Sun Healthcare Group, Inc. Reports 2010 First-Quarter Earnings; EPS of $0.24

Sun Healthcare Group, Inc. (NASDAQ: SUNH) announced its operating results for the first quarter ended March 31, 2010 last week that showed an increase in revenues by 1.1% compared to the same period in 2009.  Revenue increases were attributable to increased patient acuity and its hospice and rehabilitation therapy businesses showed revenue growth.  The company had diluted earnings per share from continuing operations of $0.24.  On a year-over-year basis for the quarter, revenue growth in Sun’s inpatient services business totaled $5.3 million, or 1.3 percent, due principally to revenue growth in SolAmor, the Company’s hospice business. SolAmor’s revenues nearly doubled, growing from $5.8 million to $11.0 million, due to census expansion derived from an October 2009 acquisition and same store census growth. SolAmor contributed $2.1 million of EBITDA for the quarter and a margin of 19.4 percent.

Sun’s rehabilitation therapy services business, SunDance, experienced revenue growth of $6.8 million, or 15.5 percent, in the quarter. EBITDA margin also expanded in the quarter by 110 basis points, producing an 8.0 percent EBITDA margin. These results were favorably impacted by the 11.3 percent growth in revenue per contract. Sun’s medical staffing services business, CareerStaff, continues to be negatively impacted by the slow national economy as revenues were down compared to revenues in the first quarter of 2009. Despite the decline in revenues, CareerStaff experienced a solid EBITDA margin of 7.1 percent for the quarter.


"Although we’re still not seeing positive sustainable trends on the top line for our nursing centers or staffing business, the company turned in a solid quarter, driven by several factors. The acuity of the patients we care for was at an all-time high, increasing our Medicare rates and mitigating, to some extent, soft occupancy and skilled mix. Our hospice and contract rehab businesses delivered strong top-line results, and both segments are poised to have their best years in terms of EBITDA margin. In addition, our corporate overhead costs were well managed, which in turn contributed positively to our EPS results for the quarter. We increased our capital expenditure investments made in the year-over-year quarter by $5.2 million and even with that increased investment were able to generate solid free cash flow for the quarter of $21.0 million," said Richard K. Matros, Sun’s chairman and chief executive officer.

SUNH 2010 Q1 8-K filing