IRVINE — In the wake of the collapse of a critical merger, Comprehensive Care Corp. said Wednesday that it will sell its California facilities in an effort to stave off creditors concerned about the company's deteriorating financial condition.
The nation's largest alcohol and drug treatment company further said it will relocate its headquarters to St. Louis and appointed W. James Nicol as president and chief executive, replacing longtime executive B. Lee Karns. Nicol and Karns--who will remain as chairman--regularly argued over Comp Care's direction.
The moves follow Comp Care's report last week of a $4.7-million third-quarter loss. Two days later on Oct. 27, First Hospital Corp. backed out of a merger with Comp Care after one of the financiers refused to consent to the deal.
The nine psychiatric and chemical dependence facilities that Comp Care owns in California are valued on the company's books for about $45 million. They include the CareUnit Hospital in Orange, Starting Point in Costa Mesa, Crossroads Hospital in Van Nuys and Woodview-Calabasas Hospital in Calabasas.
Nicol, 46, said the restructuring will result in the termination of about 50 administrative employees. The remaining 2,000 Comp Care employees in California will more than likely receive offers of employment from the company that purchases those facilities, he said.
Comp Care, formed in 1969, made a name for itself in psychiatric care, particularly in the treatment of alcohol and drug problems of celebrities and common folk. But in recent years the company has struggled because of greater competition and changes in insurance reimbursement programs.
Analysts viewed Comp Care's action positively. The company's stock, which lost more than half of its value last week, closed Wednesday up 12 1/2 cents to $3.75 in trading on the New York Stock Exchange.