8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):         May 9, 2007

SUN HEALTHCARE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-49663	85-0410612
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

18831 Von Karman, Suite 400 Irvine, CA	92612
(Address of principal executive offices)	(Zip Code)

No Change

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 7.01.  Regulation FD Disclosure

     On May 9, 2007, Sun Healthcare Group, Inc. ("Sun") conducted an investor presentation. The slide show for the presentation is attached to this report as Exhibit 99.1. The furnishing of these materials is not intended to constitute a representation that such furnishing is required by Regulation FD or other securities laws, or that the transcript includes material investor information that is not otherwise publicly available. In addition, Sun does not assume any obligation to update such information in the future.

Item 9.01 Financial Statements and Exhibits

99.1 Slide show for investor presentation conducted May 9, 2007.

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SUN HEALTHCARE GROUP, INC.

  /s/ Mike Berg                                 

Name:  Mike Berg

Title:  Secretary

Dated:  May 9, 2007

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EX-99.1

EXHIBIT 99.1

UBS 2007 Leveraged Finance Conference

UBS 2007 Leveraged Finance Conference

May 2007

May 2007

Statements made in this presentation may contain “forward-looking” information, such as forecasts of future financial performance. Such statements involve risks and uncertainties and are subject to change at any time. Factors that could cause actual results to differ materially include, but are not limited to, the following: potential liability for losses not covered by, or in excess of, our insurance; continued compliance by the Company under its debt agreements; changes in Medicare and Medicaid reimbursements; the impact of federal and state regulations and investigations; changes in payor mix and payment methodologies; our ability to integrate the operations of Harborside Healthcare Corporation; our ability to generate sufficient cash flow to operate our business; our ability to receive increases in reimbursement rates from government payors to cover increased costs; and competition for qualified staff in the healthcare industry. More information on these and other factors that could affect our business and financial results are included in our Annual Report on Form 10-K for the year ended December 31, 2006 and other public filings made with the Securities and Exchange Commission.

The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution that any forward-looking statements made by us 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.

Furthermore, any reference to non-GAAP financial information provided is reconciled herein to comparable GAAP financial information included in our SEC filings which are available on our website at www.sunh.com.

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 the Investor Relations Department of Sun 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 NW, Albuquerque, NM 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 450 Fifth Street, NW, Room 1200, Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 or visit the SEC’s web site for further information on its public reference room.

Forward-Looking Statements

1

t Attractive industry fundamentals and reimbursement outlook

t Nationally diversified portfolio of facilities

t Focus on high-acuity patients

t Harborside acquisition creates one of the largest U.S. operators

t Demonstrated integration track record

t Strong financial performance and underlying asset coverage

t Proven and experienced management team

Investment Highlights

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Source: US Census Bureau.

Source: CMS.

SNFs- Lowest Cost Setting for Rehab and Recovery

85+ Population Growth

Declining Number of Nursing Facilities

(in thousands)

(in millions)

The long-term healthcare industry continues to grow due to demographic demand
with limited construction of new inpatient facilities.

Attractive Industry Fundamentals

3

Q1 2007 Sun Standalone

Revenues by Segment (1)

(Inpatient)

(Staffing)

Total: $273.6 million

Total: $12.7 million

(1) Includes corporate eliminations and excludes sales to affiliates.

($ in millions)

($ in millions)

(1)

(Rehabilitation)

Q1 2007 Sun Standalone

EBITDA by Segment

Sun is a Leading Long-Term
Healthcare Provider

t Nationwide provider of long-term
    healthcare services to seniors

t Three operating divisions:

t   15,447 licensed beds in 19 states

t   Headquartered in Irvine, CA

t  19,800 total employees as of March
    31, 2007

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2001

2002

2003

2004

2005

2006

November 2001

Rick Matros joined Sun as
Chairman & CEO

February 2002

Exited bankruptcy

December 2004

Completed restructuring

February 2003

Commenced second
restructuring

May 2005

Announced
acquisition of Peak

December 2005

Closed Peak acquisition and
completed equity offering for
net proceeds of $38 million

October 2006

Announced acquisition of
Harborside

December 2006

Completed equity offering
for net proceeds of $121
million and completed
sale of SunPlus

February 2004

Completed PIPE for net
proceeds of $52 million

March 2004

Listed on NASDAQ

FYE December 31,    2002     2006⁽²⁾

Inpatient Facilities             233     141

Adj. EBITDAR                 $40.3    $107.2

% Margin                         5.9%   10.3%

Adj. EBITDA                   ($2.6)    $50.5

% Margin                        (0.4%)   4.8%

($ in millions)

2007

March 2007

Completed $200 million
senior subordinated notes
offering

April 2007

Closed Harborside acquisition
and completed $455 million(1)
senior secured debt offering

(1) Includes revolving credit, synthetic L/C and delayed draw term loan facilities, all of which were undrawn and close.

(2) Sun standalone.

Sun’s Recent Developments

5

Medicare as a % of Revenue

Inpatient Revenue Quality Mix (1)

Inpatient Revenue Per Patient Day

Occupancy

(1) Quality mix includes all non-Medicaid inpatient revenues.

Improving Inpatient Performance
Metrics

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Note: REX defined as Rehab with Extensive Days.

The inpatient business has a continued opportunity to improve
acuity and increase margins.

t Sun’s rehabilitation therapy segment helps drive
     Medicare inpatient days

§ Attracts high-acuity patients who require more
     intensive and medically complex care

t Sun has adapted its business model to increasingly
     provide care for high-acuity patients

§    Captures the benefit of the January 2006 RUGs

     refinement

– Added nine high-acuity categories with
     higher reimbursement rates

–    Previously these patients had been admitted to higher

     cost, post-acute care settings

REX Days as a % of Medicare Days

REX Days as a % of Rehab Days

Rehab Days as a % of Total Medicare Days

Sun’s High Acuity Strategy Drives
Margins

7

Same dedicated integration team is now focusing on the Harborside integration.

Proven Integration Track Record
with Peak Medical

Sun acquired Peak Medical Corporation in December 2005

t $151.6 million acquisition consideration in stock and assumed debt

t Operator of 56 inpatient facilities (17 owned) in 7 states

§ 49 SNFs

§ 6 ALFs / ILFs

§ 1 Mental Health Facility

t Sun management successfully integrated Peak into its inpatient portfolio and
    achieved approximately $7 million of first year synergies from the transaction, ahead
    of budget

§ Corporate Overhead

§ Billing

§ Information Technology

§ Medicare Revenue Mix

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Harborside Healthcare Overview

t 73 SNFs and 2 ALFs/ILFs located in 10 states

§ 53(1) owned and 22 leased

§ 8,979 licensed beds

§ 2006 pro forma revenues and Adjusted
    EBITDA of $653.2 million and $71.6 million,
    respectively

t FY 2006 occupancy of 91%

t FY 2006 Medicare revenue of 31%

FY 2006 Inpatient Revenue by Payor

($ in millions)

(1) Includes the to be acquired Moffie portfolio of five facilities and 688
       beds and the NHP portfolio of four facilities and 401 beds.

Total: $562.2 million

Harborside’s High Quality Portfolio

10

Overlapping State

9

Regional Office

20

4

13

2

1

6

8

10

2

Harborside State

#

Number of Facilities

Regionally Focused Footprint

11

Adjusted EBITDAR and EBITDA

Revenues

($ in millions)

($ in millions)

Adj. EBITDAR % Margin	9.6%	11.5%	12.2%	13.5%
Adj. EBITDA % Margin	2.4%	4.7%	6.6%	11.0%

Represents the full year impact of acquisitions completed during 2006 and the exercise of the Moffie and NHP purchase options.

Harborside’s Strong Financial Performance

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Medicare as a % of Revenue

Occupancy

Inpatient Revenue Quality Mix ⁽²⁾

Inpatient Revenue PPD

(1) Actual year results, including the impact of 2006 acquisitions from the date they closed.

(2) Quality mix includes all non-Medicaid inpatient revenues.

(1)

(1)

(1)

(1)

Harborside Inpatient Performance Metrics

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Combined Company Overview

(1) Includes exercise of Moffie and NHP purchase options.

Total: $1,441.3 million

FY 2006 Inpatient Payor Mix

t Strong asset base of 216 inpatient facilities across
     25 states

t High CON concentration provides barriers to entry

§ 17 of 25 states

t Significant facility ownership

§ 81 Facilities⁽¹⁾ - 38%

t Leverages existing Sun infrastructure to realize
    significant cost savings

($ in millions)

Sun Pro Forma for Harborside Acquisition

Acquisition creates one of the largest long-term care operators in the U.S.

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24,426 Licensed Beds in 25 States

Existing Sun State

Harborside State

Overlapping State

6

5

10

1

17

3

9

1

12

12

7

9

9

9

8

3

10

2

19

15

4

7

20

1

#

Number of Facilities

17

(1) Includes the exercise of Harboside’s purchase options on the Moffie portfolio (five facilities) and the NHP portfolio (four facilities).

216 inpatient facilities — 81 owned (38%) ⁽¹⁾

t 17 of the 25 states in which Sun operates are Certificate of Need (“CON”) states

Nationally Diversified Portfolio of Facilities

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Consolidated Company Financials

Adjusted Pro Forma for the Fiscal Year ended December 31, 2006

$1,698.8 million

Consolidated

$205.7 million

$132.4 million

Note: Adjusted Pro Forma combines Sun and Harborside results for 2006 annualizing transactions that took
place during the year, giving effect to the Moffie and NHP purchase options and normalizing Sun’s results.

Improved Scale, Margins and Occupancy

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Harborside Integration Plan

t Sun management has the experience and skill necessary to integrate large
     multi-facility acquisitions without disrupting existing operations

t Dedicated transition team in place with detailed integration planning under way

t Quickly identified and communicated with key Harborside employees who will be
     offered positions at Sun

t Acquisition of Harborside will result in the establishment of a third reporting division
     with its own dedicated management

t Identifiable cost saving opportunities of $12-15 million

§ Sun expects to realize approximately two-thirds of these net synergies over the
     first twelve months

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Financial Performance

Sun’s 2007 full-year guidance includes only nine months of impact from the Harborside acquisition. As such, Sun anticipates
annual 12 month run rates for depreciation and amortization to be approximately $39 to $41 million and annual 12 month run rates
for net interest expense to be approximately $56 to $59 million.

2007 Guidance

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Note 1: $10mm estimated first year synergies. $6mm guidance synergies. $8mm in nine month annualized guidance synergies

Adjusted Pro Forma EBITDA Bridge

21

(1) Pro forma for a full year of interest on debt to be assumed with the exercise of Moffie / NHP purchase options.

Pro Forma Capitalization Table

22

t Attractive industry fundamentals and reimbursement outlook

t Nationally diversified portfolio of facilities

t Focus on high-acuity patients

t Harborside acquisition creates one of the largest U.S. operators

t Demonstrated integration track record

t Strong financial performance and underlying asset coverage

t Proven and experienced management team

Investment Highlights

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Reconciliations

Definitions of EBITDA and EBITDAR

EBITDA is defined as earnings before depreciation, amortization, interest, net, loss on asset impairment, loss on
lease termination, (gain) loss on sale of assets, reorganization gain, net, restructuring costs, net, income tax
expense (benefit), and (income) loss from discontinued operations.

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, cash flows
generated by 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 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.

Normalized EBITDA and EBITDAR exclude significant adjustments not related to ongoing operations.

Reconciliation Section

Overview

25

Reconciliation Section

Reconciliation to Normalized Pro Forma Sun EBITDA(R)

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