, and restricted cash $ 160,842 $ 118,704 $ 98,206
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
Cash in Excess of FDIC Limits
4 unchanged sentences
Insurance Subsidiary Deposits and Investments
−Removed: The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities.
+Added: The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as current and non-current assets based on the timing of expected future payments of the Company's captive insurance liabilities.
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
Patient and Resident Service Revenue
−Removed: Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services.
−Removed: Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services.
−Removed: These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations.
−Removed: The Company recognizes revenue as its performance obligations are completed.
+Added: The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents.
+Added: Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled.
+Added: These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor.
+Added: Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly.
+Added: The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate.
+Added: Revenue is recognized as the performance obligations are satisfied.
Routine services are treated as a single performance obligation satisfied over time as services are rendered.
These routine services represent a bundle of services that are not capable of being distinct.
−Removed: The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided.
+Added: Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity.
+Added: Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges.
+Added: The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation.
+Added: Generally, performance obligations satisfied over time relate to residents receiving services in the facility.
+Added: The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away.
Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered.
+Added: Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price.
+Added: The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration.
+Added: Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers.
+Added: Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience.
+Added: The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.
+Added: If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known.
+Added: The Company maintains a refund liability for consideration collected related to revenue that is not probable that a significant revenue reversal will not occur.
+Added: The Company expects to refund some or all of that consideration back to the payor.
+Added: Agreements with third-party payors typically provide for payments at amounts less than established charges.
+Added: A summary of the payment arrangements with major third-party payors is as follows:
+Added: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system.
+Added: Payments for skilled nursing facility services rendered to Medicaid program beneficiaries are based on an established daily reimbursement rate for eligible stays.
+Added: The rate is adjusted periodically.
+Added: The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid.
+Added: Managed Care, Private and Other:
+Added: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates.
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: The Company’s contracts are short term in nature with a duration of one year or less.
+Added: The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care.
+Added: As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component.
+Added: Included in the Company’s combined/consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of differences between the timing of revenue recognition and billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided.
+Added: The Company has no material contract liabilities and contract assets as of December 31, 2025 and 2024.
+Added: Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation.
+Added: As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider.
+Added: Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs.
+Added: The Company believes that it is in compliance with all applicable laws and regulations.
+Added: The contracts the Company has with commercial payors also provide for retrospective audit and review of claims.
+Added: Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services.
+Added: These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved.
+Added: Estimated settlements are adjusted in future periods as information becomes available.
+Added: Historically, differences between estimated settlements and actual settlements have been immaterial.
Accounts Receivable and Allowance for Credit Losses
1 unchanged sentence
At December 31, 2025 and 2024, the allowance for credit losses was immaterial to the combined/consolidated financial statements.
−Removed: The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors.
−Removed: Contractual adjustments are based on contractual agreements and historical experience with those payors.
−Removed: The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience.
−Removed: The allowance for implicit price concession is routinely evaluated and any subsequent changes are recorded as an adjustment to patient and resident service revenue in the combined/consolidated statements of income.
Government Grants
18 unchanged sentences
The Company leases skilled nursing facilities, assisted living facilities, and commercial office space.
−Removed: The Company determines if an arrangement is a lease (for accounting purposes) upon execution of each respective agreement.
+Added: The Company determines if an arrangement is a lease upon execution of each respective agreement.
Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease.
6 unchanged sentences
Determining a credit spread as secured by the Company’s assets may require significant judgment.
−Removed: The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three to twenty years .
+Added: The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional five to twenty years .
Exercise of renewal options is generally subject to the satisfaction of certain conditions which vary by contract and generally follow payment terms that are consistent with those in place during the initial term, including contractual rent escalators.
27 unchanged sentences
Fair Value Measurements
−Removed: The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings.
+Added: The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits and investments, accounts payable and borrowings.
Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value.
11 unchanged sentences
The Company is principally self-insured for risks related to PLGL claims.
−Removed: Additionally, the Company is partially self-insured for risks related to WC policies.
+Added: Additionally, the Company is partially self-insured for risks related to workers’ compensation (WC) policies.
Accrued risk reserves primarily represent the accrual for risks associated with WC and PLGL claims.
63 unchanged sentences
The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors based on estimated fair values, ratably over the requisite service period of the award.
−Removed: Net income reflects the recognition of the fair value of all restricted stock unit awards issued, the amount of which is based upon the number of grants and other variables.
+Added: Stock-based compensation expense within net income reflects the recognition of the fair value of all restricted stock unit awards issued, the amount of which is based upon the number of grants and other variables.
The Company accounts for award forfeitures as they occur.
2 unchanged sentences
GAAP, are excluded from net income.
−Removed: For the year ended December 31, 2024, comprehensive income includes unrealized gains and losses on the Company’s available-for-sale debt securities, offsetting to $ 0 in the period.
There were no components of comprehensive income for the years ended December 31, 2025 and 2023.
−Removed: The Company does not have any components of
+Added: For the year ended December 31, 2024, comprehensive income includes unrealized gains and losses on the Company’s available-for-sale debt securities, offsetting to $ 0 in the period.
+Added: The Company does not have any components
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: other comprehensive income recorded within its combined/consolidated financial statements to present and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements.
+Added: of other comprehensive income recorded within its combined/consolidated financial statements to present and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements.
Commitments and Contingencies
1 unchanged sentence
The defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require the Company to incur significant expense.
−Removed: Loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss.
−Removed: These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known.
−Removed: Accordingly, the Company is often initially unable to develop a best estimate of loss and therefore, the estimated minimum loss amount, which could be zero, is recorded;
−Removed: then, as information becomes known, the minimum loss amount is updated, as appropriate.
−Removed: Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation.
+Added: Loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss, which could be zero.
+Added: These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as necessary when additional information becomes known and expectations change.
Recent Accounting Standards Adopted by the Company
−Removed: In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures .
−Removed: The standard improved reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”) and enhanced disclosure requirements for companies with a single reportable segment.
−Removed: Additionally, the standard requires the annual disclosures on an interim basis.
−Removed: This guidance was effective for annual periods beginning with the Company’s fiscal year 2024, and in interim periods within the Company’s fiscal year 2025.
−Removed: The Company adopted this standard in Note 3, “Business Segments” of this annual report on Form 10-K.
−Removed: Recent Accounting Standards Issued But Not Yet Adopted by the Company
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
−Removed: Improvements to Income Tax Disclosures , which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.
−Removed: This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company’s fiscal year 2025, with early adoption permitted.
−Removed: The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements.
+Added: Improvements to Income Tax Disclosures .
+Added: The standard requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.
+Added: This guidance was effective for annual periods beginning after December 15, 2024.
+Added: The Company adopted the standard on a retrospective basis in Note 12, “Income Taxes”, of this annual report on Form 10-K.
+Added: Recent Accounting Standards Issued But Not Yet Adopted by the Company
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which requires the Company to disaggregate key expense categories such as employee compensation, depreciation, and intangible asset amortization within its financial statements.
2 unchanged sentences
The Company is currently evaluating the impact this guidance will have on the disclosures included in the notes to the combined/consolidated financial statements.
+Added: In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):
+Added: Narrow-Scope Improvements , which clarifies interim disclosure requirements and the applicability of Topic 270.
+Added: The guidance will be effective for interim periods beginning January 1, 2028.
+Added: Early adoption is permitted.
+Added: Upon adoption, the guidance can be applied prospectively or retrospectively.
+Added: The Company is currently evaluating the impact this guidance will have and does not expect the adoption of this guidance to have a material impact on the interim condensed consolidated financial statements.
BUSINESS SEGMENTS
5 unchanged sentences
Net income is also used to monitor budget versus actual results.
+Added: As the Company’s single reportable segment is at the consolidated level, the accounting policies of the reportable segment are the same as those disclosed in Note 2, “Summary of Significant Accounting Policies”.
+Added: The Company's CODM does not review segment assets at a different asset level or category than that disclosed in its combined/consolidated balance sheets and therefore assets by segment are not disclosed below.
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: As the Company’s single reportable segment is at the consolidated level, the accounting policies of the reportable segment are the same as those disclosed in Note 2, “Summary of Significant Accounting Policies”.
−Removed: The Company's CODM does not review segment assets at a different asset level or category than that disclosed in its combined/consolidated balance sheets and therefore assets by segment are not disclosed below.
The following table sets forth financial information for the segment:
14 unchanged sentences
REVENUE AND ACCOUNTS RECEIVABLE
−Removed: Patient and Resident Service Revenue
−Removed: The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents.
−Removed: Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled.
−Removed: These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor.
−Removed: Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly.
−Removed: The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate.
−Removed: Revenue is recognized as the performance obligations are satisfied.
−Removed: Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity.
−Removed: Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges.
−Removed: The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation.
−Removed: Generally, performance obligations satisfied over time relate to residents receiving services in the facility and, when applicable, residents receiving services in their homes (independent care or assisted living).
−Removed: The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away.
−Removed: Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price.
−Removed: The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration.
−Removed: Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers.
−Removed: Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience.
−Removed: The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: in a future period.
−Removed: If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known.
−Removed: The Company maintains a refund liability for consideration collected related to revenue that is not probable that a significant revenue reversal will not occur.
−Removed: The Company expects to refund some or all of that consideration back to the payor.
−Removed: The balance of the refund liability was $ 145,795 and $ 0 as of December 31, 2024 and 2023, respectively, and is presented within current liabilities on the Company's combined/consolidated balance sheets.
−Removed: Agreements with third-party payors typically provide for payments at amounts less than established charges.
−Removed: A summary of the payment arrangements with major third-party payors is as follows:
−Removed: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system.
−Removed: The applicable licensed healthcare provider entity is paid for certain reimbursable services at the approved rate with final settlement determined after submission of the annual cost report and audit thereof by the designated Medicare fiscal intermediary.
−Removed: Revenue from the Medicare program amounted to 33.8 %, 38.6 %, and 47.6 % of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
−Removed: Payments for skilled nursing facility services rendered to Medicaid (including Medi-Cal, which is the name of the state Medicaid program in California) program beneficiaries are based on an established daily reimbursement rate for eligible stays.
−Removed: The rate is adjusted periodically.
−Removed: The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid.
−Removed: Revenue from the Medicaid program amounted to 40.4 %, 37.6 %, and 30.2 % of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
−Removed: Managed Care, Private and Other :
−Removed: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates.
−Removed: Revenue from these sources collectively amounted to 25.8 %, 23.8 %, and 22.2 % of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
−Removed: The Company’s contracts are short term in nature with a duration of one year or less.
−Removed: The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care.
−Removed: As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component.
−Removed: Included in the Company’s combined/consolidated balance sheets are contract balances, comprised of billed accounts receivable and unbilled receivables, which are the result of differences between the timing of revenue recognition and billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided.
−Removed: The Company has no material contract liabilities and contract assets as of December 31, 2024 and 2023.
−Removed: Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation.
−Removed: As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider.
−Removed: Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs.
−Removed: The Company believes that it is in compliance with all applicable laws and regulations.
−Removed: The contracts the Company has with commercial payors also provide for retrospective audit and review of claims.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services.
−Removed: These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved.
−Removed: Estimated settlements are adjusted in future periods as information becomes available, or as years are settled or are no longer subject to such audits or other reviews.
−Removed: Historically, differences between estimated settlements and actual settlements have been immaterial.
+Added: Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled nursing, rehabilitation therapy, and assisted living services.
+Added: Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services.
+Added: These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations.
+Added: Disaggregation of Revenue
The Company disaggregates revenue from contracts with its patients by payors.
8 unchanged sentences
$ 5,287,885 100.0 % $ 4,086,655 100.0 % $ 3,110,114 100.0 %
+Added: Refund Liability
+Added: The balance of the refund liability was $ 181,129 and $ 145,795 as of December 31, 2025 and 2024, respectively, and is presented within current liabilities on the Company's combined/consolidated balance sheets.
Additional Funding and CARES Act
−Removed: Through the CARES Act, the Company received $ 14,962 in funding from the U.S.
+Added: Through the CARES Act of 2020, the Company received $ 14,962 in funding from the U.S.
Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) during the year ended December 31, 2022.
−Removed: These funds were provided to 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.
−Removed: The Company recorded these funds as deferred revenue upon receipt and revenue was recognized only to the extent that health-care-related expenses or lost revenues had been incurred and were not reimbursed from other funding sources.
−Removed: The Company recognized an immaterial amount of revenue within additional funding on its combined/consolidated statements of income in 2023 for funds received prior to 2023.
−Removed: The Company did not receive any funds related to this program during 2023 or 2024.
−Removed: The CARES Act also provided for refundable payroll tax credits known as the Employee Retention Tax Credit (ERTC), which allowed qualified employers to receive a credit of 70% of the employee qualified wages and related payroll costs paid after December 31, 2020 through September 30, 2021, up to a maximum credit of $7 per employee, per quarter, for a maximum of $21 per employee in 2021.
−Removed: The Company treated these credits under the accrual basis of accounting in conformity with U.S.
−Removed: The Company interpreted the condition of partial suspension through governmental orders during all quarters of 2020 and the first three quarters of 2021, as defined by the CARES Act and to incur qualified payroll and related costs during the applicable quarters.
−Removed: The Company claimed a total of $ 32,428 under the ERTC for qualified wages related to periods prior to the year ended December 31, 2022.
−Removed: The Company utilized outside consultants to calculate the qualified wages and the ERTC amounts, and to prepare and submit the applications.
−Removed: Subsequently, due to uncertainty related to meeting the necessary qualifications, the Company recorded a reserve against the entire amount claimed.
−Removed: In the year ended December 31, 2024, the Company recognized $ 14,599 of the ERTC as an offset to labor in cost of services, as the statute of limitations surrounding the uncertainty of the qualifications, for certain of the funds received, expired.
−Removed: As of December 31, 2024 and 2023, the Company has recorded $ 21,917 and $ 36,477 , respectively, in other liabilities to reflect the cash already received related to these credits which may need to be returned and potential penalties.
−Removed: Additionally, under the CARES Act, employers could elect to defer the deposit and payment of the employer’s share of Social Security taxes through the end of 2020.
−Removed: One half of the deferral was required to be repaid on or before December 31, 2021 with the remaining half due on or before December 31, 2022.
−Removed: The Company paid $ 7,793 during the year ended December 31, 2022 and there are no remaining short-term or long-term balances as of December 31, 2024 and 2023.
+Added: These funds were provided to healthcare providers who diagnosed, tested, or cared for individuals with cases of COVID-19 and had
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
+Added: health-care-related expenses and lost revenues attributable to COVID-19.
+Added: The Company recorded these funds as deferred revenue upon receipt and revenue was recognized only to the extent that health-care-related expenses or lost revenues had been incurred and were not reimbursed from other funding sources.
+Added: The Company recognized an immaterial amount of revenue within additional funding on its combined/consolidated statements of income for the ended December 31, 2023 for funds received prior to 2023.
+Added: The Company did not receive any funds related to this program during the years ended December 31, 2025, 2024 or 2023.
+Added: The CARES Act also provided for refundable payroll tax credits known as the Employee Retention Tax Credit (ERTC), which allowed qualified employers to receive a credit of 70% of the employee qualified wages and related payroll costs paid after December 31, 2020 through September 30, 2021, up to a maximum credit of $7 per employee, per quarter, for a maximum of $21 per employee in 2021.
+Added: Due to uncertainty related to meeting the necessary qualifications, the Company recorded a reserve against the entire amount claimed.
+Added: In the years ended December 31, 2025 and 2024, the Company recognized $ 14,946 and $ 14,599 , respectively, of the ERTC as an offset to labor in cost of services, as the statute of limitations surrounding the uncertainty of the qualifications, for certain of the funds received, expired.
+Added: As of December 31, 2025 and 2024, the Company has recorded $ 9,674 and $ 21,917 , respectively, in other liabilities to reflect the cash already received related to these credits which may need to be returned and potential penalties.
Certain subsidiaries of the Company have obtained Department of Housing and Urban Development (HUD)-insured mortgages on properties that they lease to affiliated operating subsidiaries of the Company, while various other subsidiaries of the Company lease properties from unrelated third-party landlords that have obtained HUD-insured mortgages on the applicable properties.
Under the terms of the HUD-insured mortgages, borrowers and/or their tenants are required to make certain deposits into escrow funds to be used for payment of property insurance, mortgage insurance premiums, and taxes.
−Removed: The deposits are generally maintained in an interest-bearing account with a federally insured financial institution.
Additionally, some HUD-insured mortgages require a reserve for replacement account and a non-critical repair reserve.
6 unchanged sentences
These reserve and escrow accounts are maintained under the control of the mortgage lender for the benefit of the applicable tenant and are generally held in an interest-bearing account with a federally insured financial institution.
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
PROPERTY AND EQUIPMENT, NET
11 unchanged sentences
The Company evaluated its long-lived assets and did not record any impairment charges for the years ended December 31, 2025, 2024, and 2023.
−Removed: See Note 16, “Operation Expansions”, for information on expansions during the years ended December 31, 2024, 2023, and 2022.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
+Added: During the year ended December 31, 2025, the Company acquired a building used as its primary office space in Salt Lake City, Utah for a purchase price of $ 31,344 .
+Added: See Note 16, “Operation Expansions”, for additional information on expansions during the years ended December 31, 2025, 2024, and 2023 impacting property and equipment, net.
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS
10 unchanged sentences
There are no prior period accumulated indefinite-lived intangible asset impairment losses nor any indefinite-lived intangible asset impairment losses for the years ended December 31, 2025, 2024, and 2023.
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
FAIR VALUE MEASUREMENT
The Company's financial assets include insurance subsidiary deposits and highly liquid investments which are held by the consolidated captive insurance entity and are designated to support long-term insurance subsidiary liabilities and are recorded at fair value of $ 87,192 and $ 66,258 as of December 31, 2025 and 2024, respectively.
−Removed: As of December 31, 2024, the insurance subsidiary deposits and investments include net unrealized gains of $ 384 .
−Removed: Gains and losses on investments are recorded within other expense, net.
+Added: The insurance subsidiary deposits and investments include net unrealized gains of $ 5,280 and $ 384 as of December 31, 2025 and 2024, respectively.
+Added: Gains and losses on investments are recorded within other income (expense), net.
Insurance subsidiary deposits and investments consist of holdings in investment grade bond mutual funds and are derived using Level 2 inputs.
7 unchanged sentences
The Company is not the managing member of any of the entities in which it is invested.
−Removed: On July 1, 2024 the Company invested $ 15,345 in the entity BRFS SNF Ventures V, LLC (BRFS) for a 50.0 % ownership.
−Removed: As of December 31, 2024 this investment held three post-acute care facilities that were operated by non-affiliated operating entities.
+Added: The Company holds a 50.0 % ownership interest in the entity BRFS SNF Ventures V, LLC (BRFS).
+Added: This investment holds three post-acute care facilities which it leases to the Company.
BRFS is a VIE, however the Company does not consolidate the entity as it does not have the power to direct the activities that most significantly impact its economic performance.
Therefore, the Company only accounts for its specific interest in the investment.
−Removed: The investment was $ 15,528 on the Company’s combined/consolidated balance sheet as of December 31, 2024.
−Removed: On August 1, 2025, the Company took over the operations of these three post-acute care facilities.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: In connection with the Prestige acquisition described in Note 16, “Operation Expansions”, the Company invested $ 10,000 in the entity Next Saddle Investors, LLC (Saddle) for a 25.8 % ownership interest.
−Removed: Saddle acquired the operations for all 53 facilities included in the acquisition, and subsequently assigned them to the Company.
+Added: The investment was $ 14,948 and $ 15,528 on the Company’s combined/consolidated balance sheets as of December 31, 2025 and 2024, respectively.
+Added: The Company holds a 25.8 % ownership interest in the entity Next Saddle Investors, LLC (Saddle).
+Added: Saddle acquired the operations for all 53 facilities included in the 2024 Prestige acquisition and subsequently assigned them to the Company.
Saddle also acquired the underlying real estate for 37 of the facilities from the Prestige acquisition, which it leases to the Company.
−Removed: The Company determined the Saddle manager to be a de facto agent to the Company under FASB ASC Topic 810, Consolidation (ASC 810).
+Added: The Company determined the Saddle manager held a de facto agency relationship with the Company under FASB ASC Topic 810, Consolidation (ASC 810).
Saddle is a VIE;
−Removed: however, the Saddle manager is the primary beneficiary and therefore the Company does not consolidate the entity and only accounts for its specific interest in the investment.
−Removed: As of December 31, 2024, the investment was $ 8,536 on the Company’s balance sheet.
+Added: however, because the Company is not the primary beneficiary, it does not consolidate the entity.
+Added: The investment was $ 4,986 and $ 8,536 on the Company’s balance sheets as of December 31, 2025 and 2024, respectively.
All of the Company’s other equity investments are individually immaterial with the largest investment of $ 7,727 in an entity representing an ownership of 49.0 %.
1 unchanged sentence
CREDIT FACILITIES
−Removed: On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities.
−Removed: The Working Capital Loan allowed the Company to borrow up to $ 17,500 at an annual interest rate of 9 %.
−Removed: On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $ 15,000 .
−Removed: As described below, the Working Capital Loan was repaid during the year and, as such, had a zero balance as of December 31, 2024 and 2023.
−Removed: On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist Bank (Truist) as administrative agent (Administrative Agent), and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swingline sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility.
−Removed: The 2023 Credit Agreement provided for:
−Removed: (i) 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $ 150,000 , including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $ 30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $ 20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $ 275,000 .
−Removed: Outstanding borrowings under the 2023 Credit Facility accrued interest at either:
−Removed: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10 % credit spread adjustment) plus a margin ranging from 2.50 % to 3.50 % per annum;
−Removed: or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50 % to 2.50 % per annum.
−Removed: The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement.
−Removed: In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30 % to 0.50 % per annum, depending on the same debt to income ratio.
−Removed: In connection with executing the 2023 Credit Agreement, deferred financing costs associated with lines-of-credit and long-term debt, of $ 3,109 , were written off, and additional deferred financing costs of $ 9,662 were capitalized during the year ended December 31, 2023.
−Removed: In addition, on the closing date of the 2023 Credit Agreement, the Company drew $ 75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $ 275,000 Truist Term Loan.
−Removed: See Note 11, “Long-Term Debt”, for more details.
−Removed: The Company used approximately $ 142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan.
−Removed: On December 7, 2023, the Company amended and restated the 2023 Credit Facility (Amended and Restated 2023 Credit Facility).
−Removed: The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $ 600,000 , which Revolving Commitments (as defined in the Amended and Restated 2023 Credit Facility) may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $ 50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $ 20,000 at any time outstanding.
−Removed: Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company equal to either (a) SOFR (plus a 0.10 % credit spread adjustment) plus a margin ranging from 2.25 % to 3.25 % per
+Added: The Company maintains a revolving credit facility between the Company and certain of its subsidiaries, and Truist Bank (Truist) as administrative agent (Administrative Agent) and a syndicate of lenders (the Amended and Restated Credit Facility).
+Added: The Amended and Restated Credit Facility provides for a Revolving Commitment (as defined in the Amended and Restated Credit Facility) of up to $ 600,000 which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $ 50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $ 20,000 at any time outstanding.
+Added: Outstanding borrowings under the Amended and Restated Credit Facility bear interest at the option of the Company equal to either (a) SOFR (plus a 0.10 % credit spread adjustment) plus a margin ranging from 2.25 % to 3.25 % per annum;
+Added: or (b) the Base Rate (which is defined in a customary manner for credit facilities of this type) plus the applicable margin ranging from 1.25 % to 2.25 % per annum.
+Added: The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the terms of the credit agreement.
+Added: In addition, the Company will pay a commitment fee ranging from 0.25 % to 0.45 % per annum on the unused portion of the Revolving Commitment, depending on the same debt to income ratio.
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus a margin ranging from 1.25 % to 2.25 % per annum.
−Removed: The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility.
−Removed: In addition, the Company will pay a commitment fee ranging from 0.25 % to 0.45 % per annum on the unused portion of the Revolving Commitments, depending on the same debt to income ratio.
−Removed: Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $ 460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility.
−Removed: Deferred financing costs associated with both lines-of-credit and long-term debt of $ 519 were written off as part of the refinancing transactions during the year ended December 31, 2023.
−Removed: The Amended and Restated 2023 Credit Facility contains certain financial and non-financial covenants and restrictions.
+Added: The credit agreement contains certain financial and non-financial covenants and restrictions.
Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand.
1 unchanged sentence
The Amended and Restated Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10 :1.00.
+Added: 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, the Company 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 the Company to the Amended and Restated Credit Facility, as further set forth therein.
1 unchanged sentence
On March 27, 2025, and May 29, 2025, the Company 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.
−Removed: The May 29, 2025 amendment supplemented teh Amended and Restated Credit Agreement’s the financial covenants requiring the Company to maintain unrestricted cash and certain permitted investments of at least $ 100,000 until the Company delivers audited financial statements for the fiscal year ended December 31, 2024 (the “Liquidity Requirement”).
+Added: The May 29, 2025 amendment supplemented the Amended and Restated Credit Agreement’s the financial covenants requiring the Company to maintain unrestricted cash and certain permitted investments of at least $ 100,000 until the Company delivers audited financial statements for the fiscal year ended December 31, 2024 (the “Liquidity Requirement”).
On July 24, 2025 and August 13, 2025 the Company 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.
1 unchanged sentence
The August 13, 2025 Forbearance Agreement and Fifth Amendment to the 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.
−Removed: 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 (as defined in the Amended and Restated Credit Agreement) thereafter, or earlier termination upon the occurrence of certain specified events of default.
On October 21, 2025, the Company entered into a third forbearance agreement (the “October Forbearance Agreement”).
3 unchanged sentences
and inaccuracies in certain representations and warranties made as a result of the foregoing (collectively, with the Initial Technical Events of Default, the “Technical Events of Default”).
+Added: 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.
+Added: On November 26, 2025, the Company entered into another amendment to and waiver (Sixth Amendment and Waiver) under the Amended and Restated Credit Facility that, among other things, waived all Technical Events of Default.
+Added: 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 the Company delivers to the Administrative Agent financial statements and a corresponding compliance certificate for the fiscal quarter ended June 30, 2026 (the “Liquidity Requirement Termination Date”).
+Added: The Company was in compliance with all such covenants and restrictions as of December 31, 2025.
+Added: The Company maintains the Amended and Restated Credit Facility as its single line of credit.
+Added: At December 31, 2025, the total commitment limit continues to be $ 600,000 and was secured by Company assets.
+Added: The agreement matures on
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: 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.
−Removed: The October Forbearance Agreement provides for the same forbearance period as the prior forbearance agreements.
−Removed: Following the October Forbearance Agreement, the Administrative Agent agreed to extend the forbearance period thereunder through November 30, 2025.
−Removed: During the forbearance period, the Company is required to comply with certain additional specified conditions, including the continued maintenance of minimum liquidity of $ 100,000 , limitations on certain investments and acquisitions, and a prohibition on the borrowing of new loans under the Amended and Restated 2023 Credit Facility.
−Removed: The October Forbearance Agreement is intended to provide the Company 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.
−Removed: The Company was in compliance with all such covenants and restrictions, as amended and allowable by forbearance, as of December 31, 2024.
−Removed: The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit.
−Removed: At December 31, 2024, the total commitment limit continues to be $ 600,000 and was secured by Company assets.
−Removed: The agreements mature on December 7, 2028.
−Removed: Due to the covenants and restrictions outlined above, the Amended and Restated 2023 Credit Facility has been classified as current on the Company’s balance sheet as of December 31, 2024.
−Removed: The balance outstanding on all applicable lines was $ 142,000 and $ 520,000 at December 31, 2024 and 2023, respectively.
−Removed: The Company had $ 13,923 in letters of credit outstanding as of December 31, 2024 and had no letters of credit outstanding as of December 31, 2023.
−Removed: Net deferred financing fees on lines-of-credit were $ 11,886 and $ 14,906 as of December 31, 2024 and 2023, respectively.
−Removed: Expense recognized relating to deferred financing fees on lines-of-credit is included in interest expense and amounted to $ 3,020 and $ 889 for the years ended December 31, 2024 and 2023, respectively, and was immaterial for the year ended December 31, 2022.
−Removed: On April 15, 2024, the Company completed an Initial Public Offering (IPO), as described in Note 19, “Capital Stock”, receiving initial net proceeds of $ 423,000 .
−Removed: The Company used $ 370,000 of the net proceeds from the IPO, which represented 87.5 % of the net proceeds from the IPO, to repay amounts outstanding under the Amended and Restated 2023 Credit Facility, and used the remaining amount for general corporate purposes to support the growth of the business.
−Removed: On September 9, 2024, the Company completed an underwritten public offering, as described in Note 19, “Capital Stock”, receiving initial net proceeds of $ 96,414 .
−Removed: The Company used 100 % of the net proceeds from the offering to repay amounts outstanding under the Amended and Restated 2023 Credit Facility.
+Added: December 7, 2028.
+Added: Due to the covenants and restrictions outlined above, the Amended and Restated Credit Facility was classified as current on the Company’s balance sheet as of December 31, 2024.
+Added: The balance outstanding on the credit facility was $ 100,000 and $ 142,000 at December 31, 2025 and 2024, respectively.
+Added: The Company had $ 7,850 and $ 13,923 in letters of credit outstanding as of December 31, 2025 and 2024, respectively.
+Added: Net deferred financing fees on lines of credit were $ 8,867 and $ 11,886 as of December 31, 2025 and 2024, respectively, and are recorded in other assets on the Company’s balance sheets.
+Added: Expense recognized relating to deferred financing fees on lines of credit is included in interest expense and amounted to $ 3,019 , $ 3,020 , and $ 889 for the years ended December 31, 2025, 2024, and 2023, respectively.
LONG-TERM DEBT
−Removed: During the years ended December 31, 2024 and 2023, certain of the Company's subsidiaries entered into HUD-insured mortgage loans in the aggregate amount of $ 68,345 and $ 88,809 , respectively.
+Added: During the year ended December 31, 2025 the Company and its subsidiaries did not enter into any HUD-insured mortgage loans, whereas in the year ended December 31, 2024, certain of the Company's subsidiaries entered into HUD-insured mortgage loans in the aggregate amount of $ 68,345 .
Additionally, the Company converted a $ 22,463 construction loan to a HUD-insured mortgage loan as disclosed in Note 5, “Escrow Funds” during the year ended December 31, 2024.
−Removed: As a result, 13 of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $ 252,913 as of December 31, 2024, of which $ 4,007 is classified as current and the remaining $ 248,906 is classified as non-current.
−Removed: As of December 31, 2023, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $ 166,181 of which $ 2,346 was classified as current and the remaining $ 163,835 was classified as non-current.
+Added: As of December 31, 2025, 13 of the Company’s subsidiaries had mortgage loans insured with HUD in the aggregate amount of $ 248,906 , of which $ 4,169 was classified as current and the remaining $ 244,737 was classified as non-current.
+Added: As of December 31, 2024, 13 of the Company’s subsidiaries had mortgage loans insured with HUD in the aggregate amount of $ 252,913 of which $ 4,007 was classified as current and the remaining $ 248,906 was classified as non-current.
These subsidiaries are subject to HUD-mortgage oversight and periodic inspections.
3 unchanged sentences
The original terms for all the HUD-insured mortgage loans are 24 to 37 years.
−Removed: In addition to the HUD-insured mortgage loans above, the Company’s subsidiaries had eight other mortgage loans or promissory notes.
+Added: In addition to the HUD-insured mortgage loans above, the Company’s subsidiaries had four other mortgage loans or promissory notes.
The non-HUD-insured mortgage loans and notes bear interest rates that range from 2.0 % to 7.5 % per annum with various maturity dates through June 1, 2027.
−Removed: As of December 31, 2024, the Company had $ 16,997 of debt principal outstanding under the non-HUD mortgage loans and promissory notes, of which $ 10,845 is classified as current
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: and the remaining $ 6,152 is classified as non-current.
−Removed: As of December 31, 2023, the Company had $ 48,829 of debt principal outstanding under the non-HUD mortgage loans and promissory notes, of which $ 14,476 is classified as current and the remaining $ 34,353 is classified as non-current.
+Added: As of December 31, 2025, the Company had $ 4,305 of debt principal outstanding under the non-HUD-insured mortgage loans and promissory notes, of which $ 294 is classified as current and the remaining $ 4,011 is classified as non-current.
+Added: As of December 31, 2024, the Company had $ 16,997 of debt principal outstanding under the non-HUD-insured mortgage loans and promissory notes, of which $ 10,845 is classified as current and the remaining $ 6,152 is classified as non-current.
The Company was in compliance with all applicable loan covenants with respect to the foregoing as of December 31, 2025 and 2024.
7 unchanged sentences
$ 244,803 $ 250,984
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
Long-term debt and line of credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2025:
10 unchanged sentences
Expense recognized related to deferred financing fees on long-term debt is included in interest expense and amounted to $ 129 , $ 95 , and $ 1,551 for the years ended December 31, 2025, 2024, and 2023, respectively.
−Removed: As discussed in Note 10, “Credit Facilities”, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement.
−Removed: Under the Truist Term Loan, the Company borrowed $ 275,000 .
−Removed: The Truist Term Loan had a maturity date of June 30, 2028.
−Removed: Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $ 224,802 .
−Removed: The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, had a zero balance as of December 31, 2024 and 2023.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
The provision for income taxes for the years ended December 31, 2025, 2024, and 2023 is summarized as follows:
+Added: Year Ended December 31,
2025 2024 2023
9 unchanged sentences
$ 92,989 $ 46,210 $ 44,435
−Removed: A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2024, 2023 and 2022, respectively, is as follows:
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: A reconciliation of the income tax expense at the federal statutory rate to income tax expense for the years ended December 31, 2025, 2024 and 2023, respectively, is as follows:
+Added: Year Ended December 31,
2025 2024 2023
−Removed: Income tax expense at statutory rate 21.0 % 21.0 % 21.0 %
+Added: Total % Total % Total %
+Added: Income tax expense at federal statutory rate $ 59,735 21.0 % $ 21,326 21.0 % $ 33,037 21.0 %
State income taxes – net of federal benefit (1)
−Removed: Non-deductible expenses 18.5 0.9 0.4
+Added: 20,045 7.0 7,106 7.0 10,283 6.5
+Added: Tax credits ( 5,000 ) ( 1.8 ) ( 947 ) ( 0.9 ) ( 336 ) ( 0.2 )
Change in valuation allowance 272 0.1 ( 622 ) ( 0.6 ) 2,107 1.3
+Added: Nontaxable or nondeductible items
+Added: Nondeductible compensation 9,413 3.3 16,780 16.5 71 0.0
+Added: Other nontaxable or nondeductible items 2,262 0.8 2,053 2.0 1,368 0.9
+Added: Stock-based compensation 5,498 1.9 — — — —
Change to deferred taxes 733 0.3 1,031 1.0 ( 2,486 ) ( 1.6 )
Other adjustments 31 — ( 517 ) ( 0.5 ) 391 0.2
−Removed: Total effective tax rate
+Added: Income tax expense $ 92,989 32.6 % $ 46,210 45.5 % $ 44,435 28.1 %
__________________
−Removed: The Company’s effective tax rate was 45.5 % for the year ended December 31, 2024, compared to 28.1 % for the same period in 2023 and 27.3 % in 2022.
−Removed: The change in effective tax rate was primarily due to an increase non-deductible expenses, including non-deductible compensation in 2024.
+Added: (1) State taxes in California comprise the majority (greater than 50 percent) of the tax effect of this category for the years ended December 31, 2025, 2024, and 2023, respectively.
+Added: Income taxes paid are as follows:
+Added: Year Ended December 31,
+Added: 2025 2024 2023
+Added: $ 50,415 $ 75,741 $ 42,447
+Added: California 26,104 25,396 17,387
+Added: Other 7,528 6,694 175
+Added: Total state and local $ 33,632 $ 32,090 $ 17,562
+Added: Total income taxes paid $ 84,047 $ 107,831 $ 60,009
+Added: __________________
+Added: (1) Excludes amounts paid to purchase transferable tax credits of $ 28,372 during the year ended December 31, 2025.
PACS GROUP, INC.
16 unchanged sentences
$ 938,040 $ 924,189
−Removed: Cash to accrual method change — ( 6,125 )
Fixed assets ( 65,661 ) ( 53,106 )
16 unchanged sentences
The Company does not anticipate the uncertain tax position to change materially within the next 12 months.
−Removed: The Inflation Reduction Act 2022 (IRA), which incorporates a Corporate Alternative Minimum Tax (CAMT), was signed on August 16, 2022.
−Removed: The changes were effective for tax years beginning after December 31, 2022.
−Removed: The new tax requires companies to compute two separate calculations for federal income tax purposes and pay the greater of the new minimum tax or their regular tax liability.
−Removed: The IRA does not have a material impact for the Company.
Operating Leases
−Removed: The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements.
−Removed: These operating leases expire at various dates throughout 2049.
+Added: The Company leases most of its skilled nursing and assisted living facilities, as well as its office space, under various non-cancelable operating lease agreements.
+Added: These operating leases expire at various dates through 2050.
+Added: 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 the Company and/or its stockholders.
+Added: For 36 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038.
+Added: At lease inception it was determined that the exercise of each of the purchase options was not reasonably certain.
+Added: Options on three of the Company’s leases have become subject to disagreement with
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: 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 the Company and/or its stockholders.
−Removed: For 35 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038.
−Removed: At lease inception it was determined that the exercise of each of the purchase options was not reasonably certain.
−Removed: 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 is working with the landlord to resolve the disagreement.
+Added: the landlord regarding whether the option exercise window has closed, and the Company is working with the landlord to resolve the disagreement.
All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements.
2 unchanged sentences
The Company leases certain skilled nursing and assisted living facilities under finance lease agreements.
−Removed: The lease terms of two of the facility finance leases allow for purchase options to be exercised at varying times until May 22, 2027.
−Removed: The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window.
+Added: The lease terms of one of the facility finance leases allow for a purchase option to be exercised during a specified window closing May 22, 2027.
+Added: The Company has determined that it is reasonably certain to exercise the purchase option at the end of the purchase option window.
Therefore, the Company has calculated the lease term through the end of the purchase option window for each such lease.
−Removed: In addition, for six of the facility finance leases, the lessor holds an option which could require the Company to purchase the associated real estate.
−Removed: The total obligation to purchase such real estate is approximately $ 86,751 and can be exercised by the lessor through June 14, 2026 (the “Lessor Options”).
+Added: In addition, for one of the facility finance leases, the lessor holds an option which could require the Company to purchase the associated real estate.
+Added: The total obligation to purchase such real estate is approximately $ 32,000 and can be exercised by the lessor through June 30, 2026 (the “Lessor Option”).
For other finance leases, the duration of the lease term represented the major part of the remaining economic life of the facility at inception.
63 unchanged sentences
$ 155,895 $ 3,092,920 $ 3,248,815
−Removed: Maturities of finance leases include amounts the Company would pay in the earliest period in which the lessor can exercise the Lessor Options.
+Added: Maturities of finance leases include amounts the Company would pay in the earliest period in which the lessor can exercise the Lessor Option.
In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities.
5 unchanged sentences
Employees vest in matching contributions over four years in accordance with the vesting schedule set out in the plan documents.
−Removed: On July 19, 2019, the Company adopted a non-qualified deferred compensation plan.
+Added: The Company has a non-qualified deferred compensation plan.
The deferred compensation plan allows certain employees to receive supplemental retirement income payments through the deferral of base salary and bonus compensation.
−Removed: Eligible employees may elect to defer receipt of no less than twenty thousand dollars of base salary and bonus compensation for any plan year.
+Added: Eligible employees may elect to defer receipt of no less than $ 20 of base salary and bonus compensation for any plan year.
Additionally, the Company may elect to make a discretionary matching contribution on behalf of the participant.
6 unchanged sentences
As of December 31, 2024, the Company terminated the Helios Consulting Agreement.
−Removed: For the years ended December 31, 2024, 2023, and 2022, the Company paid $ 0 , $ 4,000 , and $ 4,000 (inclusive of $ 150 paid to a subsidiary of Helios in 2023 and 2022), respectively.
+Added: For both of the years ended December 31, 2025 and 2024, the Company paid $ 0 , respectively, and for the year ended December 31, 2023, the Company paid $ 4,000 (inclusive of $ 150 paid to a subsidiary of Helios).
On March 24, 2023, the Company entered into subscription agreements with Mr.
8 unchanged sentences
OPERATION EXPANSIONS
+Added: 2025 Expansions and Divestitures
+Added: During the year ended December 31, 2025, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases.
+Added: The Company acquired operations of eight skilled nursing, assisted living, and subacute facilities and executed seven real estate purchases.
+Added: Of the seven real estate purchases, one of the properties was acquired in conjunction with the operations of the associated facility.
+Added: For the other six real estate purchases, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations.
+Added: These new operations added 655 and 271 operational skilled nursing and assisted living beds, respectively.
+Added: The aggregate purchase price for these expansions during the year ended December 31, 2025 was $ 143,751 .
+Added: The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment amounting to $ 142,751 .
+Added: As such, these transactions were classified as asset acquisitions.
+Added: The remaining aggregate purchase price for transactions during the year ended December 31, 2025 was concentrated in goodwill in the amount of $ 1,000 .
+Added: Such transactions were classified as business combinations.
+Added: The Company expects 100 % of the goodwill to be deductible for income tax purposes.
+Added: During the year ended December 31, 2025, the Company also divested of one leased facility which included 120 skilled nursing beds.
2024 Expansions
19 unchanged sentences
Other assets acquired consist of contracts assumed with local hospitals, wherein the Company agrees to hold a specified number of beds available for potential hospital discharge, for a set date range.
−Removed: The fair value of these hospital contracts was determined using the income approach.
+Added: The fair value of these hospital contracts was determined using the
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: income approach.
This approach utilized significant assumptions including management’s best estimates of the expected future cash flows and renewal rates of the contracts.
6 unchanged sentences
The Company reassessed whether it correctly identified all of the assets acquired and all of the liabilities assumed prior to recognition of the gain, in accordance with ASC 805.
−Removed: This bargain purchase gain is recorded within other income (expense), net on the Company’s combined/consolidated statements of income.
−Removed: The unaudited pro-forma results presented below include the effects of the Prestige acquisition as if it had been consummated as of January 1, 2022, with adjustments to give effect to pro forma events that are directly attributable to the Prestige acquisition which includes adjustments related to the Rent - cost of services expense.
−Removed: The unaudited pro forma
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: results do not reflect any operating efficiency or potential cost savings which may result from the consolidation of the acquired operations of the facilities.
−Removed: Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operation of the combined company would have been if the Prestige acquisition had occurred at the beginning of the period presented nor are they indicative of future results of operations and are not necessarily indicative of results that might have been achieved had the Prestige acquisition been consummated as of January 1, 2022.
−Removed: Year Ended December 31,
−Removed: 2024 2023 2022
−Removed: Revenue $ 4,367,701 $ 3,531,211 $ 2,798,435
−Removed: Income before provision for income taxes $ 106,809 $ 157,585 $ 210,783
−Removed: For the year ended December 31, 2024, the acquired facilities contributed revenue of $ 180,905 .
−Removed: For the year ended December 31, 2024, income before provision for income taxes related to the facilities was $ 5,681 .
+Added: This bargain purchase gain was recorded within other income (expense), net on the Company’s combined/consolidated statements of income.
In addition to the Prestige acquisition, during the year ended December 31, 2024, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases.
3 unchanged sentences
These new operations added 6,414 and 174 operational skilled nursing beds and assisted living beds, respectively.
−Removed: The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies.
The aggregate purchase price for these expansions during the year ended December 31, 2024 was $ 283,844 .
12 unchanged sentences
These new operations added 6,744 and 484 operational skilled nursing and assisted living beds, respectively.
−Removed: The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add team members with important skill sets, and/or realize synergies.
The aggregate purchase price for these expansions during the year ended December 31, 2023 was $ 129,174 .
10 unchanged sentences
The Company entered into separate agreements with the applicable prior operators as part of each transaction.
−Removed: 2022 Expansions
−Removed: During the year ended December 31, 2022, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases.
−Removed: The Company acquired operations at nine stand-alone skilled nursing, assisted living, and subacute facilities and four real estate purchases.
−Removed: Of the four real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility.
−Removed: For the other two acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations.
−Removed: These new operations added 1,180 operational skilled nursing beds.
−Removed: The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add team members with important skill sets, and/or realize synergies.
−Removed: The aggregate purchase price for these expansions during the year ended December 31, 2022 was $ 55,374 .
−Removed: The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment and other assets, amounting to $ 46,500 and $ 378 , respectively.
−Removed: As such, these transactions were classified as asset acquisitions.
−Removed: The remaining aggregate purchase price for transactions during the year ended December 31, 2022 was concentrated in goodwill in the amount of $ 8,496 and as such, the transactions were classified as business combinations.
−Removed: The Company expects 100 % of the goodwill to be deductible for income tax purposes.
−Removed: In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenants’ post-assumption rights and obligations under the long-term leases.
−Removed: The Company entered into separate agreements with the applicable prior operators as part of each transaction.
The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities to improve both clinical and financial performance of the acquired facility.
+Added: The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add team members with important skill sets, and/or realize synergies.
The operations added by the Company are frequently underperforming financially and have regulatory and clinical challenges to overcome.
1 unchanged sentence
The Company believes that prior operating results are not typically a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries.
−Removed: The assets added during the years ended December 31, 2024, 2023, and 2022 and through the issuance of the combined/consolidated financial statements were not material operations to the Company individually or in the aggregate.
−Removed: Accordingly, other than as disclosed above, pro forma financial information is not presented.
+Added: The assets added during the year ended December 31, 2025 and through the issuance of the combined/consolidated financial statements were not material operations to the Company individually or in the aggregate.
+Added: Accordingly, pro forma financial information is not presented.
The additions have been included in the December 31, 2025 and 2024 combined/consolidated balance sheets of the Company, and the operating results have been included in the combined/consolidated statements of income of the Company since the date the Company gained effective control.
2026 Expansions and Divestitures
−Removed: Subsequent to December 31, 2024, the Company’s operations and real estate portfolio expanded in four existing states with the addition of seven stand-alone facilities, five of which were acquired through long-term leases and two of which the Company had previously owned the real estate.
−Removed: These new facilities added 495 skilled nursing beds and 271 assisted living beds operated by the Company's affiliated operating subsidiaries.
+Added: Subsequent to December 31, 2025, the Company’s operations expanded in two existing states with the addition of three stand-alone facilities, two of which were acquired with the underlying real estate and one of which was acquired through a long-term lease.
+Added: These new facilities added 207 assisted living beds operated by the Company's affiliated operating subsidiaries.
The aggregate purchase price for these facilities was $ 50,500 .
−Removed: Additionally, during the same period the Company expanded its portfolio of owned properties by acquiring five properties associated with the Lessor Options for an aggregate purchase price of $ 79,351 .
+Added: Additionally, during the same period the Company expanded its portfolio of owned properties by acquiring one property, for which it had previously operated the facility, for an aggregate purchase price of $ 35,750 .
Subsequent to December 31, 2025, the Company also divested of one leased facility which included 110 skilled nursing beds.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: OTHER ACCRUED EXPENSES
−Removed: Other accrued expenses consisted of the following:
−Removed: Current portion of finance lease liabilities $ 21,177 $ 942
−Removed: Other 121,171 69,007
−Removed: Total other accrued expenses $ 142,348 $ 69,949
COMMITMENTS AND CONTINGENCIES
10 unchanged sentences
The CID includes requests for information relating to referral source relationships, including relationships with medical directors and other individuals.
+Added: Since the receipt of the CID, the DOJ has made additional
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: requests for information from Providence, including marketing materials and certain expense data across all Providence facilities.
The Company is cooperating with the investigation, which is ongoing.
8 unchanged sentences
that prohibit the making of fraudulent or false statements to any branch of the government of the United States.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: subpoena includes requests for information relating to PACS’ 1135 COVID Waiver practices, billing of Medicare Part B for respiratory and sensory integration therapy services, change of insurance enrollment, cost waivers for co-pays, deductibles, and co-insurance, and claim reimbursement from Medicare for bad debt.
+Added: The subpoena includes requests for information relating to PACS’ 1135 COVID Waiver practices, billing of Medicare Part B for respiratory and sensory integration therapy services, change of insurance enrollment, cost waivers for co-pays, deductibles, and co-insurance, and claim reimbursement from Medicare for bad debt.
The Company is cooperating with the investigation, which is ongoing.
9 unchanged sentences
Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories.
−Removed: The Company and other companies in its industry are routinely subjected to varying types of claims and suits, including class-actions.
+Added: The Company and other companies in its industry are routinely subjected to varying types of claims and suits,
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: including class-actions.
Class-action suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs.
11 unchanged sentences
Inc., and Regions Securities LLC.
−Removed: The complaint brings claims under Sections 11 and 15 of the Securities Act, and Section 10(b), and 20(a) of the Exchange Act, and alleges
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: the Company and its leadership engaged in a multi-year scheme to inflate revenue and profitability by (i) exploiting a COVID-era Medicare waiver to “flip” long-term Medicaid patients to higher-paying Medicare coverage, (ii) billing unnecessary Medicare Part B respiratory and sensory integration therapies, and (iii) falsifying licensure and staffing documentation.
+Added: The complaint brings claims under Sections 11 and 15 of the Securities Act, and Section 10(b), and 20(a) of the Exchange Act, and alleges the Company and its leadership engaged in a multi-year scheme to inflate revenue and profitability by (i) exploiting a COVID-era Medicare waiver to “flip” long-term Medicaid patients to higher-paying Medicare coverage, (ii) billing unnecessary Medicare Part B respiratory and sensory integration therapies, and (iii) falsifying licensure and staffing documentation.
On January 7, 2025, the court consolidated the Manchin action with a similar action brought by plaintiff New Orleans Employees’ Retirement System, and on February 11, 2025 the court appointed 1199SEIU Health Care Employees Pension Fund as lead plaintiff, and its counsel, Labaton Keller Sucharow LLP, as lead counsel.
−Removed: Pursuant to the parties’ stipulation and as ordered by the court on May 29, 2025, the Lead Plaintiff’s consolidated complaint is not due until 14 days after the Company files its Quarterly Report on Form 10-Q for the period ended September 30, 2024 and its Annual Report on Form 10-K for the year ended December 31, 2024.
−Removed: Defendants’ motion to dismiss the consolidated complaint is due 60 days after the complaint is filed, Plaintiffs’ opposition is due 60 days after the filing of the motion to dismiss, and Defendants’ reply is due 45 days after the filing of the opposition.
+Added: On December 19, 2025, after the Company filed its Quarterly Report on Form 10-Q for the period ended September 30, 2024 and its Annual Report on Form 10-K for the year ended December 31, 2024, the lead plaintiff filed a consolidated complaint.
+Added: The new complaint added Joshua Jergensen and P.J.
+Added: Sanford as named defendants, and also brought additional claims pursuant to Section 12(a)(2) of the Securities Act and Section 20A of the Exchange Act.
+Added: Defendants moved to dismiss the consolidated complaint on February 17, 2026.
+Added: According to the current operative schedule, Plaintiffs’ opposition is due April 20, 2026, and Defendants’ reply will be due June 4, 2026.
On February 14, 2025, a derivative action originally filed by plaintiff Theresa Howard-Hines (“ Howard-Hines Action”) captioned IN RE PACS GROUP, INC.
9 unchanged sentences
DERIVATIVE LITIGATION .
−Removed: The defendants have not yet been served in this action.
−Removed: The parties have tentatively agreed to stay the Utah Derivative Action pending resolution of the anticipated motion to dismiss the securities class action.
−Removed: No dispositive rulings have issued, discovery is not proceeding, and there are no settlement ranges or agreements in principle.
−Removed: Future developments may include motions to dismiss and other dispositive motions, and potential coordination with the securities class action if the stays are lifted.
+Added: The plaintiff voluntarily dismissed this case on December 8, 2025, without prejudice to her ability to refile.
Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control.
1 unchanged sentence
Regardless of final outcomes, however, any such proceedings, claims, and investigations may nonetheless impose a significant burden on management and employees and be costly to defend, with unfavorable preliminary, interim or final rulings.
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
The Company accrues a liability amount when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.
7 unchanged sentences
Insurance Claims
−Removed: The Company purchased PLGL claims made insurance policies to cover applicable claims through an unrelated insurer.
−Removed: The PLGL policies are claims-made high deductible self-insured policies whereby the Company is responsible for
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: the first layer of coverage, generally ranging from $ 350 to $ 500 per claim, as well as an aggregate one-time deductible generally ranging from $ 4,975 to $ 6,000 per policy, with the unrelated insurer typically covering up to $ 10,000 in aggregate claims paid per policy year.
−Removed: For certain subsidiaries located in Colorado, Kansas and Pennsylvania, the Company has purchased third-party insurance coverage generally ranging from $ 500 to $ 1,000 per claim, as well as an aggregate policy limit generally ranging from $ 1,500 to $ 3,000 .
−Removed: The Company uses its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retained under its PLGL programs.
−Removed: Accordingly, the Company is in essence self-insured for claims that are less than policy deductible amounts, claims not covered by such policies, and claims that exceed policy limits.
−Removed: It is the Company’s policy to use an external actuary to assist management in estimating the expense and related self-insurance liabilities for PLGL claims, both asserted and unasserted, on an undiscounted basis.
+Added: The Company is partially self-insured for general and professional liability claims up to a base amount per claim (the self-insured retention) with an aggregate, one-time deductible above this limit.
+Added: Losses beyond these amounts are insured through third-party policies with coverage limits per claim, per location and on an aggregate basis for the Company.
+Added: The combined self-insured retention is $ 750 per claim, subject to an additional one-time deductible of $ 9,500 for the Company’s independent subsidiaries in California.
+Added: For a subset of the Company’s independent subsidiaries acquired as part of the Plum acquisition in 2021 across California and Nevada, the combined self-insured retention is $ 500 per claim, subject to an additional one-time deductible of $ 6,000 .
+Added: For the independent subsidiaries not in California, the self-insured claim is $ 750 per claim, subject to an additional one-time deductible of $ 10,000 .
+Added: For all independent subsidiaries, except those located in Colorado, Kansas, and Pennsylvania the third-party coverage above these limits is $ 1,000 per claim, $ 3,000 per operation, with a $ 10,000 aggregate limit and an additional state-specific aggregate where required by state law.
+Added: In Colorado, Kansas, and Pennsylvania, the third-party coverage above these limits is $ 1,000 per claim and $ 3,000 per operation, which is independent of the aforementioned aggregate limits that apply outside of these states.
+Added: Subsequent to December 31, 2025, the combined self-insured retention is $ 750 per claim ($ 650 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 9,500 for the Company’s independent subsidiaries in California.
+Added: For the independent subsidiaries not in California, the self-insured claim is $ 750 per claim ($ 650 if an enforceable arbitration agreement applies), subject to an additional one-time deductible of $ 10,200 .
+Added: The majority of the self-insured retention and deductible limits for professional and general liabilities are self-insured through the captive insurance subsidiary, the related assets and liabilities of which are included in the accompanying combined/consolidated balance sheets.
+Added: The captive insurance subsidiary is subject to certain statutory requirements as an insurance provider.
+Added: The Company’s policy is to accrue amounts equal to the actuarial estimated costs to settle open claims of insureds, as well as an estimate of the cost of insured claims that have been incurred but not reported.
The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis.
The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.
−Removed: Included as part of accrued self-insurance liabilities in the accompanying combined/consolidated balance sheets are PLGL self-insurance liabilities amounting to $ 216,534 , and $ 162,976 as of December 31, 2024 and 2023, respectively, which includes $ 28,593 and $ 34,676 , respectively, of estimated obligations that will be covered by the unrelated insurer.
−Removed: PLGL self-insurance liabilities as of December 31, 2024 and 2023 include $ 76,650 and $ 43,083 , respectively, that were related to unasserted claims.
−Removed: As of December 31, 2024, the Company recorded an asset for the estimated PLGL claims that will be covered by the unrelated insurer amounting to $ 4,861 and $ 23,732 within other receivables and other assets, respectively, and as of December 31, 2023, the Company recorded an asset for the estimated PLGL claims that will be covered by the unrelated insurer amounting to $ 5,895 and $ 28,781 within other receivables and other assets, respectively, as the PLGL claims and the anticipated insurance recoveries are recorded on a gross rather than net basis in accordance with U.S.
As part of the Plum acquisition in 2021, the Company assumed Plum’s workers’ compensation plan.
2 unchanged sentences
The Plum facilities were transferred onto the Company’s retrospective-rated premium workers’ compensation policy as of the acquisition date.
+Added: The Company believes that adequate provision has been made in the combined/consolidated financial statements for liabilities that may arise out of patient care, workers’ compensation and related services provided to date.
+Added: The amount of the Company’s reserves was determined based on an estimation process that uses information obtained from both company-specific and industry data.
+Added: This estimation process requires the Company to continuously monitor and evaluate the life cycle of the claims.
+Added: It is the Company’s policy to use an external actuary to assist management in estimating the
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: expense and related self-insurance liabilities for PLGL claims, both asserted and unasserted, on an undiscounted basis.
+Added: The Company develops information about the size of the ultimate claims based on historical experience, current industry information and actuarial analysis, and evaluates the estimates for claim loss exposure on a quarterly basis.
+Added: The Company uses actuarial valuations to estimate the liability based on historical experience and industry information.
+Added: The most significant assumptions used in the estimation process include determining the trend in costs, the expected cost of claims incurred but not reported and the expected costs to settle or pay damage awards with respect to unpaid claims.
+Added: The self-insured liabilities are based upon estimates, and while management believes that the estimates of loss are reasonable, the ultimate liability may be in excess of or less than the recorded amounts.
+Added: Due to the inherent volatility of actuarially determined loss estimates, it is reasonably possible that the Company could experience changes in estimated losses that could be material to net income.
+Added: If the Company’s actual liabilities exceed its estimates of losses, its future earnings, cash flows and financial condition would be adversely affected.
+Added: The following table represents the Company’s self-insurance liabilities, on an undiscounted basis, inclusive of anticipated insurance recoveries, as of December 31, 2025 and 2024:
+Added: PLGL self- insurance liabilities $ 296,280 $ 216,534
+Added: Workers’ compensation liabilities 25,275 24,411
+Added: Total self-insurance liabilities $ 321,555 $ 240,945
+Added: current self-insurance liabilities
+Added: 128,994 75,966
+Added: Long-term self-insurance liabilities $ 192,561 $ 164,979
The following table represents activity in the Company’s PLGL self- insurance liabilities as of and for the years ended December 31, 2025 and 2024:
8 unchanged sentences
Balance December 31, 2025 $ 296,280
+Added: PLGL self-insurance liabilities as of December 31, 2025 and 2024 include $ 102,882 and $ 76,650 , respectively, that were related to unasserted claims.
+Added: The anticipated insurance recoveries included in the self-insurance liabilities are presented gross rather than net with the corresponding asset of $ 17,453 and $ 26,179 as of December 31, 2025 and $ 4,861 and $ 23,732 as of December 31, 2024, included in Other Receivables and Other Assets, respectively, on the consolidated balance sheets.
From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims.
−Removed: These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company.
−Removed: The terms of such
+Added: These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount.
+Added: (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company.
+Added: The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount.
Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted.
Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the combined/consolidated balance sheets for any of the periods presented.
−Removed: CAPITAL STOCK
−Removed: The Reorganization on June 30, 2023 referred to in Note 1, “Organization and Nature of Business”, resulted in the Common Shares outstanding being converted from 600 shares of PGI to 20,000 shares of PACS Group (a 1 to 33.33 conversion ratio).
−Removed: On March 31, 2024, the Company’s board of directors approved a 1 to 6,436.1693 stock split of its issued and outstanding common stock, which was effective by amendment to the Company’s charter on April 1, 2024.
−Removed: As part of the amendment, the number of authorized shares of common stock was revised to 1,250,000,000 with the par value remaining at $ 0.001 per share, and the number of authorized shares of preferred stock was approved to be 50,000,000 with a par value of $ 0.001 .
−Removed: All issued and outstanding common stock and per share amounts contained in the combined/consolidated financial statements have been retrospectively adjusted to give effect to the stock split for all periods presented.
−Removed: On April 15, 2024, the Company completed an IPO in which the Company issued and sold 21,428,572 shares of common stock at a public offering price of $ 21.00 per share, generating aggregate gross proceeds of $ 450,000 before underwriter discounts and commissions, fees, and other expenses of $ 35,843 .
−Removed: In addition, the underwriters exercised their 30 -day option to purchase an additional 3,214,284 shares of the Company’s common stock at the initial public offering price from the selling stockholders, less underwriting discounts and commissions.
−Removed: The Company did not receive any proceeds from any sale of shares by the selling stockholders.
−Removed: On September 9, 2024, the Company completed an underwritten public offering in which the Company issued and sold 2,777,778 shares of common stock at a public offering price of $ 36.25 per share, generating gross proceeds of $ 100,694 before underwriter discounts and commissions, fees, and other expenses of $ 5,409 .
−Removed: As part of the offering, selling stockholders sold 13,773,946 shares at the public offering price less underwriter discounts and commissions.
−Removed: In addition, the underwriters exercised their 30-day option to purchase an additional 2,482,758 shares of the Company’s common stock at the offering price from the selling stockholders, less underwriting discounts and commissions.
−Removed: The Company did not receive any proceeds from any sale of shares by the selling stockholders.
−Removed: As of December 31, 2024, the amount of issued and outstanding shares of common stock was 155,177,511 .
−Removed: The Company has no t issued any shares of preferred stock.
COMPUTATION OF NET INCOME PER COMMON SHARE
1 unchanged sentence
The computation of diluted net income per share is similar to the computation of basic net income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued, which are comprised of restricted stock units using the treasury stock method.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
A reconciliation of the numerator and denominator used in the calculation of basic net income per common share follows:
19 unchanged sentences
Diluted net income per common share $ 1.22 $ 0.38 $ 0.88
+Added: __________________
+Added: (1) The diluted per share amounts do not reflect 2,289,103 common share equivalents from restricted stock units for the year ended December 31, 2025 because of their anti-dilutive effect.
Stock-based compensation expense consists of stock-based payment awards made to employees and directors, comprised of restricted stock units, based on their estimated fair values.
−Removed: Stock-based compensation expense recognized in the Company’s combined/consolidated statements of income for the years ended December 31, 2024, 2023, and 2022 was based on the vesting of awards granted to date.
+Added: Stock-based compensation expense recognized in
+Added: PACS GROUP, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
+Added: (dollars in thousands, except for share and per share values)
+Added: the Company’s combined/consolidated statements of income for the years ended December 31, 2025, 2024, and 2023 was based on the vesting of awards granted to date.
2024 Incentive Award Plan (2024 Plan)
−Removed: On March 31, 2024, the Company’s board of directors and stockholders approved the 2024 Plan, which became effective on April 9, 2024.
The 2024 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors and consultants.
2 unchanged sentences
As of December 31, 2025, the total number of shares available for issuance under the 2024 Plan was 4,552,426 .
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
2024 Employee Stock Purchase Plan (2024 ESPP)
−Removed: On March 31, 2024, the Company’s board of directors and stockholders approved the 2024 ESPP, which became effective on April 9, 2024.
−Removed: The number of shares initially available for issuance pursuant to the 2024 ESPP was equal to the number of shares equal to 1 % of the number of shares of common stock outstanding as of immediately following the completion of the IPO (disregarding the shares issuable under the 2024 Plan).
+Added: The number of shares initially available for issuance pursuant to the 2024 ESPP (which number included 1,501,520 shares of common stock issuable pursuant to rights granted under the plan) was equal to 1 % of the number of shares of common stock outstanding immediately following the completion of the IPO (disregarding the shares issuable under the 2024 Plan).
The number of shares available for issuance under the 2024 ESPP increases annually on the first day of the year by an amount equal to up to 1 % of the aggregate number of shares outstanding on the final day of the immediately preceding calendar year.
−Removed: As of December 31, 2024 the total number of shares available for issuance under the 2024 ESPP was 1,501,520 as there have been no shares issued under this plan.
+Added: As of December 31, 2025 the total number of shares available for issuance under the 2024 ESPP was 3,053,295 .
Restricted Stock Unit Awards
−Removed: Pursuant to the 2024 Plan, the Company granted RSU awards to key executives and directors of 15,409,470 during the year ended December 31, 2024, and 0 shares during preceding years.
−Removed: For certain awards granted to key executives, the stock price used to determine the award fair value was the initial public offering price of $ 21.00 per share.
−Removed: Subsequent grants to non-employee directors used the market price on the date of respective grant to determine the award fair value.
−Removed: Awards granted to key executives at the time of the IPO vested 25 % upon issuance with the remaining shares scheduled to vest in equal increments on an annual basis over the next five years as the grantee meets the requisite service condition.
−Removed: Other awards granted vest over one year .
−Removed: The fair value per share of RSU awards granted during the year ended December 31, 2024 ranged from $ 21.00 to $ 24.85 .
−Removed: The fair value per share includes awards to non-employee directors.
−Removed: A summary of the status of the Company’s non-vested RSU awards for the year ended December 31, 2024 is presented below (there was no such activity prior to the approval of the 2024 Plan, including in 2023 and 2022):
+Added: Pursuant to the 2024 Plan, the Company granted 3,362,538 and 15,409,470 RSU awards during the years ended December 31, 2025 and 2024, respectively.
+Added: Awards granted to key executives at the time of the IPO vested 25 % upon issuance with the remaining shares scheduled to vest in equal increments on an annual basis over the next five years .
+Added: All other awards generally vest in equal increments on an annual basis over three years as the grantees meet the requisite service condition.
+Added: These awards granted used the market price on the date of the respective grant date to determine the award fair value.
+Added: The fair value per share of RSU awards granted during the years ended December 31, 2025 and 2024 ranged from $ 13.72 to $ 36.37 and from $ 21.00 to $ 24.85 , respectively.
+Added: A summary of the status of the Company’s non-vested RSU awards for the years ended December 31, 2025 and 2024 is presented below (there was no such activity prior to the approval of the 2024 Plan, including in 2023):
Non-Vested Restricted Stock Unit Awards Weighted Average Grant Date Fair Value
4 unchanged sentences
Non-vested at December 31, 2024 11,561,818 $ 21.01
+Added: Granted 3,362,538 21.79
+Added: Vested ( 2,325,126 ) 21.03
+Added: Forfeited ( 2,342,935 ) 20.38
+Added: Non-vested at December 31, 2025 10,256,295 $ 21.40
During the year ended December 31, 2025, the Company granted 13,197 RSU awards to non-employee directors for their service on the Company’s board of directors from the 2024 Plan.
The fair value per share of these awards were $ 36.37 based on the market price on the grant date.
−Removed: Subsequent to December 31, 2024, the Company granted 1,962,425 RSU awards to employees from the 2024 Plan.
−Removed: The fair value per share of these awards were $ 13.72 based on the market price on the grant date.
−Removed: Stock-based compensation expense
−Removed: Stock-based compensation expense recognized during the year ended December 31, 2024 for the Company’s equity incentive plans was $ 115,544 .
−Removed: In future periods, the Company expects to recognize $ 208,127 in stock-based compensation expense for unvested RSU awards that were outstanding as of December 31, 2024.
−Removed: Future stock-based compensation expense will be recognized over 4.3 weighted average years for unvested RSU awards.
−Removed: RESTATEMENT OF PREVIOUSLY ISSUED QUARTERLY FINANCIAL STATEMENTS (UNAUDITED)
−Removed: Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q filed on August 12, 2024, the Company 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.
−Removed: The Company determined that due
PACS GROUP, INC.
2 unchanged sentences
(dollars in thousands, except for share and per share values)
−Removed: to the underlying regulatory ambiguity those certain ancillary services revenue may be subject to significant reversal in the future.
−Removed: As such, the Company has 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.
−Removed: In accordance with ASC 250 - Accounting Changes and Error Corrections , SEC Staff Accounting Bulletin ("SAB") No.
−Removed: 99 - Materiality , and SAB No.
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: The financial statement line items impacted include the following:
−Removed: • Accounts receivable, net
−Removed: • Other assets
−Removed: • Accrued payroll and benefits
−Removed: • Refund liability
−Removed: • Other liabilities
−Removed: • Patient and resident service revenue
−Removed: • General and administrative expense
−Removed: 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.
−Removed: The Company corrected this classification as part of the restatement.
−Removed: The following tables present the unaudited condensed combined/consolidated balance sheets, statements of income (loss) and comprehensive income (loss), statements of stockholders’ equity, and statements of cash flows as previously reported, the restatement adjustments and the unaudited condensed combined/consolidated balance sheets for the quarters ended March 31, 2024 and June 30, 2024 and the unaudited statements of income (loss) and comprehensive income (loss), statements of stockholders’ equity, and statements of cash flows as adjusted for the quarter and year to date periods ended March 31, 2024 and June 30, 2024.
−Removed: Restatement adjustments are reflected as follows:
−Removed: • Related to Medicare Part B revenue are labeled “MPB”
−Removed: • Related to lease classification are labeled “LEA”
−Removed: In those cases where a financial statement line has been adjusted due to more than one category, a footnote reference detailing the categories has been added.
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED BALANCE SHEETS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: March 31, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Category Reference
−Removed: Current Assets:
−Removed: Cash and cash equivalents $ 81,213 $ — $ 81,213
−Removed: Accounts receivable, net 622,737 ( 10,938 ) MPB
−Removed: Other receivables 66,014 — 66,014
−Removed: Prepaid expenses and other current assets 61,761 — 61,761
−Removed: Total Current Assets 831,725 ( 10,938 ) 820,787
−Removed: Property and equipment, net 660,157 6,745 LEA
−Removed: Operating lease right-of-use assets 2,175,169 ( 1,614 ) LEA
−Removed: Insurance subsidiary deposits and investments 25,201 — 25,201
−Removed: Escrow funds 21,456 — 21,456
−Removed: Goodwill and other indefinite-lived assets 65,291 — 65,291
−Removed: Other assets 87,329 — 87,329
−Removed: Total Assets $ 3,866,328 $ ( 5,807 ) $ 3,860,521
−Removed: LIABILITIES AND EQUITY
−Removed: Current Liabilities:
−Removed: Accounts payable $ 157,000 $ — $ 157,000
−Removed: Accrued payroll and benefits 143,811 — 143,811
−Removed: Current operating lease liabilities 113,617 ( 113 ) LEA
−Removed: Current maturities of long-term debt 16,837 — 16,837
−Removed: Current portion of accrued self-insurance liabilities 29,210 — 29,210
−Removed: Refund liability — 3,947 MPB
−Removed: Other accrued expenses 71,073 — 71,073
−Removed: Total Current Liabilities 531,548 3,834 535,382
−Removed: Long-term operating lease liabilities 2,123,865 ( 1,562 ) LEA
−Removed: Accrued benefits, less current portion 6,738 — 6,738
−Removed: Lines of credit 537,000 — 537,000
−Removed: Long-term debt, less current maturities, net of deferred financing fees 230,855 — 230,855
−Removed: Accrued self-insurance liabilities, less current portion 154,892 — 154,892
−Removed: Other liabilities 147,837 6,242 MPB, LEA (1)
−Removed: Total Liabilities $ 3,732,735 $ 8,514 $ 3,741,249
−Removed: Commitments and contingencies
−Removed: PACS Group, Inc.
−Removed: stockholders’ equity:
−Removed: Common stock - 64,361,693,000 shares authorized, $ 0.001 par value, 128,723,386 shares issued and outstanding as of March 31, 2024
−Removed: Accumulated other comprehensive income 201 — 201
−Removed: Retained earnings 127,661 ( 14,321 ) 113,340
−Removed: Total stockholders' equity 127,991 ( 14,321 ) 113,670
−Removed: Noncontrolling interest in subsidiary
−Removed: 5,602 — 5,602
−Removed: Total Equity $ 133,593 $ ( 14,321 ) $ 119,272
−Removed: Total Liabilities and Equity $ 3,866,328 $ ( 5,807 ) $ 3,860,521
−Removed: $( 1,035 ), LEA:
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED BALANCE SHEETS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: June 30, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Category Reference
−Removed: Current Assets:
−Removed: Cash and cash equivalents $ 73,374 $ — $ 73,374
−Removed: Accounts receivable, net 610,577 ( 30,440 ) MPB
−Removed: Other receivables 50,396 — 50,396
−Removed: Prepaid expenses and other current assets 66,301 ( 6,539 ) LEA
−Removed: Total Current Assets 800,648 ( 36,979 ) 763,669
−Removed: Property and equipment, net 763,904 92,919 LEA
−Removed: Operating lease right-of-use assets 2,112,914 ( 38,160 ) LEA
−Removed: Insurance subsidiary deposits and investments 35,476 — 35,476
−Removed: Escrow funds 19,531 — 19,531
−Removed: Goodwill and other indefinite-lived assets 65,291 — 65,291
−Removed: Other assets 98,584 18,684 MPB, LEA (1)
−Removed: Total Assets $ 3,896,348 $ 36,464 $ 3,932,812
−Removed: LIABILITIES AND EQUITY
−Removed: Current Liabilities:
−Removed: Accounts payable $ 125,746 $ — $ 125,746
−Removed: Accrued payroll and benefits 107,077 ( 7,706 ) MPB
−Removed: Current operating lease liabilities 113,278 ( 2,848 ) LEA
−Removed: Current maturities of long-term debt 15,745 — 15,745
−Removed: Current portion of accrued self-insurance liabilities 31,252 — 31,252
−Removed: Refund liability — 30,586 MPB
−Removed: Other accrued expenses 75,003 64 LEA
−Removed: Total Current Liabilities 468,101 20,096 488,197
−Removed: Long-term operating lease liabilities 2,068,585 ( 36,229 ) LEA
−Removed: Accrued benefits, less current portion 6,738 — 6,738
−Removed: Lines of credit 248,000 — 248,000
−Removed: Long-term debt, less current maturities, net of deferred financing fees 227,107 — 227,107
−Removed: Accrued self-insurance liabilities, less current portion 172,111 — 172,111
−Removed: Other liabilities 127,472 87,886 LEA
−Removed: Total Liabilities $ 3,318,114 $ 71,753 $ 3,389,867
−Removed: Commitments and contingencies
−Removed: PACS Group, Inc.
−Removed: stockholders’ equity:
−Removed: Common stock:
−Removed: $ 0.001 par value;
−Removed: 1,250,000,000 shares authorized, 152,399,733 shares issued and outstanding as of June 30, 2024
−Removed: Additional paid-in capital 471,472 — 471,472
−Removed: Retained earnings 100,504 ( 35,289 ) 65,215
−Removed: Total stockholders' equity 572,128 ( 35,289 ) 536,839
−Removed: Noncontrolling interest in subsidiary
−Removed: 6,106 — 6,106
−Removed: Total Equity $ 578,234 $ ( 35,289 ) $ 542,945
−Removed: Total Liabilities and Equity $ 3,896,348 $ 36,464 $ 3,932,812
−Removed: $ 18,635 , LEA:
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
−Removed: (dollars in thousands, except for share and per share values)
−Removed: Three Months Ended March 31, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Category Reference
−Removed: Patient and resident service revenue $ 934,298 $ ( 14,885 ) MPB
−Removed: Additional funding — — —
−Removed: Other revenues 423 — 423
−Removed: Total Revenue $ 934,721 $ ( 14,885 ) $ 919,836
−Removed: Operating Expenses
−Removed: Cost of services 735,992 — 735,992
−Removed: Rent - cost of services 63,961 ( 448 ) LEA
−Removed: General and administrative expense 46,906 — 46,906
−Removed: Depreciation and amortization 7,902 214 LEA
−Removed: Total Operating Expenses $ 854,761 $ ( 234 ) $ 854,527
−Removed: Operating Income $ 79,960 $ ( 14,651 ) $ 65,309
−Removed: Other (Expense) Income
−Removed: Interest expense ( 15,391 ) ( 705 ) LEA
−Removed: Gain on lease termination 8,046 — 8,046
−Removed: Other income, net
−Removed: Total Other Expense, net $ ( 6,905 ) $ ( 705 ) $ ( 7,610 )
−Removed: Income before provision for income taxes 73,055 ( 15,356 ) 57,699
−Removed: Provision for income taxes ( 23,915 ) 1,035 ( 22,880 )
−Removed: Net Income $ 49,140 $ ( 14,321 ) $ 34,819
−Removed: Net income attributable to noncontrolling interest 2 — 2
−Removed: Net income attributable to PACS Group, Inc.
−Removed: $ 49,138 $ ( 14,321 ) $ 34,817
−Removed: Net income per common share attributable to PACS Group, Inc.
−Removed: Basic and diluted $ 0.38 $ ( 0.11 ) $ 0.27
−Removed: Weighted-average shares outstanding
−Removed: Basic and diluted 128,723,386 — 128,723,386
−Removed: Other comprehensive income, net of tax:
−Removed: Unrealized gain on available-for-sale debt securities, net of tax $ 201 $ — $ 201
−Removed: Total other comprehensive income 201 — 201
−Removed: Comprehensive income $ 49,341 $ ( 14,321 ) $ 35,020
−Removed: Comprehensive income attributable to noncontrolling interest 2 — 2
−Removed: Comprehensive income attributable to PACS Group, Inc.
−Removed: $ 49,339 $ ( 14,321 ) $ 35,018
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
−Removed: (dollars in thousands, except for share and per share values)
−Removed: Three Months Ended June 30, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Category Reference
−Removed: Patient and resident service revenue $ 981,398 $ ( 46,141 ) MPB
−Removed: Additional funding — — —
−Removed: Other revenues 448 — 448
−Removed: Total Revenue $ 981,846 $ ( 46,141 ) $ 935,705
−Removed: Operating Expenses
−Removed: Cost of services 762,147 — 762,147
−Removed: Rent - cost of services 65,833 ( 1,024 ) LEA
−Removed: General and administrative expense 144,380 ( 7,706 ) MPB
−Removed: Depreciation and amortization 8,776 478 LEA
−Removed: Total Operating Expenses $ 981,136 $ ( 8,252 ) $ 972,884
−Removed: Operating Income (Loss)
−Removed: $ 710 $ ( 37,889 ) $ ( 37,179 )
−Removed: Other (Expense) Income
−Removed: Interest expense ( 9,187 ) ( 728 ) LEA
−Removed: Gain on lease termination — — —
−Removed: Other expense, net
−Removed: ( 3,905 ) — ( 3,905 )
−Removed: Total Other Expense, net $ ( 13,092 ) $ ( 728 ) $ ( 13,820 )
−Removed: (Loss) income before provision for income taxes
−Removed: ( 12,382 ) ( 38,617 ) ( 50,999 )
−Removed: Benefit (provision) for income taxes
−Removed: 1,474 17,649 19,123
−Removed: Net (Loss) Income
−Removed: $ ( 10,908 ) $ ( 20,968 ) $ ( 31,876 )
−Removed: Net income attributable to noncontrolling interest 2 — 2
−Removed: Net (loss) income attributable to PACS Group, Inc.
−Removed: $ ( 10,910 ) $ ( 20,968 ) $ ( 31,878 )
−Removed: Net (loss) income per share attributable to PACS Group, Inc.
−Removed: $ ( 0.07 ) $ ( 0.14 ) $ ( 0.21 )
−Removed: $ ( 0.07 ) $ ( 0.14 ) $ ( 0.21 )
−Removed: Weighted-average common shares outstanding
−Removed: 149,463,655 — 149,463,655
−Removed: 149,463,655 — 149,463,655
−Removed: Other comprehensive loss, net of tax:
−Removed: Unrealized loss on available-for-sale debt securities, net of tax $ ( 201 ) $ — $ ( 201 )
−Removed: Total other comprehensive loss ( 201 ) — ( 201 )
−Removed: Comprehensive (loss) income
−Removed: $ ( 11,109 ) $ ( 20,968 ) $ ( 32,077 )
−Removed: Comprehensive income attributable to noncontrolling interest 2 — 2
−Removed: Comprehensive (loss) income attributable to PACS Group, Inc.
−Removed: $ ( 11,111 ) $ ( 20,968 ) $ ( 32,079 )
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
−Removed: (dollars in thousands, except for share and per share values)
−Removed: Six Months Ended June 30, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Category Reference
−Removed: Patient and resident service revenue $ 1,915,696 $ ( 61,026 ) MPB
−Removed: Additional funding — — —
−Removed: Other revenues 871 — 871
−Removed: Total Revenue $ 1,916,567 $ ( 61,026 ) $ 1,855,541
−Removed: Operating Expenses
−Removed: Cost of services 1,498,139 — 1,498,139
−Removed: Rent - cost of services 129,794 ( 1,472 ) LEA
−Removed: General and administrative expense 191,286 ( 7,706 ) MPB
−Removed: Depreciation and amortization 16,678 692 LEA
−Removed: Total Operating Expenses $ 1,835,897 $ ( 8,486 ) $ 1,827,411
−Removed: Operating Income (Loss)
−Removed: $ 80,670 $ ( 52,540 ) $ 28,130
−Removed: Other (Expense) Income
−Removed: Interest expense ( 24,578 ) ( 1,433 ) LEA
−Removed: Gain on lease termination 8,046 — 8,046
−Removed: Other expense, net
−Removed: ( 3,465 ) — ( 3,465 )
−Removed: Total Other Expense, net $ ( 19,997 ) $ ( 1,433 ) $ ( 21,430 )
−Removed: (Loss) income before provision for income taxes
−Removed: 60,673 ( 53,973 ) 6,700
−Removed: Benefit (provision) for income taxes
−Removed: ( 22,441 ) 18,684 ( 3,757 )
−Removed: Net (Loss) Income
−Removed: $ 38,232 $ ( 35,289 ) $ 2,943
−Removed: Net income attributable to noncontrolling interest 4 — 4
−Removed: Net (loss) income attributable to PACS Group, Inc.
−Removed: $ 38,228 $ ( 35,289 ) $ 2,939
−Removed: Net (loss) income per share attributable to PACS Group, Inc.
−Removed: Basic $ 0.27 $ ( 0.25 ) $ 0.02
−Removed: Diluted $ 0.27 $ ( 0.25 ) $ 0.02
−Removed: Weighted-average common shares outstanding
−Removed: Basic 139,093,520 — 139,093,520
−Removed: Diluted 139,684,618 — 139,684,618
−Removed: Other comprehensive loss, net of tax:
−Removed: Unrealized loss on available-for-sale debt securities, net of tax $ — $ — $ —
−Removed: Total other comprehensive loss — — —
−Removed: Comprehensive (loss) income
−Removed: $ 38,232 $ ( 35,289 ) $ 2,943
−Removed: Comprehensive income attributable to noncontrolling interest 4 — 4
−Removed: Comprehensive (loss) income attributable to PACS Group, Inc.
−Removed: $ 38,228 $ ( 35,289 ) $ 2,939
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
−Removed: (dollars in thousands, except for share and per share values)
−Removed: Common Stock Additional Paid-In Capital Retained Earnings Noncontrolling Interest
−Removed: Accumulated Other Comprehensive Income Total
−Removed: Shares Amount
−Removed: Balance January 1, 2024 128,723,386 $ 129 $ — $ 95,997 $ 5,600 $ — $ 101,726
−Removed: Dividends on common stock ($ 0.1358 per share)
−Removed: — — — ( 17,474 ) — — ( 17,474 )
−Removed: Other comprehensive income — — — — — 201 201
−Removed: Net income attributable to noncontrolling interest — — — — 2 — 2
−Removed: Net income attributable to PACS Group, Inc.
−Removed: — — — 49,138 — — 49,138
−Removed: Restatement Adjustments:
−Removed: Net income attributable to PACS Group, Inc.
−Removed: — — — ( 14,321 ) — — ( 14,321 )
−Removed: Balance March 31, 2024 (as restated) 128,723,386 $ 129 $ — $ 113,340 $ 5,602 $ 201 $ 119,272
−Removed: Contributions — — — — 502 — 502
−Removed: Issuance of common stock 21,428,572 21 414,136 — — — 414,157
−Removed: Employee stock-based compensation 3,847,652 4 90,932 — — — 90,936
−Removed: Tax withholdings related to net share settlement of equity awards ( 1,599,877 ) ( 2 ) ( 33,596 ) — — — ( 33,598 )
−Removed: Dividends on common stock ($ 0.1066 per share)
−Removed: — — — ( 16,247 ) — — ( 16,247 )
−Removed: Other comprehensive loss — — — — — ( 201 ) ( 201 )
−Removed: Net income attributable to noncontrolling interest — — — — 2 — 2
−Removed: Net loss attributable to PACS Group, Inc.
−Removed: — — — ( 10,910 ) — — ( 10,910 )
−Removed: Restatement Adjustments:
−Removed: Net loss attributable to PACS Group, Inc.
−Removed: — — — ( 20,968 ) — — ( 20,968 )
−Removed: Balance June 30, 2024 (as restated) 152,399,733 $ 152 $ 471,472 $ 65,215 $ 6,106 $ — $ 542,945
−Removed: (1) Restated net income attributable to PACS Group, Inc.
−Removed: for the three months ended March 31, 2024 is the sum of the previously reported $ 49,138 and the restatement adjustment of $( 14,321 ):
−Removed: (2) Restated net loss attributable to PACS Group, Inc.
−Removed: for the three months ended June 30, 2024 is the sum of the previously reported $( 10,910 ) and the restatement adjustment of $( 20,968 ):
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (dollars in thousands)
−Removed: Three Months Ended March 31, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Cash flows from operating activities:
−Removed: Net income $ 49,140 $ ( 14,321 ) $ 34,819
−Removed: Adjustments to reconcile net income to net cash provided by operating activities
−Removed: Depreciation and amortization 7,902 214 8,116
−Removed: Amortization and write-off of deferred financing fees 775 — 775
−Removed: Loss on disposition of property and equipment
−Removed: Gain on investment in partnership
−Removed: ( 120 ) — ( 120 )
−Removed: Deferred taxes 4,985 ( 1,035 ) 3,950
−Removed: Noncash lease expense 7,262 ( 399 ) 6,863
−Removed: Change in operating assets and liabilities
−Removed: Accounts receivable, net ( 74,930 ) 10,938 ( 63,992 )
−Removed: Other receivables ( 13,755 ) — ( 13,755 )
−Removed: Prepaid expenses and other current assets ( 5,009 ) — ( 5,009 )
−Removed: Other assets ( 1,802 ) — ( 1,802 )
−Removed: Escrow funds ( 5,807 ) — ( 5,807 )
−Removed: Operating lease obligations ( 8,572 ) 338 ( 8,234 )
−Removed: Accounts payable 13,938 — 13,938
−Removed: Accrued payroll and benefits 51,577 — 51,577
−Removed: Accrued self-insurance liabilities 10,399 — 10,399
−Removed: Refund liability
−Removed: — 3,947 3,947
−Removed: Other accrued expenses 1,340 ( 36 ) 1,304
−Removed: Other liabilities 21,121 318 21,439
−Removed: NET CASH PROVIDED BY OPERATING ACTIVITIES $ 58,787 $ ( 36 ) $ 58,751
−Removed: Cash flows from investing activities
−Removed: Investment in partnership $ ( 5,081 ) $ — $ ( 5,081 )
−Removed: Non-operating distributions from investment in partnership 673 — 673
−Removed: Purchase of investments ( 25,000 ) — ( 25,000 )
−Removed: Acquisition of facilities ( 78,500 ) — ( 78,500 )
−Removed: Purchase of property and equipment ( 10,761 ) — ( 10,761 )
−Removed: NET CASH USED IN INVESTING ACTIVITIES $ ( 118,669 ) $ — $ ( 118,669 )
−Removed: Cash flows from financing activities
−Removed: Borrowing on lines-of-credit, net of deferred financing fees 117,000 — 117,000
−Removed: Payments on lines-of-credit ( 100,000 ) — ( 100,000 )
−Removed: Dividends on common stock ( 17,474 ) — ( 17,474 )
−Removed: Borrowings of long-term debt, net of deferred financing fees 39,786 — 39,786
−Removed: Payments on long-term debt ( 4,859 ) 36 ( 4,823 )
−Removed: NET CASH PROVIDED BY FINANCING ACTIVITIES $ 34,453 $ 36 $ 34,489
−Removed: Net change in cash ( 25,429 ) — ( 25,429 )
−Removed: Cash, cash equivalents, and restricted cash - beginning of period 118,704 — 118,704
−Removed: Cash, cash equivalents, and restricted cash - end of period $ 93,275 $ — $ 93,275
−Removed: Supplemental disclosures of cash flow information
−Removed: Cash paid during the period for:
−Removed: Interest $ 15,638 $ 705 $ 16,343
−Removed: Income taxes $ — $ — $ —
−Removed: Non-cash financing and investing activity
−Removed: Accrued capital expenditures $ 4,112 $ — $ 4,112
−Removed: Assets acquired in operation expansions in exchange for notes payable $ — $ — $ —
−Removed: Assets acquired in operation expansions through settlement of notes receivable $ 500 $ — $ 500
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO COMBINED/CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (dollars in thousands, except for share and per share values)
−Removed: PACS GROUP, INC.
−Removed: AND SUBSIDIARIES
−Removed: RESTATED UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (dollars in thousands)
−Removed: Six Months Ended June 30, 2024
−Removed: As Previously Reported
−Removed: Restatement Adjustments
−Removed: Cash flows from operating activities
−Removed: Net income $ 38,232 $ ( 35,289 ) $ 2,943
−Removed: Adjustments to reconcile net income to net cash provided by operating activities
−Removed: Depreciation and amortization 16,678 692 17,370
−Removed: Amortization and write-off of deferred financing fees 1,551 — 1,551
−Removed: Stock-based compensation 90,936 — 90,936
−Removed: Loss on disposition of property and equipment 343 — 343
−Removed: Loss on investment in partnership 4,288 — 4,288
−Removed: Gain on other investments ( 476 ) — ( 476 )
−Removed: Deferred taxes ( 15,969 ) ( 18,684 ) ( 34,653 )
−Removed: Noncash lease expense 15,185 ( 582 ) 14,603
−Removed: Change in operating assets and liabilities
−Removed: Accounts receivable, net ( 62,770 ) 30,440 ( 32,330 )
−Removed: Other receivables 1,863 — 1,863
−Removed: Prepaid expenses and other current assets ( 18,286 ) 6,539 ( 11,747 )
−Removed: Other assets ( 1,021 ) — ( 1,021 )
−Removed: Escrow funds ( 3,882 ) — ( 3,882 )
−Removed: Operating lease obligations ( 9,859 ) ( 335 ) ( 10,194 )
−Removed: Accounts payable ( 17,203 ) — ( 17,203 )
−Removed: Accrued payroll and benefits 14,843 ( 7,706 ) 7,137
−Removed: Accrued self-insurance liabilities 29,660 — 29,660
−Removed: Refund liability — 30,586 30,586
−Removed: Other accrued expenses 5,492 ( 12 ) 5,480
−Removed: Other liabilities 3,995 ( 5,726 ) ( 1,731 )
−Removed: NET CASH PROVIDED BY OPERATING ACTIVITIES $ 93,600 $ ( 77 ) $ 93,523
−Removed: Cash flows from investing activities
−Removed: Investment in partnership $ ( 5,081 ) $ — $ ( 5,081 )
−Removed: Non-operating distributions from investment in partnership 1,190 — 1,190
−Removed: Purchase of investments ( 35,000 ) — ( 35,000 )
−Removed: Acquisition of facilities ( 174,650 ) — ( 174,650 )
−Removed: Purchase of property and equipment ( 26,093 ) — ( 26,093 )
−Removed: Cash proceeds from the sale of assets — — —
−Removed: NET CASH USED IN INVESTING ACTIVITIES $ ( 239,634 ) $ — $ ( 239,634 )
−Removed: Cash flows from financing activities
−Removed: Borrowing on lines-of-credit, net of deferred financing fees $ 288,000 $ — $ 288,000
−Removed: Payments on lines-of-credit ( 560,000 ) — ( 560,000 )
−Removed: Dividends on common stock ( 33,721 ) — ( 33,721 )
−Removed: Contributions from noncontrolling interest 502 — 502
−Removed: Borrowings of long-term debt, net of deferred financing fees 39,757 — 39,757
−Removed: Payments on long-term debt ( 9,913 ) 77 ( 9,836 )
−Removed: Proceeds from initial public offering, net of issuance costs 414,157 — 414,157
−Removed: Taxes paid related to net share settlement of stock-based compensation awards ( 33,598 ) — ( 33,598 )
−Removed: NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
−Removed: $ 105,184 $ 77 $ 105,261
−Removed: Net change in cash ( 40,850 ) — ( 40,850 )
−Removed: Cash, cash equivalents, and restricted cash - beginning of period 118,704 — 118,704
−Removed: Cash, cash equivalents, and restricted cash - end of period $ 77,854 $ — $ 77,854
−Removed: Supplemental disclosures of cash flow information
−Removed: Cash paid during the period for:
−Removed: Interest $ 25,550 $ 1,433 $ 26,983
−Removed: Income taxes $ 43,455 $ — $ 43,455
−Removed: Non-cash financing and investing activity
−Removed: Accrued capital expenditures $ 5,154 $ — $ 5,154
−Removed: Assets acquired in operation expansions in exchange for notes payable $ — $ — $ —
−Removed: Assets acquired in operation expansions through settlement of notes receivable $ 500 $ — $ 500
−Removed: SUBSEQUENT EVENTS
−Removed: On November 19, 2025, the Audit Committee of the Company’s Board of Directors concluded an independent investigation that was initially disclosed in a press release issued on November 6, 2024, furnished as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 6, 2024.
+Added: During the year ended December 31, 2025 and 2024, the aggregate fair value of RSU awards that vested was $ 21,642 and $ 92,882 , respectively.
+Added: The number of RSU awards vested includes shares of common stock that the Company withheld on behalf of employees to satisfy statutory tax withholding requirements.
+Added: Stock-based compensation expense
+Added: Stock-based compensation expense recognized during the years ended December 31, 2025 and 2024 for the Company’s equity incentive plans was $ 54,069 and $ 115,544 , respectively.
+Added: In future periods, the Company expects to recognize $ 176,719 in stock-based compensation expense for unvested RSU awards that were outstanding as of December 31, 2025.
+Added: Future stock-based compensation expense will be recognized over 2.96 weighted average years for unvested RSU awards.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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.