Health services for retirees is a growth business.
The Rolling Stones sang "What a drag it is getting old." True, unless you own a lot of care facilities for seniors. Sun Healthcare (NASDAQ: SUNH, Bullboard) is a leader in the field and does business across three segments: inpatient services, rehabilitation therapy, and medical staffing.
SUNH trades in the middle of its range at $14.50. Friedman Billings recently upgraded the stock. Although some federal payments for Medicare are being cut, the brokerage felt the impact on Sun would be small.
SUNH bought some businesses last year. Taking that into account, on a pro forma basis Q4 2007 revenue rose to $450 million from $421. Pretax income moved up from $11.6 million to $14.3 million. EBITDA for the quarter was up to $40.8 million, a 9% margin.
The acquisition the company made to increase it size added $651 million in debt. Sun plans to raise $200 million. If EBITDA remains good, the debt should not be a major issue.
Everyone is getting older. This makes SUNH attractive.
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