Philips settles US medical recall for $1.1bn
Royal Philips has settled its Respironics medical equipment recall case in the US for $1.1bn.
The first quarter results for Philips saw sales of €4.1bn, up 2.4%. However the order intake was down 3.8%, mainly due to China. The €982m provision for the Respironics case led to a loss of €824m for the quarter.
Philips and Philips Respironics do not admit any fault or liability, or that any injuries were caused by Respironics’ devices, and there is an additional €540m agreement reached with insurers to pay for Respironics recall-related product liability claims. This income is expected to be recognized in Q2 2024 and payment is expected during 2024.
“We started the year in line with our plan, with order intake growth outside China turning positive and strong margin improvement. Supported by key innovation launches and strong focus on our execution priorities, we remain confident in our performance improvement plan for 2024,” said Roy Jakobs, CEO of Royal Philips.
“Patient safety and quality is our highest priority, and we have taken important steps in further resolving the consequences of the Respironics recall. The remediation of the sleep therapy devices for patients is almost complete, and the test results to date show the use of these devices is not expected to result in appreciable harm to health. We do regret the concern that patients may have experienced.”
“The approved consent decree and economic loss settlement, and now the resolution of the personal injury and medical monitoring litigation in the US, are significant milestones and provide further clarity on the way forward for Philips,” he said.
“We are pleased to have reached a resolution of personal injury and medical monitoring claims for $1.1 billion. The agreements with Philips will provide compensation to those users of the now-recalled CPAP and other respiratory devices who suffer from significant physical injuries and important research for the treatment of those injuries,” said the Co-Lead Counsel for the plaintiffs in the case.
“This is in addition to the uncapped settlement that will provide more than $600 million in economic compensation to affected device owners. Ultimately, these combined agreements accomplish what we sought to achieve when this litigation began — holding Philips accountable by obtaining care for those with physical injuries and compensation for those needing new respiratory devices,” they said.
The market in China continues to be impacted by the industry-wide anti-corruption measures initiated by the government and by subdued consumer demand. In the first quarter, the government of China announced a subsidy program for hospitals to upgrade aged medical equipment, which will support gradual improvement of a fundamentally attractive market.
For the full year 2024, Philips continues to expect 3-5% comparable sales growth.
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