Philips books good results despite still-dragging sleep apnea recall

Philips is doing better, despite still working to close its massive sleep apnea device recall. The company booked a profit of 74 million euros in the second quarter of this year, compared to a 20 million euros loss a year earlier, Philips said on Monday.

The medical tech company is getting more orders, managed to cut costs, and increased its turnover. Problems in the supply chain, especially with chips, also seem to be largely over. Philips is therefore adjusting its turnover expectations upwards for the rest of the year, CEO Roy Jakobs said.

Over the past few years, the biggest problem facing Philips was the recall of its sleep apnea devices. The company recalled countless machines after discovering that contact with certain cleaning agents could dissolve the insulating foam meant to dampen the machine’s noise. At the same time, the company also recalled a large number of ventilators.

There were concerns about foam particles entering people’s airways if they used the machine. However, research by Philips has shown that the problem wasn’t as dangerous as initially thought. In May, the company reported that the risks fall within the safety limits.

According to Jakobs, the recall and replace or repair action is nearly done. “Completing the Philips Respironics field action remains our highest priority. The vast majority of the sleep therapy devices are now with patients and home care providers, and we are fully focused on the remediation of the affected ventilators.”

According to Philips, 99 percent of the affected sleep apnea devices have been repaired or replaced, or the company has the necessary parts to do so.

Philips is already facing over 500 lawsuits in the United States over the recall, with another mass claim involving about 50,000 people to be filed soon. There are also lawsuits brewing in other countries. Philips set 575 million euros aside for legal settlements in the first quarter. It can’t yet say whether that will be enough.

The company also said that its reorganization and plans to simplify its operating model are on track, contributing to improving results in the second quarter. The company has cut 6,600 jobs, saving 237 million euros in recent months. Philips wants to cut a total of 10,000 jobs in two years.