Profile: Sun Healthcare Group, Inc. (SUNH.O)

Sun Healthcare Group, Inc., incorporated in 1993, provides nursing, rehabilitative and related specialty healthcare services principally to the senior population in the United States. Inpatient services are offered primarily through 184 skilled nursing centers, 15 assisted and independent living centers and eight mental health centers. At December 1, 2008, the Company’s centers had 23,345 licensed beds located in 25 states, of which 22,544 were available for occupancy. Rehabilitation therapy services are extended to non-affiliated and affiliated centers while medical staffing and other ancillary services are offered primarily to non-affiliated centers and other third parties. The Company’s subsidiaries are engaged in three principal business segments: inpatient services, rehabilitation therapy services and medical staffing services. Harborside is a privately held healthcare company that operated 73 skilled nursing centers, one assisted living center and one independent living center with approximately 9,000 licensed beds in 10 states.

Inpatient Services

As of December 31, 2008, the Company operated 207 healthcare facilities through SunBridge Healthcare Corporation and other subsidiaries. Its skilled nursing centers provide services that include daily nursing, therapeutic rehabilitation, social services, housekeeping, nutrition and administrative services for individuals requiring certain assistance for activities in daily living. Several of these skilled nursing centers also contain wings dedicated to the care of residents afflicted with Alzheimer’s disease. Assisted living centers provide services that include minimal nursing assistance, housekeeping, nutrition, laundry and administrative services for individuals requiring minimal assistance for activities in daily living. Independent living centers provide services that include security, housekeeping, nutrition and limited laundry services for individuals requiring no assistance for activities in daily living. Mental health centers provide a range of inpatient and outpatient behavioral health services for adults and children through specialized treatment programs. Sun Healthcare Group also provides hospice services, including palliative care, social services, pain management and spiritual counseling, through its subsidiary, SolAmor Hospice, Corporation, in seven states for individuals facing end-of-life issues. The Company generated 88.6% of consolidated net revenues through inpatient services during 2008.

Rehabilitation Therapy Services

The Company provides rehabilitation therapy services through SunDance Rehabilitation Corporation (SunDance). SunDance provides an array of rehabilitation therapy services, including speech pathology, physical therapy and occupational therapy. As of December 31, 2008, SunDance provided rehabilitation therapy services to 445 centers in 33 states, 327 of which were operated by nonaffiliated parties and 118, of which were operated by affiliates. In most of the 89 healthcare centers for, which SunDance does not provide rehabilitation therapy services, those services are provided by staff employed by the centers, although some centers engage third-party therapy companies for such services. Sun Healthcare Group generated 4.9% of consolidated net revenues through rehabilitation therapy services during 2008.

Medical Staffing Services

The Company provides temporary medical staffing in 37 states through CareerStaff Unlimited, Inc. (CareerStaff). During 2008, CareerStaff derived 58.8% of its revenues from hospitals and other providers, 21.9% from skilled nursing centers, 15% from schools and 4.4% from prisons. CareerStaff provides licensed therapists skilled in the areas of physical, occupational and speech therapy; nurses; pharmacists, pharmacist technicians and medical imaging technicians; physicians, and related medical personnel. Sun Healthcare Group generated 6.5% of its consolidated net revenues through medical staffing services in 2008.