Hythiam and CompCare Terminate Merger Agreement
Hythiam, Inc. (NASDAQ:HYTM) announced today that it had entered into an agreement with Comprehensive Care Corporation (CompCare) terminating the agreement and plan of merger for Hythiam’s purchase of the remaining minority interest in CompCare. As previously disclosed in its most recent SEC form 10K and 10Q filings, and associated conference calls on March 15th, 2007 and May 9th, 2007, Hythiam has determined that it can effectuate substantially all of the benefits of its desired relationship with CompCare with its current contractual relationship and strategic, controlling majority interest in the company. Going forward, CompCare will serve as an administrative services organization (ASO) for Hythiam, providing infrastructure and support for Hythiam’s proprietary PROMETA protocol based disease management offering to managed care entities. Hythiam will continue to consolidate CompCare’s financial results.
On January 12, 2007, Hythiam gained a majority controlling interest in CompCare by purchasing an entity that owned 1,739,130 shares of CompCare’s common stock and 14,400 shares of CompCare’s preferred stock. The preferred stock is convertible into 4,235,328 shares of CompCare’s common stock at Hythiam’s election. Through this acquisition, Hythiam has dividend and liquidation preferences in CompCare, anti-dilution protection, and the right to appoint a majority of CompCare’s board of directors. In addition, CompCare is required to obtain Hythiam’s consent for a sale or merger involving a material portion of its assets or business, and prior to entering into any single or series of related transactions exceeding $500,000 or incurring any debt in excess of $200,000.
“While the purchase of the controlling position in CompCare was predicated on strategic business reasons, we were initially also looking at completing the merger of the minority interest in order to achieve certain other operational and financial synergies,” said Terren Peizer, Chairman and CEO of Hythiam. “Given that we believe we are able to achieve our operational objectives with CompCare as a majority owned, controlled subsidiary, both parties have determined that the costs of completing the merger at this point outweigh any other intended benefits.
Peizer continued, “CompCare will provide infrastructure for the disease management offerings under a standard ASO arrangement, saving Hythiam the time, distraction and cost of creating and supporting this portion of the disease management offering. Hythiam will continue to develop and control the core competencies for the substance abuse disease management platform, including treatment algorithms, predictive modeling and screening and treatment protocols. Additionally, we will work with CompCare on additional business opportunities, including helping them to incorporate the PROMETA protocols into products for their managed behavioral health customers.
“Hythiam remains on target to deliver a robust offering for substance abuse disease management this year. Our controlling interest provides us with the assurances necessary to build this complex program on a base infrastructure that we know we can count on. We will have sufficient strategic input to ensure that this infrastructure will not be sold out from under us or otherwise be made unavailable, and since CompCare will continue as a separate majority owned entity, only minimal integration activity is expected.”
About PROMETA®
Hythiam’s PROMETA® treatment protocols are designed for use by healthcare providers seeking to treat individuals diagnosed with dependencies to alcohol, cocaine or methamphetamine, as well as combinations of these drugs. The PROMETA treatment protocols comprise nutritional supplements, FDA-approved oral and IV medications used off-label and separately administered in a unique dosing algorithm, as well as psychosocial or other recovery-oriented therapy chosen by the patient and his or her treatment provider. As a result, PROMETA represents an innovative approach to managing alcohol, cocaine, or methamphetamine dependence that is designed to address physiological, nutritional, and psychosocial aspects of the disease, and is thereby intended to offer patients an opportunity to achieve sustained recovery. To learn more, please visit www.prometainfo.com.
About Hythiam, Inc.
Integrating both medical and psychosocial treatment modalities, Hythiam, Inc. provides comprehensive behavioral health management services to health plans, employers, criminal justice, and government agencies. With a focus on using the latest medical and health technology towards improved outcomes and out-patient treatment, the company manages all behavioral health disorders. The company also researches, develops, licenses and commercializes innovative and proprietary physiological, nutritional, and behavioral treatment protocols. Hythiam currently offers disease management programs for substance dependence built around its proprietary PROMETA treatment protocols for alcoholism and dependence to stimulants. The PROMETA treatment protocols, which integrate behavioral, nutritional, and medical components, are available through licensed treatment providers. For further information, please visit www.hythiam.com.
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the company’s control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, limited operating history and lack of statistically significant formal research studies, the risk that treatment protocols might not be effective, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the healthcare industry; and additional risks factors as discussed in the reports filed by the company with the Securities and Exchange Commission, which are available on its website at http://www.sec.gov.