Philips sets 575 million euros aside for US lawsuits

Under-pressure Dutch medical tech maker Philips announced Monday it has set aside 575 million euros to resolve expected lawsuits in the United States, resulting from its massive recall of faulty sleep respirators.

The Amsterdam-based firm said it was a defendant “in several class-action lawsuits and individual personal injury claims” in the United States due to safety issues with the device.

“This quarter, Philips Respironics recorded a 575 million euro ($635 million) provision in connection with the anticipated resolution of the economic loss class action,” Philips said as it announced its first quarter results.

This was “an important step in addressing litigation to the recall,” it said.

The provision largely for the 583 million-euro net loss posted for the first three months of 2023, Philips added.

Once famous for making lightbulbs and televisions among other products, Philips in recent years sold off its subsidiaries to focus on medical care technology.

But it was forced to issue a global recall in 2021 of its devices that help people suffering from sleep apnoea, a disorder in which breathing stops and starts during sleep.

The company said sound-dampening foam in the machines could degrade, causing people to inhale or swallow pieces of the foam with “possible toxic and carcinogenic effects”.

The recall hit the 132-year-old company hard and by January it had announced it was slashing 10,000 jobs as a result.

Philips said Monday it has already cut 5,400 jobs so far with chief executive Roy Jakobs saying “I realise that we are asking a lot from our employees to work through the necessary changes.”

Philips said to date more than 95 percent of the new replacement devices and repair kits for fixing registered devices have been produced, with the “vast majority” of these devices having been sent to patients and home care providers.

“Resolving the Philips Respironics recall for patients remains our highest priority,” Jakobs said.

Philips’ first quarter sales increased by six percent to 4.2 billion euros with Jakobs saying “we are confident in our plan for the year 2023, acknowledging that uncertainties remain.”