A long-term care (LTC) provider is hoping for the best but planning for the worst.
Sun Healthcare Group Inc., Irvine, Calif. (Nasdaq:SUNH), says it has volunteered to pay down $50 million in senior secured facility credit early and agreed to a 1.25-percentage-point increase in the interest rate to get more flexible loan covenants.
The covenants relate to the company’s maximum leverage ratio and its interest coverage ratio.
The Centers for Medicare and Medicaid Services (CMS) reduced the Medicare reimbursement rate for skiled nursing facility care Oct. 1., and Sun changed the credit facility agreement to cope with the reimbursement changes, the company says.
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Sun generates $1.9 billion in annual revenue. It runs 165 skilled nursing centers; 14 facilities that combine skilled nursing, assisted living services and independent living services; the SolAmor Hospice business; and a variety of other health care facilities and programs.
Sun says in a quarterly financial report filed with the U.S. Securities and Exchange Commission that it set up the senior credit facility with a syndicate led by Credit Suisse in October 2010.