Philips reaches DOJ agreement over device recall, books €288 million provision in Q3

Key Points:

• Philips recalled millions of healthcare devices in 2021 due to concerns that sound-reducing foam could degrade and become potentially toxic, leading to ongoing probes and court cases.
• The company’s Respironics unit reached an agreement in principle with the U.S. Department of Justice (DOJ) to resolve investigations, booking a €288 million ($322 million) provision expected to be paid by early 2027.
• Philips did not disclose whether the DOJ settlement includes an admission of wrongdoing and continues to face investigations by U.S. state attorneys general, with discussions ongoing and no provisions booked yet.
• Despite recall-related costs, Philips beat market expectations for third-quarter core earnings with a 7.2% rise in adjusted EBITA to €569 million ($637 million), driven by higher sales, improved margins, and productivity gains.
• The company maintained its 2026 financial targets but excluded potential impacts from other Respironics-related legal proceedings in its outlook.