From another investor. Yes, I am long the stock.
DATE PROFILED: October 9, 2003
SYMBOL: SUHG, Sun Healthcare Group Inc.
PRICE: $6.90
PROFILE: finance.yahoo.com
FINANCIALS: biz.yahoo.com Recent earnings: biz.yahoo.com
CHART: SUHG
"Sun Healthcare Group Inc. is a provider of long-term, sub-acute and related specialty healthcare services in the United States. The Company operated through three principal business segments: inpatient services, rehabilitation therapy services and pharmaceutical services prior to filing for chapter 11 in 1999. Sun Healthcare's long-term and sub-acute care facilities provide inpatient skilled nursing and custodial services, as well as rehabilitative, restorative and transitional medical services. The Company provides 24-hour nursing care in these facilities by registered nurses, licensed practical nurses and certified nursing aides" (finance.yahoo.com profile).
Why do I believe SUHG is a compelling investment? Following its emergence from chapter 11 in early 2002, SUHG is expected to complete a downsizing of its current principal business, which is operating nursing homes, from roughly 250 units to around 110. The pharmaceutical unit was sold earlier this year to Omnicare for $95 million with the resulting proceeds used to reduce outstanding debt. Subsequent to that SUHG restructured its existing revolving debt, which put the company on a firmer financial footing. The smaller SUHG will consist of nursing facilities, which operate profitably with revenues of approximately $700 million with a net profit of $45 million on an annualized basis. With this increased cash flow, SUHG will have the ability to pay down its remaining debt and fund existing obligations. Lastly, the improving scenario will permit SUHG to raise its visibility by listing on a more prominent exchange. A new listing will increase the pool of eligible investors able to enter SUHG and will create increased liquidity. A move to a new exchange would promote better credibility as well as increased visibility.
In summation, I feel that SUHG is currently a compelling value at these levels. An earnings stream close to its potential would sustain sharply higher prices from the current level. The technicals on the chart are extremely bullish in my view as well. The combination of the fundamentals with the technical landscape leads me to believe this is a good entry point. |
