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Advanced Medical Sets Recall

The company expects revenue for the rest of the year to be reduced.

Advanced Medical Optics (EYE) - Get National Vision Holdings, Inc. Report is recalling some of its Complete MoisturePlus contact lens solution packs because they could have been contaminated by bacteria.

The move could reduce the company's revenue for the remainder of the year by $40 million to $45 million. If so, total sales for 2006 might be more in the range of $985 million to $1 billion rather than Advanced Medical's prior guidance of $1.01 billion to $1.02 billion.

The company expects to incur charges of roughly $35 million to $40 million in the remainder of 2006 and in 2007 for costs to complete the recall, remedy manufacturing issues and restore its market share.

For 2007, Advanced Medical is now targeting revenue of $1.06 billion to $1.08 billion, compared with its previous outlook of between $1.08 billion and $1.1 billion.

Three lots of the contact lens solution packs sold in Japan were found to be contaminated by way of a production-line problem at the company's manufacturing plant in China. As a result, it's recalling 18 lots distributed in the U.S. that were made at the same production line around the same time.

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Nonsterile contact lens solution may have serious health consequences, the company says, including eye infections and microbial keratitis, which could cause scarring or even blindness.

Advanced Medical hasn't received any reports of health problems associated with the recalled product lots in the U.S.

Goods manufactured at the company's facility in Spain, which produces the vast majority of its contact lens solution products distributed in the U.S. and Europe, aren't affected by this recall.

"AMO is committed to taking all necessary measures to remedy this production-line issue and protect the trust physicians and patients place in our products," said Randy Meier, the company's president of global eye care and chief financial officer.

Advanced Medical is currently contacting retailers, customers and distributors regarding product returns and replacements. Reply cards and mailing slips are being provided in order to allow returns.

Shares of Advanced Medical were down 8.4% to $35.95 Tuesday.