AMSTERDAM (Reuters) – Dutch medical equipment specialist Philips said on Monday it had reached an agreement with the US Medicines Agency (FDA) to ban the sale of new respiratory devices in the United States.
Philips will need to implement improvements at its factories producing its Respironics ventilators in order to be able to market new respiratory devices in the United States.
The agreement is currently being finalized and will be subject to approval by the relevant US court.
General manager Roy Jakobs declined to give details of the agreement but indicated that it would take five to seven years to comply.
Philips fell 5.39% at 09:12 GMT, compared to a 0.11% rise in the Stoxx 600, after the announcement of what Marc Hesselink, analyst at ING, described as a “very punitive” agreement.
“We believe it will be very difficult for Philips to regain its position in the US (breathing devices) market,” he wrote in a note.
Philips also reported a provision of 363 million euros in the fourth quarter of 2023 in connection with the agreement, or “consent decree”, with the FDA, or around 1% of total turnover in 2024.
Due to this provision, Philips’ fourth-quarter net profit remained roughly stable at 653 million euros, while like-for-like revenue fell 1%.
The consensus of analysts was betting on a net profit of 672 million euros, compared to 651 million euros the previous year, with like-for-like revenue growth of 2.6%.
The agreement did not change Philips’ growth projections announced last year, with the group still expecting a close to 5% increase in like-for-like revenue and lower adjusted Ebitda growth. to 10% in 2025, while available cash flow could reach 1.4 billion to 1.6 billion euros.
Philips said it expects like-for-like revenue growth of 3-5% in 2024, with adjusted Ebita margin growth of 11-11.5%.
Philips had already faced a massive recall of respiratory devices in 2021, which caused the stock value to fall by 70%.
(Reporting Bart Meijer, Corentin Chappron, editing by Kate Entringer)
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