SOURCE: Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc.

April 28, 2009 16:05 ET

Sun Healthcare Group, Inc. Reports First-Quarter Earnings; Strongest First Quarter to Date

IRVINE, CA--(Marketwire - April 28, 2009) - Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced results for the first quarter ended March 31, 2009.

Consolidated Results - First Quarter

Total net revenue for the quarter ended March 31, 2009, was $468.3 million, up 4.0 percent compared to $450.4 million for the comparable period one year ago. Net income for the quarter ended March 31, 2009, was $10.2 million, compared to net income of $8.6 million for the comparable 2008 period. Diluted earnings per share for the quarter ended March 31, 2009, was $0.23 compared to $0.19 for the comparable period one year ago. The table below shows results of operations for the quarters ended March 31, 2009 and 2008, including certain normalized items that have been adjusted as discussed following the table.

(Dollars in thousands)                           Quarter Ended March 31,
                                                 ------------------------
                                                     2009         2008
                                                 -----------  -----------

Revenue                                          $   468,296  $   450,369

Depreciation and amortization                         10,723        9,607

Interest expense, net                                 12,726       14,431

Pre-tax income                                        19,656       13,490

Income tax expense                                     8,059        5,388

Income from continuing operations                     11,597        8,102

(Loss) income from discontinued operations            (1,354)         475
                                                 -----------  -----------
Net income                                       $    10,243  $     8,577
                                                 ===========  ===========

                                                 -----------  -----------
Diluted earnings per share                       $      0.23  $      0.19
                                                 ===========  ===========

                                                 -----------  -----------
EBITDAR                                          $    61,520  $    55,892
                                                 ===========  ===========
   Margin - EBITDAR                                     13.1%        12.4%
                                                 ===========  ===========
EBITDAR normalized                               $    61,520  $    57,361
                                                 ===========  ===========
   Margin - EBITDAR normalized                          13.1%        12.7%
                                                 ===========  ===========

                                                 -----------  -----------
EBITDA                                           $    43,105  $    37,451
                                                 ===========  ===========
   Margin - EBITDA                                       9.2%         8.3%
                                                 ===========  ===========
EBITDA normalized                                $    43,105  $    38,920
                                                 ===========  ===========
   Margin - EBITDA normalized                            9.2%         8.6%
                                                 ===========  ===========

                                                 -----------  -----------
Pre-tax income continuing operations -
 normalized                                      $    19,656  $    14,959
                                                 ===========  ===========
Income tax expense - normalized                  $     8,059  $     5,976
                                                 ===========  ===========

                                                 -----------  -----------
Income from continuing operations - normalized   $    11,597  $     8,983
                                                 ===========  ===========
Diluted earnings per share - normalized          $      0.26  $      0.20
                                                 ===========  ===========

                                                 -----------  -----------
Net income - normalized                          $    10,243  $     9,458
                                                 ===========  ===========
Diluted earnings per share - normalized          $      0.23  $      0.21
                                                 ===========  ===========

There were no normalizing adjustments for the quarter ended March 31, 2009. During the quarter, we incurred non-recurring costs of $0.9 million associated with the implementation of a new clinical/billing platform and a labor management system, but made no normalizing adjustments for these costs. Normalized results for the quarter ended March 31, 2008, include a $1.5 million pre-tax charge related to integration costs associated with the acquisition of Harborside Healthcare Corporation in 2007.

On a normalized basis, comparing the quarter ended March 31, 2009, to the same period in 2008:

--  revenue increased $17.9 million, or 4.0 percent;
--  EBITDAR increased $4.2 million, or 7.3 percent;
--  EBITDAR margin improved 40 basis points to 13.1 percent;
--  EBITDA increased $4.2 million, or 10.8 percent;
--  EBITDA margin improved 60 basis points to 9.2 percent; and
--  income from continuing operations increased by $2.6 million, or 29.1
    percent.
    

Commenting on the results, Richard K. Matros, Sun's chairman and chief executive officer, stated, "We continue to achieve positive financial results in challenging economic times by generating four-percent top line growth and solid margin improvement in the quarter. Furthermore, eliminating $5.3 million of revenues resulting from the extra revenue day in 2008, which was a leap year, and the corresponding $1.2 million EBITDA contribution, so that the year-over-year comparison is for the same number of days, we had five percent revenue growth and our EBITDA margin grew 70 basis points. Our deleveraging efforts in the quarter were significant as we reduced our long-term debt by $19.6 million through principal payments. I am also pleased with our continued strong liquidity position which, at the end of the quarter, was $150 million, comprised of $100 million in cash coupled with our $50 million undrawn revolving credit facility."

Inpatient Business

For our core inpatient business, comparing the quarters ended March 31, 2009 and 2008, on a normalized basis:

--  revenue increased $16.4 million, or 4.1 percent, to $415.4 million
    from $399.0 million;
--  net segment EBITDAR increased $4.0 million, or 5.8 percent, to $72.8
    million from $68.8 million;
--  net segment EBITDAR margin for 2009 was 17.5 percent compared to 17.2
    percent in 2008;
--  net segment EBITDA increased $4.0 million, or 7.9 percent, to $54.7
    million from $50.7 million;
--  net segment EBITDA margin for 2009 was 13.2 percent compared to 12.7
    percent in 2008;
--  rehabilitation RUGS utilization increased 400 basis points to 88.2
    percent as a percent of total Medicare days; and
--  Rehabilitation Extensive Service ("REX") days as a percent of total
    Medicare days was 41.2 percent, up 60 basis points from the same period in
    2008.
    

The revenue gain of $16.4 million in the quarter was primarily attributable to:

--  an $8.6 million increase in Medicare revenue due principally to
    Medicare part A rate growth and part B volume growth;
--  a $4.4 million increase in managed care/commercial insurance revenue
    due to a higher customer base coupled with rate growth;
--  a $2.4 million increase in Medicaid revenue resulting from a $3.7
    million rate improvement partially offset by a $1.3 million impact from a
    decrease in customer base;
--  a $3.0 million increase in hospice revenue due to both internal growth
    and a September 2008 hospice acquisition; and
--  a $2.2 million decrease in private and other revenue due principally
    to a decline in customer base.
    

Matros further stated, "I am pleased with the results achieved from the acuity shift in our skilled nursing beds. Our skilled mix at quarter-end was 20.8 percent, our highest to date. We continue to combat contraction in Medicaid rates and I am pleased to report our overall dependency on Medicaid declined in the quarter by 130 basis points sequentially to 43.7 percent, a new reported low for the company. In addition to skilled mix growth, our Rehab Recovery Suites® ("RRS") continue to be a growth driver for the company. We currently have 48 centers with an RRS unit and we remain on target to have approximately 70 centers with an RRS unit by the end of 2009."

Ancillary Businesses

For our ancillary businesses comparing the quarters ended March 31, 2009 and 2008:

--  revenue increased $5.5 million, or 8.3 percent, to $71.7 million from
    $66.2 million;
--  EBITDA increased $0.8 million, or 19.4 percent, to $5.2 million from
    $4.4 million; and
--  EBITDA margin for 2009 was 7.3 percent compared to 6.6 percent in
    2008.
    

Conference Call

Sun invites investors to listen to a conference call with Sun's senior management on Wednesday, April 29, 2009, at 10 a.m. Pacific / 1 p.m. Eastern, to discuss the Company's first-quarter earnings for 2009.

To listen to the conference call, dial (877) 719-9799 and refer to Sun Healthcare Group. A recording of the call will be available from 4 p.m. Eastern on April 29, 2009, until midnight Eastern on May 29, 2009, by calling (888) 203-1112 and using access code 2900481.

About Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc., with executive offices in Irvine, California, owns SunBridge Healthcare Corporation and other affiliated companies that operate healthcare centers 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; our ability to maintain the occupancy rates and payor mix at our healthcare centers; potential liability for losses not covered by, or in excess of, our insurance; the effects of government regulations and investigations; the significant amount of our indebtedness, covenants in our debt agreements that may restrict our activities and our ability to incur more indebtedness; the impact of the current economic downturn on 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 Forms 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. EBITDA and EBITDAR as used in this press release, and EBITDAM and EBITDARM as used in the accompanying tables, which are non-GAAP financial measures, are each reconciled to net income (loss) in the accompanying tables. In addition, the normalizing adjustments to EBITDA, EBITDAR, pre-tax income and income from continuing operations discussed in this press release and shown in the accompanying tables are non-GAAP adjustments.

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.

              SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                    (in thousands, except share data)


                                                   March 31,   December 31,
                                                      2009        2008
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)
                ASSETS

Current assets:
  Cash and cash equivalents                       $    99,945  $    92,153
  Restricted cash                                      26,568       34,676
  Accounts receivable, net                            211,552      205,620
  Prepaid expenses and other assets                    22,200       21,456
  Assets held for sale                                    959        3,654
  Deferred tax assets                                  57,705       57,261
                                                  -----------  -----------

  Total current assets                                418,929      414,820

Property and equipment, net                           605,500      603,645
Intangible assets, net                                 52,839       54,388
Goodwill                                              326,957      326,808
Restricted cash, non-current                            3,305        3,303
Deferred tax assets                                   128,189      134,807
Other assets                                            5,097        5,563
                                                  -----------  -----------

  Total assets                                    $ 1,540,816  $ 1,543,334
                                                  ===========  ===========


          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                $    58,681  $    62,000
  Accrued compensation and benefits                    64,938       60,660
  Accrued self-insurance obligations, current          46,527       45,293
  Other accrued liabilities                            61,469       56,857
  Current portion of long-term debt and capital
   lease obligations                                    8,225       17,865
                                                  -----------  -----------

  Total current liabilities                           239,840      242,675

Accrued self-insurance obligations, net of
 current portion                                      114,230      114,557
Long-term debt and capital lease obligations, net
 of current portion                                   698,061      707,976
Unfavorable lease obligations, net                     14,807       15,514
Other long-term liabilities                            59,082       58,903
                                                  -----------  -----------

  Total liabilities                                 1,126,020    1,139,625


Stockholders' equity:
  Preferred stock of $.01 par value, authorized
   10,000,000 shares, no shares were issued and
   outstanding as of March 31, 2009 and
   December 31, 2008                                        -            -
  Common stock of $.01 par value, authorized
   125,000,000 shares, 43,548,765 and
   43,544,765 shares issued and outstanding as of
   March 31, 2009 and December 31, 2008,
   respectively                                           435          435
  Additional paid-in capital                          651,455      650,543
  Accumulated deficit                                (232,439)    (242,683)
  Accumulated other comprehensive loss, net            (4,655)      (4,586)
                                                  -----------  -----------
                                                      414,796      403,709
                                                  -----------  -----------
    Total liabilities and stockholders' equity    $ 1,540,816  $ 1,543,334
                                                  ===========  ===========



                SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

                               CONSOLIDATED
                            INCOME STATEMENTS
                  (in thousands, except per share data)


                                                 For the        For the
                                              Three Months   Three Months
                                                  Ended          Ended
                                                March 31,      March 31,
                                                  2009           2008
                                              -------------  -------------
                                               (unaudited)    (unaudited)

Total net revenues                            $     468,296  $     450,369
                                              -------------  -------------
Costs and expenses:
   Operating salaries and benefits                  262,984        254,932
   Self-insurance for workers' compensation
    and general and professional liability
    insurance                                        14,659         14,774
   Operating administrative costs                    12,577         11,936
   Other operating costs                             95,819         92,941
   Center rent expense                               18,415         18,441
   General and administrative expenses               16,750         16,586
   Depreciation and amortization                     10,723          9,607
   Provision for losses on accounts
    receivable                                        3,987          3,308
   Interest, net of interest income of $108
    and $545, respectively                           12,726         14,431
   Gain on sale of assets, net                            -            (77)
                                              -------------  -------------
Total costs and expenses                            448,640        436,879
                                              -------------  -------------

Income before income taxes and discontinued
 operations                                          19,656         13,490
Income tax expense                                    8,059          5,388
                                              -------------  -------------
Income from continuing operations                    11,597          8,102
                                              -------------  -------------

Discontinued operations:
   (Loss) income from discontinued
    operations, net of related taxes                 (1,046)           537
   Loss on disposal of discontinued
    operations, net of related taxes                   (308)           (62)
                                              -------------  -------------
(Loss) income from discontinued operations,
 net                                                 (1,354)           475
                                              -------------  -------------

Net income                                    $      10,243  $       8,577
                                              =============  =============


Basic income per common and common equivalent
 share:
   Income from continuing operations          $        0.27  $        0.19
   (Loss) income from discontinued
    operations, net                                   (0.04)          0.01
                                              -------------  -------------
Net income                                    $        0.23  $        0.20
                                              =============  =============

Diluted income per common and common
 equivalent share:
   Income from continuing operations          $        0.26  $        0.18
   (Loss) income from discontinued
    operations, net                                   (0.03)          0.01
                                              -------------  -------------
Net Income                                    $        0.23  $        0.19
                                              =============  =============

Weighted average number of common and
 common equivalent shares outstanding:
   Basic                                             43,643         43,067
   Diluted                                           43,872         44,474




               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,
                                                  2009           2008
                                              -------------  -------------
                                               (unaudited)    (unaudited)

Cash flows from operating activities:
   Net income                                 $      10,243  $       8,577
   Adjustments to reconcile net income to net
    cash provided by operating activities,
    including discontinued operations:
     Depreciation and amortization                   10,723          9,717
     Amortization of favorable and
      unfavorable lease intangibles                    (401)          (503)
     Provision for losses on accounts
      receivable                                      3,987          3,301
     Loss (gain) on sale of assets, including
      discontinued operations, net                      523            (15)
     Stock-based compensation expense                 1,268            965
     Deferred taxes                                   6,174          1,829
   Changes in operating assets and
    liabilities, net of acquisitions:
     Accounts receivable                            (10,068)       (16,040)
     Restricted cash                                  8,106              5
     Prepaid expenses and other assets                  154         (3,416)
     Accounts payable                                (3,536)        (1,403)
     Accrued compensation and benefits                4,273          1,062
     Accrued self-insurance obligations                 907          2,033
     Income taxes payable                                 -            470
     Other accrued liabilities                        4,743          6,432
     Other long-term liabilities                        297          1,785
                                              -------------  -------------
         Net cash provided by operating
          activities                                 37,393         14,799
                                              -------------  -------------

Cash flows from investing activities:
   Capital expenditures                             (11,865)        (5,916)
   Proceeds from sale of assets held for sale         2,174          3,777
   Acquisitions, net of cash acquired                     -           (307)
                                              -------------  -------------
     Net cash used for investing activities          (9,691)        (2,446)
                                              -------------  -------------

Cash flows from financing activities:
   Principal repayments of long-term debt and
    capital lease obligations                       (19,612)        (3,084)
   Payment to non-controlling interest                    -         (2,035)
   Distribution to non-controlling interest            (311)          (223)
   Proceeds from issuance of common stock                13             39
                                              -------------  -------------
     Net cash used for financing activities         (19,910)        (5,303)
                                              -------------  -------------

Net increase in cash and cash equivalents             7,792          7,050
Cash and cash equivalents at beginning of
 period                                              92,153         55,832
                                              -------------  -------------
Cash and cash equivalents at end of period    $      99,945  $      62,882
                                              =============  =============






               SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

         RECONCILIATION OF NET INCOME TO EBITDA(M) and EBITDAR(M)
                              (in thousands)

                                                 For the        For the
                                              Three Months   Three Months
                                                  Ended          Ended
                                                March 31,      March 31,
                                                  2009           2008
                                              -------------  -------------
                                               (unaudited)    (unaudited)

Total net revenues                            $      468,296 $     450,369
                                              -------------- -------------

Net income                                    $       10,243 $       8,577
                                              -------------- -------------

  Income from continuing operations                   11,597         8,102

  Income tax expense                                   8,059         5,388

  Gain on sale of assets, net                              -           (77)
                                              -------------- -------------

Net segment income                            $       19,656 $      13,413

  Interest, net                                       12,726        14,431

  Depreciation and amortization                       10,723         9,607
                                              -------------- -------------

EBITDA                                        $       43,105 $      37,451

  Center rent expense                                 18,415        18,441
                                              -------------- -------------

EBITDAR                                       $       61,520 $      55,892

  Operating administrative costs                      12,577        11,936
  General and administrative expenses                 16,750        16,586
                                              -------------- -------------
Total operating and general and admin expenses        29,327        28,522

EBITDAM                                       $       72,432 $      65,973
EBITDARM                                      $       90,847 $      84,414


EBITDA is defined as earnings before income (loss) on discontinued
operations, income taxes, loss (gain) on sale of assets, net, interest,
net, depreciation and amortization. EBITDAM is defined as EBITDA before
operating and general and administrative expenses. EBITDAR is defined
as EBITDA before facility rent expense. EBITDARM is defined as EBITDAR
before operating and 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, 2009
                                (unaudited)


                        Rehabil-                      Elimination
                        itation   Medical                of
             Inpatient  Therapy   Staffing   Other &  Affiliated  Consol-
             Services   Services  Services  Corp Seg    Revenue   idated
             ---------  --------  --------  ---------  --------  ---------

Nonaffiliated
 revenue     $ 415,402  $ 25,516  $ 27,374  $       4  $      -  $ 468,296
Affiliated
 revenue             -    18,216       560          -   (18,776)         -
             ---------  --------  --------  ---------  --------  ---------
  Total
   revenue     415,402    43,732    27,934          4   (18,776)   468,296

Net segment
 income
 (loss)      $  41,789  $  2,889  $  2,021  $ (27,043) $      -  $  19,656
Interest,
 net             3,209        (1)        1      9,517         -     12,726
Depreciation
 and
 amortization    9,728       128       190        677         -     10,723
             ---------  --------  --------  ---------  --------  ---------

  EBITDA     $  54,726  $  3,016  $  2,212  $ (16,849) $      -  $  43,105
Center rent
 expense        18,056       115       244          -         -     18,415
             ---------  --------  --------  ---------  --------  ---------

  EBITDAR    $  72,782  $  3,131  $  2,456  $ (16,849) $      -  $  61,520
Operating
 and general
 and
 admin-
 istrative
 expenses        9,864     1,916       797     16,750         -     29,327
             ---------  --------  --------  ---------  --------  ---------

  EBITDAM    $  64,590  $  4,932  $  3,009  $     (99) $      -  $  72,432
  EBITDARM   $  82,646  $  5,047  $  3,253  $     (99) $      -  $  90,847


    EBITDA
     margin       13.2%      6.9%      7.9%                            9.2%
    EBITDAM
     margin       15.5%     11.3%     10.8%                           15.5%
    EBITDAR
     margin       17.5%      7.2%      8.8%                           13.1%
    EBITDARM
     margin       19.9%     11.5%     11.6%                           19.4%


See definitions of EBITDA and EBITDAR in the table "Reconciliation of
 Net Income to EBITDA(M) and EBITDAR(M)."




                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, 2008
                                (unaudited)


                        Rehabil-                      Elimination
                        itation   Medical                of
             Inpatient  Therapy   Staffing   Other &  Affiliated  Consol-
             Services   Services  Services  Corp Seg    Revenue   idated
             ---------  --------  --------  ---------  --------  ---------

Nonaffiliated
 revenue     $ 398,980  $ 21,710  $ 29,668  $      11  $      -  $ 450,369
Affiliated
 revenue             -    14,291       533          -   (14,824)         -
             ---------  --------  --------  ---------  --------  ---------
  Total
   revenue     398,980    36,001    30,201         11   (14,824)   450,369

Net segment
 income
 (loss)      $  37,843  $  2,128  $  1,932  $ (28,490) $      -  $  13,413
Interest,
 net             3,318         -        (1)    11,114         -     14,431
Depreciation
 and
 amortization    8,599       126       195        687         -      9,607
             ---------  --------  --------  ---------  --------  ---------

  EBITDA     $  49,760  $  2,254  $  2,126  $ (16,689) $      -  $  37,451
Center rent
 expense        18,107        86       248          -         -     18,441
             ---------  --------  --------  ---------  --------  ---------

  EBITDAR    $  67,867  $  2,340  $  2,374  $ (16,689) $      -  $  55,892
Operating
 and general
 and
 admin-
 istrative
 expenses        9,509     1,617       811     16,585         -     28,522
             ---------  --------  --------  ---------  --------  ---------

  EBITDAM    $  59,269  $  3,871  $  2,937  $    (104) $      -  $  65,973
  EBITDARM   $  77,376  $  3,957  $  3,185  $    (104) $      -  $  84,414


    EBITDA
     margin       12.5%      6.3%      7.0%                            8.3%
    EBITDAM
     margin       14.9%     10.8%      9.7%                           14.6%
    EBITDAR
     margin       17.0%      6.5%      7.9%                           12.4%
    EBITDARM
     margin       19.4%     11.0%     10.5%                           18.7%


See definitions of EBITDA and EBITDAR in the table "Reconciliation of
 Net Income to EBITDA(M) and EBITDAR(M)."



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


                                  For the Three Months Ended
                                          March 31,
                                -------------------------------
                                  2009                  2008
Consolidated Company

Revenues - Non-affiliated (in
 thousands)
  Inpatient Services            $ 415,402             $ 398,980
  Rehabilitation Therapy
   Services                        25,516                21,710
  Medical Staffing Services        27,374                29,668
  Other - non-core businesses           4                    11
                                ---------             ---------
    Total                       $ 468,296             $ 450,369
                                =========             =========

Revenue Mix - Non-affiliated
 (in thousands)
  Medicare                      $ 141,876         30% $ 129,158         29%
  Medicaid                        181,451         39%   178,917         40%
  Private and Other               114,664         24%   116,730         25%
  Managed Care / Insurance         26,409          6%    22,023          5%
  Veterans                          3,896          1%     3,541          1%
                                ---------  ---------  ---------  ---------
    Total                       $ 468,296        100% $ 450,369        100%
                                =========  =========  =========  =========


Inpatient Services Stats

 Number of centers:                   207                   207
 Number of available beds:         22,511                22,524
 Occupancy %:                        88.7%                 89.5%


 Payor Mix % based on patient
  days:
   Medicare - SNF Beds               16.5%                 16.7%
   Managed care / Ins. - SNF
    Beds                              4.3%                  3.8%
                                ---------             ---------
       Total SNF skilled mix         20.8%                 20.5%
                                ---------             ---------
  Medicare                           15.0%                 15.1%
  Medicaid                           59.8%                 59.1%
  Private and Other                  20.3%                 21.4%
  Managed Care / Insurance            3.9%                  3.5%
  Veterans                            1.0%                  0.9%

 Revenue Mix % of revenues:
   Medicare - SNF Beds               33.8%                 32.8%
   Managed care / Ins. - SNF
    Beds                              6.7%                  5.8%
                                ---------             ---------
       Total SNF skilled mix         40.5%                 38.6%
                                ---------             ---------
  Medicare                           33.2%                 31.7%
  Medicaid                           43.7%                 44.8%
  Private and Other                  15.9%                 17.1%
  Managed Care / Insurance            6.3%                  5.5%
  Veterans                            0.9%                  0.9%


 Revenues PPD:
  LTC only Medicare (Part A)    $  450.47             $  412.91
  Medicare Blended Rate (Part
   A & B)                       $  485.72             $  441.76
  Medicaid                      $  168.71             $  165.06
  Private and Other             $  176.28             $  169.55
  Managed Care / Insurance      $  373.93             $  342.93
  Veterans                      $  220.02             $  208.80

Rehab contracts

 Affiliated                           120                   106
 Non-affiliated                       331                   312



                SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES

             NORMALIZING ADJUSTMENTS - 1st QUARTER COMPARISON
                  (in thousands, except per share data)



                            AS REPORTED - 1st QUARTER 2009
            ===============================================================
                                                Income
                                                 from
                                               Continuing
                                                 Oper-              Net
            Revenue  EBITDAR  EBITDA   Pre-tax  ations   Disc Ops  Income
            -------- -------  -------  -------  -------  --------  -------

As Reported
 1st
 QUARTER
 2009       $468,296 $61,520  $43,105  $19,656  $11,597  $ (1,354) $10,243
Percent of
 Revenue                13.1%     9.2%     4.2%     2.5%     -0.3%     2.2%
Normalizing
 Adjustments:
 None              -       -        -        -        -         -        -
            -------- -------  -------  -------  -------  --------  -------

Adjusted As
 Reported -
 1st
 QUARTER
 2009       $468,296 $61,520  $43,105  $19,656  $11,597  $ (1,354) $10,243
            ======== =======  =======  =======  =======  ========  =======
Percent of
 Revenue                13.1%     9.2%     4.2%     2.5%     -0.3%     2.2%
Diluted
 EPS:
  As
   Reported                                     $  0.26  $  (0.03) $  0.23
  As
   Adjusted                                     $  0.26  $  (0.03) $  0.23



                              AS REPORTED - 1st QUARTER 2008
            ===============================================================
                                                Income
                                                 from
                                               Continuing
                                                 Oper-              Net
            Revenue  EBITDAR  EBITDA   Pre-tax  ations   Disc Ops  Income
            -------- -------  -------  -------  -------  --------  -------

As Reported
 - 1st
 QUARTER
 2008       $450,369 $55,892  $37,451  $13,490  $ 8,102  $    475  $ 8,577
Percent of
 Revenue                12.4%     8.3%     3.0%     1.8%      0.1%     1.9%
Normalizing
 Adjustments:
 Harborside
  integration
  costs            -   1,469    1,469    1,469      881         -      881
            -------- -------  -------  -------  -------  --------  -------

Adjusted As
 Reported -
 1st
 QUARTER
 2008       $450,369 $57,361  $38,920  $14,959  $ 8,983  $    475  $ 9,458
            ======== =======  =======  =======  =======  ========  =======
Percent of
 Revenue                12.7%     8.6%     3.3%     2.0%      0.1%     2.1%
Diluted
 EPS:
  As
   Reported                                     $  0.18  $   0.01  $  0.19
  As
   Adjusted                                     $  0.20  $   0.01  $  0.21



See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA(M) and EBITDAR(M)."

Normalizing adjustments are transactions or adjustments not related to
ongoing operations, including integration costs related to the Harborside
acquisition.

Since normalizing adjustments are not measurements determined in
accordance with U.S. generally accepted accounting principles and are thus
susceptible to varying calculations and interpretations, the information
presented herein may not be comparable to other similarly described
information of other companies.

Contact Information

  • Contact:

    Investor Inquiries
    (505) 468-2341

    Media Inquiries
    (505) 468-4582