Philips says it has an 'agreement in principle' with US authorities over sleep machine recall

Philips said it has reached an agreement in principle with US authorities to bring an end to a lengthy case involving defective sleep machines.

The Dutch electronics and medical device maker has spent years dealing with fallout from the recall of its DreamStation devices, used to treat sleep apnoea, a condition in which breathing repeatedly stops and starts during sleep.

Millions of units were pulled from the market amid concerns that users could inhale particles from the sound-dampening foam inside the machines, with fears that exposure could raise cancer risks.

Alongside its results announcement, Philips said it had reached an agreement in principle with the US Department of Justice to resolve previously disclosed criminal and civil investigations tied to the recall.

The company booked a provision of 288 million euros ($322 million) in the quarter to cover the settlement, with payment expected in the first quarter of 2027.

Philips said the settlement still depends on finalising the necessary documentation.

The provision reduced third-quarter profit to 28 million euros, down from 187 million euros in the same period a year earlier.

Chief executive Roy Jakobs said the deal was reached in recent days, but he declined to provide more detail while the paperwork is completed.

“It’s certainly an important milestone for us as it marks a step forward in resolving the sleep and respiratory care related proceedings,” he said.

- 'AI-enabled innovations' -

Philips, once best known for lightbulbs and televisions, has in recent years sold off businesses to concentrate on healthcare technology.

The Amsterdam-based company reported quarterly revenue of 4.4 billion euros, compared with 4.3 billion euros in the same quarter a year earlier.

It kept its full-year forecast for sales growth at between 3.0% and 4.5%.

“We delivered a strong third quarter,” Jakobs said.

“We see our customers responding well to our latest AI-enabled innovations,” he added.

In February, Philips reported its first annual profit after three consecutive years of losses, posting a better-than-expected gain of 897 million euros.

In the second quarter, it reported net profit of 386 million euros, boosted by a refund tied to US tariffs later struck down by the US Supreme Court.

Jakobs offered an upbeat assessment of the company’s prospects.

“Our year-to-date results, together with our strong order book, give us confidence in delivering our full-year outlook and achieving our medium-term ambitions,” he said.