CompCare Says It’s Considering Restructuring

Comprehensive Care Corp. of Irvine said Thursday that it has appointed a special committee of directors to evaluate strategic alternatives, including a possible financial restructuring, asset sale or acquisition by another company.

CompCare, which operates alcohol and drug abuse treatment programs in 193 hospitals nationwide, has suffered declining earnings over the past few years. For the fiscal year ended May 31, 1988, profits fell 26% to $9 million on revenue of $212 million.

In a statement, the company said it believed that its stock was selling for less than its true value, which played a role in the decision by its board to chart a new business strategy. CompCare stock closed Thursday at $11.75 a share, up 50 cents.

B. Lee Karns, CompCare’s chairman and chief executive, said the 17-year-old company has reached “a critical point” in its growth.

“We are starting with a blank piece of paper,” he said. “We retained Prudential-Bache to decide what would be in the best interest of our shareholders and employees.”

Karns said he did not know if the company would sell any of its facilities, including three in Orange County and one in San Diego. Nationwide, he said, the company owns 23 hospitals and provides services under contract in another 170.

Karns said CompCare’s earnings have been depressed for three years by a rapid expansion program and by continuing repurchases of CompCare stock. In the past two years, he said, the company has added seven new hospitals and spent $60 million to buy back 5 million shares, leaving it with about 11 million shares outstanding.