From Earlier: Sun Healthcare Group Sees 2012 EPS of $0.45-0.60

Sun Healthcare Group, Inc. SUNH yesterday reaffirmed its 2011 updated financial guidance and established its outlook for 2012. The Company believes that its 2011 adjusted EBITDAR and diluted earnings per share will be at the high end of the previously announced range. For 2012, the Company expects EBITDAR to be in the range of $222 million to $228 million and diluted earnings per share to be between $0.45 and $0.60. "Our expectations for 2012 incorporate organic growth opportunities from each of our four business lines, the negative impact of the implementation of the CMS Final Rule on Medicare reimbursement which was effective on Oct. 1, 2011 and expected operating and overhead cost savings generated from our mitigation strategies implemented to partially offset the impact of the CMS Final Rule," said William A. Mathies, Sun's chairman and chief executive officer. "Based on our experience to-date, we are updating the expected net impact of the final rule in 2012 to be between $40 million to $45 million versus our previously announced original estimate of $45 million to $50 million. Our 2012 guidance also assumes another year of flat Medicaid rates, net of provider taxes, and no changes to Medicare rates other than acuity growth and a moderate market basket increase in the fourth quarter of 2012. In addition, the guidance excludes the results of operations of selected assets that Sun expects to transition to held for sale status in 2012. These assets generated revenues of approximately $49 million and an EBITDA loss of approximately $4.6 million in 2011." Mathies concluded, "In December 2011, we amended our senior secured credit facility and made a voluntary debt pay-down of $50 million and increased our interest rate by 1.25 percent in return for greater flexibility to our financial covenants.