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United States securities and exchange commission logo
January 4, 2024
Jason Murray
Chief Executive Officer
PACS Group, Inc.
262 N. University Ave.
Farmington, Utah 84025
Re:PACS Group, Inc.
Draft Registration Statement on Form S-1
Submitted December 8, 2023
File No. 377-06990
Dear Jason Murray:
            We have reviewed your draft registration statement and have the following comments.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR. If you do not believe a comment applies to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to this letter and your amended
draft registration statement or filed registration statement, we may have additional comments.
Draft Registration Statement on Form S-1
Cover Page
1.Please revise to state whether the offering is contingent on listing approval.
Industry, Market and Other Data, page 1
2.We note your statement that you "have not independently verified" publications, research,
surveys and studies conducted by third parties, and investors are "cautioned not to give
undue weight to such information, estimates or projections." Such statement may imply an
inappropriate disclaimer of liability for such third-party information. Please revise to
remove any implication that investors are not entitled to rely on information in your
registration statement.

 FirstName LastNameJason Murray
 Comapany NamePACS Group, Inc.
 January 4, 2024 Page 2
 FirstName LastName
Jason Murray
PACS Group, Inc.
January 4, 2024
Page 2
Prospectus Summary, page 2
3.We note that you make various statements throughout the draft registration statement
discussing the SNF industry and projections, including, but not limited to, the following:

•“The SNF industry is large and growing, with total expenditures expected to increase
from $193.6 billion in 2022 to $283.3 billion in 2031, representing a compound
annual growth rate (CAGR) of 4.3%;"
•"The SNF industry in the United States encompasses approximately 15,000 nursing
homes and serves over 1.3 million patients annually. The industry is highly
fragmented, with the top 10 operators, each having greater than 100 facilities,
representing approximately 11% of total number of SNFs in the United States;"
•"While the total U.S. population is expected to increase 25% from 2016 to 2060, the
population aged 65 and older is expected to increase 92% during that same period;"
and
•"Additionally, the percentage of those 50 years and older with more than one chronic
condition is estimated to increase by 99.5% from 2020 to 2050."

Please revise your disclosure to provide the basis for each of the above statements. In
addition, to the extent that some of these statements are intended to be qualified to your
belief, please revise to state such and to state the basis, to the extent material, for your
belief.
4.We note your disclosure that you "have a robust pipeline of potential single-facility tuck-
in acquisitions, larger multi-facility portfolio acquisitions and select new facility builds
across existing and new markets." Please revise your disclosure to include a more fulsome
discussion of your near-term plans, including investments for which you might utilize the
proceeds from this offering.
5.Please balance your prospectus summary by including disclosure regarding
your regulatory compliance obligations and that you derive substantial revenue from
government healthcare programs. Similarly, we note on page 4 you discuss your revenue,
net income, Adjusted EBITDA and CAGR. Please revise to balance this disclosure, such
as by disclosing your current indebtedness.
6.Please revise to provide support for your statements that you are "one of the largest skilled
nursing providers in the United States" and "one of the largest SNF operators in the
United States." Additionally, please revise to provide support for statements concerning
competitors or industry practices, such as your statement on page 5 that you "provide
payors with a high-quality alternative to higher cost post-acute sites of care, such as
inpatient rehabilitation facilities" and your statement on page 7 that your "investment into
facilities is differentiated from traditional industry operators who are often hesitant to
make physical plant investments into facilities and who often seek to extract value through
cost-cutting or other limitations on facility resources." To the extent these are statements
of belief please revise to state such.

 FirstName LastNameJason Murray
 Comapany NamePACS Group, Inc.
 January 4, 2024 Page 3
 FirstName LastNameJason Murray
PACS Group, Inc.
January 4, 2024
Page 3
7.Please revise to clarify the entities through which the Company conducts its operations.
Risk Factors
We may not be fully reimbursed for all services for which each facility bills through
consolidated billing..., page 19
8.We note your disclosure that "bundling," while uncommon, "adversely affects SNF
utilization and payments." Please revise your disclosure to clarify the circumstances when
SNFs are required to perform consolidated billing.
We review and audit the care delivery, recordkeeping and billing processes of our operating
subsidiaries..., page 22
9.We note your disclosure that "[f]rom time to time, [y]our systems and internal controls
highlight potential compliance issues" and "[w]hen errors or compliance failures are
identified, [you] seek to rectify them as appropriate. " Please disclose any material
systems and internal controls compliance issues you have experienced.
We are subject to litigation, which is commonplace in our industry, that could result in
significant legal costs..., page 23
10.We note your statement on page 23 that you, and others in the industry, have been, and
continue to be, subject to an increasing number of claims and lawsuits, including
professional liability claims. We also note that on page F-8 you mention that you have a
wholly-owned captive insurance subsidiary, Welsch Insurance Ltd., that provides
coverage to various consolidated operating subsidiaries related to Professional Liability
and General Liability insurance. Please revise to state here that you utilize a captive
insurance company for at least certain of these risks and the risks involved with using a
wholly-owned captive insurance company.
We face and are currently subject to surveys, investigations, and other proceedings relating to
our licenses and certification..., page 44
11.We note the following statement on page 44: "We have received notices of potential
sanctions and remedies based upon alleged regulatory deficiencies from time to time, and
such sanctions have been imposed on some of our facilities. We have had facilities placed
on special focus facility status in the past, continue to have some facilities on this status
currently and other operating subsidiaries may be identified for such status in the
future. As of December 31, 2023, we had facilities placed on special focus facility status."
Please revise to state the number of facilities in special focus facility status when available
and the nature of the material alleged regulatory deficiencies. You also mention that if a
facility fails to institute an acceptable plan of correction to remediate the deficiency the
facility could be subject to remedial action and you provide examples of remedial action.
Please revise to state whether any material remedial actions have been taken against you
and the nature of such action(s).

 FirstName LastNameJason Murray
 Comapany NamePACS Group, Inc.
 January 4, 2024 Page 4
 FirstName LastNameJason Murray
PACS Group, Inc.
January 4, 2024
Page 4
Future sales of shares of common stock by existing stockholders could cause the market price of
our common stock to decline, page 51
12.Please revise this risk factor to discuss the risks associated with the registration rights
granted to Jason Murray and Mark Hancock.
Use Of Proceeds, page 62
13.We note that you intend to use the net proceeds from the offering for general corporate
purposes to support the growth of your business and that you may use a portion of the net
proceeds to acquire or invest in additional nursing facilities or other businesses and
service offerings, although you do not have binding agreements or commitments for any
material investments at this time. Please provide a more specific breakdown of how you
plan to allocate the net proceeds from this offering.
Management's Discussion and Analysis Of Financial Condition and Results Of Operations, page
68
14.We note your disclosure that you participate in joint ventures. Please revise your
disclosure to discuss the nature of these joint ventures, including the material provisions
of your contractual agreements.
Non-GAAP Financial Measures, page 73
15.We note you will present Adjusted EBITDAR, which includes a non-GAAP adjustment
for rent. Please tell us how you considered Non-GAAP Financial Measures C&DI
Question 100.01 as part of your determination to adjust for rent and present Adjusted
EBITDAR.
Results of Operations
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021, page 78
16.We note significant increases in your financial statement line items from 2021 to 2022,
but your discussion and analysis does not appear to allow investors to view the registrant
from management's perspective, as set forth in Item 303(a) of Regulation S-K. For
example, in certain instances your discussion is limited to the repetition of one piece of
information (e.g., the increase was primarily attributable to the additional expenses from
New facilities). We note further, for example, that your cost of services includes a number
of components, including payroll and related benefits, supplies, purchased services, the
cost of pharmacy and therapy services provided to patients, general and professional
liability insurance, and rent expenses, but you do not discuss any of these
components. Item 303(a) sets forth that a discussion and analysis should have descriptions
and amounts of matters that have had a material impact on reported operations, as well as
matters that are reasonably likely based on management's assessment to have a material
impact on future operations. Item 303(b)(2)(i) sets forth that a registrant should describe

 FirstName LastNameJason Murray
 Comapany NamePACS Group, Inc.
 January 4, 2024 Page 5
 FirstName LastNameJason Murray
PACS Group, Inc.
January 4, 2024
Page 5
any other significant components of revenues or expenses that would be material to an
understanding of the registrant's results of operations. Please revise your discussion and
analysis to more fully address the requirements of Item 303(a), (b), and (b)(2) of
Regulation S-K.
Liquidity & Capital Resources
Operating Activities, page 81
17.Your discussion of operating activities appears to primarily restate amounts identified on
the statement of cash flows without providing any material information as described in
Item 303(a) of Regulation S-K. In addition, your discussion of an increase in accounts
receivable appears to a certain extent superficial. Lastly, your discussion appears to omit
other significant changes underlying the net cash provided by operating activities, as
identified in the statement of cash flows. Please provide a more robust analysis of the
changes in net cash provided by operating activities. Please quantify all factors cited and
address the material drivers underlying those factors. You should focus on the primary
drivers of and other material factors necessary to an understanding of the registrant's cash
flows and the indicative value of historical cash flows. Please also discuss the underlying
drivers responsible for material changes in your cash flows from investing and financing
activities for all periods presented. Refer to Item 303 of Regulation S-K.
Business
Business Overview, page 87
18.Please revise your disclosure to include a discussion of the general development of your
business. Refer to Item 101(a) of Regulation S-K.
Our Operating Model, page 89
19.We note your disclosure that you "contract with each facility to provide PACS Services,
which includes support through a regional team of seasoned, highly qualified, cross-
functional professionals, and led by an RVP." Please revise your disclosure to discuss the
nature of these contracts with facilities, including material provisions. Please file a form of
such agreement pursuant to Item 601(b)(10) of Regulation S-K to the extent available.
Human Capital Resources, page 99
20.It appears you have some unionized employees. Please revise to state so here and the
number of employees covered by collective bargaining agreements.
Underwriting
Conflicts of Interest, page 146
21.Please revise your disclosure to include reference to, and the material provisions of, the
Truist Term Loan referenced on page 83.

 FirstName LastNameJason Murray
 Comapany NamePACS Group, Inc.
 January 4, 2024 Page 6
 FirstName LastName
Jason Murray
PACS Group, Inc.
January 4, 2024
Page 6
Financial Statements
Note 3. Revenue and Accounts Receivable, page F-14
22.We note revenue recognized from healthcare services is adjusted for estimates of variable
consideration to arrive at the transaction price and variable consideration includes
estimates of price concessions and discounts so that the estimated transaction price is
reflective of the amount you expect to be entitled in exchange for providing the healthcare
services to customers. Please revise to disclose the qualitative and quantitative
information about the significant judgments and changes in judgments that significantly
affect the determination of your transaction price, as set forth in ASC 606-10-50-1(b), 50-
17(b), and 50-20(a).
General
23.Please provide us with copies of all written communications, as defined in Rule 405 under
the Securities Act, that you, or anyone authorized to do so on your behalf, present to
potential investors in reliance on Section 5(d) of the Securities Act, whether or not they
retain copies of the communications.
            Please contact Jeanne Bennett at 202-551-3606 or Michael Fay at 202-551-3812 if you
have questions regarding comments on the financial statements and related matters. Please
contact Juan Grana at 202-551-6034 or Margaret Sawicki at 202-551-7153 with any other
questions.
Sincerely,
Division of Corporation Finance
Office of Industrial Applications and
Services
cc:       Shayne Kennedy, Esq.