Beruflich Dokumente
Kultur Dokumente
Non-Deal Roadshow
July 2010
1
Statements made in this presentation that are not historical facts are "forward-looking" statements (as defined in the Pr ivate Securities
Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forw ard-looking statements
may include, but are not limited to, statements containing w ords such as "anticipate," "believe," "plan," "estimate,” "expect,” "hope,” "intend,”
"may” and similar expressions. Forw ard-looking statements in this presentation also include all statements regarding expected financial
position, results of operations, cash flows, liquidity, financing plans, business strategy, growth opportunities, plans and objectives of
management for future operations and the timing and impact of the proposed restructuring transactions. Factors that could cause actual
results to differ are identified in the public filings made by the company w ith the Securities and Exchange Commission and include our
ability to consummate the proposed spin-off; our ability to consummate the equity and debt financings necessary, in connection w ith the
proposed spin-off, to repay Sun’s existing indebtedness on terms acceptable to Sun or at all; changes in Medicare and Medicaid
reimbursements; our ability to maintain the occupancy rates and payor mix at our healthcare centers; potential liability for losses not
covered by, or in excess of, our insurance; the effects of government regulations and investigations; the significant amount of our
indebtedness, covenants in our debt agreements that may restrict our activities and our ability to make acquisitions, incur more
indebtedness and refinance indebtedness on favorable terms; the impact of the current economic dow nturn on our business and our ability
to collect our receivables; increasing labor costs and the shortage of qualified healthcare personnel; and our ability to receive increases in
reimbursement rates from government payors to cover increased costs. More information on factors that could affect our business and
financial results are included in our public filings made w ith the Securities and Exchange Commission, including our Annual Report on
For ms 10-K and Quarterly Reports on Form 10-Q, copies of w hich are available on Sun’s w eb site, www.sunh.com.
The forw ard-looking statements involve know n and unknow n risks, uncertainties and other factors that are, in some cases, beyond our
control. We caution that any forward-looking statements made by us are not guarantees of future performance. We disclaim 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.
References to “Sun” refer to Sun Healthcare Group, Inc. and its subsidiaries
2
References are made in this presentation to EBITDA, EBITDA margin, EBITDAR, EBITDAR margin and FFO, w hich are non-GAAP
financial measures. These non-GAAP financial measures are reconciled to the corresponding GAAP financial measures in the
Appendices included at the end of this presentation.
EBITDA is defined as net income before loss (gain) on discontinued operations, interest expense (net of interest income), income tax
expense (benefit) and depreciation and amortization. EBITDA margin is EBITDA as a percentage of revenue. EBITDAR is EBITDA
before center rent expense and EBITDAR margin is EBITDAR as a percentage of revenue. Sun believes that the presentation of
EBITDA, EBITDA margin and EBITDA R provides useful information regarding Sun’s operational performance because they enhance the
overall understanding of the financial performance and prospects for the future of Sun’s core business activities, provides consistency in
Sun’s financial reporting and provides a basis for the comparison of results of core business operations betw een current, past and future
periods. These measures are also some of the primary indicators Sun uses for planning and forecasting in future periods, including
trending and analyzing the core operating performance of its business from period to per iod w ithout the effect of GAAP expenses,
revenues and gains that are unrelated to day-to-day performance.
FFO is defined in accordance w ith the definition used by the National Association of Real Estate Investments Trusts and is defined as
net income, excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. FFO is useful to investors in comparing operating and financial results betw een periods.
This is especially true because FFO excludes real estate depreciation and amortization, and real estate values fluctuate based on
market conditions rather than depreciate ratably on a straight-line basis over time. In addition, a presentation of FFO also provides a
more meaningful measure of operating results of other real estate investment trusts.
3
In connection w ith the restructuring transaction described in this presentation, SHG Services, Inc. (“Operating Company”) has filed w ith
the SEC a Registration Statement on For m S-1 and Sabra Health Care REIT, Inc. has filed w ith the SEC a Registration Statement on
For m S-4, each containing an identical proxy statement/prospectus. The definitive proxy statement/prospectus w ill be mailed to Sun
stockholders. In addition, Sun has filed a shelf registration statement on For m S-3 (including a prospectus) relating to shares of common
stock of Sun w ith the SEC, and such registration statement has been declared effective. This presentation does not constitute an offer
to sell or a solicitation of an offer to buy shares of Sun common stock, nor shall there be any offer, solicitation or sale of these securities
in any state or jurisdiction in w hich such an offer, solicitation or sale w ould be unlawful. The offering of shares of Sun common stock
may be made only by means of a prospectus relating to the proposed offering.
Before making any voting or investment decision, Sun stockholders and investors are urged to read the proxy
statement/prospectus, the prospectus in the registration statement on Form S-3, and other documents filed w ith the SEC
carefully and in their entirety when they become available because they w ill contain im portant about the proposed
transactions. Stockholders w ill be able to obtain these documents free of charge at the SEC’s w eb site at www.sec.gov. In addition,
investors and stockholders of Sun may obtain free copies of the documents filed w ith the SEC by contacting Sun’s investor relations
department at (505) 468-2341 (TDD users, please call (505) 468-4458) or by sending a w ritten request to Investor Relations, Sun
Healthcare Group, Inc. 101 Sun Avenue N.E., Albuquerque, N.M. 87109.
Sun and its directors and executive officers and other members of its management and employees may be deemed to be participants in
the solicitation of proxies from the stockholders of Sun in connection w ith the transactions described in this release. Information about
the directors and executive officers of Sun and their ow nership of shares of Sun common stock are set forth in the Annual Report on
For m 10-K for the year ended December 31, 2009 filed w ith the SEC on March 5, 2010 and in the definitive proxy statement relating to
Sun’s 2010 Annual Meeting of Stockholders filed w ith the SEC on April 30, 2010. These documents can be obtained free of charge from
the sources indicated above. Additional information regarding the interests of these participants w ill also be included in the definitive
proxy statement/prospectus w hen it becomes available.
4
Recent Developments /
Restructuring Transactions
5
¾ On 05/24/10 Sun Healthcare announced plans to separate into two separate
publicly traded companies
Operating Leases
REIT
Company
Sun Healthcare Group, Inc. Sabra Health Care REIT, Inc.
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Geographically diversified portfolio of skilled nursing and senior housing assets
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Favorable Operating Trends in the Underlying Portfolio
9
Strong structural protections to the REIT with positive operating flexibility to the
operating company
¾ Master lease on all 87 facilities
¾ No purchase options
10
Sabra will be opportunistic in its investing strategy, but initially will be focused on
skilled nursing and senior housing opportunity
Trend in Certified Nursing Facilities, Beds and Residents US Seniors Population Trends (70+ years old)(1)
While certified beds and patient occupancy rates remains relatively Implied Demand Grow th of 35,000 per year …
stable, the number of skilled nursing facilities Continues to decline,
signifying that demand for SNFs w ill exceed supply
(figures in 000s)
18.0x
17.0x
16.0x
15.0x
14.0x
15.0x
13.0x
12.0x
11.0x
10.0x
9.0x
8.0x
7.0x
6.0x 6.5x
5.0x
Jan-03 Mar-04 Jun-05 Sep-06 Nov-07 Feb-09 May-10
HC REIT Index Forward FFO Multiple LTC Index Forward EBITDAR Multiple
¾ December Separation
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¾ SunBridge (Skilled Nursing) 3/31/10 LTM Net Revenue
203 inpatient facilities Total: $ 1.9 billion
19,700 patients/residents
Private Pay
¾ SunDance (Rehab) and Other
25.0% Skilled Mix
35.0%
460+ contracts/330 non-affiliated
Contract services, rehab agency,
management services 40.0%
¾ CareerStaff (Staffing)
More than 50% of business is in Medicaid
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Focused Organization Positioned for Optimal Operating Execution
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Significant Growth Opportunities within the Sector
Well positioned to pursue acquisition opportunities and leverage existing infrastructure in
targeted growth segments
¾Organic Growth Activity Focused on Continued Development of Rehab Recovery
Suites® (RRS)
Currently 66 centers with RRS units totaling 1632 beds
¾Accretive Acquisition Activity Focused on:
Hospice Business
– Synergistic to inpatient business
– Looking for small tuck-ins or large regional players located near our centers
Skilled Nursing Centers
– Mid year 2011, post reimbursement change/stabilized environment
– Individual and regional targets
– Complement our 25 state footprints individual/regional multi targets
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Medicare
¾ Implementation of Resource Utilization Group (RUG) system to RUG-IV
13 new RUG categories focused on medically complex
RUGS-IV and elimination of lookback and concurrent effective
10/1/10
Medicaid
¾ Guidance assumes flat rates – 2010 over 2009
¾ States continue to have budgetary issues that may effect rates
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Transaction Pro Forma
18
Pro Forma
New Sun Healthcare Group, Inc. Sabra Health Care REIT, Inc.
(Dollars in millions)
(1)
EBITDAR 243.8 61.4 EBITDA 69.5 17.4
(1) Adjusted for one-time expenses related to net restructuring costs and net loss on sale of assets.
(2) Calculated in accordance with NAREIT’s definition of FFO except that there are no adjustments for gains (or losses) from sales of property
or adjustments for unconsolidated partnerships and joint ventures.
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(1) T he actual amount of the New Sun and/or New Sabra indebtedness may be less than the amount shown above if cash collections from
operation s between March 31, 2010 and the date of the Separation are received in accordance with Sun's projections.
20
NON GAAP RECONCILIATION
21
As Reported Reconciliation Section
Add:
Income tax expense 7.3 8.1
D&A 12.4 10.7
Interest 12.0 12.7
22
Pro Forma Reconciliation Section
Add:
Income tax expense 25.5 6.1
D&A 24.6 7.2
Interest 10.7 2.7
Restructuring costs and net loss on sale of assets 1.3 -
23
Pro Forma Reconciliation Section
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APPENDIX
25
SunBridge Performance Metrics
Occupancy Skilled Mix as a % of Revenue
26
Product Differentiation
Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10
Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10 Q1 ‘09 Q1 ‘10
27
SolAmor Performance Metrics
Revenue
ADC ($ in millions) EBITDA Margin
811 19.4%
$11.0
85 14.9%
$1.3
14.1%
450 405 $5.7 20.3%
45 $5.8 17.7%
122 $0.7
841 $1.7 19.7% 841
283 321 19.5%
$4.0
$3.4
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SunDance Performance Metrics
8.0%
6.9%
$50.5
$43.7 $46.3 5.7%
Revenue / Contract
($ in thousands) Non-Affiliated Contracts
29
CareerStaff Unlimited Performance Metrics
Q1 ’10 Revenue
By Type
Revenue
($ in millions) Physician Services
6 .9
%
25.9%
Nursing
$27.9 61.9%
% Allied
$23.6 $23.5
5 .2
Pharmacy
Q1 ‘09 Q4 ‘09 Q1 ‘10
Q1 ’09 Revenue
By Type
EBITDA Margin
Physician Services
6 .4 %
10.1% 28.9%
9.%
7.9% Nursing
9.3% 7.1% 57.9%
Allied
8%
Q1 ‘09 Q4 ‘09 Q1 ‘10 6.
Pharmacy
30
Net Debt Leverage
Net Debt /EBITDA
$683
4.9x
$644 3.9x
$606 3.4x
$587 3.3x
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Sun’s Commitment to Quality
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