SOURCE: Sun Healthcare Group, Inc.

May 04, 2005 17:56 ET

Sun Healthcare Group, Inc. Announces First Quarter 2005 Earnings; EBITDAR From Continuing Operations Up 26.4 Percent

IRVINE, CA -- (MARKET WIRE) -- May 4, 2005 -- Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced results for the first quarter ended March 31, 2005.

Earnings

For the quarter ended March 31, 2005, Sun reported total net revenues of $207.2 million and a net loss of $1.2 million, which included income of $0.3 million on discontinued operations, compared with total net revenues of $204.6 million and a net loss of $10.4 million for the quarter ended March 31, 2004, which included a $6.8 million loss on discontinued operations. For the quarter ended March 31, 2005, Sun reported a loss from continuing operations of $1.5 million as compared to a loss from continuing operations of $3.6 million for the same period in 2004. The 2005 first quarter EBITDAR from continuing operations was $12.9 million as compared to $10.2 million from continuing operations for the same period in 2004.

"These results show a strong start in 2005, as evidenced by the Company's quarter over quarter improvement," said Richard K. Matros, Sun's chairman and chief executive officer. "We continue to be pleased with the improved performance in our operations and note that these results are consistent with the 2005 guidance that we provided in our March 2, 2005, earnings release."

Inpatient Business

Net revenues from the inpatient services operations, which comprised 71.8 percent of Sun's first quarter total net revenue from continuing operations, increased 2.9 percent to $148.8 million from $144.6 million for the same period in 2004. The revenue gain was primarily attributable to: (i) a 60 basis point improvement in Medicare patient mix to 13.9 percent from 13.3 percent of total occupancy, and (ii) higher per diem rates in all payor categories. The segment EBITDAR increased 26.4 percent to $20.1 million for the quarter ended March 31, 2005, from $15.9 million for the same period in 2004. "Our inpatient business continues to improve its key performance metrics as evidenced by our bottom-line improvement quarter over quarter," said Matros.

Ancillary Business

Net revenues from Sun's ancillary business operations, comprised of SunDance Rehabilitation Corporation, CareerStaff Unlimited, Inc., SunPlus Home Health Services, Inc., and SunAlliance Healthcare Services, Inc., net of intersegment eliminations, decreased $1.6 million, or 2.7 percent, to $58.4 million for the quarter ended March 31, 2005, from $60.0 million for the same period in 2004. The majority of this reduction in revenue was due to the impact of the 2003-2004 restructuring of our inpatient services operations on our rehabilitation services operations. Segment EBITDAR for the ancillary operations for the quarter ended March 31, 2005, decreased $1.1 million, or 18.6 percent, over the same period in 2004, to $4.8 million from $5.9 million. This decrease was primarily due to the aforementioned reduction in rehabilitation therapy service revenues. "Despite the quarter over quarter statistical decline, I am encouraged by two key improvements in our ancillary business operations during the first quarter of 2005. First, in our rehabilitation therapy services operations, annualized new sales were $7.9 million for the first quarter of 2005 as compared to annualized new sales revenues of $0.2 million for the same period in 2004." Matros continued, "Second, our temporary staffing services operations demonstrated continuing progress with a 5 percent increase in gross revenues and a 150 basis point improvement in EBITDA quarter over quarter."

Conference Call

Sun's senior management will hold a conference call to discuss the Company's first quarter operating results on Thursday, May 5, at 1 p.m. EDT / 10 a.m. PDT. To listen to the conference call, dial (877) 516-8526 and refer to Sun Healthcare Group. A recording of the call will be available from 4 p.m. EDT on May 5 until midnight EDT on May 11 by calling (800) 642-1687 and using access code 5583644.

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, medical staffing through CareerStaff Unlimited, Inc., home care through SunPlus Home Health Services, Inc., and medical laboratory and mobile radiology services through SunAlliance Healthcare Services, Inc.

Statements made in this release that are not historical facts, including our estimates regarding financial performance in 2005, 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; 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, copies of which are available at 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 us 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.


              SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

                            CONDENSED
                    CONSOLIDATED BALANCE SHEETS
                          (in thousands)

             ASSETS
                                                    March 31,  December 31,
                                                      2005         2004
                                                   ---------     ---------
                                                  (unaudited)   (unaudited)
Current assets:
 Cash and cash equivalents                         $  17,226     $  22,596
 Accounts receivable, net                             98,399        95,829
 Restricted cash                                      26,925        26,649
 Other current assets                                 11,930        14,098
                                                   ---------     ---------

Total current assets                                 154,480       159,172

 Property and equipment, net                         107,162       105,852
 Restricted cash, non-current                         33,012        34,111
 Other assets, net                                    17,084        16,780
                                                   ---------     ---------

Total assets                                       $ 311,738     $ 315,915
                                                   =========     =========
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                  $  32,932     $  36,163
 Accrued compensation and benefits                    37,335        38,243
 Accrued self-insurance obligations,
  current portion                                     40,052        40,236
 Other accrued liabilities                            55,632        57,649
 Current portion of long-term debt                    17,898        17,476
                                                   ---------     ---------

Total current liabilities                            183,849       189,767

 Accrued self-insurance obligations, net
  of current portion                                 121,623       130,686
 Long-term debt, net of current portion              103,349        89,706
 Other long-term liabilities                          27,528        29,136
                                                   ---------     ---------

Total liabilities                                    436,349       439,295

Stockholders' deficit                               (124,611)     (123,380)
                                                   ---------     ---------

Total liabilities and stockholders' deficit        $ 311,738     $ 315,915
                                                   =========     =========


                SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

                             CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)

                                                    For the       For the
                                                 Three Months  Three Months
                                                     Ended         Ended
                                                    March 31,     March 31,
                                                      2005          2004
                                                   ---------     ---------
                                                  (unaudited)   (unaudited)

Total net revenues                                 $ 207,183     $ 204,641
                                                   ---------     ---------
Costs and expenses:
 Operating salaries and benefits                     124,365       122,057
 Self insurance for workers' compensation
  and general and professional liability insurance     9,503        12,359
 Other operating costs                                41,715        41,272
 Facility rent expense                                 9,741        10,390
 General and administrative expenses                  17,629        16,346
 Depreciation and amortization                         2,132         1,718
 Provision for losses on accounts receivable             629         2,370
 Interest, net                                         2,657         2,116
 Loss on asset impairment                                361             -
 Restructuring costs, net                                 70           836
 Loss on sale of assets, net                             306            21
 Loss on extinguishment of debt, net                     408             -
                                                   ---------     ---------
Total costs and expenses                             209,516       209,485
                                                   ---------     ---------

Loss before income taxes and discontinued
 operations                                           (2,333)       (4,844)
Income tax (benefit)                                    (804)       (1,286)
                                                   ---------     ---------
Loss before discontinued operations                   (1,529)       (3,558)
                                                   ---------     ---------

Discontinued operations:
 Loss from discontinued operations, net                 (664)       (5,611)
 Gain (loss) on disposal of discontinued
  operations, net                                      1,025        (1,256)
                                                   ---------     ---------
 Income (loss) on discontinued operations                361        (6,867)
                                                   ---------     ---------

Net loss                                           $  (1,168)    $ (10,425)
                                                   =========     =========
Basic and diluted (loss) earnings per common
 and common equivalent share:
 Loss before discontinued operations               $   (0.10)    $   (0.29)
 Income (loss) on discontinued operations               0.02         (0.57)
                                                   ---------     ---------
Net loss                                           $   (0.08)    $   (0.86)
                                                   =========     =========


Weighted average number of common and common
 equivalent shares outstanding:
 Basic and diluted                                    15,320        12,113


              SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

                            CONDENSED
               CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (in thousands)

                                                    For the      For the
                                                 Three Months  Three Months
                                                     Ended        Ended
                                                   March 31,     March 31,
                                                     2005          2004
                                                   ---------     ---------
                                                  (unaudited)   (unaudited)

Cash flows from operating activities:
Net loss                                           $  (1,168)    $ (10,425)
Adjustments to reconcile net loss to net cash
 used for operating activities, including
 discontinued operations:
 Loss on extinguishment of debt, net                     408             -
 Depreciation                                          1,067           730
 Amortization                                          1,066         1,080
 Amortization of favorable and unfavorable
  lease intangibles                                     (508)       (1,133)
 Provision for losses on accounts receivable             650         2,929
 Loss on sale of assets, net                             306            21
 (Gain) loss on disposal of discontinued
  operations, net                                     (1,025)        1,256
 Loss on asset impairment                                361             -
 Restricted stock compensation and stock
  option compensation                                    232           245
 Other, net                                               23           150
 Changes in operating assets and liabilities         (17,627)      (17,755)
                                                   ---------     ---------
  Net cash used for operating activities before
   reorganization costs                              (16,215)      (22,902)
  Net cash paid for reorganization costs                   -          (455)
                                                   ---------     ---------
  Net cash used for operating activities            (16,215)      (23,357)
                                                   ---------     ---------

Cash flows from investing activities:
 Capital expenditures, net                            (3,572)       (1,862)
 Proceeds from sale of assets held for sale              766             -
 Repayment of long-term notes receivable                 237            10
                                                   ---------     ---------
  Net cash used for investing activities              (2,569)       (1,852)
                                                   ---------     ---------

Cash flows from financing activities:
 Net borrowings (payments) under Revolving
  Loan Agreement                                      17,021       (13,091)
 Long-term debt repayments                            (3,305)       (1,545)
 Distribution of partnership equity                     (302)            -
  Net proceeds from issuance of common stock               -        52,266
                                                   ---------     ---------
 Net cash provided by financing activities            13,414        37,630
                                                   ---------     ---------
Net (decrease) increase in cash and
 cash equivalents                                  $  (5,370)    $  12,421
                                                   =========     =========


                    Sun Healthcare Group, Inc.

       Reconciliation of Net Loss to EBITDA(M) and EBITDAR(M)
                          (in thousands)

                                                    For the     For the
                                                 Three Months Three Months
                                                     Ended        Ended
                                                   March 31,     March 31,
                                                     2005          2004
                                                   ---------     ---------
                                                  (unaudited)   (unaudited)

Total net revenues                                 $ 207,183     $ 204,641
                                                   ---------     ---------

Net loss                                           $  (1,168)    $ (10,425)
                                                   ---------     ---------

  Loss before discontinued operations              $  (1,529)    $  (3,558)

  Income tax (benefit)                                  (804)       (1,286)

  Loss on asset impairment                               361             -

  Restructuring costs, net                                70           836

  Loss on sale of assets, net                            306            21
                                                   ---------     ---------

Net segment loss                                   $  (1,596)    $  (3,987)

  Interest, net                                        2,657         2,116

  Depreciation and amortization                        2,132         1,718
                                                   ---------     ---------

EBITDA                                             $   3,193     $    (153)

  Facility rent expense                                9,741        10,390
                                                   ---------     ---------

EBITDAR                                            $  12,934     $  10,237

   General and administrative expenses                17,629        16,346
                                                   ---------     ---------

EBITDAM                                            $  20,822     $  16,193
EBITDARM                                           $  30,563     $  26,583

EBITDA is defined as earnings before depreciation, amortization, interest
expense, interest income, income tax benefit, restructuring costs, net,
loss on sale of assets, net, income (loss) on discontinued operations, and
loss on asset impairment. EBITDAM is defined as EBITDA before general and
administrative expenses. EBITDAR is defined as EBITDA before facility rent
expense. EBITDARM is defined as EBITDAR before general and administrative
expenses. EBITDA, EBITDAM, EBITDAR and EBITDARM are used by management to
evaluate financial performance and resource allocation for each entity
within the operating units and for the Company as a whole. EBITDA, EBITDAM,
EBITDAR and EBITDARM are commonly used as analytical indicators within the
healthcare industry and also serve as measures of leverage capacity and
debt service ability. EBITDA, EBITDAM, EBITDAR and EBITDARM should not be
considered as measures of financial performance under generally accepted
accounting principles. As the items excluded from EBITDA, EBITDAM, EBITDAR
and EBITDARM are significant components in understanding and assessing
financial performance, EBITDA, EBITDAM, EBITDAR and EBITDARM should not be
considered in isolation or as alternatives to net income (loss), cash flows
generated by or used in operating, investing or financing activities or
other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity. Because
EBITDA, EBITDAM, EBITDAR and EBITDARM are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations, EBITDA, EBITDAM, EBITDAR and EBITDARM
as presented may not be comparable to other similarly titled measures of
other companies.


             SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

   RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA(M) AND EBITDAR(M)
                            ($ in thousands)

                 For the Three Months Ended March 31, 2005
                               (unaudited)

                                       Rehabil-
                                       itation    Medical    Home
                           Inpatient   Therapy    Staffing   Health
                           Services    Services   Services   Services
                           ----------  ---------  ---------  ---------

Total nonaffiliated
 net revenues              $  148,810  $  23,977  $  14,868  $  14,811
                           ----------  ---------  ---------  ---------


Net segment income (loss)  $    7,837  $   1,980  $     973  $     554

Interest, net                   1,864        (78)         1          3

Depreciation and
 amortization                   1,467         54         48        193
                           ----------  ---------  ---------  ---------


  EBITDA                   $   11,168  $   1,956  $   1,022  $     750

Facility rent expense           8,907        126        170        447
                           ----------  ---------  ---------  ---------


  EBITDAR                  $   20,075  $   2,082  $   1,192  $   1,197

General and
 administrative expenses        3,125      1,846        562        263
                           ----------  ---------  ---------  ---------


  EBITDAM                  $   14,293  $   3,802  $   1,584  $   1,013
  EBITDARM                 $   23,200  $   3,928  $   1,754  $   1,460

    EBITDA margin                 7.5%       8.2%       6.9%       5.1%

    EBITDAR margin               13.5%       8.7%       8.0%       8.1%

    EBITDAM margin                9.6%      15.9%      10.7%       6.8%

    EBITDARM margin              15.6%      16.4%      11.8%       9.9%


                           Laboratory
                           & Radiology
                           Services     Corporate    Consolidated
                           ---------    ---------    ----------

Total nonaffiliated
 net revenues              $   4,711    $       6    $  207,183
                           ---------    ---------    ----------


Net segment income (loss)  $      55    $ (12,995)   $   (1,596)

Interest, net                      -          867         2,657

Depreciation and
 amortization                    149          221         2,132
                           ---------    ---------    ----------


  EBITDA                   $     204    $ (11,907)   $    3,193

Facility rent expense             91            -         9,741
                           ---------    ---------    ----------


  EBITDAR                  $     295    $ (11,907)   $   12,934

General and
 administrative expenses           -       11,833        17,629
                           ---------    ---------    ----------


  EBITDAM                  $     204    $     (74)   $   20,822
  EBITDARM                 $     295    $     (74)   $   30,563

    EBITDA margin                4.3%                       1.5%

    EBITDAR margin               6.3%                       6.2%

    EBITDAM margin               4.3%                      10.1%

    EBITDARM margin              6.3%                      14.8%


             SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

   RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA(M) AND EBITDAR(M)
                           ($ in thousands)

              For the Three Months Ended March 31, 2004
                               (unaudited)

                                            Rehabil-
                                            itation    Medical    Home
                                Inpatient   Therapy    Staffing   Health
                                Services    Services   Services   Services
                                ---------  ---------  ---------  ---------

Total nonaffiliated net
 revenues                       $ 144,647  $  27,471  $  13,775  $  13,786
                                ---------  ---------  ---------  ---------

Net segment income (loss)       $   4,307  $   3,291  $     353  $     634

Interest, net                         868         (2)         1          2

Depreciation and amortization       1,224        107         44        147
                                ---------  ---------  ---------  ---------

  EBITDA                        $   6,399  $   3,396  $     398  $     783

Facility rent expense               9,471        158        223        451
                                ---------  ---------  ---------  ---------

  EBITDAR                       $  15,870  $   3,554  $     621  $   1,234

General and administrative
 expenses                           2,940        822        766        260
                                ---------  ---------  ---------  ---------

  EBITDAM                       $   9,339  $   4,218  $   1,164  $   1,043
  EBITDARM                      $  18,810  $   4,376  $   1,387  $   1,494

    EBITDA margin                     4.4%      12.4%       2.9%       5.7%

    EBITDAR margin                   11.0%      12.9%       4.5%       9.0%

    EBITDAM margin                    6.5%      15.4%       8.5%       7.6%

    EBITDARM margin                  13.0%      15.9%      10.1%      10.8%


                                 Laboratory &
                                 Radiology
                                 Services   Corporate  Consolidated
                                 ---------  ---------  ---------

Total nonaffiliated net
 revenues                        $   4,930  $      32  $ 204,641
                                 ---------  ---------  ---------

Net segment income (loss)        $     295  $ (12,867) $  (3,987)

Interest, net                            -      1,247      2,116

Depreciation and amortization           72        124      1,718
                                 ---------  ---------  ---------

  EBITDA                         $     367  $ (11,496) $    (153)

Facility rent expense                   87          -     10,390
                                 ---------  ---------  ---------

  EBITDAR                        $     454  $ (11,496) $  10,237

General and administrative
 expenses                              115     11,443     16,346
                                 ---------  ---------  ---------

  EBITDAM                        $     482  $     (53) $  16,193
  EBITDARM                       $     569  $     (53) $  26,583

    EBITDA margin                      7.4%                    -

    EBITDAR margin                     9.2%                  5.0%

    EBITDAM margin                     9.8%                  7.9%

    EBITDARM margin                   11.5%                 13.0%


             SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

   RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA AND EBITDAR
                        INPATIENT SERVICES ONLY
                             ($ in thousands)

                    For the Three Months Ended March 31, 2005
                                    (unaudited)

                                                             Inpatient
                           Inpatient   Inpatient             Services-
                           Services-   Services-             Planned
                           Retained    Overhead   Americare  Divested
                           ----------  ---------  ---------  ---------

Total nonaffiliated
 net revenues              $  146,901  $       -  $     606  $   1,303
                           ----------  ---------  ---------  ---------

Net segment income (loss)  $   11,599  $  (3,125) $     158  $      65

Interest, net                     801          -          -         (4)

Depreciation and
 amortization                   1,106          -         12         11
                           ----------  ---------  ---------  ---------

  EBITDA                   $   13,506  $  (3,125) $     170  $      72

Facility rent expense           9,745          -          9         29
                           ----------  ---------  ---------  ---------

  EBITDAR                  $   23,251  $  (3,125) $     179  $     101
                           ==========  =========  =========  =========

    EBITDA margin                 9.2%                 28.1%       5.5%

    EBITDAR margin               15.8%                 29.5%       7.8%


                                 Inpatient
                                 Services              Total
                                 Before                Inpatient
                                 Clipper    Clipper(1) Services
                                 ---------  ---------  ---------

Total nonaffiliated net
 revenues                        $ 148,810  $       -  $ 148,810
                                 ---------  ---------  ---------

Net segment income (loss)        $   8,697  $    (860) $   7,837

Interest, net                          797      1,067      1,864

Depreciation and amortization        1,129        338      1,467
                                 ---------  ---------  ---------

  EBITDA                         $  10,623  $     545  $  11,168

Facility rent expense                9,783       (876)     8,907
                                 ---------  ---------  ---------

  EBITDAR                        $  20,406  $    (331) $  20,075
                                 =========  =========  =========


    EBITDA margin                      7.1%                  7.5%

    EBITDAR margin                    13.7%                 13.5%

(1) Clipper represents our interest of less than eight percent in nine
    entities that are consolidated pursuant to the Financial Accounting
    Standards Board's revised Interpretation No. 46 Consolidation of
    Variable Interest Entities.


              SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

   RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA AND EBITDAR
                        INPATIENT SERVICES ONLY
                            ($ in thousands)

               For the Three Months Ended March 31, 2004
                              (unaudited)

                                                                  Inpatient
                              Inpatient   Inpatient               Services-
                              Services-   Services-               Planned
                              Retained    Overhead    Americare   Divested
                              --------    --------    --------    --------

Total nonaffiliated net
 revenues                     $142,516    $      -    $    757    $  1,374
                              --------    --------    --------    --------

Net segment income (loss)     $  7,031    $ (2,940)   $    164    $     52

Interest, net                      889           -           -         (21)

Depreciation and amortization    1,203           -          10          11
                              --------    --------    --------    --------

     EBITDA                   $  9,123    $ (2,940)   $    174    $     42

Facility rent expense            9,421           -          21          29
                              --------    --------    --------    --------

     EBITDAR                  $ 18,544    $ (2,940)  $     195    $     71
                              ========    ========    ========    ========

             EBITDA margin         6.4%                   23.0%        3.1%

             EBITDAR margin       13.0%                   25.8%        5.2%


                              Inpatient
                              Services                Total
                              Before                  Inpatient
                              Clipper     Clipper     Services
                              --------    --------    --------
Total nonaffiliated net
 revenues                     $144,647    $      -    $144,647
                              --------    --------    --------

Net segment income (loss)     $  4,307    $      -    $  4,307

Interest, net                      868           -         868

Depreciation and amortization    1,224           -       1,224
                              --------    --------    --------

     EBITDA                   $  6,399    $      -    $  6,399

Facility rent expense            9,471           -       9,471
                              --------    --------    --------
     EBITDAR                  $ 15,870    $      -    $ 15,870
                              ========    ========    ========

             EBITDA margin         4.4%                    4.4%

             EBITDAR margin       11.0%                   11.0%




              Sun Healthcare Group, Inc. and Subsidiaries
                     Selected Operating Statistics
                         Continuing Operations

                                                         For the
                                                    Three Months Ended
                                                         March 31,
                                                    2005           2004
                                                 ----------     ----------
Number of licensed beds:
     SNF                                             10,407         10,402
     Hospitals                                          192            192

Number of facilities:
     SNF                                                100            100
     Hospitals                                            3              3

Occupancy %:
     SNF                                               90.6%          90.8%
     Hospitals                                         58.9%          54.3%
     Inpatient                                         90.0%          90.1%

Payor Mix % based on patient days - SNF:
     Medicare                                          13.1%          12.7%
     Medicaid                                          63.2%          64.1%
     Private and other                                 23.7%          23.2%

Payor Mix % based on patient days - Hospitals:
     Medicare                                          75.3%          71.7%
     Medicaid                                           7.2%           6.4%
     Private and other                                 17.5%          21.9%

Payor Mix % based on patient days - Inpatient
 Services:
     Medicare                                          13.9%          13.3%
     Medicaid                                          62.5%          63.5%
     Private and other                                 23.6%          23.2%

Revenue Mix % of revenues - SNF:
     Medicare                                          27.0%          26.4%
     Medicaid                                          50.1%          51.3%
     Private and other                                 22.9%          22.3%

Revenue Mix % of revenues - Hospitals:
     Medicare                                          77.7%          73.0%
     Medicaid                                           6.3%           6.0%
     Private and other                                 16.0%          21.0%

Revenue Mix % of revenues - Inpatient Services:
     Medicare                                          31.0%          29.9%
     Medicaid                                          46.8%          48.0%
     Private and other                                 22.2%          22.1%



              Sun Healthcare Group, Inc. and Subsidiaries
                     Selected Operating Statistics
                         Continuing Operations


                                                          For the
                                                    Three Months Ended
                                                          March 31,
                                                    2005           2004
                                                 ----------     ----------
Revenues PPD - SNF:
     Medicare (Part A)                           $   321.17     $   313.19
     Medicaid                                    $   135.62     $   131.24
     Private and other                           $   148.75     $   141.72

Revenues PPD - Hospitals:
     Medicare (Part A)                           $ 1,016.19     $   995.11
     Medicaid                                    $   901.79     $   943.07
     Private and other                           $ 1,113.60     $ 4,267.29

Revenues - Non-affiliated (in thousands):
   Inpatient Services:
     Medicare                                    $   46,086     $   43,263
     Medicaid                                        69,574         69,342
     Private and other                               33,150         32,042
                                                 ----------     ----------
            Subtotal                                148,810        144,647

     Rehabilitation Therapy                          23,977         27,471
     Medical Staffing                                14,868         13,775
     Home Health                                     14,811         13,786
     Laboratory and Radiology                         4,711          4,930
                                                 ----------     ----------
            Subtotal                                 58,367         59,962

     Other - non-core businesses                          6             32
                                                 ----------     ----------
               Total                             $  207,183     $  204,641
                                                 ==========     ==========

Rehab contracts:
     Affiliated - continuing                             90             93
     Non-Affiliated                                     317            335

DSO:
     Inpatient Services - SNF                            31             34
     Inpatient Services - Hospitals                      65             71
     Rehabilitation Therapy                              98            113
     Medical Staffing                                    57             60
     Home Health                                         56             66
     Laboratory and Radiology                           114             82

Contact Information

  • Contact:
    Investor Inquiries
    (505) 468-2341

    Media Inquiries
    (505) 468-4582