Philips Respironics reaches settlement with US DOJ & FDA on ventilator recall

Koninklijke Philips, opens new tab CEO Roy Jakobs has ticked one more item off his long list of regulatory and legal overhangs stemming from faulty breathing devices. On Wednesday, opens new tab, the $19 billion Dutch toothbrushes-to-defibrillators group said it had finalised a settlement, opens new tab with the U.S. government that requires quality management improvements at its Respironics U.S. plants. The deal, which was initially outlined in January, also restricts the production and sales of Philips’ respiratory devices in the United States until all the settlement conditions are met.

Philips has not indicated how long this could take. But the economic damage linked to this specific deal may be contained: the company booked a 363 million euro settlement-related write-down in the fourth quarter and forecasted a hit of less than 200 million euros this year. Philips also last year took a 575 million euro provision for a class-action lawsuit that it expects to resolve. Unfortunately, other legal cases remain open-ended. The company still faces hundreds of personal injury lawsuits that could drag on for years and potentially cost billions. Analysts at Bernstein apply a low probability that Philips may be forced to pay. Despite a 2% pop on Wednesday, Philips shares are still trading at half their value from June 2021, when the company recalled some breathing devices. Understandably, investors seem to prefer to play it safe. Reuters