Sun Healthcare Group, Inc. Schedules Special Stockholder Meeting to Approve Restructuring

IRVINE, CA–(Marketwire – September 30, 2010) –  Sun Healthcare Group, Inc. (NASDAQ: SUNH) today announced that it will be holding a special stockholder meeting on Thursday, Nov. 4, 2010 at the Irvine Hilton Hotel. At this meeting, stockholders will vote on the previously announced restructuring pursuant to which Sun is separating its operating assets and its real property assets by means of a distribution of SHG Services, Inc. stock. SHG Services, Inc. will own all of Sun’s operating assets and will be renamed Sun Healthcare Group, Inc. Stockholders will also be asked to vote on the merger of Sun with and into Sabra Health Care REIT, Inc., which will own substantially all of Sun’s real property assets, and intends to elect to be treated as a real estate investment trust effective Jan. 1, 2011. As previously announced, Sun expects that the restructuring will be completed in the fourth quarter of 2010.

The record date for stockholders entitled to vote at the meeting is Sept. 15, 2010. Sun expects that a proxy statement/prospectus describing the restructuring transactions will be mailed to stockholders on or about Oct. 4, 2010.

Richard K. Matros, Sun’s Chairman and Chief Executive Officer, commented, “We look forward to the opportunity to create increased shareholder value by separating into two publicly-held companies with independent growth strategies. This meeting is a significant step in the restructuring process.”

About Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc.’s (NASDAQ: SUNH) subsidiaries provide nursing, rehabilitative and related specialty healthcare services principally to the senior population in the United States. Sun’s core business is providing, through its subsidiaries, inpatient services, primarily through 166 skilled nursing centers, 16 combined skilled nursing, assisted and independent living centers, 10 assisted living centers, two independent living centers and eight mental health centers. On a consolidated basis, Sun has annual revenues of $1.9 billion and approximately 30,000 employees in 46 states. At June 30, 2010, SunBridge centers had 23,209 licensed beds located in 25 states, of which 22,427 were available for occupancy. Sun also provides rehabilitation therapy services to affiliated and non-affiliated centers through its SunDance subsidiary, medical staffing services through its CareerStaff Unlimited subsidiary and hospice services through its SolAmor subsidiary. 

Forward-Looking Statements

Statements made in this release that are not historical facts are “forward-looking” statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “hope,” “intend,” “may” and similar expressions. Factors that could cause actual results to differ are identified in the public filings made by the Company with the Securities and Exchange Commission (SEC) and include the company’s ability to successfully complete the restructuring on terms and conditions satisfactory to Sun, as well as other risks and uncertainties, including those detailed from time to time in Sun’s SEC Commission filings. More information on factors that could affect the business and financial results are included in the company’s public filings made with the SEC, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on Sun’s web site, www.sunh.com. The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond Sun’s control. Investors are cautioned that any forward-looking statements made by Sun are not guarantees of future performance. Sun disclaims 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.

Additional Information

In connection with the transactions described in this release, SHG Services, Inc. has filed with the SEC a Registration Statement on Form S-1 and Sabra Health Care REIT, Inc. has filed with the SEC a Registration Statement on Form S-4, each containing an identical prospectus and proxy statement for the special meeting. The definitive proxy statement/prospectus is being mailed to Sun stockholders on or about October 4, 2010. Before making any voting or investment decision, Sun stockholders and investors are urged to read the proxy statement/prospectus and other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about the proposed transactions. Stockholders will be able to obtain these documents free of charge at the SEC’s web site at www.sec.gov. In addition, investors and stockholders of Sun may obtain free copies of the documents filed with the SEC by contacting Sun’s investor relations department at (505) 468-2341 (TDD users, please call (505) 468-4458) or by sending a written request to Investor Relations, Sun Healthcare Group, Inc. 101 Sun Avenue N.E., Albuquerque, N.M. 87109. Investors and stockholders may also obtain a copy of these documents by requesting them in writing from Sun’s proxy solicitation agent, Innisfree M&A, at 501 Madison Avenue, New York, NY 10022, or by telephone at (212) 750-5833. 

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 with the transactions described in this release. Information about the directors and executive officers of Sun and their ownership of shares of Sun common stock are set forth in the Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March 5, 2010 and in the definitive proxy statement relating to Sun’s 2010 Annual Meeting of Stockholders filed with 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 is also included in the definitive proxy statement/prospectus regarding the proposed transactions that is being mailed to Sun stockholders on or about October 4, 2010.