Wayne Smith, former CEO and current executive board chairman at Community Health Systems, was not deterred when the Franklin-based hospital company’s shares plummeted last week.
On Monday and Tuesday, Smith bought 1 million shares, mostly at a cost of $2.94 per share, near the bottom of the dip. During the day Wednesday, after Smith filed paperwork informing federal regulators of his buy, CHS shares were trading up more than 25 percent.
As of midday Wednesday, the shares Smith purchased earlier this week had seen a $638,000 increase in on-paper value.
CHS CEO Tim Hingtgen blamed a disappointing second quarter on contract labor costs, lower-than-anticipated patient volumes and lower revenues per admission.
“We have initiatives underway intended to actively address these pressures by accelerating strategic growth opportunities in key markets, aggressively working to recruit and retain permanent staff to replace contract labor, achieving incremental expense reductions and leveraging our centralized resources to achieve improved results,” Hingtgen said.
HCA Healthcare is another local hospital company hit by contract labor costs, though HCA reported an improved labor cost outlook for the second quarter.
HCA co-founder Thomas Frist Jr., who served as chairman and CEO before retiring, made a similar trade to Smith’s following HCA’s post-Q1 share price dip.