PACS Group gears up for $400 million IPO. Here’s all you need to know

After a slow start to the year, the IPO market is witnessing a rush of tech and healthcare companies seeking to go public, taking a cue from the upbeat investor sentiment. It is estimated that the market is on the road to recovery, ending the two-year-long slowdown. PACS Group, Inc., which operates post-acute care facilities and provides ancillary services through its subsidiaries, recently revealed plans to list on the New York Stock Exchange.

The Utah-based company intends to offer around 19 million shares, at an estimated price of $20-22 per share. At the mid-point of the offer price, the IPO will deliver proceeds of around $400 million. After deducting estimated underwriting discounts, commissions, and other expenses, net proceeds will be around $370 million. Citigroup, JP Morgan, and Truist Securities are the lead underwriters for the offering. The company has applied to list on the New York Stock Exchange under the symbol PACS.

Use of Proceeds

Meanwhile, the date for the listing is yet to be revealed. Around $330 million of the proceeds from the offering will be used for repaying amounts outstanding under a credit facility, and the remaining funds will be used for general corporate purposes to support the business. The company plans to use a portion of the proceeds to acquire or invest in additional nursing facilities or other businesses and service offerings.

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The nursing home operator also provides a slew of back-office support and consulting services to skilled nursing and post-acute care facilities. Its main offerings are skilled nursing centers, assisted living, senior care, and independent living.

Road Ahead

The company, which has completed an average of around 20 acquisitions and one de-novo or new-build facility per year, plans to continue pursuing similar opportunities to supplement organic growth as it looks to expand its presence in existing and new markets. Other growth strategies include leveraging operational upside within the existing footprint by filling unused capacity while investing in the training of existing leaders and expanding the bench of new administrators.

There has been a steady increase in PACS’ revenues and gross margins in recent years, but operating profit and operating cash flow moderated. In fiscal 2023, the company generated total revenues of $3.11 billion, which is sharply higher than the $2.40 billion revenue it delivered in the previous year. In fiscal 2021, revenues totaled $1.14 billion. Meanwhile, net income decreased to $112.9 million or $0.88 per share in 2023 from $150.5 million or $1.17 per share in 2022, mainly reflecting an increase in operating expenses.