Pacs Group up after saying audit committee probe ‘substantially complete’

Shares of Pacs Group (PACS) are up after the company announced that it will restate its previously issued condensed combined/consolidated financial statements as of and for the three months ended on March 31, 2024 included in the company’s Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024, and as of and for the three and six months ended on June 30, 2024 included in the company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2024. The Prior Financial Statements and any previously furnished reports or communications of PACS describing the company’s financial results for the Impacted Periods should no longer be relied upon, the company said. As previously disclosed, the company’s independent Audit Committee of the Board of Directors, with assistance from external counsel, has been conducting an independent investigation of third-party allegations. The Audit Committee has made substantial progress and is nearing the completion of the investigation. To date, the Audit Committee has found no basis to question the integrity of the Company’s Executive Vice Chairman, CEO, CFO, or Chief Accounting Officer. In connection with additional facts learned, including as a result of the Audit Committee’s independent investigation, and due to regulatory, compliance and Medicare Part B billing uncertainties, management has determined that it is appropriate to reconsider the company’s judgmental assessments of the compliance of its respiratory and certain other therapy services. Management has also determined that it is appropriate to reconsider the application of certain aspects of revenue recognition guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts With Customers regarding revenue from billings for such services. As a result, the company believes that the revenue associated with the provision of respiratory services and certain other therapy services billed under Medicare Part B should not have been recognized as revenue in the Impacted Periods. Accordingly, the company has determined that it overstated total revenue in the condensed combined/consolidated statements for the Impacted Periods by: Approximately $15M-$17M for the three month period ended March 31, 2024 and approximately $46M-$48M for the three month period ended June 30, 2024. The company is working diligently to restate the Prior Financial Statements as soon as practicable. Shares of Pacs Group are up over 17% in morning trading to $11.89.