By Ian Walker
Royal Philips said it has reached a $1.1 billion settlement in the U.S. related its Respironics ventilators, and backed its full-year guidance.
The Dutch health-technology group said Monday that the agreement relates to the personal-injury litigation and medical monitoring class action in the U.S. but that Philips Respironics hasn't admitted any fault or liability, or that any injuries were caused by Respironics devices.
The company also said it has agreed with insurers to a 540 million euro ($577.4 million) payout to cover Respironics recall-related product liability and that this is expected to be recognized in its second quarter accounts, with the payment anticipated to be made this year.
Philips made the disclosure as it reported a net loss for the first quarter of EUR999 million compared with a loss of EUR665 million for the comparable period a year earlier and a consensus taken from the company's website of EUR64 million in profit.
The widened loss includes a provision of EUR982 million related to the Respironics agreement.
Sales fell to EUR4.14 billion from EUR4.17 billion, a rise of 2% on a comparable basis. The consensus sales estimate was EUR4.15 billion.
Adjusted earnings before interest, taxes and appreciation was EUR388 million compared with EUR359 million and a consensus of EUR361 million, driven by productivity and pricing actions.
The adjusted Ebita margin was 9.4% while the comparable order intake fell 3.8%, mainly due to China, the company said.
For the year ahead, Philips expects comparable sales growth of between 3% and 5%, with an adjusted Ebita and appreciation margin in the 11% to 11.5% range.
Earlier this month, the company reached a final agreement with the U.S. Justice Department and Food and Drug Administration on terms of a settlement related its Respironics ventilators.
It said at the time 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.
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.
"We have taken important steps in further resolving the consequences of the Respironics recall...The approved consent decree and economic loss settlement, and now the resolution of the personal injury and medical monitoring litigation in the U.S., are significant milestones and provide further clarity on the way forward for Philips," Chief Executive Roy Jakobs said Monday.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
April 29, 2024 01:40 ET (05:40 GMT)
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