Philips CEO: ‘We still are relevant’ 

AMSTERDAM – The “pruning” that Philips has been doing in its Connected Care business, which includes Sleep & Respiratory Care, is “working,” says CEO Roy Jakobs. 

In January, Philips released a list of 19 sleep and respiratory products that the company said it would stop selling in the United States, as early as that month. Among them: the EverFlo home oxygen system and the Trilogy EVO and EV300 home ventilators.   

“We see the growth returning; we see the profitability returning,” said Jakobs during a conference call to discuss the company’s second quarter financial results. “Yes, as a result of pruning, there will be a less broad portfolio, but we still are relevant. We have the core products that have been kind of the biggest volume drivers for us, both in sleep, as well as respiratory, and we keep active in both sides. So that's something that remains part of the plan.” 

In the U.S., Philips is also permanently restrained and enjoined from directly or indirectly manufacturing, holding and/or distributing any device at or from covered facilities until the provisions of a consent decree related to a June 2021 recall of certain sleep and respiratory devices are met. The company may continue to sell a select group of devices deemed "medical necessary" by the U.S. Food and Drug Administration in the U.S. and it may continue to export devices to other countries. 

Those other countries are where Philips is seeing the most sales activity for Sleep & Respiratory Care, company officials said. 

“We saw strong performance in sleep systems and patient interface in markets outside of the U.S.,” said Abhijit Bhattacharya, CFO. “Connected Care adjusted EBITDA margin improved by 130 basis points to 8.8%, driven by solid performance in Monitoring and a strong step up in profitability in Sleep & Respiratory Care, which is encouraging.” 

In addition to pruning, Philips has also taken numerous productivity measures, including reducing its workforce by up to 9,000 roles so far, with a goal of reducing 10,000 by 2025. The Pittsburgh Post-Gazette reported in June that the company will cut 300 manufacturing jobs in Western Pennsylvania and relocate approximately 500 workers from its Pittsburgh headquarters to two other plants in the nearby suburbs.  

“We are happy to see Sleep & Respiratory Care regaining momentum, started, of course, with the sales momentum outside of the U.S., then for the remaining part of the business that we have in the U.S.,” Jakobs said. “We also see actually good momentum and we have been rightsizing the business based on the clarity that we got (from the consent decree).” 

While Philips has settled personal injury litigation and medical monitoring class action lawsuits, as well as an economic loss settlement, related to its recall in the U.S., company officials were asked about reports of similar lawsuits in Europe. 

“You saw the European class action recently kind of announced,” Jakobs said. “Actually, we have, so far, very limited information. (We) have not been served with a complaint. We expect it will be in the same vein as what was kind of put forward in the U.S. We will build on the testing that we have also used in the North America case and, therefore, we will address it in a rigorous manner with the best team on it.”