Philips has reached an agreement in principle with the US Department of Justice regarding the investigation into its sleep apnea device recall. The health technology company expects to pay 288 million euros to resolve both criminal and civil investigations into the large-scale product recall. The company announced the preliminary agreement alongside its latest quarterly financial results.
The settlement remains subject to the finalisation of relevant legal documentation. Philips expects to make the payment in the first quarter of 2027.
Background and Ongoing Investigations
Problems with Philips sleep apnea devices emerged five years ago when insulating foam inside the machines was found to degrade. The company recalled millions of devices worldwide. The issue has already cost Philips billions of euros in legal settlements, write-downs, remediation expenses, and related costs.
Chief Executive Roy Jakobs declined to disclose specific details of the agreement while negotiations continue. However, he called the preliminary deal an important milestone that marks another step forward in resolving legal proceedings surrounding the matter. Alongside the US Department of Justice, a group of US state attorneys general continues to investigate the company over the recall.
Financial Performance and Outlook
The financial reserve set aside for the settlement weighed heavily on company profits. Net profit fell to 28 million euros, down from 187 million euros in the same period last year. Meanwhile, overall quarterly revenue rose by 2 per cent to 4.4 billion euros. Growth was driven primarily by sales of patient monitoring systems and personal care products, including electric toothbrushes and shavers.
Excluding the impact of the settlement, profits would have increased. Adjusted profit margins improved due to cost-cutting measures and higher sales. Philips confirmed it remains on track to achieve 1.5 billion euros in total savings between 2026 and 2028. The company also maintained its full-year guidance, which includes expected sales growth of between 3 and 4.5 per cent.
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