SOURCE: Sun Healthcare Group, Inc.

January 18, 2007 07:00 ET

Sun Healthcare Group, Inc. Announces Board Member's Resignation

IRVINE, CA -- (MARKET WIRE) -- January 18, 2007 -- Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced that Keith W. Pennell has resigned as a member of the board of directors, effective Jan. 15, 2007. Mr. Pennell's resignation is in connection with the sale of approximately 1.8 million shares of the Company's common stock currently held by DFW Capital Partners, L.P. ("DFW"), approximately 4.2 percent of the outstanding common stock of the Company. DFW had nominated Mr. Pennell as a director in December 2005, pursuant to the terms of a Registration Rights Agreement that was entered into by the Company and former shareholders of Peak Medical Corporation. DFW's sale is being made in connection with a planned winding down of an investment partnership that holds such common stock. The purchaser of DFW's shares, a large institutional investor, will own the shares subject to certain restrictions on resale similar to those contained in the Registration Rights Agreement but will not have the right to nominate a director.

"I appreciate the contributions Keith has made as a director," said Richard K. Matros, the Company's chairman and chief executive officer.

"We are delighted to have been affiliated with Sun and wish Rick Matros and his talented management team great success in continuing to build Sun," noted Mr. Pennell.

About Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc., with executive offices located in Irvine, California, owns SunBridge Healthcare Corporation and other affiliated companies that operate long-term and postacute care facilities in many states. In addition, the Sun Healthcare Group family of companies provides therapy through SunDance Rehabilitation Corporation, hospice services through SolAmor Hospice and medical staffing through CareerStaff Unlimited, Inc.

Statements made in this release that are not historical facts are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "anticipate," "believe," "plan," "estimate," "expect," "hope," "intend," "may" and similar expressions. Factors that could cause actual results to differ are identified in the public filings made by the company with the Securities and Exchange Commission and include changes in Medicare and Medicaid reimbursements; potential liability for losses not covered by, or in excess of, our insurance; the effects of government regulations and investigations; our ability to generate cash flow sufficient to operate our business; our ability to complete the acquisition of Harborside Healthcare Corporation and integrate its operations; increasing labor costs and the shortage of qualified healthcare personnel; and our ability to receive increases in reimbursement rates from government payors to cover increased costs. More information on factors that could affect our business and financial results are included in our public filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on Sun's web site, www.sunh.com.

The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution investors that any forward-looking statements made by Sun are not guarantees of future performance. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.

Any documents filed by Sun with the SEC may be obtained free of charge at the SEC's web site at www.sec.gov. In addition, investors and stockholders of Sun may obtain free copies of the documents filed with the SEC by contacting Sun's investor relations department at (505) 468-2341 (TDD users, please call (505) 468-4458) or by sending a written request to Investor Relations, Sun Healthcare Group, Inc., 101 Sun Avenue N.E., Albuquerque, N.M. 87109. You may also read and copy any reports, statements and other information filed by Sun with the SEC at the SEC public reference room at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 or visit the SEC's web site for further information on its public reference room.

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