SOURCE: The Bedford Report

The Bedford Report

August 11, 2011 08:16 ET

Sun Healthcare and Skilled Healthcare Well-Prepared for Near-Term Headwinds

The Bedford Report Provides Equity Research on Sun Healthcare and Skilled Healthcare

NEW YORK, NY--(Marketwire - Aug 11, 2011) - While recent spending cuts courtesy of the Centers for Medicare & Medicaid Services has created short-term headwinds for skilled nursing facilities, companies in the industry remain optimistic that their diversified property portfolios will shield them somewhat from the cuts. The Bedford Report examines the outlook for companies in the long-term care facilities industry and provides stock research on Sun Healthcare Group, Inc. (NASDAQ: SUNH) and Skilled Healthcare Group, Inc. (NYSE: SKH). Access to the full company reports can be found at:

The Centers for Medicare & Medicaid Services said the cuts are in response to unexpected increases in nursing home payments this fiscal year after the agency slightly changed coverage rates last year. The Alliance for Quality Nursing Home Care, a lobbying group for the industry, said in a statement that the change in reimbursement rates "will dangerously destabilize the nation's second-largest health facility employer, place patients and their care at deep risk, and put tens of thousands of health jobs in immediate jeopardy."

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While the announcement caused a massive selloff throughout the industry, companies in the sector are quick to point out that they generally have diversified property portfolios that will shield them somewhat from the cuts.

Skilled Healthcare Chief Executive Boyd Hendrickson said that the company was "extremely disappointed" with the rate cuts. On the upside Hendrickson believes the company is "well-positioned for the future" given its diversified offerings that could help reduce its exposure to Medicare and Medicaid rate changes. SKH recently said its second quarter earnings more than doubled on a 7.3 percent increase in revenue.

Last week Sun Healthcare said second quarter consolidated revenues rose 3.3 percent to $487.7 million, compared to the same period in 2010, driven primarily by growth in rate and skilled mix in its inpatient services segment.

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