Sun Healthcare

      Irvine, Calif. (Nov. 15, 2005) - Sun Healthcare Group, Inc. (NASDAQ NM: SUNH) announced today that it has successfully obtained regulatory approvals in all states in which Peak Medical Corporation operates with the exception of the State of Oklahoma. The Department of Health of the State of Oklahoma has advised the Company that it is denying the Company’s certificate of need (CON) applications to operate 11 skilled nursing facilities currently operated by Peak. The Company believes that this is not unusual in the CON process in the State of Oklahoma and it has initiated the steps required to appeal the Department’s ruling. The approval of these applications is a condition to Sun’s ability to operate the facilities in Oklahoma and to complete its previously announced acquisition of Peak. If the appeal is successful, the Company anticipates that the acquisition of Peak will close within the next 90 days, and the Company and Peak are currently in discussions to extend the termination date of the merger agreement beyond Dec. 31, 2005.
      "While we would have preferred not having to go through the appeal process, we recognize that every state has its own distinct process and we are respectful of that," said Richard K. Matros, Sun’s chief executive officer. "We believe that we have a compelling case to present in the appeal and we are committed to working through this process." Matros also noted that when Peak acquired some of these facilities in 2001, its CON applications were initially denied by the Oklahoma Department of Health and then subsequently approved upon appeal.
      "We remain committed to aggressively pursuing growth opportunities," stated Matros. "The vast majority of jurisdictions do not require a CON approval process for acquisitions of existing facilities as does Oklahoma."

About Sun Healthcare Group, Inc.
      Sun Healthcare Group, Inc., with executive offices located in Irvine, California, owns SunBridge Healthcare Corporation and other affiliated companies that operate long-term and postacute care facilities in many states. In addition, the Sun Healthcare Group family of companies provides therapy through SunDance Rehabilitation Corporation, medical staffing through CareerStaff Unlimited, Inc., and home care through SunPlus Home Health Services, Inc.

      Statements made in this release that are not historical facts, including our estimates regarding financial performance in 2005, are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "anticipate," "believe," "plan," "estimate," "expect," "hope," "intend," "may" and similar expressions. Factors that could cause actual results to differ are identified in the public filings made by the company with the Securities and Exchange Commission and include changes in Medicare and Medicaid reimbursements; potential liability for losses not covered by, or in excess of, our insurance; the effects of government regulations and investigations; our ability to generate cash flow sufficient to operate our business; our ability to complete the acquisition of Peak Medical Corporation and integrate its operations; increasing labor costs and the shortage of qualified healthcare personnel; and our ability to receive increases in reimbursement rates from government payors to cover increased costs. More information on factors that could affect our business and financial results are included in our public filings made with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on Sun’s web site, www.sunh.com.
      The forward-looking statements involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. We caution investors that any forward-looking statements made by us are not guarantees of future performance. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
               Any documents filed by Sun with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and stockholders of Sun may obtain free copies of the documents filed with the SEC by contacting Sun’s investor relations department at (505) 468-2341 (TDD users, please call (505) 468-4458) or by sending a written request to Investor Relations, Sun Healthcare Group, Inc., 101 Sun Avenue N.E., Albuquerque, N.M. 87109. You may also read and copy any reports, statements and other information filed by Sun with the SEC at the SEC public reference room at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 or visit the SEC’s web site for further information on its public reference room.