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ATRION Corp. Message Board

  • stillwater9999 stillwater9999 Mar 1, 2012 5:48 PM Flag

    Contact with IR

    I spoke to Jeff Strickland (CFO) whoe does investor relations today at Atrion. He provided some additional public detail on the contact lense business. He basically reiterated what had been stated in the Atrion earnings press release:

    "This month, however, we learned from the above mentioned ophthalmic customer that it had accumulated too large an inventory, necessitating significant reductions in 2012 shipments to it. We expect our earnings for the full year could decline by approximately 10% from 2011 levels. The bulk of this decline will be felt in the first two quarters, which will likely show declines of some 20% before tapering off."

    As I noted in previous posts, the customer in question is Novartis. Novartis owned the Ciba Vision business prior to the Alcon acquisition that occurred late last year. I have noted that the inventory reduction could be the result of planned synergies/cost savings in connection with the Alcon acquisition. I had some concerns that there might be something more involved such as an eventual discontinuation of Atrion as a supplier to Novartis. While Mr. Strickland could not go beyond the press release language, he did point out that the disinfection cases used with the Ciba Vision product are designed for a peroxide cleaning system and as such are different that many of the other cases in the market that are used with non-peroxide cleaning systems. The peroxide system while somewhat more inconvenient for the user, provides what is thought to be the best disinfection protection. As such the Atrion product is different and appears unlikely to be easily switched out of. Overall my discussion today along with the language in the press release make me think the opthalmic business shortfall issue will be temporary.

    Atrion's two other business segments continue to move forward with 8% growth in the latest quarter. The company continues to invest in its businesses. Atrion's superb track record lends confidence that the company will be back on track once this temporary problem in the opthalmic business passes.


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