Comprehensive Care Kills Plan to Distribute Subsidiary’s Stock

Irvine-based Comprehensive Care, a national provider of alcohol and drug abuse treatment programs, said Thursday it has halted plans to distribute stock in a recently formed contract services subsidiary.

The company attributed its decision to the “depressed” price of its own stock as well as other medical company shares traded in the over-the-counter market.

In a prepared statement, the company said its board of directors “has decided not to proceed with the development of a proposal for the distribution of shares of the newly formed CareUnit Inc. to the stockholders of CompCare.”

Contract Services

As part of a restructuring effort, Comprehensive Care recently formed CareUnit to provide hospitals with such contract services as treatment for alcohol and drug abuse, as well as psychiatric and eating disorders.

In describing the reorganization plan last month, the company said it planned to spin off CareUnit by issuing all of its common stock to Comprehensive Care’s existing shareholders.

B. Lee Karns, chairman and chief executive officer of Comprehensive Care, said in Thursday’s statement that the board’s decision not to proceed with the share distribution resulted from current market conditions faced by over-the-counter health care companies and the current market price of CompCare’s stock.

Comprehensive Care stock has fallen from $13.50 per share shortly before the Oct. 19 stock market crash to $6.50 a share at the market’s close Thursday.