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Philips is set to shed its domestic appliances unit so it can more effectively focus on its healthcare-related businesses.
The company’s CEO Frans Van Houten said the separation could take between the next 12 to 18 months. Philips’ domestic appliances business, which includes kitchen appliances, coffee, garment care, and home care appliances, generated sales of $2.53 billion for 2019.
“This [Domestic Appliances] business has significantly contributed to Philips, but it is not a strategic fit for our future, as we choose to further sharpen the focus along the health continuum and invest in our consumer health and professional healthcare-related businesses,” Van Houten said during the company’s 4Q19 earnings call, according to a transcript from Seeking Alpha.
Philips healthcare segment saw growth year-over-year. The company reported it had brought in about $2.7 billion during 4Q19. Phillips said sales were driven by ultrasound and image-guided therapy offerings.
During the call, Van Houten said the company expects that “2020s will be a very exciting decade for healthcare accelerating developments in technology data science and precision medicine will come together at unparalleled speed to create many innovation opportunities to address consumer, customer and patient needs. The 2020s will also be an era where the transformation to value-based care will take center stage in society. Our strategy to deliver solutions along the health continuum that deliver on the quadruple aim of healthcare plays right into that. We continue to focus on improving execution and I'm certain that by courageously taking the next steps on our journey, we will make Philips more valuable in the coming years.”
Philips built up its healthcare businesses in 2018 through M&A. The company picked up Remote Diagnostic Technologies (RDT) for an undisclosed sum to expand its Therapeutic Care Business back in June of 2018.
Just a few weeks before the RDT acquisition announcement, Philips revealed it would acquire EPD Solutions$292 million. EPD Solutions specializes in image-guided procedures for cardiac arrhythmias. The transaction closed in July of 2018.