Why Shares of Nutex Health Jumped on Friday

What happened

Shares of Nutex Health (NUTX -2.54%) were up more than 12% Friday afternoon after being up as much as 24% earlier in the day. The company provides technology-driven healthcare management and operates physician networks and 19 for-profit micro-hospitals across eight states. Its shares are still down more than 70% so far this year.

So what

There were two reasons for the stock's rise. The healthcare company's shares bounced back from an overcorrection after the company announced a first-quarter earnings per share (EPS) loss of $0.02 on Monday.

The other reason for the surge was that on Thursday, Nutex reported that director John J. Waters bought 50,000 shares of the company at $0.469 a share and now owns 196,292 shares. The buy wasn't that substantial, at only $23,450, but the insider purchase did show confidence in the stock. The bounce back that was already in effect was just helped by the insider buy.

In the first quarter, Nutex said it planned to open four to five more hospitals this year and another 14 by the end of 2025. The company, in its first-quarter report, said it had revenue of $53.2 million, up 807% year over year, and its EPS loss of $0.02 was a big improvement over the $0.35 it lost in the same period a year ago.

There were a few more details in the report that were positive but might have taken the market a bit of time to digest. The company said it had closed three unprofitable properties in Texas: two hospital outpatient departments and a micro-hospital.

Now what

While the jump seemed a bit dramatic considering the paucity of real news, Nutex appears to be getting closer to being profitable again after having four consecutive quarters with a net loss. Instead of retrenching, the move to open additional hospitals shows the company believes it has the funds needed to make such a move profitable.

"Despite challenging market conditions, we intend to execute on our growth strategy and believe we have significant opportunities ahead of us," the company's president, Warren Hosseinion, said in the quarterly release.