NEW YORK (AP) — Shares of Alere Inc. skidded Friday after the medical diagnostics company said it expects to recall some of its Alere Triage tests and said it has received a federal subpoena related to the performance and quality control of those products.
THE SPARK: Alere said the Food and Drug Administration began an inspection of a San Diego manufacturing plant in March. The inspection was related to Alere Triage products, which are used to make quick diagnosis of conditions like heart attack and heart failure, evaluating risk of pulmonary embolism. Alere said the FDA was concerned about the company's quality-control methods and the way those methods were described on Triage product labeling.
In May, the company received a subpoena from the Department of Health and Human Services' Office of the Inspector General. Alere said the government is primarily interested in documents related to the performance of Triage devices and its quality-control testing.
Alere said the FDA has not closed the inspection or cited any defects, but the company said it has made changes to its quality-control procedures and will make further changes by Sept. 30.
Alere said it still having discussions with the FDA and expects to recall some of the products. Because the company does not know what changes it will have to make to satisfy the FDA's concerns, and it is not sure how many products it will have to recall or what effect the recall may have on its profit and revenue. However it expects manufacturing costs to increase and it may have difficulty supplying Alere Triage products to its customers.
THE BIG PICTURE: The Waltham, Mass., company reported $671 million in revenue in the first quarter. That included $69 million in U.S. sales of Triage toxicology and cardiology products. It said the recall and related issues should not affect Triage test designed to run on systems developed by Beckman Coulter Inc., and sales of those products totaled $18 million in the first three months of the year.
However the problems could affect its other Triage revenue, which included including $20 million in heart attack damage products and $31 million in revenue from toxicology, heart failure and blood clot tests in the first quarter.
SHARE ACTION: Shares of Alere dropped $3.24, or 14.5 percent, to $19.06 in afternoon trading. The stock has fallen 13.1 percent since the company reported its first-quarter results April 27.