Oppenheimer Reports On Sun Healthcare's Adjusted EPS

In a report published by Oppenheimer, in its first quarter following the spin-off and implementation of RUG-IV, Sun Healthcare Group SUNH reported adjusted EPS from continuing operations of $0.43, or GAAP ($1.24), compared to its estimate of $0.37 and Street consensus of $0.42. Oppenheimer reported that adjusted EPS exclude prior-period self-insurance costs of $0.35, a loss on the extinguishment of debt of $0.67 and REIT separation costs of $0.51. “Sun Healthcare also reaffirmed its FY2011 EPS guidance of $1.30-1.45, which was established in early January. Like the other SNFs, SUNH saw very strong Medicare rates due to the new RUGs, which overcame the higher costs associated with the new reimbursement system, and continued pressure on occupancy/skilled-mix. We believe that SUNH and the other SNFs remain an attractive sub-sector given the improved Medicare outlook.” Sun Healthcare closed yesterday at $14.70.