Is Philips the Medical Device Industry’s Next Rising Phoenix?

Philips could be emerging as medtech’s newest phoenix, as the company is seemingly on the rise from the challenges of its past recall issues. Proof of the Amsterdam-based firm’s resurgence was seen after the company’s shares jumped more than 10% on reports of better-than-expected 2Q24 earnings.

Philips said group sales reached $4.87 billion, which was a 2% growth in comparable sales. The company also reported a 9% increase in comparable order intake. The firm also noted that it still expected 2024 guidance to be between 3% and 5% in comparable sales growth.

“We delivered strong orders and margin improvement, solid operational cash flow, and comparable sales growth in line with our plan within a challenging macro environment,” Philips's CEO Roy Jakobs said according to a Seeking Alpha transcript of the call. “This was a result of progress on our execution and our industry-leading innovations. Supported by key innovation launches and our ongoing actions, we are confident in our plan and reiterate our outlook for the full year 2024.”

The seeds of a comeback for Philips were planted earlier this year, when it said it would pay $1.1 billion to settle claims over its recalled Respironics devices. The settlement tied up nearly three-year-long recall saga that included Philips parting ways with its longtime CEO; the company losing significant market value; layoffs, and federal probes.

Related:Philips Recall Woes Continue

The recalls were related to millions of ventilators and sleep apnea machines that used sound abatement foam that could degrade and emit toxic particles into the airway.

Although Philips has turned the corner with lawsuits in the US, the firm still faces litigation in Europe.

“You saw the European class action recently kind of announced,” Jakobs said according to a Seeking Alpha transcript of the earnings call.  “Actually, we have, so far, very limited information, 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. There's nothing currently that we can say about it. And the extent that we will defend ourselves in this, 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.”