Sun Healthcare Group, Inc. Reports 2011 Fourth-Quarter and Year-End Operating Results; Normalized Full Year EPS of $1.04
(firmenpresse) - IRVINE, CA -- (Marketwire) -- 02/28/12 -- Sun Healthcare Group, Inc. (NASDAQ: SUNH) 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."
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.
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.
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.
Sun Healthcare Group, Inc. (NASDAQ: SUNH) 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 .
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, . 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.
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.
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.
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