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Sun Healthcare slashes jobs
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April 9, 1999: 9:55 a.m. ET
Nursing home operator cutting 10,000 jobs after posting 4Q loss of $761M
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NEW YORK (CNNfn) - Sun Healthcare Group Inc. said Friday it is slashing more than 10,000 jobs and seeks to sell some of its non-core assets after reporting a steep fourth-quarter loss.
The troubled long-term healthcare provider posted a loss of $761.7 million, or $13.34 per share, for the quarter ended Dec. 31. For the year, the company lost $753.7 million, or $14.49 per share.
The company said its cost-cutting program should result in $400 million in annual savings.
Sun (SHG) said its recent transition to the Medicare "prospective payment system," called PPS, has reduced Medicare reimbursements and devastated its operations.
Implementing the PPS system "has sent the entire nursing home industry into a tailspin," said Andrew L. Turner, chairman and CEO. He said the new market conditions "have had a severe impact on Sun, from which it will take some time to recover."
Sun also has instituted a company-wide wage freeze and a reduction in certain benefit packages. The company said it also will consolidate regional operations and close 70 offices.
For the fourth quarter, Sun reported net revenue of $780 million, a 15 percent increase over the year-ago period. For the year, revenue totaled $3.1 billion, a jump of 55 percent.
But the company took a huge hit in the quarter because of charges associated with a four-part restructuring plan. Costs included a charge of $397.5 million, primarily made up of an impairment on the company's long-lived assets, and a $196.2 million charge for the anticipated loss connected to the disposition of certain assets and the termination of building leases.
As of Dec. 31, the Albuquerque-N.M.-based company operated 614 long-term care facilities, with a total of 60,065 beds in the United States, Britain, Spain, Germany and Australia.
Sun's stock has plunged in recent months, trading down 1/16 Friday morning at 7/8, compared with a 52-week high of 19-13/16. 
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Sun Healthcare
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