The company's shares were up about 9 percent at $21.09 on Wednesday on the New York Stock Exchange.

Prior to Wednesday's gains, the stock had lost about 12 percent of it value since March, when the U.S. Food and Drug Administration began an inspection of the company's San Diego facility questioning the labeling and quality control of its Triage products.

While the agreement with the FDA will lead to lower manufacturing yields of the Triage products, the company will raise production to 3.3 million tests per month to meet demand, Alere said in a regulatory filing on Wednesday.

"This represents closure on long process on discussions with the FDA and makes for a much clearer path for Triage business going forward," Wedbush Securities analyst Zarak Khurshid said.

The company had to recall several lots of its Triage products in May as they did not meet the interim specifications set by the regulator.

Alere expects a shortfall in supply of the products due to the lower yields for October, but expects to be able to meet demand from November.

Alere's Triage is a test system that helps in the diagnosis of critical diseases and health conditions including heart failure and heart attacks.

(Reporting by Prateek Kumar in Bangalore)

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