Advanced Medical Optics recalls contact lens solution, lowers financial outlook

Tuesday, November 21st 2006, 4:45 pm
By: News On 6

NEW YORK (AP) Eye care products maker Advanced Medical Optics Inc. is recalling U.S. batches of its Complete MoisturePlus multipurpose contact lens solution and Active Packs after finding bacterial contamination in three lots made at the same plant in China and distributed in Japan.

The Santa Ana, California based company said it has not received any reports of adverse health events associated with the 18 recalled product lots in the U.S.

Advanced Medical Optics said it withdrew affected products from the market in Japan earlier and alerted regulatory authorities worldwide including the U.S. Food and Drug Administration.

Tainted solution could cause an eye infection, the company said. It said the risk of infection is likely low but it decided to take a conservative approach.

The company cut its earnings outlook on Tuesday as it announced the recall, and its shares sank nearly 9 percent.

Earlier in the year, Bausch & Lomb conducted a recall of one of its contact lens solutions after it became associated with a severe fungal infection. In May, Bausch & Lomb decided to permanently discontinue its ReNu with MoistureLoc contact lens solution after hundreds of cases of an eye fungus were linked to the product.

As a result of the latest recall, Advanced Medical Optics cut its 2006 and 2007 sales outlook by $40 million to $45 million. The company now expects 2006 adjusted earnings per share of $1.30 to $1.40, down from $1.85 to $1.90, on revenue of $985 million and $1 billion, compared to a previous outlook of $1.01 billion to $1.02 billion.

For 2007, the company expects adjusted earnings per share of $1.85 to $2, down from $2.25 to $2.35, on revenue of $1.06 billion to $1.08 billion, down from an estimate of $1.08 billion and $1.1 billion.

Analysts surveyed by Thomson Financial expect earnings per share of $1.88 on sales of $1.01 billion in 2006, and $2.28 on revenue of $1.08 billion in 2007.

Advanced Medical Optics shares dropped $3.50, or 8.9 percent, to close at $35.75 on the New York Stock Exchange. Shares dipped as low as $34.20 early in the session after trading between $37.35 and $52.90 over the past 52 weeks.

Of the 2.9 million units being recalled worldwide, about 183,000 units made it into the U.S. Affected U.S. units account for less than one percent of Complete MoisturePlus' annual sales. The company booked about $208.6 million, or about 28 percent of total sales, from eye care product sales for the first nine months of 2006.

The company said it will suspend production at its plant in China for about 10 to 12 weeks.

Shares of rivals Bausch & Lomb and Alcon Inc. both reacted positively to the news. Bausch & Lomb shares rose $1.10, or 2.3 percent, to close at $49.76, and Alcon shares jumped $6.10, or 6 percent, to close at $107.79 on the NYSE.