Philips reaches EUR 288M agreement with US DOJ

AMSTERDAM – Philips has reached an agreement in principle with the U.S. Department of Justice to resolve previously disclosed criminal and civil investigations related to the Respironics recall.

The company recorded a EUR 288 million provision in the third quarter related to the settlement.

“We continue to make progress in resolving the consequences of the Sleep & Respiratory Care recall,” said Roy Jakobs, CEO of Royal Philips. “The Respironics agreement in principle with the US Department of Justice marks an important step in this process.”

The settlement is subject to the finalization of the relevant documentation, with payment expected in the first quarter of 2027.

Also in the third quarter, the Enterprise Chamber of the Amsterdam Court of Appeal denied requests from certain investors for an investigation into the affairs of Philips in connection with the Respironics recall.

Prior settlements:

• In 2024, Philips agreed to pay $1.1 billion to resolve personal injury litigation and medical monitoring class action related to the recall.
• In 2023, the company recognized a EUR 575 million to resolve all economic loss claims related to the recall.

For the third quarter, Philips reported comparable sales increased by 5% for Connected Care, which includes the Sleep & Respiratory Care business. The company said the increase was driven by growth in all businesses.

Adjusted EBITA margin increased by 190 basis points to 13.3% for Connected Care, mainly driven by higher sales, higher gross margin and productivity measures, partly offset by cost inflation.

For the whole business, Philips reported:

• Comparable order intake grew 8%, driven by strong growth in Diagnosis & Treatment.
• Comparable sales increased by 3%, drive by Personal Health and Connected Care.
• Adjusted EBITA margin increased 70 basis points to 13.0%, mainly driven by higher sales, higher gross margin and productivity measures, partly offset by cost inflation.
• Net cash flows from operating activities increased to EUR 544 million, mainly driven by higher cash earnings and lower working capital outflows.
• Free cash flow increased to EUR 384 million.

“Our year-to-date results, together with our strong order book, give us confidence in delivering our full-year outlook and achieving our medium-term ambitions,” Jakobs said. “As we move forward in collaboration with customers, our hardworking teams around the world are focused on putting quality at the heart of our operations as we deliver better care for more people.”

• Related reading: Philips provides update on recalled devices.