Philips shares climb after finalizing pact with U.S. over device sales

By Steve Goldstein

Philips reiterated its financial outlook on Wednesday after finalizing a consent degree with the U.S. Department of Justice and Food and Drug Administration that will prevent it from selling new respiratory care devices in the U.S. but will allow for exports.

The agreement focuses on its U.S. respironics business that is headquartered in Pittsburgh, after it stopped selling Continuous Positive Airway Pressure or Bilevel Positive Airway Pressure sleep therapy devices and other respiratory care devices in 2021 following a recall over the risk that foam would break down and be swallowed.

Philips is still allowed to service devices and sell accessories.

Philips shares (NL:PHIA) (PHG) jumped 4% in early Amsterdam trade. The stock is down 6% this year.

The Food and Drug Administration said the consent decree requires a recall remediation plan providing for either new or remediated devices or refunds. The FDA said Philips will have to receive written notice they're in compliance on current good manufacturing practice, reporting corrections and removals and medical device reporting.

Philips said it still expects "costs of around 100 basis points" this year for remediation activities and profit disgorgement payments, as it reiterated its guidance that calls for mid single digit sales growth and low teens margins excluding those costs.

-Steve Goldstein

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04-10-24 0330ET

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