Philips said on Monday it would halt sales of new sleep therapy devices in the United States, as part of a broader settlement that saw the company take a €363 million ($393 million) payout.
Philips said it will not sell any new CPAP, bilevel CPAP sleep therapy devices or other respiratory care devices in the United States until they meet the requirements of a US Department of Justice consent decree that is being finalized. But it will need court approval.
Philips will be able to service existing devices and sell accessories, and restrictions will not apply outside the United States
Phillips said the new provision covers remediation activities, inventory write-downs and onerous contract provisions.
Philips has been forced to recall millions of sleep therapy devices and ventilators due to the risk of the foam used in the devices degrading and the possibility of being swallowed. More recently, the Food and Drug Administration has reported on the risk of overheating of newer devices.
Terms of the settlement were released as part of its fourth-quarter financials, in which it swung to a profit of €38 million while sales fell 7% to €5.06 billion. On a similar basis, Philips said sales fell 1% and orders fell 3%.
Philips expects similar sales growth of 3% to 5% and an adjusted EBITDA margin of 11% to 11.5% this year, following an EBITDA margin of 10.5% excluding provisions in 2023.
Philips PHIA shares,
PhD,
It fell 5% in early trading in Amsterdam. The stock is up 26% over the past 52 weeks.
Analysts at Citi described the fourth-quarter results as “mixed” but said the consent decree provides “much-needed clarity.”
