Philips has reported Q3 sales of €4.4bn ($4.9bn) and outlined settlement plans relating to Respironics subsidiary’s faulty sleep apnoea devices recall of 2021 with the US Department of Justice (DoJ).
The medtech giant’s comparable order intake grew by 8% in the quarter, which it ascribed to strong growth in its diagnosis & treatment, from which the lion’s share of its revenues – at around $2bn – emanated from.
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Comparables sales in the quarter increased by 3%, a margin mainly driven by mid-single-digit growth in its connected care segment and high-single-digit growth in personal health, Philips stated. These segments achieved revenues of around €1.2bn and €953m, respectively. Meanwhile, comparable sales growth was flat in Philips’ diagnostics and treatment segment.
Shares in Euronext Amsterdam-listed Philips rose by around 7% at market open on 3 November following the earnings release and were up by a net 4% by market open on 4 November. The company has a market cap of around €25.5bn.
Reiterating its 2026 outlook, Philips projects comparable sales growth of 3% to 4.5%. The company noted that its view for the year includes currently known tariffs, also revealing that it assumes a €288m payment to the DoJ in Q1 2027 to settle legal proceedings relating to subsidiary Respironics’ faulty sleep apnoea devices recall of 2021.
Philips noted, however, that its 2026 outlook excludes other ongoing Respironics-related proceedings, including an investigation by the US State Attorneys General.
DoJ settlement relates to 2021 sleep apnoea devices recall
Philips’ Respironics recalled certain continuous positive airway pressure (CPAP) and bi-level positive airway pressure (BiPAP) sleep therapy devices and ventilators in June 2021 due to a fault related to polyester-based polyurethane (PE-PUR) foam used in these devices. The issue meant that pieces of the foam or certain invisible chemicals could be ingested by individuals using the device.
Philips CEO Roy Jakobs said during an earnings call that the agreement in principle with the DoJ marked an “important step” in resolving the consequences of the sleep apnoea device recall that impacted 15 million units worldwide.
Following Philips’ voluntary recall in 2021, the Dutch medtech company agreed to a consent decree with the DoJ and the US Food and Drug Administration (FDA) in January 2024. The document restricted Philips’s production and sale of new CPAP and BiPAP machines at several of its Respironics facilities in the US until certain requirements are met. These include the completion of various activities outlined in Philips Recall Remediation Plan and factoring in good manufacturing practice (GMP) tenets at its manufacturing facility in Murrysville, Pennsylvania.
Jakobs noted that Philips is not in control of any timing around the return to market and continues “working towards that so that actually we are ready”.
“But ultimately, it needs to be granted by the FDA, and we keep working with them,” he added.
