Philips shares rocket 33% as firm settles U.S. respiratory device case

Philips shares soared to a two-year high Monday after the Dutch medical devices giant agreed a $1.1 billion settlement in the U.S. for personal injury cases linked to the recall of some of its sleep apnea devices.

Millions of devices were recalled in 2021 over concerns that components carried potential cancer risks. Philips shares were 33% higher at 9:00 a.m. London time.

The company said it had made a 982 million euro ($1.1 billion) provision for the payout of personal injury and medical monitoring claims, adding that the settlement would end the uncertainty over the litigation for the company. It said it did not admit any fault or liability, or that any injuries were caused by its Respironics devices.

“Patient safety and quality is our highest priority, and we have taken important steps in further resolving the consequences of the Respironics recall,” Philips CEO Roy Jakobs said in a 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. We do regret the concern that patients may have experienced.”

The provision was below the 2 to 4 billion euros that was expected, according to Barclays analyst Hassan Al-Wakeel. He added that 10 billion euros was feared in a worst-case scenario.

The settlement is a “capped amount and ends uncertainty on litigation,” Al-Wakeel said in a Monday note.

In September, Philips settled economic loss claims in the U.S. related to the recall, for which it made a 575 million euro provision ($615.7 million).

Monday’s rebound took Philips shares back to their highest level since April 2022.

The firm also on Monday reported a loss of 998 million euros ($1.07 billion) in the first quarter. Adjusted earnings, meanwhile, beat consensus analyst expectations, according to Reuters, coming in at 388 million euros for the quarter.

Sales were slightly lower year-on-year, at 4.14 billion euros in the first quarter from 4.17 billion euros in 2023.