Ahmed Hussein, a director and outspoken shareholder in Irvine medical software maker Quality Systems Inc., is speaking up again in Securities and Exchange Commission filings.
Hussein, who sparked a fight with the company’s directors and management in 2005, said he remains concerned about Quality’s board and governance.
A year ago, Quality struck a deal with Hussein, an Egyptian businessman who owns 17% of the company. The pact ended a lawsuit over the election of directors at Quality and increased the company’s board to nine from eight members.
Hussein and an ally were elected to Quality’s board in 2005.
In a federal filing late last month, Hussein said he’s still concerned about the structure of Quality’s board and governance under the control of a majority of directors. He said the company’s interpretation of the settlement deal with him “is substantially different” than his understanding of it.
“To date, (Quality) has not disclosed the dispute (to shareholders) even though (Hussein) and other minority directors believe the dispute to be material,” he said in his filing.
Hussein, who didn’t elaborate on his concerns in the filing, said he offered to enter into binding arbitration with Quality.
Quality responded in a filing of its own.
“The company believes it has complied fully with the terms of the agreement,” Quality said, including nominating Hussein and two other board candidates at its 2006 annual meeting and renominating them for 2007.
“The ‘dispute’ alleged by Mr. Hussein relates primarily to an interpretation of a provision in the settlement agreement concerning the selection of legal counsel for the board of directors,” Quality said.
The filing says a majority of Quality directors determined that Hussein’s interpretation of the agreement “was without merit” and the issue wasn’t material to investors. The company also declined Hussein’s request to arbitrate the matter “in favor of the existing dispute resolution provisions of the agreement.”
Quality held its shareholder meeting last week at the Center Club in Costa Mesa. Company founder and Chairman Sheldon Razin, Chief Executive Louis Silverman, Patrick Cline, Vincent Love, Russell Pflueger, Steven Plochocki, Hussein, Ibrahim Fawzy and Edwin Hoffman all ran for director slots.
Quality, which had a recent market value of $1 billion, makes software that doctors and dentists use to manage their practices. The business has boomed amid a transition from paper to electronic medical records.
Consumer Ads Boosting Allergan
Irvine drug maker Allergan Inc.’s consumer advertising for medical cosmetic products should bring sales gains, according to one analyst.
Alexander Arrow of Lazard Capital Markets, in a research note, said the impact has been “significant and is still unfolding.”
“Many of the product lines that exceeded expectation by the widest margins were the subjects of new direct-to-consumer advertising campaigns,” he said.
Arrow cited Restasis, Allergan’s dry eye drug, Juv & #233;derm, the lower-face dermal filler, and Lap-Band, an obesity fighting stomach banding system. Allergan got Juv & #233;derm and Lap-Band through its 2006 buy of Inamed Corp.
“Importantly, the full impact of some of the campaigns has yet to be felt, particularly those with long sales cycles such as Lap-Band and Restasis,” Arrow said. “Juv & #233;derm and Botox ads tend to have a more immediate impact, so the results we just saw for (the second quarter) are a fair indicator of their full effect.”
Allergan’s second-quarter profit rose 86% to $137.8 million, excluding charges, from a year ago on higher sales of drugs, wrinkle removers and breast implants. The company’s quarterly revenue was up 23% to $988.1 million, including a 54% hike in products gained through the Inamed deal, such as implants and dermal fillers.
Advanced Medical Upgrade
Advanced Medical Optics Inc.’s decision to drop its $4.23 billion takeover bid for rival Bausch & Lomb Inc., along with higher sales of laser vision surgery devices, got a thumbs-up earlier this month from an analyst who’s criticized the contact lens care and eye surgery company in the past.
Analyst Andrew Swanson of Citi Investment Research said in a note that Santa Ana-based Advanced Medical’s laser vision correction business is improving and that its stock price will benefit from its decision to bow out of the Bausch chase.
The end of the Bausch bid, along with second-quarter results that were largely in line with expectations, improves “several of the key overhangs on AMO’s business,” Swanson said.
Excluding charges, Advanced Medical lost $48 million in the second quarter, more than analysts’ overall expectations. Swanson said he expected the company to lose $61 million.
Advanced Medical’s laser vision correction revenue nearly doubled in the quarter. The company expanded its laser vision business with its $808 million deal earlier this year for IntraLase Corp., an Irvine maker of lasers.
