Advanced Medical Optics Inc. has transformed itself in the past three years from a unit of Irvine-based drug maker Allergan Inc. to a major player in the eye device market.
The Santa Ana-based ophthalmic company’s sales have grown at a 235% clip in the past three years, from $251.7 million for the year ended June 30, 2002 to $842.7 million for the 12 months ended June 30.
Advanced Medical’s growth has propelled it onto the Business Journal’s annual list of fastest-growing publicly held companies based in Orange County. Advanced Medical made its debut on this year’s list as No. 9.
The fast sales growth has come largely through acquisitions. Advanced Medical has parlayed a pair of sizable deals to become a player in the eye surgical industry.
Its $1.3 billion buy of Visx Inc., a Santa Clara-based maker of lasers used in corrective eye surgery, finally wrapped up in May. The deal was announced some six months earlier.
Another big deal for Advanced Medical: the $450 million buy of Pfizer Inc.’s cataract surgery business last year. One-time costs associated with the acquisitions led to a loss of $446 million for the 12 months ended June 30.
More acquisitions could be coming.
“Where we see opportunities, I can guarantee you that we will be aggressive,” Chief Executive James Mazzo has said in the past. “We’re not shy, and we’ve done a great job of integration.”
Advanced Medical shook up its earnings guidance earlier this month after announcing a plan to focus more on eye surgery products.
The plan calls for the company to stop making non-core cataract and eye care products by the end of this year in order to boost its profitable core lens implant and laser surgery businesses. The moves are likely to hurt its profit in the short-term, but boost sales next year.
Shares of Advanced Medical slumped on the news. At a recent check of $33.92, the company’s stock is trading near its 52-week low and 25% off the high.
The revised guidance calls for Advanced Medical to post a 2005 profit of $96 million to $100 million, down from a prior forecast of $109 million to $116 million. The company’s sales projection for the year remains at $920 million to $930 million.
The company held to its 2006 outlook of $145 million to $152 million in profit on sales of $1.02 billion to $1.04 billion. It expects sales to be higher than previously expected in 2007.
Investors are expecting more details on the move when the company reports its third-quarter financial results in a couple of weeks.
Mazzo has become one of OC’s more visible chief executives during the past few years as his company’s profile has risen following the 2002 spinoff.
Allergan spun off its eye surgery and contact lens care business,what now is Advanced Medical,to focus more on its specialty drug products such as eye care and the ubiquitous Botox neurotoxin.
“As a new entity, I felt it was a requirement that we raise our profile,everything from local education to local boards and even working with local politicians,” Mazzo said earlier this year.
So Mazzo has made the rounds to industry, education and community groups. His ties to the University of California, Irvine, run deep.
Mazzo is a trustee of the UCI Foundation, a member of the university’s Chief Executive Roundtable and sits on the board of directors’ executive committee of the Paul Merage School of Business.
The chief executive also was closely involved with the university’s efforts in selecting Michael Drake, an ophthalmologist and UC system health executive, as UCI’s new chancellor. Drake replaced Ralph Cicerone, now head of the National Academy of Sciences.
Market value: $2.5 billion
3-year sales growth: 235%
Annual sales through June 30: $842.7 million
Annual loss: $445.9 million
Company: medical device maker