The stock of Integrated Health Services Inc. rebounded yesterday from a blow delivered by a negative news story, despite a fresh disclosure that the company's chairman and president recently sold nearly all their shares.
Dr. Robert N. Elkins, chairman and chief executive officer, sold 133,507 shares of IHS in late January, at prices ranging from $38.75 to $38.625 a share, according to a filing with the Securities and Exchange Commission. The sale, which was worth about $5.27 million, left him with no shares.
Dr. Elkins, however, retains a significant stake in the Owings Mills-based company's fortunes -- he holds stock options that can be converted to about 1.65 million shares of common stock during the next few years.
Fast-growing IHS provides medical care to patients who do not require hospitalization but need more services than nursing homes offer.
The company operates 192 "sub-acute care" facilities in 30 states, as well as numerous support services companies.
The SEC filing also showed that IHS President Lawrence P. Cirka sold 69,000 shares in mid-January, leaving him with only 647 shares. Mr. Cirka still owns options worth more than a half-million common shares, according to the company's 1994 proxy statement.
Dr. Elkins told Bloomberg Business News that the latest shares he sold were among the 2.3 million shares he acquired as part of his "founder's stake" when he helped start the company nine years ago.
It was not clear what price he paid, if any, for those shares.
Dr. Elkins did not return calls seeking comment yesterday, and Mr. Cirka was traveling and unavailable for comment.
Dr. Elkins also told Bloomberg that IHS' earnings will come in ahead of analysts' estimates.
Wall Street has predicted the company will report 48 cents a share in fourth-quarter profits and $1.70 a share for the year. Dr. Elkins also said first-quarter earnings were thus far running ahead of estimates of 51 cents a share.
IHS is expected to release its earnings next week.
That news and the company's detailed response to allegations in a Wall Street Journal story published Tuesday appear to have helped the stock post a rebound.
It gained $1.25 yesterday to close at $39.875, after dropping $3.375 Tuesday.
The Journal's widely read Heard on the Street column detailed the allegations in a lawsuit filed against IHS by a former manager of the company's Miami facility.
The manager, Tony Gilchrist, accused the company of employing "creative accounting" methods to boost its Medicare reimbursements, among other things.
Yesterday Dr. Elkins sent out a four-page "Dear Investor" letter, denying the allegations and dismissing Mr. Gilchrist as a disgruntled former employee who was allowed to resign a year ago.
The company discovered he had been jailed for a week in January 1994 after being a fugitive from justice for three years because of his failure to pay child support payments, according to Dr. Elkins' letter.
Neither Mr. Gilchrist nor his lawyer could be reached for TTC comment yesterday.
Dr. Elkins also noted in his letter that IHS has been given a clean bill of health by federal Medicare auditors and its own external auditors every year since its founding in 1986.