Today’s guest pitch is Sun Healthcare Group (SUNH). The author considers himself a value investor and currently works in the financial services industry. He is also a CFA Level III candidate. He can be with questions or comments at
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This was generally a very good presentation, although I would recommend two changes.
The reimbursement risk on RUG IV is a bit of a red herring; the industry has announced that RUG IV will be a positive. The real reimbursement risk is on the Medicaid side, where the company has announced that they currently expect flat reimbursement levels in 2011. As support for this, the company sites 18 of 25 states, where levels have been flat thus far. However, as we move into 2012 and 2013, the Medicaid issue will remain an overhang.
Finally, there are a number of other comps that i would look to, including NHR / NHC, FFIV, and CSU.