Dutch health technology company Philips said today it had reached an agreement on the terms of a settlement with the US Food and Drug Administration (FDA) over a large-scale recall of ventilators.
Philips said the costs of the so-called consent decree with the FDA led to a provision of €363m in the fourth quarter of last year, and were expected to be about 1% of total revenues in 2024.
The agreement sets out the improvements that Philips needs to make at its Respironics plants in order to be able to sell new respiratory devices in the US again.
Until the conditions are met, no new Respironics devices will be sold there, the company said.
"We are fully committed to complying with the consent decree, which is an important step and provides a clear path forward," chief executive Roy Jakobs said in a statement.
The decree is being finalised and will be submitted to the relevant US court for approval.
Philips recalled millions of breathing devices and ventilators used to treat sleep apnea in 2021 because foam used to dampen noise from the devices can degrade and become toxic, carrying potential cancer risks.
The operation knocked about 70% off Philips' market value, as investors feared large litigation bills.
Philips said the agreement did not change its expectations of reaching mid-single-digit comparable sales growth and a low-teens profit margin, in adjusted EBITA, in 2025, with a free cash flow of €1.4-1.6 billion.
Due to the provision, Philips core profit in the fourth quarter remained roughly stable at €653m, while comparable sales fell 1%.
Analysts in a company-compiled poll on average had predicted adjusted EBITA would rise to €672m from €651m a year before, with comparable sales growth of 2.6%.
Philips said it expected to deliver 3-5% comparable sales growth in 2024, with an adjusted EBITA margin of 11-11.5%.
