NT 10-K, 1999-03-30
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                              WASHINGTON, DC 20549

                                   FORM 12b-25

                         Commission File Number: 1-12040

                           NOTIFICATION OF LATE FILING

(Check  One):  x Form 10-K  o Form 11-K  o Form 20-F  o Form 10-Q  o Form N-SAR
     For Period Ended: 12/31/98

  o Transition Report on Form 10-K             o Transition Report on Form 10-Q
  o Transition Report on Form 20-F             o Transition Report on Form N-SAR
  o Transition Report on Form 11-K

    For the Transition Period Ended:       

     Nothing in this form shall be  construed to imply that the  Commission  has
verified any information contained herein.

     If the  notification  relates  to a portion of the  filing  checked  above,
identify the item(s) to which the notification relates: Items 6, 7 and 8

                                     PART I
                             REGISTRANT INFORMATION

Full name of registrant             Sun Healthcare Group, Inc.                 
Former name if applicable           N/A

Address of principal executive office (Street and number)  101 Sun Avenue, N.E.
City, state and zip code            Albuquerque, NM 87109


                                     PART II
                             RULE 12b-25 (b) AND (c)

     If the subject  report could not be filed  without  unreasonable  effort or
expense  and  the  registrant  seeks  relief  pursuant  to Rule  12b-25(b),  the
following should be completed. (Check box if applicable).

         | (a) The reasons  described in reasonable detail in Part III of this |
         form could not be eliminated without  unreasonable effort or | expense;
         | | (b) The subject annual  report,  semi-annual  report,  transition |
         report on Form 10-K, 20-F, 11-K or Form N-SAR, or portion
       x | thereof will be filed on or before the 15th  calendar day | following
         the  prescribed  due  date;  or  the  subject  quarterly  |  report  to
         transition report on Form 1-Q, or portion thereof | will be filed on or
         before the fifth  calendar day following | the prescribed due date; and
         | | (c) The accountant's  statement or other exhibit required by | Rule
         12b-25(c) has been attached is applicable.

                                    PART III

     State below in  reasonable  detail the reasons why Form 10-K,  11-K,  20-F,
10-Q,  N-SAR or the transition  report portion thereof could not be filed within
the prescribed time period. (Attach extra sheets if needed.):

     Sun Healthcare  Group, Inc. ("Sun") is continuing to evaluate the impact of
the new Medicare  prospective  payment  system on the value of Sun's  long-lived
assets. The extended review period for completing Sun's financial  statements is
the result of,  among  other  reasons,  Sun's  need to  determine  the amount of
nonrecurring  charges  that will be  recorded  for the  write-down  of  impaired
goodwill  relating to Sun's operations in the U.S. in accordance with Statements
of Financial Accounting Standards No. 121.

                                     PART IV
                                OTHER INFORMATION

     (1) Name and  telephone  number  of  person  to  contact  in regard to this

        William Warrick               (505)                       821-3355     
             (Name)                (Area Code)               (Telephone Number)

     (2) Have all other periodic  reports  required under Section 13 or 15(d) of
the Securities  Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940  during the  preceding  12 months or for such  shorter  period  that the
registrant was required to file such report(s) been filed?  If the answer is no,
identify report(s).

                                                                      x Yes o No

     (3) Is it anticipated that any significant  change in results of operations
from the corresponding  period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?

                                                                     x Yes  o No

     If so: Attach an explanation of the anticipated  change,  both  narratively
and  quantitatively,  and, if  appropriate,  state the reasons why a  reasonable
estimate of the results cannot be made:

     Attached  hereto as Exhibit 99.1 is an excerpt from a press release  issued
by Sun Healthcare Group, Inc. dated February 1, 1999.

     Sun Healthcare Group, Inc. has caused this notification to be signed on its
behalf by the undersigned thereunto duly authorized.

Date:  March 30, 1999           By: /s/ William Warrick                        
                                Name:   William Warrick
                                Title:  Vice President and Corporate Controller


                                INDEX TO EXHIBITS

Exhibit No.                         Document         

99.1                                Press Release dated February 1, 1999.


                                                                    EXHIBIT 99.1

                             FOURTH QUARTER RESULTS

            Company Continues to Implement Management Reorganization
                           and Reduction in Work Force

     Albuquerque,  NM, Feb. 1, 1999 - Sun Healthcare  Group,  Inc.  (NYSE:  SHG)
today announced that it has completed a preliminary  review of financial results
for its fourth quarter ended December 31, 1998. As a result primarily of changes
in the Medicare  reimbursement  system, and a  greater-than-expected  decline in
demand for certain company  services,  Sun expects to report a significant  loss
from operations for the fourth quarter, before certain adjustments and charges.

     In response to these  changing  market and  reimbursement  conditions,  the
company continues to implement a comprehensive  restructuring of operations. The
company also expects to record  several  adjustments  that have been prompted by
the new operating environment.

     Special  charges in the fourth  quarter  are  expected  to include a charge
resulting primarily from severance expenses related to the company's  reductions
in work force that occurred during the fourth quarter.  The company also expects
to record a charge for the  write-down  of impaired  goodwill for certain of its
domestic  inpatient   facilities  that  have  been  impacted  by  the  company's
transition  to the  Medicare  prospective  payment  system  (PPS).  Sun is  also
evaluating the  recoverability  of goodwill related to certain of its operations
in the United Kingdom.

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