Sun Healthcare Group, Inc. Reports Second-Quarter Earnings; $0.30 Normalized EPS; Continuing Margin Growth IRVINE, CA--(Marketwire - 08/05/09) - Sun Healthcare Group, Inc. (NASDAQ:SUNH - News) today
announced results for the second quarter ended June 30, 2009. Consolidated Results - Second Quarter Total net revenue for the quarter ended June 30, 2009, was $468.9 million, up 4.0 percent compared to $450.9 million for the comparable period one year ago. On a normalized basis, income from continuing operations for the quarter ended June 30, 2009, was $13.4 million, compared to $11.0 million for the comparable 2008 period. Normalized diluted earnings per share from continuing operations for the quarter ended June 30, 2009, was $0.30 compared to $0.25 for the comparable period one year ago. The table below shows results of operations for the quarter ended June 30, 2009 and 2008, including certain normalized items that have been adjusted as discussed following the table.
Actual Results
--------------------
Quarter Ended
(Dollars in thousands) June 30,
--------------------
2009 2008
--------- ---------
Revenue $ 468,884 $ 450,933
Depreciation and amortization 11,153 9,782
Interest expense, net 12,465 13,643
Pre-tax income 18,334 21,078
Income tax expense 7,517 8,445
Income from continuing operations 10,817 12,633
Loss from discontinued operations (721) (2,948)
--------- ---------
--------- ---------
Net income $ 10,096 $ 9,685
========= =========
--------- ---------
Diluted earnings per share $ 0.23 $ 0.22
========= =========
--------- ---------
EBITDAR $ 60,260 $ 63,037
========= =========
Margin - EBITDAR 12.9% 14.0%
========= =========
EBITDAR normalized $ 64,560 $ 60,387
========= =========
Margin - EBITDAR normalized 13.8% 13.4%
========= =========
--------- ---------
EBITDA $ 41,992 $ 44,503
========= =========
Margin - EBITDA 9.0% 9.9%
========= =========
EBITDA normalized $ 46,292 $ 41,853
========= =========
Margin - EBITDA normalized 9.9% 9.3%
========= =========
--------- ---------
Pre-tax income continuing operations - normalized $ 22,634 $ 18,428
========= =========
Income tax expense - normalized $ 9,280 $ 7,385
========= =========
--------- ---------
Income from continuing operations - normalized $ 13,354 $ 11,043
========= =========
Diluted earnings per share - normalized $ 0.30 $ 0.25
========= =========
--------- ---------
Net income - normalized $ 12,981 $ 7,873
========= =========
Diluted earnings per share - normalized $ 0.30 $ 0.18
========= =========
Normalized results for the quarter ended June 30, 2009, include the pre-tax expense of $4.9 million to increase prior period self-insurance reserves ($0.6 million of which were related to discontinued operations). Normalized results for the quarter ended June 30, 2008, include pre-tax income of $3.0 million to decrease prior period self-insurance reserves ($0.4 million of which were related to discontinued operations). Also during the 2009 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. On a normalized basis, comparing the quarter ended June 30, 2009, to the same period in 2008: -- revenue increased $18.0 million, or 4.0 percent; -- EBITDAR increased $4.2 million, or 6.9 percent; -- EBITDAR margin improved 40 basis points to 13.8 percent; -- EBITDA increased $4.4 million, or 10.6 percent; -- EBITDA margin improved 60 basis points to 9.9 percent; and -- income from continuing operations increased by $2.3 million, or 20.9 percent. Commenting on the results, Richard K. Matros, Sun's chairman and chief executive officer, stated, "Both occupancy and skilled mix days were soft for the quarter, with skilled mix days lower on a year-over-year basis for the first time. The company experienced a precipitous drop in those numbers early in April and took some time to recover. We are encouraged by the fact that June was higher than May, contrary to normal trends. Skilled mix as a percent of revenues did show growth for the quarter. Cost controls were excellent for the quarter, enabling the company to meet expectations, despite a $1.5 million increase in the provision for losses on accounts receivable, to reflect the slow down in payment on certain of our receivables." Inpatient Business For our core inpatient business, comparing the quarters ended June 30, 2009 and 2008, on a normalized basis:
-- revenue increased $16.9 million, or 4.2 percent, to $416.6 million from
$399.7 million;
-- net segment EBITDAR increased $3.3 million, or 4.7 percent, to
$74.3 million from $70.9 million;
-- net segment EBITDAR margin for 2009 was 17.8 percent compared to
17.7 percent in 2008;
-- net segment EBITDA increased $3.6 million, or 6.9 percent, to
$56.3 million from $52.7 million;
-- net segment EBITDA margin for 2009 was 13.5 percent compared to
13.2 percent in 2008;
-- rehabilitation RUGS utilization increased 440 basis points to
88.5 percent as a percentage of total Medicare days; and
-- Rehabilitation Extensive Service ("REX") days as a percentage of total
Medicare days was 42.1 percent, up 300 basis points from the same period
in 2008.
The revenue gain of $16.9 million in the quarter was primarily attributable to: -- an $8.8 million increase in Medicaid revenue resulting from a $6.8 million rate improvement (partially offsetting this rate improvement was $2.2 million of provider tax costs, which are recorded as an expense), coupled with a $2.0 million impact from an increase in customer base; -- a $4.4 million increase in Medicare revenue due principally to Medicare Part A rate growth and Part B volume growth; -- a $3.3 million increase in hospice revenue due to a combination of internal growth and the full-quarter impact of our September 2008 hospice acquisition; -- a $2.0 million increase in managed care/commercial insurance revenue due principally to rate growth; and -- a ($1.6) million decrease in private and other revenue due principally to a decline in customer base. Matros further stated, "We continue to have success in our strategy to provide care to higher-acuity patients, both as a result of our Rehab Recovery Suites® ('RRS') as well as execution in the portfolio generally. We currently have 51 centers with an RRS unit and we remain on target to have approximately 70 centers with an RRS unit by the end of 2009. As noted above, our case mix continued to show growth, pushing skilled mix revenues up for the quarter. I would also note that while we are taking care of these higher-acuity patients, our clinical outcomes, including those measured by external survey agencies, are the best the company has ever experienced." Ancillary Businesses For our ancillary businesses comparing the quarters ended June 30, 2009 and 2008: -- revenue increased $4.7 million, or 7.0 percent, to $71.2 million from $66.5 million; -- EBITDA increased $0.4 million, or 7.9 percent, to $5.8 million from $5.3 million; and -- EBITDA margin for 2009 was 8.1 percent compared to 8.0 percent in 2008. Conference Call Sun invites investors to listen to a conference call with Sun's senior management on Thursday, Aug. 6, 2009, at 10 a.m. Pacific / 1 p.m. Eastern, to discuss the Company's second-quarter earnings for 2009. To listen to the conference call, dial (877) 397-0250 and refer to Sun Healthcare Group. A recording of the call will be available from 4 p.m. Eastern on Aug. 6, 2009, until midnight Eastern on Sept. 5, 2009, by calling (888) 203-1112 and using access code 1409737. 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 and refinance indebtedness on favorable terms; 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 10-K/A and Quarterly Reports on Form 10-Q and 10-QA, 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)
June 30, December 31,
2009 2008
----------- -----------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 95,672 $ 92,153
Restricted cash 25,150 34,676
Accounts receivable, net 216,795 205,620
Prepaid expenses and other assets 23,141 21,456
Assets held for sale 959 3,654
Deferred tax assets 58,534 57,261
----------- -----------
Total current assets 420,251 414,820
Property and equipment, net 611,403 603,645
Intangible assets, net 50,723 54,388
Goodwill 327,020 326,808
Restricted cash, non-current 3,308 3,303
Deferred tax assets 121,015 134,807
Other assets 5,068 5,563
----------- -----------
Total assets $ 1,538,788 $ 1,543,334
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 56,821 $ 62,000
Accrued compensation and benefits 61,031 60,660
Accrued self-insurance obligations, current 48,619 45,293
Other accrued liabilities 55,831 56,857
Current portion of long-term debt and capital
lease obligations 8,260 17,865
----------- -----------
Total current liabilities 230,562 242,675
Accrued self-insurance obligations, net of
current portion 112,482 114,557
Long-term debt and capital lease obligations, net
of current portion 696,022 707,976
Unfavorable lease obligations, net 14,092 15,514
Other long-term liabilities 59,045 58,903
----------- -----------
Total liabilities 1,112,203 1,139,625
Stockholders' equity:
Preferred stock of $.01 par value, authorized
10,000,000 shares, no shares were issued and
outstanding as of June 30, 2009 and
December 31, 2008 - -
Common stock of $.01 par value, authorized
125,000,000 shares, 43,720,116 and
43,544,765 shares issued and outstanding
as of June 30, 2009 and December 31, 2008,
respectively 437 435
Additional paid-in capital 652,773 650,543
Accumulated deficit (222,344) (242,683)
Accumulated other comprehensive loss, net (4,281) (4,586)
----------- -----------
426,585 403,709
----------- -----------
Total liabilities and stockholders' equity $ 1,538,788 $ 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
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Total net revenues $ 468,884 $ 450,933
------------- -------------
Costs and expenses:
Operating salaries and benefits 262,039 252,088
Self-insurance for workers' compensation and
general and professional liability
insurance 16,815 11,697
Operating administrative costs 13,192 12,944
Other operating costs 94,563 92,179
Center rent expense 18,268 18,534
General and administrative expenses 15,721 16,111
Depreciation and amortization 11,153 9,782
Provision for losses on accounts receivable 6,294 2,877
Interest, net of interest income of $96 and
$569, respectively 12,465 13,643
Loss on sale of assets, net 40 -
------------- -------------
Total costs and expenses 450,550 429,855
------------- -------------
Income before income taxes and discontinued
operations 18,334 21,078
Income tax expense 7,517 8,445
------------- -------------
Income from continuing operations 10,817 12,633
------------- -------------
Discontinued operations:
Loss from discontinued operations, net of
related taxes (714) (1,141)
Loss on disposal of discontinued operations,
net of related taxes (7) (1,807)
------------- -------------
Loss from discontinued operations, net (721) (2,948)
------------- -------------
Net income $ 10,096 $ 9,685
============= =============
Basic income per common and common equivalent
share:
Income from continuing operations $ 0.25 $ 0.29
Loss from discontinued operations, net (0.02) (0.07)
------------- -------------
Net income $ 0.23 $ 0.22
============= =============
Diluted income per common and common
equivalent share:
Income from continuing operations $ 0.25 $ 0.29
Loss from discontinued operations, net (0.02) (0.07)
------------- -------------
Net Income $ 0.23 $ 0.22
============= =============
Weighted average number of common and
common equivalent shares outstanding:
Basic 43,851 43,188
Diluted 43,960 43,928
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
INCOME STATEMENTS
(in thousands, except per share data)
For the For the
Six Months Six Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Total net revenues $ 937,180 $ 901,302
------------- -------------
Costs and expenses:
Operating salaries and benefits 525,023 507,019
Self-insurance for workers' compensation and
general and professional liability insurance 31,474 26,471
Operating administrative costs 25,769 24,880
Other operating costs 190,382 185,121
Center rent expense 36,683 36,975
General and administrative expenses 32,471 32,697
Depreciation and amortization 21,876 19,389
Provision for losses on accounts receivable 10,281 6,184
Interest, net of interest income of $203 and
$1,114, respectively 25,191 28,074
Loss (gain) on sale of assets, net 41 (76)
------------- -------------
Total costs and expenses 899,191 866,734
------------- -------------
Income before income taxes and discontinued
operations 37,989 34,568
Income tax expense 15,575 13,833
------------- -------------
Income from continuing operations 22,414 20,735
------------- -------------
Discontinued operations:
Loss from discontinued operations, net of
related taxes (1,760) (604)
Loss on disposal of discontinued operations,
net of related taxes (315) (1,869)
------------- -------------
Loss from discontinued operations, net (2,075) (2,473)
------------- -------------
Net income $ 20,339 $ 18,262
============= =============
Basic income per common and common equivalent
share:
Income from continuing operations $ 0.51 $ 0.48
Loss from discontinued operations, net (0.05) (0.06)
------------- -------------
Net income $ 0.46 $ 0.42
============= =============
Diluted income per common and common
equivalent share:
Income from continuing operations $ 0.51 $ 0.47
Loss from discontinued operations, net (0.05) (0.06)
------------- -------------
Net Income $ 0.46 $ 0.41
============= =============
Weighted average number of common and
common equivalent shares outstanding:
Basic 43,748 43,122
Diluted 43,891 44,034
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Three Months Three Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 10,096 $ 9,685
Adjustments to reconcile net income to net
cash provided by operating activities,
including discontinued operations:
Depreciation and amortization 11,153 9,883
Amortization of favorable and unfavorable
lease intangibles (474) (488)
Provision for losses on accounts receivable 6,294 3,210
Loss on sale of assets, including
discontinued operations, net 53 1,732
Impairment charge for discontinued operation - 1,800
Stock-based compensation expense 1,641 1,368
Deferred taxes 6,345 6,442
Other - 79
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable (11,599) (3,512)
Restricted cash 1,415 3,058
Prepaid expenses and other assets (392) (1,905)
Accounts payable (1,527) (1,727)
Accrued compensation and benefits (3,907) (4,713)
Accrued self-insurance obligations 344 (2,268)
Income taxes payable - 1,121
Other accrued liabilities (5,571) (10,049)
Other long-term liabilities 885 4,266
------------ ------------
Net cash provided by operating activities 14,756 17,982
------------ ------------
Cash flows from investing activities:
Capital expenditures (13,137) (10,223)
Purchase of leased real estate (3,275) (727)
Proceeds from sale of assets held for sale - 180
Acquisitions, net of cash acquired - (6)
Insurance proceeds received for damaged property - 75
------------ ------------
Net cash used for investing activities (16,412) (10,701)
------------ ------------
Cash flows from financing activities:
Borrowings of long-term debt - 20,290
Principal repayments of long-term debt and
capital lease obligations (2,075) (22,115)
Distribution to non-controlling interest (549) -
Proceeds from issuance of common stock 7 31
------------ ------------
Net cash used for financing activities (2,617) (1,794)
------------ ------------
Net (decrease) increase in cash and cash
equivalents (4,273) 5,487
Cash and cash equivalents at beginning of period 99,945 62,882
------------ ------------
Cash and cash equivalents at end of period $ 95,672 $ 68,369
============ ============
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Six Months Six Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 20,339 $ 18,262
Adjustments to reconcile net income to net
cash provided by operating activities,
including discontinued operations:
Depreciation and amortization 21,876 19,600
Amortization of favorable and unfavorable
lease intangibles (876) (991)
Provision for losses on accounts receivable 10,281 6,511
Loss on sale of assets, including
discontinued operations, net 575 1,716
Impairment charge for discontinued operation - 1,800
Stock-based compensation expense 2,909 2,333
Deferred taxes 12,519 8,271
Other - 79
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable (21,667) (19,552)
Restricted cash 9,521 3,063
Prepaid expenses and other assets (238) (5,321)
Accounts payable (5,063) (3,130)
Accrued compensation and benefits 366 (3,651)
Accrued self-insurance obligations 1,251 (235)
Income taxes payable - 1,591
Other accrued liabilities (825) (3,617)
Other long-term liabilities 1,181 6,052
------------ ------------
Net cash provided by operating activities 52,149 32,781
------------ ------------
Cash flows from investing activities:
Capital expenditures (25,002) (16,139)
Purchase of leased real estate (3,275) (727)
Proceeds from sale of assets held for sale 2,174 3,957
Acquisitions, net of cash acquired - (313)
Insurance proceeds received for damaged property - 75
------------ ------------
Net cash used for investing activities (26,103) (13,147)
------------ ------------
Cash flows from financing activities:
Borrowings of long-term debt - 20,290
Principal repayments of long-term debt and
capital lease obligations (21,687) (25,199)
Payment to non-controlling interest - (2,035)
Distribution to non-controlling interest (860) (223)
Proceeds from issuance of common stock 20 70
------------ ------------
Net cash used for financing activities (22,527) (7,097)
------------ ------------
Net increase in cash and cash equivalents 3,519 12,537
Cash and cash equivalents at beginning of period 92,153 55,832
------------ ------------
Cash and cash equivalents at end of period $ 95,672 $ 68,369
============ ============
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA and EBITDAR
(in thousands)
For the For the
Three Months Three Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Total net revenues $ 468,884 $ 450,933
------------- -------------
Net income $ 10,096 $ 9,685
------------- -------------
Income from continuing operations 10,817 12,633
Income tax expense 7,517 8,445
Loss on sale of assets, net 40 -
------------- -------------
Net segment income $ 18,374 $ 21,078
Interest, net 12,465 13,643
Depreciation and amortization 11,153 9,782
------------- -------------
EBITDA $ 41,992 $ 44,503
Center rent expense 18,268 18,534
------------- -------------
EBITDAR $ 60,260 $ 63,037
============= =============
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA and EBITDAR
(in thousands)
For the For the
Six Months Six Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
(unaudited) (unaudited)
Total net revenues $ 937,180 $ 901,302
------------- -------------
Net income $ 20,339 $ 18,262
------------- -------------
Income from continuing operations 22,414 20,735
Income tax expense 15,575 13,833
Loss (gain) on sale of assets, net 41 (76)
------------- -------------
Net segment income $ 38,030 $ 34,492
Interest, net 25,191 28,074
Depreciation and amortization 21,876 19,389
------------- -------------
EBITDA $ 85,097 $ 81,955
Center rent expense 36,683 36,975
------------- -------------
EBITDAR $ 121,780 $ 118,930
============= =============
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 EBITDAR is defined as EBITDA before facility rent expense. EBITDA and EBITDAR 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 and EBITDAR are commonly used as analytical indicators within the healthcare industry and also serve as measures of leverage capacity and debt service ability. EBITDA and EBITDAR should not be considered as measures of financial performance under generally accepted accounting principles. As the items excluded from EBITDA and EBITDAR are significant components in understanding and assessing financial performance, EBITDA and EBITDAR 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 and EBITDAR are not measurements determined in accordance with U.S. generally accepted accounting principles and are thus susceptible to varying calculations, EBITDA and EBITDAR 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 and EBITDAR
($ in thousands)
For the Three Months Ended June 30, 2009
(unaudited)
Elimination
Rehabilitation Medical of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue Consolidated
--------- ---------- -------- -------- --------- ---------
Nonaffiliated
revenue $ 416,622 $ 26,155 $ 26,097 $ 10 $ - $ 468,884
Affiliated
revenue - 18,360 563 - (18,923) -
--------- ---------- -------- -------- --------- ---------
Total
revenue 416,622 44,515 26,660 10 (18,923) 468,884
Net
segment
income
(loss) $ 38,816 $ 3,111 $ 2,289 $(25,842) $ - $ 18,374
Interest,
net 3,111 - (1) 9,355 - 12,465
Depreciation
and
amortization 10,118 131 232 672 - 11,153
--------- ---------- -------- -------- --------- ---------
EBITDA $ 52,045 $ 3,242 $ 2,520 $(15,815) $ - $ 41,992
Center
rent
expense 17,921 114 233 - - 18,268
--------- ---------- -------- -------- --------- ---------
EBITDAR $ 69,966 $ 3,356 $ 2,753 $(15,815) $ - $ 60,260
========= ========== ======== ======== ========= =========
Normalized
EBITDA $ 56,345 $ 3,242 $ 2,520 $(15,815) $ - $ 46,292
Normalized
EBITDAR $ 74,266 $ 3,356 $ 2,753 $(15,815) $ - $ 64,560
EBITDA
margin 12.5% 7.3% 9.5% 9.0%
EBITDAR
margin 16.8% 7.5% 10.3% 12.9%
Normalized
EBITDA
margin 13.5% 7.3% 9.5% 9.9%
Normalized
EBITDAR
margin 17.8% 7.5% 10.3% 13.8%
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR"
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison"
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA and EBITDAR
($ in thousands)
For the Six Months Ended June 30, 2009
(unaudited)
Elimination
Rehabilitation Medical of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue Consolidated
--------- ---------- -------- -------- --------- ---------
Nonaffiliated
revenue $ 832,025 $ 51,670 $ 53,471 $ 14 $ - $ 937,180
Affiliated
revenue - 36,576 1,123 - (37,699) -
--------- ---------- -------- -------- --------- ---------
Total
revenue 832,025 88,246 54,594 14 (37,699) 937,180
Net
segment
income
(loss) $ 80,604 $ 6,000 $ 4,310 $(52,884) $ - $ 38,030
Interest,
net 6,322 (2) (1) 18,872 - 25,191
Depreciation
and
amortization 19,846 259 422 1,349 - 21,876
--------- ---------- -------- -------- --------- ---------
EBITDA $ 106,772 $ 6,257 $ 4,731 $(32,663) $ - $ 85,097
Center
rent
expense 35,977 229 477 - - 36,683
--------- ---------- -------- -------- --------- ---------
EBITDAR $ 142,749 $ 6,486 $ 5,208 $(32,663) $ - $ 121,780
========= ========== ======== ======== ========= =========
Normalized
EBITDA $ 111,072 $ 6,257 $ 4,731 $(32,663) $ - $ 89,397
Normalized
EBITDAR $ 147,049 $ 6,486 $ 5,208 $(32,663) $ - $ 126,080
EBITDA
margin 12.8% 7.1% 8.7% 9.1%
EBITDAR
margin 17.2% 7.3% 9.5% 13.0%
Normalized
EBITDA
margin 13.3% 7.1% 8.7% 9.5%
Normalized
EBITDAR
margin 17.7% 7.3% 9.5% 13.5%
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR"
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison"
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA and EBITDAR
($ in thousands)
For the Three Months Ended June 30, 2008
(unaudited)
Elimination
Rehabilitation Medical of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue Consolidated
--------- ---------- -------- -------- --------- ---------
Nonaffiliated
revenue $ 399,686 $ 21,142 $ 30,096 $ 9 $ - $ 450,933
Affiliated
revenue - 14,462 794 - (15,256) -
--------- ---------- -------- -------- --------- ---------
Total
revenue 399,686 35,604 30,890 9 (15,256) 450,933
Net
segment
income
(loss) $ 43,382 $ 2,562 $ 2,456 $(27,322) $ - $ 21,078
Interest,
net 3,263 - (8) 10,388 - 13,643
Depreciation
and
amortization 8,733 132 200 717 - 9,782
--------- ---------- -------- -------- --------- ---------
EBITDA $ 55,378 $ 2,694 $ 2,648 $(16,217) $ - $ 44,503
Center
rent
expense 18,195 99 240 - - 18,534
--------- ---------- -------- -------- --------- ---------
EBITDAR $ 73,573 $ 2,793 $ 2,888 $(16,217) $ - $ 63,037
========= ========== ======== ======== ========= =========
Normalized
EBITDA $ 52,728 $ 2,694 $ 2,648 $(16,217) $ - $ 41,853
Normalized
EBITDAR $ 70,923 $ 2,793 $ 2,888 $(16,217) $ - $ 60,387
EBITDA
margin 13.9% 7.6% 8.6% 9.9%
EBITDAR
margin 18.4% 7.8% 9.3% 14.0%
Normalizeded
EBITDA
margin 13.2% 7.6% 8.6% 9.3%
Normalized
EBITDAR
margin 17.7% 7.8% 9.3% 13.4%
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR"
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison"
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET SEGMENT INCOME (LOSS) TO EBITDA and EBITDAR
($ in thousands)
For the Six Months Ended June 30, 2008
(unaudited)
Elimination
Rehabilitation Medical of
Inpatient Therapy Staffing Other & Affiliated
Services Services Services Corp Seg Revenue Consolidated
--------- ---------- -------- -------- --------- ---------
Nonaffiliated
revenue $ 798,666 $ 42,851 $ 59,764 $ 21 $ - $ 901,302
Affiliated
revenue - 28,752 1,328 - (30,080) -
--------- ---------- -------- -------- --------- ---------
Total
revenue 798,666 71,603 61,092 21 (30,080) 901,302
Net
segment
income
(loss) $ 81,227 $ 4,690 $ 4,388 $(55,813) $ - $ 34,492
Interest,
net 6,582 (1) (9) 21,502 - 28,074
Depreciation
and
amortization 17,332 258 395 1,404 - 19,389
--------- ---------- -------- -------- --------- ---------
EBITDA $ 105,141 $ 4,947 $ 4,774 $(32,907) $ - $ 81,955
Center
rent
expense 36,302 185 488 - - 36,975
--------- ---------- -------- -------- --------- ---------
EBITDAR $ 141,443 $ 5,132 $ 5,262 $(32,907) $ - $ 118,930
========= ========== ======== ======== ========= =========
Normalized
EBITDA $ 103,438 $ 4,947 $ 4,774 $(32,385) $ - $ 80,774
Normalized
EBITDAR $ 139,740 $ 5,132 $ 5,262 $(32,385) $ - $ 117,749
EBITDA
margin 13.2% 6.9% 7.8% 9.1%
EBITDAR
margin 17.7% 7.2% 8.6% 13.2%
Normalized
EBITDA
margin 13.0% 6.9% 7.8% 9.0%
Normalized
EBITDAR
margin 17.5% 7.2% 8.6% 13.1%
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR"
See normalizing adjustments in the table "Normalizing Adjustments -
Quarter Comparison"
Sun Healthcare Group, Inc. and Subsidiaries
Selected Operating Statistics
Continuing Operations
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
Consolidated
Company
--------- --- --------- --- --------- --- --------- ---
Revenues -
Non-affiliated
(in thousands)
Inpatient
Services $ 416,622 $ 399,686 832,025 798,666
Rehabilitatiion
Therapy
Services 26,155 21,142 51,670 42,851
Medical
Staffing
Services 26,097 30,096 53,471 59,764
Other -
non-core
businesses 10 9 14 21
--------- --------- --------- ---------
Total $ 468,884 $ 450,933 $ 937,180 $ 901,302
========= ========= ========= =========
Revenue Mix -
Non-affiliated
(in thousands)
Medicare $ 137,863 29% $ 129,151 29% 279,739 30% 258,308 29%
Medicaid 188,030 40% 179,166 40% 369,480 39% 358,083 40%
Private and
Other 112,955 24% 115,167 25% 227,619 24% 231,898 25%
Managed Care
/ Insurance 25,789 6% 23,720 5% 52,198 6% 45,743 5%
Veterans 4,247 1% 3,729 1% 8,144 1% 7,270 1%
--------- --- --------- --- --------- --- --------- ---
Total $ 468,884 100% $ 450,933 100% $ 937,180 100% $ 901,302 100%
========= === ========= === ========= === ========= ===
Inpatient
Services Stats
--------- --- --------- --- --------- --- --------- ---
Number of
centers: 207 207 207 207
Number of
available
beds: 22,527 22,529 22,527 22,529
Occupancy %: 87.7% 89.0% 88.2% 89.2%
Payor Mix %
based on
patient days:
Medicare -
SNF Beds 15.6% 16.6% 16.1% 16.6%
Managed care
/ Ins. -
SNF Beds 4.1% 4.1% 4.2% 3.9%
--------- --------- --------- ---------
Total SNF
skilled
mix 19.7% 20.7% 20.3% 20.5%
--------- --------- --------- ---------
Medicare 14.2% 15.1% 14.6% 15.1%
Medicaid 60.8% 59.3% 60.3% 59.2%
Private and
Other 20.2% 20.9% 20.3% 21.2%
Managed Care
/ Insurance 3.8% 3.7% 3.8% 3.6%
Veterans 1.0% 1.0% 1.0% 0.9%
Revenue Mix %
of revenues:
Medicare -
SNF Beds 32.6% 32.7% 33.2% 32.7%
Managed care
/ Ins. -
SNF Beds 6.5% 6.2% 6.6% 6.0%
--------- --------- --------- ---------
Total SNF
skilled
mix 39.1% 38.9% 39.8% 38.7%
--------- --------- --------- ---------
Medicare 32.1% 31.6% 32.6% 31.7%
Medicaid 45.1% 44.8% 44.4% 44.8%
Private and
Other 15.7% 16.8% 15.8% 16.9%
Managed Care
/ Insurance 6.1% 5.9% 6.2% 5.7%
Veterans 1.0% 0.9% 1.0% 0.9%
Revenues PPD:
LTC only
Medicare
(Part A) $ 454.42 $ 415.73 $ 452.39 $ 414.31
Medicare
Blended Rate
(Part A & B) $ 494.37 $ 444.96 $ 489.93 $ 443.35
Medicaid $ 171.77 $ 165.45 $ 170.25 $ 165.25
Private and
Other $ 174.63 $ 170.06 $ 175.46 $ 169.80
Managed Care
/ Insurance $ 376.44 $ 348.64 $ 375.17 $ 345.87
Veterans $ 234.73 $ 213.59 $ 227.45 $ 211.23
Rehab contracts
--------- --- --------- --- --------- --- --------- ---
Affiliated 121 108 121 108
Non-affiliated 326 317 326 317
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - QUARTER COMPARISON
(in thousands, except per share data)
AS REPORTED - 2nd QUARTER 2009
-------------------------------------------------------------
Income from
Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- ------- ------- ------- ------- ------- -------
As Reported -
2nd QUARTER
2009 $468,884 $60,260 $41,992 $18,334 $10,817 $ (721) $10,096
Percent of
Revenue 12.9% 9.0% 3.9% 2.3% -0.2% 2.2%
Normalizing
Adjustments:
Prior periods'
self-insurance
costs - 4,300 4,300 4,300 2,537 348 2,885
-------- ------- ------- ------- ------- ------- -------
Adjusted As
Reported -
2nd QUARTER
2009 $468,884 $64,560 $46,292 $22,634 $13,354 $ (373) $12,981
======== ======= ======= ======= ======= ======= =======
Percent of
Revenue 13.8% 9.9% 4.8% 2.8% -0.1% 2.8%
Diluted EPS:
As Reported $ 0.25 $ (0.02) $ 0.23
As Adjusted $ 0.30 $ (0.01) $ 0.30
AS REPORTED - 2nd QUARTER 2008
-------------------------------------------------------------
Income from
Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- ------- ------- ------- ------- ------- -------
As Reported -
2nd QUARTER
2008 $450,933 $63,037 $44,503 $21,078 $12,633 $(2,948) $ 9,685
Percent of
Revenue 14.0% 9.9% 4.7% 2.8% -0.7% 2.1%
Normalizing
Adjustments:
Release of
insurance
reserves
related to
prior periods - (2,650) (2,650) (2,650) (1,590) (222) (1,812)
-------- ------- ------- ------- ------- ------- -------
Adjusted As
Reported -
2nd QUARTER
2008 $450,933 $60,387 $41,853 $18,428 $11,043 $(3,170) $ 7,873
======== ======= ======= ======= ======= ======= =======
Percent of
Revenue 13.4% 9.3% 4.1% 2.4% -0.7% 1.7%
Diluted EPS:
As Reported $ 0.29 $ (0.07) $ 0.22
As Adjusted $ 0.25 $ (0.07) $ 0.18
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR".
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of prior periods' self-insurance costs.
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.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - YEAR TO DATE COMPARISON
(in thousands, except per share data)
AS REPORTED -SIX MONTHS 2009
--------------------------------------------------------------
Income from
Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- -------- ------- ------- ------- ------- -------
As Reported -
Six Months
2009 $937,180 $121,780 $85,097 $37,989 $22,414 $(2,075) $20,339
Percent of
Revenue 13.0% 9.1% 4.1% 2.4% -0.2% 2.2%
Normalizing
Adjustments:
Prior periods'
self-insurance
costs - 4,300 4,300 4,300 2,537 348 2,885
-------- -------- ------- ------- ------- ------- -------
Adjusted As
Reported -
Six Months
2009 $937,180 $126,080 $89,397 $42,289 $24,951 $(1,727) $23,224
======== ======== ======= ======= ======= ======= =======
Percent of
Revenue 13.5% 9.5% 4.5% 2.7% -0.2% 2.5%
Diluted EPS:
As Reported $ 0.51 $ (0.05) $ 0.46
As Adjusted $ 0.57 $ (0.04) $ 0.53
AS REPORTED -SIX MONTHS 2008
--------------------------------------------------------------
Income from
Continuing Disc Net
Revenue EBITDAR EBITDA Pre-tax Operations Ops Income
-------- -------- ------- ------- ------- ------- -------
As Reported -
Six Months
2008 $901,302 $118,930 $81,955 $34,568 $20,735 $(2,473) $18,262
Percent of
Revenue 13.2% 9.1% 3.8% 2.3% -0.3% 2.0%
Normalizing
Adjustments:
Release of
insurance
reserves
related to
prior periods - (2,650) (2,650) (2,650) (1,590) (222) (1,812)
Harborside
integration
costs - 1,469 1,469 1,469 881 - 881
-------- -------- ------- ------- ------- ------- -------
Adjusted As
Reported -
Six Months
2008 $901,302 $117,749 $80,774 $33,387 $20,026 $(2,695) $17,331
======== ======== ======= ======= ======= ======= =======
Percent of
Revenue 13.1% 9.0% 3.7% 2.2% -0.3% 1.9%
Diluted EPS:
As Reported $ 0.47 $ (0.06) $ 0.41
As Adjusted $ 0.45 $ (0.06) $ 0.39
See definitions of EBITDA and EBITDAR in the table "Reconciliation of Net
Income to EBITDA and EBITDAR".
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of prior periods' self-insurance costs and
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:
Source: Sun Healthcare Group, Inc.
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