Philips has been the topic of conversation surrounding CPAP recalls and chronic issues with recall-related challenges for years now, but their profits don’t show the distress as of quarter 2, 2024. In fact, they also reported a positive net income for the first time in over a year, of $95 million ($90 million euros) for the three-month period ending Sept. 30. This is a vast improvement from the net loss of 1.3 billion euros the prior year.
But that quarter wasn’t without struggle, like previous quarters, following months and even years of ongoing issues with CPAP recalls, and a long road to recover and regain customers’ trust. Earlier this year, CEO Frans van Houten stepped down amid a massive recall of CPAP and BiLevel PAP machines. In April, the FDA even assigned its most serious designation to the CPAP machine recall.
On Oct. 23, Philips released details of those third-quarter results, with group sales increasing 11 percent, income from operations at 224 million euros, compared to a loss of 1,529 million euros in quarter 3 last year, and an outlook for full year 2024 of 6-7 percent comparable sales growth.
The CEO of the company, officially called Royal Philips, stated, “Our improved operational performance was driven by our focus on execution to enhance patient safety and quality, strengthen our supply chain reliability and establish a simplified operating model.
The order book remains strong, and we are taking the necessary actions to improve order intake by shortening lead times from order to delivery and building on the positive impact we are making with our innovations, for example in predictive data analytics and artificial intelligence across our portfolio, to help improve the quality and efficiency of care delivery.” He added that the recall remains the highest priority, and that the remediation of the sleep therapy devices is almost complete, but the remediation of ventilators is “ongoing.”
Things are looking up, he says: “Based on our improved performance, we are further raising the outlook for both sales and profitability for the full year 2024, although recognizing uncertainties remain in an increasingly volatile geopolitical environment. The progress we are making reinforces our confidence in delivering on the three-year plan to create value with sustainable impact.”
However, amidst this positive report from the company, shares of the Dutch health tech company dropped 4 percent last week, which some attribute to ongoing concerns about a continuing fall in new orders, Reuters reports. All eyes will be on Philips as they continue to handle their recall, and seek to level out and continue to see profits rise in the near future.
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Sources
Park, Andrea. “Philips records another quarter of positive profits despite still-slipping orders, ongoing FDA recall talks,” Fierce Biotech; October 24, 2024.
Meijer, Bart H. “Philips shares drop as new order decline clouds rosier outlook,” Reuters; October 23, 2024.
