Chinese billionaire Tianqiao Chen has purchased 3.5 million more shares of Community Health Systems and now holds 14.7 million shares or 12.9% of the struggling hospital chain, CHS said in a regulatory filing Tuesday.
Chen, who originally made his fortune in online gambling, exercised buy options for the additional stake, paying a total of $31.9 million or just over $9 on average for the shares.
CHS shares traded at about $60 a share a year ago. But a precipitous earnings slump combined with a high debt level have caused shares to fall to about $11.
Now, CHS management is talking to Wall Street advisers about selling the company or perhaps chunks of it.
Private equity group Apollo Global Management is reportedly interested in CHS' assets, as are other investors, including real estate investment trusts that might buy hospital real estate.
A CHS spokeswoman did not respond to a request for comment about Chen's additional stake, though the company said repeatedly it will have no further comment following confirmation Monday of its strategic review of a possible sale.
Apollo entered the hospital business last year by acquiring RegionalCare Hospital Partners from Warburg Pincus, then nearly doubling the size of its hospital holdings with the May acquisition of Capella Healthcare. The deal was valued at $550 million. RCCH HealthCare Partners is based in Brentwood, Tenn.
Chen moved onto CHS' radar in August when, through his affiliate Shanda Media, he accumulated 11.3 million shares of CHS, or 9.9% of common shares. Days later, he added another 88,000 CHS shares to make it an even 10%.
All of Chen's regulatory filings for his CHS holdings has shown him to be a passive investor interested in profiting from a possible rise of the company's stock price rather than forcefully promoting management, board and strategic changes.
But activist investors this year won newly created board seats at Tenet Healthcare and Jana Capital Partners demanded and received three board seats at Team Health, eventually obtaining the retirement of CEO Mike Snow.