PACS Group, Inc. (NYSE: PACS) Stock Plunges

Shares of PACS Group, Inc. fell sharply by over 37% on Wednesday following the release of preliminary Q3 results and an announcement regarding a delay in the full earnings report.

This stock drop comes amid scrutiny from Hindenburg Research, which disclosed a short position in PACS and released a report questioning the company's practices.

In response, PACS emphasized its commitment to transparency and compliance, stating that its Audit Committee, with external counsel, is currently investigating the third-party allegations mentioned in Hindenburg's report.

CEO Jason Murray characterized the allegations as misleading, reaffirming the company's dedication to regulatory compliance and its cooperation with federal inquiries.

PACS noted that it has received civil investigative demands from the federal government concerning reimbursement and referral practices, which may or may not be connected to Hindenburg's report.

Murray said, "We take these types of allegations seriously and will continue to cooperate with the government," while expressing confidence in PACS’s systems, controls, and financial health.

In its Q3 announcement, PACS reported that 76% of its skilled nursing facilities earned high ratings of 4 or 5 stars under the CMS Quality Measures. Occupancy rates were strong, with mature facilities reaching 94.5% and an overall rate of 90.5%, surpassing the industry average of 77%.

Additionally, PACS expanded its portfolio by acquiring 56 facilities across six states. The company maintains over $600 million in liquidity, indicating its underlying financial strength.

Despite these positives, investors remain concerned due to the delayed earnings report and ongoing scrutiny, which add uncertainty to PACS’s outlook.