Sun Healthcare Group shines its rays on US nursing homes. The company provides long-term, subacute, and related health care services at about 190 managed inpatient facilities in 23 states (totaling some 21,400 beds) through its SunBridge Healthcare business. SunBridge mainly operates skilled nursing centers for seniors; it also offers assisted and independent living arrangements and behavioral health services. Its SunDance Rehabilitation provides physical, occupational, and speech therapy in 36 states while the SolAmor business focuses on hospice care in 11 states. CareerStaff Unlimited provides 40 states with temporary medical staffing. Skilled nursing care provider Genesis HealthCare is acquiring the company.
Change in Company Type
Genesis HealthCare has agreed to pay about $275 million to acquire Sun Healthcare. The deal, which has been approved by Sun Healthcare's board and is subject to customary closing conditions, will increase the scale and geographic reach of the Genesis business.
The company generates about 86% of its revenues from its inpatient facility operations. Much of that comes from Medicaid (39% of revenues) and Medicare (32%) reimbursements. To further expand its inpatient business, Sun Healthcare is working to boost occupancy rates at existing facilities through increased marketing efforts while also enhancing services for clients within the Medicare and high-need market. Its goal has it adding Rehab Recovery Suites and Alzheimer's care wings to several of its skilled nursing homes.
Sun Healthcare sees the SunDance rehab operations as a healthy source of diversified revenues and plans to expand the business by adding services, enhancing productivity, and entering new third-party contracts.
Mergers and Acquisitions
The company anticipates further growth in its hospice business through acquisitions. To that end, in late 2011 Sun Healthcare acquired Medicare-certified Harbinger Hospice, which serves patients in Ohio, for $1.1 million in cash. The deal follows previous hospice group purchases in Massachusetts, Alabama, and Georgia.
Sun Healthcare logged a 2% rise in net revenue in 2011 vs. 2010 due to a larger Medicare customer base and a boost in rehabilitation therapy services. Dragging down results were lower medical staffing services revenue due to a decline of about 7,400 medical staffing hours and decreases in its physician placement business. Despite its net revenue gains, Sun Healthcare saw a more than 6% increase in net losses in 2011 as compared to 2010. Contributing to the losses were rising operating costs, bigger center rent expenses, provisions for losses on accounts receivables, and general and administrative expenses. Provider tax increases and costlier contract labor specifically for housekeeping and laundry services also conspired to whittle away at Sun Healthcare's slight net revenue increases in 2011.
Sun Healthcare completed a major restructuring in 2010 that separated its health care operations from its property assets, which were spun off into a new, publicly traded real estate investment trust into Sabra Health Care REIT. The spinoff included about 85 long-term care properties that SunBridge continues to manage; the transaction made Sun Healthcare a pure operating company, as the remainder of its facilities were already owned by third parties and operated through lease agreements. Post-2010 Sun Healthcare retained all of the operating subsidiaries. – less