PACS Group, Inc. (NYSE: PACS)

Sector: Healthcare Industry: Medical Care Facilities CIK: 0002001184
Market Cap 6.53 Bn
P/B 7.50
P/E 38.65
P/S 1.27
ROIC (Qtr) 4.54
Div Yield % 0.00
Rev 1y % (Qtr) 31.01
Total Debt (Qtr) 3.47 Bn
Debt/Equity (Qtr) 3.98

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 472.20M provides exceptional 16.23x coverage of interest expenses 29.09M, showing strong debt service capability.
  • Operating cash flow of 472.20M fully covers other non-current liabilities 343.45M by 1.37x, showing strong long-term stability.
  • Cash reserves of 355.67M provide ample 117.93x coverage of acquisition spending 3.02M, enabling strategic growth opportunities.
  • Free cash flow of 254.14M provides exceptional 8.74x coverage of interest expense 29.09M, showing strong debt service ability.
  • Strong free cash flow of 254.14M provides 84.26x coverage of acquisition spending 3.02M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 472.20M barely covers its investment activities of (250.21M), with a coverage ratio of -1.89, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating earnings of 289.10M show weak coverage of depreciation charges of 101.94M, with a 2.84 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 472.20M shows concerning coverage of minority interest expenses of (1.18M), which is -401.88x, suggesting complex corporate structure risks.
  • Tangible assets of 5.56B provide limited backing for working capital of (70.87M), which is -78.43x, suggesting increased operational risk in market downturns.
  • R&D investment of 0 represents just 0x of SG&A expenses of 391.22M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Medical Care Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HCA HCA Healthcare, Inc. 127.45 Bn 22.21 1.86 46.35 Bn
2 UHS Universal Health Services Inc 18.67 Bn 23.63 1.71 5.11 Bn
3 THC Tenet Healthcare Corp 18.20 Bn 13.44 0.87 13.19 Bn
4 FMS Fresenius Medical Care AG 13.41 Bn 15.88 0.58 14.98 Bn
5 EHC Encompass Health Corp 13.23 Bn 28.58 2.76 2.66 Bn
6 DVA Davita Inc. 8.13 Bn 10.53 0.61 12.78 Bn
7 ENSG Ensign Group, Inc 7.29 Bn 250.52 15.00 2.16 Bn
8 CHE Chemed Corp 7.16 Bn 27.28 3.54 0.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.62 1.28
EV to Cash from Ops. EV/CFO 19.34 17.96
EV to Debt EV to Debt 2.63 12.55
EV to EBIT EV/EBIT 31.59 14.53
EV to EBITDA EV/EBITDA 23.49 18.49
EV to Free Cash Flow [EV/FCF] EV/FCF 35.94 24.20
EV to Market Cap EV to Market Cap 1.40 441.22
EV to Revenue EV/Rev 1.78 3.33
Price to Book Value [P/B] P/B 7.50 -2.35
Price to Earnings [P/E] P/E 38.65 11.29
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.10
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -13.44
Dividend per Basic Share Div per Share (Qtr) 0.00 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 5.42
Interest Coverage Int. cover (Qtr) 9.94 -97.94
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 32.48 -114.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 618.25 65.22
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 130.37 -46.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 117.69 75.97
EBIT Growth (1y) % EBIT 1y % (Qtr) 109.81 -61.19
EBT Growth (1y) % EBT 1y % (Qtr) 192.17 -115.48
EPS Growth (1y) % EPS 1y % (Qtr) 153.49 -24.32
FCF Growth (1y) % FCF 1y % (Qtr) 949.79 309.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 64.36 17.88
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.91 1.04
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.30 0.39
Current Ratio Curr Ratio (Qtr) 0.94 1.39
Debt to Equity Ratio Debt/Equity (Qtr) 3.98 -13.19
Interest Cover Ratio Int Coverage (Qtr) 9.94 -97.94
Times Interest Earned Times Interest Earned (Qtr) 9.94 -97.94
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.60 -95.81
EBIT Margin % EBIT Margin % (Qtr) 5.63 -94.97
EBT Margin % EBT Margin % (Qtr) 5.06 -105.60
Gross Margin % Gross Margin % (Qtr) 14.20 23.31
Net Profit Margin % Net Margin % (Qtr) 3.30 -106.14