Dutch group Philips has reached a $1.1 billion settlement to end litigation related to its machines used to treat night-time breathing problems, causing its shares to surge by as much as 37 percent. The company faced legal battles in the US over personal injury claims and a medical monitoring class action suit after recalling certain devices in 2021 due to foam breakdown issues.
Despite not admitting liability, Philips agreed to settle to eliminate uncertainty and move forward. The ongoing investigation by the US justice department into the devices remains, with 15 million affected globally. The company has taken significant steps to address the problem, including cutting jobs and recalling 5.6 million devices.
The settlement was seen as a positive development by analysts, with Jefferies calling it “much milder than feared” and Goldman Sachs noting that it came sooner than expected. Philips, known for its transformation into a medical technology business, saw its shares rise significantly following the news.
CEO Roy Jakobs emphasized that the settlement does not imply guilt and highlighted the company’s efforts to replace faulty products. Moving forward, Philips aims to achieve 3 to 5 percent growth by 2025, despite reporting a 1 percent sales decline in the first quarter of 2024, partly due to challenges in China.
While the investigation into hospital purchasing practices in China has impacted sales, Jakobs remains optimistic about the company’s future prospects. The focus now shifts to resolving the remaining issues and driving growth in the coming years.