8Santa Ana-based Advanced Medical Optics Inc. is back with a contact lens solution after a May recall.
The company has started shipping its Complete solution in the U.S., Europe and parts of Asia, including Japan, two months ahead of schedule, Chief Executive Jim Mazzo said.
The move follows a voluntary recall four months ago of Advanced Medical’s Complete MoisturePlus, which regulators linked to a rare eye infection that can lead to blindness.
“We relaunched Complete with the same name because it has a very strong brand image,” Mazzo said.
There’s a rub to the new version, literally. Directions call for users to rub their contact lenses clean with the solution, rather than just soaking them.
“Easy Rub Formula = Disinfection & Comfort” reads the box in large white letters.
The directions talk about “rubbing, yet says it in a way that it doesn’t sound very complicated,” said Dave Noon, Advanced Medical’s senior vice president of global eye care.
The new Complete stands to compete with solutions from other companies that bill themselves as “no-rub” formulas.
Advanced Medical is stressing lens rubbing after finding the problem linked to its solution wasn’t related to manufacturing.
The company is promoting rubbing,an extra step for lens wearers,as a safer alternative that can make lenses more comfortable.
“It enhances their ability to maximize their lenses,” Noon said.
Advanced Medical is working with three groups, the American Academy of Ophthalmology, the American Optometric Association and the American Society of Cataract and Refractive Surgery, to encourage rubbing, Mazzo said.
“When we had the recall, all of them came out with support that this is the right thing to do,” he said.
Noon and his team are training eye doctors on the use of the new Complete. The company is providing information about Complete as well as information on rubbing and rinsing, he said.
Some efforts aimed at users also are planned, Noon said.
Lost sales and charges stemming from the recall hit Advanced Medical hard,the company’s contact lens solution sales, once a quarter of its $1 billion in yearly revenue, plunged 73% in the second quarter. The company posted a $167 million, charge-laden loss in the quarter.
As for wrapping up the recall, Mazzo said: “I didn’t get an ulcer You learn, first off, about your team, and I will tell you how proud I am of the team. We didn’t lose anyone from it, all the way from the sales reps through the management through the senior management. We were very focused, got the job done.”
Recalls have been a large issue in the contact lens market in recent years. Besides Advanced Medical, Rochester, N.Y.-based rival Bausch & Lomb Inc. came under fire in 2006 for its handling of a recall of its ReNu with MoistureLoc contact lens solution after federal regulators linked it to outbreaks of a fungal infection.
In August, Advanced Medical ended a bid to buy Bausch & Lomb for $4.23 billion. Private equity firm Warburg Pincus LLC is buying Bausch instead.
After several weeks of back and forth and shareholder resistance, Advanced Medical walked away from the deal.
“We felt it was a good strategic fit, but we’ve moved on,” Mazzo said. “We’ve got other things to worry about right now. We are staying focused on what we have in front of us. It’s kind of a distant memory for me.”
The recall did play a role in the dropped bid, according to Mazzo. But not from a financial standpoint, he said.
“Any time you have a major recall, (it) puts a lot of people under concern,I understand that,” he said.
Mazzo said he doesn’t believe shareholder opposition, led by 15% holder ValueAct Capital Partners LP of San Francisco, scuttled the Bausch deal.
“That was not a reason why we pulled out,” he said. “We pulled out because the process was not conducive.”
ValueAct “did not stop us from going forward,” he said.
The recall and Bausch bid took a toll on Advanced Medical’s stock and on how some analysts see it. The company’s shares are down some 22% for the year with a market value of $1.7 billion late last week.
Analysts expect the company to post a loss of $25.3 million on sales of $265.2 million for the third quarter.
The recall will have a greater effect on its third-quarter earnings than in the second quarter, Jefferies & Co. analyst Peter Bye recently wrote in a report on rival Alcon Inc., which employs 630 people in Irvine.
In the report, Bye also said that Alcon’s new chief financial officer, Richard Croarkin, believed that Alcon will keep lens solution market share it has taken from Advanced Medical due to the recall.
Mazzo believes Wall Street has a wait-and-see attitude about Advanced Medical, and that it will take a couple more quarters before investors regain the confidence they had in the company prior to the recall.
_________________________________________________________
Impac Exiting Most Mortgage Lending
Irvine-based Impac Mortgage Holdings Inc. last week said it was shutting down most of its mortgage lending operations, including for riskier Alt-A mortgages.
Along with Alt-A loans, which are one step above the riskiest subprime loans, Impac said it’s also quitting warehouse lending and commercial lending.
The company is laying off 144 employees as a result of the changes. It let go of some 350 workers a month ago, which was more than 40% of its employee base at the time.
Impac still will make some mortgage loans that conform to standards set by Fannie Mae, the government-backed buyer of mortgages.
The company, which primarily buys mortgages as investments, stepped up its business originating loans with the May acquisition of Florida’s Pinnacle Financial Corp.
Impac’s operations now will primarily consist of managing its long-term investments and mortgage servicing.
The company cited continued market disruptions and a lack of funding for riskier mortgages for its decision.
The company counted a recent market value of about $115 million.
,Mark Mueller
