Cover
Cover | 6 Months Ended |
Jun. 30, 2024 | |
Cover [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | PACS Group, Inc. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 92-3144268 |
Entity Address, Address Line One | 262 N. University Ave. |
Entity Address, City or Town | Farmington |
Entity Address, State or Province | UT |
Entity Address, Postal Zip Code | 84025 |
City Area Code | 801 |
Local Phone Number | 447-9829 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Central Index Key | 0002001184 |
Amendment Flag | false |
COMBINED_CONSOLIDATED BALANCE S
COMBINED/CONSOLIDATED BALANCE SHEETS - 10-K - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 73,416 | $ 58,269 |
Accounts receivable, net | 547,807 | 370,924 |
Other receivables | 52,259 | 49,200 |
Prepaid expenses and other current assets | 48,665 | 32,770 |
Total Current Assets | 722,147 | 511,163 |
Property and equipment, net | 577,528 | 430,565 |
Operating lease right-of-use assets | 2,007,812 | 1,345,044 |
Escrow funds | 15,649 | 16,217 |
Goodwill and other indefinite-lived assets | 65,291 | 61,491 |
Other assets | 124,312 | 97,411 |
Total Assets | 3,512,739 | 2,461,891 |
Current Liabilities: | ||
Accounts payable | 140,947 | 110,576 |
Accrued payroll and benefits | 92,234 | 77,360 |
Current operating lease liabilities | 109,438 | 83,171 |
Current maturities of long term debt | 16,822 | 61,363 |
Current portion of accrued self-insurance liabilities | 27,536 | 24,233 |
Other accrued expenses | 69,949 | 127,159 |
Total Current Liabilities | 456,926 | 483,862 |
Long-Term Liabilities: | ||
Long-term operating lease liabilities | 1,961,997 | 1,304,780 |
Accrued benefits, less current portion | 6,738 | 15,287 |
Lines of credit | 520,000 | 146,820 |
Long-term debt, less current maturities, net of deferred financing fees | 195,708 | 291,521 |
Accrued self-insurance liabilities, less current portion | 146,167 | 113,894 |
Other liabilities | 123,477 | 37,076 |
Total Long-Term Liabilities | 2,954,087 | 1,909,378 |
Total Liabilities | 3,411,013 | 2,393,240 |
Commitments and contingencies | ||
Equity: | ||
Common stock | 129 | 129 |
Retained earnings | 95,997 | 63,517 |
Total stockholders' equity | 96,126 | 63,646 |
Non-controlling interest in subsidiary | 5,600 | 5,005 |
Total Equity | 101,726 | 68,651 |
Total Liabilities and Equity | $ 3,512,739 | $ 2,461,891 |
COMBINED_CONSOLIDATED BALANCE_2
COMBINED/CONSOLIDATED BALANCE SHEETS - 10-K (Parenthetical) - $ / shares | Jun. 30, 2024 | Apr. 01, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||||
Common stock, shares authorized (in shares) | 1,250,000,000 | 1,250,000,000 | 64,361,693,000 | 64,361,693,000 |
Common stock, par value (in us dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 152,399,733 | 128,723,386 | 128,723,386 | |
Common stock, shares outstanding (in shares) | 152,399,733 | 128,723,386 | 128,723,386 |
CONDENSED COMBINED_CONSOLIDATED
CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF (LOSS) INCOME - 10-K - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | |||||||||
Patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 | $ 3,110,114 | $ 2,399,155 | $ 1,135,909 | ||
Additional funding | 0 | 0 | 0 | 375 | 375 | 21,482 | 28,563 | ||
Other revenues | 448 | 240 | 871 | 481 | 1,003 | 1,357 | 2,091 | ||
Total Revenue | 981,846 | 760,664 | 1,916,567 | 1,469,106 | 3,111,492 | 2,421,994 | 1,166,563 | ||
Operating Expenses | |||||||||
Cost of services | 762,147 | 590,815 | 1,498,139 | 1,129,587 | 2,447,713 | 1,861,314 | 901,095 | ||
Rent - cost of services | 65,833 | 51,456 | 129,794 | 96,560 | 216,711 | 160,003 | 78,122 | ||
General and administrative expense | 144,380 | 62,695 | 191,286 | 122,137 | 213,664 | 149,006 | 96,834 | ||
Depreciation and amortization | 8,776 | 6,159 | 16,678 | 11,988 | 25,632 | 22,311 | 7,153 | ||
Total Operating Expenses | 981,136 | 711,125 | 1,835,897 | 1,360,272 | 2,903,720 | 2,192,634 | 1,083,204 | ||
Operating Income | 710 | 49,539 | 80,670 | 108,834 | 207,772 | 229,360 | 83,359 | ||
Other (Expense) Income | |||||||||
Interest expense | (9,187) | (15,306) | (24,578) | (25,942) | (49,919) | (25,538) | (5,278) | ||
Other expense, net | (3,905) | (2,643) | (3,465) | (2,203) | (536) | 3,223 | 3,345 | ||
Total Other Expense, net | (13,092) | (17,949) | (19,997) | (28,145) | (50,455) | (22,315) | (1,933) | ||
(Loss) income before provision for income taxes | (12,382) | 31,590 | 60,673 | 80,689 | 157,317 | 207,045 | 81,426 | ||
Benefit (provision) for income taxes | 1,474 | (10,370) | (22,441) | (21,871) | (44,435) | (56,549) | (33,479) | ||
Net (Loss) Income | (10,908) | 21,220 | 38,232 | 58,818 | 112,882 | 150,496 | 47,947 | ||
Net income attributable to noncontrolling interest | 2 | $ 2 | 2 | $ 1 | 4 | 3 | 8 | 0 | 0 |
Net (loss) income attributable to PACS Group, Inc. | $ (10,910) | $ 49,138 | $ 21,218 | $ 37,597 | $ 38,228 | $ 58,815 | $ 112,874 | $ 150,496 | $ 47,947 |
Net (loss) income per share attributable to PACS Group, Inc. | |||||||||
Basic (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 | ||
Diluted (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 | ||
Weighted-average common shares outstanding | |||||||||
Basic (in shares) | 149,463,655 | 128,723,386 | 139,093,520 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 | ||
Diluted (in shares) | 149,463,655 | 128,723,386 | 139,684,618 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 |
CONDENSED COMBINED_CONSOLIDAT_2
CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 10-K (Statement) - USD ($) $ in Thousands | Total | Common Stock | Retained Earnings | Non-Controlling Interest |
Beginning balance (in shares) at Dec. 31, 2020 | 128,723,386 | |||
Beginning balance at Dec. 31, 2020 | $ (39,104) | $ 129 | $ (40,992) | $ 1,759 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Dividends on common stock | (33,654) | (33,654) | ||
Net income attributable to noncontrolling interest | 0 | |||
Net Income | 47,947 | 47,947 | ||
Ending balance (in shares) at Dec. 31, 2021 | 128,723,386 | |||
Ending balance at Dec. 31, 2021 | $ (24,811) | $ 129 | (26,699) | 1,759 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.26 | |||
Contributions | $ 3,246 | 3,246 | ||
Dividends on common stock | (60,280) | (60,280) | ||
Net income attributable to noncontrolling interest | 0 | |||
Net Income | $ 150,496 | 150,496 | ||
Ending balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||
Ending balance at Dec. 31, 2022 | $ 68,651 | $ 129 | 63,517 | 5,005 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.47 | |||
Dividends on common stock | $ (18,513) | (18,513) | ||
Net income attributable to noncontrolling interest | 1 | 1 | ||
Net Income | 37,597 | 37,597 | ||
Ending balance (in shares) at Mar. 31, 2023 | 128,723,386 | |||
Ending balance at Mar. 31, 2023 | $ 87,736 | $ 129 | 82,601 | 5,006 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1438 | |||
Beginning balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||
Beginning balance at Dec. 31, 2022 | $ 68,651 | $ 129 | 63,517 | 5,005 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income attributable to noncontrolling interest | 3 | |||
Net Income | 58,815 | |||
Ending balance (in shares) at Jun. 30, 2023 | 128,723,386 | |||
Ending balance at Jun. 30, 2023 | $ 83,741 | $ 129 | 78,604 | 5,008 |
Beginning balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||
Beginning balance at Dec. 31, 2022 | $ 68,651 | $ 129 | 63,517 | 5,005 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Contributions | 587 | 587 | ||
Dividends on common stock | (80,394) | (80,394) | ||
Net income attributable to noncontrolling interest | 8 | 8 | ||
Net Income | $ 112,874 | 112,874 | ||
Ending balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||
Ending balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 95,997 | 5,600 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.62 | |||
Beginning balance (in shares) at Mar. 31, 2023 | 128,723,386 | |||
Beginning balance at Mar. 31, 2023 | $ 87,736 | $ 129 | 82,601 | 5,006 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Dividends on common stock | (25,215) | (25,215) | ||
Net income attributable to noncontrolling interest | 2 | 2 | ||
Net Income | 21,218 | 21,218 | ||
Ending balance (in shares) at Jun. 30, 2023 | 128,723,386 | |||
Ending balance at Jun. 30, 2023 | $ 83,741 | $ 129 | 78,604 | 5,008 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1959 | |||
Beginning balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||
Beginning balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 95,997 | 5,600 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Dividends on common stock | (17,474) | (17,474) | ||
Net income attributable to noncontrolling interest | 2 | 2 | ||
Net Income | 49,138 | 49,138 | ||
Ending balance (in shares) at Mar. 31, 2024 | 128,723,386 | |||
Ending balance at Mar. 31, 2024 | $ 133,593 | $ 129 | 127,661 | 5,602 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1358 | |||
Beginning balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||
Beginning balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 95,997 | 5,600 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income attributable to noncontrolling interest | 4 | |||
Net Income | $ 38,228 | |||
Ending balance (in shares) at Jun. 30, 2024 | 152,399,733 | 152,399,733 | ||
Ending balance at Jun. 30, 2024 | $ 578,234 | $ 152 | 100,504 | 6,106 |
Beginning balance (in shares) at Mar. 31, 2024 | 128,723,386 | |||
Beginning balance at Mar. 31, 2024 | 133,593 | $ 129 | 127,661 | 5,602 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Contributions | 502 | 502 | ||
Dividends on common stock | (16,247) | (16,247) | ||
Net income attributable to noncontrolling interest | 2 | 2 | ||
Net Income | $ (10,910) | (10,910) | ||
Ending balance (in shares) at Jun. 30, 2024 | 152,399,733 | 152,399,733 | ||
Ending balance at Jun. 30, 2024 | $ 578,234 | $ 152 | $ 100,504 | $ 6,106 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1066 |
CONDENSED COMBINED_CONSOLIDAT_3
CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS - 10-K (Statement) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net income | $ 150,496 | $ 47,947 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 22,311 | 7,153 |
Amortization and write-off of deferred financing fees | 1,205 | 902 |
Loss on disposition of property and equipment | 4 | (2,974) |
Loss on investment in partnership | 346 | (232) |
Deferred taxes | 3,573 | 7,490 |
Deferred taxes | (1,921) | 7,834 |
Noncash lease expense | 14,464 | 1,329 |
Change in operating assets and liabilities | ||
Accounts receivable, net | (114,416) | (36,903) |
Other receivables | (202) | (3,185) |
Prepaid expenses and other current assets | (6,371) | 14,967 |
Other assets | (39,341) | 2,193 |
Escrow funds | (4,526) | (5,112) |
Operating lease obligations | (92) | (1,091) |
Accounts payable | 32,808 | 30,778 |
Accrued payroll and benefits | (5,564) | 6,825 |
Accrued self-insurance liabilities | 67,636 | 32,633 |
Other accrued expenses | (24,390) | (25,294) |
Other liabilities | 168 | (20,168) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 92,615 | 57,602 |
Cash flows from investing activities | ||
Investment in partnership | 0 | (15,714) |
Non-operating distributions from investment in partnership | 2,905 | 877 |
Acquisition of facilities | (55,374) | (79,676) |
Purchase of property and equipment | (22,862) | (124,087) |
Cash proceeds from the sale of assets | 10 | 0 |
NET CASH USED IN INVESTING ACTIVITIES | (75,321) | (218,600) |
Cash flows from financing activities | ||
Borrowing on lines-of-credit, net of deferred financing fees | 154,528 | 460,923 |
Payments on lines-of-credit | (119,149) | (352,120) |
Dividends on common stock | (60,280) | (53,797) |
Contributions from non-controlling interest | 3,246 | 0 |
Borrowings of long-term debt, net of deferred financing fees | 87,906 | 161,474 |
Payments on long-term debt | (53,901) | (34,432) |
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES | 12,350 | 182,048 |
Net change in cash | 29,644 | 21,050 |
Cash, cash equivalents, and restricted cash - beginning of period | 68,562 | 47,512 |
Cash, cash equivalents, and restricted cash - end of period | 98,206 | 68,562 |
Supplemental disclosures of cash flow information | ||
Interest | 25,911 | 6,943 |
Income taxes | 42,554 | 29,110 |
Non-cash financing and investing activity | ||
Accrued capital expenditures | $ 717 | $ 1,799 |
CONDENSED COMBINED_CONSOLIDAT_4
CONDENSED COMBINED/CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Current Assets: | ||
Cash and cash equivalents | $ 73,374 | $ 73,416 |
Accounts receivable, net | 610,577 | 547,807 |
Other receivables | 50,396 | 52,259 |
Prepaid expenses and other current assets | 66,301 | 48,665 |
Total Current Assets | 800,648 | 722,147 |
Property and equipment, net | 763,904 | 577,528 |
Operating lease right-of-use assets | 2,112,914 | 2,007,812 |
Insurance subsidiary deposits and investments | 35,476 | 0 |
Escrow funds | 19,531 | 15,649 |
Goodwill and other indefinite-lived assets | 65,291 | 65,291 |
Other assets | 98,584 | 124,312 |
Total Assets | 3,896,348 | 3,512,739 |
Current Liabilities: | ||
Accounts payable | 125,746 | 140,947 |
Accrued payroll and benefits | 107,077 | 92,234 |
Current operating lease liabilities | 113,278 | 109,438 |
Current maturities of long term debt | 15,745 | 16,822 |
Current portion of accrued self-insurance liabilities | 31,252 | 27,536 |
Other accrued expenses | 75,003 | 69,949 |
Total Current Liabilities | 468,101 | 456,926 |
Long-term operating lease liabilities | 2,068,585 | 1,961,997 |
Accrued benefits, less current portion | 6,738 | 6,738 |
Lines of credit | 248,000 | 520,000 |
Long-term debt, less current maturities, net of deferred financing fees | 227,107 | 195,708 |
Accrued self-insurance liabilities, less current portion | 172,111 | 146,167 |
Other liabilities | 127,472 | 123,477 |
Total Liabilities | 3,318,114 | 3,411,013 |
Commitments and contingencies | ||
Equity: | ||
Common stock | 152 | 129 |
Additional paid-in capital | 471,472 | 0 |
Retained earnings | 100,504 | 95,997 |
Total stockholders' equity | 572,128 | 96,126 |
Non-controlling interest in subsidiary | 6,106 | 5,600 |
Total Equity | 578,234 | 101,726 |
Total Liabilities and Equity | $ 3,896,348 | $ 3,512,739 |
CONDENSED COMBINED_CONSOLIDAT_5
CONDENSED COMBINED/CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2024 | Apr. 01, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||||
Common stock, par value (in us dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 1,250,000,000 | 1,250,000,000 | 64,361,693,000 | 64,361,693,000 |
Common stock, shares issued (in shares) | 152,399,733 | 128,723,386 | 128,723,386 | |
Common stock, shares outstanding (in shares) | 152,399,733 | 128,723,386 | 128,723,386 |
UNAUDITED CONDENSED COMBINED_CO
UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Revenue | ||||
Patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 |
Additional funding | 0 | 0 | 0 | 375 |
Other revenues | 448 | 240 | 871 | 481 |
Total Revenue | 981,846 | 760,664 | 1,916,567 | 1,469,106 |
Operating Expenses | ||||
Cost of services | 762,147 | 590,815 | 1,498,139 | 1,129,587 |
Rent - cost of services | 65,833 | 51,456 | 129,794 | 96,560 |
General and administrative expense | 144,380 | 62,695 | 191,286 | 122,137 |
Depreciation and amortization | 8,776 | 6,159 | 16,678 | 11,988 |
Total Operating Expenses | 981,136 | 711,125 | 1,835,897 | 1,360,272 |
Operating Income | 710 | 49,539 | 80,670 | 108,834 |
Other (Expense) Income | ||||
Interest expense | (9,187) | (15,306) | (24,578) | (25,942) |
Gain on lease termination | 0 | 0 | 8,046 | 0 |
Other expense, net | (3,905) | (2,643) | (3,465) | (2,203) |
Total Other Expense, net | (13,092) | (17,949) | (19,997) | (28,145) |
(Loss) income before provision for income taxes | (12,382) | 31,590 | 60,673 | 80,689 |
Benefit (provision) for income taxes | 1,474 | (10,370) | (22,441) | (21,871) |
Net (Loss) Income | (10,908) | 21,220 | 38,232 | 58,818 |
Net income attributable to noncontrolling interest | 2 | 2 | 4 | 3 |
Net (loss) income attributable to PACS Group, Inc. | $ (10,910) | $ 21,218 | $ 38,228 | $ 58,815 |
Net (loss) income per share attributable to PACS Group, Inc. | ||||
Basic (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 |
Diluted (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 149,463,655 | 128,723,386 | 139,093,520 | 128,723,386 |
Diluted (in shares) | 149,463,655 | 128,723,386 | 139,684,618 | 128,723,386 |
Other comprehensive loss, net of tax: | ||||
Unrealized loss on available-for-sale debt securities, net of tax | $ (201) | $ 0 | $ 0 | $ 0 |
Other comprehensive income (loss) | (201) | 0 | 0 | 0 |
Comprehensive (loss) income | (11,109) | 21,220 | 38,232 | 58,818 |
Comprehensive income attributable to noncontrolling interest | 2 | 2 | 4 | 3 |
Comprehensive (loss) income attributable to PACS Group, Inc. | $ (11,111) | $ 21,218 | $ 38,228 | $ 58,815 |
UNAUDITED CONDENSED COMBINED__2
UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Statement) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Non-Controlling Interest | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Dec. 31, 2020 | 128,723,386 | |||||
Beginning balance at Dec. 31, 2020 | $ (39,104) | $ 129 | $ (40,992) | $ 1,759 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends on common stock | (33,654) | (33,654) | ||||
Net income attributable to noncontrolling interest | 0 | |||||
Net income (loss) attributable to PACS Group, Inc. | 47,947 | 47,947 | ||||
Ending balance (in shares) at Dec. 31, 2021 | 128,723,386 | |||||
Ending balance at Dec. 31, 2021 | (24,811) | $ 129 | (26,699) | 1,759 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Contributions | 3,246 | 3,246 | ||||
Dividends on common stock | (60,280) | (60,280) | ||||
Net income attributable to noncontrolling interest | 0 | |||||
Net income (loss) attributable to PACS Group, Inc. | $ 150,496 | 150,496 | ||||
Ending balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||||
Ending balance at Dec. 31, 2022 | $ 68,651 | $ 129 | $ 0 | 63,517 | 5,005 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends on common stock | (18,513) | (18,513) | ||||
Net income attributable to noncontrolling interest | 1 | 1 | ||||
Net income (loss) attributable to PACS Group, Inc. | 37,597 | 37,597 | ||||
Ending balance (in shares) at Mar. 31, 2023 | 128,723,386 | |||||
Ending balance at Mar. 31, 2023 | $ 87,736 | $ 129 | 0 | 82,601 | 5,006 | 0 |
Beginning balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||||
Beginning balance at Dec. 31, 2022 | $ 68,651 | $ 129 | 0 | 63,517 | 5,005 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Other comprehensive income (loss) | 0 | |||||
Net income attributable to noncontrolling interest | 3 | |||||
Net income (loss) attributable to PACS Group, Inc. | 58,815 | |||||
Ending balance (in shares) at Jun. 30, 2023 | 128,723,386 | |||||
Ending balance at Jun. 30, 2023 | $ 83,741 | $ 129 | 0 | 78,604 | 5,008 | 0 |
Beginning balance (in shares) at Dec. 31, 2022 | 128,723,386 | 128,723,386 | ||||
Beginning balance at Dec. 31, 2022 | $ 68,651 | $ 129 | 0 | 63,517 | 5,005 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Contributions | 587 | 587 | ||||
Dividends on common stock | (80,394) | (80,394) | ||||
Net income attributable to noncontrolling interest | 8 | 8 | ||||
Net income (loss) attributable to PACS Group, Inc. | $ 112,874 | 112,874 | ||||
Ending balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||||
Ending balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 0 | 95,997 | 5,600 | 0 |
Beginning balance (in shares) at Mar. 31, 2023 | 128,723,386 | |||||
Beginning balance at Mar. 31, 2023 | 87,736 | $ 129 | 0 | 82,601 | 5,006 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends on common stock | (25,215) | (25,215) | ||||
Other comprehensive income (loss) | 0 | |||||
Net income attributable to noncontrolling interest | 2 | 2 | ||||
Net income (loss) attributable to PACS Group, Inc. | 21,218 | 21,218 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 128,723,386 | |||||
Ending balance at Jun. 30, 2023 | $ 83,741 | $ 129 | 0 | 78,604 | 5,008 | 0 |
Beginning balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||||
Beginning balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 0 | 95,997 | 5,600 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Dividends on common stock | (17,474) | (17,474) | ||||
Other comprehensive income (loss) | 201 | 201 | ||||
Net income attributable to noncontrolling interest | 2 | 2 | ||||
Net income (loss) attributable to PACS Group, Inc. | 49,138 | 49,138 | ||||
Ending balance (in shares) at Mar. 31, 2024 | 128,723,386 | |||||
Ending balance at Mar. 31, 2024 | $ 133,593 | $ 129 | 0 | 127,661 | 5,602 | 201 |
Beginning balance (in shares) at Dec. 31, 2023 | 128,723,386 | 128,723,386 | ||||
Beginning balance at Dec. 31, 2023 | $ 101,726 | $ 129 | 0 | 95,997 | 5,600 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Other comprehensive income (loss) | 0 | |||||
Net income attributable to noncontrolling interest | 4 | |||||
Net income (loss) attributable to PACS Group, Inc. | $ 38,228 | |||||
Ending balance (in shares) at Jun. 30, 2024 | 152,399,733 | 152,399,733 | ||||
Ending balance at Jun. 30, 2024 | $ 578,234 | $ 152 | 471,472 | 100,504 | 6,106 | 0 |
Beginning balance (in shares) at Mar. 31, 2024 | 128,723,386 | |||||
Beginning balance at Mar. 31, 2024 | 133,593 | $ 129 | 0 | 127,661 | 5,602 | 201 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Contributions | 502 | 502 | ||||
Issuance of common stock (in shares) | 21,428,572 | |||||
Issuance of common stock | 414,157 | $ 21 | 414,136 | |||
Employee stock-based compensation (in shares) | 3,847,652 | |||||
Employee stock-based compensation | 90,936 | $ 4 | 90,932 | |||
Tax withholdings related to net share settlement of equity awards | (1,599,877) | |||||
Tax withholdings related to net share settlement of equity awards | (33,598) | $ (2) | (33,596) | |||
Dividends on common stock | (16,247) | (16,247) | ||||
Other comprehensive income (loss) | (201) | (201) | ||||
Net income attributable to noncontrolling interest | 2 | 2 | ||||
Net income (loss) attributable to PACS Group, Inc. | $ (10,910) | (10,910) | ||||
Ending balance (in shares) at Jun. 30, 2024 | 152,399,733 | 152,399,733 | ||||
Ending balance at Jun. 30, 2024 | $ 578,234 | $ 152 | $ 471,472 | $ 100,504 | $ 6,106 | $ 0 |
UNAUDITED CONDENSED COMBINED__3
UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF CASH FLOWS (Statement) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | |||||
Net income | $ 38,232 | $ 58,818 | $ 112,882 | $ 150,496 | $ 47,947 |
Adjustments to reconcile net income to net cash provided by operating activities | |||||
Depreciation and amortization | 16,678 | 11,988 | 25,632 | 22,311 | 7,153 |
Amortization and write-off of deferred financing fees | 1,551 | 4,279 | 6,068 | 1,205 | 902 |
Stock-based compensation | 90,936 | 0 | |||
Loss on disposition of property and equipment | 343 | 516 | 581 | 4 | (2,974) |
Loss on investment in partnership | 4,288 | 0 | 391 | 346 | (232) |
Gain on other investments | (476) | 0 | |||
Deferred taxes | (15,969) | (7,253) | (9,923) | 3,573 | 7,490 |
Noncash lease expense | 15,185 | 9,093 | 22,727 | 14,464 | 1,329 |
Change in operating assets and liabilities | |||||
Accounts receivable, net | (62,770) | (76,563) | (176,883) | (114,416) | (36,903) |
Other receivables | 1,863 | (9,925) | (3,059) | (202) | (3,185) |
Prepaid expenses and other current assets | (18,286) | 378 | (18,765) | (6,371) | 14,967 |
Other assets | (1,021) | (12,009) | (3,338) | (39,341) | 2,193 |
Escrow funds | (3,882) | 2,130 | 568 | (4,526) | (5,112) |
Operating lease obligations | (9,859) | (1,320) | (2,011) | (92) | (1,091) |
Accounts payable | (17,203) | 33,467 | 33,371 | 32,808 | 30,778 |
Accrued payroll and benefits | 14,843 | 7,092 | 6,325 | (5,564) | 6,825 |
Accrued self-insurance liabilities | 29,660 | 40,413 | 35,576 | 67,636 | 32,633 |
Other accrued expenses | 5,492 | (36,367) | (55,501) | (24,390) | (25,294) |
Other liabilities | 3,995 | 33,475 | 89,056 | 168 | (20,168) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 93,600 | 58,212 | 63,697 | 92,615 | 57,602 |
Cash flows from investing activities | |||||
Investment in partnership | (5,081) | 0 | (2,597) | 0 | (15,714) |
Non-operating distributions from investment in partnership | 1,190 | 945 | 1,862 | 2,905 | 877 |
Purchase of investments | (35,000) | 0 | |||
Acquisition of facilities | (174,650) | (52,365) | (127,024) | (55,374) | (79,676) |
Purchase of property and equipment | (26,093) | (16,591) | (45,782) | (22,862) | (124,087) |
Cash proceeds from the sale of assets | 0 | 750 | 750 | 10 | 0 |
NET CASH USED IN INVESTING ACTIVITIES | (239,634) | (67,261) | (172,791) | (75,321) | (218,600) |
Cash flows from financing activities | |||||
Borrowing on lines-of-credit, net of deferred financing fees | 288,000 | 178,905 | 855,704 | 154,528 | 460,923 |
Payments on lines-of-credit | (560,000) | (222,002) | (497,986) | (119,149) | (352,120) |
Dividends on common stock | (33,721) | (43,728) | (80,394) | (60,280) | (53,797) |
Contributions from non-controlling interest | 502 | 0 | 587 | 3,246 | 0 |
Borrowings of long-term debt, net of deferred financing fees | 39,757 | 315,167 | 411,313 | 87,906 | 161,474 |
Payments on long-term debt | (9,913) | (236,969) | (559,632) | (53,901) | (34,432) |
Proceeds from initial public offering, net of issuance costs | 414,157 | 0 | |||
Taxes paid related to net share settlement of stock-based compensation awards | (33,598) | 0 | |||
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES | 105,184 | (8,627) | 129,592 | 12,350 | 182,048 |
Net change in cash | (40,850) | (17,676) | 20,498 | 29,644 | 21,050 |
Cash, cash equivalents, and restricted cash - beginning of period | 118,704 | 98,206 | 98,206 | 68,562 | 47,512 |
Cash, cash equivalents, and restricted cash - end of period | 77,854 | 80,530 | 118,704 | 98,206 | 68,562 |
Supplemental disclosures of cash flow information | |||||
Interest | 25,550 | 28,004 | 50,558 | 25,911 | 6,943 |
Income taxes | 43,455 | 16,540 | 60,009 | 42,554 | 29,110 |
Non-cash financing and investing activity | |||||
Accrued capital expenditures | 5,154 | 2,552 | 3,000 | 717 | 1,799 |
Assets acquired in operation expansions | 0 | 3,635 | |||
Assets acquired in operation expansions in exchange for notes payable | |||||
Non-cash financing and investing activity | |||||
Assets acquired in operation expansions | $ 2,150 | $ 8,200 | $ 12,800 | ||
Assets acquired in operation expansions through settlement of notes receivable | |||||
Non-cash financing and investing activity | |||||
Assets acquired in operation expansions | $ 500 | $ 0 |
UNAUDITED CONDENSED COMBINED__4
UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Parenthetical - $ / shares | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | |||||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1066 | $ 0.1358 | $ 0.1959 | $ 0.1438 | $ 0.62 | $ 0.47 | $ 0.26 |
UNAUDITED CONDENSED COMBINED__5
UNAUDITED CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Parenthetical - $ / shares | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | |||||||
Common stock, dividends, declared (in us dollars per share) | $ 0.1066 | $ 0.1358 | $ 0.1959 | $ 0.1438 | $ 0.62 | $ 0.47 | $ 0.26 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | ORGANIZATION AND NATURE OF BUSINESS PACS Group, Inc. (PACS Group), a Delaware corporation, was incorporated on March 24, 2023. PACS Group is a holding company which consolidates various operating and other subsidiaries. PACS Group’s applicable operating subsidiaries operate various skilled nursing facilities (SNF) and assisted living facilities (ALF). PACS Group also owns other subsidiaries that are engaged in the acquisition, ownership, and leasing of health care-related properties. As of December 31, 2023 PACS Group subsidiaries operated 208 health care facilities in the states of Arizona, California, Colorado, Kentucky, Missouri, Nevada, Ohio, South Carolina, and Texas. PACS Group subsidiaries operated approximately 22,950 skilled nursing beds and 690 assisted living beds as of that date. As of December 31, 2023, PACS Group subsidiaries operated 179 facilities under long-term lease arrangements and had options to purchase 11 of those facilities. PACS Group subsidiaries have investments in joint ventures that own the underlying real estate and related improvements of 14 post-acute care facilities that are operated by other PACS Group subsidiaries. PACS Group also owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities and one non-affiliated ALF operating entity. PACS Group’s real estate portfolio includes 29 properties which are operated and managed by applicable PACS Group subsidiaries. Providence Administrative Consulting Services, Inc. (PACS), a California corporation, is a subsidiary of PACS Group and provides administrative support services, on a consulting basis, to other subsidiaries of PACS Group. PACS Group also has a wholly-owned captive insurance subsidiary, Welsch Insurance Ltd. (Welsch). Welsch provides coverage to various consolidated operating subsidiaries related to Professional Liability and General Liability (PLGL) insurance. Reorganization Prior to June 30, 2023, Providence Group, Inc. (PGI) owned the operating subsidiaries of PACS Group. On June 30, 2023, PGI and its consolidated subsidiaries reorganized (the Reorganization) to facilitate their entrance into a new credit agreement, dated June 30, 2023 (the New Credit Agreement), between certain lenders party thereto, Truist Bank, as administrative agent, PACS Group, and PACS Holdings, LLC (PACS Holdings) as borrower thereunder. PACS Group and its wholly owned subsidiary PACS Holdings were created on March 24, 2023, and April 10, 2023, respectively, in anticipation of the Reorganization. The equity interests of certain other direct or indirect wholly-owned subsidiaries of PGI at the time of the Reorganization were also contributed to other new direct or indirect wholly-owned subsidiaries of PACS Group to facilitate the New Credit Agreement. PACS Group and its consolidated subsidiaries subsequent to the Reorganization are collectively referred to herein as the Company. The New Credit Agreement is described in Note 8. The Reorganization was effected by the two then-existing stockholders of PGI (which at the time was the direct or indirect parent company of all consolidated entities comprising the Company), contributing their respective shares in PGI to newly-formed PACS Holdings, in exchange for a proportionate interest of shares in newly-formed PACS Group (via issuance of shares of PACS Group), and thus became the sole stockholders of PACS Group. As a result of the Reorganization, (i) for most practical purposes PACS Group in effect became the successor to the historical consolidated business of PGI, and (ii) both of the two stockholders of PGI immediately prior to the Reorganization became the sole stockholders of PACS Group, and maintained their respective pro rata ownership percentage in PACS Group that they held in PGI immediately prior to the Reorganization (which was and remained 50/50). The Reorganization was accounted for as an equity reorganization between entities under common control. The Reorganization combined entities that historically have not been presented together resulting in financial statements that are effectively considered to be those of a different reporting entity. Accordingly, the historical financial statements for periods prior to the Reorganization represent combined financial statements and the financial statements after the Reorganization represent consolidated financial statements. The contribution of shares of PGI and receipt of shares of PACS Group will be accounted on a retrospective basis. Accordingly, all share and per share amounts in these combined/consolidated financial statements and related notes have been retrospectively restated, where applicable, for all periods herein, to give effect to the current shares outstanding of PACS Group. ORGANIZATION AND NATURE OF BUSINESS PACS Group, Inc. (PACS Group or the Company), a Delaware corporation, was incorporated on March 24, 2023. PACS Group is a holding company which consolidates various operating and other subsidiaries. PACS Group’s applicable operating subsidiaries operate various skilled nursing facilities (SNF) and assisted living facilities (ALF). PACS Group also owns other subsidiaries that are engaged in the acquisition, ownership, and leasing of health care-related properties. As of June 30, 2024, PACS Group subsidiaries operated 220 health care facilities in the states of Arizona, California, Colorado, Kentucky, Missouri, Nevada, Ohio, South Carolina, and Texas. PACS Group subsidiaries operated approximately 24,480 skilled nursing beds and 880 assisted living beds as of that date. As of June 30, 2024, PACS Group subsidiaries operated 182 facilities under long-term lease arrangements and had options to purchase 13 of those facilities. PACS Group subsidiaries have investments in joint ventures that own the underlying real estate and related improvements of 12 post-acute care facilities that are operated by other PACS Group subsidiaries. PACS Group also owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities and one non-affiliated ALF operating entity. PACS Group’s real estate portfolio includes 38 properties which are operated and managed by applicable PACS Group subsidiaries. Providence Administrative Consulting Services, Inc., a California corporation, is a subsidiary of PACS Group and provides administrative support services, on a consulting basis, to other subsidiaries of PACS Group. PACS Group also has a wholly-owned captive insurance subsidiary, Welsch Insurance Ltd. (Welsch). Welsch provides coverage to various consolidated operating subsidiaries related to professional liability and general liability (PLGL) insurance. Reorganization Prior to June 30, 2023, Providence Group, Inc. (PGI) owned the operating subsidiaries of PACS Group. On June 30, 2023, PGI and its consolidated subsidiaries reorganized (the Reorganization) to facilitate their entrance into a new credit agreement, dated June 30, 2023 (the New Credit Agreement), between certain lenders party thereto, Truist Bank (Truist), as administrative agent, PACS Group, and PACS Holdings, LLC (PACS Holdings) as borrower thereunder. PACS Group and its wholly owned subsidiary PACS Holdings were created on March 24, 2023, and April 10, 2023, respectively, in anticipation of the Reorganization. The equity interests of certain other direct or indirect wholly-owned subsidiaries of PGI at the time of the Reorganization were also contributed to other new direct or indirect wholly-owned subsidiaries of PACS Group to facilitate the New Credit Agreement. PACS Group and its consolidated subsidiaries subsequent to the Reorganization are collectively referred to herein as the Company. The New Credit Agreement is described in Note 6, “Credit Facilities”. The Reorganization was effected by the two then-existing stockholders of PGI (which at the time was the direct or indirect parent company of all consolidated entities comprising the Company), contributing their respective shares in PGI to newly-formed PACS Holdings, in exchange for a proportionate interest of shares in newly-formed PACS Group (via issuance of shares of PACS Group), and thus became the sole stockholders of PACS Group. As a result of the Reorganization, (i) for most practical purposes PACS Group in effect became the successor to the historical consolidated business of PGI, and (ii) both of the two stockholders of PGI immediately prior to the Reorganization became the sole stockholders of PACS Group, and maintained their respective pro rata ownership percentage in PACS Group that they held in PGI immediately prior to the Reorganization (which was and remained 50/50). The Reorganization was accounted for as an equity reorganization between entities under common control. The Reorganization combined entities that historically have not been presented together resulting in financial statements that are effectively considered to be those of a different reporting entity. Accordingly, the historical financial statements for periods prior to the Reorganization represent combined financial statements and the financial |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its combined/consolidated balance sheets and the amount of combined/consolidated income that is attributable to the Company and the noncontrolling interest in its combined/consolidated statements of income. Use of Estimates The preparation of the combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL and, prior to 2023, workers’ compensation (WC) claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding WC and PLGL claims. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 Cash in Excess of FDIC Limits The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000. The Company has not experienced any losses in such amounts. Insurance Subsidiary Deposits and Investments The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities. Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At December 31, 2023 and 2022, the allowance for doubtful accounts was immaterial to the combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The allowance for implicit price concession is routinely evaluated and any subsequent changes are recorded as an adjustment to patient and resident service revenue in the combined/consolidated statements of income. The implicit price concession recorded as a reduction to patient and resident service revenue was $52,078, $33,927 and $13,733 for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023 and 2022, the Company has recorded estimated implicit price concessions as a reduction to accounts receivable of $42,171, and $33,988, respectively. Government Grants In the absence of specific guidance to account for government grants under U.S. GAAP, the Company has concluded to account for government grants in accordance with International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, the Company recognizes grant income on a systematic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate. Additional funding presented on the combined/consolidated statements of income is associated with government grants received through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). See Note 3 for more details. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - 3 to 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. Goodwill and Other Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed. The Company assesses goodwill for impairment at least annually on October 1st. The Company will perform an impairment assessment at other times if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. When assessing goodwill for impairment the Company may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary. If the Company does not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative test. The Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The Company’s indefinite-lived intangible assets primarily consist of licenses. The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If the Company does not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company calculates the estimated fair value of the indefinite-lived intangible asset. If the estimated fair value of the indefinite-lived intangible asset is lower than its carrying amount, an impairment loss is recognized for the difference. Fair Value Measurements The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three-tiers include: Level 1: observable inputs such as quoted market prices in active markets; Level 2: inputs other than quoted market prices included in Level 1 that are directly or indirectly observable for the asset or liability and Level 3: unobservable inputs for which little or no market data exists, thereby requiring management to develop their own estimates and assumptions. Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment (ASC 360), long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operating subsidiaries to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related assets. The Company did not identify any indicators of impairment of its long-lived assets during the years ended December 31, 2023, 2022, and 2021. Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Additionally, the Company is partially self-insured for risks related to WC policies. Accrued risk reserves primarily represent the accrual for risks associated with WC and PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to a significant portion of its WC program assumed as part of the Plum acquisitions (this acquisition is discussed further in Note 15), and its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). The Company’s retrospective-rated premium WC policy is subject to an annual assessment of the policy premium in relation to the payroll and losses incurred for the policy period. The Company recognizes the WC retrospective policy adjustment as the amount of settlement is determined. Investments in Joint Ventures Investments in joint ventures, in which the Company exercises significant influence over operating and financial policies, are accounted for using the equity method of accounting. Under this method, the investment is carried at cost and is adjusted to recognize the investor’s share of earnings or losses of the investee after the date of acquisition and is adjusted for impairment whenever it is determined that a decline in the fair value below the cost basis is other than temporary. The fair value of the investment then becomes the new cost basis of the investment, and it is not adjusted for subsequent recoveries in fair value. The Company evaluates its investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist. No indicators of impairment existed as of December 31, 2023, 2022 and 2021. Noncontrolling Interest The Company is the majority-owner in a subsidiary which was formed to develop land, a building, and other assets to be leased to a facility operated by the Company upon completion. The noncontrolling interest in subsidiary is initially recognized at estimated fair value on the contribution date and is presented within total equity in the Company’s combined/consolidated balance sheets since these interests are not redeemable. Advertising Advertising costs are expensed as incurred. For the years ended December 31, 2023, 2022, and 2021, advertising expenses included in the Company’s combined/consolidated statements of income were $7,127, $5,414, and $4,870, respectively. Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 10 for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. The Company holds amounts of cash in excess of the FDIC insured limits. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 20% and 36% of total accounts receivable, respectively, at December 31, 2023 and 32% and 21% of total accounts receivable, respectively, at December 31, 2022. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for doubtful accounts on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s operating subsidiaries, excluding four subsidiaries that exclusively operate assisted living facilities, have all of their skilled nursing beds designated for care of patients under federal Medicare and/or state Medicaid programs. 63% of skilled nursing beds are located in California. Comprehensive Income The Company does not have any components of other comprehensive income recorded within its combined/consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements. Segment Presentation The Company’s chief operating decision maker (CODM), the Chief Operating Officer, reviews the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only one reportable segment. The Company does not distinguish between markets or regions for the purpose of allocating resources. Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. The standard will become effective for the Company for the fiscal year 2024 annual financial statements and may be applied prospectively or retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The condensed combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed combined/consolidated balance sheets and the amount of condensed combined/consolidated (loss) income that is attributable to the Company and the noncontrolling interest in its condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The accompanying condensed combined/consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. The December 31, 2023 balance sheet data was derived from audited financial statements; however, the accompanying notes to the condensed combined/consolidated financial statements do not include all of the annual disclosures required under GAAP and should be read in conjunction with the audited combined/consolidated financial statements included in the Company’s final prospectus filed with the SEC on April 12, 2024. Management believes that the condensed combined/consolidated financial statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the condensed combined/consolidated financial statements are not necessarily representative of operations for the entire year. Use of Estimates The preparation of the condensed combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding PLGL claims. See Note 5, “Fair Value Measurement”, for information on the use of restricted cash in other assets to purchase investments in the period. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 Cash in Excess of FDIC Limits The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000. The Company has not experienced any losses in such amounts. Insurance Subsidiary Deposits and Investments The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities. Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At June 30, 2024 and December 31, 2023, the allowance for credit losses was immaterial to the condensed combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The allowance for implicit price concession is routinely evaluated and any subsequent changes are recorded as an adjustment to patient and resident service revenue in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The implicit price concession recorded as a reduction to patient and resident service revenue was $21,980 and $11,336 for the three months ended June 30, 2024 and 2023, respectively, and was $42,936, and $22,411 for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, the Company has recorded estimated implicit price concessions as a reduction to accounts receivable of $59,201 and $42,171, respectively. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - minimum of 3 to a maximum of 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Co |
REVENUE AND ACCOUNTS RECEIVABLE
REVENUE AND ACCOUNTS RECEIVABLE - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE Patient and Resident Service Revenue The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled. These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor. Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly. The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Revenue is recognized as the performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Generally, performance obligations satisfied over time relate to residents receiving services in the facility and, when applicable, residents receiving services in their homes (independent care or assisted living). The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away. Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers. Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience. The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Historically the Company has not had material differences between its estimated transaction price and actual collections from payors. If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known. Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors is as follows: Medicaid: Payments for skilled nursing facility services rendered to Medicaid (including Medi-Cal, which is the name of the state Medicaid program in California) program beneficiaries are based on an annually established daily reimbursement rate for eligible stays. The rate is adjusted annually. The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid. Revenue from the Medicaid program amounted to 38%, 30%, and 35% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Medicare: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system. The applicable licensed healthcare provider entity is paid for certain reimbursable services at the approved rate with final settlement determined after submission of the annual cost report and audit thereof by the designated Medicare fiscal intermediary. Revenue from the Medicare program amounted to 39%, 48%, and 44% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Managed Care, Private and Other: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates. Revenue from these sources collectively amounted to 24%, 22%, and 21% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. The Company’s contracts are short term in nature with a duration of one year or less. The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care. As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component. Included in the Company’s combined/consolidated balance sheets are contract balances, comprising of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company has no material contract liabilities and contract assets as of December 31, 2023 and 2022. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider. Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. The Company believes that it is in compliance with all applicable laws and regulations. The contracts the Company has with commercial payors also provide for retrospective audit and review of claims. Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits or other reviews. These amounts are immaterial. The Company disaggregates revenue from contracts with its patients by payors. The Company determines that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The composition of patient and resident service revenue by primary payors for the years ended December 31, 2023, 2022, and 2021 are as follows: 2023 % of Revenue 2022 % of Revenue 2021 % of Revenue Medicare $ 1,200,801 38.6 % $ 1,142,863 47.6 % $ 496,311 43.7 % Medicaid 1,168,455 37.6 % 723,896 30.2 % 399,141 35.1 % Managed care 586,850 18.9 % 416,089 17.3 % 159,541 14.0 % Private and other 154,008 4.9 % 116,307 4.9 % 80,916 7.2 % Total patient and resident service revenue $ 3,110,114 100.0 % $ 2,399,155 100.0 % $ 1,135,909 100.0 % Additional Funding and CARES Act Through the CARES Act, the Company received $14,962 and $5,654 in funding from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) during the years ended December 31, 2022 and 2021, respectively. These funds were provided to healthcare providers who diagnose, test, or care for individuals with cases of COVID-19 and have health care related expenses and lost revenues attributable to COVID-19. The Company recorded these funds as deferred revenue upon receipt and revenue is recognized only to the extent that health-care related expenses or lost revenues have been incurred and are not reimbursed from other funding sources. The company did not receive any funds related to this program during 2023. The CARES Act also provided for refundable payroll tax credits known as the Employee Retention Tax Credit (ERTC), which allowed qualified employers to receive a credit of 70% of the employee qualified wages and related payroll costs paid after December 31, 2020 through September 30, 2021, up to a maximum credit of $7 per employee, per quarter, for a maximum of $21 per employee in 2021. The Company treated these credits under the accrual basis of accounting in conformity with U.S. GAAP. The Company interpreted the condition of partial suspension through governmental orders during all quarters of 2020 and the first three quarters of 2021, as defined by the CARES Act and to incur qualified payroll and related costs during the applicable quarters. The Company claimed a total of $32,428 under the ERTC, $18,656 related to 2021 qualified wages and $13,772 related to 2020 qualified wages. The Company utilized outside consultants to calculate the qualified wages and the ERTC amounts, and to prepare and submit the applications. Subsequently, due to uncertainty related to meeting the necessary qualifications, the Company recorded a reserve against the entire amount claimed. As of December 31, 2023 and 2022, the Company has recorded $36,477 and $17,119, respectively, in other liabilities to reflect the cash already received related to these credits which may need to be returned and potential penalties. Additionally, under the CARES Act, employers could elect to defer the deposit and payment of the employers share of Social Security taxes through the end of 2020. One half of the deferral was required to be repaid on or before December 31, 2021 with the remaining half due on or before December 31, 2022. The deferral of social security tax payments in the amount of $7,793 was recorded as a liability at December 31, 2021. The Company paid $7,793 during the year ended December 31, 2022 and there are no remaining short-term or long-term balances as of December 31, 2022 and 2023. REVENUE AND ACCOUNTS RECEIVABLE Patient and Resident Service Revenue The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled. These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor. Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly. The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Revenue is recognized as the performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Generally, performance obligations satisfied over time relate to residents receiving services in the facility and, when applicable, residents receiving services in their homes (independent care or assisted living). The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away. Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers. Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience. The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Historically the Company has not had material differences between its estimated transaction price and actual collections from payors. If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known. Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors is as follows: Medicaid: Payments for skilled nursing facility services rendered to Medicaid (including Medi-Cal, which is the name of the state Medicaid program in California) program beneficiaries are based on an annually established daily reimbursement rate for eligible stays. The rate is adjusted annually. The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid. Revenue from the Medicaid program amounted to 38.1% and 35.4% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 38.4% and 32.9% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. Medicare: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system. The applicable licensed healthcare provider entity is paid for certain reimbursable services at the approved rate with final settlement determined after submission of the annual cost report and audit thereof by the designated Medicare fiscal intermediary. Revenue from the Medicare program amounted to 37.5% and 41.7% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 36.6% and 44.8% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. Managed Care, Private and Other: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates. Revenue from these sources collectively amounted to 24.4% and 22.9% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 25.0% and 22.3% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. The Company’s contracts are short term in nature with a duration of one year or less. The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care. As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component. Included in the Company’s condensed combined/consolidated balance sheets are contract balances, comprising of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company has no material contract liabilities or contract assets as of June 30, 2024 and December 31, 2023. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider. Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. The Company believes that it is in compliance with all applicable laws and regulations. The contracts the Company has with commercial payors also provide for retrospective audits and review of claims. Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits or other reviews. These amounts are immaterial. The Company disaggregates revenue from contracts with its patients by payors. The Company determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The composition of patient and resident service revenue by primary payors for the three and six months ended June 30, 2024 and 2023 are as follows: Three Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 368,044 37.5 % $ 316,877 41.7 % Medicaid 373,818 38.1 % 268,867 35.4 % Managed care 191,273 19.5 % 138,440 18.2 % Private and other 48,263 4.9 % 36,240 4.7 % Total patient and resident service revenue $ 981,398 100.0 % $ 760,424 100.0 % Six Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 701,387 36.6 % $ 657,287 44.8 % Medicaid 736,170 38.4 % 483,026 32.9 % Managed care 375,553 19.6 % 261,877 17.8 % Private and other 102,586 5.4 % 66,060 4.5 % Total patient and resident service revenue $ 1,915,696 100.0 % $ 1,468,250 100.0 % Additional Funding and CARES Act Through the CARES Act, the Company received funding from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) during the years ended December 31, 2022 and 2021. These funds were provided to healthcare providers who diagnose, test, or care for individuals with cases of COVID-19 and have health care related expenses and lost revenues attributable to COVID-19. The Company recorded these funds as deferred revenue upon receipt and revenue was recognized only to the extent that health-care related expenses or lost revenues had been incurred and were not reimbursed from other funding sources. The Company recognized an immaterial amount of additional funding in the six months ended June 30, 2023 for funds received prior to 2023. The Company did not receive any additional funds related to this program during 2023 or 2024. |
ESCROW FUNDS - 10K
ESCROW FUNDS - 10K | 6 Months Ended |
Jun. 30, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
ESCROW FUNDS | ESCROW FUNDS Certain subsidiaries of the Company have obtained Department of Housing and Urban Development (HUD)-insured mortgages on properties that they lease to affiliated operating subsidiaries of the Company, while various other subsidiaries of the Company lease properties from unrelated third-party landlords that have obtained HUD-insured mortgages on the applicable properties. Under the terms of the HUD-insured mortgages, borrowers and/or their tenants are required to make certain deposits into escrow funds to be used for payment of property insurance, mortgage insurance premiums, and taxes. The deposits are generally maintained in an interest-bearing account with a federally insured financial institution. Additionally, some HUD-insured mortgages require a reserve for replacement account and a non-critical repair reserve. Under the terms of the HUD-insured mortgages and the related regulatory agreements required by HUD, the tenants are required to make regular monthly deposits into a reserve for replacement account to assure the availability of funds to replace building components, furniture and equipment over time. All disbursements from this account require prior written approval by HUD and the mortgage lender. The non-critical repair reserve is used to cover estimated repairs on the properties typically within 12 months of closing on the HUD loans. During 2021, the Company obtained a construction loan from an unaffiliated third-party lender that the subsidiary expects will be refinanced through a HUD-insured mortgage at a future date. At December 31, 2023 and 2022, this subsidiary had escrows related to debt service reserves, working capital escrows, and various other construction related escrows, in accordance with the terms of the loan agreement. These reserve and escrow accounts are maintained under the control of the mortgage lender for the benefit of the applicable tenant and are generally held in an interest-bearing account with a federally insured financial institution. |
PROPERTY AND EQUIPMENT - 10-K
PROPERTY AND EQUIPMENT - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 The Company evaluated its long-lived assets and did not record an impairment charge for the years ended December 31, 2023, 2022, and 2021. See Note 15 for information on expansions during the years ended December 31, 2023, 2022, and 2021. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2023 Expansions During the year ended December 31, 2023, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at 58 stand-alone skilled nursing, assisted living, and subacute facilities and six real estate purchases. Of the six real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other four acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 6,744 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2023 was $129,174. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment amounting to $124,874. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2023 was concentrated in goodwill and other assets in the amount of $3,800 and $500, respectively. Such transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2022 Expansions During the year ended December 31, 2022, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at nine stand-alone skilled nursing, assisted living, and subacute facilities and four real estate purchases. Of the four real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other two acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,180 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2022 was $55,374. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment and other assets, amounting to $46,500 and $378, respectively. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2022 was concentrated in goodwill in the amount of $8,496 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2021 Expansions Plum Healthcare Group Acquisition On November 5, 2021, the Company completed the acquisition of all of the equity interest of 58 stand-alone skilled nursing, assisted living, and subacute facilities and eight real estate entities from Bay Bridge Capital Partners, LLC d/b/a Plum Healthcare Group (Plum) for $121,000, consisting of cash of $104,200 and notes due to prior owner of $16,800, in order to grow and expand its footprint. The acquisition added 6,380 operational skilled nursing beds, 40 assisted living beds, and 190 subacute beds. The table below represents the purchase price allocation to total identifiable assets acquired and net liabilities assumed using the acquisition method, based on their respective fair values as of November 5, 2021. Amount Cash and cash equivalents $ 7,957 Accounts receivable 94,555 Prepaid and other 43,076 Restricted cash 22,483 Property and equipment 166,072 Operating lease right-of-use assets 612,522 Other assets 5,781 Goodwill and other indefinite-lived assets 32,345 Current operating lease liabilities assumed (28,324) Other current liabilities assumed (134,886) Long-term operating lease liabilities assumed (576,848) Debt and finance lease liabilities assumed (55,095) Other liabilities assumed (68,638) Total purchase price $ 121,000 The indefinite-lived intangible assets acquired include the certificates of need and licenses. Fair value of the indefinite-lived intangible assets was determined using a cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The cost approach utilized assumptions for the current replacement costs of similar assets which for these indefinite-lived intangible assets included assumptions regarding estimated fees on a per unit basis in the applicable jurisdictions. Fair value of property and equipment was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing property and equipment and economic obsolescence. Fair value of the right-of-use assets was determined under a market approach. The market approach utilized significant assumptions based on estimated market rent assessments for the acquired lease contracts. The goodwill is primarily attributed to the workforce acquired. The Company expects 100% of the goodwill to be deductible for income tax purposes. During the year ended December 31, 2022, the Company recorded a measurement period adjustment primarily related to the finalization of professional liability loss reserves, which increased the amount of goodwill and other liabilities assumed in the Plum acquisition by $18,844. At the time of the adjustment, the measurement period was still open as the Company was gathering further information about facts and circumstances that existed as of the acquisition date related to the legal matters that gave rise to the professional liability loss reserve adjustment. Other 2021 Expansions Additionally, the Company invested in two joint ventures during the year ended December 31, 2021. Information related to joint venture activity is disclosed in Note 7. In June 2021, the Company sold one real estate entity, resulting in a gain on sale of $3,100. In conjunction with the sale, the Company entered into a note receivable agreement with the buyer in the principal amount of $5,000 with monthly interest payments accruing at 6% percent. Annual principal payments are due on each anniversary date, with the remaining principal due and payable on the maturity date of June 1, 2024. At December 31, 2023, the outstanding balance of the note was $3,500 which is included in Other Assets. During the year ended December 31, 2021, the Company’s consolidated operations grew through a combination of long-term leases and real estate purchases, with the addition of 17 stand-alone skilled nursing facilities and five real estate purchases. These new operations added approximately 1,780 operational skilled nursing beds. The aggregate purchase price for these acquisitions during the year ended December 31, 2021 was $118,324. The fair value of assets for the real estate entities were concentrated in property and equipment amounting to $116,423. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2021 was concentrated in goodwill in the amount of $1,901 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for tax purposes. In connection with the new operations acquired for the stand-alone skilled nursing facilities, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into agreements with the applicable prior operators as part of each transaction. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return. The operations added by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the year ended December 31, 2023, 2022 and 2021 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the December 31, 2023 and 2022 combined/consolidated balance sheets of the Company, and the operating results have been included in the combined/consolidated statements of income of the Company since the date the Company gained effective control. 2024 Expansions Subsequent to December 31, 2023, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 10 stand-alone facilities and six real estate purchases. Of the six real estate purchases, three of the properties were acquired in conjunction with the operations of the associated facility. For the other three acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,334 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The aggregate purchase price for these acquisitions was $78,500. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 The Company did not record an impairment charge for the six months ended June 30, 2024, and 2023. See Note 12, “Operation Expansions”, for information on expansions during the six months ended June 30, 2024. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2024 Expansions During the six months ended June 30, 2024, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 12 stand-alone facilities and nine real estate purchases. Of the nine real estate purchases, four of the properties were acquired in conjunction with the operations of the associated facility. For the other five acquired properties, the Company’s subsidiaries previously operated the respective facilities and have now acquired the real estate associated with those operations. The aggregate purchase price for these acquisitions was $175,150. These new operations added 1,501 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities to improve both clinical and financial performance of the acquired facility. The operations added by the Company are underperforming financially and have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the six months ended June 30, 2024 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the June 30, 2024 condensed combined/consolidated balance sheets of the Company, and the operating results have been included in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income of the Company since the date the Company gained effective control. Expansions After Period End On August 1, 2024, the Company finalized the acquisition of operations for 12 skilled nursing and 13 assisted living and independent living facilities. The operations are located across six states, including 19 facilities in Washington, two in Nevada, and one facility each in Alaska, Arizona, California, and Montana. Collectively, these facilities comprise 1,072 skilled nursing beds and 831 assisted living and independent living units. Of these facilities, 21 are leased from a new joint venture the Company entered into on the same date for $10,000 in which it owns a 25.8% interest. The remaining four facilities are leased from unaffiliated third-party landlords. |
GOODWILL AND OTHER INDEFINITE-L
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS | GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS Goodwill consisted of the following: Goodwill Balance as of January 1, 2022 $ 27,882 Acquisitions 8,495 Divestitures — Measurement period adjustment - Plum 18,844 Balance as of December 31, 2022 $ 55,221 Acquisitions $ 3,800 Divestitures $ — Balance as of December 31, 2023 $ 59,021 There are no prior period accumulated goodwill impairment losses nor any goodwill impairment losses for the years ended December 31, 2023, 2022, and 2021. As of the year ended December 31, 2023 and 2022, the Company's indefinite-lived intangible assets consisted of the following: December 31, 2023 2022 Licenses $ 6,270 $ 6,270 Total other indefinite-lived intangible assets $ 6,270 $ 6,270 There are no prior period accumulated indefinite-lived intangible asset impairment losses nor any indefinite-lived intangible asset impairment losses for the years ended December 31, 2023, 2022, and 2021. |
INVESTMENT IN PARTNERSHIP - 10-
INVESTMENT IN PARTNERSHIP - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN PARTNERSHIP | INVESTMENT IN PARTNERSHIP For the years ended December 31, 2023, 2022, and 2021, the Company had invested $12,362, $12,018, and $15,269, respectively, in multiple equity investments. These joint venture operations were formed to develop, own, and lease health care facilities to operational subsidiaries of the Company. Some of the joint ventures hold options to purchase the related real estate property holdings. Each of the joint ventures is governed by a managing member who makes the significant decisions that impact the economic performance of the joint venture. The Company is not the managing member of any of the joint ventures in which it is invested. All of the investments are individually immaterial with the Company’s largest equity investment of $9,481 in a joint venture representing an ownership of 27%. All investments are included in other assets in the Company’s combined/consolidated balance sheets. The Company accounts for its share in its equity method investments in the other income (expense), net line item in the Company’s combined/consolidated statements of income. (Loss) income from the investments in partnerships was $(391), $(346), and $232 for the years ended December 31, 2023, 2022, and 2021, respectively. |
CREDIT FACILITIES - 10-K
CREDIT FACILITIES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during the year and, as such, has a zero balance as of December 31, 2023. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist Bank (Truist) and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. See Note 9 for more details. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of December 31, 2023. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At December 31, 2023, the total commitment limit continues to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $520,000 at December 31, 2023, resulting in available cash of $80,000. The Company had no letters of credit outstanding as of December 31, 2023 and had $22,370 in letters of credit outstanding as of December 31, 2022. As of December 31, 2022, the Company maintained several other lines-of-credit with commercial banks. At December 31, 2022, the total commitment limit amounted to $176,000 and was secured by Company assets. These agreements bear interest at rates ranging from LIBOR to LIBOR plus 3.5% and SOFR plus 3.15%. The agreements matured through November 5, 2024. The balance outstanding on these other applicable lines was $146,820 at December 31, 2022, resulting in available cash of $29,180. As discussed above, these other lines-of-credit were closed in connection with executing the 2023 Credit Agreement. Deferred financing fees on lines-of-credit were $15,099 and $4,218 as of December 31, 2023 and 2022, respectively. Amortization expense relating to deferred financing fees on lines-of-credit for the year ended December 31, 2023 was $889 and was immaterial for the years ended December 31, 2022 and 2021, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $193 and $2,811 for the years ended December 31, 2023 and 2022, respectively. LONG-TERM DEBT During the years ended December 31, 2023 and 2022, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $88,809 and $7,027, respectively. As a result, eight of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $166,181 as of December 31, 2023, of which $2,346 is classified as short-term and the remaining $163,834 is classified as long-term. As of December 31, 2022, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $79,031 of which $1,509 was classified as short-term and the remaining $77,522 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of December 31, 2023, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 30 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 8.0% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and its stockholders. As of December 31, 2023 and 2022, the Company had $48,829 and $277,201, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $14,476 is classified as short-term and the remaining $34,354 is classified as long-term as of December 31, 2023, and $59,854 is classified as short-term and the remaining $217,347 is classified as long-term as of December 31, 2022. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of December 31, 2023 and 2022. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $438,645, and $323,439 at December 31, 2023 and 2022, respectively. Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt and line-of-credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2023: Amount 2024 $ 16,822 2025 13,278 2026 3,545 2027 2,772 2028 522,770 Thereafter 175,823 Total $ 735,010 Deferred financing fees incurred in conjunction with debt financing of $2,611 and $4,734 for the years ended December 31, 2023 and 2022, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $1,551, $978, and $462 for the years ended December 31, 2023, 2022, and 2021, respectively. Accumulated amortization related to those deferred financing fees was $131 and $1,386 for the years ended December 31, 2023 and 2022, respectively. As discussed in Note 8, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of December 31, 2023. CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during 2023 and, as such, has a zero balance as of June 30, 2024. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) the 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (the Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of June 30, 2024. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At June 30, 2024, the total commitment limit continued to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $248,000 and $520,000 at June 30, 2024 and December 31, 2023, resulting in available cash of $340,350 and $80,000, respectively, net of letter of credit usage. Deferred financing fees on lines-of-credit were $15,099 as of June 30, 2024 and December 31, 2023. Amortization expense relating to deferred financing fees on lines-of-credit for the three months ended June 30, 2024 and 2023 was $755 and $165, respectively and for the six months ended June 30, 2024 and 2023 were $1,510 and $352, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $1,703 and $193 as of June 30, 2024 and December 31, 2023, respectively. On April 15, 2024, the Company completed an Initial Public Offering (IPO), as described in Note 13, “Capital Stock”, receiving initial net proceeds of $423,000. The Company used $370,000 of the net proceeds from the IPO, which represented 87.5% of the net proceeds from the IPO, to repay amounts outstanding under the Amended and Restated 2023 Credit Facility, and used the remaining amount for general corporate purposes to support the growth of the business. LONG-TERM DEBT During the six months ended June 30, 2024 and the year ended December 31, 2023, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $34,685 and $88,809, respectively. As a result, 11 of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $199,404 as of June 30, 2024, of which $3,339 is classified as short-term and the remaining $196,058 is classified as long-term. As of December 31, 2023, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $166,181 of which $2,346 was classified as short-term and the remaining $163,835 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of June 30, 2024, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 24 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 7.5% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and certain stockholders. As of June 30, 2024 and December 31, 2023, the Company had $46,021 and $48,829, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $12,407 is classified as short-term and the remaining $33,614 is classified as long-term as of June 30, 2024, and $14,476 is classified as short-term and the remaining $34,353 is classified as long-term as of December 31, 2023. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of June 30, 2024 and December 31, 2023. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $235,222 and $438,645 at June 30, 2024 and December 31, 2023, respectively. Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 Deferred financing fees incurred in conjunction with debt financing of $2,745 and $2,611 as of June 30, 2024 and December 31, 2023, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $21 and $390 for the three months ended June 30, 2024 and 2023, respectively, and $41 and $818 for the six months ended June 30, 2024 and 2023, respectively. Accumulated amortization related to those deferred financing fees was $172 and $131 at June 30, 2024 and December 31, 2023, respectively. As discussed in Note 6, “Credit Facilities”, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of June 30, 2024. |
LONG-TERM DEBT - 10-K
LONG-TERM DEBT - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during the year and, as such, has a zero balance as of December 31, 2023. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist Bank (Truist) and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. See Note 9 for more details. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of December 31, 2023. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At December 31, 2023, the total commitment limit continues to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $520,000 at December 31, 2023, resulting in available cash of $80,000. The Company had no letters of credit outstanding as of December 31, 2023 and had $22,370 in letters of credit outstanding as of December 31, 2022. As of December 31, 2022, the Company maintained several other lines-of-credit with commercial banks. At December 31, 2022, the total commitment limit amounted to $176,000 and was secured by Company assets. These agreements bear interest at rates ranging from LIBOR to LIBOR plus 3.5% and SOFR plus 3.15%. The agreements matured through November 5, 2024. The balance outstanding on these other applicable lines was $146,820 at December 31, 2022, resulting in available cash of $29,180. As discussed above, these other lines-of-credit were closed in connection with executing the 2023 Credit Agreement. Deferred financing fees on lines-of-credit were $15,099 and $4,218 as of December 31, 2023 and 2022, respectively. Amortization expense relating to deferred financing fees on lines-of-credit for the year ended December 31, 2023 was $889 and was immaterial for the years ended December 31, 2022 and 2021, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $193 and $2,811 for the years ended December 31, 2023 and 2022, respectively. LONG-TERM DEBT During the years ended December 31, 2023 and 2022, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $88,809 and $7,027, respectively. As a result, eight of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $166,181 as of December 31, 2023, of which $2,346 is classified as short-term and the remaining $163,834 is classified as long-term. As of December 31, 2022, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $79,031 of which $1,509 was classified as short-term and the remaining $77,522 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of December 31, 2023, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 30 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 8.0% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and its stockholders. As of December 31, 2023 and 2022, the Company had $48,829 and $277,201, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $14,476 is classified as short-term and the remaining $34,354 is classified as long-term as of December 31, 2023, and $59,854 is classified as short-term and the remaining $217,347 is classified as long-term as of December 31, 2022. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of December 31, 2023 and 2022. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $438,645, and $323,439 at December 31, 2023 and 2022, respectively. Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt and line-of-credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2023: Amount 2024 $ 16,822 2025 13,278 2026 3,545 2027 2,772 2028 522,770 Thereafter 175,823 Total $ 735,010 Deferred financing fees incurred in conjunction with debt financing of $2,611 and $4,734 for the years ended December 31, 2023 and 2022, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $1,551, $978, and $462 for the years ended December 31, 2023, 2022, and 2021, respectively. Accumulated amortization related to those deferred financing fees was $131 and $1,386 for the years ended December 31, 2023 and 2022, respectively. As discussed in Note 8, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of December 31, 2023. CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during 2023 and, as such, has a zero balance as of June 30, 2024. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) the 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (the Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of June 30, 2024. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At June 30, 2024, the total commitment limit continued to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $248,000 and $520,000 at June 30, 2024 and December 31, 2023, resulting in available cash of $340,350 and $80,000, respectively, net of letter of credit usage. Deferred financing fees on lines-of-credit were $15,099 as of June 30, 2024 and December 31, 2023. Amortization expense relating to deferred financing fees on lines-of-credit for the three months ended June 30, 2024 and 2023 was $755 and $165, respectively and for the six months ended June 30, 2024 and 2023 were $1,510 and $352, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $1,703 and $193 as of June 30, 2024 and December 31, 2023, respectively. On April 15, 2024, the Company completed an Initial Public Offering (IPO), as described in Note 13, “Capital Stock”, receiving initial net proceeds of $423,000. The Company used $370,000 of the net proceeds from the IPO, which represented 87.5% of the net proceeds from the IPO, to repay amounts outstanding under the Amended and Restated 2023 Credit Facility, and used the remaining amount for general corporate purposes to support the growth of the business. LONG-TERM DEBT During the six months ended June 30, 2024 and the year ended December 31, 2023, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $34,685 and $88,809, respectively. As a result, 11 of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $199,404 as of June 30, 2024, of which $3,339 is classified as short-term and the remaining $196,058 is classified as long-term. As of December 31, 2023, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $166,181 of which $2,346 was classified as short-term and the remaining $163,835 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of June 30, 2024, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 24 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 7.5% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and certain stockholders. As of June 30, 2024 and December 31, 2023, the Company had $46,021 and $48,829, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $12,407 is classified as short-term and the remaining $33,614 is classified as long-term as of June 30, 2024, and $14,476 is classified as short-term and the remaining $34,353 is classified as long-term as of December 31, 2023. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of June 30, 2024 and December 31, 2023. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $235,222 and $438,645 at June 30, 2024 and December 31, 2023, respectively. Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 Deferred financing fees incurred in conjunction with debt financing of $2,745 and $2,611 as of June 30, 2024 and December 31, 2023, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $21 and $390 for the three months ended June 30, 2024 and 2023, respectively, and $41 and $818 for the six months ended June 30, 2024 and 2023, respectively. Accumulated amortization related to those deferred financing fees was $172 and $131 at June 30, 2024 and December 31, 2023, respectively. As discussed in Note 6, “Credit Facilities”, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of June 30, 2024. |
PROVISION FOR INCOME TAXES - 10
PROVISION FOR INCOME TAXES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
PROVISION FOR INCOME TAXES | PROVISION FOR INCOME TAXES Effective January 1, 2021, the Company elected “C” corporation status with the Internal Revenue Service. For financial reporting purposes, income before income taxes includes the following components: 2023 2022 2021 Income before provision for income taxes 157,317 207,045 81,426 The provision for income taxes on continuing operations for the years ended December 31, 2023, 2022, and 2021, respectively, is summarized as follows: 2023 2022 2021 Current Federal $ 38,242 $ 37,044 $ 16,438 State 16,116 15,932 9,551 Total current provision 54,358 52,976 25,989 Deferred Federal (6,641) 3,345 8,700 State (3,282) 228 (1,210) Total deferred provision (9,923) 3,573 7,490 Total income tax provision $ 44,435 $ 56,549 $ 33,479 A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2023, 2022 and 2021, respectively, is comprised as follows: 2023 2022 2021 Income tax expense at statutory rate 21.0 % 21.0 % 21.0 % State income taxes – net of federal benefit 6.5 6.3 8.3 Non-deductible expenses 0.9 0.4 1.6 Change in valuation allowance 1.3 — — Recognition of prior year deferred tax liability — — 10.2 Non-deductible transaction costs — — 0.8 Change to deferred taxes (1.6) — — Other Adjustments — (0.4) (0.9) Total effective tax rate 28.1 % 27.3 % 41.0 % The Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are summarized as follows: 2023 2022 Deferred tax assets (liabilities) Accrued expenses $ 17,523 $ 13,740 Allowance for doubtful accounts 8,247 5,919 Deferred revenue — 910 Insurance 15,428 11,131 Intangible assets 4,073 4,353 Deferred compensation 1,202 554 Lease liability 573,227 375,669 Total deferred tax assets 619,700 412,276 Valuation allowance (2,107) — Total net deferred tax assets 617,593 412,276 Cash to accrual method change (6,125) (12,082) Fixed assets (36,838) (31,622) Prepaid expenses (10,802) (6,579) Investment in partnership (4,904) (5,252) Right of use asset (555,766) (364,055) Other (1,411) (861) Total deferred tax liabilities (615,846) (420,451) Net deferred tax assets (liabilities) $ 1,747 $ (8,175) As of December 31, 2023 , the Company has recorded a valuation allowance of 2,107 against its c aptive insurance dual consolidated loss deferred tax asset. This valuation allowance has been established because it is more likely than not that the deferred tax asset will not be realized. The Company is subject to U.S. federal income tax, as well as income tax in certain states in which it operates. The Company’s federal returns for tax years 2020 and forward are subject to examination, and state returns for tax years 2019 and forward are subject to examination. The Company is not, to its knowledge under examination by any federal or state income tax authority. The Company’s balance of net deferred tax assets and net deferred tax liabilities is included within other assets and other liabilities on the combined/consolidated balance sheets as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company did not have any unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company does not anticipate the uncertain tax position to change materially within the next 12 months. The Inflation Reduction Act 2022 (IRA), which incorporates a Corporate Alternative Minimum Tax (CAMT), was signed on August 16, 2022. The changes were effective for tax years beginning after December 31, 2022. The new tax requires companies to compute two separate calculations for federal income tax purposes and pay the greater of the new minimum tax or their regular tax liability. The IRA does not have a material impact for the Company. INCOME TAXES The Company recorded income tax expense of $22,441 and $21,871 during the six months ended June 30, 2024, and 2023, respectively, or 37.0% of earnings before income taxes for the six months ended June 30, 2024, compared to 27.1% for the six months ended June 30, 2023. The change in effective tax rate in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to an increase in non-deductible expenses, including non-deductible compensation in 2024. The Company is subject to U.S. federal income tax, as well as income tax in certain states in which it operates. The Company’s federal returns for tax years 2020 and forward are subject to examination, and state returns for tax years 2019 and forward are subject to examination. The Company’s balance of net deferred tax assets and net deferred tax liabilities are included within other assets and other liabilities on the condensed combined/consolidated balance sheets as of June 30, 2024 and 2023, respectively. As of June 30, 2024 and 2023, the Company did not have any unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company does not anticipate the uncertain tax position to change materially within the next twelve months. |
LEASES - 10-K
LEASES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
LEASES | LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 11 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times starting September 9, 2021 through January 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 30 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. During the year ended December 31, 2021, the Company acquired facility leases and various leases for laptops, copiers, and vehicles as part of the acquisition further described in Note 15. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,850 and $33,593 as of December 31, 2023 and 2022, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the combined/consolidated statements of income. LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 13 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 20 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,205 and $37,850 as of June 30, 2024 and December 31, 2023, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
LEASES | LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 11 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times starting September 9, 2021 through January 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 30 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. During the year ended December 31, 2021, the Company acquired facility leases and various leases for laptops, copiers, and vehicles as part of the acquisition further described in Note 15. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,850 and $33,593 as of December 31, 2023 and 2022, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the combined/consolidated statements of income. LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 13 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 20 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,205 and $37,850 as of June 30, 2024 and December 31, 2023, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
RETIREMENT PLANS - 10-K
RETIREMENT PLANS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Retirement Benefits [Abstract] | |
RETIREMENT PLANS | RETIREMENT PLANS The Company has two 401(k) defined contribution plans for the benefit of all eligible union and non-union employees. Employees over the age of 21 may begin elective deferrals and become eligible for matching contributions after two months of service. Employer discretionary matching contributions may be up to 25% of the employee’s elective deferrals that do not exceed 4% of the employee’s compensation. Employees vest in matching contributions over five years in accordance with the vesting schedule set out in the plan documents. In conjunction with the acquisition of Bay Bridge Capital Partners, LLC (see Note 15), the Company acquired another 401(k) defined contribution plan for the benefit of all eligible employees. Eligible employees may enter the plan immediately upon being hired. Employees are eligible to receive discretionary matching contributions up to 25% of the employee’s elective deferrals that do not exceed $1,060 per participant after completing six months of service. Employees vest in matching contributions over five years in accordance with the vesting schedule set out in the plan document. |
RELATED PARTY TRANSACTIONS - 10
RELATED PARTY TRANSACTIONS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS On July 1, 2021, the Company entered into a Consulting and Strategic Advisory Services Agreement with Helios Consulting, LLC (Helios), a limited liability company owned by Jason Murray, the Company’s Chief Executive Officer and Chairman of its board of directors, and Mark Hancock, Executive Vice Chairman of its board of directors, (Helios Consulting Agreement) which automatically renewed for successive one-year terms. The Helios Consulting Agreement provides for a cash consulting fee of approximately $4,000 annually, paid in monthly installments, for consulting and strategic advisory services provided to the Company by Helios. For the years ended December 31, 2023, 2022, and 2021, the Company paid approximately $4,000, $4,000, and 2,333 (inclusive of approximately $150 paid to a subsidiary of Helios), respectively. As of December 31, 2023, the Company terminated the Helios Consulting Agreement. 2023 Related Party Transactions On March 24, 2023, the Company entered into subscription agreements with Mr. Murray and Mr. Hancock, pursuant to which Mr. Murray and Mr. Hancock each purchased 10,000 shares of the Company’s common stock for a purchase price of $0.001 per share, in a private placement concurrent with the Company’s incorporation in the State of Delaware and in anticipation of effecting the reorganization on June 30, 2023. RELATED PARTY TRANSACTIONS On July 1, 2021, the Company entered into a Consulting and Strategic Advisory Services Agreement with Helios Consulting, LLC (Helios), a limited liability company owned by Jason Murray, the Company’s Chief Executive Officer and Chairman of its board of directors, and Mark Hancock, Executive Vice Chairman of its board of directors, (Helios Consulting Agreement) which automatically renewed for successive one-year terms. The Helios Consulting Agreement provided for a cash consulting fee of approximately $4,000 annually, paid in monthly installments, for consulting and strategic advisory services provided to the Company by Helios. For the three months ended June 30, 2024 and 2023, the Company paid $0 and $1,000 (inclusive of $0 and $38, respectively, paid to a subsidiary of Helios), respectively. For the six months ended June 30, 2024 and 2023, the Company paid $0 and $2,000 (inclusive of $0 and $75, respectively, paid to a subsidiary of Helios), respectively. As of December 31, 2023, the Company terminated the Helios Consulting Agreement. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation. Compliance with such laws and regulations is evaluated regularly, the results of which can be subject to future governmental review and interpretation, and can include significant regulatory action including fines, penalties, and exclusion from certain governmental programs. Included in these laws and regulations is monitoring performed by the Office of Civil Rights which covers the Health Insurance Portability and Accountability Act of 1996, the terms of which require healthcare providers (among other things) to safeguard the privacy and security of certain patient protected health information. Litigation The skilled nursing business involves a significant risk of liability given the age and health of the patients and residents served by the Company’s independent operating subsidiaries. The Company, and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. In addition, the Company, its independent operating subsidiaries, and others in the industry are subject to claims and lawsuits in connection with COVID-19 and a facility’s preparation for and/or response to COVID-19. The defense of these lawsuits may result on significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories. The Company and other companies in its industry are routinely subjected to varying types of claims and suits, including class-actions. Class-action suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs. The Company expects the plaintiffs’ bar to continue to be aggressive in their pursuit of claims. The Company has been subjected to, and is currently involved in, litigation alleging violations of state and federal wage and hour laws as resulting from the alleged failure to pay wages, to timely provide and authorize meal and rest breaks, and related causes of action. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, cash flows, financial condition, or results of operations. The Company has been, and continues to be, subject to claims and legal actions that arise in the normal course of business, including potential claims filed by patients or others on their behalf related to patient care and treatment (professional negligence claims), as well as employment related claims filed by current or former employees. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe the results of such litigation and investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company, taken as a whole. However, the Company’s assessment may evolve based upon further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. Insurance Claims The Company purchased PLGL claims made insurance policies to cover applicable claims through an unrelated insurer. The PLGL policies are claims-made high deductible self-insured policies whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim, as well as an aggregate one-time deductible generally ranging from $750 to $4,000 per policy, with the unrelated insurer typically covering up to $10,000 in aggregate claims paid per policy year. The Company uses its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retained under its PLGL programs. Accordingly, the Company is in essence self-insured for claims that are less than policy deductible amounts, claims not covered by such policies, and claims that exceed policy limits. It is the Company’s policy to use an actuary to assist management in recording the expense and related liability for PLGL claims, both asserted and unasserted, on an undiscounted basis. Included as part of accrued self-insurance liabilities in the accompanying combined/consolidated balance sheets are PLGL self-insurance liabilities amounting to $162,976, and $138,127 as of December 31, 2023 and 2022, respectively, which includes $34,676 and $42,549, respectively, of estimated obligations that will be covered by the unrelated insurer. PLGL self-insurance liabilities as of December 31, 2023 and 2022 include $43,083 and $38,742, respectively, that were related to unasserted claims. As of December 31, 2023, the Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer amounting to $5,895 and $28,781 within other receivables and other assets, respectively, and as of December 31, 2022, the Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer amounting to $7,233 and $35,316 within other receivables and other assets, respectively, as the claims related to the Company's general and professional liability and the anticipated insurance recoveries are recorded on a gross rather than net basis in accordance with U.S. GAAP. As part of the Plum acquisition in 2021 (refer to Note 15), the Company assumed Plum’s workers’ compensation plan. Plum purchased an occurrence-based high deductible self-insured workers’ compensation policy whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim. The estimated obligation recorded at December 31, 2023 and 2022 was $8,323, and $17,062, respectively. The Plum facilities were transferred onto the Company’s retrospective-rated premium workers’ compensation policy as of the acquisition date. The following table represents activity in the Company’s PLGL self- insurance liabilities as of and for the years ended December 31, 2023 and 2022: Amount Balance January 1, 2022 $ 70,491 Current year expense 40,964 Claims paid (28,914) Change in obligations covered by unrelated insurer 31,247 Remeasurement of Plum Assumed Liabilities (Note 15) 24,339 Balance December 31, 2022 $ 138,127 Current year expense 106,107 Claims paid (73,385) Change in obligations covered by unrelated insurer (7,873) Balance December 31, 2023 $ 162,976 Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the combined/consolidated balance sheets for any of the periods presented. COMMITMENTS AND CONTINGENCIES Regulatory Matters Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation. Compliance with such laws and regulations is evaluated regularly, the results of which can be subject to future governmental review and interpretation, and can include significant regulatory action including fines, penalties, and exclusion from certain governmental programs. Included in these laws and regulations is monitoring performed by the Office of Civil Rights which covers the Health Insurance Portability and Accountability Act of 1996, the terms of which require healthcare providers (among other things) to safeguard the privacy and security of certain patient protected health information. Litigation The skilled nursing business involves a significant risk of liability given the age and health of the patients and residents served by the Company’s independent operating subsidiaries. The Company, and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. In addition, the Company, its independent operating subsidiaries, and others in the industry are subject to claims and lawsuits in connection with COVID-19 and a facility’s preparation for and/or response to COVID-19. The defense of these lawsuits may result on significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories. The Company and other companies in its industry are routinely subjected to varying types of claims and suits, including class-actions. Class-action suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs. The Company expects the plaintiffs’ bar to continue to be aggressive in their pursuit of claims. The Company has been subjected to, and is currently involved in, litigation alleging violations of state and federal wage and hour laws as resulting from the alleged failure to pay wages, to timely provide and authorize meal and rest breaks, and related causes of action. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, cash flows, financial condition, or results of operations. The Company has been, and continues to be, subject to claims and legal actions that arise in the normal course of business, including potential claims filed by patients or others on their behalf related to patient care and treatment (professional negligence claims), as well as employment related claims filed by current or former employees. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe the results of such litigation and investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company, taken as a whole. However, the Company’s assessment may evolve based upon further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. Insurance Claims The Company purchased PLGL claims made insurance policies to cover applicable claims through an unrelated insurer. The PLGL policies are claims-made high deductible self-insured policies whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim, as well as an additional aggregate one-time deductible generally ranging from $750 to $4,000 per policy, with the unrelated insurer typically covering up to $10,000 in aggregate claims paid per policy year. The Company uses its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retained under its PLGL programs. Accordingly, the Company is in essence self-insured for claims that are less than policy deductible amounts, claims not covered by such policies, and claims that exceed policy limits. It is the Company’s policy to use an actuary to assist management in recording the expense and related liability for PLGL claims, both asserted and unasserted, on an undiscounted basis. Included as part of accrued self-insurance liabilities in the accompanying condensed combined/consolidated balance sheets are PLGL self-insurance liabilities amounting to $183,836 and $162,976 as of June 30, 2024 and December 31, 2023, respectively, which include $31,628 and $34,676, respectively, of estimated obligations that will be covered by the unrelated insurer. PLGL self-insurance liabilities as of June 30, 2024 and December 31, 2023 include $53,673 and $43,083, respectively, that were related to unasserted claims. The Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer. As of June 30, 2024 this asset amounted to $5,377 and $26,251 recorded within other receivables and other assets, respectively, and as of December 31, 2023, this asset amounted to $5,895 and $28,781 recorded within other receivables and other assets, respectively, as the claims related to the Company's general and professional liability and the anticipated insurance recoveries are recorded on a gross rather than net basis in accordance with U.S. GAAP. Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the combined/consolidated balance sheets for any of the periods presented. |
OPERATION EXPANSIONS - 10-K
OPERATION EXPANSIONS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |
OPERATION EXPANSIONS | PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 The Company evaluated its long-lived assets and did not record an impairment charge for the years ended December 31, 2023, 2022, and 2021. See Note 15 for information on expansions during the years ended December 31, 2023, 2022, and 2021. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2023 Expansions During the year ended December 31, 2023, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at 58 stand-alone skilled nursing, assisted living, and subacute facilities and six real estate purchases. Of the six real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other four acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 6,744 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2023 was $129,174. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment amounting to $124,874. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2023 was concentrated in goodwill and other assets in the amount of $3,800 and $500, respectively. Such transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2022 Expansions During the year ended December 31, 2022, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at nine stand-alone skilled nursing, assisted living, and subacute facilities and four real estate purchases. Of the four real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other two acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,180 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2022 was $55,374. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment and other assets, amounting to $46,500 and $378, respectively. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2022 was concentrated in goodwill in the amount of $8,496 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2021 Expansions Plum Healthcare Group Acquisition On November 5, 2021, the Company completed the acquisition of all of the equity interest of 58 stand-alone skilled nursing, assisted living, and subacute facilities and eight real estate entities from Bay Bridge Capital Partners, LLC d/b/a Plum Healthcare Group (Plum) for $121,000, consisting of cash of $104,200 and notes due to prior owner of $16,800, in order to grow and expand its footprint. The acquisition added 6,380 operational skilled nursing beds, 40 assisted living beds, and 190 subacute beds. The table below represents the purchase price allocation to total identifiable assets acquired and net liabilities assumed using the acquisition method, based on their respective fair values as of November 5, 2021. Amount Cash and cash equivalents $ 7,957 Accounts receivable 94,555 Prepaid and other 43,076 Restricted cash 22,483 Property and equipment 166,072 Operating lease right-of-use assets 612,522 Other assets 5,781 Goodwill and other indefinite-lived assets 32,345 Current operating lease liabilities assumed (28,324) Other current liabilities assumed (134,886) Long-term operating lease liabilities assumed (576,848) Debt and finance lease liabilities assumed (55,095) Other liabilities assumed (68,638) Total purchase price $ 121,000 The indefinite-lived intangible assets acquired include the certificates of need and licenses. Fair value of the indefinite-lived intangible assets was determined using a cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The cost approach utilized assumptions for the current replacement costs of similar assets which for these indefinite-lived intangible assets included assumptions regarding estimated fees on a per unit basis in the applicable jurisdictions. Fair value of property and equipment was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing property and equipment and economic obsolescence. Fair value of the right-of-use assets was determined under a market approach. The market approach utilized significant assumptions based on estimated market rent assessments for the acquired lease contracts. The goodwill is primarily attributed to the workforce acquired. The Company expects 100% of the goodwill to be deductible for income tax purposes. During the year ended December 31, 2022, the Company recorded a measurement period adjustment primarily related to the finalization of professional liability loss reserves, which increased the amount of goodwill and other liabilities assumed in the Plum acquisition by $18,844. At the time of the adjustment, the measurement period was still open as the Company was gathering further information about facts and circumstances that existed as of the acquisition date related to the legal matters that gave rise to the professional liability loss reserve adjustment. Other 2021 Expansions Additionally, the Company invested in two joint ventures during the year ended December 31, 2021. Information related to joint venture activity is disclosed in Note 7. In June 2021, the Company sold one real estate entity, resulting in a gain on sale of $3,100. In conjunction with the sale, the Company entered into a note receivable agreement with the buyer in the principal amount of $5,000 with monthly interest payments accruing at 6% percent. Annual principal payments are due on each anniversary date, with the remaining principal due and payable on the maturity date of June 1, 2024. At December 31, 2023, the outstanding balance of the note was $3,500 which is included in Other Assets. During the year ended December 31, 2021, the Company’s consolidated operations grew through a combination of long-term leases and real estate purchases, with the addition of 17 stand-alone skilled nursing facilities and five real estate purchases. These new operations added approximately 1,780 operational skilled nursing beds. The aggregate purchase price for these acquisitions during the year ended December 31, 2021 was $118,324. The fair value of assets for the real estate entities were concentrated in property and equipment amounting to $116,423. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2021 was concentrated in goodwill in the amount of $1,901 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for tax purposes. In connection with the new operations acquired for the stand-alone skilled nursing facilities, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into agreements with the applicable prior operators as part of each transaction. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return. The operations added by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the year ended December 31, 2023, 2022 and 2021 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the December 31, 2023 and 2022 combined/consolidated balance sheets of the Company, and the operating results have been included in the combined/consolidated statements of income of the Company since the date the Company gained effective control. 2024 Expansions Subsequent to December 31, 2023, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 10 stand-alone facilities and six real estate purchases. Of the six real estate purchases, three of the properties were acquired in conjunction with the operations of the associated facility. For the other three acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,334 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The aggregate purchase price for these acquisitions was $78,500. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 The Company did not record an impairment charge for the six months ended June 30, 2024, and 2023. See Note 12, “Operation Expansions”, for information on expansions during the six months ended June 30, 2024. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2024 Expansions During the six months ended June 30, 2024, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 12 stand-alone facilities and nine real estate purchases. Of the nine real estate purchases, four of the properties were acquired in conjunction with the operations of the associated facility. For the other five acquired properties, the Company’s subsidiaries previously operated the respective facilities and have now acquired the real estate associated with those operations. The aggregate purchase price for these acquisitions was $175,150. These new operations added 1,501 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities to improve both clinical and financial performance of the acquired facility. The operations added by the Company are underperforming financially and have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the six months ended June 30, 2024 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the June 30, 2024 condensed combined/consolidated balance sheets of the Company, and the operating results have been included in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income of the Company since the date the Company gained effective control. Expansions After Period End On August 1, 2024, the Company finalized the acquisition of operations for 12 skilled nursing and 13 assisted living and independent living facilities. The operations are located across six states, including 19 facilities in Washington, two in Nevada, and one facility each in Alaska, Arizona, California, and Montana. Collectively, these facilities comprise 1,072 skilled nursing beds and 831 assisted living and independent living units. Of these facilities, 21 are leased from a new joint venture the Company entered into on the same date for $10,000 in which it owns a 25.8% interest. The remaining four facilities are leased from unaffiliated third-party landlords. |
OTHER ACCRUED EXPENSES - 10-K
OTHER ACCRUED EXPENSES - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Payables and Accruals [Abstract] | |
OTHER ACCRUED EXPENSES | OTHER ACCRUED EXPENSES Other accrued expenses consisted of the following: December 31, 2023 2022 Current portion of finance lease liabilities 942 37,895 Amounts due to former Plum shareholders — 36,586 Other 69,007 52,678 Total other accrued expenses $ 69,949 $ 127,159 |
EARNINGS PER SHARE - 10-K
EARNINGS PER SHARE - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic net income per share is calculated by dividing net income attributable to the common stockholders by the weighted-average shares of Common Stock outstanding for the period. The computation of diluted net income per share is similar to the computation of basic net income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued. As the Company did not have any potentially dilutive securities, basic and diluted EPS are the same. The following table sets forth the computation of the Company’s basic and diluted net income attributable per share to common stockholders for the years ended December 31, 2023, 2022, and 2021: Years Ended December 31, 2023 2022 2021 Basic EPS: Numerator: Net income $ 112,882 $ 150,496 $ 47,947 Less: net income attributable to noncontrolling interest $ 8 $ — $ — Net income attributable to PACS Group, Inc. $ 112,874 $ 150,496 $ 47,947 Denominator: Basic and diluted weighted average common stock outstanding 128,723,386 128,723,386 128,723,386 Net income per common share attributable to PACS Group, Inc. Basic and diluted $ 0.88 $ 1.17 $ 0.37 The Reorganization referred to in Note 1 resulted in the common shares outstanding being converted from 600 shares of PGI to 20,000 shares of PACS Group (a 1 to 33.33 conversion ratio). On March 31, 2024, the Company’s board of directors approved a 1 to 6,436.1693 stock split of its issued and outstanding common stock, which was effective by amendment to the Company’s charter on April 1, 2024. As part of the amendment, the number of authorized shares of common stock was revised to 1,250,000,000 and the par value of the common stock was not adjusted. All issued and outstanding common stock and per share amounts contained in the combined/consolidated financial statements have been retrospectively adjusted to give effect to the stock split for all periods presented. COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE Basic net (loss) income per share is calculated by dividing net (loss) income attributable to the common stockholders by the weighted-average shares of Common Stock outstanding for the period. The computation of diluted net (loss) income per share is similar to the computation of basic net (loss) income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued. A reconciliation of the numerator and denominator used in the calculation of basic net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Basic net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 A reconciliation of the numerator and denominator used in the calculation of diluted net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Plus: effect of diluted shares (1) — — 591,098 — Adjusted weighted average common shares outstanding 149,463,655 128,723,386 139,684,618 128,723,386 Diluted net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 __________________ (1) The diluted per share amounts do not reflect 1,182,196 common share equivalents from restricted stock units for the three months ended June 30, 2024 because of their anti-dilutive effect. |
SUBSEQUENT EVENTS - 10-K
SUBSEQUENT EVENTS - 10-K | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS 2024 Equity Incentive Plans (unaudited) On March 31, 2024, the Company’s board of directors and stockholders approved the PACS Group, Inc. 2024 Incentive Award Plan (the 2024 Plan), which will become effective on the date immediately preceding the date on which the Company’s registration statement will be declared effective by the SEC. The 2024 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors and consultants. The number of shares initially available for issuance under awards granted pursuant to the 2024 Plan (which number includes 15,146,772 shares of common stock issuable upon the exercise of restricted stock unit awards, to be granted in connection with the offering) is equal to 10.25% of the number of shares of our common stock outstanding as of immediately following the completion of this offering (disregarding the shares issuable under the 2024 Plan). 2024 Employee Stock Purchase Plan (unaudited) On March 31, 2024, the Company’s board of directors and stockholders approved the 2024 Employee Stock Purchase Plan (the 2024 ESPP), which will become effective on the date immediately preceding the date on which the Company’s registration statement will be declared effective by the SEC. The number of shares initially available for issuance pursuant to the 2024 ESPP will be equal to the number of shares equal to 1% of the number of shares of our common stock outstanding as of immediately following the completion of this offering (disregarding the shares issuable under the 2024 Plan). |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | ORGANIZATION AND NATURE OF BUSINESS PACS Group, Inc. (PACS Group), a Delaware corporation, was incorporated on March 24, 2023. PACS Group is a holding company which consolidates various operating and other subsidiaries. PACS Group’s applicable operating subsidiaries operate various skilled nursing facilities (SNF) and assisted living facilities (ALF). PACS Group also owns other subsidiaries that are engaged in the acquisition, ownership, and leasing of health care-related properties. As of December 31, 2023 PACS Group subsidiaries operated 208 health care facilities in the states of Arizona, California, Colorado, Kentucky, Missouri, Nevada, Ohio, South Carolina, and Texas. PACS Group subsidiaries operated approximately 22,950 skilled nursing beds and 690 assisted living beds as of that date. As of December 31, 2023, PACS Group subsidiaries operated 179 facilities under long-term lease arrangements and had options to purchase 11 of those facilities. PACS Group subsidiaries have investments in joint ventures that own the underlying real estate and related improvements of 14 post-acute care facilities that are operated by other PACS Group subsidiaries. PACS Group also owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities and one non-affiliated ALF operating entity. PACS Group’s real estate portfolio includes 29 properties which are operated and managed by applicable PACS Group subsidiaries. Providence Administrative Consulting Services, Inc. (PACS), a California corporation, is a subsidiary of PACS Group and provides administrative support services, on a consulting basis, to other subsidiaries of PACS Group. PACS Group also has a wholly-owned captive insurance subsidiary, Welsch Insurance Ltd. (Welsch). Welsch provides coverage to various consolidated operating subsidiaries related to Professional Liability and General Liability (PLGL) insurance. Reorganization Prior to June 30, 2023, Providence Group, Inc. (PGI) owned the operating subsidiaries of PACS Group. On June 30, 2023, PGI and its consolidated subsidiaries reorganized (the Reorganization) to facilitate their entrance into a new credit agreement, dated June 30, 2023 (the New Credit Agreement), between certain lenders party thereto, Truist Bank, as administrative agent, PACS Group, and PACS Holdings, LLC (PACS Holdings) as borrower thereunder. PACS Group and its wholly owned subsidiary PACS Holdings were created on March 24, 2023, and April 10, 2023, respectively, in anticipation of the Reorganization. The equity interests of certain other direct or indirect wholly-owned subsidiaries of PGI at the time of the Reorganization were also contributed to other new direct or indirect wholly-owned subsidiaries of PACS Group to facilitate the New Credit Agreement. PACS Group and its consolidated subsidiaries subsequent to the Reorganization are collectively referred to herein as the Company. The New Credit Agreement is described in Note 8. The Reorganization was effected by the two then-existing stockholders of PGI (which at the time was the direct or indirect parent company of all consolidated entities comprising the Company), contributing their respective shares in PGI to newly-formed PACS Holdings, in exchange for a proportionate interest of shares in newly-formed PACS Group (via issuance of shares of PACS Group), and thus became the sole stockholders of PACS Group. As a result of the Reorganization, (i) for most practical purposes PACS Group in effect became the successor to the historical consolidated business of PGI, and (ii) both of the two stockholders of PGI immediately prior to the Reorganization became the sole stockholders of PACS Group, and maintained their respective pro rata ownership percentage in PACS Group that they held in PGI immediately prior to the Reorganization (which was and remained 50/50). The Reorganization was accounted for as an equity reorganization between entities under common control. The Reorganization combined entities that historically have not been presented together resulting in financial statements that are effectively considered to be those of a different reporting entity. Accordingly, the historical financial statements for periods prior to the Reorganization represent combined financial statements and the financial statements after the Reorganization represent consolidated financial statements. The contribution of shares of PGI and receipt of shares of PACS Group will be accounted on a retrospective basis. Accordingly, all share and per share amounts in these combined/consolidated financial statements and related notes have been retrospectively restated, where applicable, for all periods herein, to give effect to the current shares outstanding of PACS Group. ORGANIZATION AND NATURE OF BUSINESS PACS Group, Inc. (PACS Group or the Company), a Delaware corporation, was incorporated on March 24, 2023. PACS Group is a holding company which consolidates various operating and other subsidiaries. PACS Group’s applicable operating subsidiaries operate various skilled nursing facilities (SNF) and assisted living facilities (ALF). PACS Group also owns other subsidiaries that are engaged in the acquisition, ownership, and leasing of health care-related properties. As of June 30, 2024, PACS Group subsidiaries operated 220 health care facilities in the states of Arizona, California, Colorado, Kentucky, Missouri, Nevada, Ohio, South Carolina, and Texas. PACS Group subsidiaries operated approximately 24,480 skilled nursing beds and 880 assisted living beds as of that date. As of June 30, 2024, PACS Group subsidiaries operated 182 facilities under long-term lease arrangements and had options to purchase 13 of those facilities. PACS Group subsidiaries have investments in joint ventures that own the underlying real estate and related improvements of 12 post-acute care facilities that are operated by other PACS Group subsidiaries. PACS Group also owns subsidiaries that own real estate and related improvements that are leased to applicable affiliated SNF operating entities and one non-affiliated ALF operating entity. PACS Group’s real estate portfolio includes 38 properties which are operated and managed by applicable PACS Group subsidiaries. Providence Administrative Consulting Services, Inc., a California corporation, is a subsidiary of PACS Group and provides administrative support services, on a consulting basis, to other subsidiaries of PACS Group. PACS Group also has a wholly-owned captive insurance subsidiary, Welsch Insurance Ltd. (Welsch). Welsch provides coverage to various consolidated operating subsidiaries related to professional liability and general liability (PLGL) insurance. Reorganization Prior to June 30, 2023, Providence Group, Inc. (PGI) owned the operating subsidiaries of PACS Group. On June 30, 2023, PGI and its consolidated subsidiaries reorganized (the Reorganization) to facilitate their entrance into a new credit agreement, dated June 30, 2023 (the New Credit Agreement), between certain lenders party thereto, Truist Bank (Truist), as administrative agent, PACS Group, and PACS Holdings, LLC (PACS Holdings) as borrower thereunder. PACS Group and its wholly owned subsidiary PACS Holdings were created on March 24, 2023, and April 10, 2023, respectively, in anticipation of the Reorganization. The equity interests of certain other direct or indirect wholly-owned subsidiaries of PGI at the time of the Reorganization were also contributed to other new direct or indirect wholly-owned subsidiaries of PACS Group to facilitate the New Credit Agreement. PACS Group and its consolidated subsidiaries subsequent to the Reorganization are collectively referred to herein as the Company. The New Credit Agreement is described in Note 6, “Credit Facilities”. The Reorganization was effected by the two then-existing stockholders of PGI (which at the time was the direct or indirect parent company of all consolidated entities comprising the Company), contributing their respective shares in PGI to newly-formed PACS Holdings, in exchange for a proportionate interest of shares in newly-formed PACS Group (via issuance of shares of PACS Group), and thus became the sole stockholders of PACS Group. As a result of the Reorganization, (i) for most practical purposes PACS Group in effect became the successor to the historical consolidated business of PGI, and (ii) both of the two stockholders of PGI immediately prior to the Reorganization became the sole stockholders of PACS Group, and maintained their respective pro rata ownership percentage in PACS Group that they held in PGI immediately prior to the Reorganization (which was and remained 50/50). The Reorganization was accounted for as an equity reorganization between entities under common control. The Reorganization combined entities that historically have not been presented together resulting in financial statements that are effectively considered to be those of a different reporting entity. Accordingly, the historical financial statements for periods prior to the Reorganization represent combined financial statements and the financial |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its combined/consolidated balance sheets and the amount of combined/consolidated income that is attributable to the Company and the noncontrolling interest in its combined/consolidated statements of income. Use of Estimates The preparation of the combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL and, prior to 2023, workers’ compensation (WC) claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding WC and PLGL claims. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 Cash in Excess of FDIC Limits The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000. The Company has not experienced any losses in such amounts. Insurance Subsidiary Deposits and Investments The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities. Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At December 31, 2023 and 2022, the allowance for doubtful accounts was immaterial to the combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The allowance for implicit price concession is routinely evaluated and any subsequent changes are recorded as an adjustment to patient and resident service revenue in the combined/consolidated statements of income. The implicit price concession recorded as a reduction to patient and resident service revenue was $52,078, $33,927 and $13,733 for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023 and 2022, the Company has recorded estimated implicit price concessions as a reduction to accounts receivable of $42,171, and $33,988, respectively. Government Grants In the absence of specific guidance to account for government grants under U.S. GAAP, the Company has concluded to account for government grants in accordance with International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, the Company recognizes grant income on a systematic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate. Additional funding presented on the combined/consolidated statements of income is associated with government grants received through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). See Note 3 for more details. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - 3 to 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. Goodwill and Other Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed. The Company assesses goodwill for impairment at least annually on October 1st. The Company will perform an impairment assessment at other times if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. When assessing goodwill for impairment the Company may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary. If the Company does not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative test. The Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The Company’s indefinite-lived intangible assets primarily consist of licenses. The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If the Company does not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company calculates the estimated fair value of the indefinite-lived intangible asset. If the estimated fair value of the indefinite-lived intangible asset is lower than its carrying amount, an impairment loss is recognized for the difference. Fair Value Measurements The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three-tiers include: Level 1: observable inputs such as quoted market prices in active markets; Level 2: inputs other than quoted market prices included in Level 1 that are directly or indirectly observable for the asset or liability and Level 3: unobservable inputs for which little or no market data exists, thereby requiring management to develop their own estimates and assumptions. Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment (ASC 360), long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operating subsidiaries to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, an impairment loss is recognized and measured using the fair value of the related assets. The Company did not identify any indicators of impairment of its long-lived assets during the years ended December 31, 2023, 2022, and 2021. Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Additionally, the Company is partially self-insured for risks related to WC policies. Accrued risk reserves primarily represent the accrual for risks associated with WC and PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to a significant portion of its WC program assumed as part of the Plum acquisitions (this acquisition is discussed further in Note 15), and its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). The Company’s retrospective-rated premium WC policy is subject to an annual assessment of the policy premium in relation to the payroll and losses incurred for the policy period. The Company recognizes the WC retrospective policy adjustment as the amount of settlement is determined. Investments in Joint Ventures Investments in joint ventures, in which the Company exercises significant influence over operating and financial policies, are accounted for using the equity method of accounting. Under this method, the investment is carried at cost and is adjusted to recognize the investor’s share of earnings or losses of the investee after the date of acquisition and is adjusted for impairment whenever it is determined that a decline in the fair value below the cost basis is other than temporary. The fair value of the investment then becomes the new cost basis of the investment, and it is not adjusted for subsequent recoveries in fair value. The Company evaluates its investment in joint ventures, including cost in excess of book value (equity method goodwill) for impairment whenever indicators of impairment exist. No indicators of impairment existed as of December 31, 2023, 2022 and 2021. Noncontrolling Interest The Company is the majority-owner in a subsidiary which was formed to develop land, a building, and other assets to be leased to a facility operated by the Company upon completion. The noncontrolling interest in subsidiary is initially recognized at estimated fair value on the contribution date and is presented within total equity in the Company’s combined/consolidated balance sheets since these interests are not redeemable. Advertising Advertising costs are expensed as incurred. For the years ended December 31, 2023, 2022, and 2021, advertising expenses included in the Company’s combined/consolidated statements of income were $7,127, $5,414, and $4,870, respectively. Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 10 for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. The Company holds amounts of cash in excess of the FDIC insured limits. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 20% and 36% of total accounts receivable, respectively, at December 31, 2023 and 32% and 21% of total accounts receivable, respectively, at December 31, 2022. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for doubtful accounts on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s operating subsidiaries, excluding four subsidiaries that exclusively operate assisted living facilities, have all of their skilled nursing beds designated for care of patients under federal Medicare and/or state Medicaid programs. 63% of skilled nursing beds are located in California. Comprehensive Income The Company does not have any components of other comprehensive income recorded within its combined/consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements. Segment Presentation The Company’s chief operating decision maker (CODM), the Chief Operating Officer, reviews the consolidated results of operations when making decisions about allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only one reportable segment. The Company does not distinguish between markets or regions for the purpose of allocating resources. Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. The standard will become effective for the Company for the fiscal year 2024 annual financial statements and may be applied prospectively or retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The condensed combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed combined/consolidated balance sheets and the amount of condensed combined/consolidated (loss) income that is attributable to the Company and the noncontrolling interest in its condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The accompanying condensed combined/consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. The December 31, 2023 balance sheet data was derived from audited financial statements; however, the accompanying notes to the condensed combined/consolidated financial statements do not include all of the annual disclosures required under GAAP and should be read in conjunction with the audited combined/consolidated financial statements included in the Company’s final prospectus filed with the SEC on April 12, 2024. Management believes that the condensed combined/consolidated financial statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the condensed combined/consolidated financial statements are not necessarily representative of operations for the entire year. Use of Estimates The preparation of the condensed combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding PLGL claims. See Note 5, “Fair Value Measurement”, for information on the use of restricted cash in other assets to purchase investments in the period. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 Cash in Excess of FDIC Limits The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000. The Company has not experienced any losses in such amounts. Insurance Subsidiary Deposits and Investments The Company's captive insurance subsidiary cash and cash equivalents, deposits and investments are designated to support long-term insurance subsidiary liabilities and have been classified as short-term and long-term assets based on the timing of expected future payments of the Company's captive insurance liabilities. Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At June 30, 2024 and December 31, 2023, the allowance for credit losses was immaterial to the condensed combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The allowance for implicit price concession is routinely evaluated and any subsequent changes are recorded as an adjustment to patient and resident service revenue in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The implicit price concession recorded as a reduction to patient and resident service revenue was $21,980 and $11,336 for the three months ended June 30, 2024 and 2023, respectively, and was $42,936, and $22,411 for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, the Company has recorded estimated implicit price concessions as a reduction to accounts receivable of $59,201 and $42,171, respectively. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - minimum of 3 to a maximum of 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Co |
REVENUE AND ACCOUNTS RECEIVAB_2
REVENUE AND ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE AND ACCOUNTS RECEIVABLE | REVENUE AND ACCOUNTS RECEIVABLE Patient and Resident Service Revenue The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled. These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor. Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly. The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Revenue is recognized as the performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Generally, performance obligations satisfied over time relate to residents receiving services in the facility and, when applicable, residents receiving services in their homes (independent care or assisted living). The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away. Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers. Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience. The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Historically the Company has not had material differences between its estimated transaction price and actual collections from payors. If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known. Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors is as follows: Medicaid: Payments for skilled nursing facility services rendered to Medicaid (including Medi-Cal, which is the name of the state Medicaid program in California) program beneficiaries are based on an annually established daily reimbursement rate for eligible stays. The rate is adjusted annually. The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid. Revenue from the Medicaid program amounted to 38%, 30%, and 35% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Medicare: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system. The applicable licensed healthcare provider entity is paid for certain reimbursable services at the approved rate with final settlement determined after submission of the annual cost report and audit thereof by the designated Medicare fiscal intermediary. Revenue from the Medicare program amounted to 39%, 48%, and 44% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Managed Care, Private and Other: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates. Revenue from these sources collectively amounted to 24%, 22%, and 21% of the Company’s combined/consolidated net patient and resident revenue for the years ended December 31, 2023, 2022, and 2021, respectively. The Company’s contracts are short term in nature with a duration of one year or less. The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care. As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component. Included in the Company’s combined/consolidated balance sheets are contract balances, comprising of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company has no material contract liabilities and contract assets as of December 31, 2023 and 2022. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider. Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. The Company believes that it is in compliance with all applicable laws and regulations. The contracts the Company has with commercial payors also provide for retrospective audit and review of claims. Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits or other reviews. These amounts are immaterial. The Company disaggregates revenue from contracts with its patients by payors. The Company determines that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The composition of patient and resident service revenue by primary payors for the years ended December 31, 2023, 2022, and 2021 are as follows: 2023 % of Revenue 2022 % of Revenue 2021 % of Revenue Medicare $ 1,200,801 38.6 % $ 1,142,863 47.6 % $ 496,311 43.7 % Medicaid 1,168,455 37.6 % 723,896 30.2 % 399,141 35.1 % Managed care 586,850 18.9 % 416,089 17.3 % 159,541 14.0 % Private and other 154,008 4.9 % 116,307 4.9 % 80,916 7.2 % Total patient and resident service revenue $ 3,110,114 100.0 % $ 2,399,155 100.0 % $ 1,135,909 100.0 % Additional Funding and CARES Act Through the CARES Act, the Company received $14,962 and $5,654 in funding from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) during the years ended December 31, 2022 and 2021, respectively. These funds were provided to healthcare providers who diagnose, test, or care for individuals with cases of COVID-19 and have health care related expenses and lost revenues attributable to COVID-19. The Company recorded these funds as deferred revenue upon receipt and revenue is recognized only to the extent that health-care related expenses or lost revenues have been incurred and are not reimbursed from other funding sources. The company did not receive any funds related to this program during 2023. The CARES Act also provided for refundable payroll tax credits known as the Employee Retention Tax Credit (ERTC), which allowed qualified employers to receive a credit of 70% of the employee qualified wages and related payroll costs paid after December 31, 2020 through September 30, 2021, up to a maximum credit of $7 per employee, per quarter, for a maximum of $21 per employee in 2021. The Company treated these credits under the accrual basis of accounting in conformity with U.S. GAAP. The Company interpreted the condition of partial suspension through governmental orders during all quarters of 2020 and the first three quarters of 2021, as defined by the CARES Act and to incur qualified payroll and related costs during the applicable quarters. The Company claimed a total of $32,428 under the ERTC, $18,656 related to 2021 qualified wages and $13,772 related to 2020 qualified wages. The Company utilized outside consultants to calculate the qualified wages and the ERTC amounts, and to prepare and submit the applications. Subsequently, due to uncertainty related to meeting the necessary qualifications, the Company recorded a reserve against the entire amount claimed. As of December 31, 2023 and 2022, the Company has recorded $36,477 and $17,119, respectively, in other liabilities to reflect the cash already received related to these credits which may need to be returned and potential penalties. Additionally, under the CARES Act, employers could elect to defer the deposit and payment of the employers share of Social Security taxes through the end of 2020. One half of the deferral was required to be repaid on or before December 31, 2021 with the remaining half due on or before December 31, 2022. The deferral of social security tax payments in the amount of $7,793 was recorded as a liability at December 31, 2021. The Company paid $7,793 during the year ended December 31, 2022 and there are no remaining short-term or long-term balances as of December 31, 2022 and 2023. REVENUE AND ACCOUNTS RECEIVABLE Patient and Resident Service Revenue The Company’s patient and resident service revenue is derived primarily from the Company’s applicable subsidiaries providing healthcare services to their respective patients and residents. Revenue is recognized when services are provided to the patients at the amount that reflects the consideration to which the Company expects to be entitled. These amounts are due from residents, third-party payors (including health insurers and government payors), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits and other reviews by the payor. Generally, the licensed healthcare provider entity providing the applicable services bills the applicable payors monthly. The healthcare services in skilled patient contracts include routine services in exchange for a contractual agreed-upon amount or rate. Revenue is recognized as the performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the applicable licensed healthcare provider entity. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected (or actual) charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Generally, performance obligations satisfied over time relate to residents receiving services in the facility and, when applicable, residents receiving services in their homes (independent care or assisted living). The Company measures the performance obligation from admission into the facility, or the commencement of the service, to the point when the applicable licensed healthcare provider entity is no longer required to provide services to that resident, which is generally at the time that the resident discharges from the applicable facility or passes away. Revenue recognized from healthcare services is adjusted for estimates of variable consideration to arrive at the transaction price. The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration. Variable consideration includes estimates of implicit price concessions so that the estimated transaction price is reflective of the amount to which the Company expects to be entitled in exchange for providing the healthcare services to customers. Variable consideration is estimated using the expected value method based on the Company’s historical reimbursement experience. The amount of variable consideration constrains the transaction price, such that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Historically the Company has not had material differences between its estimated transaction price and actual collections from payors. If actual amounts of consideration ultimately received differ from the Company’s estimates, it adjusts these estimates, which would affect net service revenue in the period such variances become known. Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors is as follows: Medicaid: Payments for skilled nursing facility services rendered to Medicaid (including Medi-Cal, which is the name of the state Medicaid program in California) program beneficiaries are based on an annually established daily reimbursement rate for eligible stays. The rate is adjusted annually. The final settlement is determined after submission of an annual cost report and audits thereof by Medicaid. Revenue from the Medicaid program amounted to 38.1% and 35.4% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 38.4% and 32.9% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. Medicare: Payments for skilled nursing facility services rendered to Medicare program beneficiaries are based on prospectively determined daily rates which vary according to a patient diagnostic classification system. The applicable licensed healthcare provider entity is paid for certain reimbursable services at the approved rate with final settlement determined after submission of the annual cost report and audit thereof by the designated Medicare fiscal intermediary. Revenue from the Medicare program amounted to 37.5% and 41.7% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 36.6% and 44.8% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. Managed Care, Private and Other: Payments for services rendered to private payors and other primary payors included in the table below are based on established rates or on agreements with certain commercial insurance companies, health maintenance organizations, and preferred provider organizations, which provide for various discounts from the established rates. Revenue from these sources collectively amounted to 24.4% and 22.9% of the Company’s condensed combined/consolidated net patient and resident revenue for the three months ended June 30, 2024 and 2023, respectively, and 25.0% and 22.3% of the Company’s condensed combined/consolidated net patient and resident revenue for the six months ended June 30, 2024 and 2023, respectively. The Company’s contracts are short term in nature with a duration of one year or less. The Company has minimal unsatisfied performance obligations at the end of the reporting period as patients are typically under no obligation to remain admitted in the Company’s facilities or under the Company’s care. As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component. Included in the Company’s condensed combined/consolidated balance sheets are contract balances, comprising of billed accounts receivable and unbilled receivables, which are the result of the timing of revenue recognition, billings and cash collections, as well as contract liabilities, which primarily represent payments the Company receives in advance of services provided. The Company has no material contract liabilities or contract assets as of June 30, 2024 and December 31, 2023. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of audits and other reviews by governmental agencies or payor sources, health care providers from time to time receive requests for information and notices regarding billing audits and potential noncompliance with applicable laws and regulations, which, in some instances, can ultimately result in substantial monetary recoupments or other remedies being imposed on the healthcare provider. Compliance with such laws and regulations may also be subject to future government review and interpretation, as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. The Company believes that it is in compliance with all applicable laws and regulations. The contracts the Company has with commercial payors also provide for retrospective audits and review of claims. Settlements with third-party payors for retroactive adjustments due to audits or other reviews are considered variable consideration and are included in the determination of the estimated transaction price for providing resident services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor, and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits or other reviews. These amounts are immaterial. The Company disaggregates revenue from contracts with its patients by payors. The Company determined that disaggregating revenue into these categories achieves the disclosure objectives to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The composition of patient and resident service revenue by primary payors for the three and six months ended June 30, 2024 and 2023 are as follows: Three Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 368,044 37.5 % $ 316,877 41.7 % Medicaid 373,818 38.1 % 268,867 35.4 % Managed care 191,273 19.5 % 138,440 18.2 % Private and other 48,263 4.9 % 36,240 4.7 % Total patient and resident service revenue $ 981,398 100.0 % $ 760,424 100.0 % Six Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 701,387 36.6 % $ 657,287 44.8 % Medicaid 736,170 38.4 % 483,026 32.9 % Managed care 375,553 19.6 % 261,877 17.8 % Private and other 102,586 5.4 % 66,060 4.5 % Total patient and resident service revenue $ 1,915,696 100.0 % $ 1,468,250 100.0 % Additional Funding and CARES Act Through the CARES Act, the Company received funding from the U.S. Department of Health and Human Services (HHS) through the Provider Relief Fund (PRF) during the years ended December 31, 2022 and 2021. These funds were provided to healthcare providers who diagnose, test, or care for individuals with cases of COVID-19 and have health care related expenses and lost revenues attributable to COVID-19. The Company recorded these funds as deferred revenue upon receipt and revenue was recognized only to the extent that health-care related expenses or lost revenues had been incurred and were not reimbursed from other funding sources. The Company recognized an immaterial amount of additional funding in the six months ended June 30, 2023 for funds received prior to 2023. The Company did not receive any additional funds related to this program during 2023 or 2024. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 The Company evaluated its long-lived assets and did not record an impairment charge for the years ended December 31, 2023, 2022, and 2021. See Note 15 for information on expansions during the years ended December 31, 2023, 2022, and 2021. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2023 Expansions During the year ended December 31, 2023, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at 58 stand-alone skilled nursing, assisted living, and subacute facilities and six real estate purchases. Of the six real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other four acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 6,744 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2023 was $129,174. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment amounting to $124,874. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2023 was concentrated in goodwill and other assets in the amount of $3,800 and $500, respectively. Such transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2022 Expansions During the year ended December 31, 2022, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at nine stand-alone skilled nursing, assisted living, and subacute facilities and four real estate purchases. Of the four real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other two acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,180 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2022 was $55,374. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment and other assets, amounting to $46,500 and $378, respectively. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2022 was concentrated in goodwill in the amount of $8,496 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2021 Expansions Plum Healthcare Group Acquisition On November 5, 2021, the Company completed the acquisition of all of the equity interest of 58 stand-alone skilled nursing, assisted living, and subacute facilities and eight real estate entities from Bay Bridge Capital Partners, LLC d/b/a Plum Healthcare Group (Plum) for $121,000, consisting of cash of $104,200 and notes due to prior owner of $16,800, in order to grow and expand its footprint. The acquisition added 6,380 operational skilled nursing beds, 40 assisted living beds, and 190 subacute beds. The table below represents the purchase price allocation to total identifiable assets acquired and net liabilities assumed using the acquisition method, based on their respective fair values as of November 5, 2021. Amount Cash and cash equivalents $ 7,957 Accounts receivable 94,555 Prepaid and other 43,076 Restricted cash 22,483 Property and equipment 166,072 Operating lease right-of-use assets 612,522 Other assets 5,781 Goodwill and other indefinite-lived assets 32,345 Current operating lease liabilities assumed (28,324) Other current liabilities assumed (134,886) Long-term operating lease liabilities assumed (576,848) Debt and finance lease liabilities assumed (55,095) Other liabilities assumed (68,638) Total purchase price $ 121,000 The indefinite-lived intangible assets acquired include the certificates of need and licenses. Fair value of the indefinite-lived intangible assets was determined using a cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The cost approach utilized assumptions for the current replacement costs of similar assets which for these indefinite-lived intangible assets included assumptions regarding estimated fees on a per unit basis in the applicable jurisdictions. Fair value of property and equipment was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing property and equipment and economic obsolescence. Fair value of the right-of-use assets was determined under a market approach. The market approach utilized significant assumptions based on estimated market rent assessments for the acquired lease contracts. The goodwill is primarily attributed to the workforce acquired. The Company expects 100% of the goodwill to be deductible for income tax purposes. During the year ended December 31, 2022, the Company recorded a measurement period adjustment primarily related to the finalization of professional liability loss reserves, which increased the amount of goodwill and other liabilities assumed in the Plum acquisition by $18,844. At the time of the adjustment, the measurement period was still open as the Company was gathering further information about facts and circumstances that existed as of the acquisition date related to the legal matters that gave rise to the professional liability loss reserve adjustment. Other 2021 Expansions Additionally, the Company invested in two joint ventures during the year ended December 31, 2021. Information related to joint venture activity is disclosed in Note 7. In June 2021, the Company sold one real estate entity, resulting in a gain on sale of $3,100. In conjunction with the sale, the Company entered into a note receivable agreement with the buyer in the principal amount of $5,000 with monthly interest payments accruing at 6% percent. Annual principal payments are due on each anniversary date, with the remaining principal due and payable on the maturity date of June 1, 2024. At December 31, 2023, the outstanding balance of the note was $3,500 which is included in Other Assets. During the year ended December 31, 2021, the Company’s consolidated operations grew through a combination of long-term leases and real estate purchases, with the addition of 17 stand-alone skilled nursing facilities and five real estate purchases. These new operations added approximately 1,780 operational skilled nursing beds. The aggregate purchase price for these acquisitions during the year ended December 31, 2021 was $118,324. The fair value of assets for the real estate entities were concentrated in property and equipment amounting to $116,423. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2021 was concentrated in goodwill in the amount of $1,901 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for tax purposes. In connection with the new operations acquired for the stand-alone skilled nursing facilities, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into agreements with the applicable prior operators as part of each transaction. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return. The operations added by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the year ended December 31, 2023, 2022 and 2021 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the December 31, 2023 and 2022 combined/consolidated balance sheets of the Company, and the operating results have been included in the combined/consolidated statements of income of the Company since the date the Company gained effective control. 2024 Expansions Subsequent to December 31, 2023, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 10 stand-alone facilities and six real estate purchases. Of the six real estate purchases, three of the properties were acquired in conjunction with the operations of the associated facility. For the other three acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,334 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The aggregate purchase price for these acquisitions was $78,500. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 The Company did not record an impairment charge for the six months ended June 30, 2024, and 2023. See Note 12, “Operation Expansions”, for information on expansions during the six months ended June 30, 2024. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2024 Expansions During the six months ended June 30, 2024, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 12 stand-alone facilities and nine real estate purchases. Of the nine real estate purchases, four of the properties were acquired in conjunction with the operations of the associated facility. For the other five acquired properties, the Company’s subsidiaries previously operated the respective facilities and have now acquired the real estate associated with those operations. The aggregate purchase price for these acquisitions was $175,150. These new operations added 1,501 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities to improve both clinical and financial performance of the acquired facility. The operations added by the Company are underperforming financially and have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the six months ended June 30, 2024 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the June 30, 2024 condensed combined/consolidated balance sheets of the Company, and the operating results have been included in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income of the Company since the date the Company gained effective control. Expansions After Period End On August 1, 2024, the Company finalized the acquisition of operations for 12 skilled nursing and 13 assisted living and independent living facilities. The operations are located across six states, including 19 facilities in Washington, two in Nevada, and one facility each in Alaska, Arizona, California, and Montana. Collectively, these facilities comprise 1,072 skilled nursing beds and 831 assisted living and independent living units. Of these facilities, 21 are leased from a new joint venture the Company entered into on the same date for $10,000 in which it owns a 25.8% interest. The remaining four facilities are leased from unaffiliated third-party landlords. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | FAIR VALUE MEASUREMENT The Company's financial assets include insurance subsidiary deposits and highly liquid investments which are held by the consolidated captive insurance entity and are designated to support long-term insurance subsidiary liabilities and are recorded at fair value of $35,476 and $0 as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024, the components of the fair value of the insurance subsidiary deposits and investments include amortized costs of $35,000 and net unrealized gains of $476. Gains and losses on investments are recorded within other expense, net. Insurance subsidiary deposits and investments consist of holdings in investment grade bond mutual funds and are derived using Level 2 inputs. These assets are recorded in insurance subsidiary deposits and investments on our condensed combined/consolidated balance sheets and are classified as available-for-sale securities. These mutual funds are primarily valued utilizing calculations which incorporate observable inputs such as yield, maturity and credit quality. The Company's non-financial assets, which includes goodwill, intangible assets, property and equipment and right-of-use assets, are not required to be measured at fair value on a recurring basis. However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, the Company assesses its long-lived assets for impairment. When impairment has occurred, such long-lived assets are written down to fair value. |
CREDIT FACILITIES
CREDIT FACILITIES | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during the year and, as such, has a zero balance as of December 31, 2023. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist Bank (Truist) and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. See Note 9 for more details. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of December 31, 2023. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At December 31, 2023, the total commitment limit continues to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $520,000 at December 31, 2023, resulting in available cash of $80,000. The Company had no letters of credit outstanding as of December 31, 2023 and had $22,370 in letters of credit outstanding as of December 31, 2022. As of December 31, 2022, the Company maintained several other lines-of-credit with commercial banks. At December 31, 2022, the total commitment limit amounted to $176,000 and was secured by Company assets. These agreements bear interest at rates ranging from LIBOR to LIBOR plus 3.5% and SOFR plus 3.15%. The agreements matured through November 5, 2024. The balance outstanding on these other applicable lines was $146,820 at December 31, 2022, resulting in available cash of $29,180. As discussed above, these other lines-of-credit were closed in connection with executing the 2023 Credit Agreement. Deferred financing fees on lines-of-credit were $15,099 and $4,218 as of December 31, 2023 and 2022, respectively. Amortization expense relating to deferred financing fees on lines-of-credit for the year ended December 31, 2023 was $889 and was immaterial for the years ended December 31, 2022 and 2021, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $193 and $2,811 for the years ended December 31, 2023 and 2022, respectively. LONG-TERM DEBT During the years ended December 31, 2023 and 2022, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $88,809 and $7,027, respectively. As a result, eight of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $166,181 as of December 31, 2023, of which $2,346 is classified as short-term and the remaining $163,834 is classified as long-term. As of December 31, 2022, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $79,031 of which $1,509 was classified as short-term and the remaining $77,522 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of December 31, 2023, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 30 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 8.0% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and its stockholders. As of December 31, 2023 and 2022, the Company had $48,829 and $277,201, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $14,476 is classified as short-term and the remaining $34,354 is classified as long-term as of December 31, 2023, and $59,854 is classified as short-term and the remaining $217,347 is classified as long-term as of December 31, 2022. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of December 31, 2023 and 2022. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $438,645, and $323,439 at December 31, 2023 and 2022, respectively. Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt and line-of-credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2023: Amount 2024 $ 16,822 2025 13,278 2026 3,545 2027 2,772 2028 522,770 Thereafter 175,823 Total $ 735,010 Deferred financing fees incurred in conjunction with debt financing of $2,611 and $4,734 for the years ended December 31, 2023 and 2022, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $1,551, $978, and $462 for the years ended December 31, 2023, 2022, and 2021, respectively. Accumulated amortization related to those deferred financing fees was $131 and $1,386 for the years ended December 31, 2023 and 2022, respectively. As discussed in Note 8, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of December 31, 2023. CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during 2023 and, as such, has a zero balance as of June 30, 2024. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) the 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (the Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of June 30, 2024. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At June 30, 2024, the total commitment limit continued to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $248,000 and $520,000 at June 30, 2024 and December 31, 2023, resulting in available cash of $340,350 and $80,000, respectively, net of letter of credit usage. Deferred financing fees on lines-of-credit were $15,099 as of June 30, 2024 and December 31, 2023. Amortization expense relating to deferred financing fees on lines-of-credit for the three months ended June 30, 2024 and 2023 was $755 and $165, respectively and for the six months ended June 30, 2024 and 2023 were $1,510 and $352, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $1,703 and $193 as of June 30, 2024 and December 31, 2023, respectively. On April 15, 2024, the Company completed an Initial Public Offering (IPO), as described in Note 13, “Capital Stock”, receiving initial net proceeds of $423,000. The Company used $370,000 of the net proceeds from the IPO, which represented 87.5% of the net proceeds from the IPO, to repay amounts outstanding under the Amended and Restated 2023 Credit Facility, and used the remaining amount for general corporate purposes to support the growth of the business. LONG-TERM DEBT During the six months ended June 30, 2024 and the year ended December 31, 2023, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $34,685 and $88,809, respectively. As a result, 11 of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $199,404 as of June 30, 2024, of which $3,339 is classified as short-term and the remaining $196,058 is classified as long-term. As of December 31, 2023, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $166,181 of which $2,346 was classified as short-term and the remaining $163,835 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of June 30, 2024, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 24 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 7.5% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and certain stockholders. As of June 30, 2024 and December 31, 2023, the Company had $46,021 and $48,829, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $12,407 is classified as short-term and the remaining $33,614 is classified as long-term as of June 30, 2024, and $14,476 is classified as short-term and the remaining $34,353 is classified as long-term as of December 31, 2023. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of June 30, 2024 and December 31, 2023. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $235,222 and $438,645 at June 30, 2024 and December 31, 2023, respectively. Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 Deferred financing fees incurred in conjunction with debt financing of $2,745 and $2,611 as of June 30, 2024 and December 31, 2023, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $21 and $390 for the three months ended June 30, 2024 and 2023, respectively, and $41 and $818 for the six months ended June 30, 2024 and 2023, respectively. Accumulated amortization related to those deferred financing fees was $172 and $131 at June 30, 2024 and December 31, 2023, respectively. As discussed in Note 6, “Credit Facilities”, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of June 30, 2024. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during the year and, as such, has a zero balance as of December 31, 2023. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist Bank (Truist) and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. See Note 9 for more details. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of December 31, 2023. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At December 31, 2023, the total commitment limit continues to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $520,000 at December 31, 2023, resulting in available cash of $80,000. The Company had no letters of credit outstanding as of December 31, 2023 and had $22,370 in letters of credit outstanding as of December 31, 2022. As of December 31, 2022, the Company maintained several other lines-of-credit with commercial banks. At December 31, 2022, the total commitment limit amounted to $176,000 and was secured by Company assets. These agreements bear interest at rates ranging from LIBOR to LIBOR plus 3.5% and SOFR plus 3.15%. The agreements matured through November 5, 2024. The balance outstanding on these other applicable lines was $146,820 at December 31, 2022, resulting in available cash of $29,180. As discussed above, these other lines-of-credit were closed in connection with executing the 2023 Credit Agreement. Deferred financing fees on lines-of-credit were $15,099 and $4,218 as of December 31, 2023 and 2022, respectively. Amortization expense relating to deferred financing fees on lines-of-credit for the year ended December 31, 2023 was $889 and was immaterial for the years ended December 31, 2022 and 2021, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $193 and $2,811 for the years ended December 31, 2023 and 2022, respectively. LONG-TERM DEBT During the years ended December 31, 2023 and 2022, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $88,809 and $7,027, respectively. As a result, eight of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $166,181 as of December 31, 2023, of which $2,346 is classified as short-term and the remaining $163,834 is classified as long-term. As of December 31, 2022, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $79,031 of which $1,509 was classified as short-term and the remaining $77,522 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of December 31, 2023, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 30 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 8.0% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and its stockholders. As of December 31, 2023 and 2022, the Company had $48,829 and $277,201, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $14,476 is classified as short-term and the remaining $34,354 is classified as long-term as of December 31, 2023, and $59,854 is classified as short-term and the remaining $217,347 is classified as long-term as of December 31, 2022. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of December 31, 2023 and 2022. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $438,645, and $323,439 at December 31, 2023 and 2022, respectively. Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt and line-of-credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2023: Amount 2024 $ 16,822 2025 13,278 2026 3,545 2027 2,772 2028 522,770 Thereafter 175,823 Total $ 735,010 Deferred financing fees incurred in conjunction with debt financing of $2,611 and $4,734 for the years ended December 31, 2023 and 2022, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $1,551, $978, and $462 for the years ended December 31, 2023, 2022, and 2021, respectively. Accumulated amortization related to those deferred financing fees was $131 and $1,386 for the years ended December 31, 2023 and 2022, respectively. As discussed in Note 8, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of December 31, 2023. CREDIT FACILITIES On February 28, 2023, the Company entered into a working capital loan agreement (the Working Capital Loan) in connection with the acquisition of various new facilities. The Working Capital Loan allowed the Company to borrow up to $17,500 at an annual interest rate of 9%. On May 8, 2023, the Company drew on the Working Capital Loan in the amount of $15,000. As described below, the Working Capital Loan was repaid during 2023 and, as such, has a zero balance as of June 30, 2024. On June 30, 2023, the Company and certain of its subsidiaries entered into a credit agreement with Truist and a syndicate of lenders (the 2023 Credit Agreement), that extended credit in the form of the revolving credit facility thereunder, (the 2023 Revolving Credit Facility), including letter of credit and swing line sub facilities and a term loan facility (Truist Term Loan), together referred to as the 2023 Credit Facility. The 2023 Credit Agreement provided for: (i) the 2023 Revolving Credit Facility with revolving commitments in an aggregate principal amount of $150,000, including a letter of credit sub facility in an amount representing that portion of the aggregate revolving commitments that may be used by the borrower for the issuance of letters of credit in an aggregate face amount not to exceed $30,000 and a swingline loan sub facility in an aggregate principal amount at any time outstanding not to exceed $20,000 and (ii) the Truist Term Loan in an aggregate principal amount of $275,000. Outstanding borrowings under the 2023 Credit Facility accrued interest at either: (a) the Secured Overnight Financing Rate (SOFR) (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.50% to 3.50% per annum; or (b) Base Rate (which was defined in a customary manner for credit facilities of this type) plus a margin ranging from 1.50% to 2.50% per annum. The applicable margin was based on the Company’s debt to income ratio as calculated in accordance with the terms of the 2023 Credit Agreement. In addition, the Company agreed to pay a commitment fee on the unused portion of the 2023 Revolving Credit Facility, which ranged from 0.30% to 0.50% per annum, depending on the same debt to income ratio. In connection with executing the 2023 Credit Agreement, deferred financing costs associated with both lines-of-credit and long-term debt of $3,109 were written off, and additional deferred financing costs of $9,662 were capitalized during the year ended December 31, 2023. In addition, on the closing date of the 2023 Credit Agreement, the Company drew $75,000 on the 2023 Revolving Credit Facility and borrowed the entirety of the $275,000 Truist Term Loan. The Company used approximately $142,000 of the net proceeds to repay certain outstanding indebtedness on prior lines of credit and the Working Capital Loan. On December 7, 2023, the Company amended and restated the 2023 Credit Facility (the Amended and Restated 2023 Credit Facility). The Amended and Restated 2023 Credit Facility provided for an increase of the 2023 Revolving Credit Facility to an aggregate principal amount of $600,000, which revolving commitments may also be utilized for (x) the issuance of letters of credit in an aggregate face amount not to exceed $50,000 and/or (y) the borrowing of swingline loans in aggregate principal amount not to exceed $20,000 at any time outstanding. Outstanding borrowings under the Amended and Restated 2023 Credit Facility bear interest at the option of the Company based on: (a) SOFR (plus a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 3.25% per annum; or (b) the Base Rate (which is defined consistent with the 2023 Credit Facility) plus the applicable margin ranging from 1.25% to 2.25% per annum. The applicable margin is based on the Company’s debt to income ratio as calculated consistent with the 2023 Credit Facility. In addition, the Company will pay a commitment fee on the unused portion of the commitments, which ranges from 0.25% to 0.45% per annum, depending on the same debt to income ratio. Upon the closing of the Amended and Restated 2023 Credit Facility, the Company borrowed $460,000 of revolving loans, the proceeds of which were used to repay and refinance all term loans and revolving loans under the 2023 Credit Facility, to repay certain other outstanding indebtedness, and to pay transaction costs in connection with the Amended and Restated 2023 Credit Facility. Deferred financing costs associated with both lines-of-credit and long-term debt of $519 were written off as part of the refinance during the year ended December 31, 2023. The agreement above contains certain financial and non-financial covenants and restrictions. Default by the applicable credit party on any covenant or restriction could affect the lender’s commitment to lend, and, if not waived or corrected, could make the outstanding balances due on demand. Under the Amended and Restated 2023 Credit Facility, the Company must maintain a debt-to-income ratio of not greater than 3.00:1.00. The Amended and Restated 2023 Credit Facility also requires that the Company maintain a minimum interest/rent coverage ratio of not less than 1.10:1.00. The Company was in compliance with all such covenants and restrictions as of June 30, 2024. The Company maintains the Amended and Restated 2023 Credit Facility as its single line-of-credit. At June 30, 2024, the total commitment limit continued to be $600,000 and was secured by Company assets. The agreements mature on December 7, 2028. The balance outstanding on all applicable lines was $248,000 and $520,000 at June 30, 2024 and December 31, 2023, resulting in available cash of $340,350 and $80,000, respectively, net of letter of credit usage. Deferred financing fees on lines-of-credit were $15,099 as of June 30, 2024 and December 31, 2023. Amortization expense relating to deferred financing fees on lines-of-credit for the three months ended June 30, 2024 and 2023 was $755 and $165, respectively and for the six months ended June 30, 2024 and 2023 were $1,510 and $352, respectively. Accumulated amortization related to deferred financing fees on lines-of-credit was $1,703 and $193 as of June 30, 2024 and December 31, 2023, respectively. On April 15, 2024, the Company completed an Initial Public Offering (IPO), as described in Note 13, “Capital Stock”, receiving initial net proceeds of $423,000. The Company used $370,000 of the net proceeds from the IPO, which represented 87.5% of the net proceeds from the IPO, to repay amounts outstanding under the Amended and Restated 2023 Credit Facility, and used the remaining amount for general corporate purposes to support the growth of the business. LONG-TERM DEBT During the six months ended June 30, 2024 and the year ended December 31, 2023, some of the Company's subsidiaries entered into Department of Housing and Urban Development (HUD)-insured mortgage loans in the aggregate amount of $34,685 and $88,809, respectively. As a result, 11 of the Company's subsidiaries had mortgage loans insured with HUD in the aggregate amount of $199,404 as of June 30, 2024, of which $3,339 is classified as short-term and the remaining $196,058 is classified as long-term. As of December 31, 2023, the Company’s subsidiaries had HUD-insured mortgage loans in the aggregate amount of $166,181 of which $2,346 was classified as short-term and the remaining $163,835 was classified as long-term. These subsidiaries are subject to HUD-mortgage oversight and periodic inspections. As of June 30, 2024, the Company’s HUD-insured mortgage loans bear fixed interest rates ranging from 2.4% to 6.3% per annum and have various maturity dates through December 31, 2058. In addition to the interest rate, the Company incurs other fees for HUD placement, including but not limited to audit fees. Amounts borrowed under the mortgage loans may be prepaid, subject to prepayment fees based on the principal balance on the date of prepayment. The original terms for all the HUD-insured mortgage loans are 24 to 35 years. In addition to the HUD-insured mortgage loans above, the Company has 12 other mortgage loans or promissory notes. The non-HUD insured mortgage loans and notes bear interest rates in the range of 2.0% and 7.5% per annum with various maturity dates through June 1, 2027. The notes are secured by equipment and guarantees by the Company and certain stockholders. As of June 30, 2024 and December 31, 2023, the Company had $46,021 and $48,829, respectively, of debt principal outstanding under the mortgage loans and promissory notes, of which $12,407 is classified as short-term and the remaining $33,614 is classified as long-term as of June 30, 2024, and $14,476 is classified as short-term and the remaining $34,353 is classified as long-term as of December 31, 2023. The Company was in compliance with all applicable loan covenants with respect to the foregoing as of June 30, 2024 and December 31, 2023. The loans above are guaranteed by the Company. Additionally, various loans are secured by real property with a carrying value amounting to $235,222 and $438,645 at June 30, 2024 and December 31, 2023, respectively. Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 Deferred financing fees incurred in conjunction with debt financing of $2,745 and $2,611 as of June 30, 2024 and December 31, 2023, respectively, are being amortized over the life of the respective loans. Total amortization related to deferred financing fees is included in interest expense and amounted to $21 and $390 for the three months ended June 30, 2024 and 2023, respectively, and $41 and $818 for the six months ended June 30, 2024 and 2023, respectively. Accumulated amortization related to those deferred financing fees was $172 and $131 at June 30, 2024 and December 31, 2023, respectively. As discussed in Note 6, “Credit Facilities”, on June 30, 2023, the Company borrowed under the Truist Term Loan in connection with the execution of the 2023 Credit Agreement. Under the Truist Term Loan, the Company borrowed $275,000. The Truist Term Loan has a maturity date of June 30, 2028. Upon closing of the Truist Term Loan, the Company paid off certain other mortgage loans and promissory notes in the aggregate amount of $224,802. The Truist Term Loan was repaid on December 7, 2023 in connection with the closing of the Amended and Restated 2023 Credit Facility and as such, has a zero balance as of June 30, 2024. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | PROVISION FOR INCOME TAXES Effective January 1, 2021, the Company elected “C” corporation status with the Internal Revenue Service. For financial reporting purposes, income before income taxes includes the following components: 2023 2022 2021 Income before provision for income taxes 157,317 207,045 81,426 The provision for income taxes on continuing operations for the years ended December 31, 2023, 2022, and 2021, respectively, is summarized as follows: 2023 2022 2021 Current Federal $ 38,242 $ 37,044 $ 16,438 State 16,116 15,932 9,551 Total current provision 54,358 52,976 25,989 Deferred Federal (6,641) 3,345 8,700 State (3,282) 228 (1,210) Total deferred provision (9,923) 3,573 7,490 Total income tax provision $ 44,435 $ 56,549 $ 33,479 A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2023, 2022 and 2021, respectively, is comprised as follows: 2023 2022 2021 Income tax expense at statutory rate 21.0 % 21.0 % 21.0 % State income taxes – net of federal benefit 6.5 6.3 8.3 Non-deductible expenses 0.9 0.4 1.6 Change in valuation allowance 1.3 — — Recognition of prior year deferred tax liability — — 10.2 Non-deductible transaction costs — — 0.8 Change to deferred taxes (1.6) — — Other Adjustments — (0.4) (0.9) Total effective tax rate 28.1 % 27.3 % 41.0 % The Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are summarized as follows: 2023 2022 Deferred tax assets (liabilities) Accrued expenses $ 17,523 $ 13,740 Allowance for doubtful accounts 8,247 5,919 Deferred revenue — 910 Insurance 15,428 11,131 Intangible assets 4,073 4,353 Deferred compensation 1,202 554 Lease liability 573,227 375,669 Total deferred tax assets 619,700 412,276 Valuation allowance (2,107) — Total net deferred tax assets 617,593 412,276 Cash to accrual method change (6,125) (12,082) Fixed assets (36,838) (31,622) Prepaid expenses (10,802) (6,579) Investment in partnership (4,904) (5,252) Right of use asset (555,766) (364,055) Other (1,411) (861) Total deferred tax liabilities (615,846) (420,451) Net deferred tax assets (liabilities) $ 1,747 $ (8,175) As of December 31, 2023 , the Company has recorded a valuation allowance of 2,107 against its c aptive insurance dual consolidated loss deferred tax asset. This valuation allowance has been established because it is more likely than not that the deferred tax asset will not be realized. The Company is subject to U.S. federal income tax, as well as income tax in certain states in which it operates. The Company’s federal returns for tax years 2020 and forward are subject to examination, and state returns for tax years 2019 and forward are subject to examination. The Company is not, to its knowledge under examination by any federal or state income tax authority. The Company’s balance of net deferred tax assets and net deferred tax liabilities is included within other assets and other liabilities on the combined/consolidated balance sheets as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company did not have any unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company does not anticipate the uncertain tax position to change materially within the next 12 months. The Inflation Reduction Act 2022 (IRA), which incorporates a Corporate Alternative Minimum Tax (CAMT), was signed on August 16, 2022. The changes were effective for tax years beginning after December 31, 2022. The new tax requires companies to compute two separate calculations for federal income tax purposes and pay the greater of the new minimum tax or their regular tax liability. The IRA does not have a material impact for the Company. INCOME TAXES The Company recorded income tax expense of $22,441 and $21,871 during the six months ended June 30, 2024, and 2023, respectively, or 37.0% of earnings before income taxes for the six months ended June 30, 2024, compared to 27.1% for the six months ended June 30, 2023. The change in effective tax rate in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to an increase in non-deductible expenses, including non-deductible compensation in 2024. The Company is subject to U.S. federal income tax, as well as income tax in certain states in which it operates. The Company’s federal returns for tax years 2020 and forward are subject to examination, and state returns for tax years 2019 and forward are subject to examination. The Company’s balance of net deferred tax assets and net deferred tax liabilities are included within other assets and other liabilities on the condensed combined/consolidated balance sheets as of June 30, 2024 and 2023, respectively. As of June 30, 2024 and 2023, the Company did not have any unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company does not anticipate the uncertain tax position to change materially within the next twelve months. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
LEASES | LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 11 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times starting September 9, 2021 through January 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 30 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. During the year ended December 31, 2021, the Company acquired facility leases and various leases for laptops, copiers, and vehicles as part of the acquisition further described in Note 15. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,850 and $33,593 as of December 31, 2023 and 2022, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the combined/consolidated statements of income. LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 13 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 20 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,205 and $37,850 as of June 30, 2024 and December 31, 2023, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
LEASES | LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 11 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times starting September 9, 2021 through January 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 30 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. During the year ended December 31, 2021, the Company acquired facility leases and various leases for laptops, copiers, and vehicles as part of the acquisition further described in Note 15. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,850 and $33,593 as of December 31, 2023 and 2022, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 In addition to its lessee activity, the Company generates an immaterial amount of revenue from arrangements where it is a lessor of certain facilities. Revenue from those arrangements is included in other revenue on the combined/consolidated statements of income. LEASES Operating Leases The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. For 13 of the facility operating leases, the Company holds an option to purchase the real estate which can be exercised at varying times until March 31, 2038. At lease inception it was determined that the exercise of these purchase options was not reasonably assured. The facility leases are generally renewable at the Company’s option for additional terms ranging from 3 to 20 years. All facility leases provide for an additional percentage rent based upon specified rates per the terms of the agreements. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. Finance lease right-of-use assets are included in property and equipment and have a balance of $37,205 and $37,850 as of June 30, 2024 and December 31, 2023, respectively. The current portion of finance lease liabilities is included in other accrued expenses other liabilities The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. Operating lease expense is included in Rent - cost of services and General and administrative expense as indicated above. For finance lease expense, the amortization of right-of-use assets is included in depreciation and amortization while the interest component is included in interest expense. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % In determining the discount rate used to measure the right-of-use asset and lease liability, the Company uses rates implicit in the lease, or if not readily available, the Company will use its incremental borrowing rate. The Company’s incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by its assets. Determining a credit spread as secured by the Company’s assets may require significant judgment. Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS On July 1, 2021, the Company entered into a Consulting and Strategic Advisory Services Agreement with Helios Consulting, LLC (Helios), a limited liability company owned by Jason Murray, the Company’s Chief Executive Officer and Chairman of its board of directors, and Mark Hancock, Executive Vice Chairman of its board of directors, (Helios Consulting Agreement) which automatically renewed for successive one-year terms. The Helios Consulting Agreement provides for a cash consulting fee of approximately $4,000 annually, paid in monthly installments, for consulting and strategic advisory services provided to the Company by Helios. For the years ended December 31, 2023, 2022, and 2021, the Company paid approximately $4,000, $4,000, and 2,333 (inclusive of approximately $150 paid to a subsidiary of Helios), respectively. As of December 31, 2023, the Company terminated the Helios Consulting Agreement. 2023 Related Party Transactions On March 24, 2023, the Company entered into subscription agreements with Mr. Murray and Mr. Hancock, pursuant to which Mr. Murray and Mr. Hancock each purchased 10,000 shares of the Company’s common stock for a purchase price of $0.001 per share, in a private placement concurrent with the Company’s incorporation in the State of Delaware and in anticipation of effecting the reorganization on June 30, 2023. RELATED PARTY TRANSACTIONS On July 1, 2021, the Company entered into a Consulting and Strategic Advisory Services Agreement with Helios Consulting, LLC (Helios), a limited liability company owned by Jason Murray, the Company’s Chief Executive Officer and Chairman of its board of directors, and Mark Hancock, Executive Vice Chairman of its board of directors, (Helios Consulting Agreement) which automatically renewed for successive one-year terms. The Helios Consulting Agreement provided for a cash consulting fee of approximately $4,000 annually, paid in monthly installments, for consulting and strategic advisory services provided to the Company by Helios. For the three months ended June 30, 2024 and 2023, the Company paid $0 and $1,000 (inclusive of $0 and $38, respectively, paid to a subsidiary of Helios), respectively. For the six months ended June 30, 2024 and 2023, the Company paid $0 and $2,000 (inclusive of $0 and $75, respectively, paid to a subsidiary of Helios), respectively. As of December 31, 2023, the Company terminated the Helios Consulting Agreement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Regulatory Matters Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation. Compliance with such laws and regulations is evaluated regularly, the results of which can be subject to future governmental review and interpretation, and can include significant regulatory action including fines, penalties, and exclusion from certain governmental programs. Included in these laws and regulations is monitoring performed by the Office of Civil Rights which covers the Health Insurance Portability and Accountability Act of 1996, the terms of which require healthcare providers (among other things) to safeguard the privacy and security of certain patient protected health information. Litigation The skilled nursing business involves a significant risk of liability given the age and health of the patients and residents served by the Company’s independent operating subsidiaries. The Company, and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. In addition, the Company, its independent operating subsidiaries, and others in the industry are subject to claims and lawsuits in connection with COVID-19 and a facility’s preparation for and/or response to COVID-19. The defense of these lawsuits may result on significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories. The Company and other companies in its industry are routinely subjected to varying types of claims and suits, including class-actions. Class-action suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs. The Company expects the plaintiffs’ bar to continue to be aggressive in their pursuit of claims. The Company has been subjected to, and is currently involved in, litigation alleging violations of state and federal wage and hour laws as resulting from the alleged failure to pay wages, to timely provide and authorize meal and rest breaks, and related causes of action. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, cash flows, financial condition, or results of operations. The Company has been, and continues to be, subject to claims and legal actions that arise in the normal course of business, including potential claims filed by patients or others on their behalf related to patient care and treatment (professional negligence claims), as well as employment related claims filed by current or former employees. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe the results of such litigation and investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company, taken as a whole. However, the Company’s assessment may evolve based upon further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. Insurance Claims The Company purchased PLGL claims made insurance policies to cover applicable claims through an unrelated insurer. The PLGL policies are claims-made high deductible self-insured policies whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim, as well as an aggregate one-time deductible generally ranging from $750 to $4,000 per policy, with the unrelated insurer typically covering up to $10,000 in aggregate claims paid per policy year. The Company uses its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retained under its PLGL programs. Accordingly, the Company is in essence self-insured for claims that are less than policy deductible amounts, claims not covered by such policies, and claims that exceed policy limits. It is the Company’s policy to use an actuary to assist management in recording the expense and related liability for PLGL claims, both asserted and unasserted, on an undiscounted basis. Included as part of accrued self-insurance liabilities in the accompanying combined/consolidated balance sheets are PLGL self-insurance liabilities amounting to $162,976, and $138,127 as of December 31, 2023 and 2022, respectively, which includes $34,676 and $42,549, respectively, of estimated obligations that will be covered by the unrelated insurer. PLGL self-insurance liabilities as of December 31, 2023 and 2022 include $43,083 and $38,742, respectively, that were related to unasserted claims. As of December 31, 2023, the Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer amounting to $5,895 and $28,781 within other receivables and other assets, respectively, and as of December 31, 2022, the Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer amounting to $7,233 and $35,316 within other receivables and other assets, respectively, as the claims related to the Company's general and professional liability and the anticipated insurance recoveries are recorded on a gross rather than net basis in accordance with U.S. GAAP. As part of the Plum acquisition in 2021 (refer to Note 15), the Company assumed Plum’s workers’ compensation plan. Plum purchased an occurrence-based high deductible self-insured workers’ compensation policy whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim. The estimated obligation recorded at December 31, 2023 and 2022 was $8,323, and $17,062, respectively. The Plum facilities were transferred onto the Company’s retrospective-rated premium workers’ compensation policy as of the acquisition date. The following table represents activity in the Company’s PLGL self- insurance liabilities as of and for the years ended December 31, 2023 and 2022: Amount Balance January 1, 2022 $ 70,491 Current year expense 40,964 Claims paid (28,914) Change in obligations covered by unrelated insurer 31,247 Remeasurement of Plum Assumed Liabilities (Note 15) 24,339 Balance December 31, 2022 $ 138,127 Current year expense 106,107 Claims paid (73,385) Change in obligations covered by unrelated insurer (7,873) Balance December 31, 2023 $ 162,976 Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the combined/consolidated balance sheets for any of the periods presented. COMMITMENTS AND CONTINGENCIES Regulatory Matters Laws and regulations governing Medicare and Medicaid programs are complex and subject to review and interpretation. Compliance with such laws and regulations is evaluated regularly, the results of which can be subject to future governmental review and interpretation, and can include significant regulatory action including fines, penalties, and exclusion from certain governmental programs. Included in these laws and regulations is monitoring performed by the Office of Civil Rights which covers the Health Insurance Portability and Accountability Act of 1996, the terms of which require healthcare providers (among other things) to safeguard the privacy and security of certain patient protected health information. Litigation The skilled nursing business involves a significant risk of liability given the age and health of the patients and residents served by the Company’s independent operating subsidiaries. The Company, and others in the industry are subject to an increasing number of claims and lawsuits, including professional liability claims, alleging that services provided have resulted in personal injury, elder abuse, wrongful death or other related claims. In addition, the Company, its independent operating subsidiaries, and others in the industry are subject to claims and lawsuits in connection with COVID-19 and a facility’s preparation for and/or response to COVID-19. The defense of these lawsuits may result on significant legal costs, regardless of the outcome, and can result in large settlement amounts or damage awards. Healthcare litigation (including class action litigation) is common and is filed based upon a wide variety of claims and theories. The Company and other companies in its industry are routinely subjected to varying types of claims and suits, including class-actions. Class-action suits have the potential to result in large jury verdicts and settlements, and may result in significant legal costs. The Company expects the plaintiffs’ bar to continue to be aggressive in their pursuit of claims. The Company has been subjected to, and is currently involved in, litigation alleging violations of state and federal wage and hour laws as resulting from the alleged failure to pay wages, to timely provide and authorize meal and rest breaks, and related causes of action. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, cash flows, financial condition, or results of operations. The Company has been, and continues to be, subject to claims and legal actions that arise in the normal course of business, including potential claims filed by patients or others on their behalf related to patient care and treatment (professional negligence claims), as well as employment related claims filed by current or former employees. While there can be no assurance, based on the Company’s evaluation of information currently available, management does not believe the results of such litigation and investigations would have a material adverse effect on the results of operations, financial position or cash flows of the Company, taken as a whole. However, the Company’s assessment may evolve based upon further developments in the proceedings at issue. The results of legal proceedings are inherently uncertain, and material adverse outcomes are possible. Insurance Claims The Company purchased PLGL claims made insurance policies to cover applicable claims through an unrelated insurer. The PLGL policies are claims-made high deductible self-insured policies whereby the Company is responsible for the first layer of coverage, generally ranging from $250 to $500 per claim, as well as an additional aggregate one-time deductible generally ranging from $750 to $4,000 per policy, with the unrelated insurer typically covering up to $10,000 in aggregate claims paid per policy year. The Company uses its wholly-owned captive insurance company for the purpose of insuring certain portions of its risk retained under its PLGL programs. Accordingly, the Company is in essence self-insured for claims that are less than policy deductible amounts, claims not covered by such policies, and claims that exceed policy limits. It is the Company’s policy to use an actuary to assist management in recording the expense and related liability for PLGL claims, both asserted and unasserted, on an undiscounted basis. Included as part of accrued self-insurance liabilities in the accompanying condensed combined/consolidated balance sheets are PLGL self-insurance liabilities amounting to $183,836 and $162,976 as of June 30, 2024 and December 31, 2023, respectively, which include $31,628 and $34,676, respectively, of estimated obligations that will be covered by the unrelated insurer. PLGL self-insurance liabilities as of June 30, 2024 and December 31, 2023 include $53,673 and $43,083, respectively, that were related to unasserted claims. The Company recorded an asset for the estimated obligations that will be covered by the unrelated insurer. As of June 30, 2024 this asset amounted to $5,377 and $26,251 recorded within other receivables and other assets, respectively, and as of December 31, 2023, this asset amounted to $5,895 and $28,781 recorded within other receivables and other assets, respectively, as the claims related to the Company's general and professional liability and the anticipated insurance recoveries are recorded on a gross rather than net basis in accordance with U.S. GAAP. Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims. These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer environmental or other liabilities and other claims arising from the Company use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company's independent operating subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, and (iv) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company. The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, because no claims have been asserted, no liabilities have been recorded for these obligations on the combined/consolidated balance sheets for any of the periods presented. |
OPERATION EXPANSIONS
OPERATION EXPANSIONS | 6 Months Ended |
Jun. 30, 2024 | |
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |
OPERATION EXPANSIONS | PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 The Company evaluated its long-lived assets and did not record an impairment charge for the years ended December 31, 2023, 2022, and 2021. See Note 15 for information on expansions during the years ended December 31, 2023, 2022, and 2021. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2023 Expansions During the year ended December 31, 2023, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at 58 stand-alone skilled nursing, assisted living, and subacute facilities and six real estate purchases. Of the six real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other four acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 6,744 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2023 was $129,174. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment amounting to $124,874. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2023 was concentrated in goodwill and other assets in the amount of $3,800 and $500, respectively. Such transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2022 Expansions During the year ended December 31, 2022, the Company’s consolidated operations and real estate portfolio grew through a combination of long-term leases and real estate purchases. The Company acquired operations at nine stand-alone skilled nursing, assisted living, and subacute facilities and four real estate purchases. Of the four real estate purchases, two of the properties were acquired in conjunction with the operations of the associated facility. For the other two acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,180 operational skilled nursing beds. The purpose of any such expansion, may include, without limitation, to expand the scope of the Company's operations, add additional team members with important skill sets, and/or realize synergies. The aggregate purchase price for these expansions during the year ended December 31, 2022 was $55,374. The fair value of assets for the entities where real estate was acquired were concentrated in property and equipment and other assets, amounting to $46,500 and $378, respectively. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2022 was concentrated in goodwill in the amount of $8,496 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for income tax purposes. In connection with the new operations made through long-term leases, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into separate agreements with the applicable prior operators as part of each transaction. 2021 Expansions Plum Healthcare Group Acquisition On November 5, 2021, the Company completed the acquisition of all of the equity interest of 58 stand-alone skilled nursing, assisted living, and subacute facilities and eight real estate entities from Bay Bridge Capital Partners, LLC d/b/a Plum Healthcare Group (Plum) for $121,000, consisting of cash of $104,200 and notes due to prior owner of $16,800, in order to grow and expand its footprint. The acquisition added 6,380 operational skilled nursing beds, 40 assisted living beds, and 190 subacute beds. The table below represents the purchase price allocation to total identifiable assets acquired and net liabilities assumed using the acquisition method, based on their respective fair values as of November 5, 2021. Amount Cash and cash equivalents $ 7,957 Accounts receivable 94,555 Prepaid and other 43,076 Restricted cash 22,483 Property and equipment 166,072 Operating lease right-of-use assets 612,522 Other assets 5,781 Goodwill and other indefinite-lived assets 32,345 Current operating lease liabilities assumed (28,324) Other current liabilities assumed (134,886) Long-term operating lease liabilities assumed (576,848) Debt and finance lease liabilities assumed (55,095) Other liabilities assumed (68,638) Total purchase price $ 121,000 The indefinite-lived intangible assets acquired include the certificates of need and licenses. Fair value of the indefinite-lived intangible assets was determined using a cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The cost approach utilized assumptions for the current replacement costs of similar assets which for these indefinite-lived intangible assets included assumptions regarding estimated fees on a per unit basis in the applicable jurisdictions. Fair value of property and equipment was determined using a combination of an income and cost approach. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing property and equipment and economic obsolescence. Fair value of the right-of-use assets was determined under a market approach. The market approach utilized significant assumptions based on estimated market rent assessments for the acquired lease contracts. The goodwill is primarily attributed to the workforce acquired. The Company expects 100% of the goodwill to be deductible for income tax purposes. During the year ended December 31, 2022, the Company recorded a measurement period adjustment primarily related to the finalization of professional liability loss reserves, which increased the amount of goodwill and other liabilities assumed in the Plum acquisition by $18,844. At the time of the adjustment, the measurement period was still open as the Company was gathering further information about facts and circumstances that existed as of the acquisition date related to the legal matters that gave rise to the professional liability loss reserve adjustment. Other 2021 Expansions Additionally, the Company invested in two joint ventures during the year ended December 31, 2021. Information related to joint venture activity is disclosed in Note 7. In June 2021, the Company sold one real estate entity, resulting in a gain on sale of $3,100. In conjunction with the sale, the Company entered into a note receivable agreement with the buyer in the principal amount of $5,000 with monthly interest payments accruing at 6% percent. Annual principal payments are due on each anniversary date, with the remaining principal due and payable on the maturity date of June 1, 2024. At December 31, 2023, the outstanding balance of the note was $3,500 which is included in Other Assets. During the year ended December 31, 2021, the Company’s consolidated operations grew through a combination of long-term leases and real estate purchases, with the addition of 17 stand-alone skilled nursing facilities and five real estate purchases. These new operations added approximately 1,780 operational skilled nursing beds. The aggregate purchase price for these acquisitions during the year ended December 31, 2021 was $118,324. The fair value of assets for the real estate entities were concentrated in property and equipment amounting to $116,423. As such, these transactions were classified as asset acquisitions. The remaining aggregate purchase price for transactions during the year ended December 31, 2021 was concentrated in goodwill in the amount of $1,901 and as such, the transactions were classified as business combinations. The Company expects 100% of the goodwill to be deductible for tax purposes. In connection with the new operations acquired for the stand-alone skilled nursing facilities, the Company did not acquire any material assets or assume any liabilities other than the tenant's post-assumption rights and obligations under the long-term lease. The Company entered into agreements with the applicable prior operators as part of each transaction. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities for return. The operations added by the Company are frequently underperforming financially and can have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the year ended December 31, 2023, 2022 and 2021 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the December 31, 2023 and 2022 combined/consolidated balance sheets of the Company, and the operating results have been included in the combined/consolidated statements of income of the Company since the date the Company gained effective control. 2024 Expansions Subsequent to December 31, 2023, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 10 stand-alone facilities and six real estate purchases. Of the six real estate purchases, three of the properties were acquired in conjunction with the operations of the associated facility. For the other three acquired properties, the Company previously operated the respective facilities and has now acquired the real estate associated with those operations. These new operations added 1,334 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The aggregate purchase price for these acquisitions was $78,500. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 The Company did not record an impairment charge for the six months ended June 30, 2024, and 2023. See Note 12, “Operation Expansions”, for information on expansions during the six months ended June 30, 2024. OPERATION EXPANSIONS FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. 2024 Expansions During the six months ended June 30, 2024, the Company’s operations and real estate portfolio grew through a combination of long-term leases and real estate purchases, with the addition of 12 stand-alone facilities and nine real estate purchases. Of the nine real estate purchases, four of the properties were acquired in conjunction with the operations of the associated facility. For the other five acquired properties, the Company’s subsidiaries previously operated the respective facilities and have now acquired the real estate associated with those operations. The aggregate purchase price for these acquisitions was $175,150. These new operations added 1,501 skilled nursing beds and 174 assisted living beds operated by the Company's affiliated operating subsidiaries. The Company’s expansion strategy has been focused on identifying both opportunistic and strategic acquisitions within its target markets that offer strong opportunities to improve both clinical and financial performance of the acquired facility. The operations added by the Company are underperforming financially and have regulatory and clinical challenges to overcome. Financial information, especially with underperforming operations, is often inadequate, inaccurate or unavailable. Consequently, the Company believes that prior operating results are not a meaningful representation of the Company’s current operating results or indicative of the integration potential of its newly acquired operating subsidiaries. The assets added during the six months ended June 30, 2024 and through the issuance of the financial statements were not material operations to the Company individually or in the aggregate. Accordingly, pro forma financial information is not presented. The additions have been included in the June 30, 2024 condensed combined/consolidated balance sheets of the Company, and the operating results have been included in the condensed combined/consolidated statements of (loss) income and comprehensive (loss) income of the Company since the date the Company gained effective control. Expansions After Period End On August 1, 2024, the Company finalized the acquisition of operations for 12 skilled nursing and 13 assisted living and independent living facilities. The operations are located across six states, including 19 facilities in Washington, two in Nevada, and one facility each in Alaska, Arizona, California, and Montana. Collectively, these facilities comprise 1,072 skilled nursing beds and 831 assisted living and independent living units. Of these facilities, 21 are leased from a new joint venture the Company entered into on the same date for $10,000 in which it owns a 25.8% interest. The remaining four facilities are leased from unaffiliated third-party landlords. |
CAPITAL STOCK
CAPITAL STOCK | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK The Reorganization on June 30, 2023 referred to in Note 1, “Organization and Nature of Business”, resulted in the Common Shares outstanding being converted from 600 shares of PGI to 20,000 shares of PACS Group (a 1 to 33.33 conversion ratio). On March 31, 2024, the Company’s board of directors approved a 1 to 6,436.1693 stock split of its issued and outstanding common stock, which was effective by amendment to the Company’s charter on April 1, 2024. As part of the amendment, the number of authorized shares of common stock was revised to 1,250,000,000 with the par value remaining at $0.001 per share, and the number of authorized shares of preferred stock was approved to be 50,000,000 with a par value of $0.001. All issued and outstanding common stock and per share amounts contained in the condensed combined/consolidated financial statements have been retrospectively adjusted to give effect to the stock split for all periods presented. On April 15, 2024, the Company completed an IPO in which the Company issued and sold 21,428,572 shares of common stock at a public offering price of $21.00 per share, generating aggregate gross proceeds of $450,000 before underwriter discounts and commissions, fees and other expenses of $35,843. In addition, the underwriters exercised their 30-day option to purchase an additional 3,214,284 shares of the Company’s common stock at the initial public offering price from the selling stockholders, less underwriting discounts and commissions. The Company did not receive any proceeds from any sale of shares by the selling stockholders. The Company’s common stock is traded on the New York Stock Exchange under the symbol “PACS”. |
COMPUTATION OF NET (LOSS) INCOM
COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE | EARNINGS PER SHARE Basic net income per share is calculated by dividing net income attributable to the common stockholders by the weighted-average shares of Common Stock outstanding for the period. The computation of diluted net income per share is similar to the computation of basic net income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued. As the Company did not have any potentially dilutive securities, basic and diluted EPS are the same. The following table sets forth the computation of the Company’s basic and diluted net income attributable per share to common stockholders for the years ended December 31, 2023, 2022, and 2021: Years Ended December 31, 2023 2022 2021 Basic EPS: Numerator: Net income $ 112,882 $ 150,496 $ 47,947 Less: net income attributable to noncontrolling interest $ 8 $ — $ — Net income attributable to PACS Group, Inc. $ 112,874 $ 150,496 $ 47,947 Denominator: Basic and diluted weighted average common stock outstanding 128,723,386 128,723,386 128,723,386 Net income per common share attributable to PACS Group, Inc. Basic and diluted $ 0.88 $ 1.17 $ 0.37 The Reorganization referred to in Note 1 resulted in the common shares outstanding being converted from 600 shares of PGI to 20,000 shares of PACS Group (a 1 to 33.33 conversion ratio). On March 31, 2024, the Company’s board of directors approved a 1 to 6,436.1693 stock split of its issued and outstanding common stock, which was effective by amendment to the Company’s charter on April 1, 2024. As part of the amendment, the number of authorized shares of common stock was revised to 1,250,000,000 and the par value of the common stock was not adjusted. All issued and outstanding common stock and per share amounts contained in the combined/consolidated financial statements have been retrospectively adjusted to give effect to the stock split for all periods presented. COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE Basic net (loss) income per share is calculated by dividing net (loss) income attributable to the common stockholders by the weighted-average shares of Common Stock outstanding for the period. The computation of diluted net (loss) income per share is similar to the computation of basic net (loss) income per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued. A reconciliation of the numerator and denominator used in the calculation of basic net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Basic net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 A reconciliation of the numerator and denominator used in the calculation of diluted net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Plus: effect of diluted shares (1) — — 591,098 — Adjusted weighted average common shares outstanding 149,463,655 128,723,386 139,684,618 128,723,386 Diluted net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 __________________ (1) The diluted per share amounts do not reflect 1,182,196 common share equivalents from restricted stock units for the three months ended June 30, 2024 because of their anti-dilutive effect. |
STOCK AWARDS
STOCK AWARDS | 6 Months Ended |
Jun. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK AWARDS | STOCK AWARDS Stock-based compensation expense consists of stock-based payment awards made to employees and directors, comprised of restricted stock units, based on their estimated fair values. Stock-based compensation expense recognized in the Company’s condensed combined/consolidated statements of (loss) income and comprehensive (loss) income for the three and six months ended June 30, 2024 and 2023 was based on the vesting of awards granted to date. 2024 Incentive Award Plan (2024 Plan) On March 31, 2024, the Company’s board of directors and stockholders approved the PACS Group, Inc. 2024 Incentive Award Plan (2024 Plan), which became effective on the date immediately preceding the date on which the Company’s IPO registration statement was declared effective by the Securities and Exchange Commission (SEC). The 2024 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors and consultants. The number of shares initially available for issuance under awards granted pursuant to the 2024 Plan (which number includes 15,390,579 shares of common stock issuable upon the vesting of restricted stock unit (RSU) awards granted in connection with the IPO) was equal to 10.25% of the number of shares of common stock outstanding immediately following the completion of the IPO (disregarding the shares issuable under the 2024 Plan). 2024 Employee Stock Purchase Plan (2024 ESPP) On March 31, 2024, the Company’s board of directors and stockholders approved the 2024 Employee Stock Purchase Plan (2024 ESPP), which became effective on the date immediately preceding the date on which the Company’s registration statement was declared effective by the SEC. The number of shares initially available for issuance pursuant to the 2024 ESPP was equal to the number of shares equal to 1% of the number of shares of common stock outstanding as of immediately following the completion of the IPO (disregarding the shares issuable under the 2024 Plan). As of June 30, 2024 there have been no shares issued under this plan. Restricted Stock Unit Awards The Company granted RSU awards to key executives and directors of 15,409,470 and 0 shares during the six months ended June 30, 2024 and 2023, respectively. For certain awards granted to key executives, the stock price used to determine the award fair value was the initial public offering price of $21.00 per share. Subsequent grants to non-employee directors used the market price on the date of respective grant to determine the award fair value. Awards granted to key executives at the time of the IPO vested 25% upon issuance with the remaining shares scheduled to vest in equal increments on an annual basis over the next five years as the grantee meets the requisite service condition. Other awards granted vest over one year. The fair value per share of RSU awards granted during the six months ended June 30, 2024 ranged from $21.00 to $24.85. The fair value per share includes awards to non-employee directors. A summary of the status of the Company’s non-vested RSU awards for the six months ended June 30, 2024 is presented below (there was no such activity prior to the approval of the 2024 Plan, including in 2023): Non-Vested Restricted Stock Unit Awards Weighted Average Grant Date Fair Value Non-vested at January 1, 2024 — $ — Granted 15,409,470 21.00 Vested (3,847,652) 21.00 Forfeited — — Non-vested at June 30, 2024 11,561,818 $ 21.01 During the six months ended June 30, 2024, the company granted 18,891 RSU awards to non-employee directors for their service on the Company’s board of directors from the 2024 Plan. The fair value per share of these awards were $24.85 based on the market price on the grant date. Stock-based compensation expense Stock-based compensation expense recognized for the Company’s equity incentive plans was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Stock-based compensation expense related to restricted stock unit awards $ 90,936 $ — $ 90,936 $ — Total stock-based compensation expense $ 90,936 $ — $ 90,936 $ — In future periods, the Company expects to recognize approximately $232,736 in stock-based compensation expense for unvested RSU awards that were outstanding as of June 30, 2024. Future stock-based compensation expense will be recognized over 4.8 weighted average years for unvested RSU awards. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - 10-K (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its combined/consolidated balance sheets and the amount of combined/consolidated income that is attributable to the Company and the noncontrolling interest in its combined/consolidated statements of income. Basis of Presentation The accompanying condensed combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The condensed combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed combined/consolidated balance sheets and the amount of condensed combined/consolidated (loss) income that is attributable to the Company and the noncontrolling interest in its condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The accompanying condensed combined/consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. The December 31, 2023 balance sheet data was derived from audited financial statements; however, the accompanying notes to the condensed combined/consolidated financial statements do not include all of the annual disclosures required under GAAP and should be read in conjunction with the audited combined/consolidated financial statements included in the Company’s final prospectus filed with the SEC on April 12, 2024. Management believes that the condensed combined/consolidated financial statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the condensed combined/consolidated financial statements are not necessarily representative of operations for the entire year. |
Use of Estimates | Use of Estimates The preparation of the combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Use of Estimates The preparation of the condensed combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. |
Restricted Cash, Cash and Cash Equivalents | Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL and, prior to 2023, workers’ compensation (WC) claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding WC and PLGL claims. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding PLGL claims. See Note 5, “Fair Value Measurement”, for information on the use of restricted cash in other assets to purchase investments in the period. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. |
Insurance Subsidiary Deposits and Investments | Insurance Subsidiary Deposits and Investments |
Patient and Resident Service Revenue | Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At December 31, 2023 and 2022, the allowance for doubtful accounts was immaterial to the combined/consolidated financial statements. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At June 30, 2024 and December 31, 2023, the allowance for credit losses was immaterial to the condensed combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The |
Government Grants | Government Grants In the absence of specific guidance to account for government grants under U.S. GAAP, the Company has concluded to account for government grants in accordance with International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, the Company recognizes grant income on a systematic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate. Additional funding presented on the combined/consolidated statements of income is associated with government grants received through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). See Note 3 for more details. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - 3 to 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - minimum of 3 to a maximum of 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. |
Leases | Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of (loss) income and comprehensive (loss) income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. |
Business Combinations | Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. |
Goodwill and Other Indefinite-Lived Intangible Assets | Goodwill and Other Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed. The Company assesses goodwill for impairment at least annually on October 1st. The Company will perform an impairment assessment at other times if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. When assessing goodwill for impairment the Company may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary. If the Company does not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative test. The Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The Company’s indefinite-lived intangible assets primarily consist of licenses. The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If the Company does not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company calculates the estimated fair value of the indefinite-lived intangible asset. If the estimated fair value of the indefinite-lived intangible asset is lower than its carrying amount, an impairment loss is recognized for the difference. |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three-tiers include: Level 1: observable inputs such as quoted market prices in active markets; Level 2: inputs other than quoted market prices included in Level 1 that are directly or indirectly observable for the asset or liability and Level 3: unobservable inputs for which little or no market data exists, thereby requiring management to develop their own estimates and assumptions. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment |
Accrued Risk Reserves and Concentration of Credit Risks | Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Additionally, the Company is partially self-insured for risks related to WC policies. Accrued risk reserves primarily represent the accrual for risks associated with WC and PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to a significant portion of its WC program assumed as part of the Plum acquisitions (this acquisition is discussed further in Note 15), and its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). The Company’s retrospective-rated premium WC policy is subject to an annual assessment of the policy premium in relation to the payroll and losses incurred for the policy period. The Company recognizes the WC retrospective policy adjustment as the amount of settlement is determined. Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. The Company holds amounts of cash in excess of the FDIC insured limits. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 20% and 36% of total accounts receivable, respectively, at December 31, 2023 and 32% and 21% of total accounts receivable, respectively, at December 31, 2022. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for doubtful accounts on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s operating subsidiaries, excluding four subsidiaries that exclusively operate assisted living facilities, have all of their skilled nursing beds designated for care of patients under federal Medicare and/or state Medicaid programs. 63% of skilled nursing beds are located in California. Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Accrued risk reserves primarily represent the accrual for risks associated with PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 23% and 37% of total accounts receivable, respectively, at June 30, 2024 and 20% and 36% of total accounts receivable, respectively, at December 31, 2023. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for credit losses on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. |
Investments in Joint Ventures | Investments in Joint Ventures Investments in Joint Ventures |
Noncontrolling Interest | Noncontrolling Interest The Company is the majority-owner in a subsidiary which was formed to develop land, a building, and other assets to be leased to a facility operated by the Company upon completion. The noncontrolling interest in subsidiary is initially recognized at estimated fair value on the contribution date and is presented within total equity in the Company’s combined/consolidated balance sheets since these interests are not redeemable. Noncontrolling Interest |
Advertising | Advertising Advertising |
Income Taxes | Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 10 for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 8, “Income Taxes”, for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. |
Comprehensive (Loss) Income | Comprehensive Income The Company does not have any components of other comprehensive income recorded within its combined/consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements. Comprehensive (Loss) Income Comprehensive (loss) income consists of gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net (loss) income. For the six months ended June 30, 2024 and 2023, comprehensive (loss) income includes unrealized gains and losses on the Company’s available-for-sale debt securities. |
Segment Presentation | Segment Presentation |
Recent Accounting Standards Issued But Not Yet Adopted by the Company | Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its combined/consolidated balance sheets and the amount of combined/consolidated income that is attributable to the Company and the noncontrolling interest in its combined/consolidated statements of income. Basis of Presentation The accompanying condensed combined/consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The condensed combined/consolidated financial statements include the accounts of PACS Group, and its consolidated subsidiaries, or the Company as defined above. All intercompany transactions and balances have been eliminated in consolidation. The Company presents noncontrolling interests within the equity section of its condensed combined/consolidated balance sheets and the amount of condensed combined/consolidated (loss) income that is attributable to the Company and the noncontrolling interest in its condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The accompanying condensed combined/consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. The December 31, 2023 balance sheet data was derived from audited financial statements; however, the accompanying notes to the condensed combined/consolidated financial statements do not include all of the annual disclosures required under GAAP and should be read in conjunction with the audited combined/consolidated financial statements included in the Company’s final prospectus filed with the SEC on April 12, 2024. Management believes that the condensed combined/consolidated financial statements reflect all adjustments which are of a normal and recurring nature necessary to present fairly the Company’s financial position and results of operations in all material respects. The results of operations presented in the condensed combined/consolidated financial statements are not necessarily representative of operations for the entire year. |
Use of Estimates | Use of Estimates The preparation of the combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. Use of Estimates The preparation of the condensed combined/consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined/consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue, acquired property, right-of-use assets, lease liabilities, impairment of long-lived assets, and general and professional liabilities included in accrued self-insurance liabilities. Actual results could differ from estimated amounts. |
Restricted Cash, Cash and Cash Equivalents | Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL and, prior to 2023, workers’ compensation (WC) claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding WC and PLGL claims. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. Restricted Cash, Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities of three months or less at the time of purchase and therefore approximate fair value. The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company maintains its cash and short-term investment balances in several high-credit quality financial institutions. Included in restricted cash are funds held for PLGL claims. Funds held in restricted cash are contractually obligated to be segregated from the Company’s other cash accounts and are legally restricted for the use of funding PLGL claims. See Note 5, “Fair Value Measurement”, for information on the use of restricted cash in other assets to purchase investments in the period. At any point in time the Company has funds in operating accounts and restricted cash accounts that are with third-party financial institutions. While management monitors the cash balances in operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets. |
Insurance Subsidiary Deposits and Investments | Insurance Subsidiary Deposits and Investments |
Patient and Resident Service Revenue | Patient and Resident Service Revenue Patient and resident service revenue is derived from services rendered, under short-term contracts, to patients for skilled and intermediate nursing, rehabilitation therapy, and assisted living services. Patient and resident service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient services. These amounts are due from patients, governmental programs, and other third-party payors, and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. The Company recognizes revenue as its performance obligations are completed. Routine services are treated as a single performance obligation satisfied over time as services are rendered. These routine services represent a bundle of services that are not capable of being distinct. The performance obligations are satisfied over time as the patient simultaneously receives and consumes the benefits of the healthcare services provided. Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At December 31, 2023 and 2022, the allowance for doubtful accounts was immaterial to the combined/consolidated financial statements. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist primarily of amounts due from Medicare and Medicaid, managed care health plans and private payor sources, net of estimates for variable consideration. At June 30, 2024 and December 31, 2023, the allowance for credit losses was immaterial to the condensed combined/consolidated financial statements. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors. Contractual adjustments are based on contractual agreements and historical experience. The Company considers the patient's ability and intent to pay the amount of consideration upon admission and records an implicit price concession based on historical patient collection experience. The |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - 3 to 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. Property and Equipment, Net Property and equipment are stated at historical cost less accumulated depreciation and amortization. Repair and maintenance charges which do not increase the useful lives of the assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment. The following is a summary of the depreciable lives of the Company’s depreciable assets: Buildings and improvements - minimum of 5 years to a maximum of 40 years, but generally 30 years Leasehold improvements - shorter of the lease term or the estimated useful life, generally 5 to 15 years Furniture and equipment - minimum of 3 to a maximum of 15 years Leasehold improvements are amortized over the lesser of the estimated useful life of the improvement or the term of the lease. Upon sale or retirement, the cost and the related accumulated depreciation and amortization are eliminated from the respective accounts and the resulting gain or loss included in current income. |
Leases | Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s combined/consolidated financial statements as assets and liabilities. Leases The Company leases skilled nursing facilities, assisted living facilities, and commercial office space. The Company determines if an arrangement is a lease (for accounting purposes) at the inception of each lease. Real estate leases are generally classified as operating leases and therefore the Company records rent expense on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date the Company is given control of the leased premises through the end of the lease term. Renewals are not assumed in the determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheets and recognize those lease payments in the combined/consolidated statements of (loss) income and comprehensive (loss) income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. The Company’s real estate leases generally have initial lease terms of ten years or more and typically include one or more options to renew, with renewal terms that generally extend the lease term for an additional three The Company leases most of its skilled nursing and assisted living facilities, as well as its office space and certain vehicles and equipment, under various non-cancelable operating lease agreements. These operating leases expire at various dates throughout 2049. Substantially all operating leases for skilled nursing and assisted living facilities are on a “triple-net” basis, which require lessees to pay for all insurance, repairs, utilities, and real property taxes assessed on the leased property, and most of the leases are guaranteed by the Company and/or its stockholders. Real estate lease payments are deemed to constitute the right to use the underlying facilities and operate as a skilled nursing facility as permitted by the accompanying license. As the license is deemed to be inseparable from the related real estate in determining value, the payments related to these components have been combined into a single lease obligation representing the right to use the facilities and to operate under the terms of the accompanying license, respectively. Finance Leases The Company leases certain skilled nursing and assisted living facilities under finance lease agreements. The economic substance of each lease is that the Company is financing the facilities through the lease. The lease terms of these finance leases allow for a purchase option during a specified window. The Company has determined that it is reasonably certain to exercise the purchase option at the end of each purchase option window. Therefore the Company has calculated the lease term through the end of the purchase option window for each lease. Accordingly, such leases are recorded in the Company’s condensed combined/consolidated financial statements as assets and liabilities. |
Business Combinations | Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. Business Combinations The Company accounts for acquisitions using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). Acquisitions are accounted for as purchases and are included in the combined/consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable assets, the Company uses various valuation techniques. These valuation methods require management to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates. FASB ASC Topic 805, Business Combinations (ASC 805) defines the definition of a business to assist entities with evaluating when a set of transferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accounting for a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. When substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would not represent a business and business combination accounting would not be required. |
Goodwill and Other Indefinite-Lived Intangible Assets | Goodwill and Other Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed. The Company assesses goodwill for impairment at least annually on October 1st. The Company will perform an impairment assessment at other times if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. When assessing goodwill for impairment the Company may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary. If the Company does not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative test. The Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to the reporting unit. The Company’s indefinite-lived intangible assets primarily consist of licenses. The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If the Company does not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the Company calculates the estimated fair value of the indefinite-lived intangible asset. If the estimated fair value of the indefinite-lived intangible asset is lower than its carrying amount, an impairment loss is recognized for the difference. |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, insurance subsidiary deposits, accounts payable and borrowings. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three-tiers include: Level 1: observable inputs such as quoted market prices in active markets; Level 2: inputs other than quoted market prices included in Level 1 that are directly or indirectly observable for the asset or liability and Level 3: unobservable inputs for which little or no market data exists, thereby requiring management to develop their own estimates and assumptions. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment Impairment of Long-Lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment |
Accrued Risk Reserves and Concentration of Credit Risks | Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Additionally, the Company is partially self-insured for risks related to WC policies. Accrued risk reserves primarily represent the accrual for risks associated with WC and PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to a significant portion of its WC program assumed as part of the Plum acquisitions (this acquisition is discussed further in Note 15), and its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). The Company’s retrospective-rated premium WC policy is subject to an annual assessment of the policy premium in relation to the payroll and losses incurred for the policy period. The Company recognizes the WC retrospective policy adjustment as the amount of settlement is determined. Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. The Company holds amounts of cash in excess of the FDIC insured limits. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 20% and 36% of total accounts receivable, respectively, at December 31, 2023 and 32% and 21% of total accounts receivable, respectively, at December 31, 2022. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for doubtful accounts on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. The Company’s operating subsidiaries, excluding four subsidiaries that exclusively operate assisted living facilities, have all of their skilled nursing beds designated for care of patients under federal Medicare and/or state Medicaid programs. 63% of skilled nursing beds are located in California. Accrued Risk Reserves The Company is principally self-insured for risks related to PLGL claims. Accrued risk reserves primarily represent the accrual for risks associated with PLGL claims. The accrued risk reserves include a liability for unpaid reported claims and estimates for incurred but unreported claims. The Company’s policy with respect to its PLGL claims is to use an actuary to assist management in estimating the Company’s exposure for claims obligation (for both asserted and unasserted claims). Concentration of Credit Risks The Company’s credit risks primarily relate to cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. Restricted cash is primarily invested in commercial paper and certificates of deposit with financial institutions and other interest-bearing accounts. Accounts receivable consist primarily of amounts due from patients (funded through Medicare, Medicaid, other contractual programs and through private payors) and from other health care companies for management, accounting and other services. The collectability of account receivable balances is dependent on the availability of funds from certain programs that rely on governmental funding, primarily Medicare and Medicaid. The Company’s receivables from Medicare and Medicaid programs accounted for 23% and 37% of total accounts receivable, respectively, at June 30, 2024 and 20% and 36% of total accounts receivable, respectively, at December 31, 2023. These receivables represent the only significant concentration of credit risk for the Company. The Company does not believe there are significant credit risks associated with these governmental programs. The Company performs continual credit evaluations of the Company’s clients and maintains appropriate allowances for credit losses on any accounts receivable proving uncollectible, and continually monitors and adjusts these allowances as necessary. |
Investments in Joint Ventures | Investments in Joint Ventures Investments in Joint Ventures |
Noncontrolling Interest | Noncontrolling Interest The Company is the majority-owner in a subsidiary which was formed to develop land, a building, and other assets to be leased to a facility operated by the Company upon completion. The noncontrolling interest in subsidiary is initially recognized at estimated fair value on the contribution date and is presented within total equity in the Company’s combined/consolidated balance sheets since these interests are not redeemable. Noncontrolling Interest |
Advertising | Advertising Advertising |
Income Taxes | Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 10 for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. Income Taxes The Company utilizes ASC Topic 740, Income Taxe s (ASC 740), which requires an asset and liability approach for financial accounting and reporting for income taxes. Under this guidance, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 8, “Income Taxes”, for further discussion of the Company’s accounting for income taxes. Under ASC 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Liabilities for income tax matters include amounts for income taxes, applicable penalties, and interest thereon and are the result of the potential alternative interpretations of tax laws and the judgmental nature of the timing of recognition of taxable income. The Company recognizes deferred tax assets (DTAs) to the extent that it believes that the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company generally expects to fully utilize its DTAs; however, when necessary, the Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. |
Stock-based Compensation | Stock-based Compensation The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors based on estimated fair values, ratably over the requisite service period of the award. Net (loss) income has been reduced as a result of the recognition of the fair value of all restricted stock unit awards issued, the amount of which is based upon the number of grants and other variables. The Company accounts for award forfeitures as they occur. |
Comprehensive (Loss) Income | Comprehensive Income The Company does not have any components of other comprehensive income recorded within its combined/consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its combined/consolidated financial statements. Comprehensive (Loss) Income Comprehensive (loss) income consists of gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net (loss) income. For the six months ended June 30, 2024 and 2023, comprehensive (loss) income includes unrealized gains and losses on the Company’s available-for-sale debt securities. |
Segment Presentation | Segment Presentation |
Recent Accounting Standards Issued But Not Yet Adopted by the Company | Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures Recent Accounting Standards Issued But Not Yet Adopted by the Company In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for the Company for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on the disclosures included in the Notes to the combined/consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Summary of Restricted Cash, Cash and Cash Equivalents | The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 |
Summary of Restrictions on Cash and Cash Equivalents | The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 |
REVENUE AND ACCOUNTS RECEIVAB_3
REVENUE AND ACCOUNTS RECEIVABLE - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Patient and Resident Service Revenue by Primary Payors | The composition of patient and resident service revenue by primary payors for the years ended December 31, 2023, 2022, and 2021 are as follows: 2023 % of Revenue 2022 % of Revenue 2021 % of Revenue Medicare $ 1,200,801 38.6 % $ 1,142,863 47.6 % $ 496,311 43.7 % Medicaid 1,168,455 37.6 % 723,896 30.2 % 399,141 35.1 % Managed care 586,850 18.9 % 416,089 17.3 % 159,541 14.0 % Private and other 154,008 4.9 % 116,307 4.9 % 80,916 7.2 % Total patient and resident service revenue $ 3,110,114 100.0 % $ 2,399,155 100.0 % $ 1,135,909 100.0 % Three Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 368,044 37.5 % $ 316,877 41.7 % Medicaid 373,818 38.1 % 268,867 35.4 % Managed care 191,273 19.5 % 138,440 18.2 % Private and other 48,263 4.9 % 36,240 4.7 % Total patient and resident service revenue $ 981,398 100.0 % $ 760,424 100.0 % Six Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 701,387 36.6 % $ 657,287 44.8 % Medicaid 736,170 38.4 % 483,026 32.9 % Managed care 375,553 19.6 % 261,877 17.8 % Private and other 102,586 5.4 % 66,060 4.5 % Total patient and resident service revenue $ 1,915,696 100.0 % $ 1,468,250 100.0 % |
PROPERTY AND EQUIPMENT - 10K (T
PROPERTY AND EQUIPMENT - 10K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 |
GOODWILL AND OTHER INDEFINITE_2
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill consisted of the following: Goodwill Balance as of January 1, 2022 $ 27,882 Acquisitions 8,495 Divestitures — Measurement period adjustment - Plum 18,844 Balance as of December 31, 2022 $ 55,221 Acquisitions $ 3,800 Divestitures $ — Balance as of December 31, 2023 $ 59,021 |
Schedule of Indefinite-Lived Intangible Assets | As of the year ended December 31, 2023 and 2022, the Company's indefinite-lived intangible assets consisted of the following: December 31, 2023 2022 Licenses $ 6,270 $ 6,270 Total other indefinite-lived intangible assets $ 6,270 $ 6,270 |
LONG-TERM DEBT - 10-K (Tables)
LONG-TERM DEBT - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt Instruments | Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 |
Schedule of Maturities of Long-Term Debt | Long-term debt and line-of-credit maturities, excluding deferred financing fees, for the next five years and in the aggregate are as follows as of December 31, 2023: Amount 2024 $ 16,822 2025 13,278 2026 3,545 2027 2,772 2028 522,770 Thereafter 175,823 Total $ 735,010 |
PROVISION FOR INCOME TAXES - _2
PROVISION FOR INCOME TAXES - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Taxes | For financial reporting purposes, income before income taxes includes the following components: 2023 2022 2021 Income before provision for income taxes 157,317 207,045 81,426 |
Schedule of Provision for Income Taxes on Continuing Operations | The provision for income taxes on continuing operations for the years ended December 31, 2023, 2022, and 2021, respectively, is summarized as follows: 2023 2022 2021 Current Federal $ 38,242 $ 37,044 $ 16,438 State 16,116 15,932 9,551 Total current provision 54,358 52,976 25,989 Deferred Federal (6,641) 3,345 8,700 State (3,282) 228 (1,210) Total deferred provision (9,923) 3,573 7,490 Total income tax provision $ 44,435 $ 56,549 $ 33,479 |
Reconciliation of Federal Statutory Rate to Effective Tax Rate | A reconciliation of the federal statutory rate to the effective tax rate for the years ended December 31, 2023, 2022 and 2021, respectively, is comprised as follows: 2023 2022 2021 Income tax expense at statutory rate 21.0 % 21.0 % 21.0 % State income taxes – net of federal benefit 6.5 6.3 8.3 Non-deductible expenses 0.9 0.4 1.6 Change in valuation allowance 1.3 — — Recognition of prior year deferred tax liability — — 10.2 Non-deductible transaction costs — — 0.8 Change to deferred taxes (1.6) — — Other Adjustments — (0.4) (0.9) Total effective tax rate 28.1 % 27.3 % 41.0 % |
Schedule of Deferred Tax Assets and Liabilities | The Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are summarized as follows: 2023 2022 Deferred tax assets (liabilities) Accrued expenses $ 17,523 $ 13,740 Allowance for doubtful accounts 8,247 5,919 Deferred revenue — 910 Insurance 15,428 11,131 Intangible assets 4,073 4,353 Deferred compensation 1,202 554 Lease liability 573,227 375,669 Total deferred tax assets 619,700 412,276 Valuation allowance (2,107) — Total net deferred tax assets 617,593 412,276 Cash to accrual method change (6,125) (12,082) Fixed assets (36,838) (31,622) Prepaid expenses (10,802) (6,579) Investment in partnership (4,904) (5,252) Right of use asset (555,766) (364,055) Other (1,411) (861) Total deferred tax liabilities (615,846) (420,451) Net deferred tax assets (liabilities) $ 1,747 $ (8,175) |
LEASES - 10-K (Tables)
LEASES - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % |
Summary of Supplemental Cash Flow Related to Leases | The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % |
Summary of Operating Lease Maturity | Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
Summary of Finance Lease Maturity | Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Self-Insurance Liabilities | The following table represents activity in the Company’s PLGL self- insurance liabilities as of and for the years ended December 31, 2023 and 2022: Amount Balance January 1, 2022 $ 70,491 Current year expense 40,964 Claims paid (28,914) Change in obligations covered by unrelated insurer 31,247 Remeasurement of Plum Assumed Liabilities (Note 15) 24,339 Balance December 31, 2022 $ 138,127 Current year expense 106,107 Claims paid (73,385) Change in obligations covered by unrelated insurer (7,873) Balance December 31, 2023 $ 162,976 |
OPERATION EXPANSIONS - 10-K (Ta
OPERATION EXPANSIONS - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |
Purchase Price Allocation | The table below represents the purchase price allocation to total identifiable assets acquired and net liabilities assumed using the acquisition method, based on their respective fair values as of November 5, 2021. Amount Cash and cash equivalents $ 7,957 Accounts receivable 94,555 Prepaid and other 43,076 Restricted cash 22,483 Property and equipment 166,072 Operating lease right-of-use assets 612,522 Other assets 5,781 Goodwill and other indefinite-lived assets 32,345 Current operating lease liabilities assumed (28,324) Other current liabilities assumed (134,886) Long-term operating lease liabilities assumed (576,848) Debt and finance lease liabilities assumed (55,095) Other liabilities assumed (68,638) Total purchase price $ 121,000 |
OTHER ACCRUED EXPENSES - 10-K (
OTHER ACCRUED EXPENSES - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Other accrued expenses consisted of the following: December 31, 2023 2022 Current portion of finance lease liabilities 942 37,895 Amounts due to former Plum shareholders — 36,586 Other 69,007 52,678 Total other accrued expenses $ 69,949 $ 127,159 |
EARNINGS PER SHARE - 10-K (Tabl
EARNINGS PER SHARE - 10-K (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of the Numerator and Denominator Used in the Calculation of Basic Net (Loss) Income Per Common Share | The following table sets forth the computation of the Company’s basic and diluted net income attributable per share to common stockholders for the years ended December 31, 2023, 2022, and 2021: Years Ended December 31, 2023 2022 2021 Basic EPS: Numerator: Net income $ 112,882 $ 150,496 $ 47,947 Less: net income attributable to noncontrolling interest $ 8 $ — $ — Net income attributable to PACS Group, Inc. $ 112,874 $ 150,496 $ 47,947 Denominator: Basic and diluted weighted average common stock outstanding 128,723,386 128,723,386 128,723,386 Net income per common share attributable to PACS Group, Inc. Basic and diluted $ 0.88 $ 1.17 $ 0.37 A reconciliation of the numerator and denominator used in the calculation of basic net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Basic net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 A reconciliation of the numerator and denominator used in the calculation of diluted net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Plus: effect of diluted shares (1) — — 591,098 — Adjusted weighted average common shares outstanding 149,463,655 128,723,386 139,684,618 128,723,386 Diluted net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 __________________ (1) The diluted per share amounts do not reflect 1,182,196 common share equivalents from restricted stock units for the three months ended June 30, 2024 because of their anti-dilutive effect. |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Summary of Restricted Cash, Cash and Cash Equivalents | The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 |
Summary of Restrictions on Cash and Cash Equivalents | The following is a reconciliation of cash and cash equivalents on the combined/consolidated balance sheets to total cash, cash equivalents, and restricted cash on the combined/consolidated statement of cash flows as of December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Cash and cash equivalents $ 73,416 $ 58,269 $ 31,962 Restricted cash (included in prepaid expenses and other current assets) 4,977 7,847 5,700 Restricted cash (included in other assets) 40,311 32,090 30,900 Total cash, cash equivalents, and restricted cash $ 118,704 $ 98,206 $ 68,562 The following presents all cash and cash equivalents and restricted cash on the condensed combined/consolidated balance sheets and reconcile to total cash included the condensed combined/consolidated statements of cash flows as of June 30, 2024, December 31, 2023, June 30, 2023: June 30, 2024 December 31, 2023 June 30, 2023 Cash and cash equivalents $ 73,374 $ 73,416 $ 38,164 Restricted cash (included in prepaid expenses and other current assets) 4,480 4,977 7,907 Restricted cash (included in other assets) — 40,311 34,459 Total cash, cash equivalents, and restricted cash $ 77,854 $ 118,704 $ 80,530 |
REVENUE AND ACCOUNTS RECEIVAB_4
REVENUE AND ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Patient and Resident Service Revenue by Primary Payors | The composition of patient and resident service revenue by primary payors for the years ended December 31, 2023, 2022, and 2021 are as follows: 2023 % of Revenue 2022 % of Revenue 2021 % of Revenue Medicare $ 1,200,801 38.6 % $ 1,142,863 47.6 % $ 496,311 43.7 % Medicaid 1,168,455 37.6 % 723,896 30.2 % 399,141 35.1 % Managed care 586,850 18.9 % 416,089 17.3 % 159,541 14.0 % Private and other 154,008 4.9 % 116,307 4.9 % 80,916 7.2 % Total patient and resident service revenue $ 3,110,114 100.0 % $ 2,399,155 100.0 % $ 1,135,909 100.0 % Three Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 368,044 37.5 % $ 316,877 41.7 % Medicaid 373,818 38.1 % 268,867 35.4 % Managed care 191,273 19.5 % 138,440 18.2 % Private and other 48,263 4.9 % 36,240 4.7 % Total patient and resident service revenue $ 981,398 100.0 % $ 760,424 100.0 % Six Months Ended June 30, 2024 % of Revenue 2023 % of Revenue Medicare $ 701,387 36.6 % $ 657,287 44.8 % Medicaid 736,170 38.4 % 483,026 32.9 % Managed care 375,553 19.6 % 261,877 17.8 % Private and other 102,586 5.4 % 66,060 4.5 % Total patient and resident service revenue $ 1,915,696 100.0 % $ 1,468,250 100.0 % |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | Property and equipment consisted of the following at: December 31, 2023 2022 Buildings and improvements $ 372,554 $ 265,520 Leasehold improvements 58,958 47,238 Furniture, fixtures, and other 64,750 46,842 Construction in process 50,937 39,813 Land 55,593 36,357 Finance lease right-of-use assets 40,536 34,960 643,328 470,730 Less: accumulated depreciation and amortization (65,800) (40,165) Property and equipment, net $ 577,528 $ 430,565 Property and equipment consisted of the following at: June 30, 2024 December 31, 2023 Buildings and improvements $ 533,808 $ 372,554 Leasehold improvements 68,298 58,958 Furniture, fixtures, and other 80,229 64,750 Construction in process 53,589 50,937 Land 69,678 55,593 Finance lease right-of-use assets 40,536 40,536 846,138 643,328 Less: accumulated depreciation and amortization (82,234) (65,800) Property and equipment, net $ 763,904 $ 577,528 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt Instruments | Long-term debt consists of the following at: December 31, 2023 2022 HUD-insured mortgage loans $ 166,181 $ 79,031 Other mortgage loans and promissory notes 48,829 277,201 Less: current maturities (16,822) (61,363) Less: deferred financing fees, net (2,480) (3,348) Total $ 195,708 $ 291,521 Long-term debt consists of the following at: June 30, 2024 December 31, 2023 HUD-insured mortgage loans $ 199,404 $ 166,181 Other mortgage loans and promissory notes 46,021 48,829 Less: current maturities (15,745) (16,822) Less: deferred financing fees, net (2,573) (2,480) Total $ 227,107 $ 195,708 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % |
Summary of Supplemental Cash Flow Related to Leases | The components of lease expense were as follows: Year Ended December 31, 2023 2022 2021 Operating lease expense Rent - cost of services (1) 216,711 160,003 78,122 General and administrative expense 941 542 587 Variable lease costs (2) 26,399 21,252 9,337 Total operating lease expense $ 244,051 $ 181,797 $ 88,046 Finance lease expense Amortization of right-of-use assets 1,264 1,230 191 Interest on lease liabilities 1,113 546 87 Total financing lease expense 2,377 1,776 278 Total lease expense $ 246,428 $ 183,573 $ 88,324 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $2,745, $964 and $242 for the years ended December 31, 2023, 2022, and 2021, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s combined/consolidated statements of income. The following table summarizes supplemental cash flow information related to leases: Year Ended December 31, 2023 2022 2021 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 194,925 $ 143,683 $ 86,717 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,113 546 87 Financing cash paid for amounts included in the measurement of finance lease liabilities 1,708 2,088 300 Operating lease right-of-use assets obtained in exchange for lease liabilities 805,866 99,843 916,823 Financing lease right-of-use assets obtained in exchange for lease liabilities 5,521 — 34,960 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term (years) Operating leases 13 13 14 Financing leases 3 1 2 Weighted-average discount rate Operating leases 5.7 % 5.1 % 5.1 % Financing leases 7.2 % 1.4 % 1.4 % The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Operating lease expense Rent - cost of services (1) $ 65,833 $ 51,456 $ 129,794 $ 96,560 General and administrative expense 607 353 1,417 708 Variable lease costs (2) 8,119 6,044 17,033 11,964 Total operating lease expense $ 74,559 $ 57,853 $ 148,244 $ 109,232 Finance lease expense Amortization of right-of-use assets 322 313 645 620 Interest on lease liabilities 736 198 1,476 330 Total financing lease expense 1,058 511 2,121 950 Total Lease Expense $ 75,617 $ 58,364 $ 150,365 $ 110,182 __________________ (1) Rent - cost of services includes other variable lease costs such as Consumer Price Index (CPI) increases and other rent adjustments of $497 and $620 for the three months ended June 30, 2024 and 2023, respectively, and $1,035 and $1,578 for the six months ended June 30, 2024 and 2023, respectively. (2) Variable lease costs, including property taxes and insurance, are classified in Cost of services in the Company’s unaudited condensed combined/consolidated statements of (loss) income and comprehensive (loss) income. The following table summarizes supplemental cash flow information related to leases: Six Months Ended June 30, 2024 2023 Operating cash paid for amounts included in the measurement of operating lease liabilities $ 116,026 $ 88,175 Operating cash paid for amounts included in the measurement of finance lease liabilities 1,476 330 Financing cash paid for amounts included in the measurement of finance lease liabilities 438 1,065 Operating lease right-of-use assets obtained in exchange for lease liabilities 259,201 557,412 Financing lease right-of-use assets obtained in exchange for lease liabilities — 2,028 Information relating to the lease term and discount rate is as follows: As of June 30, 2024 Weighted-average remaining lease term (years) Operating leases 14 Financing leases 2 Weighted-average discount rate Operating leases 5.8 % Financing leases 7.2 % |
Summary of Operating Lease Maturity | Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
Summary of Finance Lease Maturity | Maturities of lease liabilities as of December 31, 2023 were as follows: Finance Leases Operating Leases Total 2024 $ 3,843 $ 220,272 $ 224,115 2025 23,560 220,997 244,557 2026 2,241 220,331 222,572 2027 17,995 217,976 235,971 2028 782 219,679 220,461 Thereafter 390 1,900,357 1,900,747 Total lease payments $ 48,811 $ 2,999,612 $ 3,048,423 Less: present value discount (7,103) (928,177) (935,280) Present value of lease liabilities $ 41,708 $ 2,071,435 $ 2,113,143 Maturities of lease liabilities as of June 30, 2024 were as follows: Finance Leases Operating Leases Total 2024 (remainder) $ 1,929 $ 116,501 $ 118,430 2025 23,560 232,133 255,693 2026 2,241 231,843 234,084 2027 17,995 229,876 247,871 2028 782 231,979 232,761 2029 391 233,208 233,599 Thereafter — 1,934,120 1,934,120 Total lease payments $ 46,898 $ 3,209,660 $ 3,256,558 Less: present value discount (5,627) (1,027,797) (1,033,424) Present value of lease liabilities $ 41,271 $ 2,181,863 $ 2,223,134 |
COMPUTATION OF NET (LOSS) INC_2
COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of the Numerator and Denominator Used in the Calculation of Basic Net (Loss) Income Per Common Share | The following table sets forth the computation of the Company’s basic and diluted net income attributable per share to common stockholders for the years ended December 31, 2023, 2022, and 2021: Years Ended December 31, 2023 2022 2021 Basic EPS: Numerator: Net income $ 112,882 $ 150,496 $ 47,947 Less: net income attributable to noncontrolling interest $ 8 $ — $ — Net income attributable to PACS Group, Inc. $ 112,874 $ 150,496 $ 47,947 Denominator: Basic and diluted weighted average common stock outstanding 128,723,386 128,723,386 128,723,386 Net income per common share attributable to PACS Group, Inc. Basic and diluted $ 0.88 $ 1.17 $ 0.37 A reconciliation of the numerator and denominator used in the calculation of basic net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Basic net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 A reconciliation of the numerator and denominator used in the calculation of diluted net (loss) income per common share follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net (loss) income $ (10,908) $ 21,220 $ 38,232 $ 58,818 Less: net income attributable to noncontrolling interest 2 2 4 3 Net (loss) income attributable to PACS Group, Inc. $ (10,910) $ 21,218 $ 38,228 $ 58,815 Denominator: Weighted average common shares outstanding 149,463,655 128,723,386 139,093,520 128,723,386 Plus: effect of diluted shares (1) — — 591,098 — Adjusted weighted average common shares outstanding 149,463,655 128,723,386 139,684,618 128,723,386 Diluted net (loss) income per common share $ (0.07) $ 0.16 $ 0.27 $ 0.46 __________________ (1) The diluted per share amounts do not reflect 1,182,196 common share equivalents from restricted stock units for the three months ended June 30, 2024 because of their anti-dilutive effect. |
STOCK AWARDS (Tables)
STOCK AWARDS (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Non-vested RSU Activity | A summary of the status of the Company’s non-vested RSU awards for the six months ended June 30, 2024 is presented below (there was no such activity prior to the approval of the 2024 Plan, including in 2023): Non-Vested Restricted Stock Unit Awards Weighted Average Grant Date Fair Value Non-vested at January 1, 2024 — $ — Granted 15,409,470 21.00 Vested (3,847,652) 21.00 Forfeited — — Non-vested at June 30, 2024 11,561,818 $ 21.01 |
Summary of Stock-Based Compensation Expense | Stock-based compensation expense recognized for the Company’s equity incentive plans was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Stock-based compensation expense related to restricted stock unit awards $ 90,936 $ — $ 90,936 $ — Total stock-based compensation expense $ 90,936 $ — $ 90,936 $ — |
ORGANIZATION AND NATURE OF BU_3
ORGANIZATION AND NATURE OF BUSINESS - 10-K (Details) | Jun. 30, 2024 facility Entity bed property | Dec. 31, 2023 facility bed Entity property | Jun. 30, 2023 shareholder | Jun. 29, 2023 |
Subsidiary or Equity Method Investee [Line Items] | ||||
Number of lease to purchase contracts | 13 | 11 | ||
Number of post-acute care facilities | 12 | 14 | ||
Number of non affiliated operating entity | Entity | 1 | 1 | ||
Number of operating properties | property | 38 | 29 | ||
Number of then-existing shareholders | shareholder | 2 | |||
Subsidiaries | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Number of operating health care facilities | 220 | 208 | ||
Number of skilled nursing beds | bed | 24,480 | 22,950 | ||
Number of assisted living beds | bed | 880 | 690 | ||
Number of long term operating facilities | 182 | 179 | ||
Number of lease to purchase contracts | 13 | 11 | ||
PGI | Shareholder A | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Ownership percentage | 50% | |||
PGI | Shareholder B | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Ownership percentage | 50% |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Cash and Cash Equivalents and Restricted Cash - 10-K (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents | $ 73,374 | $ 73,416 | $ 38,164 | $ 58,269 | $ 31,962 | |
Total cash, cash equivalents, and restricted cash | 77,854 | 118,704 | 80,530 | 98,206 | 68,562 | $ 47,512 |
Prepaid Expenses and Other Current Assets | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Restricted Cash | 4,480 | 4,977 | 7,907 | 7,847 | 5,700 | |
Other Assets | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Restricted Cash | $ 0 | $ 40,311 | $ 34,459 | $ 32,090 | $ 30,900 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative - 10-K (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) subsidiary | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) segment subsidiary | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||||
Implicit price concession recorded as a reduction to patient and resident service revenue | $ 21,980 | $ 11,336 | $ 42,936 | $ 22,411 | $ 52,078 | $ 33,927 | $ 13,733 |
Estimated implicit price concessions | $ 59,201 | $ 59,201 | $ 42,171 | 33,988 | |||
Lease term (in years) | 10 years | 10 years | 10 years | ||||
Advertising expense | $ 1,710 | $ 1,758 | $ 3,740 | $ 3,573 | $ 7,127 | $ 5,414 | $ 4,870 |
Number of subsidiaries exclusively operating under assisted living facilities | subsidiary | 4 | 4 | |||||
Number of reportable segments | segment | 1 | 1 | |||||
Accounts Receivable | Customer Concentration Risk | Medicare | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 23% | 20% | 32% | ||||
Accounts Receivable | Customer Concentration Risk | Medicaid | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 37% | 36% | 21% | ||||
Skilled Nursing Beds | Geographic Concentration Risk | CALIFORNIA | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 64% | 63% | |||||
Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 30 years | 30 years | 30 years | ||||
Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Renewal term (in years) | 3 years | 3 years | 3 years | ||||
Minimum | Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 5 years | 5 years | 5 years | ||||
Minimum | Leasehold improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 5 years | 5 years | 5 years | ||||
Minimum | Furniture, fixtures, and other | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 3 years | 3 years | 3 years | ||||
Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Renewal term (in years) | 20 years | 20 years | 30 years | ||||
Renewal term (in years) | 20 years | ||||||
Maximum | Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 40 years | 40 years | 40 years | ||||
Maximum | Leasehold improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 15 years | 15 years | 15 years | ||||
Maximum | Furniture, fixtures, and other | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 15 years | 15 years | 15 years |
REVENUE AND ACCOUNTS RECEIVAB_5
REVENUE AND ACCOUNTS RECEIVABLE - Narrative - 10-K (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | 24 Months Ended | |||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||||||
Contract with customer, term | 1 year | 1 year | 1 year | ||||||
Employee retention tax credit | $ 18,656 | $ 13,772 | $ 32,428 | ||||||
Accrual for employee retention tax credit | $ 36,508 | $ 36,508 | $ 36,477 | $ 17,119 | |||||
Accrual for Social Security tax payment, under CARES Act | 7,793 | $ 7,793 | |||||||
Payment of Social Security tax deferral under CARES Acts | 7,793 | ||||||||
Provider Relief Fund Distributions CARES Act | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Proceeds under relief fund distribution | $ 14,962 | $ 5,654 | |||||||
Revenue Benchmark | Customer Concentration Risk | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Concentration risk (as in percent) | 100% | 100% | 100% | 100% | 100% | 100% | 100% | ||
Medicaid | Revenue Benchmark | Customer Concentration Risk | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Concentration risk (as in percent) | 38.10% | 35.40% | 38.40% | 32.90% | 37.60% | 30.20% | 35.10% | ||
Medicare | Revenue Benchmark | Customer Concentration Risk | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Concentration risk (as in percent) | 37.50% | 41.70% | 36.60% | 44.80% | 38.60% | 47.60% | 43.70% | ||
Managed Care, Private And Other | Revenue Benchmark | Customer Concentration Risk | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Concentration risk (as in percent) | 24.40% | 22.90% | 25% | 22.30% | 24% | 22% | 21% |
REVENUE AND ACCOUNTS RECEIVAB_6
REVENUE AND ACCOUNTS RECEIVABLE - Summary of Patient and Resident Service Revenue by Primary Payors - 10-K (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 | $ 3,110,114 | $ 2,399,155 | $ 1,135,909 |
Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 | $ 3,110,114 | $ 2,399,155 | $ 1,135,909 |
% of Revenue | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
Medicare | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 368,044 | $ 316,877 | $ 701,387 | $ 657,287 | $ 1,200,801 | $ 1,142,863 | $ 496,311 |
% of Revenue | 37.50% | 41.70% | 36.60% | 44.80% | 38.60% | 47.60% | 43.70% |
Medicaid | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 373,818 | $ 268,867 | $ 736,170 | $ 483,026 | $ 1,168,455 | $ 723,896 | $ 399,141 |
% of Revenue | 38.10% | 35.40% | 38.40% | 32.90% | 37.60% | 30.20% | 35.10% |
Managed care | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 191,273 | $ 138,440 | $ 375,553 | $ 261,877 | $ 586,850 | $ 416,089 | $ 159,541 |
% of Revenue | 19.50% | 18.20% | 19.60% | 17.80% | 18.90% | 17.30% | 14% |
Private and other | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 48,263 | $ 36,240 | $ 102,586 | $ 66,060 | $ 154,008 | $ 116,307 | $ 80,916 |
% of Revenue | 4.90% | 4.70% | 5.40% | 4.50% | 4.90% | 4.90% | 7.20% |
PROPERTY AND EQUIPMENT - 10-K (
PROPERTY AND EQUIPMENT - 10-K (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Finance lease right-of-use assets | $ 40,536,000 | $ 40,536,000 | $ 34,960,000 | ||
Property and equipment, gross | 846,138,000 | 643,328,000 | 470,730,000 | ||
Less: accumulated depreciation and amortization | (82,234,000) | (65,800,000) | (40,165,000) | ||
Property and equipment, net | 763,904,000 | 577,528,000 | 430,565,000 | ||
Impairment charges | 0 | $ 0 | 0 | 0 | $ 0 |
Buildings and improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 533,808,000 | 372,554,000 | 265,520,000 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 68,298,000 | 58,958,000 | 47,238,000 | ||
Furniture, fixtures, and other | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 80,229,000 | 64,750,000 | 46,842,000 | ||
Construction in process | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 53,589,000 | 50,937,000 | 39,813,000 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | $ 69,678,000 | $ 55,593,000 | $ 36,357,000 |
GOODWILL AND OTHER INDEFINITE_3
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - 10-K - Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | |||
Goodwill | $ 55,221,000 | $ 27,882,000 | |
Acquisitions | 3,800,000 | 8,495,000 | |
Divestitures | 0 | 0 | |
Measurement period adjustment - Plum | 18,844,000 | ||
Goodwill | 59,021,000 | 55,221,000 | $ 27,882,000 |
Goodwill, accumulated impairment loss | 0 | 0 | 0 |
Goodwill, impairment loss | $ 0 | $ 0 | $ 0 |
GOODWILL AND OTHER INDEFINITE_4
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS - 10-K - Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Indefinite-Lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | $ 6,270,000 | $ 6,270,000 | |
Impairment of intangible assets, indefinite-lived | 0 | 0 | $ 0 |
Licenses | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | $ 6,270,000 | $ 6,270,000 |
INVESTMENT IN PARTNERSHIP - 1_2
INVESTMENT IN PARTNERSHIP - 10-K (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||
Equity method investments | $ 12,362 | $ 12,018 | $ 15,269 |
Income (loss) from equity method investments | (391) | $ (346) | $ 232 |
Largest Equity Investment | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity method investments | $ 9,481 | ||
Ownership percentage | 27% |
CREDIT FACILITIES - 10-K (Detai
CREDIT FACILITIES - 10-K (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2023 USD ($) | Dec. 07, 2023 USD ($) Rate | Jun. 30, 2023 USD ($) | May 08, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Feb. 28, 2023 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||
Lines of credit | $ 520,000,000 | $ 248,000,000 | $ 248,000,000 | $ 520,000,000 | $ 146,820,000 | |||||||
Letters of credit outstanding | 0 | 0 | 22,370,000 | |||||||||
Amortization and write-off of deferred financing fees | 1,551,000 | $ 4,279,000 | 6,068,000 | 1,205,000 | $ 902,000 | |||||||
Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Deferred financing costs | 15,099,000 | 15,099,000 | 15,099,000 | 15,099,000 | 4,218,000 | |||||||
Amortization and write-off of deferred financing fees | 755,000 | $ 165,000 | 1,510,000 | 352,000 | 889,000 | |||||||
Accumulated amortization, debt issuance costs | 193,000 | 1,703,000 | 1,703,000 | 193,000 | $ 2,811,000 | |||||||
The Working Capital Loan | Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 17,500,000 | |||||||||||
Interest rate | 9% | |||||||||||
Proceeds from loan | $ 15,000,000 | |||||||||||
Outstanding balance | 0 | 0 | 0 | 0 | ||||||||
The 2023 Credit Agreement | Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | 600,000,000 | 600,000,000 | 600,000,000 | 600,000,000 | ||||||||
Proceeds from loan | $ 460,000,000 | |||||||||||
Deferred financing costs | 9,662,000 | 9,662,000 | ||||||||||
Repayments of long-term debt | 142,000,000 | $ 142,000,000 | ||||||||||
Debt to income ratio, maximum | Rate | 300% | |||||||||||
Interest rent coverage ratio, minimum | Rate | 110% | |||||||||||
Lines of credit | 520,000,000 | 248,000,000 | 248,000,000 | 520,000,000 | ||||||||
Remaining borrowing capacity | 80,000,000 | $ 340,350,000 | $ 340,350,000 | 80,000,000 | ||||||||
The 2023 Credit Agreement | Line of Credit | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Commitment fee percentage | 0.25% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Commitment fee percentage | 0.45% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit spread adjustment on variable rate | 0.0010 | 0.0010 | ||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 2.25% | 2.50% | ||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 3.25% | 3.50% | ||||||||||
The 2023 Credit Agreement | Line of Credit | Base Rate | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 1.25% | 1.50% | ||||||||||
The 2023 Credit Agreement | Line of Credit | Base Rate | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 2.25% | 2.50% | ||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 600,000,000 | $ 150,000,000 | 150,000,000 | 150,000,000 | ||||||||
Proceeds from loan | $ 75,000,000 | $ 75,000,000 | ||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Commitment fee percentage | 0.30% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Commitment fee percentage | 0.50% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Letter of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | 50,000,000 | $ 30,000,000 | 30,000,000 | 30,000,000 | ||||||||
The 2023 Credit Agreement | Line of Credit | Swingline Loan | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 20,000,000 | 20,000,000 | 20,000,000 | 20,000,000 | ||||||||
The 2023 Credit Agreement | Line of Credit | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from loan | 275,000,000 | |||||||||||
Debt instrument, face amount | $ 275,000,000 | $ 275,000,000 | $ 275,000,000 | |||||||||
The 2023 Credit Agreement | Line of Credit | Line of Credit and Long-term Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Deferred financing costs, writeoff | 3,109,000 | |||||||||||
The 2023 Credit Agreement | Line of Credit | Line of Credit and Long-term Debt, Amended | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Deferred financing costs, writeoff | $ 519,000 | |||||||||||
Other Line-of-credit Agreements | Secured Overnight Financing Rate (SOFR) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 3.15% | |||||||||||
Other Line-of-credit Agreements | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Spread on base rate | 3.50% | |||||||||||
Other Line-of-credit Agreements | Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 176,000,000 | |||||||||||
Lines of credit | 146,820,000 | |||||||||||
Remaining borrowing capacity | $ 29,180,000 |
LONG-TERM DEBT - Narrative - 10
LONG-TERM DEBT - Narrative - 10-K (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) subsidiary loan | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) subsidiary loan | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) loan subsidiary | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||
Number of subsidiaries with HUD mortgage loans | subsidiary | 11 | 11 | 8 | ||||
Carrying value | $ 735,010,000 | ||||||
Current maturities of long term debt | $ 15,745,000 | $ 15,745,000 | 16,822,000 | $ 61,363,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | 227,107,000 | 227,107,000 | 195,708,000 | 291,521,000 | |||
Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value of loans secured by real property | 235,222,000 | 235,222,000 | 438,645,000 | 323,439,000 | |||
Deferred financing costs | 2,745,000 | 2,745,000 | 2,611,000 | 4,734,000 | |||
Interest expense, debt | 21,000 | $ 390,000 | 41,000 | $ 818,000 | 1,551,000 | 978,000 | $ 462,000 |
Accumulated amortization, debt issuance costs | 172,000 | 172,000 | 131,000 | 1,386,000 | |||
Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing costs | 15,099,000 | 15,099,000 | 15,099,000 | 4,218,000 | |||
Accumulated amortization, debt issuance costs | 1,703,000 | 1,703,000 | 193,000 | 2,811,000 | |||
HUD-insured mortgage loans | Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 34,685,000 | 34,685,000 | 88,809,000 | 7,027,000 | |||
Carrying value | 199,404,000 | 199,404,000 | 166,181,000 | 79,031,000 | |||
Current maturities of long term debt | 3,339,000 | 3,339,000 | 2,346,000 | 1,509,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | $ 196,058,000 | $ 196,058,000 | $ 163,835,000 | 77,522,000 | |||
HUD-insured mortgage loans | Mortgages | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 2.40% | 2.40% | 2.40% | ||||
Debt instrument, term | 24 years | 30 years | |||||
HUD-insured mortgage loans | Mortgages | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 6.30% | 6.30% | 6.30% | ||||
Debt instrument, term | 35 years | 35 years | |||||
Other mortgage loans and promissory notes | Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value | $ 46,021,000 | $ 46,021,000 | $ 48,829,000 | 277,201,000 | |||
Current maturities of long term debt | 12,407,000 | 12,407,000 | 14,476,000 | 59,854,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | $ 33,614,000 | $ 33,614,000 | $ 34,353,000 | $ 217,347,000 | |||
Number of other mortgage loans and promissory notes | loan | 12 | 12 | 12 | ||||
Other mortgage loans and promissory notes | Mortgages | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 2% | 2% | 2% | ||||
Other mortgage loans and promissory notes | Mortgages | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 7.50% | 7.50% | 8% | ||||
Other mortgage loans and promissory notes | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of secured debt | 224,802,000 | ||||||
The 2023 Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing costs | $ 9,662,000 | ||||||
The 2023 Credit Agreement | Line of Credit | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 275,000,000 | $ 275,000,000 | |||||
Amended And Restated 2023 Credit Facility | Line of Credit | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value | $ 0 | $ 0 | $ 0 |
LONG-TERM DEBT - Summary of Lon
LONG-TERM DEBT - Summary of Long-Term Debt Instruments - 10-K (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | $ 735,010 | ||
Less: current maturities | $ (15,745) | (16,822) | $ (61,363) |
Less: deferred financing fees, net | (2,573) | (2,480) | (3,348) |
Total | 227,107 | 195,708 | 291,521 |
Mortgages | HUD-insured mortgage loans | |||
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | 199,404 | 166,181 | 79,031 |
Less: current maturities | (3,339) | (2,346) | (1,509) |
Total | 196,058 | 163,835 | 77,522 |
Mortgages | Other mortgage loans and promissory notes | |||
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | 46,021 | 48,829 | 277,201 |
Less: current maturities | (12,407) | (14,476) | (59,854) |
Total | $ 33,614 | $ 34,353 | $ 217,347 |
LONG-TERM DEBT - Schedule of Ma
LONG-TERM DEBT - Schedule of Maturities - 10-K (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 16,822 |
2025 | 13,278 |
2026 | 3,545 |
2027 | 2,772 |
2028 | 522,770 |
Thereafter | 175,823 |
Total | $ 735,010 |
PROVISION FOR INCOME TAXES - In
PROVISION FOR INCOME TAXES - Income Before Income Taxes - 10-K (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||||
Income before provision for income taxes | $ (12,382) | $ 31,590 | $ 60,673 | $ 80,689 | $ 157,317 | $ 207,045 | $ 81,426 |
PROVISION FOR INCOME TAXES - Pr
PROVISION FOR INCOME TAXES - Provision for Income Taxes - 10-K (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current | |||||||
Federal | $ 38,242 | $ 37,044 | $ 16,438 | ||||
State | 16,116 | 15,932 | 9,551 | ||||
Total current provision | 54,358 | 52,976 | 25,989 | ||||
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||
Federal | (6,641) | 3,345 | 8,700 | ||||
State | (3,282) | 228 | (1,210) | ||||
Total deferred provision | $ (15,969) | $ (7,253) | (9,923) | 3,573 | 7,490 | ||
Total income tax provision | $ (1,474) | $ 10,370 | $ 22,441 | $ 21,871 | $ 44,435 | $ 56,549 | $ 33,479 |
PROVISION FOR INCOME TAXES - Re
PROVISION FOR INCOME TAXES - Reconciliation to Effective Tax Rate - 10-K (Details) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense at statutory rate | 37% | 27.10% | 21% | 21% | 21% |
State income taxes – net of federal benefit | 6.50% | 6.30% | 8.30% | ||
Non-deductible expenses | 0.90% | 0.40% | 1.60% | ||
Change in valuation allowance | 1.30% | 0% | 0% | ||
Recognition of prior year deferred tax liability | 0% | 0% | 10.20% | ||
Non-deductible transaction costs | 0% | 0% | 0.80% | ||
Change to deferred taxes | (1.60%) | 0% | 0% | ||
Other Adjustments | 0% | (0.40%) | (0.90%) | ||
Total effective tax rate | 28.10% | 27.30% | 41% |
PROVISION FOR INCOME TAXES - De
PROVISION FOR INCOME TAXES - Deferred Tax Assets and Liabilities - 10-K (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Accrued expenses | $ 17,523 | $ 13,740 |
Allowance for doubtful accounts | 8,247 | 5,919 |
Deferred revenue | 0 | 910 |
Insurance | 15,428 | 11,131 |
Intangible assets | 4,073 | 4,353 |
Deferred compensation | 1,202 | 554 |
Lease liability | 573,227 | 375,669 |
Total deferred tax assets | 619,700 | 412,276 |
Valuation allowance | (2,107) | 0 |
Total net deferred tax assets | 617,593 | 412,276 |
Cash to accrual method change | (6,125) | (12,082) |
Fixed assets | (36,838) | (31,622) |
Prepaid expenses | (10,802) | (6,579) |
Investment in partnership | (4,904) | (5,252) |
Right of use asset | (555,766) | (364,055) |
Other | (1,411) | (861) |
Total deferred tax liabilities | (615,846) | (420,451) |
Net deferred tax assets | $ 1,747 | |
Net deferred tax liabilities | $ (8,175) |
LEASES - Narrative - 10-K (Deta
LEASES - Narrative - 10-K (Details) $ in Thousands | Jun. 30, 2024 USD ($) facility | Dec. 31, 2023 USD ($) facility | Dec. 31, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |||
Number of lease to purchase contracts | facility | 13 | 11 | |
Finance lease, right-of-use asset, after accumulated amortization | $ 37,205 | $ 37,850 | $ 33,593 |
Finance lease, liability, current, statement of financial position [extensible enumeration] | Other accrued expenses | Other accrued expenses | |
Current portion of finance lease liabilities | $ 991 | $ 942 | 37,895 |
Finance lease, liability, noncurrent, statement of financial position [extensible enumeration] | Other liabilities | Other liabilities | |
Long-term portion of finance lease liabilities | $ 40,279 | $ 40,766 | $ 0 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 3 years | 3 years | |
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 20 years | 30 years |
LEASES - Summary of Components
LEASES - Summary of Components of Lease Expense - 10-K (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating lease expense | |||||||
Rent - cost of services | $ 65,833 | $ 51,456 | $ 129,794 | $ 96,560 | $ 216,711 | $ 160,003 | $ 78,122 |
General and administrative expense | 607 | 353 | 1,417 | 708 | 941 | 542 | 587 |
Variable lease costs | 8,119 | 6,044 | 17,033 | 11,964 | 26,399 | 21,252 | 9,337 |
Total operating lease expense | 74,559 | 57,853 | 148,244 | 109,232 | 244,051 | 181,797 | 88,046 |
Finance lease expense | |||||||
Amortization of right-of-use assets | 322 | 313 | 645 | 620 | 1,264 | 1,230 | 191 |
Interest on lease liabilities | 736 | 198 | 1,476 | 330 | 1,113 | 546 | 87 |
Total financing lease expense | 1,058 | 511 | 2,121 | 950 | 2,377 | 1,776 | 278 |
Total lease expense | 75,617 | 58,364 | 150,365 | 110,182 | 246,428 | 183,573 | 88,324 |
Other variable costs | $ 497 | $ 620 | $ 1,035 | $ 1,578 | $ 2,745 | $ 964 | $ 242 |
LEASES - Summary of Supplementa
LEASES - Summary of Supplemental Cash Flow Related to Leases - 10-K (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||||
Operating cash paid for amounts included in the measurement of operating lease liabilities | $ 116,026 | $ 88,175 | $ 194,925 | $ 143,683 | $ 86,717 |
Operating cash paid for amounts included in the measurement of finance lease liabilities | 1,476 | 330 | 1,113 | 546 | 87 |
Financing cash paid for amounts included in the measurement of finance lease liabilities | 438 | 1,065 | 1,708 | 2,088 | 300 |
Right-of-use asset obtained in exchange for lease liabilities: | |||||
Operating lease right-of-use assets obtained in exchange for lease liabilities | 259,201 | 557,412 | 805,866 | 99,843 | 916,823 |
Financing lease right-of-use assets obtained in exchange for lease liabilities | $ 0 | $ 2,028 | $ 5,521 | $ 0 | $ 34,960 |
LEASES - Summary of Lease Term
LEASES - Summary of Lease Term and Discount Rates - 10-K (Details) | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Weighted-average remaining lease term (years) | ||||
Operating leases | 14 years | 13 years | 13 years | 14 years |
Financing leases | 2 years | 3 years | 1 year | 2 years |
Weighted-average discount rate | ||||
Operating leases | 5.80% | 5.70% | 5.10% | 5.10% |
Financing leases | 7.20% | 7.20% | 1.40% | 1.40% |
LEASES - Summary of Maturities
LEASES - Summary of Maturities of Operating and Financing Lease Liabilities - 10-K (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Finance Leases | ||
2024 | $ 23,560 | $ 3,843 |
2025 | 2,241 | 23,560 |
2026 | 17,995 | 2,241 |
2027 | 782 | 17,995 |
2028 | 391 | 782 |
Thereafter | 0 | 390 |
Total lease payments | 46,898 | 48,811 |
Less: present value discount | (5,627) | (7,103) |
Present value of lease liabilities | 41,271 | 41,708 |
Operating Leases | ||
2024 | 232,133 | 220,272 |
2025 | 231,843 | 220,997 |
2026 | 229,876 | 220,331 |
2027 | 231,979 | 217,976 |
2028 | 233,208 | 219,679 |
Thereafter | 1,934,120 | 1,900,357 |
Total lease payments | 3,209,660 | 2,999,612 |
Present value of lease liabilities | (1,027,797) | (928,177) |
Present value of lease liabilities | 2,181,863 | 2,071,435 |
Total | ||
2024 | 255,693 | 224,115 |
2025 | 234,084 | 244,557 |
2026 | 247,871 | 222,572 |
2027 | 232,761 | 235,971 |
2028 | 233,599 | 220,461 |
Thereafter | 1,934,120 | 1,900,747 |
Total lease payments | 3,256,558 | 3,048,423 |
Less: present value discount | (1,033,424) | (935,280) |
Present value of lease liabilities | $ 2,223,134 | $ 2,113,143 |
RETIREMENT PLANS - 10-K (Detail
RETIREMENT PLANS - 10-K (Details) | 12 Months Ended | |
Dec. 31, 2023 USD ($) plan | Dec. 31, 2022 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | ||
Number of plans | plan | 2 | |
Employer matching contribution, vesting term | 5 years | |
Deferred compensation liability | $ 4,379,000 | $ 2,047,000 |
Plan One | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Minimum age requirement | 21 years | |
Requisite service period | 2 months | |
Employer matching contribution, percent of match | 25% | |
Percent of employees' gross pay | 4% | |
Employer matching contribution, vesting term | 5 years | |
Plan Two | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Requisite service period | 6 months | |
Employer matching contribution, percent of match | 25% | |
Employer matching contribution, vesting term | 5 years | |
Maximum annual contributions per employee | $ 1,060 |
RELATED PARTY TRANSACTIONS -10-
RELATED PARTY TRANSACTIONS -10-K (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Mar. 24, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 01, 2021 | |
Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Professional and contract services, renewal term (in years) | 1 year | ||||||||
Related Party | Mr. Murray | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 10,000 | ||||||||
Common stock, price per share (in us dollars per share) | $ 0.001 | ||||||||
Related Party | Mr. Hancock | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 10,000 | ||||||||
Common stock, price per share (in us dollars per share) | $ 0.001 | ||||||||
Annual Cash Consulting Fee | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | ||||||||
Annual Cash Consulting Fee | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | ||||||||
Consulting And Strategic Advisory Services | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 0 | $ 1,000 | 0 | $ 2,000 | |||||
Consulting And Strategic Advisory Services | Subsidiary of Helios Consulting | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 0 | $ 38 | $ 0 | $ 75 | |||||
Consulting And Strategic Advisory Services | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | $ 2,333 | |||||||
Consulting And Strategic Advisory Services | Related Party | Subsidiary of Helios Consulting | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 150 | $ 150 | $ 150 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Narrative 10-K (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Malpractice Insurance [Line Items] | ||||
Self insurance reserve | $ 183,836 | $ 162,976 | $ 138,127 | $ 70,491 |
Insurance receivable | 31,628 | 34,676 | 42,549 | |
Insurance receivable, current | 5,377 | 5,895 | 7,233 | |
Insurance receivable, noncurrent | 26,251 | 28,781 | 35,316 | |
Plum 2021 Acquisition | ||||
Malpractice Insurance [Line Items] | ||||
Insurance receivable | 8,323 | 17,062 | ||
Unasserted Claim | ||||
Malpractice Insurance [Line Items] | ||||
Self insurance reserve | 53,673 | 43,083 | $ 38,742 | |
Minimum | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | 250 | 250 | ||
Deductible | 750 | 750 | ||
Minimum | Plum 2021 Acquisition | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | 250 | |||
Maximum | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | 500 | 500 | ||
Deductible | 4,000 | 4,000 | ||
Annual coverage limit | $ 10,000 | 10,000 | ||
Maximum | Plum 2021 Acquisition | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | $ 500 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Self-Insurance Liabilities 10-K (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 138,127 | $ 70,491 |
Current year expense | 106,107 | 40,964 |
Claims paid | (73,385) | (28,914) |
Change in obligations covered by unrelated insurer | (7,873) | 31,247 |
Remeasurement of Plum Assumed Liabilities (Note 15) | 24,339 | |
Ending balance | $ 162,976 | $ 138,127 |
OPERATION EXPANSIONS - 10-K - N
OPERATION EXPANSIONS - 10-K - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Nov. 05, 2021 USD ($) facility bed property | Jun. 30, 2021 USD ($) realEstateEntity | Mar. 31, 2024 USD ($) property facility bed | Jun. 30, 2024 USD ($) property bed facility | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) property bed facility | Dec. 31, 2022 USD ($) facility bed property | Dec. 31, 2021 USD ($) facility bed property joint_venture | |
Property, Plant and Equipment [Line Items] | ||||||||
Payments to acquire buildings | $ 174,650 | $ 52,365 | $ 127,024 | $ 55,374 | $ 79,676 | |||
Goodwill | 59,021 | 55,221 | 27,882 | |||||
Number of real estate properties sold | realEstateEntity | 1 | |||||||
Gain on sale of real estate | $ 3,100 | |||||||
2023 Expansion | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Goodwill | 3,800 | |||||||
Business combination, other assets acquired | $ 500 | |||||||
Percent of goodwill deductible for income tax purposes | 100% | |||||||
2022 Expansion | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Goodwill | $ 8,496 | |||||||
Percent of goodwill deductible for income tax purposes | 100% | |||||||
2021 Expansions | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Goodwill | $ 1,901 | |||||||
Percent of goodwill deductible for income tax purposes | 100% | |||||||
Notes Receivable | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Note receivable | $ 5,000 | $ 3,500 | ||||||
Financing receivable, interest rate, stated percentage | 0.06 | |||||||
2024 Expansion | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Stand-alone facilities acquired | facility | 10 | 12 | ||||||
Real estate purchases | property | 6 | 9 | ||||||
Real estate acquired in conjunction with operations | property | 3 | 4 | 2 | |||||
Real estate acquired previously operated by subsidiaries | property | 3 | 5 | 4 | |||||
Number of skilled nursing beds | bed | 1,334 | 1,501 | ||||||
Payments to acquire buildings | $ 78,500 | $ 175,150 | ||||||
Number of assisted living beds | bed | 174 | 174 | ||||||
2023 Expansion | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Stand-alone facilities acquired | facility | 58 | |||||||
Real estate purchases | property | 6 | |||||||
Number of skilled nursing beds | bed | 6,744 | |||||||
Payments to acquire buildings | $ 129,174 | |||||||
Property and plant additions | $ 124,874 | |||||||
2022 Expansion | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Stand-alone facilities acquired | facility | 9 | |||||||
Real estate purchases | property | 4 | |||||||
Real estate acquired in conjunction with operations | property | 2 | |||||||
Number of skilled nursing beds | bed | 1,180 | |||||||
Payments to acquire buildings | $ 55,374 | |||||||
Property and plant additions | 46,500 | |||||||
Asset acquisition, consideration transferred, other assets | 378 | |||||||
Plum 2021 Acquisition | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Stand-alone facilities acquired | facility | 58 | |||||||
Real estate purchases | property | 8 | |||||||
Number of skilled nursing beds | bed | 6,380 | |||||||
Property and plant additions | $ 166,072 | |||||||
Percent of goodwill deductible for income tax purposes | 100% | |||||||
Asset acquisition, consideration transferred | $ 121,000 | |||||||
Payments for asset acquisitions | 104,200 | |||||||
Asset acquisition, consideration transferred, notes payable | $ 16,800 | |||||||
Number of assisted living beds | bed | 40 | |||||||
Number of subacute beds acquired | bed | 190 | |||||||
Asset acquisition, provisional information, initial accounting incomplete, adjustment, goodwill and other liabilities | $ 18,844 | |||||||
2021 Expansions | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Stand-alone facilities acquired | facility | 17 | |||||||
Real estate purchases | property | 5 | |||||||
Number of skilled nursing beds | bed | 1,780 | |||||||
Payments to acquire buildings | $ 118,324 | |||||||
Property and plant additions | $ 116,423 | |||||||
Number of joint ventures | joint_venture | 2 |
OPERATION EXPANSIONS - 10-K- Pu
OPERATION EXPANSIONS - 10-K- Purchase Price Allocation (Details) - Plum 2021 Acquisition $ in Thousands | Nov. 05, 2021 USD ($) |
Property, Plant and Equipment [Line Items] | |
Cash and cash equivalents | $ 7,957 |
Accounts receivable | 94,555 |
Prepaid and other | 43,076 |
Restricted cash | 22,483 |
Property and equipment | 166,072 |
Operating lease right-of-use assets | 612,522 |
Other assets | 5,781 |
Goodwill and other indefinite-lived assets | 32,345 |
Current operating lease liabilities assumed | (28,324) |
Other current liabilities assumed | (134,886) |
Long-term operating lease liabilities assumed | (576,848) |
Debt and finance lease liabilities assumed | (55,095) |
Other liabilities assumed | (68,638) |
Total purchase price | $ 121,000 |
OTHER ACCRUED EXPENSES - 10-K_2
OTHER ACCRUED EXPENSES - 10-K (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | |||
Current portion of finance lease liabilities | $ 991 | $ 942 | $ 37,895 |
Amounts due to former Plum shareholders | 0 | 36,586 | |
Other | 69,007 | 52,678 | |
Total other accrued expenses | $ 75,003 | $ 69,949 | $ 127,159 |
EARNINGS PER SHARE - 10-K - Sum
EARNINGS PER SHARE - 10-K - Summary of Reconciliation of the Numerator and Denominator Used in the Calculation of Basic Net (Loss) Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | |||||||||
Net (loss) income | $ (10,908) | $ 21,220 | $ 38,232 | $ 58,818 | $ 112,882 | $ 150,496 | $ 47,947 | ||
Less: net income attributable to noncontrolling interest | 2 | $ 2 | 2 | $ 1 | 4 | 3 | 8 | 0 | 0 |
Net (loss) income attributable to PACS Group, Inc. (basic) | $ (10,910) | $ 21,218 | $ 38,228 | $ 58,815 | $ 112,874 | $ 150,496 | $ 47,947 | ||
Denominator: | |||||||||
Weighted average common shares outstanding, basic (in shares) | 149,463,655 | 128,723,386 | 139,093,520 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 | ||
Weighted average common shares outstanding, diluted (in shares) | 149,463,655 | 128,723,386 | 139,684,618 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 | ||
Net income per common share attributable to PACS Group, Inc. | |||||||||
Basic net (loss) income per common share (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 | ||
Diluted net (loss) income per common share (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 |
EARNINGS PER SHARE - 10-K - Add
EARNINGS PER SHARE - 10-K - Additional Information (Details) | Mar. 31, 2024 | Jun. 30, 2023 shares | Jun. 30, 2024 shares | Apr. 01, 2024 shares | Dec. 31, 2023 shares | Dec. 31, 2022 shares |
Class of Stock [Line Items] | ||||||
Common stock, shares outstanding (in shares) | 152,399,733 | 128,723,386 | 128,723,386 | |||
Stock split number of shares issued (in shares) | 20,000 | |||||
Subsequent changes to number of common shares | 6,436.1693 | 33.33 | ||||
Common stock, shares authorized (in shares) | 1,250,000,000 | 1,250,000,000 | 64,361,693,000 | 64,361,693,000 | ||
PGI | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares outstanding (in shares) | 600 |
Subsequent Events - 10-K (Detai
Subsequent Events - 10-K (Details) - Subsequent event | 3 Months Ended |
Mar. 31, 2024 shares | |
2024 Incentive Award Plan | |
Subsequent Event [Line Items] | |
Number of shares available for grant (in shares) | 15,146,772 |
Shares available for issuance as compared to total shares outstanding, percent | 10.25% |
2024 Employee Stock Purchase Plan | |
Subsequent Event [Line Items] | |
Shares available for issuance as compared to total shares outstanding, percent | 1% |
ORGANIZATION AND NATURE OF BU_4
ORGANIZATION AND NATURE OF BUSINESS (Details) | Jun. 30, 2024 facility bed Entity property | Dec. 31, 2023 facility bed Entity property | Jun. 30, 2023 shareholder | Jun. 29, 2023 |
Subsidiary or Equity Method Investee [Line Items] | ||||
Number of lease to purchase contracts | 13 | 11 | ||
Number of post-acute care facilities | 12 | 14 | ||
Number of non affiliated operating entity | Entity | 1 | 1 | ||
Number of operating properties | property | 38 | 29 | ||
Number of then-existing shareholders | shareholder | 2 | |||
Subsidiaries | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Number of operating health care facilities | 220 | 208 | ||
Number of skilled nursing beds | bed | 24,480 | 22,950 | ||
Number of assisted living beds | bed | 880 | 690 | ||
Number of long term operating facilities | 182 | 179 | ||
Number of lease to purchase contracts | 13 | 11 | ||
PGI | Shareholder A | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Ownership percentage | 50% | |||
PGI | Shareholder B | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Ownership percentage | 50% |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents | $ 73,374 | $ 73,416 | $ 38,164 | $ 58,269 | $ 31,962 | |
Total cash, cash equivalents, and restricted cash | 77,854 | 118,704 | 80,530 | 98,206 | 68,562 | $ 47,512 |
Prepaid Expenses and Other Current Assets | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Restricted Cash | 4,480 | 4,977 | 7,907 | 7,847 | 5,700 | |
Other Assets | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Restricted Cash | $ 0 | $ 40,311 | $ 34,459 | $ 32,090 | $ 30,900 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) segment | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||||
Implicit price concession recorded as a reduction to patient and resident service revenue | $ 21,980 | $ 11,336 | $ 42,936 | $ 22,411 | $ 52,078 | $ 33,927 | $ 13,733 |
Estimated implicit price concessions | $ 59,201 | $ 59,201 | $ 42,171 | 33,988 | |||
Lease term (in years) | 10 years | 10 years | 10 years | ||||
Advertising expense | $ 1,710 | $ 1,758 | $ 3,740 | $ 3,573 | $ 7,127 | $ 5,414 | $ 4,870 |
Number of reportable segments | segment | 1 | 1 | |||||
Accounts Receivable | Customer Concentration Risk | Medicare | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 23% | 20% | 32% | ||||
Accounts Receivable | Customer Concentration Risk | Medicaid | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 37% | 36% | 21% | ||||
Skilled Nursing Beds | Geographic Concentration Risk | CALIFORNIA | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as in percent) | 64% | 63% | |||||
Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 30 years | 30 years | 30 years | ||||
Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Renewal term (in years) | 3 years | 3 years | 3 years | ||||
Minimum | Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 5 years | 5 years | 5 years | ||||
Minimum | Leasehold improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 5 years | 5 years | 5 years | ||||
Minimum | Furniture, fixtures, and other | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 3 years | 3 years | 3 years | ||||
Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Renewal term (in years) | 20 years | 20 years | 30 years | ||||
Maximum | Buildings and improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 40 years | 40 years | 40 years | ||||
Maximum | Leasehold improvements | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 15 years | 15 years | 15 years | ||||
Maximum | Furniture, fixtures, and other | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Useful life (in years) | 15 years | 15 years | 15 years |
REVENUE AND ACCOUNTS RECEIVAB_7
REVENUE AND ACCOUNTS RECEIVABLE - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||||
Contract with customer, term | 1 year | 1 year | 1 year | ||||
Accrual for employee retention tax credit | $ 36,508 | $ 36,508 | $ 36,477 | $ 17,119 | |||
Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Concentration risk (as in percent) | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
Medicaid | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Concentration risk (as in percent) | 38.10% | 35.40% | 38.40% | 32.90% | 37.60% | 30.20% | 35.10% |
Medicare | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Concentration risk (as in percent) | 37.50% | 41.70% | 36.60% | 44.80% | 38.60% | 47.60% | 43.70% |
Managed Care, Private And Other | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Concentration risk (as in percent) | 24.40% | 22.90% | 25% | 22.30% | 24% | 22% | 21% |
REVENUE AND ACCOUNTS RECEIVAB_8
REVENUE AND ACCOUNTS RECEIVABLE - Summary of Patient and Resident Service Revenue by Primary Payors (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 | $ 3,110,114 | $ 2,399,155 | $ 1,135,909 |
Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 981,398 | $ 760,424 | $ 1,915,696 | $ 1,468,250 | $ 3,110,114 | $ 2,399,155 | $ 1,135,909 |
% of Revenue | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
Medicare | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 368,044 | $ 316,877 | $ 701,387 | $ 657,287 | $ 1,200,801 | $ 1,142,863 | $ 496,311 |
% of Revenue | 37.50% | 41.70% | 36.60% | 44.80% | 38.60% | 47.60% | 43.70% |
Medicaid | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 373,818 | $ 268,867 | $ 736,170 | $ 483,026 | $ 1,168,455 | $ 723,896 | $ 399,141 |
% of Revenue | 38.10% | 35.40% | 38.40% | 32.90% | 37.60% | 30.20% | 35.10% |
Managed care | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 191,273 | $ 138,440 | $ 375,553 | $ 261,877 | $ 586,850 | $ 416,089 | $ 159,541 |
% of Revenue | 19.50% | 18.20% | 19.60% | 17.80% | 18.90% | 17.30% | 14% |
Private and other | Revenue Benchmark | Customer Concentration Risk | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total patient and resident service revenue | $ 48,263 | $ 36,240 | $ 102,586 | $ 66,060 | $ 154,008 | $ 116,307 | $ 80,916 |
% of Revenue | 4.90% | 4.70% | 5.40% | 4.50% | 4.90% | 4.90% | 7.20% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Finance lease right-of-use assets | $ 40,536,000 | $ 40,536,000 | $ 34,960,000 | ||
Property and equipment, gross | 846,138,000 | 643,328,000 | 470,730,000 | ||
Less: accumulated depreciation and amortization | (82,234,000) | (65,800,000) | (40,165,000) | ||
Property and equipment, net | 763,904,000 | 577,528,000 | 430,565,000 | ||
Impairment charges | 0 | $ 0 | 0 | 0 | $ 0 |
Buildings and improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 533,808,000 | 372,554,000 | 265,520,000 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 68,298,000 | 58,958,000 | 47,238,000 | ||
Furniture, fixtures, and other | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 80,229,000 | 64,750,000 | 46,842,000 | ||
Construction in process | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | 53,589,000 | 50,937,000 | 39,813,000 | ||
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment | $ 69,678,000 | $ 55,593,000 | $ 36,357,000 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - Insurance Subsidiary Deposits - Fair Value, Inputs, Level 2 - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value | $ 35,476 | $ 0 |
Amortized cost | 35,000 | |
Net unrealized gains | $ 476 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Apr. 15, 2024 USD ($) | Dec. 31, 2023 USD ($) | Dec. 07, 2023 USD ($) Rate | Jun. 30, 2023 USD ($) | May 08, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Feb. 28, 2023 USD ($) | |
Debt Instrument [Line Items] | |||||||||||||
Lines of credit | $ 520,000,000 | $ 248,000,000 | $ 248,000,000 | $ 520,000,000 | $ 146,820,000 | ||||||||
Amortization and write-off of deferred financing fees | 1,551,000 | $ 4,279,000 | 6,068,000 | 1,205,000 | $ 902,000 | ||||||||
IPO | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Net proceeds from issuance of stock | $ 423,000,000 | ||||||||||||
Line of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Deferred financing costs | 15,099,000 | 15,099,000 | 15,099,000 | 15,099,000 | 4,218,000 | ||||||||
Amortization and write-off of deferred financing fees | 755,000 | $ 165,000 | 1,510,000 | 352,000 | 889,000 | ||||||||
Accumulated amortization, debt issuance costs | 193,000 | 1,703,000 | 1,703,000 | 193,000 | $ 2,811,000 | ||||||||
The Working Capital Loan | Line of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 17,500,000 | ||||||||||||
Interest rate | 9% | ||||||||||||
Proceeds from loan | $ 15,000,000 | ||||||||||||
Outstanding balance | 0 | 0 | 0 | 0 | |||||||||
The 2023 Credit Agreement | Line of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum borrowing capacity | 600,000,000 | 600,000,000 | 600,000,000 | 600,000,000 | |||||||||
Proceeds from loan | $ 460,000,000 | ||||||||||||
Deferred financing costs | 9,662,000 | 9,662,000 | |||||||||||
Repayments of long-term debt | 142,000,000 | $ 142,000,000 | |||||||||||
Debt to income ratio, maximum | Rate | 300% | ||||||||||||
Interest rent coverage ratio, minimum | Rate | 110% | ||||||||||||
Lines of credit | 520,000,000 | 248,000,000 | 248,000,000 | 520,000,000 | |||||||||
Remaining borrowing capacity | 80,000,000 | $ 340,350,000 | $ 340,350,000 | 80,000,000 | |||||||||
Repayments of long-term lines of credit | $ 370,000,000 | ||||||||||||
Portion used for repayments of long term line of credit | 0.875 | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Commitment fee percentage | 0.25% | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Commitment fee percentage | 0.45% | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Credit spread adjustment on variable rate | 0.0010 | 0.0010 | |||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on base rate | 2.25% | 2.50% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Secured Overnight Financing Rate (SOFR) | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on base rate | 3.25% | 3.50% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Base Rate | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on base rate | 1.25% | 1.50% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Base Rate | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Spread on base rate | 2.25% | 2.50% | |||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 600,000,000 | $ 150,000,000 | 150,000,000 | 150,000,000 | |||||||||
Proceeds from loan | $ 75,000,000 | $ 75,000,000 | |||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Commitment fee percentage | 0.30% | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Revolving Credit Facility | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Commitment fee percentage | 0.50% | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Letter of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum borrowing capacity | 50,000,000 | $ 30,000,000 | 30,000,000 | 30,000,000 | |||||||||
The 2023 Credit Agreement | Line of Credit | Swingline Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 20,000,000 | 20,000,000 | 20,000,000 | 20,000,000 | |||||||||
The 2023 Credit Agreement | Line of Credit | Secured Debt | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Proceeds from loan | 275,000,000 | ||||||||||||
Debt instrument, face amount | $ 275,000,000 | $ 275,000,000 | $ 275,000,000 | ||||||||||
The 2023 Credit Agreement | Line of Credit | Line of Credit and Long-term Debt | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Deferred financing costs, writeoff | 3,109,000 | ||||||||||||
The 2023 Credit Agreement | Line of Credit | Line of Credit and Long-term Debt, Amended | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Deferred financing costs, writeoff | $ 519,000 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) subsidiary loan | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) subsidiary loan | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) loan subsidiary | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||
Number of subsidiaries with HUD mortgage loans | subsidiary | 11 | 11 | 8 | ||||
Carrying value | $ 735,010,000 | ||||||
Current maturities of long term debt | $ 15,745,000 | $ 15,745,000 | 16,822,000 | $ 61,363,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | 227,107,000 | 227,107,000 | 195,708,000 | 291,521,000 | |||
Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value of loans secured by real property | 235,222,000 | 235,222,000 | 438,645,000 | 323,439,000 | |||
Deferred financing costs | 2,745,000 | 2,745,000 | 2,611,000 | 4,734,000 | |||
Interest expense, debt | 21,000 | $ 390,000 | 41,000 | $ 818,000 | 1,551,000 | 978,000 | $ 462,000 |
Accumulated amortization, debt issuance costs | 172,000 | 172,000 | 131,000 | 1,386,000 | |||
Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing costs | 15,099,000 | 15,099,000 | 15,099,000 | 4,218,000 | |||
Accumulated amortization, debt issuance costs | 1,703,000 | 1,703,000 | 193,000 | 2,811,000 | |||
HUD-insured mortgage loans | Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 34,685,000 | 34,685,000 | 88,809,000 | 7,027,000 | |||
Carrying value | 199,404,000 | 199,404,000 | 166,181,000 | 79,031,000 | |||
Current maturities of long term debt | 3,339,000 | 3,339,000 | 2,346,000 | 1,509,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | $ 196,058,000 | $ 196,058,000 | $ 163,835,000 | 77,522,000 | |||
HUD-insured mortgage loans | Mortgages | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 2.40% | 2.40% | 2.40% | ||||
Debt instrument, term | 24 years | 30 years | |||||
HUD-insured mortgage loans | Mortgages | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 6.30% | 6.30% | 6.30% | ||||
Debt instrument, term | 35 years | 35 years | |||||
Other mortgage loans and promissory notes | Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value | $ 46,021,000 | $ 46,021,000 | $ 48,829,000 | 277,201,000 | |||
Current maturities of long term debt | 12,407,000 | 12,407,000 | 14,476,000 | 59,854,000 | |||
Long-term debt, less current maturities, net of deferred financing fees | $ 33,614,000 | $ 33,614,000 | $ 34,353,000 | $ 217,347,000 | |||
Number of other mortgage loans and promissory notes | loan | 12 | 12 | 12 | ||||
Other mortgage loans and promissory notes | Mortgages | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 2% | 2% | 2% | ||||
Other mortgage loans and promissory notes | Mortgages | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 7.50% | 7.50% | 8% | ||||
Other mortgage loans and promissory notes | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of secured debt | 224,802,000 | ||||||
The 2023 Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing costs | $ 9,662,000 | ||||||
The 2023 Credit Agreement | Line of Credit | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 275,000,000 | $ 275,000,000 | |||||
Amended And Restated 2023 Credit Facility | Line of Credit | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value | $ 0 | $ 0 | $ 0 |
LONG-TERM DEBT - Summary of L_2
LONG-TERM DEBT - Summary of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | $ 735,010 | ||
Less: current maturities | $ (15,745) | (16,822) | $ (61,363) |
Less: deferred financing fees, net | (2,573) | (2,480) | (3,348) |
Total | 227,107 | 195,708 | 291,521 |
Mortgages | HUD-insured mortgage loans | |||
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | 199,404 | 166,181 | 79,031 |
Less: current maturities | (3,339) | (2,346) | (1,509) |
Total | 196,058 | 163,835 | 77,522 |
Mortgages | Other mortgage loans and promissory notes | |||
Debt Instrument, Redemption [Line Items] | |||
Long-Term Debt | 46,021 | 48,829 | 277,201 |
Less: current maturities | (12,407) | (14,476) | (59,854) |
Total | $ 33,614 | $ 34,353 | $ 217,347 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||||
Total income tax provision | $ (1,474) | $ 10,370 | $ 22,441 | $ 21,871 | $ 44,435 | $ 56,549 | $ 33,479 |
Income tax expense at statutory rate | 37% | 27.10% | 21% | 21% | 21% |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Thousands | Jun. 30, 2024 USD ($) facility | Dec. 31, 2023 USD ($) facility | Dec. 31, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |||
Number of lease to purchase contracts | facility | 13 | 11 | |
Finance lease, right-of-use asset, after accumulated amortization | $ 37,205 | $ 37,850 | $ 33,593 |
Finance lease, liability, current, statement of financial position [extensible enumeration] | Other accrued expenses | Other accrued expenses | |
Current portion of finance lease liabilities | $ 991 | $ 942 | 37,895 |
Finance lease, liability, noncurrent, statement of financial position [extensible enumeration] | Other liabilities | Other liabilities | |
Long-term portion of finance lease liabilities | $ 40,279 | $ 40,766 | $ 0 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 3 years | 3 years | |
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term (in years) | 20 years | 30 years |
LEASES - Summary of Component_2
LEASES - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating lease expense | |||||||
Rent - cost of services | $ 65,833 | $ 51,456 | $ 129,794 | $ 96,560 | $ 216,711 | $ 160,003 | $ 78,122 |
General and administrative expense | 607 | 353 | 1,417 | 708 | 941 | 542 | 587 |
Variable lease costs | 8,119 | 6,044 | 17,033 | 11,964 | 26,399 | 21,252 | 9,337 |
Total operating lease expense | 74,559 | 57,853 | 148,244 | 109,232 | 244,051 | 181,797 | 88,046 |
Finance lease expense | |||||||
Amortization of right-of-use assets | 322 | 313 | 645 | 620 | 1,264 | 1,230 | 191 |
Interest on lease liabilities | 736 | 198 | 1,476 | 330 | 1,113 | 546 | 87 |
Total financing lease expense | 1,058 | 511 | 2,121 | 950 | 2,377 | 1,776 | 278 |
Total lease expense | 75,617 | 58,364 | 150,365 | 110,182 | 246,428 | 183,573 | 88,324 |
Other variable costs | $ 497 | $ 620 | $ 1,035 | $ 1,578 | $ 2,745 | $ 964 | $ 242 |
LEASES - Summary of Supplemen_2
LEASES - Summary of Supplemental Cash Flow Related to Leases (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||||
Operating cash paid for amounts included in the measurement of operating lease liabilities | $ 116,026 | $ 88,175 | $ 194,925 | $ 143,683 | $ 86,717 |
Operating cash paid for amounts included in the measurement of finance lease liabilities | 1,476 | 330 | 1,113 | 546 | 87 |
Financing cash paid for amounts included in the measurement of finance lease liabilities | 438 | 1,065 | 1,708 | 2,088 | 300 |
Right-of-use asset obtained in exchange for lease liabilities: | |||||
Operating lease right-of-use assets obtained in exchange for lease liabilities | 259,201 | 557,412 | 805,866 | 99,843 | 916,823 |
Financing lease right-of-use assets obtained in exchange for lease liabilities | $ 0 | $ 2,028 | $ 5,521 | $ 0 | $ 34,960 |
LEASES - Summary of Lease Ter_2
LEASES - Summary of Lease Term and Discount Rates (Details) | Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Weighted-average remaining lease term (years) | ||||
Operating leases | 14 years | 13 years | 13 years | 14 years |
Financing leases | 2 years | 3 years | 1 year | 2 years |
Weighted-average discount rate | ||||
Operating leases | 5.80% | 5.70% | 5.10% | 5.10% |
Financing leases | 7.20% | 7.20% | 1.40% | 1.40% |
LEASES - Summary of Maturitie_2
LEASES - Summary of Maturities of Operating and Financing Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Finance Leases | ||
2024 (remainder) | $ 1,929 | |
2025 | 23,560 | $ 3,843 |
2026 | 2,241 | 23,560 |
2027 | 17,995 | 2,241 |
2028 | 782 | 17,995 |
2029 | 391 | 782 |
Thereafter | 0 | 390 |
Total lease payments | 46,898 | 48,811 |
Less: present value discount | (5,627) | (7,103) |
Present value of lease liabilities | 41,271 | 41,708 |
Operating Leases | ||
2024 (remainder) | 116,501 | |
2025 | 232,133 | 220,272 |
2026 | 231,843 | 220,997 |
2027 | 229,876 | 220,331 |
2028 | 231,979 | 217,976 |
2029 | 233,208 | 219,679 |
Thereafter | 1,934,120 | 1,900,357 |
Total lease payments | 3,209,660 | 2,999,612 |
Present value of lease liabilities | (1,027,797) | (928,177) |
Present value of lease liabilities | 2,181,863 | 2,071,435 |
Total | ||
2024 (remainder) | 118,430 | |
2025 | 255,693 | 224,115 |
2026 | 234,084 | 244,557 |
2027 | 247,871 | 222,572 |
2028 | 232,761 | 235,971 |
2029 | 233,599 | 220,461 |
Thereafter | 1,934,120 | 1,900,747 |
Total lease payments | 3,256,558 | 3,048,423 |
Less: present value discount | (1,033,424) | (935,280) |
Present value of lease liabilities | $ 2,223,134 | $ 2,113,143 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Mar. 24, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 01, 2021 | |
Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Professional and contract services, renewal term (in years) | 1 year | ||||||||
Related Party | Mr. Murray | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 10,000 | ||||||||
Common stock, price per share (in us dollars per share) | $ 0.001 | ||||||||
Related Party | Mr. Hancock | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued in transaction (in shares) | 10,000 | ||||||||
Common stock, price per share (in us dollars per share) | $ 0.001 | ||||||||
Annual Cash Consulting Fee | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | ||||||||
Annual Cash Consulting Fee | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | ||||||||
Consulting And Strategic Advisory Services | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 0 | $ 1,000 | 0 | $ 2,000 | |||||
Consulting And Strategic Advisory Services | Subsidiary of Helios Consulting | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 0 | $ 38 | $ 0 | $ 75 | |||||
Consulting And Strategic Advisory Services | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 4,000 | $ 2,333 | |||||||
Consulting And Strategic Advisory Services | Related Party | Subsidiary of Helios Consulting | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party transaction | $ 150 | $ 150 | $ 150 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Malpractice Insurance [Line Items] | ||||
Self insurance reserve | $ 183,836 | $ 162,976 | $ 138,127 | $ 70,491 |
Insurance receivable | 31,628 | 34,676 | 42,549 | |
Insurance receivable, current | 5,377 | 5,895 | 7,233 | |
Insurance receivable, noncurrent | 26,251 | 28,781 | 35,316 | |
Unasserted Claim | ||||
Malpractice Insurance [Line Items] | ||||
Self insurance reserve | 53,673 | 43,083 | $ 38,742 | |
Minimum | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | 250 | 250 | ||
Deductible | 750 | 750 | ||
Maximum | ||||
Malpractice Insurance [Line Items] | ||||
Coverage floor | 500 | 500 | ||
Deductible | 4,000 | 4,000 | ||
Annual coverage limit | $ 10,000 | $ 10,000 |
OPERATION EXPANSIONS (Details)
OPERATION EXPANSIONS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Aug. 01, 2024 USD ($) facility state bed | Mar. 31, 2024 USD ($) property facility bed | Jun. 30, 2024 USD ($) property bed facility | Jun. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Aug. 09, 2024 bed facility | |
Asset Acquisition [Line Items] | ||||||||
Payments to acquire buildings | $ | $ 174,650 | $ 52,365 | $ 127,024 | $ 55,374 | $ 79,676 | |||
Payments to acquire interest in joint venture | $ | $ 5,081 | $ 0 | $ 2,597 | $ 0 | $ 15,714 | |||
2024 Expansion | ||||||||
Asset Acquisition [Line Items] | ||||||||
Stand-alone facilities acquired | 10 | 12 | ||||||
Real estate purchases | property | 6 | 9 | ||||||
Real estate acquired in conjunction with operations | property | 3 | 4 | 2 | |||||
Real estate acquired previously operated by subsidiaries | property | 3 | 5 | 4 | |||||
Payments to acquire buildings | $ | $ 78,500 | $ 175,150 | ||||||
Number of skilled nursing beds | bed | 1,334 | 1,501 | ||||||
Number of assisted living beds | bed | 174 | 174 | ||||||
Other Asset Acquisitions | Subsequent event | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing beds | bed | 1,072 | |||||||
Number of assisted living beds | bed | 831 | |||||||
Number of skilled nursing facilities | 12 | |||||||
Number of assisted living facilities | 13 | |||||||
Number of states of acquired facilities | state | 6 | |||||||
Other Asset Acquisitions | Subsequent event | 2024 Expansion Joint Venture | ||||||||
Asset Acquisition [Line Items] | ||||||||
Payments to acquire interest in joint venture | $ | $ 10,000 | |||||||
Ownership percentage | 25.80% | |||||||
Other Asset Acquisitions | Subsequent event | Joint Venture | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 21 | |||||||
Other Asset Acquisitions | Subsequent event | Nonrelated Party | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 4 | |||||||
Other Asset Acquisitions | Subsequent event | WASHINGTON | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 19 | |||||||
Other Asset Acquisitions | Subsequent event | NEVADA | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 2 | |||||||
Other Asset Acquisitions | Subsequent event | ALASKA | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 1 | |||||||
Other Asset Acquisitions | Subsequent event | ARIZONA | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 1 | |||||||
Other Asset Acquisitions | Subsequent event | CALIFORNIA | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 1 | |||||||
Other Asset Acquisitions | Subsequent event | MONTANA | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing and assisted living facilities acquired | 1 | |||||||
Other Asset Acquisitions | Subsequent event | KANSAS | ||||||||
Asset Acquisition [Line Items] | ||||||||
Number of skilled nursing beds | bed | 378 | |||||||
Stand-alone facilities acquired through long term lease with a purchase option | 3 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) $ / shares in Units, $ in Thousands | Apr. 15, 2024 USD ($) $ / shares shares | Mar. 31, 2024 | Jun. 30, 2023 shares | Jun. 30, 2024 $ / shares shares | Apr. 01, 2024 $ / shares shares | Dec. 31, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares |
Class of Stock [Line Items] | |||||||
Common stock, shares outstanding (in shares) | 152,399,733 | 128,723,386 | 128,723,386 | ||||
Stock split number of shares issued (in shares) | 20,000 | ||||||
Subsequent changes to number of common shares | 6,436.1693 | 33.33 | |||||
Common stock, shares authorized (in shares) | 1,250,000,000 | 1,250,000,000 | 64,361,693,000 | 64,361,693,000 | |||
Common stock, par value (in us dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Preferred stock authorized (in shares) | 50,000,000 | ||||||
Preferred stock (in usd dollars per share) | $ / shares | $ 0.001 | ||||||
Common stock, shares issued (in shares) | 152,399,733 | 128,723,386 | 128,723,386 | ||||
Preferred stock issued (in shares) | 0 | ||||||
IPO | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issued in transaction (in shares) | 21,428,572 | ||||||
Common stock, price per share (in us dollars per share) | $ / shares | $ 21 | ||||||
Sale of stock, consideration received on transaction | $ | $ 450,000 | ||||||
Payments of stock issuance costs | $ | $ 35,843 | ||||||
Over-allotment option | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issued in transaction (in shares) | 3,214,284 | ||||||
Option period | 30 days | ||||||
PGI | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares outstanding (in shares) | 600 |
COMPUTATION OF NET (LOSS) INC_3
COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE - Summary of Reconciliation of the Numerator and Denominator Used in the Calculation of Basic Net (Loss) Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | |||||||||
Net (loss) income | $ (10,908) | $ 21,220 | $ 38,232 | $ 58,818 | $ 112,882 | $ 150,496 | $ 47,947 | ||
Less: net income attributable to noncontrolling interest | 2 | $ 2 | 2 | $ 1 | 4 | 3 | 8 | 0 | 0 |
Net (loss) income attributable to PACS Group, Inc. (basic) | (10,910) | 21,218 | 38,228 | 58,815 | $ 112,874 | $ 150,496 | $ 47,947 | ||
Net (loss) income attributable to PACS Group, Inc. (diluted) | $ (10,910) | $ 21,218 | $ 38,228 | $ 58,815 | |||||
Denominator: | |||||||||
Weighted average common shares outstanding, basic (in shares) | 149,463,655 | 128,723,386 | 139,093,520 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 | ||
Plus: effect of diluted shares (in shares) | 0 | 0 | 591,098 | 0 | |||||
Weighted average common shares outstanding, diluted (in shares) | 149,463,655 | 128,723,386 | 139,684,618 | 128,723,386 | 128,723,386 | 128,723,386 | 128,723,386 | ||
Earnings Per Share [Abstract] | |||||||||
Basic net (loss) income per common share (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 | ||
Diluted net (loss) income per common share (in us dollars per share) | $ (0.07) | $ 0.16 | $ 0.27 | $ 0.46 | $ 0.88 | $ 1.17 | $ 0.37 |
COMPUTATION OF NET (LOSS) INC_4
COMPUTATION OF NET (LOSS) INCOME PER COMMON SHARE - Additional Information (Details) | 3 Months Ended |
Jun. 30, 2024 shares | |
Earnings Per Share [Abstract] | |
Dilutive effect of restricted stock units (in shares) | 1,182,196 |
STOCK AWARDS - Narrative (Detai
STOCK AWARDS - Narrative (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Mar. 31, 2024 shares | Jun. 30, 2024 USD ($) $ / shares shares | Jun. 30, 2023 shares | |
Minimum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Offering price (in us dollars per share) | $ / shares | $ 21 | ||
Maximum | 2024 Incentive Award Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Offering price (in us dollars per share) | $ / shares | $ 24.85 | ||
Employee Stock | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Initial percentage of outstanding stock available for issuance | 0.1025 | ||
Percentage of outstanding stock maximum | 1% | ||
Shares issued in period (in shares) | 0 | ||
Employee Stock | 2024 Incentive Award Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares available for grant (in shares) | 15,390,579 | ||
Restricted Stock Units (RSUs) | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares available for grant (in shares) | 15,409,470 | 0 | |
Vesting term | 1 year | ||
Share-based payment arrangement, nonvested award, excluding option, cost not yet recognized, amount | $ | $ 232,736 | ||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 4 years 9 months 18 days | ||
Restricted Stock Units (RSUs) | 2024 Incentive Award Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares available for grant (in shares) | 18,891 | ||
Restricted Stock Units (RSUs) | Tranche One | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Award vesting rights, percentage | 25% | ||
Restricted Stock Units (RSUs) | Tranche Two Through Six | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Vesting term | 5 years |
STOCK AWARDS - Summary of Non-v
STOCK AWARDS - Summary of Non-vested RSU Activity (Details) - Restricted Stock Units (RSUs) - 2024 Incentive Award Plan | 6 Months Ended |
Jun. 30, 2024 $ / shares shares | |
Non-Vested Restricted Stock Unit Awards | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 15,409,470 |
Vested (in shares) | shares | (3,847,652) |
Forfeited (in shares) | shares | 0 |
Ending balance (in shares) | shares | 11,561,818 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in us dollars per share) | $ / shares | $ 0 |
Granted (in us dollars per share) | $ / shares | 21 |
Vested (in us dollars per share) | $ / shares | 21 |
Forfeited (in us dollars per share) | $ / shares | 0 |
Ending balance (in us dollars per share) | $ / shares | $ 21.01 |
STOCK AWARDS - Summary of Stock
STOCK AWARDS - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 90,936 | $ 0 | $ 90,936 | $ 0 |
Stock-based compensation expense related to restricted stock unit awards | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 90,936 | $ 0 | $ 90,936 | $ 0 |