EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
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 Total Population
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

5
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) Occupancy excludes hospitals
(2) Medicare as a % of Revenue includes Americare and 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
9
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
 
 
 
4th Quarter 2007 Occupancy
4th Quarter 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
11
Description
Geography (states)
Gross Revenue
Margin
EBITDA
One of the largest contract rehab
companies, providing physical,
occupational and speech rehab
therapy services
 
 
 
12
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
 
 
 
14
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
 
 
 
15
(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
 
 
 
16
( $ 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
      
 
Interest Expense (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 Cash Flow
 
 
 
19
2008
Key Focus Areas
• Same store growth
• Harborside integration/synergies
• Distinct hospice growth plan
• Company wide process improvement initiatives
• Delever balance sheet
 
 
 
20