Philips reaches $288 million agreement with U.S. over sleep apnea case

Philips has said that it has reached an agreement in principle with the U.S. Department of Justice related to the sleep apnea case. The technological medical group is expected to pay around 288 million euros to end the criminal and civil proceedings related to the large-scale recall of the sleep apnea devices, Philips stated in its quarterly figures.

“The settlement is dependent on the completion of the relevant documentation; payment is expected in the first quarter of 2027,” Philips stated.

Philips began facing problems five years ago when it emerged that foam used to insulate some of its sleep apnea devices could deteriorate and break apart. The company subsequently recalled millions of machines, resulting in billions of euros in costs related to settlements, repairs, asset write-downs, and other expenses.

CEO Roy Jakobs declined to disclose substantive details about the agreement, saying negotiations surrounding the settlement are still ongoing. However, he described the deal as "an important milestone because it represents another step forward in resolving the legal proceedings related to this issue."

In addition to the U.S. Department of Justice, a group of state attorneys general is also investigating the company over the sleep apnea device scandal.

Philips' profits took a hit from the funds reserved for the settlement, with net income dropping to 28 million euros from 187 million euros in the same period last year. Revenue, however, rose by 2 percent to 4.4 billion euros. The increase was largely fuelled by stronger sales of patient monitoring equipment and personal care items, including electric toothbrushes and shavers.

Without the impact of the settlement, Philips' profit would likely have increased. Its adjusted profit margin actually improved, partly thanks to cost-cutting measures and higher sales. Philips said it remains on track to achieve a total of 1.5 billion euros in savings between 2026 and 2028.

Philips maintained its financial forecast for the year, projecting revenue to increase by 3 to 4.5 percent.