IRVINE, CA, Sep. 9, 2009 (Marketwire) --
IRVINE, CA -- (Marketwire) -- 09/09/09 -- Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced an update to its full-year 2009 guidance. The revised guidance reflects the estimated impact of changes in the Medicare and Medicaid reimbursement environments.
Updated 2009 Full-Year Guidance
Sun is updating its previously-issued guidance for 2009 to reflect changes in Medicare and Medicaid reimbursement.
UPDATED 2009 Full Original 2009 Full
(Dollars in millions, except EPS) Year Guidance Year Guidance
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Low High Low High
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Revenue $1,876.0 $1,890.0 $1,919.0 $1,933.0
EBITDAR $ 248.0 $ 251.0 $ 260.0 $ 264.0
EBITDA $ 174.5 $ 177.5 $ 185.0 $ 189.0
Pre-tax earnings $ 79.5 $ 81.7 $ 87.0 $ 89.5
Income from continuing operations $ 46.9 $ 48.2 $ 51.3 $ 52.8
Diluted earnings per share $ 1.07 $ 1.10 $ 1.15 $ 1.19
Diluted weighted average shares 44.0 44.0 44.5 44.5
EBITDAR margin 13.2% 13.3% 13.5% 13.7%
EBITDA margin 9.3% 9.4% 9.6% 9.8%
Sun's original 2009 guidance incorporated the assumption that Medicare rates would experience a market basket increase in the fourth quarter of 2009, consistent with Sun's experience in prior years. On July 31, 2009, the Centers for Medicare and Medicaid Services (CMS) issued its final rule for skilled nursing facilities for the federal fiscal year 2010, which covers the last three months of 2009 and the first nine months of 2010. The CMS rule provides for a market basket increase of 2.2 percent in Medicare rates, which is more than offset by a 3.3 percent decrease resulting from a forecast error correction also implemented by CMS. After incorporating the CMS rule with Sun's current patient and labor mix, Sun's management estimates that the net result of these adjustments will be a decrease of 0.85 percent in its fourth-quarter 2009 Medicare reimbursement rates from the rates effective for the third quarter of 2009, resulting in a decrease of $0.05 in fully diluted EPS from its previous estimate.
Sun's original guidance anticipated an average year-over-year Medicaid rate increase of 200 basis points, which on a year-over-year comparative basis was a smaller increase than experienced in prior years. Due to current economic conditions, for 2009 and 2010 many states have implemented rate freezes and cuts in part to balance their budgets. States have also increased provider taxes by an amount that exceeds the associated revenue, creating a significant increase in expense. To date, 16 of the 25 states in which we operate have confirmed that they will use one or all of these budget-balancing methodologies.
