Community Health Systems shareholders this week will be asked to approve a proposal that would authorize the company to issue 30 million shares of stock, double the number it currently can issue.
Deborah Moffett, the hospital chain's vice president of finance, said the additional shares won't necessarily be used for acquisition purposes. But she added, "That certainly would be another use for additional stock."
The company most likely will need the additional shares for future stock splits and stock options for executives, she said. Houston-based Community has had two stock splits since its initial public offering in 1991. Its stock is traded on the NASDAQ market. As of last week, it was selling for about $22 a share.
Community's acquisition strategy has been to buy hospitals in rural communities. Because most of the company's acquisition targets are tax-exempt or government-owned hospitals, it hasn't used stock to acquire the facilities, Ms. Moffett noted. In 1993, Community acquired four hospitals.
Community now operates 20 hospitals in 12 states.
In other news, the company reported that net income in its first quarter ended March 31 rose 19% to $4.7 million, or 40 cents per share, compared with $3.9 million, or 34 cents per share, in the year-ago period. Revenues rose 26% to $70 million.