Sun forecasts lower-than-expected annual earnings
Skilled nursing chain Sun Healthcare Group Inc. projects earnings per share of $0.92 to $0.98 for 2010.
Following the release of the guidance, Sun's share price fell 3.2% to close at $8.89 on Wednesday. The earnings per share projection was below Wall Street's EPS expectations of $1.07. Meanwhile, Sun estimated its 2010 revenue at between $1.93 and $1.95 billion, beating Wall Street's expectations. The company forecasts a reduction in earnings before interest, taxes, depreciation and amortization of $22 million for the year. Sun CEO Richard Matros explained in a statement that his company doesn't expect any increase in Medicaid rates, and that any Medicare market-basket update would likely be offset by other costs.
The impending healthcare reform bill working its way through Congress is likely to affect earnings forecasts made by healthcare providers, especially nursing home companies that receive government funding, the Dow Jones news service suggested.