Directors of Comprehensive Care Corp. said Wednesday that they will not pay a quarterly shareholder dividend in light of a 55% decline in the firm’s third-quarter earnings.
The Irvine-based operator of alcohol and drug abuse treatment programs reported net earnings of $860,000 for the third quarter ended Feb. 28, compared to $1.9 million in the year-earlier period. The company said the earnings included a gain of about $500,000 from the sale of the company’s CareUnit of DuPage, Ill., a treatment center facility.
The company has issued quarterly dividends since 1976. In recent quarters, the company has issued a 10-cent quarterly dividend for each of its shares, worth about $1.1 million for all 10.1 million of the firm’s shares outstanding.
Company officials, who could not be reached for comment, said in a prepared statement that “restrictions in loan agreements” were another reason directors decided against paying a dividend.
More Cash on Hand
One industry analyst said Comprehensive Care also might have decided against a dividend so that more cash would be available within the company to help a prospective buyer finance an acquisition of the firm.
Last month, Comprehensive Care said it had appointed a special committee of directors to evaluate strategic alternatives, including a possible financial restructuring, asset sale or acquisition by another firm.
Comprehensive Care’s third-quarter earnings were way down despite a 4% increase in revenue. The firm posted revenue of $54.5 million, compared to $52.4 million last year.
The company said pretax operating earnings for the quarter declined about $2.3 million compared to the year-earlier period. Much of the decline was attributed to higher costs and less than expected occupancy at its facilities in December.
For the first 9 months of fiscal 1989, Comprehensive Care’s net earnings declined by 15% to $5.6 million, compared to $6.6 million in the year-earlier period. Revenues for the period were up 12% to $171.9 million, compared to $152.6 million.
A decline in patient count in March will reduce fourth-quarter expectations, the company said. Patient count had improved in January and February.
The company’s stock lost $1.375 per share Wednesday, closing at $9.75, in unusually heavy trading of 254,600 shares on the New York Stock Exchange.