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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ___________

                                  FORM 10-K/A-2

                                   (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, 1998

/ /  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)

        DELAWARE                                         85-0410612
(State of Incorporation)                              (I.R.S. Employer
                                                       Identification No.)
   
                                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:

     TITLE OF EACH CLASS              NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, par value                         New York Stock Exchange
$.01 per share, and
Preferred Stock Purchase Rights

        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 30, 1999, Sun Healthcare  Group,  Inc. had 60,669,825  outstanding
shares of Common Stock. Of those, 53,294,347 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 30,  1999,  was  approximately
$59,956,140.

     
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     Sun Healthcare Group, Inc. hereby amends its Annual Report on Form 10-K for
the fiscal year ended  December 31, 1998 by attaching  Exhibit 27, the financial
data schedule.


                                   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.
 

                                        SUN HEALTHCARE GROUP, INC.
 

                                        By:  /s/ Robert D. Woltil
                                             --------------------------
                                             Robert D. Woltil
                                             Chief Financial Officer
 
April 29, 1999






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