Philips has taken another step toward resolving the legal fallout from its recall of respiratory devices. Its subsidiary Respironics has reached an agreement in principle with the US Justice Department, which opened a civil and criminal investigation after the recall. Formal details remain to be completed, and payment is expected in the first quarter of next year.
The Dutch medical technology company said it recorded a €288 million provision in the third quarter. Philips shares rose 6.5% from the previous close to €26.10 around midday. Barclays described the agreement as an important milestone, while noting that the amount was higher than expected.
Philips began recalling millions of devices in 2021. The machines, used by people with sleep apnea, contained sound-dampening foam that could break down and potentially cause harm if inhaled.
The latest agreement follows a 2024 US settlement worth more than $1 billion to resolve patient lawsuits. Philips has also reached agreements with insurers and faced costs related to the product recall. Other legal matters remain unresolved: investigations by attorneys general in several US states are ongoing, CEO Roy Jakobs said. In Amsterdam, the Enterprise Chamber recently rejected investors’ demands for a more extensive investigation into the company.
In the third quarter, Philips reported comparable sales growth of 3% to €4.4 billion. Adjusted operating income, measured as EBITA, rose to €569 million.
Sources: FAZ.