Tokos Medical Says Earnings to Fall Short

SANTA ANA —  Tokos Medical Corp. said Thursday that its fourth-quarter earnings will fall short of analysts’ projections.

The corporation blamed delays in completing its acquisition of a Georgia firm that has received federal approval to market at-home monitoring devices used by women during high-risk pregnancies.

Tokos said it expects to report earnings of $300,000 to $400,000 on revenue of $21 million to $22 million for the fourth quarter ended Dec. 31. By contrast, analysts had been projecting earnings of $600,000 to $1 million, company President Craig Davenport said.

He attributed the lower earnings to expenses associated with Tokos’ acquisition of Atlanta-based Physiologic Diagnostic Services.

The deal’s closing was delayed by about five weeks, Davenport said, because of an unanticipated review by the Federal Trade Commission of possible antitrust implications. In the end, the FTC raised no objections to the merger, which was completed Aug. 31.

But the delay postponed the companies’ plans to consolidate their operations and reduce administrative costs, he said.

Tokos and PDS both manufacture devices used at home for monitoring pregnant women during pre-term labor, so early contractions can be detected in time to prevent premature delivery, which can lead to birth defects and other complications.

In September, PDS became the first company to obtain FDA approval to market the devices for at-home use. Tokos had been unable to get FDA approval for its device, so in June it decided to acquire PDS.

During the fourth quarter, Davenport said, the FDA approval helped boost sales of PDS’s product and increase demand for a similar Tokos-designed unit, which is awaiting federal approval.

Tokos stock closed Thursday at $11.75 per share, down 12.5 cents.