PACS Group to Restate Certain Previously Issued Financial Statements
PACS Group, Inc. (NYSE: PACS) (“PACS” or the “Company”) announced today that it will restate its previously issued condensed combined/consolidated financial statements as of and for the three months ended on March 31, 2024 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024 (as amended on May 21, 2024), and as of and for the three and six months ended on June 30, 2024 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2024 (collectively, the “Prior Financial Statements,” and each such quarterly period in the six months ended June 30, 2024, the “Impacted Periods”). The Prior Financial Statements and any previously furnished reports or communications of PACS describing the Company’s financial results for the Impacted Periods should no longer be relied upon.
As previously disclosed, the Company’s independent Audit Committee of the Board of Directors (the “Audit Committee”), with assistance from external counsel, has been conducting an independent investigation of third-party allegations. The Audit Committee has made substantial progress and is nearing the completion of the investigation. To date, the Audit Committee has found no basis to question the integrity of the Company’s Executive Vice Chairman, Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer.
In connection with additional facts learned, including as a result of the Audit Committee’s independent investigation, and due to regulatory, compliance and Medicare Part B billing uncertainties, management has determined that it is appropriate to reconsider the Company’s judgmental assessments of the compliance of its respiratory and certain other therapy services. Management has also determined that it is appropriate to reconsider the application of certain aspects of revenue recognition guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts With Customers (“ASC 606”) regarding revenue from billings for such services.
As a result, the Company believes that the revenue associated with the provision of respiratory services and certain other therapy services billed under Medicare Part B should not have been recognized as revenue in the Impacted Periods. Accordingly, the Company has determined that it overstated total revenue in the condensed combined/consolidated statements for the Impacted Periods by:
- Approximately $15.0 million to $17.0 million for the three month period ended March 31, 2024 and approximately $46.0 million to $48.0 million for the three month period ended June 30, 2024.
- These amounts are preliminary and may be subject to change.
The Company is working diligently to restate the Prior Financial Statements as soon as practicable. Given the ongoing investigation, PACS has been unable to file its Quarterly Report on Form 10-Q for the nine months ended September 30, 2024, its Annual Report on Form 10-K for the year ended December 31, 2024, and its Quarterly Report on Form 10-Q for the three months ended March 31, 2025. As previously disclosed in the Company’s Current Report on Form 8-K filed on June 2, 2025, The New York Stock Exchange (“NYSE”) provided the Company with an additional trading period through September 2, 2025, subject to reassessment on an ongoing basis, to file its delinquent filings and regain compliance with NYSE listing standards. PACS intends to restate the Prior Financial Statements and file its delinquent quarterly and annual reports within the granted additional period.
Further to the Audit Committee’s ongoing investigation, the Company’s management team, together with external counsel and outside advisors, has undertaken a thorough review of its regulatory compliance program and has begun to implement additional measures designed to enhance processes and controls surrounding regulatory compliance. As part of this process, PACS has retained a new Interim Chief Compliance Officer to oversee the ongoing review and the implementation of updates to the Company’s compliance program. PACS is also continuing to assess the effect of any restatements on the Company’s internal controls over financial reporting and its disclosure controls and procedures.
