KEY TAKEAWAYS
- Dutch medical devices giant Philips agreed to a $1.1 billion settlement to pay out personal injury cases in the U.S. linked to the recall of some of its sleep apnea devices.
- The company said it did not admit any fault or liability, or that any injuries were caused by its Respironics devices.
- Philips shares soared as the settlement was smaller than expected than analysts had expected.
Koninklijke Philips (PHG) shares traded in the U.S. soared nearly 30% Monday morning after the Dutch medical devices giant agreed to a $1.1 billion settlement to pay out personal injury cases in the U.S. linked to the recall of some of its sleep apnea devices.
The company said it did not admit any fault or liability, or that any injuries were caused by its Respironics devices.
Philips in January said it would halt sales of the devices in the U.S. The Dutch firm had issued a recall of the machines in 2021 after officials said that they were dangerous because sound-reducing polyurethane foam in the devices could break down and potentially be inhaled or swallowed by users.
Settlement Smaller and Earlier Than Expected
The settlement is smaller than what Barclays analysts had forecast, according to Reuters, and came earlier than anticipated, removing an overhang on the company’s stock for years.
Philips CEO Roy Jakobs said in a statement that “the remediation of the sleep therapy devices” is almost complete.
The comments on the devices came as the Dutch multinational reported first-quarter results. It reported adjusted earnings before interest taxes and amortization profit of 388 million euros ($416 million), versus 359 million euros a year earlier. Comparable store sales rose 2% in the quarter versus the year-ago period, down from the 6% growth registered in the first quarter of 2023.
Philips shares were up 29% at $27.22 at about 11:30 a.m. ET, after moving as high as $28.90 in the opening minutes of trading. The stock is trading at its highest levels since April of 2022.
CORRECTION: This article has been updated with correct information abut the last time the stock traded at levels reached Monday morning.