Revenue growth has been significant, yet operating margins remain constrained, peaking at only 8.6% in 2024Q1 before settling at 8.5% in 2026Q1.
| Sales/Revenue | 5.43B | - | - | - | - |
| Revenue Growth % | - | - | - | - | - |
| Cost of Goods Sold | 0 | - | - | - | - |
| COGS % of Revenue | - | - | - | - | - |
| Gross Profit | 1.04B | 1.16B | 792.64M | 447.07M | 400.68M |
| Gross Margin % | 19.19% | 21.92% | 19.38% | 14.37% | 16.54% |
| Gross Profit Growth % | - | 46.25% | 77.3% | 11.58% | - |
| Operating Expenses | 661.08M | 849.64M | 669.57M | 239.3M | 171.32M |
| OpEx % of Revenue | - | 16.06% | 16.37% | 7.69% | 7.07% |
| Selling, General & Admin | 428.67M | 415.07M | 343.81M | 213.66M | 149.01M |
| SG&A % of Revenue | - | 7.85% | 8.41% | 6.87% | 6.15% |
| Research & Development | 0 | - | - | - | - |
| R&D % of Revenue | - | - | - | - | - |
| Other Operating Expenses | 0 | - | - | - | - |
| Operating Income | 381.49M | 309.6M | 123.07M | 207.77M | 229.36M |
| Operating Margin % | 7.02% | 5.85% | 3.01% | 6.68% | 9.47% |
| Operating Income Growth % | - | 151.55% | -40.77% | -9.41% | - |
| EBITDA | 442.52M | 365.26M | 163.88M | 233.4M | 251.67M |
| EBITDA Margin % | 8.15% | 6.91% | 4.01% | 7.5% | 10.39% |
| EBITDA Growth % | 134.5% | 122.88% | -29.79% | -7.26% | - |
| D&A (Non-Cash Add-back) | 61.03M | 55.66M | 40.81M | 25.63M | 22.31M |
| EBIT | 383.21M | 309.9M | 145.9M | 207.24M | 232.58M |
| Net Interest Income | -27.88M | -28.36M | -44.34M | -49.92M | -25.54M |
| Interest Income | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 27.88M | 28.36M | 44.34M | 49.92M | 25.54M |
| Other Income/Expense | 0 | - | - | - | - |
| Pretax Income | 355.46M | 284.45M | 101.55M | 157.32M | 207.04M |
| Pretax Margin % | 6.54% | 5.38% | 2.48% | 5.06% | 8.55% |
| Income Tax | 111.71M | 92.99M | 46.21M | 44.44M | 56.55M |
| Effective Tax Rate % | 31.43% | 32.69% | 45.5% | 28.25% | 27.31% |
| Net Income | 243.77M | 191.54M | 55.76M | 112.87M | 150.5M |
| Net Margin % | 4.49% | 3.62% | 1.36% | 3.63% | 6.21% |
| Net Income Growth % | 246.34% | 243.51% | -50.6% | -25% | - |
| Net Income (Continuing) | 243.75M | 191.54M | 55.34M | 112.88M | 150.5M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 5.02M | 5.68M | 6.14M | 5.6M | 5M |
| EPS (Diluted) | 1.50 | 1.22 | 0.38 | 0.75 | 1.00 |
| EPS Growth % | 245.54% | 221.05% | -49.33% | -25% | - |
| EPS (Basic) | - | 1.23 | 0.38 | 0.75 | 1.00 |
| Diluted Shares Outstanding | 162.08M | 156.7M | 148.57M | 150.15M | 150.15M |
| Basic Shares Outstanding | 157.07M | 156.18M | 146.66M | 150.15M | 150.15M |
| Dividend Payout Ratio | - | - | 60.48% | 71.22% | 40.05% |
Regulatory reimbursement policy shifts
According to the provided financial data, PACS Group has demonstrated significant top-line expansion, with quarterly revenue climbing from $853.2 million in 2023Q4 to $1.4 billion by 2026Q1, reflecting an aggressive acquisition-led growth strategy that prioritizes rapid geographic footprint expansion over organic occupancy gains in the post-acute sector.
The consistent revenue growth suggests that management is successfully executing a roll-up strategy, though the lack of organic growth disclosure warrants caution regarding the underlying health of mature facilities. Investors should monitor whether this pace of expansion can be sustained without diluting the decentralized operational model that historically drove performance.
As reported in the quarterly income statements, PACS Group's gross margins have fluctuated significantly, ranging from a low of 10.1% in 2024Q3 to a peak of 22.2% in 2025Q3, highlighting the inherent sensitivity of the business to labor costs and government-mandated reimbursement rate adjustments.
The wide variance in gross margins suggests that the company lacks consistent pricing power, leaving it vulnerable to inflationary pressures in clinical labor. This volatility implies that profitability is highly dependent on the successful management of payer mix and the ability to control variable costs at the facility level.
Based on the income statement figures, operating margins have struggled to scale proportionally with revenue, peaking at 8.6% in 2024Q1 before compressing to 8.5% in 2026Q1, which indicates that administrative overhead and facility-level costs are rising in tandem with the company's rapid expansion efforts.
The inability to significantly expand operating margins despite substantial revenue growth suggests that the company is not yet achieving meaningful economies of scale. This may indicate that the costs of integrating new acquisitions are offsetting the potential efficiencies gained from a larger, more decentralized operating network.
Analysis of recent financial filings reveals that PACS Group has increasingly utilized stock-based compensation, with expenses reaching $15.7 million in 2025Q4, which serves to dampen reported net income and complicates the assessment of true operational profitability for shareholders evaluating the company's bottom-line performance.
The presence of recurring stock-based compensation suggests that management is aligning incentives with equity performance, yet this practice effectively lowers the quality of reported earnings. Investors should adjust for these non-cash charges to better understand the underlying cash-generating capability of the core skilled nursing facility operations.
Based on the reported financial data, the company's reliance on aggressive acquisition-led growth, coupled with a thin 5.85% average operating margin, creates a precarious environment where any regulatory shift or labor cost spike could rapidly erode the company's ability to maintain its current earnings trajectory.
Short-term performance gains may be masking integration risks that typically accompany such rapid expansion in the highly regulated post-acute care industry. The market should be wary of the potential for margin compression if the company's decentralized management structure fails to maintain clinical quality standards across its growing portfolio.
Quick answers to the most common questions about buying PACS stock.
PACS Group, Inc. (PACS) is profitable, generating $191.5M in net income for the fiscal year ending 2025 with a net profit margin of 3.6%.
PACS Group, Inc. (PACS) reported an operating income of $309.6M, resulting in an operating profit margin of 5.9%. This margin reflects the operational efficiency of the business before interest and taxes.
PACS Group, Inc. (PACS) generated $1.16B in gross profit for the year, representing a gross profit margin of 21.9%. This demonstrates the company's core pricing power and production efficiency.