Sale of Women’s Health Care Clinics Collapses

San Jose-based Health Discovery Inc. has terminated its previously announced plan to acquire three clinics owned by financially troubled Women’s Health Centers of America, the companies said Monday.

The deal fell apart Friday, just one day before WHCA shareholders voted to sell the centers to Health Discovery for $50,000. WHCA conducted the previously scheduled vote, even though the deal had fallen apart, WHCA Chairman Ronald F. Meadows.

Health Discovery, which operates similar women’s care centers in the Bay Area, did not explain why it had terminated the deal that was announced in January. Meadows would not comment on the termination, and Health Discovery Chairman Allan Kramer was not available for comment on Monday.

‘Found Itself Overextended’

However, the termination “probably had little to do with WHCA’s facilities or operations,” according to one medical industry observer who is familiar with both companies. “I think Health Discovery might have found itself over-extended and unable” to complete the deal.

Treatment will continue to be provided for the immediate future at the WHCA clinics in San Diego and Vista, Meadows said. However, Meadows was uncertain about the centers’ future. “I can’t predict whether they’ll remain open or not,” Meadows said Monday.

Meadows earlier had indicated that WHCA would liquidate itself if the Health Discovery deal fell through. “We’re in the process of trying to put together a plan right now,” he said.

WHCA has received “numerous indications of interest in individual facilities or some of the equipment,” Meadows said.

WHCA has not reported a quarterly profit since its first public offering in 1986. The San Diego-based company had trimmed operating losses and increased revenues in recent months. However, Meadows in January acknowledged that WHCA lacked the capital to make its existing centers profitable.