Royal Philips NV yesterday said that it had reached a US$1.1 billion deal to settle US lawsuits over faulty sleep machines that have dogged the Dutch medical device maker.
The company’s shares soared more than 45 percent on news of the settlement, which was less onerous than feared by some shareholders.
Philips has been battling a series of crises since 2021 over its DreamStation machines for sleep apnea, a disorder in which breathing intermittently stops during sleep.
Photo: ANP/AFP
Millions of devices were recalled over concerns that users were at risk of inhaling pieces of noise-canceling foam and fears it could potentially cause cancer.
The company earlier this year decided to halt new sales in the US of the machines made by subsidiary Philips Respironics.
The company has reached an agreement with the plaintiffs “to resolve the personal injury litigation and the medical monitoring class action to end the uncertainty associated with litigation in the US,” Philips said in a statement.
The company said it did not “admit any fault or liability, or that any injuries were caused by Respironics’ devices.”
The agreement addresses claims filed in US courts and other potential cases, it added.
“Patient safety and quality is our highest priority, and we have taken important steps in further resolving the consequences of the Respironics recall,” Philips chief executive Roy Jakobs said in the statement.
“The remediation of the sleep therapy devices for patients is almost complete, and the test results to date show the use of these devices is not expected to result in appreciable harm to health,” Jakobs added.
“We do regret the concern that patients may have experienced,” he said, adding that the settlements were “significant milestones and provide further clarity on the way forward for Philips.”
Philips, which has had to cut thousands of jobs, posted a loss of 463 million euros (US$496 million) over the full year last year.
It yesterday reported a loss of 824 million euros in the first quarter of this year on sales totaling 4.1 billion euros.
Philips said the settlement payments are expected to take place next year and would be funded through cash-flow generation.
The company said it booked a provision of 982 million euros in the first quarter to cover the settlement.
Philips said it also concluded an agreement with insurers to pay Philips 540 million euros to cover Respironics recall-related claims.
“The three biggest litigation cases that we had are now put behind us,” Jakobs said in a conference call.
“We can move on and that’s very important,” he said, while cautioning that it “doesn’t mean that everything is resolved.”
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