Utah-based PACS Group Closes a Secondary Public Offering, Raising ~$101 Million for the Firm, with ~$589 Million Raised by Selling Shareholders

Since its $450 million IPO on 11 April 2024 that valued the firm at $3.1 billion, Farmington, Utah-based PACS Group (NYSE:PACS) has been on a tear, with its valuation jumping nearly 87% since the IPO to a high of $42.25 two weeks ago.

Now PACS has closed a secondary public offering, one that produced

• $101 million in gross proceeds for the company, and
• $589 million in gross proceeds for selling shareholders.

Naturally, the announcement of yesterday's new offering led to a recent pullback on PACS' share price over the past 10 business days.

However, according the news release distributed yesterday afternoon by the company after the close of trading on Wall Street, the upsized public offering saw over 19 million shares of common stock sold at $36.25/share, with

• ~2.27 million shares sold by the company, and
• ~16.26 million shares sold by selling shareholders.

This offering was bolstered by the fact that its underwriters (Citigroup, J.P. Morgan, Truist Securities, RBC Capital Markets, Goldman Sachs, UBS Investment Bank, Stephens Inc. and Oppenheimer & Co.) have already exercised their 30-day option to purchase 2.48 million additional shares from the selling shareholders.

And in aftermarket trading last night, the PACS stock price jumped $1.15/share to $38.25/share, a 3.1% overnight increase.

Who/What is PACS Group?

PACS defines itself as "... a holding company investing in post-acute healthcare facilities, professionals, and ancillary services (with) ... one of the largest post-acute platforms in the United States."

Since going public, PACS (through its subsidiaries) now owns, operates, or manages 276 senior living locations and/or post-acute care facilities across 15 states (facilities where individuals reside after a hospital stay, whether long-term, medium-length-stays, or temporary).

That represents unit growth of nearly 25% in the 3rd quarter alone for PACS given the fact that the firm closed its previously announced acquisition of 53 skilled nursing facilities (SNFs) and assisted/independent living facilities across eight western states from Prestige in July 2024, an "acquisition" originally reported by Utah Money Watch on 07 June 2024.

In total, PACS now has over 39,000 employees, which support over 29,000 patients and residents per day.

What's fascinating about this growth to this author, however, is that the average PACS occupancy rate is nearly 91% versus an average of 76% for facilities owned/operated by other long-term care organizations.

Obviously, that's a massive occupancy delta, one that portends the potential for higher multiples for PACS as greater occupancy levels typically translate into greater profit.

Additionally, for locations PACS has managed/occupied for 36 months or more, the occupancy rate jumps to 94% for the firm.

From a monetary standpoint, through the first six months of 2024 (ended June 30), PACS generated revenue of

• ~$701 million from Medicare (36.6% of its total for the 6-month period),
• ~$736 million from Medicaid (38.1% of its total for the 6-month period),
• ~$376 million from Managed Care (19.6% of its total for the 6-month period), and
• ~$103 million from Private pay and other sources (5.4% of its total for the 6-month period),

for a total of ~$1.92 billion in total revenue for the first two quarters of 2024.

Based upon my conversations with the firm, plus what I see happening in the marketplace, I do not expect PACS Group to slow down its growth plans any time soon.

AUTHOR'S NOTE: For a more in-depth look at PACS Group, please turn to "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."

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