DOW JONES NEWSWIRES
Advanced Medical Optics Inc. (EYE) swung to a fourth-quarter
profit on boosted margins and higher revenue for cataract
procedures, though laser correction slumped on an industrywide drop
in demand for such services.
Abbott Laboratories (ABT) agreed last month to acquire Advanced
Medical for about $1.36 billion, a deal that launches Abbott into
the eye-health market at a discount but also exposes it to a
business that has been walloped during the recession.
Most sought is Advanced Medical's cataract business. Abbott
noted last month that 60% of people over 60 have the eye problem
and that the number of people with it is expected to increase
nearly 50% in the next decade. The segment is half of Advanced
Medical's revenue, and 70% of its cataract sales are overseas.
The company, which also makes equipment for Lasik
vision-correction surgery, posted net income of $25.1 million, or
40 cents a share, compared with a year-earlier net loss of $12.3
million, or 20 cents a share. The latest quarter included a net
gain of 23 cents a share related to the early retirement of debt,
while the previous year included 17 cents a share in
acquisition-related charges and hedging losses.
Revenue decreased 6.4% to $285.2 million.
Analysts surveyed by Thomson Reuters expected earnings of 14
cents a share on revenue of $283 million.
Gross margin dipped to 58.2% from 58.5%.
Cataract business sales rose 3.8% and eye-care sales rose 8.3%,
driven by the addition of artificial tears to the company's product
line.
However, refractive sales fell 25% as strength in Japan was more
than offset by woes in other parts of the world as declining
consumer spending crimps demand for elective vision-correction
procedures. Advanced Medical said its share of the U.S. Lasik
market was 62%, unchanged from the prior quarter.
Abbott will pay $22 a share for Advanced Medical, a huge premium
to the company's stock the day before the deal was announced but a
level equal to where the stock was trading four months before. The
deal is set to close later this quarter. The stock lost nearly 90%
of its value in September and October, but has more than tripled so
far this year on the Abbott bid.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com