By Mackenzie Tatananni

Shares of PACS Group surged by double-digits Thursday after the healthcare holding company posted earnings for the first time in a year.

For the third quarter, the company reported adjusted earnings of 32 cents a share, missing the 45 cents Wall Street had projected. However, revenue of $1.34 billion came in above the $1.11 billion consensus among analysts polled by FactSet.

That wasn't all, seeing as PACS Group's full-year outlook blew past expectations. The company, which operates nursing homes and other so-called post-acute care facilities, sees revenue in the range of $5.25 billion to $5.35 billion for 2025. Analysts were looking for $4.87 billion.

Shares surged 54% to $25.88 on the back of the results, but it wasn't the only event driving them higher.

While it effectively straddles the line between a small-cap and mid-cap stock -- PACS Group's market capitalization stands at around $2.6 billion -- the company has attracted outsized attention in the nearly two years since its initial public offering.

Its buzzy trading debut in April 2024 seemed to put the company on course for success. However, short seller Hindenburg Research published a report that November accusing the company of "systematically scamming taxpayer-funded healthcare programs," which included abusing a COVID-era waiver to commit Medicare fraud.

Shares notched a record close of $42.94 and all-time intraday high of $43.92, both on Nov. 1, but fell off a cliff following the release of the report. Hindenburg's claims kick-started an independent investigation into the company, which ultimately found no reason to question the integrity of the company's top executives, PACS Group said Thursday.

But the internal audit did cause the delay of financial reports for three consecutive quarters in 2024 as well as for the first quarter of 2025. In November 2024, the company said it had received a filing delinquency notification from the New York Stock Exchange over its failure to meet timely filing requirements with the Securities and Exchange Commission.

Those issues are now resolved, PACS Group asserted. The company completed the restatement of past financial reports that were found to have overstated revenue and labeled as "unreliable" earlier this year.

While questions remain regarding the extent of the alleged fraud, it seems the uncertainty related to PACS Group's possible delisting from the NYSE has dissipated, meaning investors can breathe a sigh of relief.

The latest results were "solid," Oppenheimer analyst Michael Wiederhorn wrote in a research note Thursday. "At first glance, the return to market communications went as well as could be expected, as PACS appears to be overcoming the challenges." He rates the stock at Outperform with a $40 price target.

Following the report, RBC Capital slightly raised its price target to $33 from $32 while maintaining an Outperform rating, saying the results pointed to PACS Group's strong underlying performance in spite of the internal audit overhang.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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November 20, 2025 12:12 ET (17:12 GMT)

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