Dutch medical device maker Philips announced Monday that it has reached a $1.1 billion settlement in the United States to settle lawsuits over faulty sleeping machines in a case that has dogged the company.
The company’s shares soared on news of the settlement, which turned out to be less onerous than some shareholders feared.
Since 2021, Philips has been grappling with a series of crises linked to its DreamStation machines for sleep apnea, a disorder in which breathing stops and starts during sleep.
Earlier this year, the company announced that it stop new machine sales in the United States following a series of recalls of devices manufactured by the subsidiary Philips Respironics.
Philips said in a statement Monday that it had reached an agreement with the plaintiffs “to resolve the personal injury and medical oversight class action litigation to end the uncertainty associated with litigation in the United States,” adding that he had “admitted no fault”. or liability, or that injury has been caused by Respironics devices.
The agreement addresses claims filed in U.S. courts and other potential cases, it says.
Analysts at investment firm Jefferies said in a note that the settlement was “much softer than expected and would mark the end of litigation uncertainty.”
Philips shares jumped more than 33 percent on the Amsterdam stock exchange following the announcement.
“Patient safety and quality are our top priority and we have taken important steps to further address the consequences of the Respironics recall,” Philips Chief Executive Officer Roy Jakobs said in the company’s statement.
“The refurbishment of sleep therapy devices for patients is almost complete and the test results carried out so far show that the use of these devices is not expected to cause appreciable harm to health,” he said. -he declares.
“We regret any concerns that patients may have felt,” he said, adding that the agreements were “important steps and provide further clarity on the path forward for Philips.”
Philips, which had to cut thousands of jobs, recorded losses of 463 million euros ($501 million) for the whole of 2023.
It reported on Monday a loss of 824 million euros in the first quarter of this year on a total turnover of 4.1 billion euros.
Philips said settlement payments are expected to occur in 2025 and will be funded through cash flow generation.
The company said it set aside a provision of 982 million euros ($1.05 billion) in the first quarter to cover the settlement.
Philips said it also reached an agreement with insurers to pay Philips 540 million euros to cover claims related to the Respironics recall.
“The three biggest disputes we had are now behind us,” Jakobs said in a conference call.
“We can move forward and that is very important,” he said, while warning that this “does not mean that everything is resolved.”
Franco-German bank Oddo BHF said that “the long tail of remaining legal risks being very…
