IRVINE, CA--(Marketwire -02/28/12)- Sun Healthcare Group, Inc. (NASDAQ: SUNH - News) today announced its operating results for the fourth quarter and year ended Dec. 31, 2011:
- consolidated revenues were $472.9 million for the quarter and $1.93 billion for the year, down 1.6 percent and up 1.8 percent, respectively, as compared to the same periods in 2010;
- consolidated adjusted EBITDAR was $48.2 million for the quarter and $243.4 million for the year, representing adjusted EBITDAR margins of 10.2 percent and 12.6 percent, respectively;
- normalized earnings per share from continuing operations was break-even for the quarter and $1.04 for the full year; and
- free cash flow was $21.9 million for the fourth quarter and $38.9 million for the year.
Regarding the Company's fourth-quarter results, William A. Mathies, Sun's chairman and chief executive officer, stated, "As expected, we faced significant challenges in the fourth quarter related to the implementation of CMS' final rule for Medicare reimbursement to skilled nursing facilities, requiring us not only to undertake cost-mitigation efforts but also to implement changes to our therapy-delivery processes. While the parity adjustment had the impact we initially projected, the impact from the therapy changes was less than originally projected due to our more rapid deployment of process changes and improved productivity.
"Not to be overlooked in the noise surrounding the final rule, we also generated same-store growth in all of our business segments in the quarter, highlighted by a 50 basis point increase in skilled mix days and EBITDAR margin growth in all three of our ancillary services businesses," Mathies added. "We believe that these metrics illustrate our ability, even in difficult times, to continue executing on our strategy of attracting and providing high quality care for high-acuity, short-stay patients and complementing this care with the expansion of our ancillary services."
Mathies concluded, "The efforts our employees and caregivers undertook to address these reimbursement challenges were tremendous, particularly when coupled with our goal of providing the quality patient care we hold as our highest priority. While the road ahead remains difficult, our early successes in mitigating part of the impact of the CMS final rule give me increased confidence in our previously issued 2012 financial guidance."
Segment Updates
Sun's inpatient services business was significantly impacted by the CMS final rule. Even with growth in skilled mix, the decreased reimbursement rates under the CMS final rule resulted in a year-over-year decrease in revenues of $7.4 million, or 1.7 percent, with a roughly $15.0 million direct impact from the final rule parity adjustment to the Medicare rates offset somewhat by mix-driven revenue growth and the continued expansion of SolAmor, Sun's hospice business. The Company continued to expand the capacity of its Rehab Recovery Suites® (RRS) during the fourth quarter, increasing bed-count by 123, further enhancing its ability to attract high-acuity patients. These additional beds bring total available RRS beds to 2,308, an increase of 15.9 percent over the same quarter in 2010.
Inpatient services normalized adjusted EBITDAR in the quarter was $58.8 million, down $16.6 million or 22.0 percent as compared to the prior-year quarter, and normalized adjusted EBITDAR margin for inpatient services in the quarter was 14.0 percent, down 360 basis points from the prior-year quarter. These results included a $5.0 million pre-tax charge for doubtful accounts, related to the collectibility of existing private-pay receivables.
Included in the inpatient services business segment, revenues from SolAmor increased $3.1 million or 25.9 percent from $11.9 million in the fourth quarter of 2010 to $15.0 million in the fourth quarter of 2011. Same store revenue growth was 10.1 percent in the year-over-year quarter driven by growth in average daily census of 5.6 percent. SolAmor's adjusted EBITDAR was $3.8 million in the quarter, up $0.8 million over the same period a year ago and adjusted EBITDAR margin was 25.2 percent, up 50 basis points over last year.
SunDance, Sun's rehabilitation therapy services business, reported fourth-quarter revenues of $63.7 million, adjusted EBITDAR of $5.1 million and an adjusted EBITDAR margin of 8.0 percent. The changes made in the quarter to SunDance's therapy-delivery processes helped to reduce the projected negative impact from the CMS final rule.
CareerStaff, Sun's medical staffing services business, reported for the quarter revenues of $22.0 million, adjusted EBITDAR of $1.5 million and adjusted EBITDAR margin of 6.8 percent. Sequentially, revenues were stable compared to those in the third quarter while billable hours increased on a year-over-year basis.
Taxes, Capital Structure and Cash Flow
The Company benefited from several income tax credits which are not expected to recur in the future. Those income tax credits served to reduce partially the Company's income tax expense for the year ended Dec. 31, 2011, resulting in an effective income tax rate for the year of 35.9 percent, after normalizing for the restructuring costs and the loss on asset impairment recorded in the third quarter of 2011.
At Dec. 31, 2011, Sun had $57.9 million in cash and cash equivalents and $89.8 million of long-term debt. During the fourth quarter, Sun amended its credit facility and in conjunction with the amendment decreased its outstanding long-term debt by $50.0 million through the pre-payment of a portion of the long-term debt. Sun's free cash flow for the fourth quarter of 2011 was $21.9 million, which was greater than projected due to the combination of better than expected fourth quarter results and certain timing differences. Free cash flow for the full year 2011 was $38.9 million.
Conference Call
As previously announced, investors and the general public are invited to listen to a conference call with Sun's senior management on Wednesday, Feb. 29, 2012, at 10 a.m. Pacific / 1 p.m. Eastern, to discuss the Company's fourth-quarter and year-end operating results for the period ended Dec. 31, 2011.
To listen to the conference call dial (888) 428-9506 and refer to Sun Healthcare Group. A recording of the call will be available from 4 p.m. Eastern on Feb. 29, 2012, through March 29, 2012, by calling (888) 203-1112 and using access code 7155504.
About Sun Healthcare Group, Inc.
Sun Healthcare Group, Inc. (NASDAQ: SUNH - News) is a healthcare services company, serving principally the senior population, with consolidated annual revenues in excess of $1.9 billion and approximately 29,000 employees in 46 states. Sun's services are provided through its subsidiaries: as of Dec. 31, 2011, SunBridge Healthcare and its subsidiaries operate 165 skilled nursing centers, 14 combined skilled nursing, assisted and independent living centers, 10 assisted living centers, two independent living centers and eight mental health centers with an aggregate of 22,860 licensed beds in 25 states; SunDance Rehabilitation provides rehabilitation therapy services to affiliated and non-affiliated centers in 36 states; CareerStaff Unlimited provides medical staffing services in 40 states; and SolAmor Hospice provides hospice services in 11 states. For more information, go to www.sunh.com.
Forward-looking Statements
Statements made in this release that are not historical facts are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "anticipate," "believe," "plan," "estimate," "expect," "hope," "intend," "may" and similar expressions. Forward-looking statements in this release include all statements regarding the scope, timing and effectiveness of the Company's efforts to mitigate the impact on the Company's business of the CMS final rule, and the statements regarding the Company's financial guidance for 2012. Factors that could cause actual results to differ are identified in filings made by the Company with the Securities and Exchange Commission and include changes in Medicare and Medicaid reimbursements, including with respect to the CMS final rule, and the Company's ability to mitigate the impact of such changes; the impact that healthcare reform legislation will have on the Company's business; the ability to maintain the occupancy rates and payor mix at the Company's healthcare centers; potential liability for losses not covered by, or in excess of, insurance; the effects of government regulations and investigations; the ability of the Company to collect its accounts receivable on a timely basis; the amount of the Company's indebtedness; covenants in debt agreements and leases that may restrict the Company's activities, including the Company's ability to make acquisitions and incur more indebtedness on favorable terms; the impact of the economic downturn on the business; increasing labor costs and the shortage of qualified healthcare personnel; and the Company's ability to receive increases in reimbursement rates from government payors to cover increased costs. More information on factors that could affect the Company's business and financial results are included in Sun's filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on Sun's web site, www.sunh.com. There may be additional risks of which the Company is presently unaware or that it currently deems immaterial.
The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control. Sun cautions investors that any forward-looking statements made by Sun are not guarantees of future performance and are only made as of the date of this release. Sun disclaims 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.
EBITDA, adjusted EBITDA, adjusted EBITDAR and free cash flow, as used in this press release and in the accompanying tables, which are non-GAAP financial measures, are each reconciled to their respective GAAP-recognized financial measures in the accompanying tables. In addition, normalizing adjustments to adjusted EBITDAR and other financial measures, as discussed in this press release and shown in the accompanying tables, are non-GAAP adjustments and are reconciled to GAAP financial measures in the accompanying tables.
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
December 31, 2011 December 31, 2010
------------------ ------------------
Revenue $ 472,919 $ 480,771
Center rent expense 37,199 28,085
Depreciation and amortization 8,450 10,182
Interest expense, net 4,762 8,611
Pre-tax loss (2,194) (49,266)
Income tax benefit (2,185) (17,026)
Loss from continuing operations (9) (32,240)
Loss from discontinued operations (410) (136)
------------------ ------------------
Net loss $ (419) $ (32,376)
================== ==================
Diluted loss per share $ (0.02) $ (1.26)
================== ==================
----------------------------------------------------------------------------
Adjusted EBITDAR $ 48,217 $ 27,680
Margin - Adjusted EBITDAR 10.2% 5.8%
Adjusted EBITDAR normalized $ 48,217 $ 65,543
Margin - Adjusted EBITDAR normalized 10.2% 13.6%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA $ 11,018 $ (405)
Margin - Adjusted EBITDA 2.3% -0.1%
Adjusted EBITDA normalized $ 11,018 $ 37,458
Margin - Adjusted EBITDA normalized 2.3% 7.8%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Pre-tax loss continuing operations -
normalized $ (2,194) $ 18,665
Income tax (benefit)/expense -
normalized $ (2,185) $ 7,779
(Loss)/Income from continuing
operations - normalized $ (9) $ 10,886
Diluted earnings per share from
continuing operations - normalized $ - $ 0.42
----------------------------------------------------------------------------
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Quarter
Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
KEY INCOME STATEMENT FIGURES
CONSOLIDATED
(in thousands, except per share data)
For the For the
Year Ended Year Ended
December 31, 2011 December 31, 2010
------------------ ------------------
Revenue $ 1,930,340 $ 1,896,505
Center rent expense 148,308 84,390
Depreciation and amortization 32,086 47,631
Interest expense, net 19,451 42,717
Pre-tax (loss) income (277,105) 184
Income tax expense 12,457 2,964
Loss from continuing operations (289,562) (2,780)
Loss from discontinued operations (2,204) (1,870)
------------------ ------------------
Net loss $ (291,766) $ (4,650)
================== ==================
Diluted loss per share $ (11.19) $ (0.24)
================== ==================
----------------------------------------------------------------------------
Adjusted EBITDAR $ 243,369 $ 204,990
Margin - Adjusted EBITDAR 12.6% 10.8%
Adjusted EBITDAR normalized $ 243,369 $ 249,849
Margin - Adjusted EBITDAR normalized 12.6% 13.2%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA $ 95,061 $ 120,600
Margin - Adjusted EBITDA 4.9% 6.4%
Adjusted EBITDA normalized $ 95,061 $ 165,459
Margin - Adjusted EBITDA normalized 4.9% 8.7%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Pre-tax income continuing operations
- normalized $ 42,412 $ 75,111
Income tax expense - normalized $ 15,205 $ 30,637
Income from continuing operations -
normalized $ 27,207 $ 44,474
Diluted earnings per share from
continuing operations - normalized $ 1.04 $ 2.31
----------------------------------------------------------------------------
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Quarter
Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 57,908 $ 81,163
Restricted cash 15,706 15,329
Accounts receivable, net 202,229 214,518
Prepaid expenses and other assets 29,075 20,381
Deferred tax assets 63,170 69,800
------------------ ------------------
Total current assets 368,088 401,191
Property and equipment, net 148,298 139,860
Intangible assets, net 35,294 39,815
Goodwill 34,496 350,199
Restricted cash, non-current 353 350
Deferred tax assets 123,974 126,540
Other assets 45,163 23,803
------------------ ------------------
Total assets $ 755,666 $ 1,081,758
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 55,888 $ 49,993
Accrued compensation and benefits 61,101 61,518
Accrued self-insurance
obligations, current portion 57,810 52,093
Other accrued liabilities 43,139 53,945
Current portion of long-term debt
and capital lease obligations 1,017 11,050
------------------ ------------------
Total current liabilities 218,955 228,599
Accrued self-insurance obligations,
net of current portion 157,267 133,405
Long-term debt and capital lease
obligations, net of current portion 88,768 144,930
Unfavorable lease obligations, net 7,110 9,815
Other long-term liabilities 58,110 52,566
------------------ ------------------
Total liabilities 530,210 569,315
Stockholders' equity:
Preferred stock of $.01 par value,
authorized 3,333 shares, zero
shares were issued and
outstanding as of December 31,
2011 and December 31, 2010 - -
Common stock of $.01 par value,
authorized 41,667 shares, 25,146
and 24,974 shares issued and
outstanding as of December 31,
2011 and December 31, 2010,
respectively 251 250
Additional paid-in capital 726,861 720,854
Accumulated deficit (500,427) (208,661)
Accumulated other comprehensive
loss, net (1,229) -
------------------ ------------------
225,456 512,443
------------------ ------------------
Total liabilities and
stockholders' equity $ 755,666 $ 1,081,758
================== ==================
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
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
Total net revenues $ 472,919 $ 480,771
------------------ ------------------
Costs and expenses:
Operating salaries and benefits 267,860 272,182
Self-insurance for workers'
compensation and general and
professional liability insurance 15,249 27,035
Operating administrative costs 12,058 13,011
Other operating costs 102,043 97,893
Center rent expense 37,199 28,085
General and administrative
expenses 17,175 16,273
Depreciation and amortization 8,450 10,182
Provision for losses on accounts
receivable 10,317 4,580
Interest, net of interest income
of $80 and $92, respectively 4,762 8,611
Loss on extinguishment of debt,
net - 29,221
Transaction costs - 22,117
Loss on sale of assets, net - 847
------------------ ------------------
Total costs and expenses 475,113 530,037
------------------ ------------------
Loss before income taxes and
discontinued operations (2,194) (49,266)
Income tax benefit (2,185) (17,026)
------------------ ------------------
Loss from continuing operations (9) (32,240)
------------------ ------------------
Discontinued operations:
Loss from discontinued operations,
net of related taxes (410) (136)
Loss from discontinued operations,
net (410) (136)
------------------ ------------------
Net loss $ (419) $ (32,376)
================== ==================
Basic loss per common and common
equivalent share:
Loss from continuing operations $ - $ (1.25)
Loss from discontinued operations,
net (0.02) (0.01)
------------------ ------------------
Net loss $ (0.02) $ (1.26)
================== ==================
Diluted loss per common and common
equivalent share:
Loss from continuing operations $ - $ (1.25)
Loss from discontinued operations,
net (0.02) (0.01)
------------------ ------------------
Net loss $ (0.02) $ (1.26)
================== ==================
Weighted average number of common
and common equivalent shares
outstanding:
Basic 26,216 25,791
Diluted 26,216 25,791
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
For the For the
Year Ended Year Ended
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
Total net revenues $ 1,930,340 $ 1,896,505
------------------ ------------------
Costs and expenses:
Operating salaries and benefits 1,086,109 1,071,786
Self-insurance for workers'
compensation and general and
professional liability insurance 61,027 70,468
Operating administrative costs 51,971 51,943
Other operating costs 400,256 386,972
Center rent expense 148,308 84,390
General and administrative
expenses 62,331 60,842
Depreciation and amortization 32,086 47,631
Provision for losses on accounts
receivable 25,277 20,391
Interest, net of interest income
of $324 and $314, respectively 19,451 42,717
Loss on extinguishment of debt,
net - 29,221
Transaction costs - 29,113
Loss on sale of assets, net 810 847
Restructuring costs 2,728 -
Loss on asset impairment 317,091 -
------------------ ------------------
Total costs and expenses 2,207,445 1,896,321
------------------ ------------------
(Loss) income before income taxes
and discontinued operations (277,105) 184
Income tax expense 12,457 2,964
------------------ ------------------
Loss from continuing operations (289,562) (2,780)
------------------ ------------------
Discontinued operations:
Loss from discontinued operations,
net of related taxes (1,523) (1,870)
Loss on disposal of discontinued
operations, net of related taxes (681) -
------------------ ------------------
Loss from discontinued operations,
net (2,204) (1,870)
------------------ ------------------
Net loss $ (291,766) $ (4,650)
================== ==================
Basic loss per common and common
equivalent share:
Loss from continuing operations $ (11.10) $ (0.14)
Loss from discontinued operations,
net (0.09) (0.10)
------------------ ------------------
Net loss $ (11.19) $ (0.24)
================== ==================
Diluted loss per common and common
equivalent share:
Loss from continuing operations $ (11.10) $ (0.14)
Loss from discontinued operations,
net (0.09) (0.10)
------------------ ------------------
Net Loss $ (11.19) $ (0.24)
================== ==================
Weighted average number of common
and common equivalent shares
outstanding:
Basic 26,083 19,280
Diluted 26,083 19,280
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Three Months Ended Three Months Ended
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
Cash flows from operating
activities:
Net loss $ (419) $ (32,376)
Adjustments to reconcile net loss
to net cash provided by operating
activities, including
discontinued operations:
Loss on extinguishment of debt - 14,126
Depreciation and amortization 8,452 10,279
Amortization of favorable and
unfavorable lease intangibles (557) (493)
Provision for losses on accounts
receivable 10,317 4,747
Loss on sale of assets,
including discontinued
operations, net - 847
Stock-based compensation expense 3,200 1,552
Deferred taxes (1,717) (16,566)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (4,174) (6,445)
Restricted cash 675 331
Prepaid expenses and other
assets 2,405 (2,341)
Accounts payable 7,473 1,786
Accrued compensation and
benefits 11,744 574
Accrued self-insurance
obligations 3,671 12,849
Income taxes payable - (1,605)
Other accrued liabilities (6,918) (8,643)
Other long-term liabilities (421) (872)
------------------ ------------------
Net cash provided by (used
for) operating activities 33,731 (22,250)
------------------ ------------------
Cash flows from investing
activities:
Capital expenditures (11,800) (12,040)
Acquisitions, net of cash acquired (1,000) (13,894)
------------------ ------------------
Net cash used for investing
activities (12,800) (25,934)
------------------ ------------------
Cash flows from financing
activities:
Borrowings of long-term debt - 415,000
Principal repayments of long-term
debt and capital lease
obligations (52,797) (322,041)
Distribution to non-controlling
interest - (36)
Distribution to Sabra Health Care
REIT, Inc. - (66,862)
Dividends to stockholders - (9,996)
Proceeds from issuance of common
stock - (608)
Deferred financing costs (1,405) (24,460)
------------------ ------------------
Net cash used for financing
activities (54,202) (9,003)
------------------ ------------------
Net decrease in cash and cash
equivalents (33,271) (57,187)
Cash and cash equivalents at
beginning of period 91,179 138,350
------------------ ------------------
Cash and cash equivalents at end of
period $ 57,908 $ 81,163
================== ==================
----------------------------------------------------------------------------
Reconciliation of net cash provided
by operating activities to free
cash flow:
Net cash provided by (used for)
operating activities $ 33,731 $ (22,250)
Capital expenditures (11,800) (12,040)
Cash used for professional fees
on restructuring - 24,232
Cash used for early redemption
fees - 15,095
Cash used for broker fees on
acquisitions - 446
------------------ ------------------
Free cash flow $ 21,931 $ 5,483
================== ==================
----------------------------------------------------------------------------
Free cash flow is defined as net cash flow provided by operating activities
less cash used for capital expenditures.
Free cash flow is used by management to evaluate discretionary cash flow
potentially available for principal repayment and other financing
activities.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the For the
Twelve Months Ended Twelve Months Ended
December 31, 2011 December 31, 2010
------------------- -------------------
(unaudited) (unaudited)
Cash flows from operating
activities:
Net loss $ (291,766) $ (4,650)
Adjustments to reconcile net
loss to net cash provided by
operating activities, including
discontinued operations:
Loss on extinguishment of debt - 14,126
Depreciation and amortization 32,331 48,023
Amortization of favorable and
unfavorable lease intangibles (2,023) (1,945)
Provision for losses on
accounts receivable 25,796 21,175
Loss on sale of assets,
including discontinued
operations, net 1,926 847
Loss on asset impairment 317,091 -
Stock-based compensation
expense 8,360 6,300
Deferred taxes 8,154 (1,590)
Changes in operating assets and
liabilities, net of
acquisitions:
Accounts receivable (15,561) (18,945)
Restricted cash (1,201) 3,176
Prepaid expenses and other
assets (178) 5,671
Accounts payable 5,567 (1,842)
Accrued compensation and
benefits (552) 2,519
Accrued self-insurance
obligations 3,377 17,890
Other accrued liabilities (5,760) (9,919)
Other long-term liabilities (2,517) (928)
------------------- -------------------
Net cash provided by
operating activities 83,044 79,908
------------------- -------------------
Cash flows from investing
activities:
Capital expenditures (44,146) (53,528)
Proceeds from sale of assets 1,809 -
Acquisitions, net of cash
acquired (1,356) (13,894)
------------------- -------------------
Net cash used for investing
activities (43,693) (67,422)
------------------- -------------------
Cash flows from financing
activities:
Borrowings of long-term debt - 435,500
Principal repayments of long-
term debt and capital lease
obligations (61,201) (590,939)
Payment to non-controlling
interest - (2,025)
Distribution to non-controlling
interest - (105)
Distribution to Sabra Health
Care REIT, Inc. - (66,862)
Dividends to stockholders - (9,996)
Proceeds from issuance of common
stock - 225,393
Deferred financing costs (1,405) (26,772)
------------------- -------------------
Net cash used for financing
activities (62,606) (35,806)
------------------- -------------------
Net decrease in cash and cash
equivalents (23,255) (23,320)
Cash and cash equivalents at
beginning of period 81,163 104,483
------------------- -------------------
Cash and cash equivalents at end
of period $ 57,908 $ 81,163
=================== ===================
----------------------------------------------------------------------------
Reconciliation of net cash
provided by operating activities
to free cash flow:
Net cash provided by operating
activities $ 83,044 $ 79,908
Capital expenditures (44,146) (53,528)
Cash used for professional
fees on restructuring - 26,436
Cash used for early redemption
fees - 15,095
Cash used for broker fees on
acquisitions - 446
------------------- -------------------
Free cash flow $ 38,898 $ 68,357
=================== ===================
----------------------------------------------------------------------------
Free cash flow is defined as net cash flow provided by operating activities
less cash used for capital expenditures.
Free cash flow is used by management to evaluate discretionary cash flow
potentially available for principal repayment and other financing
activities.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA and ADJUSTED EBITDAR
(in thousands)
For the For the
Three Months Ended Three Months Ended
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
Total net revenues $ 472,919 $ 480,771
------------------ ------------------
Net loss $ (419) $ (32,376)
------------------ ------------------
Loss from continuing operations (9) (32,240)
Income tax benefit (2,185) (17,026)
Interest, net 4,762 8,611
Depreciation and amortization 8,450 10,182
------------------ ------------------
EBITDA $ 11,018 $ (30,473)
Loss on extinguishment of debt,
net - 29,221
Loss on sale of assets, net - 847
------------------ ------------------
Adjusted EBITDA $ 11,018 $ (405)
Center rent expense 37,199 28,085
------------------ ------------------
Adjusted EBITDAR $ 48,217 $ 27,680
================== ==================
EBITDA is defined as earnings before loss on discontinued operations, income taxes, interest, net, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before loss on extinguishment of debt, loss on sale of assets, restructuring costs and loss on asset impairment. Adjusted EBITDAR is defined as Adjusted EBITDA before center rent expense. Adjusted EBITDA and Adjusted EBITDAR are used by management to evaluate financial performance and resource allocation for each entity within the operating units and for the Company as a whole. Adjusted EBITDA and Adjusted EBITDAR are commonly used as analytical indicators within the healthcare industry and also serve as measures of leverage capacity and debt service ability. Adjusted EBITDA and Adjusted EBITDAR should not be considered as measures of financial performance under generally accepted accounting principles. As the items excluded from Adjusted EBITDA and Adjusted EBITDAR are significant components in understanding and assessing finance performance, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as alternatives to net income, cash flows generated by or used in operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA and Adjusted EBITDAR are not measurements determined in accordance with U.S. generally accepted accounting principles and are thus susceptible to varying calculations, Adjusted EBITDA and Adjusted EBITDAR as presented may not be comparable to other similarly titled measures of other companies.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA and ADJUSTED EBITDAR
(in thousands)
For the For the
Year Ended Year Ended
December 31, 2011 December 31, 2010
------------------ ------------------
(unaudited) (unaudited)
Total net revenues $ 1,930,340 $ 1,896,505
------------------ ------------------
Net loss $ (291,766) $ (4,650)
------------------ ------------------
Loss from continuing operations (289,562) (2,780)
Income tax expense 12,457 2,964
Interest, net 19,451 42,717
Depreciation and amortization 32,086 47,631
------------------ ------------------
EBITDA $ (225,568) $ 90,532
Loss on extinguishment of debt,
net - 29,221
Loss on sale of assets, net 810 847
Restructuring costs 2,728 -
Loss on asset impairment 317,091 -
------------------ ------------------
Adjusted EBITDA $ 95,061 $ 120,600
Center rent expense 148,308 84,390
------------------ ------------------
Adjusted EBITDAR $ 243,369 $ 204,990
================== ==================
EBITDA is defined as earnings before loss on discontinued operations, income taxes, interest, net, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before loss on extinguishment of debt, loss on sale of assets, restructuring costs and loss on asset impairment. Adjusted EBITDAR is defined as Adjusted EBITDA before center rent expense. Adjusted EBITDA and Adjusted EBITDAR are used by management to evaluate financial performance and resource allocation for each entity within the operating units and for the Company as a whole. Adjusted EBITDA and Adjusted EBITDAR are commonly used as analytical indicators within the healthcare industry and also serve as measures of leverage capacity and debt service ability. Adjusted EBITDA and Adjusted EBITDAR should not be considered as measures of financial performance under generally accepted accounting principles. As the items excluded from Adjusted EBITDA and Adjusted EBITDAR are significant components in understanding and assessing finance performance, Adjusted EBITDA and Adjusted EBITDAR should not be considered in isolation or as alternatives to net income, cash flows generated by or used in operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Adjusted EBITDA and Adjusted EBITDAR are not measurements determined in accordance with U.S. generally accepted accounting principles and are thus susceptible to varying calculations. Adjusted EBITDA and Adjusted EBITDAR as presented may not be comparable to other similarly titled measures of other companies.
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 December 31, 2011
(unaudited)
Rehabili- Elimination
tation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
---------- -------- ------- --------- --------- ----------
Nonaffiliated
revenue $ 421,394 $ 30,221 $21,301 $ 3 $ - $ 472,919
Affiliated
revenue - 33,433 692 - (34,125) -
---------- -------- ------- --------- --------- ----------
Total revenue $ 421,394 $ 63,654 $21,993 $ 3 $ (34,125)$ 472,919
---------- -------- ------- --------- --------- ----------
Income (loss)
from continuing
operations $ 14,905 $ 4,722 $ 1,150 $ (20,786)$ - $ (9)
Income tax
expense - - - (2,185) - (2,185)
Interest, net (8) - - 4,770 - 4,762
Depreciation and
amortization 7,054 251 186 959 - 8,450
---------- -------- ------- --------- --------- ----------
EBITDA $ 21,951 $ 4,973 $ 1,336 $ (17,242)$ - $ 11,018
Loss on
extinguishment
of debt, net - - - - - -
Loss on sale of
assets, net - - - - - -
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDA $ 21,951 $ 4,973 $ 1,336 $ (17,242)$ - $ 11,018
Center rent
expense 36,897 137 165 - - 37,199
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDAR $ 58,848 $ 5,110 $ 1,501 $ (17,242)$ - $ 48,217
========== ======== ======= ========= ========= ==========
Normalized
Adjusted
EBITDA $ 21,951 $ 4,973 $ 1,336 $ (17,242)$ - $ 11,018
Normalized
Adjusted
EBITDAR $ 58,848 $ 5,110 $ 1,501 $ (17,242)$ - $ 48,217
Adjusted EBITDA
margin 5.2% 7.8% 6.1% 2.3%
Adjusted EBITDAR
margin 14.0% 8.0% 6.8% 10.2%
Normalized
Adjusted EBITDA
margin 5.2% 7.8% 6.1% 2.3%
Normalized
Adjusted EBITDAR
margin 14.0% 8.0% 6.8% 10.2%
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the
table "Reconciliation of Net Loss to Adjusted EBITDA and Adjusted
EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Quarter
Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Year Ended December 31, 2011
(unaudited)
Rehabili- Elimination
tation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
---------- -------- ------- --------- --------- ----------
Nonaffiliated
revenue $1,723,825 $119,866 $86,610 $ 39 $ - $1,930,340
Affiliated
revenue - 132,143 2,771 - (134,914) -
---------- -------- ------- --------- --------- ----------
Total revenue $1,723,825 $252,009 $89,381 $ 39 $(134,914)$1,930,340
---------- -------- ------- --------- --------- ----------
Income (loss)
from continuing
operations $ (207,417)$ 13,217 $ 5,232 $(100,594)$ - $ (289,562)
Income tax
expense - - - 12,457 - 12,457
Interest, net (76) - 1 19,526 - 19,451
Depreciation and
amortization 26,779 941 746 3,620 - 32,086
---------- -------- ------- --------- --------- ----------
EBITDA $ (180,714)$ 14,158 $ 5,979 $ (64,991)$ - $ (225,568)
Loss on
extinguishment
of debt, net - - - - - -
Loss on sale of
assets, net 810 - - - - 810
Restructuring
costs 302 - - 2,426 - 2,728
Loss on asset
impairment 317,091 - - - - 317,091
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDA $ 137,489 $ 14,158 $ 5,979 $ (62,565)$ - $ 95,061
Center rent
expense 147,099 531 678 - - 148,308
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDAR $ 284,588 $ 14,689 $ 6,657 $ (62,565)$ - $ 243,369
========== ======== ======= ========= ========= ==========
Normalized
Adjusted
EBITDA $ 137,489 $ 14,158 $ 5,979 $ (62,565)$ - $ 95,061
Normalized
Adjusted
EBITDAR $ 284,588 $ 14,689 $ 6,657 $ (62,565)$ - $ 243,369
Adjusted EBITDA
margin 8.0% 5.6% 6.7% 4.9%
Adjusted EBITDAR
margin 16.5% 5.8% 7.4% 12.6%
Normalized
Adjusted EBITDA
margin 8.0% 5.6% 6.7% 4.9%
Normalized
Adjusted EBITDAR
margin 16.5% 5.8% 7.4% 12.6%
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the
table "Reconciliation of Net Loss to Adjusted EBITDA and Adjusted
EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Year to
Date Comparison."
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 December 31, 2010
(unaudited)
Rehabili- Elimination
tation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
---------- -------- ------- --------- --------- ----------
Nonaffiliated
revenue $ 428,817 $ 29,889 $22,053 $ 12 $ - $ 480,771
Affiliated
revenue - 22,892 672 - (23,564) -
---------- -------- ------- --------- --------- ----------
Total revenue $ 428,817 $ 52,781 $22,725 $ 12 $ (23,564)$ 480,771
---------- -------- ------- --------- --------- ----------
Income (loss)
from continuing
operations $ 36,237 $ 2,315 $ 1,116 $ (71,908)$ - $ (32,240)
Income tax
expense - - - (17,026) - (17,026)
Interest, net 1,319 - - 7,292 - 8,611
Depreciation and
amortization 8,919 194 189 880 - 10,182
---------- -------- ------- --------- --------- ----------
EBITDA $ 46,475 $ 2,509 $ 1,305 $ (80,762)$ - $ (30,473)
Loss on
extinguishment
of debt, net - - - 29,221 - 29,221
Loss on sale of
assets, net 847 - - - - 847
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDA $ 47,322 $ 2,509 $ 1,305 $ (51,541)$ - $ (405)
Center rent
expense 27,724 133 228 - - 28,085
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDAR $ 75,046 $ 2,642 $ 1,533 $ (51,541)$ - $ 27,680
========== ======== ======= ========= ========= ==========
Normalized
Adjusted
EBITDA $ 47,769 $ 2,509 $ 1,305 $ (14,124)$ - $ 37,459
Normalized
Adjusted
EBITDAR $ 75,493 $ 2,642 $ 1,533 $ (14,124)$ - $ 65,544
Adjusted EBITDA
margin 11.0% 4.8% 5.7% -0.1%
Adjusted EBITDAR
margin 17.5% 5.0% 6.7% 5.8%
Normalized
Adjusted EBITDA
margin 11.1% 4.8% 5.7% 7.8%
Normalized
Adjusted EBITDAR
margin 17.6% 5.0% 6.7% 13.6%
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the
table "Reconciliation of Net Loss to Adjusted EBITDA and Adjusted
EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Quarter
Comparison."
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED
EBITDA and ADJUSTED EBITDAR
($ in thousands)
For the Year Ended December 31, 2010
(unaudited)
Rehabili- Elimination
tation Medical of
Inpatient Therapy Staffing Other & Affiliated Consoli-
Services Services Services Corp Seg Revenue dated
---------- -------- ------- --------- --------- ----------
Nonaffiliated
revenue $1,687,087 $119,613 $89,765 $ 40 $ - $1,896,505
Affiliated
revenue - 86,476 2,036 - (88,512) -
---------- -------- ------- --------- --------- ----------
Total revenue $1,687,087 $206,089 $91,801 $ 40 $ (88,512)$1,896,505
---------- -------- ------- --------- --------- ----------
Income (loss)
from continuing
operations $ 149,836 $ 14,073 $ 5,595 $(172,284)$ - $ (2,780)
Income tax
expense - - - 2,964 - 2,964
Interest, net 9,146 - (1) 33,572 - 42,717
Depreciation and
amortization 42,956 678 732 3,265 - 47,631
---------- -------- ------- --------- --------- ----------
EBITDA $ 201,938 $ 14,751 $ 6,326 $(132,483)$ - $ 90,532
Loss on
extinguishment
of debt, net - - - 29,221 - 29,221
Loss on sale of
assets, net 847 - - - - 847
Restructuring
costs - - - - - -
Loss on asset
impairment - - - - - -
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDA $ 202,785 $ 14,751 $ 6,326 $(103,262)$ - $ 120,600
Center rent
expense 83,050 496 844 - - 84,390
---------- -------- ------- --------- --------- ----------
Adjusted
EBITDAR $ 285,835 $ 15,247 $ 7,170 $(103,262)$ - $ 204,990
========== ======== ======= ========= ========= ==========
Normalized
Adjusted
EBITDA $ 203,231 $ 14,751 $ 6,326 $ (58,849)$ - $ 165,459
Normalized
Adjusted
EBITDAR $ 286,281 $ 15,247 $ 7,170 $ (58,849)$ - $ 249,849
Adjusted EBITDA
margin 12.0% 7.2% 6.9% 6.4%
Adjusted EBITDAR
margin 16.9% 7.4% 7.8% 10.8%
Normalized
Adjusted EBITDA
margin 12.0% 7.2% 6.9% 8.7%
Normalized
Adjusted EBITDAR
margin 17.0% 7.4% 7.8% 13.2%
See definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDAR in the
table "Reconciliation of Net Loss to Adjusted EBITDA and Adjusted
EBITDAR."
See normalizing adjustments in the table "Normalizing Adjustments - Year to
Date Comparison."
Sun Healthcare Group, Inc. and Subsidiaries
Selected Operating Statistics
Continuing Operations
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- --------------------------
2011 2010 2011 2010
Consolidated
Company
----------------------------------------------------------------------------
Revenues - Non-
affiliated (in
thousands)
Skilled
Nursing and
similar
facilities $405,952 $416,346 $1,663,294 $1,639,321
Hospice 14,979 11,901 58,626 45,533
Other -
Inpatient
Services 463 570 1,905 2,233
-------- -------- ---------- ----------
Inpatient
Services 421,394 428,817 1,723,825 1,687,087
Rehabilitation
Therapy
Services 30,221 29,889 119,866 119,613
Medical
Staffing
Services 21,301 22,053 86,610 89,765
Other - non-
core
businesses 3 12 39 40
-------- -------- ---------- ----------
Total $472,919 $480,771 $1,930,340 $1,896,505
======== ======== ========== ==========
Revenue Mix -
Non-
affiliated
(in
thousands)
Medicare $139,534 30% $144,920 30% $ 612,185 32% $ 564,766 30%
Medicaid 196,490 42% 194,236 40% 759,471 39% 763,458 40%
Private and
Other 108,028 22% 112,758 24% 440,367 23% 451,921 24%
Managed Care /
Insurance 23,754 5% 23,521 5% 97,516 5% 95,997 5%
Veterans 5,113 1% 5,336 1% 20,801 1% 20,363 1%
-------- --- -------- --- ---------- --- ---------- ---
Total $472,919 100% $480,771 100% $1,930,340 100% $1,896,505 100%
======== === ======== === ========== === ========== ===
----------------------------------------------------------------------------
Inpatient
Services Stats
----------------------------------------------------------------------------
Number of
centers: 199 199 199 199
Number of
available beds: 22,045 22,106 22,045 22,106
Occupancy %: 86.4% 86.7% 86.5% 87.0%
Payor Mix %
based on
patient days:
Medicare -
SNF Beds 14.5% 14.2% 15.3% 15.0%
Managed care
/ Ins. -
SNF Beds 3.9% 3.7% 4.0% 3.9%
-------- -------- ---------- ----------
Total SNF
skilled
mix 18.4% 17.9% 19.3% 18.9%
-------- -------- ---------- ----------
Medicare 13.3% 13.0% 14.0% 13.7%
Medicaid 63.5% 63.0% 62.5% 62.3%
Private and
Other 18.4% 19.3% 18.6% 19.2%
Managed Care /
Insurance 3.6% 3.4% 3.7% 3.6%
Veterans 1.2% 1.3% 1.2% 1.2%
Revenue Mix % of
revenues:
Medicare -
SNF Beds 31.0% 32.4% 33.8% 32.1%
Managed care
/ Ins. -
SNF Beds 6.0% 5.8% 6.0% 6.0%
-------- -------- ---------- ----------
Total SNF
skilled
mix 37.0% 38.2% 39.8% 38.1%
-------- -------- ---------- ----------
Medicare 32.0% 32.7% 34.4% 32.4%
Medicaid 46.6% 45.3% 44.1% 45.2%
Private and
Other 14.7% 15.4% 14.7% 15.6%
Managed Care /
Insurance 5.5% 5.4% 5.6% 5.6%
Veterans 1.2% 1.2% 1.2% 1.2%
Revenues PPD:
Medicare (Part
A) $ 464.54 $ 515.32 $ 506.53 $ 476.57
Medicare
Blended Rate
(Part A & B) $ 513.83 $ 558.27 $ 547.95 $ 516.88
Medicaid $ 176.60 $ 174.10 $ 174.46 $ 173.21
Medicaid, net
of provider
taxes $ 160.39 $ 159.55 $ 159.21 $ 159.36
Private and
Other $ 183.39 $ 184.17 $ 186.57 $ 184.73
Managed Care /
Insurance $ 376.02 $ 390.28 $ 375.62 $ 373.92
Veterans $ 249.73 $ 239.33 $ 249.86 $ 240.60
----------------------------------------------------------------------------
Rehab contracts
----------------------------------------------------------------------------
Affiliated 178 162 178 162
Non-affiliated 339 346 339 346
Average Qtrly
Revenue per
Contract (in
thousands) $ 123 $ 104 $ 122 $ 101
----------------------------------------------------------------------------
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - QUARTER COMPARISON
(in thousands, except per share data)
AS REPORTED - 4th QUARTER 2011
---------------------------------------
Adjusted Adjusted
Revenue EBITDAR EBITDA Pre-tax
-------- -------- -------- --------
As Reported 4th QUARTER 2011 $472,919 $ 48,217 $ 11,018 $ (2,194)
Percent of Revenue 10.2% 2.3% -0.5%
Normalizing Adjustments:
None - - - -
-------- -------- -------- --------
Normalized As Reported - 4th QUARTER
2011 $472,919 $ 48,217 $ 11,018 $ (2,194)
======== ======== ======== ========
Percent of Revenue 10.2% 2.3% -0.5%
As Reported
Diluted EPS:
As Normalized
AS REPORTED - 4th QUARTER 2011
-------------------------------
Loss from
Continuing Net
Operations Disc Ops Income
---------- -------- --------
As Reported 4th QUARTER 2011 $ (9) $ (410) $ (419)
Percent of Revenue 0.0% -0.1% -0.1%
Normalizing Adjustments:
None - - -
---------- -------- --------
Normalized As Reported - 4th QUARTER
2011 $ (9) $ (410) $ (419)
========== ======== ========
Percent of Revenue 0.0% -0.1% -0.1%
As Reported $ - $ (0.02) $ (0.02)
Diluted EPS:
As Normalized $ - $ (0.02) $ (0.02)
AS REPORTED - 4th QUARTER 2010
---------------------------------------
Adjusted Adjusted
Revenue EBITDAR EBITDA Pre-tax
-------- -------- -------- --------
As Reported - 4th QUARTER 2010 $480,771 $ 27,680 $ (405) $(49,266)
Percent of Revenue 5.8% -0.1% -10.2%
Normalizing Adjustments:
Loss on sale of property - - - 847
Loss on extinguishment of debt - - - 29,221
Transaction costs related to
acquisition - 446 446 446
Prior periods' self-insurance
costs and other general liability
matters - 15,300 15,300 15,300
REIT separation transaction costs - 22,117 22,117 22,117
-------- -------- -------- --------
Normalized As Reported - 4th QUARTER
2010 $480,771 $ 65,543 $ 37,458 $ 18,665
======== ======== ======== ========
Percent of Revenue 13.6% 7.8% 3.9%
As Reported
Diluted EPS:
As Normalized
AS REPORTED - 4th QUARTER 2010
-------------------------------
Income/
(Loss) from
Continuing Net
Operations Disc Ops Income
---------- -------- --------
As Reported - 4th QUARTER 2010 $ (32,240) $ (136) $(32,376)
Percent of Revenue -6.7% 0.0% -6.7%
Normalizing Adjustments:
Loss on sale of property 500 - 500
Loss on extinguishment of debt 17,240 - 17,240
Transaction costs related to
acquisition 263 - 263
Prior periods' self-insurance
costs and other general liability
matters 9,027 - 9,027
REIT separation transaction costs 16,096 - 16,096
---------- -------- --------
Normalized As Reported - 4th QUARTER
2010 $ 10,886 $ (136) $ 10,750
========== ======== ========
Percent of Revenue 2.3% 0.0% 2.2%
As Reported $ (1.25) $ (0.01) $ (1.26)
Diluted EPS:
As Normalized $ 0.42 $ - $ 0.42
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDAR."
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of loss on sale of property, loss on debt
extinguishment, transaction costs on acquisition, prior periods' self-
insurance costs, and REIT separation transaction costs.
Since normalizing adjustments are not measurements determined in accordance
with U.S. generally accepted accounting principles and are thus susceptible
to varying calculations and interpretations, the information presented
herein may not be comparable to other similarly described information of
other companies.
SUN HEALTHCARE GROUP, INC. AND SUBSIDIARIES
NORMALIZING ADJUSTMENTS - YEAR TO DATE COMPARISON
(in thousands, except per share data)
AS REPORTED - TWELVE MONTHS 2011
-----------------------------------------
Adjusted Adjusted
Revenue EBITDAR EBITDA Pre-tax
---------- -------- -------- ---------
As Reported - Twelve Months 2011 $1,930,340 $243,369 $ 95,061 $(277,105)
Percent of Revenue 12.6% 4.9% -14.4%
Normalizing Adjustments:
Restructuring costs - - - 2,426
Impairment of assets - - - 317,091
---------- -------- -------- ---------
Normalized As Reported - Twelve
Months 2011 $1,930,340 $243,369 $ 95,061 $ 42,412
========== ======== ======== =========
Percent of Revenue 12.6% 4.9% 2.2%
As Reported
Diluted EPS:
As Normalized
AS REPORTED - TWELVE MONTHS
2011
--------------------------------
Income/
(Loss) from
Continuing Net
Operations Disc Ops Income
---------- -------- ---------
As Reported - Twelve Months 2011 $ (289,562) $ (2,204) $(291,766)
Percent of Revenue -15.0% -0.1% -15.1%
Normalizing Adjustments:
Restructuring costs 1,480 - 1,480
Impairment of assets 315,289 - 315,289
---------- -------- ---------
Normalized As Reported - Twelve
Months 2011 $ 27,207 $ (2,204) $ 25,003
========== ======== =========
Percent of Revenue 1.4% -0.1% 1.3%
As Reported $ (11.10) $ (0.09) $ (11.19)
Diluted EPS:
As Normalized $ 1.04 $ (0.08) $ 0.96
AS REPORTED - TWELVE MONTHS 2010
----------------------------------------
Adjusted Adjusted
Revenue EBITDAR EBITDA Pre-tax
---------- -------- -------- --------
As Reported - Twelve Months 2010 $1,896,505 $204,990 $120,600 $ 184
Percent of Revenue 10.8% 6.4% 0.0%
Normalizing Adjustments:
Loss on sale of property - - - 847
Loss on extinguishment of debt - - - 29,221
Transaction costs related to
acquisition - 446 446 446
Prior periods' self-insurance
costs and other general
liability matters - 15,300 15,300 15,300
REIT separation transaction costs - 29,113 29,113 29,113
---------- -------- -------- --------
Normalized As Reported - Twelve
Months 2010 $1,896,505 $249,849 $165,459 $ 75,111
========== ======== ======== ========
Percent of Revenue 13.2% 8.7% 4.0%
As Reported
Diluted EPS:
As Normalized
AS REPORTED - TWELVE MONTHS
2010
-------------------------------
Income/
(Loss) from
Continuing Net
Operations Disc Ops Income
---------- -------- --------
As Reported - Twelve Months 2010 $ (2,780) $ (1,870) $ (4,650)
Percent of Revenue -0.1% -0.1% -0.2%
Normalizing Adjustments:
Loss on sale of property 500 - 500
Loss on extinguishment of debt 17,240 - 17,240
Transaction costs related to
acquisition 263 - 263
Prior periods' self-insurance
costs and other general
liability matters 9,027 - 9,027
REIT separation transaction costs 20,224 - 20,224
---------- -------- --------
Normalized As Reported - Twelve
Months 2010 $ 44,474 $ (1,870) $ 42,604
========== ======== ========
Percent of Revenue 2.3% -0.1% 2.2%
As Reported $ (0.14) $ (0.10) $ (0.24)
Diluted EPS:
As Normalized $ 2.31 $ (0.10) $ 2.21
See definitions of Adjusted EBITDA and Adjusted EBITDAR in the table
"Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR."
Normalizing adjustments are transactions or adjustments not related to
ongoing operations and consist of impairment of assets, restructuring
costs, loss on sale of property, loss on debt extinguishment, transaction
costs on acquisition, prior periods' self-insurance costs, and REIT
separation transaction costs.
Since normalizing adjustments are not measurements determined in accordance
with U.S. generally accepted accounting principles and are thus susceptible
to varying calculations and interpretations, the information presented
herein may not be comparable to other similarly described information of
other companies.
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