Philips says ‘momentum’ continues for sleep business

AMSTERDAM – With its recent clearance in France, the Sleep & Respiratory Care business at Philips can once again sell products in all countries except for the United States. 

“If you talk about S&RC, indeed, the momentum is coming into that business again,” said Roy Jakobs, CEO, during a Feb. 19 conference call to discuss the company’s fourth quarter and full year financial results for 2024. “(It’s) driven by the return to the market outside of the U.S., where now the last market came fully into play, which is France, so we can now sell in all markets out of the U.S. again. We got that news yesterday, so that's great.” 

For Connected Care, which houses SR&C, comparable sales increased 7% in Q4 on the back of a low comparison base due to the impact of a provision against sales taken in 2023 related to the recall remediation. Sales increased 2% for the year. 

Additionally, adjusted EBITDA margin was 15% for the quarter and 9.4% for the year, mainly driven by operational improvement. 

“Importantly, Enterprise Informatics and Sleep & Respiratory Care businesses delivered positive adjusted EBITDA margin in 2024,” said Charlotte Hanneman, CFO. 

Other highlights from the call included: 

‘We brought it back’ 

Philips has received two new approvals from the U.S. Food and Drug Administration for masks. 

“I already spoke that the mask range is doing really well,” Jakobs said. “We are kind of trending at a level when we had in the U.S. devices still included, including the first setup sales of those. And volume-wise, we have kind of now outgrown that in 2024, and that also brought SR&C in good profitability in 2024 because, of course, it has been dilutive for now a few years. We brought it back.” 

Extra for incidentals 

Philips has set aside an extra 200 basis points for restructuring and incidentals in 2025, mainly for recall field action activity and other quality action-related charges. While the company has finalized medical monitoring and personal injury settlements in the U.S – at a cost of $1.1 billion, with payments expected in the first half of 2025 – a consent decree lingers. 

“Then on a consent decree, that 200 basis points, that will taper off over time,” Jakobs said. “Yes, we are working now at the height of the consent decree. We got it just one year, right, so there's a lot of activity going on to fulfill the needs and also we're putting a lot of effort into going through that, so we can come back to the market in the speediest possible time. But on that time, again, we said before, we cannot speculate because that is up to the approval of the FDA.” 

Geopolitical climate 

Philips is also expanding its productivity plan for 2025 to counter “what we see around us in the world,” including the impact from tariffs, Jakobs said. 

“That's a combination of cost activities, so it's partly role reduction, but actually also really stopping activities scaling innovations that we have to get better leverage (and) procurement savings,” he said. “And we do that at the same time to keep our innovation spend at the level that we have been in recent years, because you have seen that we keep spending behind the innovations, especially also now more and more on AI.”