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):         August 6, 2007

SUN HEALTHCARE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-12040	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))

1

Item 7.01.  Regulation FD Disclosure

     On August 7, 2007, Sun Healthcare Group, Inc. ("Sun") will conduct 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 slide show 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 to be conducted August 7, 2007.

2

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:  August 6, 2007

3

EX-99.1

EXHIBIT 99.1

      Investor Relations Roadshow

      Investor Relations Roadshow

AUGUST 2007

AUGUST 2007

UBS Investment Bank

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/A 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, references to non-GAAP financial information and pro forma, normalized data contained herein
are reconciled to comparable GAAP financial information in our earnings release dated August 1, 2007 which
is available on our website at www.sunh.com and has been filed with the SEC in an 8K. 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

Investment Highlights

•Attractive industry fundamentals and reimbursement
  outlook

•Nationally diversified portfolio of facilities 

•Focus on high-acuity patients

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

•Demonstrated integration track record

•Strong financial performance and underlying asset
  coverage

•Proven and experienced management team

Source: CMS.

(in thousands)

SNFs- Lowest Cost Setting for Rehab and Recovery

85+ Population Growth

Declining Number of Nursing Facilities

Source: US Census Bureau.

(in millions)

7

4

6

10

15

21

1.5%

2.0%

2.2%

2.6%

3.9%

5.0%

0

5

10

15

20

2000A

2010E

2020E

2030E

2040E

2050E

0%

2%

4%

6%

8%

10%

85+ Population

% of Total Population

Comparison of per Case Rates

SNF

IRF

LTAC

Tracheotomy with Vent

$10,051

$26,051

$115,463

Respiratory with Vent

7,897

26,051

74,689

Joint Replacement

6,165

17,135

67,104

Hip Fracture

10,618

18,487

44,633

Stroke

8,905

34,196

31,496

Average

$8,727

$24,384

$66,677

Source

:  

Medpac

15.9

16.0

16.1

16.3

16.5

16.7

16.9

17.0

17.3

17.1

16.7

16.4

15.0

15.5

16.0

16.5

17.0

17.5

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

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

Attractive Industry Fundamentals

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

(2)Sun standalone.

2001

2001

2002

2002

2003

2003

2004

2004

2005

2005

2006

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%

% Margin                            (0.4%)
Adj. EBITDA($2.6)$50.5
            
4.8%

($ in millions)

2007

2007

March 2007

Completed $200 million
senior subordinated notes
offering

April 2007

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

The Sun Story

Harborside Healthcare
Overview

t73 SNFs and 2 ALFs/ILFs located in
10 states

t73 SNFs and 2 ALFs/ILFs located in
10 states

§53(1) owned and 22 leased

§53(1) owned and 22 leased

§8,979 licensed beds

§8,979 licensed beds

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

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

tFY 2006 occupancy of 91%

tFY 2006 occupancy of 91%

tFY 2006 Medicare revenue of 31%

tFY 2006 Medicare revenue of 31%

tStrong Quality Results

tStrong Quality Results

($ 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

FY 2006 Inpatient Revenue by Payor

 31%

 50%

 19%

Medicare 

$172.4

Medicaid $281.8

Private Pay 

and Other 

$108.0

Harborside’s High Quality Portfolio

($ in millions)

Adjusted EBITDAR and EBITDA 

Revenues

($ in millions)

Adj. EBITDAR % Margin9.6%11.5%12.2%13.5%

Adj. EBITDA % Margin2.4%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. 

2003

2004

2005

2006

$421.2

$447.4

$495.7

$653.2

$71.6

$32.8

$20.9

$9.9

 $88.0

 $60.3

$51.2

$40.6

Adj. EBITDA

Adj. EBITDAR

2003

2004

2005

2006

Harborside’s Strong Financial Performance

Combined Company Overview

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

•Strong asset base of 216 inpatient facilities
     across 25 states

•High CON concentration provides barriers
     to entry

–17 of 25 states

•Significant facility ownership

–81 Facilities (1) - 38%

•Leverages existing Sun infrastructure to
     realize significant cost savings

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

Total:  $788.8 million

2007

2007

Pro Forma Six Months

Pro Forma Six Months

Impatient Payor Mix

Impatient Payor Mix

($ in millions)

Medicare 

$247.6

Medicaid 

$364.8

Private Pay
and Other

 $176.5

 32%

 46%

 22%

Sun Pro Forma for Harborside Acquisition

.

.

.

6

5

10

17

3

1

9

1

12

12

4

20

3

19

10

1

15

2

17

7

9

9

8

9

7

Existing Sun State

Harborside State

Overlapping State

#

Number of Facilities

24,426 Licensed Beds in 25 States

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

Consolidated Company Financials

Consolidated Company Financials

Adjusted Pro Forma for the Six Months ended June 30, 2007

$884.1
million

Consolidated

$104.3
million

$60.7 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.

% Margin 

Sun Standalone 

Six Months

June-2007

Pro Forma Sun 

Adjusted 

EBITDAR

10

.

0

%

11.8%

.

Adjusted 

EBITDA

4.8%

6.9%

Occupancy

87.7%

88.9%

Adj. EBITDA

Adj. EBITDAR

Revenue

Sun

Harborside

Synergies

44.0%

53.3%

63.0%

54.4%

45.7%

37.0%

1.6%

1.0%

Six Months

June-2007

Improved Scale, Margins and Occupancy

Medicare as a % of Revenue (2)

Inpatient Revenue Quality Mix (3)

Inpatient Revenue Per Patient Day

Occupancy (1)

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

Commercial Insurance

Medicare [Part A]

Q2 2006

Q2 2007

31.6%

31.0%

Q2 2006

Q2 2007

88.6%

89.0%

Q2 2006

Q2 2007

$378

$354
$408
            
          

$154  

52.8%

54.0%

Q2 2006

Q2 2007

(1) Occupancy includes LTC and Hospitals.

(2) Medicare as a % of Revenue includes Americare and Hospice.

Medicaid

Private and Other

$160

$158

$166

$356

Improving Inpatient Performance Metrics
Pro Forma Sun with Harborside

 $408

Note:REX defined as Rehab with Extensive Days.

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

REX Days as a % of Medicare Days

Rehab Days as a % of Total Medicare Days

37.2%

35.0%

Q2 2006

Q2 2007

82.4%

79.0%

Q2 2006

Q2 2007

Sun’s High Acuity Strategy Drives Margins

•Sun’s rehabilitation therapy segment
     helps drive Medicare inpatient days 

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

•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

Rehab Recovery Suites - Opportunity for
Growth

•32 Centers currently have RRS

•RRS Centers have demonstrated:

–Higher Medicare occupancy

•18.6% vs. 15% in non RRS Centers

–Higher Managed Care/Comm Ins occupancy

•3.5% vs. 2.6% in non RRS Centers

–Higher Rehab RUGS

•89.8% vs. 79.8%

–Higher REX Day

•47.5% vs. 33.6%

•Additional 7 RRS units are in development as well as 1 current unit
    being expanded

Harborside Integration Plan

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

•Acquisition of Harborside resulted in the establishment of a
    third reporting division with its own dedicated
    management

•Identifiable cost saving opportunities of $12-15 million

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

One of the largest contract
rehab companies, providing
physical, occupational and
speech rehab therapy services

Specializes in temporary
therapy, pharmacy, physician,
and nursing staffing

Geography

39 States

21 States

2Q-07 Gross
Revenue

$31.1

$29.2

% of Revenue

7.0%

6.5%

2Q-07 EBITDA

Margin

Description

$2.4

$2.3

7.8%

7.7%

Sun’s ancillary businesses are complementary to its core business

Ancillary Businesses

Financial Performance

                                                                                           Low                                    High        
Revenue
          Sun                                                          $1,100.0            $1,110.0
          Harborside                                                             505.0                                    509.0
   Total                                                               $1,605.0                               $1,619.0
EBITDAR
          Sun                                   110.0                                   114.0
          Harborside                                                  71.0                                     73.0
          Synergies                                                               6.0                                       6.0
               Total                                                            187.0                                   193.0
EBITDA
          Sun                                                                             54.0                           58.0
          Harborside                                                                51.0                           53.0
          Synergies                                                                    6.0                                       6.0
               Total                                                      111.0                                   117.0

Depreciation and amortization   33.0            34.0
Interest expense, net                                                 44.0                                    45.0
Pre-tax                                                                          34.0                                    38.0
Income taxes @ 35%                                                          11.9                                    13.3
Net income                                                           $     22.1                              $    24.7

 
EBITDAR Margin                                                11.7%                                 11.9%
EBITDA Margin                                                         5.9%                    7.2%
Diluted weighted-average shares                                     44.0                       44.0
Diluted earnings per share                              $     0.50                       $    0.56

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

Sun Pro Forma 6 Months Results

•                Actual ResultsPro Forma 
                                                                         Six Months ended June 30  Six Months ended June 30
                                                 20072006                                        2007                 2006

•Revenue                         $720,233$515,215     $884,077$833,626
          

•Depreciation and amortization              13,708      6,628                          18,48415,425
          

•Interest expense, net                      14,058   9,446                        18,703         16,205
          

•Income from continuing 

•operations                                    $15,678           $6,655            $14,367        $14,146          

•EBITDAR normalized                   $ 83,720  $47,539                         $104,314   $86,900
          

•Margin -EBITDAR normalized               11.6%      9.2%11.8%10.4%

          

•EBITDA normalized                  $ 47,043   20,180   60,661  43,781
          

•Margin -EBITDA normalized                 6.5%   3.9%  6.9%              5.3%

          

•Income from continuing 
          

•Operations - normalized      $12,866          $1,553            $15,668  $9,282
          

•Diluted earnings per share

•       - normalized                                $0.29 $0.05                         $0.36  $0.21
          

   
($ in millions)    6/30/07               Pro Forma 

Cash                                                         $  84.5(1)              $    25.0(1)
Debt:
Revolver                                               15.0                         0.0
         Mortgage Debt                              83.0            83.0
         Assumed Mortgage Debt               31.752.7
         Clipper Debt                              49.8            49.6
         Senior Secured Debt                      306.4           306.4
         Senior Secured Delayed Draw                    35.035.0
         Subordinated Debt                                 200.0             200.0
         Other Long Term Debt                      1.3                           1.3
                  Total Debt              722.2       728.0

   
     Net Debt                                                            662.7                      728.0













Adjusted EBITDA                            $   113.8(2)             $   143.1(3)
Credit Ratios  
         Debt/EBITDA                             5.8/1                       5.1/1



Note: (1) Assumes cash over $25 million used to pay off debt.(2) Based on Normalized Pro Forma EBITDA for last twelve months ending 6/30/07. Excludes impact of Moffie and NHP. Includes $1 million in synergies. (3) Includes impact of Moffie $6 million and NHP $2.2 million and full impact of first synergies of $10 million.


            
            

Pro Forma Capitalization Table