Welcome to Oppenheimer's 36th Annual Healthcare Conference. I'm Mike Wiederhorn, the healthcare analyst. It's our pleasure to introduce the PACS Group, CEO Jason Murray, and CFO Mark Hancock. Thank you.
Yeah. Thank you, Mike. Appreciate the time this afternoon, and good afternoon, everyone. Thank you for taking the time to listen to our story. We have some prepared remarks here, and then we're planning to maybe answer a couple of questions. We wanted to just start by reintroducing the story of PACS. This first slide is our mission statement, and we like to lead with this because we wanna make sure that people understand that we're a mission-driven organization. The way that we think about the work that we do is that we are elevating healthcare and in particular post-acute healthcare.
You know, we use the term within our organization that we are striving to revolutionize the delivery, the leadership, and the quality of post-acute care nationally. We love the work that we do, and we feel very strongly that we play an important part in the healthcare continuum today. When Mark and I, who's on the call with us today, he and I started the company, you know, about 13 years ago. We did so with the idea that, you know, there was a better way. There had to be a better way to operate nursing homes. At that time, he and I both spent time working as nursing home administrators.
I started my career working as a CNA on an Alzheimer's unit, providing direct patient care, and it was during that time that I think I really started to understand the importance of the work that we do. As I fast-forward throughout my career and as Mark and I eventually met and started the company together, we did so under this idea that you know, we're gonna take these experiences that we had had in other companies, and we're gonna cobble together what we felt was a unique operating model, clinical model, leadership model, and work to add value to the post-acute sector.
On the next slide, we talk about the way that we were approaching this is that we wanted to take what we felt was a unique approach, you know, this locally led, centrally supported model where we create a structure where our administrators are the local CEOs of the markets where they operate and that they have a team that they assemble around them, and they are supported by a robust PACS services back office support function where PACS provides all of the resources that administrator and team need in order for them to stay laser focused on care. That was very important to us.
As we were cobbling together this model, that was a very important component of it. We also understood that healthcare was changing, and it had changed in the, you know, 20+ years prior that I've been doing this. We've seen the acuity levels change within our sector, and as on the right side of this slide indicates, we were really working hard to focus on embracing this idea that acuity is moving. Yesterday's hospital patient is today's nursing home patient, and they are moving from the hospital into the nursing homes, and we need to be better at taking those patients and providing the high quality care that they need and to be good, trusted partners in the markets where we operate.
We really worked hard early on to develop a system that was embracing this idea that healthcare acuity levels were changing. Over time, as we've done this, we've had some success at taking underperforming facilities and infusing this model, this operating model and clinical model into them. As we've done that, we've been able to scale and grow. As you'll see on the next slide, this gives a bit of an optic on our growth over time. You'll notice we started with two facilities in San Diego, and you know, Mark and I don't think we really ever had a specific plan to grow to a certain size.
I think this, what you see in front of you here is a function of us finding, you know, highly motivated and highly driven people within our organization, administrators and leadership within our organization who are married to the mission of the company and understand the value that we bring to this sector and that's something that is very important to us as we've grown, is we wanna do it for the right reasons. The way that we think about growth is in the form of individuals.
You know, every facility that we can improve, you know, 10th of a point that we can gain on a quality metric within our portfolio, we're improving an individual's life, and we're improving it in the environment where our employees want to work as well. As we've really worked hard over the years to, you know, perfect this system and this platform that we've developed, as we've married, you know, the mission of the company with highly skilled individuals, leaders within our organization, we've just seen our ability to continue to influence our sector for good. We've grown, you know, significantly over the years.
You all know, just call out here in 2024, you'll notice a very high growth year for us, where we added over 100 facilities. We've been making good progress on assimilating those facilities within our portfolio, and they fall within the new bucket. You'll hear us talk about this today. We have a new ramping and mature bucket or the cohorts on how we measure our facilities performance and progress. You'll notice that in 2024, there was a big chunk that we grew, and we've been working over, you know, this last year and into 2026 as well to assimilate those facilities.
We made good progress, and we're excited for, you know, continued growth over time. On the next slide, you know, this is a good snapshot, I think, to give an idea of, you know, as we've taken underperforming facilities and we've deployed our model, and as we've tried to infuse new life into these facilities, you know, we've seen good success. It really begins with and ends with care. You know, that's the way we think about our growth is what value can we bring to this facility from a quality standpoint. As we do a good job underwriting those facilities, you know, we have a pretty good idea of the levers that need to be moved in order for us to improve the quality.
As we focus on the quality and as that's kind of thing number one for us to tackle and to get right when we're doing an acquisition, you know, you see to where we are today as our portfolio has grown. You know, we're at 323 facilities now. Another metric here that I would like to highlight is our overall occupancy. We've, you know, we have around 95% for our mature facilities, which is industry-leading. We're very proud of that 'cause we feel like that's a good signal that we are the operator of choice in the markets where we operate. That's important to us.
We only can get to a 95% occupancy in our mature facilities by providing high-quality care, which you'll notice again at the bottom of this particular slide. 4.4 is our QM rating. This is out of a 5.0-star rating across our portfolio, and this is, again, what I would call a best in class for our particular sector, and we're proud of that. It's something that we work hard to obtain and something that we are continuously improving in. As we do that, we'll have more opportunities to expand our influence and facilities, and we'll continue to have strong occupancy across our portfolio. So Mark, you wanna take these next few slides?
Yeah. With that, I'll speak to some of our trends and numbers and financials over the last year and the last quarter. Total revenue in 2025 was $5.29 billion, which represented almost 30% growth year-over-year. Adjusted EBITDA for the full year was $505 million. Revenue for the fourth quarter specifically was $1.36 billion, up 12% year-over-year. Adjusted EBITDA in the fourth quarter was $142 million, which represented margin expansion over the year and that continued expansion particularly reflected in Q4. These quarterly and annual results represent record performance for PACS and really demonstrates our ability to scale profitably while maintaining operational discipline. The next slide shows some of the cohorts that Jason referenced.
Within the cohort framework, we characterize facilities as new during their first 18 months under our ownership and as ramping from months 19 through 36 as they progress towards mature status. Mature SNF facilities are those that we've operated for three years or more. Occupancy within these cohorts reflects the continued integration and stabilization of facilities that we acquired in prior years. From a portfolio standpoint, at the end of 2025, total occupancy for the year was over 89%. Mature facilities were approaching almost 95% occupancy, which was up 0.5 from occupancy levels in 2024 for that cohort. Ramping facilities averaged over 86%.
This was actually down slightly from the prior year, but to be clear, this adjustment reflects the graduation of facilities within the cohorts and the shift between those buckets. As we acquired a number of new facilities, over 100 facilities in 2024, and those continued to move from new to ramping and some of those from prior years had shifted towards our mature buckets. While these facilities are still early in their earlier stages of stabilization relative to our longer-tenured operations, we see steady improvements and they continue to trend where we've seen our facilities progress historically.
New facilities averaged just over 81% occupancy, and again, just reflecting the stabilization of those large number of facilities that we acquired in the second half of 2024. In summary, I would just characterize our portfolio as nearly half of our portfolio falls within the new and ramping buckets. As these continue to season and progress through the new ramping to mature progression, we view this as a significant potential source for future organic growth, which is already embedded within the existing, within the existing platform. For 2025, I'll just summarize the next slide. We ended with $5.29 billion in top-line revenue and over $500 million in Adjusted EBITDA, reflecting full-year portfolio margins approaching double digits for the full year.
Our cost structure remains aligned with our revenue growth while enabling this margin expansion. Again, this just kind of reinforces the disciplined and methodical approach we've taken in scaling our platform. I'd like to highlight here that, you know, we ended the year of 2025 with cash and available liquidity of nearly $700 million and a net leverage of approximately 0.3x. This was even after substantial acquisition activity, which we completed in 2024 and the nominal acquisitions we had in 2025. We did have significant capital deployment in 2025 as we exercised some purchase options and some facility upgrades to our existing portfolio. We believe that this, our balance sheet positions us for meaningful financial flexibility and allows us to continue to pursue our disciplined growth model as those opportunities present themselves.
The next slide, I'll just reiterate our 2026 guidance that we shared in our annual filings and our most recent investor presentations. This is just a restatement of that same guidance. For the full year 2026, we expect revenue to be in the range of $5.65 billion-$5.75 billion, with a midpoint of $5.7 billion. That midpoint would represent nearly an 8% growth year-over-year from 2025. For adjusted EBITDA, we expect to be in the range of $555 million-$575 million, with a midpoint of $565 million. That midpoint would be nearly a 12% growth from 2025 EBITDA of $505 million.
We see, again, continued margin expansion is what we expect in our 2026 guidance. I would add that while there is some nominal acquisition activity assumed for 2026, this outlook reflects primarily our organic growth and margin expansion through improved occupancy and skilled mix across our portfolio. We expect a stable reimbursement environment, and we expect to continue to be disciplined in our capital allocation in support of our ongoing acquisition activity and consistent with our kind of historical pace. For 2026, the punchline is we expect to deliver another year of record revenue and Adjusted EBITDA. This continued momentum really highlights the strength of our model as we continue to deploy that throughout our footprint across the country.
With this, we look forward to demonstrating our ability to execute and deliver results for both our patients and shareholders. I think we have a few minutes here now. We can turn it over for questions.
All right. Well, thank you. Yeah, a couple questions here. One, why don't you provide us an update on the ongoing litigation and DOJ investigation and whether there have been any meaningful developments since the last time you guys discussed it publicly?
Yeah, sure. I'll take that one, Michael. So, you know, we've talked publicly about this, and disclosed certain information around it as well. Maybe just to take a step back to provide a little more completeness around this. There was a short report that was published against the company back in November 2024. You know, many of you may be aware of that. As the company worked through that process of getting you know, back in compliance with the SEC, with our filings, our public filings, there was an internal investigation that was conducted by our independent directors who engaged outside counsel to work through that process. It was a very thorough process. It took around 14 months to complete.
you know, we've disclosed publicly what some of the findings of that was. The part of that process was also, you know, the government had some inquiries around the same time as that short report came out. as we have outside counsel that we work with who's very, you know, well-versed in these areas, said that that's not necessarily uncommon to have the government piggyback on some of these short reports and have additional questions of the company. we've been working through that process. it is, you know, we get regular updates, Mark and I do, and the management team does from our outside counsel in this area.
The updates continue to be that things move forward in a normal fashion. There's been nothing out of the ordinary up to this point, or really no change in the facts or the scope of what the government is looking at and asking for. You know, the company continues to be cooperative with the government. We've signaled to the government that we're anxious to find a resolution on this sooner than later. We are at the mercy of the timelines of the government in this situation. We'll continue to be cooperative. We'll continue to produce, you know, documents when the government asks for them, continue to hold meetings, which we've been holding as well.
You know, some of the recent disclosures in our K, there was some additional language that was added, and really that language was for the purpose of being just more complete in what we were disclosing. There was no new facts or anything related to the government's investigation that we needed to call out in there. There were some additional information requests that the government had asked for. There were some additional names of officers that were added that our outside counsel felt like that was very normal course for this situation, provided that they were officers of the company. There's been no material change in the i n the scope of work that the government is looking at, and we look forward to, you know, to getting a resolution on this sooner than later.
In the meantime, the company continues to operate and under what we would view as normal circumstances. With the internal investigation now concluded, we have the ability to move forward there, and we will continue to do so. We're excited. You know, 2025 was a challenging year, but as we've from a, you know, operational standpoint.
As we've signaled publicly, it was a record year for us and, now that we are outside of the internal investigation and as we continue to work through the government investigations, you know, we feel good about where we're at going into 2026 and beyond, as you know, as Mark indicated.
That's great. Another question. You know, obviously, acquisitions have historically played, you know, significantly in your growth. Can you give us an update how the pipeline is shaping up this year and whether you're seeing an improvement in deal flow or pricing relative to last year and what the competitive environment is overall as well?
Yeah. You know, we had a significant growth year in 2024, which we continue to reference, and that was probably a little bit unusual, you know, relative to our historical pace. You know, our model, our approach has always been to be opportunistic. Right now, you know, as a company, we represent about 3% of market share. We feel like there's just a lot of opportunity to deploy our model, and there's a lot of demand for the services that we provide. Meaning, you know, we're deploying a more clinically complex model that takes patients from the hospitals that aren't, they're not ready to go home. There's a lot of options for long-term care beyond nursing homes today.
There's assisted living, there's home health, there's more opportunities to age in place. For hospital patients that are not ready to go home yet or not ready to go to a longer-term care setting, there's a big demand for the type of transitional care services that our model provides. Even last year, while we were going through kind of our internal investigative process, we continue to see a large volume of deal flow. We see hundreds of opportunities every year and sometimes every quarter. We try to be disciplined in our approach in closing on deals that fit within the profile for our investment thesis.
To reiterate what that is, we acquire generally facilities that are underperforming, and they're generally long-term, more custodial-focused. Like I said, there's just more options for long-term care today. Those facilities are generally 60%-70% occupied when we take them on. They're struggling operationally, they're nearly always struggling financially as well. The EBITDA contribution is zero or breakeven at best. Generally, as we acquire these underperforming facilities, they can be dilutive to our overall portfolio, but that creates opportunity again for that embedded growth and upside.
As we improve the physical plants, as we improve the clinical capabilities of the local teams and with resource equipment, training, and a higher clinical model, we have the ability of taking those patients from the hospitals and providing care for, you know, 20-30 days and transition them to whatever the most appropriate level for more long-term care if that's still needed. We take that open capacity of 30%-40%, and we're able to take what we call the skilled mix of patients. That is what drives our occupancy and what drives the skilled mix of our portfolio.
There's so much opportunity for that right now with this aging demographic of baby boomers that, you know, we've been talking about the silver tsunami for the last 10-20 years. Now that silver wave is here, and it's at our doorstep, and we're feeling it, and we're seeing the demand for our services. That, again, drives our occupancy, but it also drives the M&A pipeline as some of these nursing home operators, which our industry is very fragmented, and it's very kind of very much a cottage industry of kind of mom-and-pop operators.
There's some faith-based and some nonprofit organizations, but it takes a very sophisticated operator, and we're one of very few in the country that has the sophistication and again, the resources and capabilities to take these, to effectively be an extension of the hospital. We are an acquirer of choice. We're an operator of choice. All of the big real estate investment trust partners, some of the big public REITs that we've worked closely with over the years, they have a lot of opportunities that are being presented, and we are one of the few operators that can take on sizable deals like we have in the past. We also have an opportunity to continue to build geographic density within our existing footprint.
Right now, we operate in 17 states, and so we see opportunities come across our desk in all of our existing geographies. We again see demand for our model in parts of the country where we don't currently operate. I would summarize it, Michael, that you know, the M&A pipeline is as strong as it's ever been, and we are well-positioned from a y ou know, balance sheet from a organizational capability as we've really accelerated our maturation as a public company over the last year as we went through this process and really tried to shore up any areas of weakness to where we can now you know, provide care at the highest level.
That's demonstrated in our Quality Measures. Again, that care is our product, and that's what drives demand for our services is we provide good outcomes. That feedback loop is very short. We see those referrals, and we see that transition of our facilities as they are acquired, and they flow through our new ramping and mature. We've been operating this model for many years now, and we continue to see that transition as we acquire new opportunities. We expect to remain opportunistic. There's a lot of opportunity ahead of us. I'll leave it at that. Jason, anything you'd add to that?
Nope. That's perfect.
Well, I guess time for one last question here in this discussion. Is there anything you would like to point out to the investor community that you believe is either misunderstood or underappreciated at this time?
Well, yeah, I mean, we have two minutes here. I don't know if that's enough time, Michael, to you know, to share you know, our thoughts around this. You know, I think that some of the you know, unfortunate circumstances that we've had to go through over the last you know, 18 months you know, they've been challenging for the organization. I think that maybe a misunderstanding that people have is that the company is reeling as a result of that and that the company is in a worse position as a result of even the government investigations that are ongoing.
I think the opposite is in fact true to that in that you know we've tried to signal publicly that you know the company is in the best position that it's ever been in from a balance sheet standpoint from a I would say a leadership and clinical capability and compliance regulatory support for our facilities and organization. We are in the best position we've ever been in. The challenging you know 14 months that we went through was a great opportunity for us to improve. We took that opportunity to improve. We're a different organization. We're a better organization as a result of that.
I think that as you look at 2025, as we had a record year, and as we look to have a very strong 2026, I don't think that record year happens by accident. You know, I think it's a function of, again, what I said earlier, high-performing people that are driven by the mission of our organization. Because of that, we were able to achieve remarkable results during a time of crisis. We look forward to now that the internal investigation is over and we're out of that crisis, even though there's the government investigations that we're working through, we feel very optimistic of our ability to continue to execute on our business plans and to return value to our patients and shareholders, as we look at 2026 and beyond.
We're in a really good position as a company. The day will come when we will have resolution on the government investigations. We look forward to that day. In the meantime, it's business as usual for us as an organization, and we're excited about that.
Well, thank you very much. That was great. Jason, Mark, we appreciate your time.
Thank you, Michael. Appreciate it.