Philips settles $1.1 billion in claims related to the sleep apnea affair at the healthcare technology group. That news leads to enthusiasm on the Amsterdam stock exchange, where Philips rises by 33 percent.
The money is intended for American patients who say they have suffered injuries from Philips’ sleep apnea devices. The money is also intended for Americans who have not yet noticed any health damage, but fear that this may be the case in the future.
The deal removes much of the uncertainty for Philips surrounding the affair that has been dragging on for a number of years. It appears that the amount for which Philips is now settling is on the low side. The financial markets had taken a higher amount into account.
Philips had previously reached an agreement to compensate American patients for so-called economic damage caused by problems with the devices. According to CEO Roy Jakobs, these are important agreements because they ‘provide further clarity about the way forward for Philips’.
The Dutch company got into trouble in 2021 due to a major recall for millions of sleep apnea devices for home use. Insulating foam could come loose from those devices. According to Philips, the issue has now cost a total of between 4 billion and 5 billion euros, if you add up all recovery costs, depreciation, settlements and other costs.
No acknowledgment of debt
In the new deal, Philips does not admit any liability for any injuries caused by its devices. But previously, sales of the devices in the US were temporarily stopped after an agreement with the FDA. The company is also still being investigated by the American justice system. This could easily result in a hefty fine, but no financial provision has yet been made for this.
The legal system is different in Europe and other parts of the world. Here, Philips is not counting on major claims cases as in the US. According to the company, tests have shown that its sleep apnea devices have not caused any health damage. The company has almost finished replacing the equipment here.
As a result of the settlement, Philips recorded a loss of approximately 1 billion euros in the past quarter, on a turnover of more than 4.1 billion euros. “We started the year in line with our plan, with growth in order intake outside China becoming positive and margins improving significantly,” says Jakobs.
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Tags: Philips rises percent Amsterdam stock exchange billiondollar settlement sleep apnea affair Economy
