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Philips Reaches Final Pact With DoJ, FDA on Ventilator Recall — Update

By Ian Walker


Philips said it reached a final agreement with the U.S. Justice Department and Food and Drug Administration on terms of a settlement related its Respironics ventilators, and backed its medium-term guidance.

The Dutch health-technology group said Wednesday that under the consent decree, Philips Respironics will continue to prioritize completing the remediation of the sleep and respiratory care devices under Respironics' voluntary June 2021 recall.

It said the agreement mainly focuses on Philips Respironics' business operations in the U.S., including its manufacturing facilities in Murrysville and New Kensington, its service center in Mount Pleasant and its Respironics headquarters in Pittsburgh in Pennsylvania.

In 2021, Philips issued a recall of its breathing-aid machines following reports that an internal sound-dampening foam could degrade, spurring concerns that it could release harmful gases or particles into the lungs of users.

Philips on Wednesday said its 2023-25 guidance for mid-single-digit comparable sales growth and low-teens adjusted earnings before interest, taxes and amortization margin is unchanged, while its forecast of 1.4 billion to 1.6 billion euros ($1.52 billion to $1.74 billion) in free cash flow takes the consent decree into account.

The company had said in January that it booked a EUR363 million provision in the fourth quarter of 2023 for remediation activities, inventory write-downs and contract provisions related to the Respironics consent decree. For 2024, costs from this are expected to represent 1% of total sales, which is estimated to amount to between EUR180 million to EUR200 million from remediation work and disgorgement payments, it added at the time.

"With the agreement on a consent decree for Philips Respironics in place, we now have a clear path forward to gradually restore the business, serving patients around the world," Chief Executive Roy Jakobs said.

Philips chief patient safety and quality officer Steve C de Baca added that Philips Respironics has been working with the FDA, and is already making significant changes in its organization, quality management systems and operations.

"This includes strengthening the quality management processes and deepening the competencies of the relevant teams," he said.


Write to Ian Walker at


(END) Dow Jones Newswires

April 10, 2024 03:14 ET (07:14 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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