PACS Shares Plunge 28% After Hindenburg Short Report

According to Bloomberg, shares of PACS Group (PACS), a major nursing home operator, nosedived 28% after a Hindenburg Research report alleged fraudulent activities, including allegedly “scamming taxpayers.”

Shorts Piling Up

The fallout from the report led to volatility halts in PACS shares, which closed at $30.85 on Monday—a steep drop from Friday’s record-high close of $42.94. PACS went public in April with an initial offering price of $21 and has been gaining investor confidence thanks to strong earnings performance.

Based in Farmington, Utah, PACS operates around 284 nursing facilities across 16 states, serving over 27K patients daily. The company recently acquired eight nursing homes in PA, four of which are leased from CareTrust REIT (CTRE). Shares of CareTrust fell 4%, the REIT’s largest drop since September 2022.

What’s Next?

Hindenburg Research, an infamous short seller, has recently targeted several other high-profile companies. 

Just last month, it released a report alleging that Roblox Corp. (RBLX) inflated key metrics. Earlier this year, it also questioned accounting practices at Super Micro Computer Inc. (SMCI), which delayed its annual financial disclosures following Hindenburg’s report.

PACS is scheduled to release its Q3 earnings this Thursday, a report investors are closely watching in light of Hindenburg’s accusations.5.