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Recall Fallout & Supply Chain Issues Cause Philips' Shares to Drop
Philips continues to suffer from the massive recall of its sleep apnea devices.
October 12, 2022
1 Min Read
Image courtesy of Kristoffer Tripplaar / Alamy Stock Photo
Philips shares fell 9% hitting their lowest levels since June 2012.
The plunge came after the Amsterdam, Netherlands-based company warned that supply chain issues were hurting sales and that it would write down $1.26 billion of the value of its troubled sleep apnea business.
According to a report from Reuters, Philips said problems with supply shortages had been much greater than anticipated in past months … and would continue to have an impact on sales for the final months of this year.
In an update on its financial performance, Philips said it now expects a mid-single-digit comparable sales decline for 4Q22 with a high-single-to-double-digit adjusted EBITA margin range. The company said it expects group sales to fall about 5% during 3Q22 to about $4.2 billion.
Philips said it will report the final 3Q22 results on October 24th.
Fallout from the massive recall of Philips sleep apnea and ventilator machines hasn’t been pretty. The company first announced it voluntarily withdrew some of its ventilators in June of 2021. In July 2021, the safety alert was designated as a recall class 1.
In June of this year, Philips faced another major recall. It was also recently revealed the company was facing a preliminary investigation of the recall from French prosecutors.
This came shortly after it was announced that long-time Philips CEO, Frans van Houten was preparing to step down and be replaced by Roy Jakobs, head of the company’s connected-care business. Van Houten stepping down is part of a trend in medtech this year – with many CEOs leaving or being removed from their positions.
Jakobs is set to take the helm on Oct. 15.
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