Investing.com -- Shares of PACS Group, Inc. (NYSE: PACS) fell sharply Wednesday, plunging more than 37% after the company released preliminary third-quarter results and announced a delay in its full earnings report.
The stock decline follows recent scrutiny from Hindenburg Research, which recently disclosed a short position in PACS and published a report questioning the company's practices.
In a statement, PACS cited its commitment to transparency and high compliance standards, explaining that its Audit Committee, with the help of external counsel, is investigating third-party allegations outlined in Hindenburg's report.
CEO Jason Murray addressed the allegations, describing them as "misleading" but stressing the company's dedication to regulatory compliance and cooperation with federal inquiries.
The company also noted that it has received civil investigative demands from the federal government related to reimbursement and referral practices, which may or may not be linked to the recent short report.
Murray stated, "We take these types of allegations seriously and will continue to cooperate with the government," while expressing confidence in PACS's systems, controls, and financial health.
In Q3, PACS said 76% of its skilled nursing facilities received high ratings of 4 or 5 stars under the CMS Quality Measures. Occupancy rates were said to be solid, with mature facilities at 94.5% and an overall occupancy rate of 90.5%, above the industry average of 77%.
PACS also expanded its portfolio by acquiring 56 facilities, growing its operations across six additional states.
The company maintains over $600 million in liquidity, which it says reflects its underlying financial strength.
However, investors are unimpressed, with the delayed earnings report and scrutiny adding uncertainty to PACS's outlook.