<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): June 17, 1997
SUN HEALTHCARE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-12040 85-0410612
- -------------------------------------------------------------------------------
State or other jurisdiction Commission IRS Employer
of incorporation File Number Identification No.
101 Sun Lane, N.E.
Alburquerque, New Mexico 87109
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number,
Including Area Code: (505) 821-3355
This Current Report on Form 8-K consists of 3 pages.
<PAGE>
ITEM 5. OTHER EVENTS
In connection with its acquisitions of Retirement Care Associates, Inc.
("Retirement Care") and Contour Medical, Inc. ("Contour") (each such
aquisition being herein referred to as the "Merger" and, collectively, as
the "Mergers"), Sun Healthcare Group, Inc. ("Sun") has been conducting an
ongoing review of Retirement Care's and Contour's financial statements and
operations. As previously announced by Sun, if the Mergers are consummated,
costs to be incurred in connection with the Mergers are expected to be
significant and would be charged against earnings of the combined company.
The charges, in connection with the Mergers, are currently estimated to
be approximately $30 million to $35 million, of which an estimated $20
million to $25 million would be for transaction costs and integration
expenses, including elimination of redundant corporation functions, severance
costs related to headcount reductions and the write-off of certain
intangibles and property and equipment. In addition, Sun currently expects
that the charge would include certain adjustments to Retirement Care's
balance sheet, which are based on Sun's ongoing review of Retirement Care's
financial statements and the underlying assumptions used to prepare such
financial statements, Sun's current understanding of Retirement Care's
operations, and Sun's evaluation of Retirement Care's internal control
structure during the due diligence process. Approximately $10 million of the
charge would relate primarily to additional accruals for expected liabilities
as well as to an increase in Retirement Care's provision for losses on
accounts receivable. It is possible that a substantial portion of the
foregoing approximately $10 million charge would be recorded by Retirement
Care as an adjustment to Retirement Care's historical financial statements to
reflect the write-off or restatement of certain items. In that event, there
would be a commensurate reduction in the merger charge. Sun is continuing to
review and discuss these matters with Retirement Care. The foregoing
statements with respect to Retirement Care's financial statements and any
adjustments or charges related thereto are forward looking. If the Retirement
Care acquisition is consummated, the actual adjustments could differ,
possibly materially, and could be affected by a number of factors, including
Retirement Care and Sun's factual findings upon further review of these
matters, and the interpretation and application of generally accepted
accounting principles to those factual findings. The foregoing statements do
not address what adjustments, if any, may be made to Retirement Care's
financial statements if the acquisition does not occur. In addition, there
can be no assurance that Sun will not incur additional charges in subsequent
quarters to reflect costs associated with the Mergers.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Sun
Healthcare Group, Inc. has duly caused this Current Report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: June 17, 1997
SUN HEALTHCARE GROUP, INC.
/s/ William C. Warrick
----------------------------------------
William C. Warrick
Vice-President and Corporate Controller
