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):         March 26, 2008

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))

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Item 7.01.  Regulation FD Disclosure

     On March 26, 2008, Sun Healthcare Group, Inc. ("Sun") intends to conduct a presentation at the Credit Suisse Leveraged Finance Conference.  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 March 26, 2008.

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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:  March 26, 2008

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EX-99.1

Credit Suisse

2008 Leveraged Finance
Conference

Phoenix , Arizona

March 26, 2008

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
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, 2007 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 March 5, 2008 which is
available on our website at www.sunh.com and has been filed with the SEC in an 8-K.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.

References to “Sun” refer to Sun Heatlhcare Group, Inc. and its subsidiaries.

2

Forward-Looking Statements

3

Key Credit Strengths

•Attractive industry fundamentals and
reimbursement outlook

•Nationally diversified portfolio of facilities

•Focus on high-acuity patients

•Strong financial performance and underlying
asset coverage

•Robust cash flow

•Proven and experienced management team

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 TotalPopulation

Attractive Industry Demographics

4

Declining Number
of Nursing Facilities
and Beds

Source: AHCA June 2007

85 + Population

•Strong asset base of 213 inpatient
facilities across 25 states:

–190 SNFs

•33 RRS units

•51 Alzheimer units

–15 ALFs/ILFs

–8 Mental Health

•Significant facility ownership

–82 Facilities - 38%

•High CON concentration provides
barriers to entry

–17 of 25 states

•Leverages existing Sun
infrastructure to realize significant
cost savings

Total:$1,749.9 million

2007

2007

Sun Healthcare Group

Sun Healthcare Group

Pro Forma Twelve Months

Pro Forma Twelve Months

($ in millions)

Skilled

Mix

$541.5

Medicaid

$738.4

Private Pay
and Other

$470.0

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30.9%

42.2%

26.9%

Sun Pro Forma for Harborside Acquisition

6

5

10

15

3

1

9

1

12

12

3

20

3

19

10

1

15

2

17

7

9

9

8

9

7

6

24,002 Licensed Beds in 25 States

23,189 Available Beds

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.

29.6%

29.9%

Q4 2006

Q4 2007

89.7%

89.3%

Q4 2006

Q4 2007

$378

$329

$157

51.3%

53.0%

Q4 2006

Q4 2007

(1) Occupancyexcludes hospitals

(2) Medicare as a % of Revenue includes Americareand Hospice

Medicaid

$164

$155

$311

$411

7

Private and Other

(Percentages represent change from prior period)

2006

2007

89.5%

89.5%

2006

2007

30.7%

30.1%

51.2%

52.6%

2006

2007

Q4 2006

Q4 2007

$167

Managed Care/Comm

Medicare Part A

4.5%

7.7%

5.8%

8.7%

Improving Inpatient Performance Metrics
Pro Forma Sun with Harborside

.

SNFs- Lowest Cost Setting for

Rehab and Recovery

8

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

ШAverage bed size: 21 beds per center

ШCost/bed :$15,000/bed

ШDevelopment time: 6 months

ШTarget to have 50 to 55 units by year end 2008

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Rehab Recovery Suites -Product Profile

Rehab Recovery Suites -Product Profile

•Separate and distinct units within a center

•Enhanced therapy and clinical product

•Hospitality services - dedicated concierge

•Target short-term younger Medicare and
managed care patient

•ALOS: 31 days

4thQuarter 2007 Occupancy

4thQuarter 2007 Rehab %

4th Quarter 2007 ALOS

10

Centers w/RRS units

All other centers

Centers w/RRS units

All other centers

All

Other

Centers

33

RRS
Units

31

Q4 ‘07

Q4 ‘07

Q4 ‘06

Q4 ‘06

Q4 ‘07

Q4 ‘07

3.1%

3.4%

17.0%

17.4%

2.0%

2.4%

13.4%

13.3%

Managed Care %

Medicare %

84.0%

43.3%

85.2%

38.2%

Q4 ‘07

Q4 ‘07

Rehab

REX

Rehab Recovery Suites -Opportunity for Growth

Q4’07	Q4’06	2007	2006	Q4’07	Q4’06	2007	2006
33	32	33	32	38	20	38	20
$33.1	$30.2	$127.1	$119.3	$29.8	$24.6	$113.9	$97.4
$2.5	$1.6	$8.3	$3.4	$2.6	$2.6	$8.9	$7.9
7.5%	5.3%	6.5%	2.8%	8.8%	10.7%	7.8%	8.1%

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

Sun’s ancillary businesses are complementary to its core business

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Description

Geography (states)

GrossRevenue

Margin

EBITDA

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

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Financial Performance

13

	Actual Results		Pro Forma
(Dollars in thousands)	Quarter Ended December 31,		Prior Yr Q4
	2007	2006	2006
Revenue	$450,549	$258,436	$421,365
Depreciation and amortization	7,893	3,212	7,943
Interest expense, net	15,479	4,364	8,980
Income (loss) from continuing operations	37,087	9,012	11,910
EBITDAR normalized	$      55,665	$    25,411	$      47,274
Margin - EBITDAR normalized	12.4%	9.8%	11.2%
EBITDA normalized	$      36,932	$    11,259	$     26,272
Margin - EBITDA normalized	8.2%	4.4%	6.2%
Income from continuing operations - normalized	$        8,781	$       6,418	$        9,620
Diluted earnings per share - normalized	$          0.20	$         0.19	$          0.22

Sun Fourth Quarter 2007 Results

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	Actual Results		Pro Forma Results
(Dollars in thousands)	Year Ended December 31,		Year Ended December 31,
	2007	2006	2007	2006
Revenue	$1,587,307	$1,004,897	$1,749,874	$ 1,647,838
Depreciation and amortization	31,537	14,708	36,289	32,505
Interest expense, net	44,380	18,504	49,025	33,851
Income from continuing operations	56,675	12,392	55,373	27,122
EBITDAR normalized	$   189,964	$      90,817	$    210,520	$   175,582
Margin - EBITDAR normalized	12.0%	9.0%	12.0%	10.7%
EBITDA normalized	$    117,951	$      37,852	$   131,553	$     93,340
Margin - EBITDA normalized	7.4%	3.8%	7.5%	5.7%
Income from continuing operations - normalized	$      27,165	$        6,040	$     29,976	$     23,060
Diluted earnings per share - normalized	$          0.63	$          0.19	$         0.69	$         0.53

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(Dollars in millions)	2008 Guidance
	Low	High
Revenue	$1,840.0	$1,850.0
EBITDAR	238.0	242.0
EBITDA	162.0	166.0
Income from continuing operations	37.2	39.6
EBITDAR margin	12.9%	13.1%
EBITDA margin	8.8%	9.0%

Sun 2008 Guidance

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( $ In Millions)

		December 31, 2007
Cash		$55.8
Debt:
	Revolving Credit Facility - $50 million
	Term Loans	$349.9
	Mortgage Debt	177.7
	Capital Leases	1.7
	Senior Secured Debt	$529.3
	Subordinated Debt	200.0
	Total Debt	$729.3
	Market Capitalization (as of 3/21/08)	$552.5
	Total Capitalization	1,281.8

Capitalization Table

17

	Dec. 31, 2007
Total Net Debt (1)	$683.5
EBITDA (Normalized Pro Forma)	139.1
InterestExpense (Pro Forma)	59.2
Credit Statistics
Total Net Debt/EBITDA	4.91x
Total Net Senior Debit/EBITDA	3.48x
EBITDA/Interest Expense	2.35x
Lease Adjusted Credit Statistic (2)
Total Net Debt/EBITDAR	5.31x
Required Bank Covenants	2007	2008
Total Net Debt/EBITDA	6.25x	5.00x
Total Net Senior Debt/EBITDA	4.50x	3.50x
EBITDA/Interest Expense	1.80x	2.25x

Credit Statistics

(1) Total Debt reduced by cash balances in excess of $10 million (2) Lease adjusted debt estimated at 6x rent expense

( $ In Millions)	FYE 12/31/07
Cash flow from operations	$83.8
Capital expenditures	(33.5)
Free cash flow	$50.3

18

Strong Free CashFlow

19

2008
Key Focus Areas

•Same store growth

•Harborside integration/synergies

•Distinct hospice growth plan

•Company wide process improvement initiatives

•Delever balance sheet

20