Delaware | 1-12040 | 13-4230695 |
(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
18831 Von Karman, Suite 400 Irvine, CA | 92,612 |
(Address of principal executive offices) | (Zip Code) |
99.1 | Press Release dated May 7, 2012. |
SUN HEALTHCARE GROUP, INC. |
/s/ Jeffrey M. Kreger |
Name: Jeffrey M. Kreger |
Title: Senior Vice President and Corporate Controller |
• | consolidated revenues were $458.5 million for the quarter, down 1.7 percent as compared to the same period in 2011 primarily as a result of the CMS Final Rule for Medicare reimbursement that became effective on Oct. 1, 2011 (the “CMS Final Rule”); |
• | consolidated adjusted EBITDAR was $52.3 million for the quarter representing an adjusted EBITDAR margin of 11.4 percent; and |
• | earnings per share was $0.07 for the quarter. |
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | |||||||
KEY INCOME STATEMENT FIGURES | |||||||
CONSOLIDATED | |||||||
(in thousands, except per share data) | |||||||
For the | For the | ||||||
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
Revenue | $ | 458,493 | $ | 466,307 | |||
Center rent expense | 36,377 | 35,692 | |||||
Depreciation and amortization | 8,430 | 7,449 | |||||
Interest expense, net | 4,411 | 4,999 | |||||
Pre-tax income | 3,047 | 16,237 | |||||
Income tax expense | 1,188 | 6,619 | |||||
Income from continuing operations | 1,859 | 9,618 | |||||
Loss from discontinued operations | (1,646 | ) | (1,506 | ) | |||
Net income | $ | 213 | $ | 8,112 | |||
Diluted earnings per share | $ | 0.01 | $ | 0.31 | |||
Adjusted EBITDAR | $ | 52,265 | $ | 64,513 | |||
Margin - Adjusted EBITDAR | 11.4 | % | 13.8 | % | |||
Adjusted EBITDA | $ | 15,888 | $ | 28,821 | |||
Margin - Adjusted EBITDA | 3.5 | % | 6.2 | % | |||
Pre-tax income from continuing operations | $ | 3,047 | $ | 16,237 | |||
Income tax expense | $ | 1,188 | $ | 6,619 | |||
Income from continuing operations | $ | 1,859 | $ | 9,618 | |||
Diluted earnings per share from continuing operations | $ | 0.07 | $ | 0.37 | |||
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table "Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR." |
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except per share data) | |||||||
March 31, 2012 | December 31, 2011 | ||||||
(unaudited) | (unaudited) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 44,771 | $ | 57,908 | |||
Restricted cash | 14,325 | 15,706 | |||||
Accounts receivable, net | 206,813 | 202,229 | |||||
Prepaid expenses and other assets | 28,022 | 29,075 | |||||
Assets held for sale | 4,537 | — | |||||
Deferred tax assets | 63,993 | 63,170 | |||||
Total current assets | 362,461 | 368,088 | |||||
Property and equipment, net | 146,033 | 148,298 | |||||
Intangible assets, net | 34,630 | 35,294 | |||||
Goodwill | 34,905 | 34,496 | |||||
Restricted cash, non-current | 353 | 353 | |||||
Deferred tax assets | 123,458 | 123,974 | |||||
Other assets | 42,825 | 45,163 | |||||
Total assets | $ | 744,665 | $ | 755,666 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 48,836 | $ | 55,888 | |||
Accrued compensation and benefits | 56,494 | 61,101 | |||||
Accrued self-insurance obligations, current portion | 59,687 | 57,810 | |||||
Other accrued liabilities | 44,746 | 43,139 | |||||
Current portion of long-term debt and capital lease obligations | 995 | 1,017 | |||||
Total current liabilities | 210,758 | 218,955 | |||||
Accrued self-insurance obligations, net of current portion | 152,921 | 157,267 | |||||
Long-term debt and capital lease obligations, net of current portion | 88,500 | 88,768 | |||||
Unfavorable lease obligations, net | 6,492 | 7,110 | |||||
Other long-term liabilities | 58,454 | 58,110 | |||||
Total liabilities | 517,125 | 530,210 | |||||
Stockholders' equity: | |||||||
Preferred stock of $.01 par value, authorized 3,333 shares, zero shares were issued and outstanding as of March 31, 2012 and December 31, 2011 | — | — | |||||
Common stock of $.01 par value, authorized 41,667 shares, 25,272 and 25,146 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively | 253 | 251 | |||||
Additional paid-in capital | 728,801 | 726,861 | |||||
Accumulated deficit | (500,214 | ) | (500,427 | ) | |||
Accumulated other comprehensive loss, net | (1,300 | ) | (1,229 | ) | |||
227,540 | 225,456 | ||||||
Total liabilities and stockholders' equity | $ | 744,665 | $ | 755,666 |
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED INCOME STATEMENTS | |||||||
(in thousands, except per share data) | |||||||
For the | For the | ||||||
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
(unaudited) | (unaudited) | ||||||
Total net revenues | $ | 458,493 | $ | 466,307 | |||
Costs and expenses: | |||||||
Operating salaries and benefits | 261,090 | 262,480 | |||||
Self-insurance for workers' compensation and general and professional liability insurance | 15,317 | 14,557 | |||||
Operating administrative costs | 12,406 | 13,067 | |||||
Other operating costs | 96,566 | 91,135 | |||||
Center rent expense | 36,377 | 35,692 | |||||
General and administrative expenses | 16,041 | 15,379 | |||||
Depreciation and amortization | 8,430 | 7,449 | |||||
Provision for losses on accounts receivable | 4,808 | 5,176 | |||||
Interest, net of interest income of $68 and $58, respectively | 4,411 | 4,999 | |||||
Restructuring costs | — | 136 | |||||
Total costs and expenses | 455,446 | 450,070 | |||||
Income before income taxes and discontinued operations | 3,047 | 16,237 | |||||
Income tax expense | 1,188 | 6,619 | |||||
Income from continuing operations | 1,859 | 9,618 | |||||
Discontinued operations: | |||||||
Loss from discontinued operations, net of related taxes | (1,646 | ) | (1,506 | ) | |||
Loss from discontinued operations, net | (1,646 | ) | (1,506 | ) | |||
Net income | $ | 213 | $ | 8,112 | |||
Basic income / (loss) per common and common equivalent share: | |||||||
Income from continuing operations | $ | 0.07 | $ | 0.37 | |||
Loss from discontinued operations, net | (0.06 | ) | (0.05 | ) | |||
Net income | $ | 0.01 | $ | 0.32 | |||
Diluted income / (loss) per common and common equivalent share: | |||||||
Income from continuing operations | $ | 0.07 | $ | 0.37 | |||
Loss from discontinued operations, net | (0.06 | ) | (0.06 | ) | |||
Net income | $ | 0.01 | $ | 0.31 | |||
Weighted average number of common and common equivalent shares outstanding: | |||||||
Basic | 26,207 | 25,740 | |||||
Diluted | 26,207 | 25,838 |
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(in thousands) | |||||||||
For the | For the | ||||||||
Three Months Ended | Three Months Ended | ||||||||
March 31, 2012 | March 31, 2011 | ||||||||
(unaudited) | (unaudited) | ||||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 213 | $ | 8,112 | |||||
Adjustments to reconcile net loss to net cash provided by | |||||||||
operating activities, including discontinued operations: | |||||||||
Depreciation and amortization | 8,582 | 7,681 | |||||||
Amortization of favorable and unfavorable lease intangibles | (513 | ) | (484 | ) | |||||
Provision for losses on accounts receivable | 5,122 | 5,644 | |||||||
Stock-based compensation expense | 2,232 | 1,449 | |||||||
Deferred taxes | (260 | ) | 2,032 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||
Accounts receivable | (9,781 | ) | (5,393 | ) | |||||
Restricted cash | 1,381 | (1,946 | ) | ||||||
Prepaid expenses and other assets | 1,752 | (249 | ) | ||||||
Accounts payable | (6,036 | ) | (1,919 | ) | |||||
Accrued compensation and benefits | (4,607 | ) | 3,438 | ||||||
Accrued self-insurance obligations | (2,469 | ) | (1,342 | ) | |||||
Income taxes payable | — | 478 | |||||||
Other accrued liabilities | 1,531 | (731 | ) | ||||||
Other long-term liabilities | 227 | (727 | ) | ||||||
Net cash (used for) provided by operating activities | (2,626 | ) | 16,043 | ||||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (9,961 | ) | (8,837 | ) | |||||
Acquisitions, net of cash acquired | (260 | ) | — | ||||||
Net cash used for investing activities | (10,221 | ) | (8,837 | ) | |||||
Cash flows from financing activities: | |||||||||
Principal repayments of long-term debt and capital lease obligations | (290 | ) | (2,798 | ) | |||||
Net cash used for financing activities | (290 | ) | (2,798 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (13,137 | ) | 4,408 | ||||||
Cash and cash equivalents at beginning of period | 57,908 | 81,163 | |||||||
Cash and cash equivalents at end of period | $ | 44,771 | $ | 85,571 | |||||
Reconciliation of net cash provided by operating activities to free cash flow: | |||||||||
Net cash (used for) provided by operating activities | $ | (2,626 | ) | $ | 16,043 | ||||
Capital expenditures | (9,961 | ) | (8,837 | ) | |||||
Free cash flow | $ | (12,587 | ) | $ | 7,206 | ||||
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | ||||||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA and ADJUSTED EBITDAR | ||||||||
(in thousands) | ||||||||
For the | For the | |||||||
Three Months Ended | Three Months Ended | |||||||
March 31, 2012 | March 31, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Total net revenues | $ | 458,493 | $ | 466,307 | ||||
Net income | $ | 213 | $ | 8,112 | ||||
Income from continuing operations | 1,859 | 9,618 | ||||||
Income tax expense | 1,188 | 6,619 | ||||||
Interest, net | 4,411 | 4,999 | ||||||
Depreciation and amortization | 8,430 | 7,449 | ||||||
EBITDA | $ | 15,888 | $ | 28,685 | ||||
Restructuring costs | — | 136 | ||||||
Adjusted EBITDA | $ | 15,888 | $ | 28,821 | ||||
Center rent expense | 36,377 | 35,692 | ||||||
Adjusted EBITDAR | $ | 52,265 | $ | 64,513 | ||||
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA and ADJUSTED EBITDAR | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
For the Three Months Ended March 31, 2012 | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Inpatient Services | Rehabilitation Therapy Services | Medical Staffing Services | Other & Corp Seg | Elimination of Affiliated Revenue | Consolidated | |||||||||||||||||||
Nonaffiliated revenue | $ | 405,788 | $ | 30,629 | $ | 22,069 | $ | 7 | — | $ | 458,493 | |||||||||||||
Affiliated revenue | — | 33,464 | 831 | — | (34,295 | ) | — | |||||||||||||||||
Total revenue | $ | 405,788 | $ | 64,093 | $ | 22,900 | $ | 7 | $ | (34,295 | ) | $ | 458,493 | |||||||||||
Income (loss) from continuing operations | $ | 19,349 | $ | 3,762 | $ | 1,431 | $ | (22,683 | ) | — | $ | 1,859 | ||||||||||||
Income tax expense | — | — | — | 1,188 | — | 1,188 | ||||||||||||||||||
Interest, net | (19 | ) | — | — | 4,430 | — | 4,411 | |||||||||||||||||
Depreciation and amortization | 7,028 | 251 | 185 | 966 | — | 8,430 | ||||||||||||||||||
EBITDA | $ | 26,358 | $ | 4,013 | $ | 1,616 | $ | (16,099 | ) | — | $ | 15,888 | ||||||||||||
Restructuring costs | — | — | — | — | — | — | ||||||||||||||||||
Adjusted EBITDA | $ | 26,358 | $ | 4,013 | $ | 1,616 | $ | (16,099 | ) | — | $ | 15,888 | ||||||||||||
Center rent expense | 36,075 | 134 | 168 | — | — | 36,377 | ||||||||||||||||||
Adjusted EBITDAR | $ | 62,433 | $ | 4,147 | $ | 1,784 | $ | (16,099 | ) | — | $ | 52,265 | ||||||||||||
Adjusted EBITDA margin | 6.5 | % | 6.3 | % | 7.1 | % | 3.5 | % | ||||||||||||||||
Adjusted EBITDAR margin | 15.4 | % | 6.5 | % | 7.8 | % | 11.4 | % | ||||||||||||||||
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the table "Reconciliation of Net Income to | ||||||||||||||||||||||||
Adjusted EBITDA and Adjusted EBITDAR." |
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA and ADJUSTED EBITDAR | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
For the Three Months Ended March 31, 2011 | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Inpatient Services | Rehabilitation Therapy Services | Medical Staffing Services | Other & Corp Seg | Elimination of Affiliated Revenue | Consolidated | |||||||||||||||||||
Nonaffiliated revenue | $ | 413,888 | $ | 30,096 | $ | 22,316 | $ | 7 | — | $ | 466,307 | |||||||||||||
Affiliated revenue | — | 32,694 | 623 | — | (33,317 | ) | — | |||||||||||||||||
Total revenue | $ | 413,888 | $ | 62,790 | $ | 22,939 | $ | 7 | $ | (33,317 | ) | $ | 466,307 | |||||||||||
Income (loss) from continuing operations | $ | 33,339 | $ | 2,772 | $ | 1,399 | $ | (27,892 | ) | — | $ | 9,618 | ||||||||||||
Income tax expense | — | — | — | 6,619 | — | 6,619 | ||||||||||||||||||
Interest, net | (6 | ) | — | 1 | 5,004 | — | 4,999 | |||||||||||||||||
Depreciation and amortization | 6,206 | 226 | 187 | 830 | — | 7,449 | ||||||||||||||||||
EBITDA | $ | 39,539 | $ | 2,998 | $ | 1,587 | $ | (15,439 | ) | — | $ | 28,685 | ||||||||||||
Restructuring costs | 136 | — | — | — | — | 136 | ||||||||||||||||||
Adjusted EBITDA | $ | 39,675 | $ | 2,998 | $ | 1,587 | $ | (15,439 | ) | — | $ | 28,821 | ||||||||||||
Center rent expense | 35,392 | 127 | 173 | — | — | 35,692 | ||||||||||||||||||
Adjusted EBITDAR | $ | 75,067 | $ | 3,125 | $ | 1,760 | $ | (15,439 | ) | — | $ | 64,513 | ||||||||||||
Adjusted EBITDA margin | 9.6 | % | 4.8 | % | 6.9 | % | 6.2 | % | ||||||||||||||||
Adjusted EBITDAR margin | 18.1 | % | 5 | % | 7.7 | % | 13.8 | % | ||||||||||||||||
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the table "Reconciliation of Net Income to | ||||||||||||||||||||||||
Adjusted EBITDA and Adjusted EBITDAR." |
Sun Healthcare Group, Inc. and Subsidiaries | ||||||||||||
Selected Operating Statistics | ||||||||||||
Continuing Operations | ||||||||||||
For the | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2012 | 2011 | |||||||||||
Consolidated Company | ||||||||||||
Revenues - Non-affiliated (in thousands) | ||||||||||||
Skilled Nursing and similar facilities | $ | 390,435 | $ | 399,554 | ||||||||
Hospice | 14,903 | 13,855 | ||||||||||
Other - Inpatient Services | 450 | 479 | ||||||||||
Inpatient Services | 405,788 | 413,888 | ||||||||||
Rehabilitation Therapy Services | 30,629 | 30,096 | ||||||||||
Medical Staffing Services | 22,069 | 22,316 | ||||||||||
Other - non-core businesses | 7 | 7 | ||||||||||
Total | $ | 458,493 | $ | 466,307 | ||||||||
Revenue Mix - Non-affiliated (in thousands) | ||||||||||||
Medicare | $ | 136,288 | 30 | % | $ | 151,251 | 32 | % | ||||
Medicaid | 186,443 | 41 | % | 177,645 | 38 | % | ||||||
Private and Other | 107,262 | 23 | % | 109,284 | 24 | % | ||||||
Managed Care / Insurance | 23,337 | 5 | % | 23,009 | 5 | % | ||||||
Veterans | 5,163 | 1 | % | 5,118 | 1 | % | ||||||
Total | $ | 458,493 | 100 | % | $ | 466,307 | 100 | % | ||||
Inpatient Services Stats | ||||||||||||
Number of centers: | 190 | 190 | ||||||||||
Number of available beds: | 20,779 | 20,818 | ||||||||||
Occupancy percent: | 87.2 | % | 87.7 | % | ||||||||
Payor Mix percentage based on patient days: | ||||||||||||
Medicare - SNF Beds | 15.3 | % | 15.8 | % | ||||||||
Managed care / Ins. - SNF Beds | 4 | % | 4.1 | % | ||||||||
Total SNF skilled mix | 19.3 | % | 19.9 | % | ||||||||
Medicare | 14 | % | 14.5 | % | ||||||||
Medicaid | 63.3 | % | 62.2 | % | ||||||||
Private and Other | 17.8 | % | 18.2 | % | ||||||||
Managed Care / Insurance | 3.7 | % | 3.8 | % | ||||||||
Veterans | 1.2 | % | 1.3 | % | ||||||||
Revenue Mix percent of revenues: | ||||||||||||
Medicare - SNF Beds | 31.6 | % | 34.9 | % | ||||||||
Managed care / Ins. - SNF Beds | 6.1 | % | 5.9 | % | ||||||||
Total SNF skilled mix | 37.7 | % | 40.8 | % | ||||||||
Medicare | 32.4 | % | 35.4 | % | ||||||||
Medicaid | 45.9 | % | 42.9 | % | ||||||||
Private and Other | 14.7 | % | 15 | % | ||||||||
Managed Care / Insurance | 5.7 | % | 5.5 | % | ||||||||
Veterans | 1.3 | % | 1.2 | % | ||||||||
Revenues Per Patient Day: | ||||||||||||
Medicare (Part A) | $ | 463.10 | $ | 522.11 | ||||||||
Medicare Blended Rate (Part A & B) | $ | 506.02 | $ | 558.27 | ||||||||
Medicaid | $ | 178.64 | $ | 173.69 | ||||||||
Medicaid, net of provider taxes | $ | 161.61 | $ | 158.62 | ||||||||
Private and Other | $ | 190.19 | $ | 196.17 | ||||||||
Managed Care / Insurance | $ | 381.54 | $ | 368.69 | ||||||||
Veterans | $ | 251.11 | $ | 245.52 | ||||||||
Rehab contracts | ||||||||||||
Affiliated | 178 | 179 | ||||||||||
Non-affiliated | 338 | 343 | ||||||||||
Average Qtrly Revenue per Contract (in thousands) | $ | 124 | $ | 120 | ||||||||