J.P Morgan Gives Color On Sun Healthcare Group's Recent Earnings Report

After the close, Sun Healthcare Group SUNH reported 4Q10 EBITDAR of $66mm, just below J.P Morgan's view. EPS came in at $0.43, $0.20 below JPM's estimate largely due to differences in D&A. Revenue was $7.6mm below JPM's outlook driven by lower inpatient revenue. The EBTIDAR margin at 13.6% was up 90bps sequentially and in-line with JPM''s outlook as higher salaries and G&A were offset by better self insurance expense, operating administrative expenses and bad debt. SUNH reaffirmed its guidance previously offered in January. The company sees EBITDAR in the range of $259-$265mm, revenue of $1,950-$1,995mm and EPS of $1.30-$1.45. The outlook for ‘11 includes the expectation of building 600 new Rehab Recovery Suites, with a '11 year end target of 2,580 beds. Inpatient revenues came in at $431.5mm, $6.4mm below JPM's outlook and up 1.9% year over year. Rehab revenues at $52.8mm were $0.5mm or 0.9% above its estimate and up 14.0% from the year ago quarter. Medical staffing revenues in the medical staffing services segment were $22.7mm, 0.5% below JPM's outlook and down 3.5% from the year ago. J.P Morgan raises its PT to $16 for $15 and has a Neutral rating on SUNH SUNH is trading lower at $14.41