IRVINE, CA–(January 3, 2011) – Sun Healthcare Group, Inc. (NASDAQ: SUNH) announced today that its subsidiary, SolAmor Hospice Corporation, completed the acquisition of Countryside Hospice Care, Inc. on December 29, 2010. Countryside is a privately-held, Medicare-certified hospice company headquartered in Anniston, Alabama, that provides services to approximately 200 hospice patients located in Alabama and Georgia.

“We are very pleased to add Countryside to SolAmor’s growing hospice operations. This transaction is Sun’s first acquisition since our restructuring was completed in November 2010, and continues our strategy of expanding our hospice business into those areas where we operate skilled nursing centers. With seven existing locations and four additional branches scheduled to open, Countryside is expected to generate approximately $11 million of revenue and to be accretive to both EBITDAR and net income in 2011,” said William A. Mathies, chairman and chief executive officer of Sun Healthcare Group, Inc. “With the addition of Countryside, we anticipate an annualized revenue run rate for SolAmor of more than $64 million in 2011,” continued Mathies.

With this transaction, SolAmor expands its hospice services to 10 states serving approximately 1,050 patients daily. “We welcome this dedicated group of caregivers from Countryside, who are committed to the SolAmor hospice philosophy of treating each patient as a member of our own family,” said Glen Cavallo, president of SolAmor.

About Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc.’s (NASDAQ: SUNH) subsidiaries provide nursing, rehabilitative and related specialty healthcare services principally to the senior population in the United States. Sun’s core business is providing, through its subsidiaries, inpatient services, primarily through 166 skilled nursing centers, 16 combined skilled nursing, assisted and independent living centers, 10 assisted living centers, two independent living centers and eight mental health centers. On a consolidated basis, Sun has annual revenues of $1.9 billion and approximately 30,000 employees in 46 states. At Oct. 1, 2010, SunBridge centers had 23,189 licensed beds located in 25 states, of which 22,407 were available for occupancy. Sun also provides rehabilitation therapy services to affiliated and non-affiliated centers through its SunDance subsidiary, medical staffing services through its CareerStaff Unlimited subsidiary and hospice services through its SolAmor subsidiary.