1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 8-K
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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: February 17, 1997
(Date of earliest event reported)

RETIREMENT CARE ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)

COLORADO 1-14114 43-1441789
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)

6000 LAKE FORREST DRIVE, SUITE 200
ATLANTA, GEORGIA 30328
(Address of principal executive offices)

(404) 255-7500
(Registrant's telephone number, including area code)

Item 2. Acquisition or Disposition of Assets.

On February 17, 1997, Retirement Care Associates, Inc. (the "Company")
entered into an Agreement and Plan of Merger and Reorganization (the "RCA Merger
Agreement") by and among Sun Healthcare Group, Inc., a Delaware corporation
("Sun"), Peach Acquisition Corporation, a Colorado corporation and a
wholly-owned subsidiary of Sun ("Sun Merger Sub"), and the Company, pursuant to
which Sun Merger Sub will be merged with and into the Company (the "RCA
Merger").

Subject to the terms and conditions of the RCA Merger Agreement
(including, without limitation, approval by the stockholders of Sun and the
Company), upon the effective time of the RCA Merger, each outstanding share of
common stock of the Company (other than shares held in the treasury of the
Company, owned by Sun or Sun Merger Sub or held by persons who exercise their
dissenter's rights under Colorado law) will be cancelled and extinguished and
converted automatically into the right to receive 0.6625 shares of common stock
of Sun. As a result of the RCA Merger, the Company will become a wholly-owned
subsidiary of Sun.

On the same date, Sun also entered into a Stockholders Stock Option and
Proxy Agreement (the "RCA Option Agreement") by and among Sun and Christopher F.
Brogdon, Connie B. Brogdon, Edward E. Lane, Darrell C. Tucker and Winter Haven
Homes, Inc. (each, a "Stockholder"), collectively owners of approximately 36% of
the outstanding shares of common stock of the Company. Pursuant to the RCA
Option Agreement, each Stockholder granted to Sun an irrevocable option to
purchase such Stockholder's shares at a price per share equal to $9.27 under
certain circumstances. In addition, each Stockholder agreed to vote, and granted
to Sun an irrevocable proxy to vote, all voting securities of the Company held
by the Stockholder in favor of approval of the RCA Merger Agreement and the RCA
Merger and against any merger, consolidation, sale of assets, reorganization or
recapitalization of the Company with any party other than Sun and its affiliates
and against any liquidation or winding up of the Company.

The foregoing descriptions are qualified in their entirety by reference
to the full texts of the RCA Merger Agreement, attached hereto as Exhibit 2.1,
and the RCA Option Agreement, attached as Exhibit 1.00(a) to the RCA Merger
Agreement, which are incorporated herein by reference.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

Exhibit No. 2.1 Agreement and Plan of Merger and Reorganization, dated as of
February 17, 1997, among Sun Healthcare
Group, Inc., Peach Acquisition Corporation
and Retirement Care Associates, Inc.

Exhibit No. 10.1 Stockholders Stock Option and Proxy Agreement*

Exhibit No. 10.2 Form of Company Affiliate Agreement*

Exhibit No. 10.3 Form of Parent Affiliate Agreement*

Exhibit No. 99.1 Joint Press Release, dated February 18, 1997, of Sun Healthcare
Group, Inc., Retirement Care Associates, Inc. and Contour
Medical, Inc.

* Contained as an exhibit to the Merger Agreement

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

RETIREMENT CARE ASSOCIATES, INC.

By: /s/ Christopher F. Brogdon
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Christopher F. Brogdon
Its President

Dated as of February 17, 1997.

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION PAGE
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2.1 Agreement and Plan of Merger and Reorganization,
dated as of February 17, 1997, among Sun
Healthcare Group, Inc., Peach Acquisition
Corporation and Retirement Care Associates, Inc.

99.1 Joint Press Release, dated February 18, 1997, of
Sun Healthcare Group, Inc., Retirement Care
Associates, Inc. and Contour Medical, Inc.