NEW YORK (AP) ¿ Health care facility operator Sun Healthcare Group Inc. cut its 2009 guidance Wednesday, citing an expected decrease in Medicare reimbursement rates, and said it will cut an undisclosed number of jobs to reduce costs.
The Irvine, Calif.-based company expects profit between $1.07 and $1.10 per share and revenue ranging from just below $1.88 billion to $1.89 billion for the full year. Previously, the company forecast profit between $1.15 and $1.19 per share on revenue between $1.92 billion and $1.93 billion.
Analysts polled by Thomson Reuters expect profit of $1.10 per share on revenue of just under $1.88 billion.
"The difficult reimbursement environment reflects the impact of the one-time adjustment referred to as the forecast error correction, impacting Medicare rates, and the effect of the current economic downturn in the states in which we operate," said Chairman and CEO Richard K. Matros, in a statement.The company plans to cut an unspecified number of jobs as well as reducing nonlabor costs. "None of the labor reductions occurs at the nursing center level, but rather they relate to overhead positions," the company said. It expects the restructuring move to save $10 million annually, and expects an $800,000 charge in the third quarter primarily for severance costs. Shares of Sun Healthcare closed at $8.04 Tuesday.