EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm 
      
      
CIBC  
18th Annual Healthcare 
Conference
November 6, 2007
 
1
 
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
 
2
  
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
 
3
  
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
2006
2006
(in thousands)
Source: CMS
The long-term healthcare industry continues to grow due to demographic demand with
limited construction of new inpatient 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
2005
Attractive Industry Demographics
Declining Number of
Nursing Facilities
 
4
  
•

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

            
Strong asset base of 213 inpatient
     facilities across 25 states
•

            
High CON concentration provides
     barriers to entry
–

            
17 of 25 states
•

            
Significant facility ownership
–

            
82 Facilities (1) - 38%
•

            
Leverages existing Sun infrastructure
     to realize significant cost savings
(1) Includes exercise of Moffie and NHP purchase options.
Total:  $1,156.3 million
2007
2007
Pro Forma Nine Months
Pro Forma Nine Months
Inpatient Payor Mix
Inpatient Payor Mix
($ in millions)
Skilled
Mix 
$393.1
Medicaid 
$550.4
Private Pay
and Other
$212.8
 34%
 47.6%
18.4%
Sun Pro Forma for Harborside Acquisition
 
5
  
.
.
8
.
9

            

          
 
 
 
 
 
 
8 
8

            

          
 
 
 
 
 
 
 
 
6
5
10
15
3
1
9
1
12
12
3
20
3
19
10
1
15
2
17
7
9
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).
 
6
  
Medicare as a % of Revenue (2)
Inpatient Revenue Quality Mix (3)
Inpatient Revenue Per Patient Day
Occupancy (1)
(3) Quality mix includes all non-Medicaid inpatient revenues. 
29.4%
28.8%
Q3 2006
Q3 2007
89.7%
89.3%
Q3 2006
Q3 2007
$365
$319
$157
50.3%
52.0%
Q3 2006
Q3 2007
(1) Occupancy  excludes hospitals
(2) Medicare as a % of Revenue includes Medicare and Hospice
Medicaid
$163
$156
$308
$391
Private and Other
(Percentages represent change from prior period)
2006  YTD
2007  YTD
89.5%
89.5%
2006 YTD
2007 YTD
28.9%
29.9%
51.2%
52.4%
2006 YTD
2007  YTD
Q3 2006
Q3 2007
$167
Managed Care/Comm
Medicare Part A
3.9%
3.7%
7.1%

            

          
7.3%
Improving Inpatient Performance Metrics
Pro Forma Sun with Harborside
 
7
  
.
SNFs- Lowest Cost Setting for 
Rehab and Recovery
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 
  
SNFs Are Lowest Cost Providers
 
8
  
32 Centers currently have RRS - 8 More Under Development
3rd Quarter 2007 Occupancy
3rd Quarter 2007 Rehab %
3rd Quarter 2007 ALOS
  
Centers 
w/RRS units
All other centers
RRS units
All other centers
   
All 
 Other 
Centers
35
RRS 
Units
29
Q3 ‘07
Q3 ‘07
Rehab Recovery Suites -Opportunity for Growth
 
9
  
89.2%
89.9%
89.0%
90.0%
Centers w/ACC 
Units
All Other 
Centers
Q3 ‘06
Q3 ‘07
Alzheimers Care Centers -
Another Opportunity
•

            
51 Centers currently have Alzheimer’s units - over 1929
   beds
•

            
93.0% Occupancy in the Alzheimer’s units
 
10
  
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
•

            
YTD savings are $3.6 million
 
11
 
Q3’07
Q3’06
Q3’07
YTD
Q3’06
YTD
  
Q3’07
Q3’06
Q3’07
YTD
Q3’06
YTD
33
32
33
32
  
33
20
33
20
$31.9
$29.9
$93.9
$89.1
  
$28.3
$24.3
$84.1
$72.7
$1.8
$1.5
$5.8
$1.8
  
$2.5
$2.0
$6.3
$5.2
5.6%
5.1%
6.2%
2.0%
  
8.9%
8.2%
7.5%
7.2%
 
Specializes in temporary therapy,
pharmacy, physician, and nurse
staffing
Sun’s ancillary businesses are complementary to its core business
Description
Geography (states)
Gross Revenue
Margin
EBITDA
One of the largest contract
rehab companies, providing
physical, occupational and
speech rehab therapy services
Ancillary Businesses
 
12
  
Financial Performance
 
13
  

            

            
Actual Results 

            

            

            
Pro Forma 

            		
            
(Dollars in thousands) 

            
Quarter Ended September 30, 

            

            

            
Prior Yr Q3 

            		
            

            

            
2007 

            

            

            
2006 

            

            

            
2006 

            		
            

            

            

            

            

            

            

            

            

            

            

            

            		
            
Revenue 

            
$ 439,570 

            

            

            
$ 252,777 

            

            

            
$ 416,724 

            		
            
Depreciation and amortization 

            
10,051 

            

            

            
4,941 

            

            

            
9,262 

            		
            
Interest expense, net 

            
14,841 

            

            

            
4,697 

            

            

            
8,670 

            		
            
Income (loss) from continuing operations 

            
5,145 

            

            

            
(931)

            

            

            
3,389 

            		
            

            

            

            

            

            

            

            

            

            

            

            

            		
            
EBITDAR normalized 

            
$ 54,156 

            

            

            
$ 22,171 

            

            

            
$ 45,789 

            		
            
   Margin - EBITDAR normalized 

            
12.3%

            

            

            
8.8%

            

            

            
11.0%

            		
            

            

            

            

            

            

            

            

            

            

            

            

            		
            
EBITDA normalized 

            
$ 35,324 

            

            

            
$ 8,834 

            

            

            
$ 25,740 

            		
            
   Margin - EBITDA normalized 

            
8.0%

            

            

            
3.5%

            

            

            
6.2%

            		
            

            

            

            

            

            

            

            

            

            

            

            

            		
            
Income from continuing operations - normalized 

            
$ 6,754 

            

            

            
$ 426 

            

            

            
$ 6,550 

            		
            
Diluted earnings per share - normalized 

            
$ 0.15 

            

            

            
$ 0.01 

            

            

            
$ 0.15 

            		
            


            

            
Sun Third Quarter 2007 Results
 
14
 
Actual Results
Pro Forma Results
  
(Dollars in thousands)
Nine Months Ended Sep 30,
Nine Months Ended Sep 30,
  
2007
2006
2007
2006
Revenue
$1,136,758
$ 746,461
$1,299,325
$ 1,226,473
Depreciation and amortization
23,643
11,497
28,396
24,561
Interest expense, net
28,901
14,140
33,546
24,871
Income from continuing operations
19,533
3,344
18,232
15,176
EBITDAR normalized
$ 134,245
$ 65,371
$ 154,801
$ 128,270
Margin - EBITDAR normalized
11.8%
8.8%
11.9%
10.5%
EBITDA normalized
$ 80,965
$ 26,558
$ 94,568
$ 67,030
Margin - EBITDA normalized
7.1%
3.6%
7.3%
5.5%
Income from continuing operations -
normalized
$ 18,331
$ (414)
$ 21,143
$ 13,404
Diluted earnings per share - normalized
$ 0.43
$ (0.01)
$ 0.49
$ 0.31
 
Sun Third Quarter 2007 Results
 
15
 
Restated
UPDATED
(Dollars in millions)
May 2007 Guidance
2007 Guidance
Low
High
Low
High
Revenue
$ 1,556.0
$ 1,570.0
$ 1,578.0
$ 1,584.0
EBITDAR
179.0
185.0
189.0
191.0
EBITDA
107.0
113.0
116.0
120.0
Income from continuing operations
20.0
23.0
26.0
28.0
Diluted earnings per share
$ 0.45
$ 0.52
$ 0.59
$ 0.64
Diluted weighted average shares
44.0
44.0
44.0
44.0
EBITDAR margin
11.5%
11.8%
12.0%
12.1%
EBITDA margin
6.9%
7.2%
7.4%
7.6%
 
Sun 2007 Guidance
 
16
  
( $ In Millions)
   
Sep. 30,
2007
  
Pro Forma
Dec. 2007
Cash
  
$ 85.1 (1)
  
$ 54.1 (1)
Debt:
        
 
Mortgage Debt
129.2
  
128.0
 
Clipper Debt
49.6
  
49.6
 
Senior Secured Debt
306.4
  
304.8
 
Senior Secured Delayed Draw
35.0
  
25.0
 
Subordinated Debt
200.0
  
200.0
 
Other Long Term Debt
1.8
  
1.3
 
Total Debt
722.0
  
708.7
 
Net Debt
661.9
  
679.6
Normalized, Pro Forma LTM EBITDA
$ 120.8 (2)
  
$ 143.1 (3)
Debt/EBITDA
5.5/1
  
4.7/1
 
Pro Forma Capitalization Table
Note: (1) Assumes cash over $25 million used to pay off debt.(2) Excludes impact of Moffie and NHP. Includes $3.6 million in
synergies. (3) Includes impact of Moffie $6 million and NHP $2.2 million, full impact of first synergies of $10 million and no
additional draws on senior secured delayed draw facility should be necessary due to greater than expected cash flows from
operations.
 
17
  
2007 / 2008
Key Focus Areas
•

            
Same store growth
•

            
Harborside integration
•

            
Development of hospice business
•

            
Infrastructure effectiveness
•

            
Debt pay down
 
18
 
 
19