Philips Shares Sharply Decline After Lowering Guidance

At one point China was fertile ground for the medical device industry. It was swelling with market potential.

However, an anti-corruption campaign that has been running across China’s Healthcare sector has largely impacted sales of medtech companies doing business in the region.

Philips felt the brunt of the impact in its 3Q24 earnings as the company lowered guidance and saw its shares fall the most in 26 years.

The company said it expects comparable sales to grow as much as 1.5% in 2024 down from a previous forecast of as much as 5%.

Philips said that comparable sales were flat in the quarter and orders decreased 2%, both due to a decline in China. It said year-to-date, order intake was 1% despite a double-digit decline in China.

Roy Jakobs, Philips CEO, addressed the slumping sales in China and the impact on the company.

“I think the difference was that we expect[ed] a stabilization [in China] when we were in July and what we've seen is deterioration, meaning that there is prolonged uncertainty and just the orders are not flowing yet into the market, and that also then prohibits sales to kind of strengthen, " Jakobs said according to a Seeking Alpha transcript of the call. "And that's something that we kind of have noticed in due course of the quarter.”

Related:5 Things Medtech Is Talking About in December

The last few years have been tumultuous for Philips. The company dealt with a massive recall surrounding its breathing machines. The recalls led to Philips  parting ways with its longtime CEO; the company losing significant market value; layoffs, and federal probes.

However, the company showed signs of improvement during its 2Q24 earnings. In July, the firm’s shares jumped more than 10% on reports of better-than-expected 2Q24 earnings.