Farmington, Utah-based PACS Group Sets Revenue Record in its First Quarterly Report Filed Since its 11 April 2024 IPO

PACS hit $934.7 million in top line revenue for Q1 2024 (ended 31 March 2024), a 31.9% growth rate on a Year-over-Year basis in Q1 2023 of $708.4 million. Net income for Q1 2024 was $49.1 million vs. $37.6 million on a YoY basis, a 30.7% growth rate.

Additionally, the company now projects it will hit 2024 annual revenue of $3.65 billion to $3.75 billion, up at least $500 million on a YoY basis.

Nearly one month to the day after it went public on the New York Stock Exchange, Farmington, Utah-based PACS Group (NYSE:PACS) filed its first ever quarterly report as a publicly traded company.

And yes, it was a good report.

According to the company news release, for its first quarter (ended 31 March), PACS generated top line revenue of $934.7 million for the quarter vs. $708.4 million for the year ago quarter, representing a 31.9% growth rate in revenue.

Net income for the quarter was $49.1 million vs. $37.6 on a Year-over-Year comparison, giving PACS a 30.7% growth rate in net income on a YoY basis. {NOTE: PACS's $49.1 million net income level for Q1 2024 is the equivalent of 43.4% of the net income the firm achieved in all of 2023, ~$113 million.}

PACS also provided guidance that it now projects it will produce 2024 revenue in the range of $3.65 billion to $3.75 billion, which would be a YoY growth rate of upwards of 21%.

By its own description, PACS "... is a holding company investing in post-acute healthcare facilities, professionals, and ancillary services."

Currently, PACS

• Operates 218 total facilities, most of which are Skilled Nursing Facilities (SNFs), while it also
• Wholly owns 35 properties.

The Back Story on PACS Group

As noted in our 11 April 2024 write-up titled "Farmington-based PACS is Poised to Shock Utah's Biz Community with its $3.1 Billion IPO Slated to Hit Today, Thursday, 11 April 2024," the company was started in "... late 2012 when its predecessor was launched in California by co-founders Jason Murray and Mark Hancock."

In the ensuing 12+ years, PACS has grown mostly through a series of acquisitions that now see the company with healthcare operations and services provided in nine states:

• California,
• South Carolina,
• Colorado,
• Arizona,
• Kentucky,
• Ohio,
• Texas,
• Nevada, and
• Missouri.

And that doesn't count its headquarters in Davis County not quite 1 mile immediately to the west of the Lagoon amusement park in Farmington on the opposite side of I-15 (Interstate 15).

Through its IPO, PACS sold ~21.4 million common shares at a $21.00/share price point, raising ~$450 million in gross proceeds.

Then, after market close on Monday (15 April 2024), PACS announced that its underwriters had exercised their option to purchase ~3.21 million shares of common stock from the two PACS co-founders, Murray and Hancock, at the IPO offering price of $21.00/share. {NOTE: The share price of PACS stock closed at $24.14 on April 15th, giving the underwriters an immediate gain of ~15% on their purchase price vs. the IPO offering price.}

As explained in the Utah Money Watch writeup titled "The Underwriters of the PACS Group IPO have Exercised their Option to Purchase ~3.21 Million Shares of Common Stock from the Company's Co-Founders," proceeds from this post-IPO sale went directly to the co-founders and not to PACS.

Additionally, even after the sale of the ~3.21 million shares of their PACS common stock, the company co-founders "... still own (a combined) 83.6% of the PACS common stock, which (based upon the corporate governance standards of the NYSE) makes PACS a 'controlled company.'" 

Last of all, at a closing price of $25.08 yesterday afternoon, PACS's market capitalization now stands at over $3.71 billion, a one-month bump on its valuation of over $600 million.

Taken in concert, I suspect 2024 will be a very interesting year for PACS Group.

{AUTHOR'S NOTE: PACS has scheduled a webcast and conference call for 4pm ET today to discuss the company's Q1 2024 results. Interested investors are invited to "... visit the Investors Relations section of PACS’s website at https://IR.pacs.com. The webcast will be recorded and will be available for replay via the website for 30 days following the call."}

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