Revenue grew 19.8% year-over-year to $1.4B in 2026Q2, but net margin of 3.62% and provision expenses of $1.1B highlight thin profitability and credit cost pressures.
PACS Group, Inc. (PACS) annual income statement — 4-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 |
|---|
| Net Interest Income | -23.59M | -28.36M | -44.34M | -49.92M | -25.54M |
| NII Growth % | 74.72% | 36.03% | 11.17% | -95.47% | - |
| Net Interest Margin % | -0.4% | -0.51% | -0.85% | -1.42% | -1.04% |
| Interest Income | 2.55M | 0 | 0 | 0 | 0 |
| Interest Expense | 26.14M | 28.36M | 44.34M | 49.92M | 25.54M |
| Loan Loss Provision | 4.78B | 4.1B | 3.25B | 2.61B | 2B |
| Non-Interest Income | 5.7B | 5.29B | 4.09B | 3.11B | 2.42B |
| Non-Interest Income % | 100.42% | 100.54% | 101.1% | 101.63% | 101.07% |
| Total Net Revenue | 5.68B | 5.26B | 4.05B | 3.06B | 2.4B |
| Revenue Growth % | 11.14% | 30.04% | 32.13% | 27.75% | - |
| Non-Interest Expense | 470.31M | 849.64M | 669.57M | 239.3M | 171.32M |
| Efficiency Ratio | 8.28% | 16.15% | 16.55% | 7.82% | 7.15% |
| Operating Income | 423.77M | 309.6M | 123.07M | 207.77M | 229.36M |
| Operating Margin % | 7.46% | 5.89% | 3.04% | 6.79% | 9.57% |
| Operating Income Growth % | - | 151.55% | -40.77% | -9.41% | - |
| Pretax Income | 397.7M | 284.45M | 101.55M | 157.32M | 207.04M |
| Pretax Margin % | 7% | 5.41% | 2.51% | 5.14% | 8.64% |
| Income Tax | 120.08M | 92.99M | 46.21M | 44.44M | 56.55M |
| Effective Tax Rate % | 30.19% | 32.69% | 45.5% | 28.25% | 27.31% |
| Net Income | 277.58M | 191.54M | 55.76M | 112.87M | 150.5M |
| Net Margin % | 4.89% | 3.64% | 1.38% | 3.69% | 6.28% |
| Net Income Growth % | 64.21% | 243.51% | -50.6% | -25% | - |
| Net Income (Continuing) | 277.63M | 191.54M | 55.34M | 112.88M | 150.5M |
| EPS (Diluted) | 1.69 | 1.22 | 0.38 | 0.75 | 1.00 |
| EPS Growth % | 65.38% | 221.05% | -49.33% | -25% | - |
| EPS (Basic) | - | 1.23 | 0.38 | 0.75 | 1.00 |
| Diluted Shares Outstanding | 163.91M | 156.7M | 148.57M | 150.15M | 150.15M |
Quick answers to the most common questions about buying PACS stock.
For fiscal year 2025, PACS Group, Inc. (PACS) reported total revenue of $5.26B. This represents a 119.5% increase compared to $2.40B in 2022.
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 22.0%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Margin pressure from labor costs
Metrics are mathematically derived from official filings.
Revenue Growth Driven by Acquisitions
PACS's total revenue grew 29.3% year-over-year to $5.29 billion, according to recent financial statements, driven primarily by acquisition-led expansion rather than organic occupancy gains.
The revenue trajectory shows consistent sequential growth from $934.7 million in 2024Q1 to $1.43 billion in 2026Q2, a 53% increase over ten quarters. This pace suggests an aggressive buy-and-fix strategy, but investors should monitor whether newly acquired facilities are integrating successfully and contributing to margin stability. The reliance on M&A for growth may mask underlying organic performance, which appears modest given the flat sequential revenue in recent quarters.
Thin Margins Leave Little Cushion
Operating margin of 5.85% and net margin of 3.62% reflect a labor-intensive model, as reported in PACS's financials, leaving minimal buffer against cost inflation or reimbursement cuts.
The gross margin of 21.92% is below peers like NHC (39.3%) and ADUS (32.5%), indicating higher direct costs, likely from labor and facility expenses. Operating margin has fluctuated between 5.9% and 8.4% over the past year, with the latest quarter at 7.6%, suggesting some improvement but still thin. The net margin of 3.62% is lower than ENSG's 6.8% and NHC's 7.9%, highlighting PACS's vulnerability to even minor operational disruptions.
Provision Expense Pressures Earnings
Provision for loan losses averaged $1.0 billion quarterly, according to PACS's income statements, significantly impacting net income, which fell to $76.4 million in 2026Q2 despite revenue growth.
The provision expense represents a substantial portion of revenue, consuming roughly 75% of total revenue each quarter. This appears to reflect the company's exposure to Medicaid receivables and potential collection risks, as well as acquisition-related costs. The high provision, combined with thin margins, explains the EPS miss in 2026Q2 ($0.47 vs. consensus $0.61), suggesting that credit costs are a key swing factor for profitability.
Fee Income Dominates Revenue Mix
Non-interest income constitutes 99.8% of total revenue, as per PACS's financial data, indicating a fee-based model with minimal net interest income, which is atypical for a bank.
The near-total reliance on fee income, primarily from patient care services, underscores the company's operational focus on skilled nursing and senior living. This structure means revenue is directly tied to occupancy and payer mix, with no diversification from interest income. The negative NII in all quarters suggests the company holds minimal interest-earning assets, making it more akin to a healthcare services provider than a traditional bank.
2026Q2: Mixed Signals on Momentum
In 2026Q2, PACS reported a revenue beat but an EPS miss, with net income of $76.4 million, according to financial statements, while raising full-year guidance, creating a divergence.
The quarter highlights a critical juncture: revenue growth of 19.8% year-over-year and raised guidance suggest management confidence, but the EPS miss indicates margin pressure or one-time costs. The operating margin improved to 7.6% from 5.9% in the prior quarter, yet net income only grew modestly. This divergence warrants close monitoring to determine if the guidance raise is based on durable operational improvements or optimistic assumptions about occupancy and skilled mix.
Earnings Quality Under Scrutiny
PACS's earnings quality may be challenged by high provision expenses and acquisition-related costs, as reported in financial statements, potentially inflating revenue growth without corresponding cash flow.
The provision for doubtful accounts and lease accounting under ASC 842 may obscure true profitability, as these items can artificially inflate both revenue and expenses. The 29% revenue growth likely includes pro-forma contributions from acquisitions that may not yet be performing at historical margins. Investors should scrutinize the sustainability of fee income and the collectability of Medicaid receivables, as any deterioration could significantly impact net income.