PACS Group, Inc.

Previous wording

We are a leading post-acute healthcare company primarily focused on delivering high-quality skilled nursing care through a portfolio of independently operated facilities. Founded in 2013, we are one of the largest skilled nursing providers in the United States based on number of facilities. We also provide senior care, assisted living, and independent living options in some of our communities. As of March 31, 2026, our portfolio consisted of 323 post-acute care, assisted living, and independent living facilities across 17 states serving over 31,900 patients daily. We believe our significant historical growth has been primarily driven by our expertise in acquiring underperforming long-term custodial care skilled nursing facilities and transforming them into higher acuity, high value-add short-term transitional care skilled nursing facilities. We believe our success is driven in significant part by our locally led, centrally supported operating model, through which we empower local leaders at each facility to operate their facility autonomously and deliver excellence in clinical quality and a superior experience for our patients. We provide our independently operated facilities with a comprehensive suite of technology, support, and back-office services that allow local leadership teams to focus more of their time and effort on providing quality care to patients. We believe our operating model delivers value to all of our healthcare stakeholders, including patients and families, referring providers, payors, and administrators and clinicians.

Current wording

We are a leading post-acute healthcare company primarily focused on delivering high-quality skilled nursing care through a portfolio of independently operated facilities. Founded in 2013, we are one of the largest skilled nursing providers in the United States based on number of facilities. We also provide senior care, assisted living, and independent living options in some of our communities. As of June 30, 2026, our portfolio consisted of 324 post-acute care, assisted living, and independent living facilities across 17 states serving 31,900 patients daily. We believe our significant historical growth has been primarily driven by our expertise in acquiring underperforming long-term custodial care skilled nursing facilities and transforming them into higher acuity, high value-add short-term transitional care skilled nursing facilities. We believe our success is driven in significant part by our locally led, centrally supported operating model, through which we empower local leaders at each facility to operate their facility autonomously and deliver excellence in clinical quality and a superior experience for our patients. We provide our independently operated facilities with a comprehensive suite of technology, support, and back-office services that allow local leadership teams to focus more of their time and effort on providing quality care to patients. We believe our operating model delivers value to all of our healthcare stakeholders, including patients and families, referring providers, payors, and administrators and clinicians.

Previous wording

We aim to create value by identifying and acquiring underperforming custodial care facilities and converting them into higher-value short-term transitional care facilities by investing in clinical teams and processes and upgrading technology, equipment, training, staffing, aesthetics, and other aspects of the business. We believe the resources and guidance offered by PACS Services is key to rapid integration of new facilities and provides our local leadership teams with an effective technology infrastructure, support tools, and regional support teams that allow local leadership to focus on operational improvements. Our facilities generally undergo an up to three-year post-acquisition transition period. During this period, we seek to implement best practices designed to realize and sustain the facility’s full potential. These practices often result in significant improvements to clinical quality and other operational metrics, including skilled mix, occupancy rates and payor contracting. We believe the results of our acquisition strategy are demonstrated by our high average QM Star rating and occupancy rate for Mature facilities, which we define as facilities purchased greater than 36 months prior to the measurement date, as compared to the same metrics for our New facilities, which we define as facilities purchased less than 18 months prior to the measurement date. As of March 31, 2026, our average QM Star rating and occupancy rate for Mature facilities were 4.4 and 95%, respectively, compared to 3.6 and 83%, respectively for New facilities as of the same date.

Current wording

We aim to create value by identifying and acquiring underperforming and moderately-performing custodial care facilities and converting them into higher-value short-term transitional care facilities by investing in clinical teams and processes and upgrading technology, equipment, training, staffing, aesthetics, and other aspects of the business. We believe the resources and guidance offered by PACS Services is key to rapid integration of new facilities and provides our local leadership teams with an effective technology infrastructure, support tools, and regional support teams that allow local leadership to focus on operational improvements. Our facilities generally undergo an up to three-year post-acquisition transition period. During this period, we seek to implement best practices designed to realize and sustain the facility’s full potential. These practices often result in significant improvements to clinical quality and other operational metrics, including skilled mix, occupancy rates and payor contracting. We believe the results of our acquisition strategy are demonstrated by our high average QM Star rating and occupancy rate for Mature facilities, which we define as facilities purchased greater than 36 months prior to the measurement date, as compared to the same metrics for our New facilities, which we define as facilities purchased less than 18 months prior to the measurement date. As of June 30, 2026, our average QM Star rating and occupancy rate for Mature facilities were 4.5 and 94%, respectively, compared to 4.0 and 79%, respectively for New facilities as of the same date.

Previous wording

Large, Fragmented Industry Comprised of Mostly Small and Independent Operators. According to the National Center for Health Statistics (NCHS) 2020 National Post-acute and Long-term Care Study, the SNF industry in the United States encompasses approximately 15,000 facilities and serves approximately 1.3 million patients annually. The industry is highly fragmented, with the top 10 operators, each having greater than approximately 100 facilities, representing approximately 11% of the total number of SNFs in the United States, according to CMS data as of September 2024, and approximately 5,000 smaller and independent operators of less than 100 facilities making up the remainder. According to such data, approximately 73% and 27% of SNFs are located in urban and rural areas, respectively. In addition, approximately 73%, 21%, and 6% of SNFs are operated as for-profit, non-profit, and by the government, respectively, according to such data. We believe this fragmented landscape creates opportunities for larger providers with greater scale to serve patients better and meet regulatory requirements nation-wide by effectively addressing staffing, quality standards, and billing processes. Moreover, many small and independent operators face pressure due to billing requirements, regulations, competition on quality of care and facilities, staffing shortages and competition, and the cessation of COVID-related provider relief funding, which has led them to pursue sales of their facilities or businesses. This provides additional opportunity for well-managed, high-quality operators to grow through acquisitions.

Current wording

Large, Fragmented Industry Comprised of Mostly Small and Independent Operators. According to the National Center for Health Statistics (NCHS) 2020 National Post-acute and Long-term Care Study, the SNF industry in the United States encompasses approximately 15,000 facilities and serves approximately 1.3 million patients annually. The industry is highly fragmented, with the top 10 operators, each having greater than approximately 100 facilities, representing approximately 12% of the total number of SNFs in the United States, according to CMS data as of September 2024, and approximately 5,000 smaller and independent operators of less than 100 facilities making up the remainder. According to such data, approximately 73% and 27% of SNFs are located in urban and rural areas, respectively. In addition, approximately 74%, 20%, and 6% of SNFs are operated as for-profit, non-profit, and by the government, respectively, according to such data. We believe this fragmented landscape creates opportunities for larger providers with greater scale to serve patients better and meet regulatory requirements nation-wide by effectively addressing staffing, quality standards, and billing processes. Moreover, many small and independent operators face pressure due to billing requirements, regulations, competition on quality of care and facilities, staffing shortages and competition, and the cessation of COVID-related provider relief funding, which has led them to pursue sales of their facilities or businesses. This provides additional opportunity for well-managed, high-quality operators to grow through acquisitions.

Previous wording

During the three months ended March 31, 2026, we expanded our operations with the addition of three assisted living and independent living facilities, two of which were acquired in conjunction with the real estate for the properties and one of which we acquired through a long-term lease. These new operations added a total of 234 assisted living beds to be operated by our affiliated operating subsidiaries. We also made one additional real estate purchase. Regarding this property, the Company previously operated the facility and has now acquired the real estate associated with the operations. Additionally, during the same period the Company died of one facility including 110 skilled nursing beds.

Current wording

During the six months ended June 30, 2026, we expanded our operations with the addition of four assisted living and independent living facilities, three of which were acquired in conjunction with the real estate for the properties and one of which we acquired through a long-term lease. These new operations added a total of 316 assisted living beds to be operated by our affiliated operating subsidiaries. We also made four additional real estate purchases. Regarding these properties, the Company previously operated the facilities and has now acquired the real estate associated with the operations. Additionally, during the same period the Company divested of one facility including 110 skilled nursing beds.

Previous wording

Subsequent to March 31, 2026, we expanded our operations in one existing state with the addition of one assisted living and independent living facility which was acquired in conjunction with the real estate for the property. The subsequent acquisition added a total of 82 assisted living beds.

Current wording

Subsequent to June 30, 2026, we expanded our operations in one existing state through the addition of 20 skilled nursing facilities, which were acquired through long-term leases. The subsequent acquisition added a total of 2,312 skilled nursing beds. Additionally, during the same period we expanded our portfolio of owned properties by acquiring four properties for which we had previously operated the facilities.

Previous wording

•Number of facilities — The total number of skilled nursing facilities that we operate. This figure excludes 33 and 27 assisted living and independent living facilities for the three months ended March 31, 2026 and 2025, respectively.

Current wording

•Number of facilities — The total number of skilled nursing facilities that we operate. This figure excludes 34 and 29 assisted living and independent living facilities for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

•Number of operational beds — The total number of operational beds associated with the skilled nursing facilities that we own.

Current wording

•Number of operational beds — The total number of operational beds associated with the skilled nursing facilities that we operate.

Previous wording

The following tables present the above key skilled services metrics by category for all skilled nursing facilities, and for the skilled nursing facilities in each of the three facility cohorts, as of and for the three months ended March 31, 2026 and 2025:

Current wording

The following tables present the above key skilled services metrics by category for the skilled nursing facilities in each of the three facility cohorts, and for all skilled nursing facilities, as of and for the three and six months ended June 30, 2026 and 2025:

Previous wording

The following tables present additional detail regarding our skilled mix, including our percentage of nursing patient days and revenue by payor source for all facilities, and for each of the three facility cohorts, for the three months ended March 31, 2026 and 2025:

Current wording

The following tables present additional detail regarding our skilled mix, including our percentage of revenue and nursing patient days by payor source for the skilled nursing facilities in each of the three facility cohorts, and for all skilled nursing facilities, for the three and six months ended June 30, 2026 and 2025:

Previous wording

The following table presents average daily rates by payor source, excluding services that are not covered by the daily rate, for the three months ended March 31, 2026 and 2025:

Current wording

The following tables present average daily rates by payor source, excluding services that are not covered by the daily rate, for the three and six months ended June 30, 2026 and 2025:

Previous wording

The following table presents the above key skilled services metrics by category for all skilled nursing facilities in operation on January 1, 2025, excluding divestitures since that time, as of and for the three months ended March 31, 2026 and 2025:

Current wording

The following tables present the above key skilled services metrics by category for all skilled nursing facilities in operation on January 1, 2025, excluding divestitures since that time, as of and for the three and six months ended June 30, 2026 and 2025:

Previous wording

In addition to our results provided throughout that are determined in accordance with GAAP, we also present the following non-GAAP financial measures: EBITDA, Adjusted EBITDA and Adjusted EBITDAR (collectively, Non-GAAP Financial Measures). EBITDA and Adjusted EBITDA are performance measures. Adjusted EBITDAR is a valuation measure. These Non-GAAP Financial Measures have no standardized meaning defined by GAAP, and therefore have limitations as analytical tools, and they should not be considered in isolation, or as a substitute for analysis of our results as reported in accordance with GAAP. You should review the reconciliation of net income to the Non-GAAP Financial Measures in the table below, together with our condensed consolidated financial statements and the related notes in their entirety, and should not rely on any single financial measure. Additionally, other companies may define these or similar

Current wording

In addition to our results provided throughout that are determined in accordance with GAAP, we also present the following non-GAAP financial measures: Adjusted Net Income, Adjusted Earnings Per Share, EBITDA, Adjusted EBITDA, and Adjusted EBITDAR (collectively, Non-GAAP Financial Measures). Adjusted Net Income, Adjusted Earnings Per Share, EBITDA, and Adjusted EBITDA are performance measures. Adjusted EBITDAR is a valuation measure. These Non-GAAP Financial Measures have no standardized meaning defined by GAAP, and therefore have limitations as analytical tools, and they should not be considered in isolation, or as a substitute for analysis of our results as reported in accordance with GAAP. You should review the reconciliation of net income to the Non-GAAP Financial Measures in the table below, together with our condensed consolidated financial statements and the related notes in their entirety, and should not rely on any single financial measure. Additionally, other companies may define these or similar Non-GAAP Financial Measures with the same or similar names differently, and because these Non-GAAP Financial Measures are not standardized, it may not be possible to compare these financial measures to those of other companies.

Previous wording

We use EBITDA and Adjusted EBITDA to facilitate internal comparisons of our historical operating performance on a more consistent basis, as well as for business planning and forecasting purposes. In addition, we believe the presentation of EBITDA and Adjusted EBITDA is useful to investors, analysts and other interested parties in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance.

Current wording

We use Adjusted Net Income, Adjusted Earnings Per Share, EBITDA, and Adjusted EBITDA to facilitate internal comparisons of our historical operating performance on a more consistent basis, as well as for business planning and forecasting purposes. In addition, we believe presentation of these measures is useful to investors, analysts and other interested parties in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance.

Previous wording

EBITDA –We calculate EBITDA as net income, adjusted for net losses attributable to noncontrolling interest, before: interest expense; provision for income taxes; and depreciation and amortization.

Current wording

EBITDA –We calculate EBITDA as net income, adjusted for net (loss) income attributable to noncontrolling interest, before: interest expense; provision for income taxes; and depreciation and amortization.

Previous wording

We use Adjusted EBITDAR as a measure to determine the value of prospective acquisitions and to assess the enterprise value of our business without regard to differences in capital structures and leasing arrangements. In addition, we believe that Adjusted EBITDAR is also a commonly used measure by investors, analysts and other interested parties to compare the enterprise value of different companies in the healthcare industry without regard to differences in capital structures and leasing arrangements, particularly for companies with operating and finance leases. For example, finance lease expenditures are recorded in depreciation and interest and are therefore removed from Adjusted EBITDA, whereas operating lease expenditures are recorded in rent expense and are therefore retained in Adjusted EBITDA. Adjusted EBITDAR is a financial valuation measure that is not specified in GAAP, and is not displayed as a performance measure as it excludes rent expense, which is a normal and recurring cash operating expense, and is therefore presented only for the current period. While we believe that Adjusted EBITDAR provides useful insight regarding our underlying operations, excluding the impact of our operating leases, we must still incur cash operating expenses related to our operating leases and rent and such expenses are necessary to operate our leased operations. As a result, Adjusted EBITDAR may understate the extent of our cash operating expenses for the respective period relative to our actual cash needs to operate our leased operations and business.

Current wording

We use Adjusted EBITDAR as a measure to determine the value of prospective acquisitions and to assess the enterprise value of our business without regard to differences in capital structures and leasing arrangements. In addition, we believe that Adjusted EBITDAR is also a commonly used measure by investors, analysts and other interested parties to compare the enterprise value of different companies in the healthcare industry without regard to differences in capital structures and leasing arrangements, particularly for companies with operating and finance leases. For example, finance lease expenditures are recorded in depreciation and interest and are therefore removed from Adjusted EBITDA, whereas operating lease expenditures are recorded in rent expense and are therefore retained in Adjusted EBITDA. Adjusted EBITDAR is a financial valuation measure that is not specified in GAAP, and is not displayed as a performance measure as it excludes rent expense, which is a normal and recurring cash operating expense, and is therefore presented only for the current period. While we believe that Adjusted EBITDAR provides useful insight regarding our underlying operations, excluding the impact of our operating leases, we must still incur cash operating expenses related to our operating leases and rent and such expenses are necessary to operate our leased operations. As a result, Adjusted EBITDAR may understate the extent of our cash operating expenses for the respective period relative to our cash needs to operate our leased operations and business.

Previous wording

Other revenue primarily consists of revenue associated with arrangements in which we are a lessor of certain facilities or office space. Other revenue typically represents an immaterial portion of our total revenue and we expect this to continue for the foreseeable future.

Current wording

Other revenue primarily consists of revenue associated with arrangements in which we are a lessor of certain facilities or office space. Other revenue typically represents an immaterial portion of our total revenue.

Previous wording

Rent - cost of services consists of base rent amounts payable under lease agreements to third-party real estate owners. Our operating subsidiaries lease and operate, but do not own the underlying real estate of, 267 facilities and these amounts do not include taxes, insurance, impounds, capital reserves or other charges payable under the applicable lease agreements.

Current wording

Rent - cost of services consists of base rent amounts payable under lease agreements to third-party real estate owners. Our operating subsidiaries lease and operate, but do not own the underlying real estate of, 264 facilities and these amounts do not include taxes, insurance, impounds, capital reserves or other charges payable under the applicable lease agreements.

Previous wording

Patient and resident service revenue - Patient and resident service revenue increased by $143.0 million to $1.4 billion for the three months ended March 31, 2026, an 11.2% increase compared to the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, skilled nursing services revenue represented more than 97% of patient and resident service revenue.

Current wording

Patient and resident service revenue - Patient and resident service revenue increased by $118.6 million to $1.4 billion for the three months ended June 30, 2026, a 9.1% increase compared to the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, skilled nursing services revenue represented more than 96% of patient and resident service revenue.

Previous wording

Our skilled nursing services revenue is impacted by fluctuations in our payor source mix. Additionally, our average Medicare daily rates increased by 1.3% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Current wording

Our skilled nursing services revenue is impacted by fluctuations in our payor source mix. Additionally, our average Medicare daily rates increased by 1.0% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

Previous wording

Our average Medicaid rates increased 4.1% due to state reimbursement increases and our participation in supplemental Medicaid payment programs and quality improvement programs in various states. Medicaid rates exclude the amount of state relief revenue we recorded.

Current wording

Our average Medicaid rates increased 3.1% due to state reimbursement increases and our participation in supplemental Medicaid payment programs and quality improvement programs in various states. Medicaid rates exclude the amount of state relief revenue we recorded.

Previous wording

Other revenue - Other revenue increased by $0.4 million for the three months ended March 31, 2026 compared to the same period in the prior year due to a change in lease income over these periods.

Current wording

Other revenue - Other revenue increased by $0.1 million for the three months ended June 30, 2026 compared to the same period in the prior year due to a change in lease income over these periods.

Previous wording

Cost of services increased by $50.7 million to $1.1 billion, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The 5.0% increase was primarily driven by an increase of $39.5 million, or 6.2%, in salaries and wages. Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased 2.5% from 315 as of March 31, 2025, to 323 as of March 31, 2026. Of the salaries and wages increase, those attributable to New facilities purchased after March 31, 2025 accounted for $13.4 million, or 34.0% of the increase in salaries and wages. Headcount and operational changes attributable to Ramping and Mature facilities accounted for the remaining change in salaries and wages. Aside from labor costs, the increase in cost of services was due to increases of $3.9 million in contracted services; $3.4 million in nursing and dietary expenses; and $2.0 million in administrative expenses for facilities. The remaining change in cost of services was spread out across various expense types.

Current wording

Cost of services increased by $68.7 million to $1.1 billion, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The 6.7% increase was primarily driven by an increase of $25.5 million, or 4.0%, in salaries and wages. Our total number of post-acute care facilities, inclusive of skilled nursing facilities and assisted living facilities, increased 2.5% from 316 as of June 30, 2025, to 324 as of June 30, 2026. Of the salaries and wages increase, those attributable to New facilities purchased after June 30, 2025 accounted for $13.1 million, or 51.4% of the increase in salaries and wages. Headcount and operational changes attributable to other New, Ramping, and Mature facilities accounted for the remaining change in salaries and wages. Aside from labor costs, the increase in cost of services was also due to increases of $31.6 million in administrative expenses for facilities, primarily consisting of an increase in liability insurance of $26.2 million; $6.0 million in nursing and dietary expenses; and $3.5 million in contracted services. The remaining change in cost of services was spread out across various expense types.

Previous wording

Rent - cost of services increased to $95.5 million for the three months ended March 31, 2026, compared to $93.8 million for the three months ended March 31, 2025. The increase was primarily attributable to the addition of new facilities with operating leases since March 31, 2025, as well as to annual escalators on existing facilities' rent.

Current wording

Rent - cost of services increased slightlyto $94.7 million for the three months ended June 30, 2026, compared to $94.3 million for the three months ended June 30, 2025. The increase was primarily attributable to the addition of new facilities with operating leases since June 30, 2025, as well as to annual escalators on existing facilities' rent. This increase was offset by a reduction in rent due to the acquisition of the real estate for facilities which we previously operated, over that same time.

Previous wording

General and administrative expense increased by $13.6 million, to $112.3 million for the three months ended March 31, 2026, compared to $98.7 million for the three months ended March 31, 2025. This increase was primarily due to an increase in salaries and wages of $11.4 million due to growth in operations and an increase in stock- based compensation expense recognized during the quarter which accounted for $8.1 million of the increase. The increase in general and administrative expense was partially offset by a decrease in professional fees, including a decrease of $11.0 million in legal expenses associated with the Audit Committee’s independent investigation during the year ended December 31, 2025 and with ongoing government investigations. The remaining change in general and administrative expense was spread out over various expense types.

Current wording

General and administrative expense increased by $14.0 million, to $114.3 million for the three months ended June 30, 2026, compared to $100.3 million for the three months ended June 30, 2025. This increase was primarily due to an increase in salaries and wages of $8.7 million due to growth in operations, and to an increase in stock-based compensation expense recognized during the quarter which accounted for an additional $12.2 million increase. These increases within general and administrative expense were partially offset by a decrease in professional fees, including a decrease of $15.9 million in legal expenses associated with the Audit Committee’s independent investigation during the year ended December 31, 2025, and with ongoing government investigations. The remaining change in general and administrative expense was spread out over various expense types.

Previous wording

Depreciation and amortization increased by $5.4 million to $18.1 million, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase is directly attributable to new real estate obtained through acquisitions.

Current wording

Depreciation and amortization increased by $6.9 million to $20.1 million, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This increase is directly attributable to our acquisitions since June 30, 2025, particularly to new real estate obtained through acquisitions.

Previous wording

Provision for income taxes totaled $33.1 million for the three months ended March 31, 2026, representing an effective tax rate of 29.1%, compared to a provision for income taxes of $14.4 million and an effective tax rate of 33.6% for the three months ended March 31, 2025. The change in effective tax rate in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to the change in forecasted pre-tax book income and the impact of excess tax benefits from stock-based compensation. See Note 11 “Income Taxes”, in our condensed consolidated financial statements for more information.

Current wording

Provision for income taxes totaled $29.5 million for the three months ended June 30, 2026, representing an effective tax rate of 27.3%, compared to a provision for income taxes of $27.6 million and an effective tax rate of 35.2% for the three months ended June 30, 2025. The change in effective tax rate in the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to the change in forecasted pre-tax book income and the impact of excess tax benefits from stock-based compensation. See Note 11 “Income Taxes”, in our condensed consolidated financial statements for more information.

Previous wording

Skilled nursing services revenue increased by 9.9%, or $124.4 million, to $1.4 billion for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This increase is inclusive of revenue of $23.3 million from payments received under California’s Workforce & Quality Incentive Program (resulting in a net impact to Adjusted EBITDA of $16.3 million), recognized during the three months ended March 31, 2026. The change to skilled nursing services revenue was driven by an increase in patient days of 91,705, or 3.5%, related to an increase in operational bed count and an increase in overall occupancy. Same-store skilled nursing services revenue grew by $99.4 million, or 8.0%, while same-store occupancy grew from 89.6% during the three months ended March 31, 2025 to 90.9% during the three months ended March 31, 2026. Additionally, on a same-store basis, skilled mix by patient days grew 50 bps to 30.2%.

Current wording

Skilled nursing services revenue increased by 8.8%, or $222.5 million, to $2.8 billion for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This increase is inclusive of revenue of $23.3 million from payments received under California’s Workforce & Quality Incentive Program (resulting in a net impact to Adjusted EBITDA of $16.3 million), recognized during the six months ended June 30, 2026. The change to skilled nursing services revenue was driven by an increase in patient days of 192,244, or 3.7%, related to an increase in operational bed count and an increase in overall occupancy. Same-store skilled nursing services revenue grew by $173.5 million, or 6.9%, while same-store occupancy grew from 89.3% during the six months ended June 30, 2025 to 90.8% during the six months ended June 30, 2026. Additionally, on a same-store basis, skilled mix by patient days grew 50 bps to 29.9%.

Previous wording

The remaining increase in patient and resident service revenue of $18.6 million was attributable to revenue from our assisted living and independent living operations, which grew primarily as a result of the addition of six assisted living and independent living facilities since March 31, 2025, including three facilities added during the three months ended March 31, 2026.

Current wording

The remaining increase in patient and resident service revenue of $39.2 million was attributable to supplemental revenue and revenue from our assisted living and independent living operations, which growth also included the addition of five assisted living and independent living facilities since June 30, 2025, including four facilities added during the six months ended June 30, 2026.

Previous wording

Total other expense, net was $6.3 million for the three months ended March 31, 2026, an increase of $0.9 million compared to $5.4 million for the three months ended March 31, 2025. Total other expense, net consists of interest expense, which decreased by $0.5 million, to $6.4 million for the three months ended March 31, 2026. Additionally, other income, net decreased $1.4 million from $1.5 million for the three months ended March 31, 2025 to $0.1 million for the three months ended March 31, 2026, driven primarily by a decrease in unrealized gains on our available for sale securities, partially offset by an increase in unrealized gains on our investments in partnerships.

Current wording

Total other expense, net was $9.8 million for the six months ended June 30, 2026, an increase of $2.5 million compared to $7.3 million for the six months ended June 30, 2025. Total other expense, net consists of interest expense, which increased by $1.2 million, to $12.5 million for the six months ended June 30, 2026 including increased interest expense on finance leases. Additionally, other income, net decreased $1.3 million from $4.0 million for the six months ended June 30, 2025 to $2.7 million for the six months ended June 30, 2026, driven primarily by a decrease from unrealized income to an unrealized loss in equity securities, offset by an increase in unrealized income on our investments in partnerships.

Previous wording

We are a holding company with no significant direct operating assets, employees or revenues. Our operating subsidiaries are operated by separate, independent entities, each of which has its own management, employees and assets. In addition, through a separate wholly-owned subsidiary, we provide centralized accounting, payroll, human resources, information technology, legal, risk management and other consulting and centralized services to the other operating subsidiaries through contractual relationships with those subsidiaries. We also have a wholly-owned captive insurance subsidiary that provides some claims-made coverage to our operating subsidiaries for professional liability and general liability insurance.

Current wording

We are a holding company with no significant direct operating assets, employees or revenues. Our operating subsidiaries are operated by separate, independent entities, each of which has its own management, employees and assets. In addition, through a separate wholly-owned subsidiary, we provide centralized accounting, payroll, human resources, information technology, legal, risk management and other consulting and centralized services to the other operating subsidiaries through contractual relationships with those subsidiaries. We also have two wholly-owned captive insurance subsidiaries that provide some claims-made coverage to our operating subsidiaries for professional liability and general liability insurance. All expenses associated with our holding company are included in the condensed consolidated financial statements and results of operations.

Previous wording

Our liquidity has generally been derived from our cash flows from operations, mortgage loans (including both Housing and Urban Development (HUD)-insured and non-HUD mortgage loans), credit facilities maintained with commercial banks, and equity offerings.

Current wording

Our liquidity has generally been derived from our cash flows from operations, credit facilities maintained with commercial banks, equity offerings, and mortgage loans (including both Housing and Urban Development (HUD)-insured and non-HUD mortgage loans).

Previous wording

As of March 31, 2026, we had cash and cash equivalents (which include short-term investments with original maturities of three months or less at the time of purchase) of $248.0 million. The total principal amount outstanding under our Amended and Restated Credit Facility as of March 31, 2026 was $45.0 million. In addition, we had outstanding letters of credit of $7.9 million as of March 31, 2026.

Current wording

As of June 30, 2026, we had cash and cash equivalents (which include short-term investments with original maturities of three months or less at the time of purchase) of $164.5 million. Following net payments on the line of credit of $45.0 million during the quarter ended June 30, 2026, we had no debt outstanding under our Amended and Restated Credit Facility as of June 30, 2026. In addition, we had outstanding letters of credit of $7.9 million as of June 30, 2026.

Previous wording

The terms of the Amended and Restated Credit Facility permit optional prepayments from time to time without premium or penalty. We expect to continue to use the Amended and Restated Credit Facility as our single line of credit and to fund the potential acquisition of additional property and operations, as well as for working capital and for general corporate purposes. Cash paid to fund real estate acquisitions was $86.5 million for the three months ended March 31, 2026, compared to $0 for the three months ended March 31, 2025. Total cash paid for capital expenditures for property and equipment were $21.8 million and $17.7 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

The terms of the Amended and Restated Credit Facility permit optional prepayments from time to time without premium or penalty. We expect to continue to use the Amended and Restated Credit Facility as our single line of credit and to fund the potential acquisition of additional property and operations, as well as for working capital and for general corporate purposes. Cash paid to fund real estate acquisitions was $190.8 million for the six months ended June 30, 2026, compared to $0.2 million for the six months ended June 30, 2025. Total cash paid for capital expenditures for property and equipment were $48.4 million and $36.3 million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 of $236.3 million increased by $86.1 million as compared with the same period in 2025. The increase was driven by an increase in operational performance across our existing portfolio of facilities as well as the incremental operational performance across our net eight facilities acquired since March 31, 2025. This increase was further driven by an increase in cash flows from the change in operating assets and liabilities of $13.7 million due primarily to the timing of accounts receivable collections as well as the timing of payables and other accrued liabilities. The impact to collections is driven by growth in operating facilities period-over-period, supported by a decrease in days sales outstanding of 5.4, from 53.9 as of March 31, 2025 to 48.4 as of March 31, 2026. This change in days sales outstanding is due to operational efficiencies as facilities continue to mature following facility ownership transition.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 of $371.8 million increased by $169.0 million as compared with the same period in 2025. The increase was driven by an increase in operational performance across our existing portfolio of facilities as well as the incremental operational performance across our net eight facilities acquired since June 30, 2025. This increase was further driven by an increase in cash flows from the change in operating assets and liabilities of $80.6 million due primarily to the timing of accounts receivable collections as well as the timing of payables and other accrued liabilities. The impact to collections is driven by growth in operating facilities period-over-period, supported by a decrease in days sales outstanding of 5.0, from 51.9 as of June 30, 2025, to 46.9 as of June 30, 2026. This change in days sales outstanding is due to operational efficiencies as facilities continue to mature following facility ownership transition.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 of $127.0 million increased by $110.5 million as compared with the same period in 2025. The increase in cash used was attributable to an increase of $86.5 million in the acquisition of facilities, an increase of $20.1 million in purchases of equity securities held by our consolidated captive insurance entity, and an increase of $4.1 million in cash used to purchase property and equipment in excess of cash used for these purposes in the three months ended March 31, 2025.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 of $282.7 million increased by $233.9 million as compared with the same period in 2025. The increase in cash used was attributable to an increase of $190.6 million in the acquisition of facilities, an increase of $48.3 million in purchases of equity securities held by our consolidated captive insurance entities, and an increase of $12.1 million in cash used to purchase property and equipment, in excess of cash used for these purposes in the six months ended June 30, 2025. This increase to cash used for investing activities was offset by $17.1 million in sales of equity securities.

Previous wording

Financing cash flows consist primarily of payments and draws on the line of credit, distributions and repayment of short-term and long-term debt, borrowings on the line of credit, contributions from noncontrolling interest, and proceeds from equity offerings.

Current wording

Financing cash flows consist primarily of payments and draws on the line of credit, distributions and repayment of short-term and long-term debt, and distributions and contributions from noncontrolling interest.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2026 was $67.7 million, an increase of $63.6 million as compared with the same period in 2025. During the three months ended March 31, 2026 we had increased financing activity consisting primarily of net payments on long-term debt and our line of credit of $1.4 million and $55.0 million, respectively, and taxes paid related to net share settlement of equity awards of $10.7 million. In contrast, during the three months ended March 31, 2025, we had net payments on our long-term debt of $4.1 million, and no activity on the line of credit.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 was $144.3 million, an increase of $127.1 million as compared with the same period in 2025. During the six months ended June 30, 2026 we had increased financing activity consisting primarily of net payments on long-term debt and our line of credit of $4.0 million and $100.0 million, respectively, and taxes paid related to net share settlement of equity awards of $39.6 million. In contrast, during the six months ended June 30, 2025, we had net payments on our long-term debt of $9.0 million, no activity on the line of credit, and taxes paid related to net share settlement of equity awards of $8.0 million.

Previous wording

Our Board of Directors approved a $250 million share repurchase authorization, effective May 7, 2026. Repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The amount and timing of repurchases, if any, will depend on several factors, including our stock price performance, on going capital allocation priorities, contractual restrictions, and general market conditions. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Share Repurchase Program does not have a fixed expiration date, does not obligate us to acquire any particular amount of common stock, and may be modified, suspended, or terminated at any time at the discretion of our Board of Directors.

Current wording

Our Board of Directors approved a $250.0 million share repurchase authorization, effective May 7, 2026. Repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The amount and timing of repurchases, if any, will depend on several factors, including our stock price performance, ongoing capital allocation priorities, contractual restrictions, and general market conditions. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Share Repurchase Program does not have a fixed expiration date, does not obligate us to acquire any particular amount of common stock, and may be modified, suspended, or terminated at any time at the discretion of our Board of Directors. As of June 30, 2026, the full $250.0 million authorized for repurchase remained available under the repurchase plan.

Previous wording

Facility pledged as collateral to secure outstanding letters of credit. We may enter into further contractual arrangements in the future in order to support our business plans. There are no other transactions, arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect our liquidity or availability of our capital resources.

Current wording

We may enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations. As of June 30, 2026, we had $7.9 million of borrowing capacity under the Amended and Restated Credit Facility pledged as collateral to secure outstanding letters of credit. We may enter into further contractual arrangements in the future in order to support our business plans. There are no other transactions, arrangements or other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect our liquidity or availability of our capital resources.