PACS Group, Inc. PACS shares traded lower on Wednesday after the company announced the postponement of third-quarter results and disclosure of civil investigative demands from the federal government.
The company reported preliminary results, with occupancy for its ramping and mature facilities standing at 93.9% and 94.5%, respectively, with total facility occupancy at 90.5%, well above the industry average of 77%.
PACS expanded its operations with the acquisition of 56 facilities in six new states, adding 2,889 skilled nursing beds and 1,334 assisted living and independent living units.
The company expects to end the quarter with over $600 million in cash and liquidity.
On November 4, Hindenburg Research released a five-month investigation involving interviews with 18 former employees and competitors and a review of over 900 detailed facility-level cost reports, which uncovered that PACS’ “turnaround” strategy is primarily based on systematically exploiting taxpayer-funded healthcare programs.
According to the Hindenburg investigation, PACS exploited a COVID-era waiver to improperly access skilled care Medicare benefits for thousands of patients across its nationwide facility portfolio.
Hindenburg estimates that the scheme accounted for more than 100% of PACS’ operating and net income from 2020 to 2023, creating the illusion of legitimate growth and profitability, which facilitated PACS’ IPO in early 2024.
Jason Murray, PACS’s Chief Executive Officer, stated, “We believe recent third-party allegations are misleading. However, in line with our commitment to holding ourselves to a high standard – in how we serve our patients, operate our business, and engage with stakeholders – the Company’s Audit Committee, with assistance from external counsel, is conducting an investigation of the allegations.”
”We’ve received civil investigative demands from the federal government regarding the Company’s reimbursement and referral practices that may or may not be related to this week’s third-party report. We take these types of allegations seriously and will continue to cooperate with the government.”
Price Action: PACS shares are down 36.1% at $18.88 at the last check Wednesday.
Image via Shutterstock
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