Philips raised its 2023 earnings outlook following an uptick in third-quarter sales, despite ongoing challenges related to its CPAP and ventilator device recall.
For the quarter, comparable sales rose 11% to 4.5 billion ($4.77 billion), while earnings before interest, taxes, depreciation, and amortization (EBITA) more than doubled to EUR 457 million ($483.3 million). As a result, the company raised its outlook for sales and profitability for the year.
“Our improved operational performance was driven by our focus on execution to enhance patient safety and quality, strengthen our supply chain reliability, and establish a simplified operating model,” says Roy Jakobs, CEO of Royal Philips, in a release. Philips is now expecting to deliver 6-7% comparable sales growth and an adjusted EBITA margin of 10-11%.
Despite increased sales, the company’s new orders were down 9% over last year, though Philips notes in a release that the “order book remains strong.”
Also during the quarter, Philips continued to address the ongoing Philips Respironics CPAP recall, which Jakobs says in a release “remains our highest priority.” According to the company, over 99% of the CPAP device registrations that are complete and actionable have been remediated, while the remediation of the ventilators is ongoing.
Philips Respironics and third-party experts previously concluded that the use of the CPAP devices is not expected “to result in appreciable harm to health in patients.” However, the US Food and Drug Administration recently determined that testing to date was inadequate to fully evaluate risks related to the use of the devices and asked for additional testing. Philips Respironics agreed with the agency to implement additional testing to supplement current test data.
Additionally, Philips Respironics received preliminary court approval for the settlement agreement to resolve all economic loss claims in the US Multidistrict Litigation related to the recall. The settlement does not include or constitute any admission of liability, wrongdoing, or fault by any of the Philips parties.
The previously disclosed litigation, including the personal injury and medical monitoring claims, and investigation by the US Department of Justice related to the Respironics field action are ongoing, as are the discussions on a proposed consent decree.
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