Philips settles suits over its sleep apnea machines for $1.1 billion
Dutch medical device maker Philips said Monday it had reached a $1.1 billion deal in the United States to settle lawsuits over faulty sleep machines in a case that's rocked the company.
Since 2021, Philips has been battling a series of crises over its DreamStation machines for sleep apnea, a disorder in which breathing stops and starts during sleep.
Earlier this year, the company said it would halt new sales of the machines in the United States following a series of recalls of the devices made by subsidiary Philips Respironics.
Philips said in a statement Monday that it had reached an agreement with the plaintiffs "to resolve the personal injury litigation and the medical monitoring class action to end the uncertainty associated with litigation in the U.S."
It added that it didn't "admit any fault or liability, or that any injuries were caused by Respironics' devices."
The settlement addresses claims filed in U.S. courts and other potential cases, it said.
"The related payments are expected in 2025 and will be funded from Philips' cash flow generation," the statement said, adding that the company had booked a provision of $1.05 billion in in the first quarter to cover the settlement.
Philips said it also concluded an agreement with insurers to pay Philips $578 million to cover Respironics recall-related claims.
Philips posted losses of $501 million over the full year in 2023.
The company has had to cut thousand of jobs.
Reuters reports the settlement amount was smaller than analysts expected and Philips shares shot up when the deal was announced.
"This settlement is significantly lower than expectations of $2-4 billion and worst case of $10 billion," Reuters quotes Barclays analysts as saying. "It comes a lot earlier than anticipated and removes an overhang many have worried would linger for years."
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