Boston Business Journal by Julie M. Donnelly, Reporter
Alere Inc. (NYSE: ALR) has recalled 803,000 heart tests following a U.S.Food and Drug Administration inspection of its San Diego plant raised concerns over quality control processes. The company’s stock was down more than 3 percent in morning trading Wednesday, after the announcement.
The tests in question brought in revenue of $69 million in the first quarter.
Executives at the Waltham, Mass.-based company acknowledged the recall could cause shortages of the tests, and committed to ramp up production with new quality control standards.
“Alere anticipates that its efforts to increase production will lead to increased manufacturing costs, commencing in the second quarter of 2012,” company officials wrote in a regulatory filing, published Wednesday. The company said it does not yet know what impact the recall will have on earnings.
“I would say that the (annual earnings) per share impact will be somewhere between 15 cents and 35 cents,” Constantine Davides, a Boston-based analyst at JMP Securities, said. “The new process will likely mean that they can produce less product and it will cost them more to do it.” Davides says much depends on how many additional tests, if any, are recalled, and the company’s margins going forward.
Alere posted a diluted net income of 9 cents per share for the full year, 2011.
Alere disclosed in regulatory documents on May 10 that the FDA had concerns about the “quality control release method” for the company’s Triage products, which are rapid diagnostic test systems used to diagnose conditions including heart failure. On May 11, the company’s stock dropped almost 14 percent and has continued to slide since then.