<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
   
                                  FORM 10-K/A
    
 
                                   (Mark One)
 
/X/  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
 
                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
 
/ /  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
 
       FOR THE TRANSITION PERIOD FROM                  TO                  .
 
                         COMMISSION FILE NUMBER 1-12040
 
                           SUN HEALTHCARE GROUP, INC.
 
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                      85-0410612
          (State of Incorporation)                 (I.R.S. Employer Identification No.)
</TABLE>
 
                               101 SUN AVENUE NE
                         ALBUQUERQUE, NEW MEXICO 87109
                                 (505) 821-3355
                  (Address and telephone number of Registrant)
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<S>                                            <C>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
 Common Stock, par value $.01 per share, and              New York Stock Exchange
       Preferred Stock Purchase Rights
</TABLE>
 
        Securities registered pursuant to Section 12(g) of the Act: None
 
    Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  /X/  No  / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  / /
 
   
    On March 27, 1998, Sun Healthcare Group, Inc. had 49,594,627 outstanding
shares of Common Stock, net of treasury stock. Of those, 42,254,045 shares of
Common Stock were held by nonaffiliates. The aggregate market value of such
Common Stock held by nonaffiliates, based on the average of the high and low
sales prices of such shares on the New York Stock Exchange on March 27, 1998,
was approximately $788,302,027.
    
 
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--------------------------------------------------------------------------------
<PAGE>
   
GENERAL
    
 
   
    Sun Healthcare Group, Inc. ("Sun", the "Company" or the "Registrant") hereby
amends its Annual Report on Form 10-K for the fiscal year ended December 31,
1997 by deleting its responses to Items 10 through 14 contained in its original
filing and replacing such sections with the following:
    
 
                                    PART III
 
   
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
 
   
    The directors and executive officers of Sun as of April 28, 1998 were:
    
 
   
<TABLE>
<CAPTION>
NAME                                                                  POSITION WITH SUN
------------------------------------------  ---------------------------------------------------------------------
<S>                                         <C>
Andrew L. Turner..........................  Chairman of the Board of Directors and Chief Executive Officer
Mark G. Wimer.............................  President, Chief Operating Officer and Director
Robert D. Woltil..........................  Chief Financial Officer and Director
Robert A. Levin...........................  Senior Vice President -- Rehabilitation Services and Director
Warren C. Schelling.......................  Senior Vice President -- Pharmaceutical Services and Director
M. Scott Athans...........................  Senior Vice President -- U.S. Inpatient Services
Julie Collins.............................  Senior Vice President -- Administrative Services
Thomas B. Hamilton........................  Senior Vice President -- Inpatient Operations, Europe
Robert F. Murphy..........................  Senior Vice President, General Counsel and Secretary
Kenneth C. Noonan.........................  Senior Vice President -- Business Development
Andrew P. Masetti.........................  Vice President -- Finance
William C. Warrick........................  Vice President, Corporate Controller
Warren H. McInteer........................  Vice President of Mergers and Acquisitions and Treasurer
John E. Bingaman..........................  Director
Zev Karkomi...............................  Director
Martin G. Mand............................  Director
Lois E. Silverman.........................  Director
James R. Tolbert, III.....................  Director
R. James Woolsey..........................  Director
</TABLE>
    
 
   
    Set forth below are the names of the executive officers and directors of Sun
and their ages as of April 28, 1998. The Board of Directors is divided into
three classes elected for staggered terms. Each director holds office until the
next annual meeting of stockholders at which the class of directors of which he
is a member is elected or until his successor has been elected and qualified.
The terms of Messrs. Bingaman, Mand, Tolbert and Woolsey expire in 1998, the
terms of Messrs. Karkomi, Wimer and Schelling and Ms. Silverman expire in 1999,
and the terms of Messrs. Turner, Levin and Woltil expire in 2000. The executive
officers of Sun are chosen annually to serve until the first meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors are elected and have qualified, or until death, resignation or
removal, whichever is sooner.
    
 
   
    Andrew L. Turner, age 51, is Chairman of the Board of Directors and Chief
Executive Officer of Sun. Mr. Turner has served in each of these capacities for
Sun since its formation and served as President of Sun from Sun's formation
until September 1997. Mr. Turner is also the founder of Sun and has overseen the
development of Sun's business since its inception in 1989. Mr. Turner was also a
founder and previously served as Chief Operating Officer of Horizon Healthcare
Corporation, a healthcare services provider, from 1986 to 1989. Prior to 1986,
Mr. Turner served as a Senior Vice President of Operations of The Hillhaven
Corporation ("Hillhaven"). Mr. Turner has over 20 years of experience in the
long-term care industry. Mr. Turner is also a member of the Board of Directors
of Watson Pharmaceuticals, Inc., a pharmaceutical products company, and of The
Sports Club Company, Inc., an operator of sports and
    
 
                                       1
<PAGE>
   
fitness clubs. See "Item 13 -- Certain Relationships and Related Transactions"
for a description of certain relationships between the Company and Mr. Turner.
    
 
   
    Mark G. Wimer, age 44, became a director of Sun in 1993. Mr. Wimer became
President and Chief Operating Officer in September 1997. Mr. Wimer had
previously served as Senior Vice President for Inpatient Services from 1996
until September 1997. Mr. Wimer previously served as the President of SunRise
Healthcare Corporation ("SunRise") from 1993 until 1995. From 1988 to 1993, Mr.
Wimer was President and Chief Executive Officer of Franciscan Eldercare
Corporation, a non-profit organization that develops and manages long-term care
facilities. From 1984 through 1988, Mr. Wimer was Regional Vice President of
Operations for Hillhaven and had responsibility for management of long-term care
facilities for Hillhaven in Washington, Oregon, Idaho and Montana.
    
 
   
    Robert D. Woltil, age 43, became a director of Sun in 1996. Mr. Woltil
became the Chief Financial Officer of Sun in 1996. From 1982 to 1996, Mr. Woltil
served in various capacities for Beverly Enterprises, Inc. ("Beverly"), a
healthcare services provider. From 1995 until 1996, Mr. Woltil was President and
Chief Executive Officer of Pharmacy Corporation of America, a subsidiary of
Beverly. From 1992 to 1995, Mr. Woltil was the Chief Financial Officer of
Beverly, and from 1990 to 1992, Mr. Woltil was the Vice President -- Financial
Planning and Control for Beverly. Mr. Woltil is also a certified public
accountant.
    
 
   
    Robert A. Levin, age 43, became a director of Sun in April 1993 and served
as the Secretary of Sun from 1993 to 1996. Mr. Levin became the Senior Vice
President for Rehabilitation Services in 1996. This position includes
responsibility for all therapy services of Sun, including those of SunDance,
Sun's rehabilitation therapy subsidiary. From January 1991 to December 1995, Mr.
Levin was the President and Chief Operating Officer of SunDance. Previously Mr.
Levin was Vice President of National Accounts for Medline Industries, Inc., a
manufacturer and distributor of medical supplies.
    
 
   
    Warren C. Schelling, age 45, became a director of Sun in 1996. Mr. Schelling
became the Senior Vice President for Pharmaceutical Services in 1996. This
position includes responsibility for all of Sun's pharmaceutical operations,
including those of SunScript, Sun's pharmacy subsidiary. From 1994 to 1995, Mr.
Schelling was the President of SunScript. Prior to joining Sun, Mr. Schelling
was the President and Chief Operating Officer of HPI Health Care Services, Inc.
a subsidiary of Diagnostek, Inc., which provides pharmacy management services to
hospitals, HMOs, long-term care facilities and health systems, from January 1993
to July 1994. From 1994 to 1994, Mr. Schelling also served as the Executive Vice
President/ Pharmacy Services Officer at Diagnostek, Inc. From 1985 to 1993, Mr.
Schelling was a manager in HPI Health Care Services, Inc.
    
 
   
    M. Scott Athans, age 52, became Senior Vice President -- Inpatient Services,
U.S. in October 1997. This position includes responsibility for all of Sun's
inpatient services, including those of SunRise, Sun's subsidiary responsible for
operations at Sun's long term care facilities. Prior to joining Sun, Mr. Athans
was Chief Operating Officer, and later Chief Executive Officer, of GranCare,
Inc. in Atlanta, Georgia, where he directed four operating divisions, including
skilled nursing facilities, pharmacies, management contracting and home care
from 1993 to 1997. Formerly, he was Chief Operating Officer of Healthfield,
Inc., a home healthcare company with operations in Georgia, Tennessee, Alabama,
Massachusetts and Florida. He has also held positions as Chief Executive Officer
of Georgia Baptist Medical Center in Atlanta and Senior Vice President and
Regional Director for America Medical International.
    
 
   
    Julie Collins, age 50, became Senior Vice President -- Administrative
Services in 1996. This position is responsible for overseeing corporate
communications, human resources, risk management, training and corporate office
facilities management. From 1994 to 1995, Ms. Collins was the Vice President
Human Resources. Prior to joining Sun, Ms. Collins was the Vice President of
Human Resources and Support Services for St. Joseph Health System in Atlanta,
Georgia from 1993 to 1994. From 1991 to 1993, Ms. Collins had been the Vice
President of SunRise. From 1990 to 1991, Ms. Collins was Director of Human
Resources for Sheperd Spinal Center in Atlanta, Georgia.
    
 
                                       2
<PAGE>
   
    Thomas B. Hamilton, age 42, became Senior Vice President -- Inpatient
Operations, Europe in July 1997. Mr. Hamilton has been Chief Executive Officer
of Ashbourne PLC since 1987 and Chairman of the Board of Directors of Ashbourne
PLC since 1997. From 1983 to 1987, Mr. Hamilton held various positions, most
recently Main Board Director, with Stakis plc.
    
 
   
    Robert F. Murphy, age 44, became Senior Vice President and the General
Counsel of Sun in 1995 and Secretary of Sun in 1996. From 1986 to 1995 Mr.
Murphy served in several capacities as an officer and legal counsel to FHP
International Corporation, most recently as Vice President and Associate General
Counsel. Previously Mr. Murphy was in private practice beginning in 1978.
    
 
   
    Kenneth C. Noonan, age 42, became Senior Vice President -- Business
Development in July 1997. Prior to joining Sun, Mr. Noonan was Vice President of
Managed Care and Business Development for Manor Care, Inc. from 1994 to June
1997, Vice President of Western Operations for Option Care, Inc. from 1992 to
1994, a founder of Disease Management Home IV Therapy Company from 1990 to 1992
and Western Region Manager for McGaw, Inc. from 1983 to 1990.
    
 
   
    Andrew P. Masetti, age 40, became Vice-President -- Finance in October 1997.
From June 1997 to October 1997, Mr. Masetti was a Financial Manager of Sun.
Prior to joining Sun, Mr. Masetti was Divisional Chief Financial Officer of
Harte-Hanks from 1996 to April 1997, Chief Financial Officer of Vista Healthcare
from 1995 to 1996, Chief Financial Officer of Diagnostek from 1994 to 1995, and
he held various financial management positions with Martin Marietta/General
Electric from 1979 to 1994.
    
 
   
    Warren H. McInteer, age 39, became Vice President of Mergers & Acquisitions
in 1995. Mr. McInteer became the Treasurer of Sun in 1996. Prior to joining Sun,
Mr. McInteer was the Vice President of Financial Planning for Continental
Medical Systems ("Continental") in Mechanicsburg, Pennsylvania, from 1993 to
1995. From 1985 to 1993, Mr. McInteer was a management consultant for Price
Waterhouse working from offices in Baltimore, London and Philadelphia.
    
 
   
    William C. Warrick, age 35, became Vice President, Corporate Controller in
1994. From 1991 to 1994, Mr. Warrick directed financial reporting for
Continental. From 1990 to 1991, Mr. Warrick held a similar position with McCrory
Stores, a retail chain store company. Previously Mr. Warrick was an accountant
with KPMG Peat Marwick. Mr. Warrick is a certified public accountant.
    
 
   
    John E. Bingaman, age 51, became a director of Sun in 1993. Mr. Bingaman
also served as a consultant to the Company from 1994 to 1996. Since 1993, Mr.
Bingaman has been Vice President of BKS Properties. From 1993 to 1994, Mr.
Bingaman was the President of Four Seasons Healthcare Management, Inc., which
was the Company's subsidiary that managed certain long-term care facilities
through management contracts. Between 1984 and 1993, Mr. Bingaman was Chief
Executive Officer of Honorcare Corporation ("Honorcare"), a provider of
long-term care services, responsible for the overall management and strategic
planning of Honorcare. Mr. Bingaman has over 25 years of experience in the
long-term care industry. See "Item 13 -- Certain Relationships and Related
Transactions" for a description of certain relationships between the Company and
Mr. Bingaman.
    
 
   
    Zev Karkomi, age 74, became a director of Sun in 1993. Mr. Karkomi has over
25 years of experience in the real estate business, with a primary emphasis on
properties owned and leased to long-term healthcare operators. He has served as
President of Karell Capital Ventures, Inc., a corporation involved in the
acquisition, sale, leasing and management of long-term care facilities, since
1980. Mr. Karkomi also serves as the President of Zevco Enterprises, Inc. and
Executive Vice President and Chairman of the Board of Progressive Health Group,
Inc., real estate investment companies. Mr. Karkomi also serves as Honorary
Co-Chairman of the Board of Directors of LTC Properties, Inc. See "Item 13 --
Certain Relationships and Related Transactions" for a description of certain
relationships between the Company and Mr. Karkomi.
    
 
   
    Martin G. Mand, age 61, became a director of Sun in 1996. Since 1995, Mr.
Mand has been Chairman, President and Chief Executive Officer of Mand
Associates, Limited, a financial consulting, speaking and
    
 
                                       3
<PAGE>
   
writing firm. Mr. Mand was previously Executive Vice President and Chief
Financial Officer of Northern Telecom, Ltd., a global manufacturer of
telecommunications equipment, from 1990 to 1994. Mr. Mand also previously served
as Vice President and Treasurer of E.I. du Pont de Nemours & Co., a chemical,
allied products and energy company. Mr. Mand also serves on the Board of
Directors of the Fuji Bank and Trust Company.
    
 
   
    Lois E. Silverman, age 57, became a director of Sun in 1995. Ms. Silverman
is a director of CONCENTRA Managed Care Inc., a publicly owned provider of
services to reduce the costs of workers' compensation, automobile, disability
and health insurance claims. Ms. Silverman was a co-founder of and served as the
Chairman of the Board of CRA Managed Care, Inc. from 1994 to September 1997 and
as its Chief Executive Officer from 1988 to 1995. Ms. Silverman is the President
of the Commonwealth Institute, a nonprofit organization she established in 1997
for the advancement of women entrepreneurs. Ms. Silverman is also a director of
CareGroup and Immunetics, a member of the Dean's Council of the Harvard School
of Public Health, an overseer at Tufts University Medical School and a Trustee
at the Hebrew Rehabilitation Center for the Aged and at Simmons College.
    
 
   
    James R. Tolbert, III, age 62, became a director of Sun in 1995. Mr. Tolbert
has served as the Chairman, President, Chief Executive Officer and Treasurer of
First Oklahoma Corporation, a holding company, since 1986. Mr. Tolbert has over
15 years of experience in the nursing home industry. In addition, Mr. Tolbert is
a member of the Board of Directors of Bonray Drilling Corporation, a corporation
engaged in domestic onshore contract drilling of oil and gas wells.
    
 
   
    R. James Woolsey, age 56, became a director of Sun in 1995. Mr. Woolsey has
been a partner in the law firm of Shea & Gardner since January 1995, where he
previously had been a partner from 1980 to 1989 and from 1991 to 1993. From 1993
to 1995, Mr. Woolsey served as the Director of Central Intelligence for the
United States government. From 1989 to 1991, Mr. Woolsey was the Ambassador and
U.S. Representative to the Negotiation on Conventional Armed Forces in Europe.
In addition, Mr. Woolsey is a member of the Board of Directors of USF&G Corp.,
an insurance holding company, and Yurie Systems, Inc., a network communications
company. See "Item 13 -- Certain Relationships and Related Transactions" for a
description of certain relationships between the Company and Mr. Woolsey.
    
 
   
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    
 
   
    Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules promulgated thereunder require Sun's directors
and executive officers and persons who own more than ten percent of Sun's common
stock, par value $.01 per share (the "Sun Common Stock"), to report their
ownership and changes in their ownership of Sun Common Stock to the Securities
and Exchange Commission (the "Commission") and the New York Stock Exchange.
Copies of such reports must also be furnished to Sun.
    
 
   
    Based solely on a review of the copies of such reports and amendments
thereto received by Sun, or written representations from certain reporting
persons, Sun believes that during 1997 all Section 16(a) filing requirements
applicable to its directors, executive officers and greater than ten percent
beneficial owners were met with the exception of (i) Andrew P. Masetti, whose
Form 3 was filed one week late due to an oversight, and (ii) Thomas Hamilton,
who reported one transaction reportable on Form 4 one month late due to an
oversight.
    
 
   
ITEM 11. EXECUTIVE COMPENSATION
    
 
   
SUMMARY COMPENSATION TABLE
    
 
   
    The following table provides information concerning the annual, long-term
and other compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years shown of those persons
    
 
                                       4
<PAGE>
   
who were, during the latest fiscal year, (i) the chief executive officer and
(ii) the other four most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers") :
    
 
   
<TABLE>
<CAPTION>
                                                                                        LONG-TERM
                                                                                   COMPENSATION AWARDS
                                                                              ------------------------------
                                                      ANNUAL COMPENSATION        RESTRICTED      SECURITIES
                                                   -------------------------        STOCK        UNDERLYING      ALL OTHER
NAME AND PRINCIPAL POSITION               YEAR       SALARY($)     BONUS($)     AWARDS($)(1)     OPTIONS(#)   COMPENSATION($)
--------------------------------------  ---------  -------------  ----------  -----------------  -----------  ----------------
<S>                                     <C>        <C>            <C>         <C>                <C>          <C>
Andrew L. Turner .....................       1997  $  537,312     $  550,000    $   5,409,625        --         $   5,771(2)
  Chief Executive Officer                    1996     500,000        250,000         --              --             3,795
                                             1995     500,000         --             --             100,000         2,321
 
Mark G. Wimer ........................       1997     367,387        255,000        2,712,500        --             1,503(3)
  President and Chief Operating              1996     322,516        125,000         --              15,000         1,770
  Officer                                    1995     281,261        125,000         --              15,000           720
 
Robert D. Woltil .....................       1997     374,428        240,000        1,443,750        --               870(4)
  Chief Financial Officer                    1996     296,164(5)     125,000         --              25,000           503
 
Robert A. Levin ......................       1997     341,193        138,000        2,668,750        --             1,503(6)
  Senior Vice President-Rehabilitation       1996     330,202         --             --              15,000         1,554
  Services                                   1995     281,261        125,000         --              15,000         1,556
 
Robert F. Murphy .....................       1997     267,469        108,000        1,299,625        --               685(7)
  Senior Vice President, General             1996     260,000        100,000         --              --               457
  Counsel and Secretary                      1995      35,000(8)      --             --              10,000          --
</TABLE>
    
 
------------------------
 
   
(1) Restricted stock awards are valued at the Company's closing stock price on
    the date of grant. Dividends, if any, would be paid on restricted shares at
    the same rate paid to all stockholders. The Named Executive Officers held
    the following shares of restricted stock valued at December 31, 1997 at a
    closing price of $19.375 per share:
    
 
   
<TABLE>
<CAPTION>
                                                                            MARKET VALUE
                                                         NUMBER OF SHARES   AT 12/31/97
                                                         -----------------  ------------
<S>                                                      <C>                <C>
Mr. Turner.............................................         251,000      $4,863,125
Mr. Wimer..............................................          99,200       1,922,000
Mr. Woltil.............................................          52,800       1,023,000
Mr. Levin..............................................          97,600       1,891,000
Mr. Murphy.............................................          47,200         914,500
</TABLE>
    
 
   
(2) Consists of $236 of matching contributions under the Company's 401(k) Plan
    and the payment of $5,535 of life insurance premiums.
    
 
   
(3) Consists of $236 of matching contributions under the Company's 401(k) Plan
    and the payment of $1,267 of life insurance premiums.
    
 
   
(4) Consists of $236 of matching contributions under the Company's 401(k) Plan
    and the payment of $634 of life insurance premiums.
    
 
   
(5) Salary for 1996 represents amounts paid to Mr. Woltil in 1996 after the
    commencement of his employment by the Company in February 1996. Mr. Woltil's
    annualized salary for 1996 would have been $350,000.
    
 
   
(6) Consists of $236 of matching contributions under the Company's 401(k) Plan
    and the payment of $1,267 of life insurance premiums.
    
 
                                       5
<PAGE>
   
(7) Consists of $236 of matching contributions under the Company's 401(k) Plan
    and the payment of $449 of life insurance premiums.
    
 
   
(8) Salary for 1995 represents amounts paid to Mr. Murphy in 1995 after the
    commencement of his employment by Sun in November 1995. Mr. Murphy's
    annualized salary for 1995 would have been $260,000.
    
 
   
OPTION GRANTS IN LAST FISCAL YEAR
    
 
   
    None of the Named Executive Officers were granted stock options during the
year ended December 31, 1997.
    
 
   
FISCAL YEAR-END OPTION VALUES
    
 
   
    Set forth in the table below is information concerning the value of stock
options held as of December 31, 1997 by each of the Named Executive Officers.
None of the Named Executive Officers exercised any stock options during the year
ended December 31, 1997.
    
 
   
<TABLE>
<CAPTION>
                                                     NUMBER OF SECURITIES        VALUE OF UNEXERCISED
                                                    UNDERLYING UNEXERCISED           IN-THE-MONEY
                                                    OPTIONS-AT-YEAR-END(#)    OPTIONS-AT-YEAR-END($)(1)
                                                  --------------------------  --------------------------
NAME                                              EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
------------------------------------------------  -----------  -------------  -----------  -------------
<S>                                               <C>          <C>            <C>          <C>
Andrew L. Turner................................     100,000        100,000    $  --        $   --
Mark G. Wimer...................................      38,000         25,000      240,625         62,500
Robert D. Woltil................................       8,334         16,666       58,338        116,662
Robert A. Levin.................................      38,000         25,000      240,625         62,500
Robert F. Murphy................................      --             10,000       --             98,750
</TABLE>
    
 
------------------------
 
   
(1) Based on the closing price of the Common Stock, as reported on the New York
    Stock Exchange, at December 31, 1997, which was $19.375 per share.
    
 
   
NON-EMPLOYEE DIRECTOR COMPENSATION
    
 
   
    Non-employee directors of the Company are entitled to receive an annual fee
of $24,000, which is payable in four equal quarterly installments. In addition,
each Chairperson of a committee of the Board of Directors is entitled to receive
an additional annual fee of $4,000, payable in four equal quarterly
installments. Effective April 11, 1997, non-employee directors and Committee
Chairpersons have the election of receiving (i) the entire annual retainer and
Committee Chairpersons fees, if applicable, in cash, or (ii) one-half of the
retainer and Committee Chairperson fees, if applicable, in cash and the
remaining one-half in the form of restricted common stock awards. If restricted
stock is elected, for every dollar of cash given up, the recipient will receive
restricted stock worth $1.10.
    
 
   
    Prior to April 11, 1997, non-employee directors were also entitled to
receive fees of $1,200 for each Board of Directors meeting attended in person,
$500 for each Board of Directors meeting attended by telephone and $500 for each
Committee meeting of the Board of Directors attended in person or by telephone,
plus reimbursement of out-of-pocket expenses for attendance at such meetings.
Effective April 11, 1997, the fee for the first Board of Directors meeting or
Committee meeting attended in person by a non-employee director in a single day
was increased to $1,750. Directors are entitled to an additional $500 for each
subsequent meeting attended that same day. The fees for any meetings that are
attended by telephone are $500. In addition, pursuant to the 1997 Non-Employee
Directors' Stock Plan, (i) non-employee directors already serving on the Board
of Directors are awarded annually 2,000 shares of restricted common stock and
non-qualified stock options to purchase 4,000 shares of common stock and (ii)
non-employee directors who are elected to the Board of Directors for the first
time or after a period of
    
 
                                       6
<PAGE>
   
not serving on the Board of Directors receive one-time awards of 5,000 shares of
restricted common stock and non-qualified stock options to purchase 10,000
shares of common stock.
    
 
   
EMPLOYMENT AGREEMENT
    
 
   
    The Company entered into an employment agreement dated as of June 2, 1993
with Mr. Turner (the "Employment Agreement") that initially provided Mr. Turner
with an annual salary of $375,000 and an annual bonus, not exceeding $250,000
per year, pursuant to a formula established by the Compensation Committee. Mr.
Turner's annual salary was increased in April 1994 to $500,000 and remained at
that level for 1995 and 1996. Pursuant to the Employment Agreement, Mr. Turner
is restricted from disclosing confidential information that has been obtained by
him or disclosed to him as a result of his employment with the Company. In
addition, during the term of his employment by the Company and for a period of
two years thereafter, Mr. Turner is prohibited from competing with the Company
or any of its affiliates, soliciting the business of any patient or customer of
the Company or any of its affiliates, and soliciting for employment any of the
employees of the Company or any of its subsidiaries. The Employment Agreement
terminates after the expiration of five years, upon death or total disability of
Mr. Turner, upon Mr. Turner reaching mandatory retirement age under any
retirement policy adopted by the Company, by mutual agreement of Mr. Turner and
the Company, upon dissolution and liquidation of the Company, at Mr. Turner's
election without cause upon six months' notice, or upon notice by the Company to
Mr. Turner for cause.
    
 
   
    The Company and Mr. Turner are currently in the process of renewing Mr.
Turner's Employment Agreement,which shall become effective on or before the
expiration of the current Employment Agreement. Mr. Turner's annual base salary
rate was recently increased by the Compensation Committee to $700,000 effective
April 1, 1998. Thereafter, his annual base salary shall increase in increments
of $150,000 on each of April 1, 1999 and April 1, 2000.
    
 
   
SEVERANCE AGREEMENTS
    
 
   
    The Company has entered into severance agreements (the "Severance
Agreements") with certain executive officers, including the Named Executive
Officers. Each Severance Agreement provides that in the event of the
"involuntary termination" of the executive, he or she will be entitled to
receive any accrued but unpaid salary plus a pro rata portion of annual bonus.
An "involuntary termination" is defined as a termination by the Company for
reasons other than an executive's disability that do not constitute "cause" or
an executive's resignation for "good reason." In addition, the executive will be
entitled to a severance payment equal to two times salary at the rate in effect
at the time of the executive's involuntary termination, or, in the event that
such termination occurs within two years following a change in control of the
Company (as defined below), a severance payment equal to three times salary at
the rate then in effect. The executive will continue to receive health and other
benefits for a period of two years following his or her involuntary termination
(or for a period of three years in the event that such termination occurs
following a change in control of the Company). The Severance Agreements also
provide for a gross-up payment to be made to the executives, if necessary to
eliminate the effects of the imposition of the excise tax under Section 280G of
the Code on the payments made thereunder. The Severance Agreements contain
identical noncompetition and nondisclosure covenants, except that the
noncompetition covenant in Mr. Turner's Severance Agreement follows the
noncompetition covenant in his Employment Agreement. See "--Employment
Agreement" for a description of this provision.
    
 
   
    For purposes of the Severance Agreements, "change in control" is generally
defined as (i) the acquisition by a person or group of beneficial ownership
representing 33 1/3% of the Company's then outstanding voting stock, (ii)
stockholder approval of a merger or consolidation of the Company other than a
merger or consolidation in which the voting securities of the Company
outstanding immediately prior thereto continues to represent at least 66 2/3% of
the combined voting power of the surviving entity's outstanding voting
securities, (iii) under certain conditions, a change in the majority of the
Board of
    
 
                                       7
<PAGE>
   
Directors of the Company, or (iv) stockholder approval of a reorganization of
the Company or a sale of substantially all of the Company's assets.
    
 
   
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
    
 
   
    At the beginning of the 1997 fiscal year, the Compensation Committee was
comprised of three members, Lois E. Silverman, Martin G. Mand and R. James
Woolsey, all non-employee members of the Board of Directors. In June 1997, Mr.
Woolsey was replaced by James R. Tolbert, III, also a non-employee member of the
Board of Directors. None of these directors were employees of the Company.
    
 
   
    Mr. Woolsey, in his capacity as a partner in the law firm of Shea & Gardner,
provided certain legal services to the Company in 1997. The Company believes the
terms of such relationship are as favorable to the Company as that which could
have been obtained from a non-affiliated party in an arm's-length relationship.
However, the Company's contractual relationship with a member of the Board of
Directors creates the potential for a conflict of interest.
    
 
   
    No executive officer of the Company during the last fiscal year served as a
member of a compensation committee or director of another entity in a situation
in which an executive officer of such other entity served as a member of the
Company's Compensation Committee.
    
 
   
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    
 
   
EQUITY OWNERSHIP OF MANAGEMENT
    
 
   
    The following table and footnotes set forth certain information regarding
the beneficial ownership of Sun Common Stock as of March 15, 1998 by (i) each
director, (ii) the five executive officers named in the Summary Compensation
Table in Item 11 above and (iii) all directors and executive officers of the
Company as a group:
    
 
   
<TABLE>
<CAPTION>
                                               SHARES
                                            BENEFICIALLY     PERCENT OF
NAME OF BENEFICIAL OWNER                      OWNED(1)       CLASS(1)(%)
----------------------------------------  ----------------   -----------
<S>                                       <C>                <C>
Andrew L. Turner........................  6,898,712(2)             13.9%
John E. Bingaman........................    185,104(3)(12)            *
Zev Karkomi.............................     86,454(4)(12)            *
Robert A. Levin.........................    173,727(5)(12)            *
Martin G. Mand..........................      3,854(6)(12)            *
Robert F. Murphy........................     48,742(12)               *
Warren C. Schelling.....................     66,041(7)(12)            *
Lois E. Silverman.......................      5,204(8)(12)            *
James R. Tolbert, III...................      4,064(8)(12)            *
Mark G. Wimer...........................    157,600(9)(12)            *
Robert D. Woltil........................     76,944(10)(12)           *
R. James Woolsey........................      3,500(11)(12)           *
All directors and executive officers as
  a group (19 persons, including those
  named above)..........................  7,794,835(13)            15.6%
</TABLE>
    
 
------------------------
 
   
   * Less than 1%
    
 
   
 (1) Beneficial ownership is determined in accordance with the rules of the
     Commission and generally includes voting or investment power with respect
     to securities. Shares of Sun Common Stock subject to options currently
     exercisable, or exercisable within 60 days of March 15, 1998, are deemed
     outstanding for computing the percentage of the person holding such option
     but are not deemed outstanding for computing the percentage of any other
     person. Except as indicated in the footnotes to this table and pursuant to
     applicable community property laws, the persons named in the table
    
 
                                       8
<PAGE>
   
     have sole voting and investment power with respect to all shares of Sun
     Common Stock beneficially owned.
    
 
   
 (2) Includes 153,000 shares of Sun Common Stock owned by the Turner Children's
     Trust, 26,024 shares of Sun Common Stock held by the Andrew and Nora Turner
     Trust and 263,645 shares of Sun Common Stock owned by the Turner Family
     Foundation (Mr. Turner disclaims beneficial ownership of these shares).
     Also includes currently exercisable options to purchase 200,000 shares of
     Sun Common Stock.
    
 
   
 (3) Includes currently exercisable options to purchase 42,500 shares of Sun
     Common Stock.
    
 
   
 (4) Includes 200 shares owned by Mr. Karkomi's grandson. Mr. Karkomi disclaims
     beneficial ownership of these shares. Also includes currently exercisable
     options to purchase 42,500 shares of Sun Common Stock.
    
 
   
 (5) Includes 3,000 shares owned by Mr. Levin and his wife, as to which Mr.
     Levin has shared voting and investment power. Also includes currently
     exercisable options to purchase 53,000 shares of Sun Common Stock.
    
 
   
 (6) Includes currently exercisable options to purchase 2,500 shares of Sun
     Common Stock.
    
 
   
 (7) Includes 2,000 shares owned by Mr. Schelling and his wife, as to which Mr.
     Schelling has shared voting and investment power. Also includes currently
     exercisable options to purchase 13,334 shares of Sun Common Stock.
    
 
   
 (8) Includes currently exercisable options to purchase 2,250 shares of Sun
     Common Stock.
    
 
   
 (9) Includes currently exercisable options to purchase 53,000 shares of Sun
     Common Stock.
    
 
   
 (10) Includes 5,000 shares owned by Mr. Woltil and his wife, as to which Mr.
      Woltil has shared voting and investment power. Also includes currently
      exercisable options to purchase 16,667 shares of Sun Common Stock.
    
 
   
 (11) Includes currently exercisable options to purchase 2,250 shares of Sun
      Common Stock.
    
 
   
 (12) Includes restricted shares awarded under the Company's 1997 Stock
      Incentive Plan and 1997 Non-Employee Directors' Plan which may be subject
      to a substantial risk of forfeiture. The number of restricted shares
      included for each person listed above as having restricted shares is as
      follows: Mr. Turner -- 200,800; Mr. Bingaman -- 2,301; Mr. Karkomi --
      2,301; Mr. Levin -- 73,200; Mr. Mand -- 2,301; Mr. Murphy -- 35,400; Mr.
      Schelling -- 34,800; Ms. Silverman -- 2,352; Mr. Tolbert -- 2,282; Mr.
      Wimer -- 74,400; Mr. Woltil -- 39,600; and Mr. Woolsey -- 2,000.
    
 
   
 (13) Includes an aggregate of 457,753 shares of Sun Common Stock issuable upon
      the exercise of options that are currently exercisable or subject to
      vesting within 60 days of March 15, 1998. Also includes an aggregate of
      518,537 restricted shares awarded under the 1997 Stock Incentive Plan and
      1997 Non-Employee Directors' Plan which may be subject to a substantial
      risk of forfeiture.
    
 
                                       9
<PAGE>
   
EQUITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
    
 
   
    The following table and footnotes set forth certain information with respect
to each person believed by the Company to be the beneficial owner of more than
five percent of Sun Common Stock as of March 15, 1998:
    
 
   
<TABLE>
<CAPTION>
                                                                    SHARES
                                                                 BENEFICIALLY      PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER                               OWNED(1)        CLASS(1)(%)
-------------------------------------------------------------  -----------------  -------------
<S>                                                            <C>                <C>
Andrew L. Turner ............................................       6,898,712(2)         13.9%
  Sun Healthcare Group, Inc.
  101 Sun Avenue, N.E.
  Albuquerque, New Mexico 87109
 
Tweedy, Browne Company LLC ..................................       3,057,159(3)          6.2%
TBK Partners, L.P.
Vanderbilt Partners, L.P.
  52 Vanderbilt Avenue
  New York, New York 10017
 
The Crabbe Huson Group, Inc. ................................       2,756,600(4)          5.6%
  121 SW Morrison, Suite 1400
  Portland, Oregon 97204
</TABLE>
    
 
------------------------
 
   
(1) Beneficial ownership is determined in accordance with the rules of the
    Commission and generally includes voting or investment power with respect to
    securities. Shares of Sun Common Stock subject to options currently
    exercisable, or exercisable within 60 days of March 15, 1998, are deemed
    outstanding for computing the percentage of the person holding such option
    but are not deemed outstanding for computing the percentage of any other
    person. Except as indicated in the footnotes to this table and pursuant to
    applicable community property laws, the persons named in the table have sole
    voting and investment power with respect to all shares of Sun Common Stock
    beneficially owned.
    
 
   
(2) Includes 153,000 shares of Sun Common Stock owned by the Turner Children's
    Trust, 26,024 shares of Sun Common Stock held by the Andrew and Nora Turner
    Trust and 263,645 shares of Sun Common Stock owned by the Turner Family
    Foundation (Mr. Turner disclaims beneficial ownership of these shares). Also
    includes 200,800 restricted shares awarded under the Stock Incentive Plan
    which may be subject to a substantial risk of forfeiture and currently
    exercisable options to purchase 200,000 shares of Sun Common Stock.
    
 
   
(3) Based on a Schedule 13D filed with the Commission on January 9, 1998.
    Consists of sole voting power over all of the shares and sole dispositive
    power over 239,215 of the shares and shared dispositive power over 2,817,944
    of the shares.
    
 
   
(4) Based on a Schedule 13G filed with the Commission on February 6, 1998.
    Consists entirely of shared voting and dispositive power.
    
 
   
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
 
   
    Mr. Turner, the Chief Executive Officer of the Company, guarantees the
Company's obligations under a lease for a nursing home in Connecticut. Mr.
Turner is the guarantor of subleases on three facilities in Illinois, the
sublessor of which is a company co-owned by Mr. Karkomi. Mr. Karkomi's company,
in turn, is the guarantor of the master lease. Mr. Turner also guarantees the
Company's obligations under one facility lease in Washington.
    
 
   
    From time to time, the Company incurred costs on behalf of and engaged in
various transactions with Mr. Turner with respect to personal automobiles and
home furnishings, resulting in indebtedness totaling $140,991. In 1997, Mr.
Turner repaid such amount in full, together with interest at an average rate of
6.4%.
    
 
                                       10
<PAGE>
   
    Kenneth C. Noonan, Senior Vice President--Business Development, is indebted
to the Company in the amount of $380,000 at an interest rate of 8%. The Company
entered into a short-term loan with Mr. Noonan for this amount in connection
with his relocation in 1997 to the Company's headquarters in Albuquerque.
    
 
   
    Mr. Woolsey, in his capacity as a partner in the law firm of Shea & Gardner,
provided certain legal services to the Company in 1997.
    
 
   
    As of December 31, 1997, the Company's nursing home subsidiary, SunRise
Healthcare Corporation ("SunRise"), was a lessee or sublessee of 57 facilities
from partnerships or corporations in which Mr. Karkomi was a general partner,
stockholder or director. These arrangements were entered into from February 1989
to June 1997, with varying lease terms. Approximately 50% of the facilities are
under ten-year terms. The aggregate lease payments, including base rents,
contingent rents and other miscellaneous payments in connection with these
leases, totaled approximately $18.3 million in 1997.
    
 
   
    As of December 31, 1997, SunRise was a lessee or assignee of seven
facilities from partnerships in which Mr. Bingaman had an equity interest of
greater than ten percent. Each of these lease arrangements was entered into
prior to the closing of the acquisition of Honorcare. All of the leases
commenced on July 13, 1993 and terminate in 2001. The aggregate lease payments,
including base rents, contingent rents and other miscellaneous payments in
connection with these leases, totaled approximately $2.2 million in 1997. In
January and February 1998, Mr. Bingaman sold his partnership interests that
leased five of these facilities.
    
 
   
    The Company believes the terms of all of the foregoing transactions are as
favorable to the Company as those that could have been obtained from
non-affiliated parties in arm's-length transactions. However, the Company's
contractual relationship with entities affiliated with members of the Board of
Directors creates the potential for conflicts of interest.
    
 
                                       11
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
    (a) Financial Statements and Financial Statement Schedules
 
        (i) Financial Statements:
 
           Report of Independent Public Accountants
 
           Consolidated Balance Sheets for the years ended December 31, 1997 and
           1996
 
           Consolidated Statements of Earnings (Loss) for the years ended
           December 31, 1997, 1996 and 1995
 
           Consolidated Statements of Stockholders' Equity as of December 31,
           1997, 1996 and 1995
 
           Consolidated Statements of Cash Flows for the years ended December
           31, 1997, 1996 and 1995
 
           Notes to Consolidated Financial Statements
 
        (ii) Financial Statement Schedules:
 
           Report of Independent Public Accountants
 
           Schedule II Valuation and Qualifying Accounts for the years ended
           December 31, 1997, 1996 and 1995
 
    (All other financial statement schedules required by Rule 5-04 of Regulation
S-X are not applicable or the required information is included in the audited
financial statements.)
 
    (b) Reports on Form 8-K
 
        Report dated October 23, 1997 reporting the acquisition of Regency
    Health Services, Inc. ("Regency").
 
        Report dated December 3, 1997 reporting (i) the amendment to the
    Agreement and Plan of Merger and Reorganization, dated as of February 17,
    1997, as amended by Amendment No. 1 thereto dated as of May 27, 1997 and by
    Amendment No. 2 thereto dated as of August 21, 1997, by and among Sun,
    Retirement Care Associates, Inc., a Colorado corporation and a wholly-owned
    subsidiary of Sun ("RCA Merger Sub"), pursuant to which RCA Merger Sub will
    be merged with and into RCA; (ii) an amendment to the Agreement and Plan of
    Merger and Reorganization, dated as of February 17, 1997 as amended by
    Amendment No. 1 thereto dated as of August 21, 1997, by and among Sun,
    Contour Medical, Inc., a Nevada corporation ("Contour"), and Nectarine
    Acquisition corporation, a Nevada corporation and wholly-owned subsidiary of
    Sun ("Contour Merger Sub"), pursuant to which Contour Merger Sub will be
    merged with and into Contour; (iii) an amendment to the Stockholders Stock
    Option and Proxy Agreement, dated as of February 17, 1997, by and among Sun
    and certain principal stockholders of RCA; and (iv) an amendment to the
    Stockholders Stock Option and Proxy Agreement, dated as of February 17, 1997
    by and among Sun and RCA, as principal stockholder of Contour.
 
        Report dated December 22, 1997 supplementing the Form 8-K filed by the
    Company on October 23, 1997 and including (i) the consolidated financial
    statements of Regency and (ii) unaudited pro forma combined financial
    statements of Regency and Sun.
 
                                       12
<PAGE>
    (c) Exhibits
 
   
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
   2.1(1)         Preincorporation Agreement dated as of April 13, 1993 between Sun and Andrew L. Turner, Nora L.
                    Turner and Elizabeth L. Keefer, as Trustee of Turner's Children's Trust No. 3
 
   2.2(16)        Agreement and Plan of Merger and Reorganization, dated as of February 17, 1997 among Sun, Peach
                    Acquisition Corporation and Retirement Care Associates, Inc.
 
   2.3(16)        Agreement and Plan of Merger and Reorganization, dated as of February 17, 1997 among Sun,
                    Nectarine Acquisition Corporation and Contour Medical, Inc.
 
   2.4(21)        Amendment No. 1 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Retirement Care Associates, Inc. and Peach Acquisition Corporation
 
   2.5(22)        Amendment No. 2 to the Agreement and Plan of Merger and Reorganization dated as of February
                    17,1997 among Sun, Retirement Care Associates, Inc. and Peach Acquisition Corporation
 
   2.6(22)        Amendment No. 1 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Contour Medical, Inc. and Nectarine Acquisition Corporation
 
   2.7(23)        Amendment No. 3 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Retirement Care Associates, Inc. and Peach Acquisition Corporation
 
   2.8(23)        Amendment No. 2 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Contour Medical, Inc. and Nectarine Acquisition Corporation
 
   2.9(20)        Agreement and Plan of Merger, dated as of July 26, 1997, among Sun, Sunreg Acquisition Corp. and
                    Regency Health Services, Inc.
 
   2.10(25)       Amendment No. 4 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Retirement Care Associates, Inc. and Peach Acquisition Corporation
 
   2.11(25)       Amendment No. 3 to the Agreement and Plan of Merger and Reorganization dated as of February 17,
                    1997 among Sun, Contour Medical, Inc. and Nectarine Acquisition Corporation
 
   3.1(1)(5)(13)  Certificate of Incorporation of Sun, as amended
 
   3.2(1)(8)      Bylaws of Sun, as amended
 
   4.1(2)         Fiscal Agency Agreement dated as of March 1, 1994 between Sun and NationsBank of Texas, N.A., as
                    Fiscal Agent
 
   4.2(5)         Amended and Restated Indenture, dated October 1, 1994, among Sun, The Mediplex Group, Inc. and
                    Fleet Bank of Massachusetts, N.A. as Trustee (6% Convertible Subordinated Debentures due 2004)
</TABLE>
    
 
                                       13
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
   4.3(5)         Amended and Restated First Supplemental Indenture to Amended and Restated Indenture, dated
                    October 1, 1994, among Sun, The Mediplex Group, Inc. and Fleet Bank of Massachusetts, N.A. as
                    Trustee (6 1/2% Convertible Subordinated Debentures due 2003)
 
   4.4(10)        Form of Rights Agreement, dated as of June 2, 1995, between Sun and Boatmen's Trust Company,
                    which includes the form of Certificate of Designations for the Series A Preferred Stock as
                    Exhibit A, the form of Right Certificate as Exhibit B and the form of Summary of Preferred
                    Stock Purchase Rights as Exhibit C.
 
   4.5(11)        First Amendment to Rights Agreement, dated as of August 11, 1995, amending the Rights Agreement,
                    dated as of June 2, 1995, between Sun and Boatmen's Trust Company
 
   4.6(24)        Indenture dated July 8, 1997, related to the 9 1/2% Senior Subordinated Notes due 2007 by and
                    between Sun, the Guarantors named therein, and First Trust National Association
 
  10.1(3)         Lease Agreement dated as of August 31, 1986, by and between Karan Associates ("Lessee") and
                    Campbell Care of Wylie, Inc., Assignment of Lease dated November 20, 1989 by and between
                    Campbell Care of Wylie, Inc. and Honorcare Corporation ("Lessee"), with First Lease Addendum
                    dated August 31, 1986, Second Addendum dated January 9, 1987, Third Addendum dated November
                    30, 1989 and Fourth Addendum dated July 12, 1993, and Assignment Agreement dated as of July
                    13, 1993, by and between Honorcare Corporation ("Assignor") and Sun Healthcare Corporation
                    ("Assignee") (Hillcrest Manor Nursing Center)
 
  10.2(13)        Lease Agreement for West Magic Care Center dated as of August 1, 1987, between Skyview
                    Associates ("Lessor") and Don Bybee and A. Keith Holloway ("Lessee")
 
  10.3(1)         Lease Agreement for East Mesa Care Center dated as of September 30, 1990, between East Mesa
                    Associates Limited Partnership ("Lessor") and SunRise ("Lessee")
 
  10.4(1)         Assignment and Assumption of Lease with Consent of Lessor for Torrington Extend-A-Care Center
                    dated as of November 1, 1990, between Beverly Enterprises Connecticut, Inc.
                    ("Assignor/Lessee"), Turner Enterprises, Inc. ("Assignee"), Andrew L. Turner and Nora Turner
                    ("Guarantors"), Harvey J. Angell and Zev Karkomi ("Special Guarantors") and Beverly Investment
                    Properties, Inc. ("Lessor") (Lease attached)
 
  10.5(1)         Lease Agreement for Mercer Island Care Center dated as of July, 1991, among Mercer View
                    Convalescent Center, Tenants-in-Common ("Lessor"), SunRise ("Lessee") and Andrew L. Turner and
                    Nora Turner, husband and wife ("Guarantor")
 
  10.6(1)         Lease Agreement for Bayside Health and Rehabilitation Center dated as of July 26, 1991, between
                    Bellingham Associates Limited Partnership ("Lessor") and SunRise ("Lessee")
 
  10.7(1)         Lease Agreement for Menlo Park Healthcare Center dated as of November 1, 1991, between Oregon
                    Associates Limited Partnership ("Lessor") and SunRise ("Lessee")
 
  10.8(1)         Sublease Agreement for Hillside Living Center d/b/a Hillside Healthcare Center dated as of March
                    1, 1992, between Elite Care Corporation ("Sublessor") and Turner Enterprises, Inc.
                    ("Sublessee") (Lease attached as Exhibit)
</TABLE>
 
                                       14
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
  10.9(1)         Sublease Agreement for Crown Manor Living Center d/b/a Crown Manor Healthcare Center dated as of
                    March 1, 1992, between Elite Care Corporation ("Sublessor") and Turner Enterprises, Inc.
                    ("Sublessee") (Lease attached as Exhibit)
 
  10.10(1)        Sublease Agreement for Colonial Manor Living Center d/b/a Colonial Manor Healthcare Center dated
                    as of March 1, 1992, between Elite Care Corporation ("Sublessor") and Turner Enterprises, Inc.
                    ("Sublessee") (Lease attached as Exhibit)
 
  10.11(1)        Sublease Agreement for Douglas Living Center d/b/a Douglas Healthcare Center dated as of March
                    1, 1992, between Elite Care Corporation ("Sublessor") and Turner Enterprises, Inc.
                    ("Sublessee") (Lease attached as Exhibit)
 
  10.12(1)        Lease Agreement for Columbia View Nursing Home dated as of June 30, 1992, between Columbia
                    Associates Limited Partnership ("Lessor") and Turner Enterprises, Inc. ("Lessee")
 
  10.13(1)        Lease Agreement for Adams House Healthcare Center dated as of October 1, 1992, between Adams
                    Connecticut Associates Limited Partnership ("Lessor") and Turner Enterprises, Inc. ("Lessee")
 
  10.14(1)        Lease Agreement for San Juan Care Center and Burton Care Center dated as of October 31, 1992, by
                    and between Zev Karkomi and Jerold Ruskin (collectively, the "Lessors") and SunRise ("Lessee")
 
  10.15(3)        Lease Agreement dated as of July 13, 1993, by and between Angelina Associates ("Lessor") and
                    Honorcare Corporation ("Lessee"), with Assignment Agreement dated as of July 13, 1993 by and
                    between Honorcare Corporation ("Assignor") and Sun Healthcare Corporation ("Assignee")
                    (Angelina Facility)
 
  10.16(3)        Lease Agreement dated as of July 13, 1993, by and between July Associates IV ("Lessor") and
                    Honorcare Corporation ("Lessee"), with Assignment Agreement dated as of July 13, 1993, by and
                    between Honorcare Corporation ("Assignor") and Sun Healthcare Corporation ("Assignee") (Park
                    Plaza)
 
  10.17(3)        Lease Agreement dated as of July 13, 1993, by and between Angelina Associates ("Lessor") and
                    Honorcare Corporation ("Lessee"), with Assignment Agreement dated as of July 13, 1993, by and
                    between Honorcare Corporation ("Assignor") and Sun Healthcare Corporation ("Assignee") (Wells)
 
  10.18(3)        Lease Agreement dated as of July 13, 1993, by and between Angelina Associates ("Lessor") and
                    Honorcare Corporation ("Lessee"), with Assignment Agreement dated as of July 13, 1993, by and
                    between Honorcare Corporation ("Assignor") and Sun Healthcare Corporation ("Assignee")
                    (Pineywood)
 
  10.19(3)        Lease Agreement dated as of July 13, 1993, by and between Golden Age Associates ("Lessor") and
                    Honorcare Corporation ("Lessee") (Golden Age)
 
  10.20(3)        Lease Agreement dated as of July 13, 1993, by and between July Associates III ("Lessor") and
                    Honorcare Corporation ("Lessee") (High Plains)
 
  10.21(7)        Lease Agreement dated as of July 30, 1993 between Zev Karkomi, Thunderbird Associated Limited
                    Partnership and SunRise Healthcare Corporation
 
  10.22(7)        Lease Agreement dated as of September 22, 1993, as amended, between Carlinville Associates and
                    SunRise Healthcare Corporation
</TABLE>
 
                                       15
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
  10.23(4)        Lease Agreement dated October 1993, by and between Salem Associates, Ltd. ("Lessor") and SunRise
                    ("Lessee") (Doctors Nursing Home)
 
  10.24(4)        Lease Agreement dated as of December 6, 1993, by and between Massachusetts Nursing Homes Limited
                    Partnership ("Lessor") and SunRise ("Lessee")
 
  10.25(3)        Lease Assignment and Transfer of Operations Agreement dated as of December 30, 1993, by and
                    between HEA of New Mexico, Inc. and SunRise (Lease attached) (Country Life Manor)
 
  10.26(3)        Lease Agreement dated as of January 1, 1994, by and between October Associates ("Lessor") and
                    SunRise ("Lessee") (Stanton Nursing Home)
 
  10.27(3)        Lease Agreement dated as of January 1, 1994, by and between Whitewright Associates ("Lessor")
                    and SunRise ("Lessee") (Campbell Care of Whitewright)
 
  10.28(3)        Lease Agreement dated as of January 1, 1994, by and between October Associates ("Lessor") and
                    SunRise ("Lessee") (Valley Mills Care Center)
 
  10.29(3)        Lease Agreement dated as of January 1, 1994, by and between October Associates ("Lessor") and
                    SunRise ("Lessee") (Moody Care Center)
 
  10.30(6)        Lease Agreement dated as of April 26, 1994, by and between Sumner Nursing Home, L.L.C. and
                    SunRise
 
  10.31(5)        Lease Agreement by and between Bellingham II Associates Limited Partnership and SunRise
                    Healthcare Corporation, dated May 31, 1994
 
  10.32(12)       Lease Agreement for Wheeler Care Center, dated as of July 24, 1995, by and between Wheeler
                    Healthcare Associates, L.L.C., a Texas limited liability company ("Lessor") and SunRise
                    Healthcare Corporation ("Lessee").
 
  10.33(12)       Agreement with Respect to and Second Amendment of Lease Agreement, dated as of September 1,
                    1995, by and between Massachusetts Nursing Homes Limited Partnership ("Lessor") and SunRise
                    Healthcare Corporation ("Lessee").
 
  10.34(12)       Third Amendment of Lease Agreement, dated as of September 1, 1995, by and between Massachusetts
                    Nursing Homes Limited Partnership ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.35(12)       Lease Agreement for Clifton Care Center, dated as of September 13, 1995, between Missouri
                    Associates ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.36(17)       Lease Agreement for Heritage Heights dated as of March 1, 1996, by and between Tor Associates
                    ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.37(15)       Second Amendment to Lease, dated as of June 1, 1996, by and between East Mesa Associates Limited
                    Partnership ("Lesser") and SunRise Healthcare Corporation ("Lessee").
 
  10.38(14)       Lease Agreement dated July 1, 1996 between Oak/Jones, Inc. and SunRise Healthcare Corporation
                    for Oaks Health & Rehabilitation Center.
 
  10.39(14)       Lease Agreement dated July 1, 1996 between Oak/Jones, Inc. and SunRise Healthcare Corporation
                    for Jones Health & Rehabilitation Center.
 
  10.40(15)       Sub-Sublease Agreement, dated as of August 22, 1996, by and between Yuba Nursing Homes, Inc.
                    ("Lessor") and SunRise Healthcare Corporation ("Lessee").
</TABLE>
 
                                       16
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
  10.41(17)       Lease Agreement for Casa del Sol Nursing Home dated as of November 26, 1996, by and between
                    Raton Property Limited Company ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.42(17)       Lease Agreement for Blue Mountain Convalescent Center dated as of November 30, 1996, by and
                    between Washington Associates ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.43(17)       Lease Agreement for Payette Lakes Care Center dated as of November 30, 1996, by and between
                    Idaho Associates L.L.C. ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.44(17)       Lease Agreement for Valley Rehabilitation and Living Center dated as of November 30, 1996, by
                    and between Idaho Associates L.L.C. ("Lessor") and SunRise Healthcare Corporation ("Lessee").
 
  10.45(17)       Unconditional Guaranty of Lease dated as of November 30, 1996 given by Sun Healthcare Group,
                    Inc. ("Guarantor") to Idaho Associates, L.L.C. ("Lessor") relating to Magic Valley Manor.
 
  10.46(17)       Unconditional Guaranty of Lease dated as of November 30, 1996 given by Sun Healthcare Group,
                    Inc. ("Guarantor") to Idaho Associates, L.L.C. ("Lessor") relating to Valley Rehabilitation
                    and Living Center.
 
  10.47(3)        Form of Management Agreement between GF/Massachusetts, Inc. and SunRise
 
  10.48(5)        Amendment and Restatement of Loan Agreement [Brookline] by and between Mediplex of
                    Massachusetts, Inc. and Meditrust Mortgage Investments, Inc., dated June 23, 1994
 
  10.49(5)        Amendment and Restatement of Loan Agreement [Columbus] by and between Mediplex Rehabilitation of
                    Massachusetts, Inc. and Meditrust Mortgage Investments, Inc., dated June 23, 1994
 
  10.50(5)        Loan Agreement [Denver] by and between Mediplex of Colorado, Inc. and Valley View Psychiatric
                    Services, Inc. and Meditrust Mortgage Investments, Inc., dated June 23, 1994
 
  10.51(13)       Omnibus Amendment to Loan Agreements, dated as of March 28, 1996, by and between certain
                    subsidiaries of The Mediplex Group, Inc. and certain subsidiaries of Sun
 
  10.52(19)       Credit Agreement among Sun, certain lenders, certain co-agents, and NationsBank of Texas, N.A.,
                    as Administrative Lender, dated October 8, 1997
 
  10.53(19)       Form of First Amendment to Credit Agreement dated October 8, 1997 among Sun, certain lenders,
                    certain co-agents, and NationsBank of Texas, N.A., as Administrative Lender, to be dated as of
                    November 12, 1997
 
  10.54(9)        First Amendment to Sun 1992 Director Stock Option Plan
 
  10.55(1)        Sun 1993 Combined Incentive and Nonqualified Stock Option Plan
 
  10.56(1)        Sun 1993 Directors Stock Option Plan
 
  10.57(9)        Amendments to Sun 1993 Combined Incentive and Nonqualified Stock Option Plan
 
  10.58(13)       Sun 1995 Non-Employee Directors' Stock Option Plan
</TABLE>
 
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<PAGE>
   
<TABLE>
<CAPTION>
 EXHIBIT NUMBER                                       DESCRIPTION OF EXHIBITS
----------------  ------------------------------------------------------------------------------------------------
<C>               <S>
  10.59(13)       Sun Employee Stock Purchase Plan
 
  10.60(13)       1996 Combined Incentive and Nonqualified Stock Option Plan
 
  10.61(1)        Tax Indemnity Agreement between Sun, SunDance Rehabilitation Corporation, Turner Enterprises,
                    Inc. and Andrew L. Turner and Nora L. Turner
 
  10.62(1)        Form of Indemnity Agreement between Sun and each of Sun's Directors before July 3, 1996
 
  10.63(25)       Form of Indemnity Agreement between Sun and each of Sun's Directors from and after July 3, 1996
 
  10.64(1)        Employment Agreement between Sun and Andrew L. Turner
 
  10.65(1)        Agreement as of May 5, 1993, between SunDance Rehabilitation Corporation and Andrew L. Turner
 
  10.66(3)        Employment Agreement between Sun and John E. Bingaman
 
  10.67(5)        Termination of Employment Agreement and Consulting Agreement by and between Sun Healthcare Group
                    and John E. Bingaman
 
  10.68(17)       Severance Agreement between Sun and Andrew L. Turner dated January 1, 1997
 
  10.69(17)       Form of Severance Agreement entered into between Sun and its President, Chief Financial Officer
                    and Senior Vice Presidents
 
  10.70(18)       Sun 1997 Non-Employee Directors' Stock Plan
 
  10.71(18)       Sun 1997 Stock Incentive Plan
 
  10.72(18)       Lease Agreement for Casa Loma Convalescent Center dated as of February 24, 1997 by and between
                    Idaho Associates, LLC ("Lessor") and SunRise Healthcare Corporation ("Lessee")
 
  10.73(19)       Lease Agreement for Evergreen Nursing and Convalescent Centre dated as of June 5, 1997, between
                    Effingham Associates, L.L.C. ("Lessor") and SunRise Healthcare Corporation ("Lessee")
 
21*               Subsidiaries of the Registrant
 
23*               Consent of Arthur Andersen LLP
 
27*               Financial Data Schedule
</TABLE>
    
 
------------------------
 
   
 *  Previously filed.
    
 
 (1) Incorporated by reference from exhibits to the Company's Registration
     Statement (No. 33-62670) on Form S-1.
 
 (2) Incorporated by reference from exhibits to the Company's Form 8-K dated
     March 11, 1994.
 
 (3) Incorporated by reference from exhibits to the Company's Annual Report on
     Form 10-K for the fiscal year ended December 31, 1993.
 
 (4) Incorporated by reference from exhibits to the Company's Form 10-Q/A-1 for
     the quarter ended September 30, 1993.
 
 (5) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended September 30, 1994.
 
                                       18
<PAGE>
 (6) Incorporated by reference from exhibits to the Company's Registration
     Statement (No. 33-77522) on Form S-1.
 
 (7) Incorporated by reference from exhibits to the Company's Registration
     Statement (No. 33-77272) on Form S-4.
 
 (8) Incorporated by reference from exhibits to the Company's Registration
     Statement (No. 33-77870) on Form S-1.
 
 (9) Incorporated by reference from exhibits to the Company's Annual Report on
     Form 10-K for the fiscal year ended December 31, 1994.
 
(10) Incorporated by reference from exhibits to the Company's Form 8-A filed
     June 6, 1995.
 
(11) Incorporated by reference from exhibits to the Company's Form 8-A/A-1 filed
     August 17, 1995.
 
(12) Incorporated by reference from exhibits to the Company's Annual Report on
     Form 10-K for the fiscal year ended December 31, 1995.
 
(13) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended March 31, 1996.
 
(14) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended June 30, 1996.
 
(15) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended September 30, 1996.
 
(16) Incorporated by reference from exhibits to the Company's Form 8-K dated
     February 17, 1997.
 
(17) Incorporated by reference from exhibits to the Company's Annual Report on
     Form 10-K for the fiscal year ended December 31, 1996.
 
(18) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended March 31, 1997.
 
(19) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended September 30, 1997
 
(20) Incorporated by reference from exhibits to the Company's Form 8-K dated
     October 8, 1997.
 
(21) Incorporated by reference from exhibits to the Company's Form 8-K dated May
     27, 1997.
 
(22) Incorporated by reference from exhibits to the Company's Form 8-K dated
     August 21, 1997.
 
(23) Incorporated by reference from exhibits to the Company's Form 8-K dated
     November 25, 1997.
 
(24) Incorporated by reference from exhibits to the Company's Form 10-Q for the
     quarter ended June 30, 1997.
 
   
(25) Incorporated by reference from exhibits to the Company's Form 8-K dated
     April 3, 1998.
    
 
                                       19
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
   
<TABLE>
<S>                             <C>  <C>
                                SUN HEALTHCARE GROUP, INC.
 
                                By:  /s/ ROBERT D. WOLTIL
                                     -----------------------------------------
                                     Robert D. Woltil
                                     CHIEF FINANCIAL OFFICER
 
April 27, 1998
</TABLE>
    
 
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