Dutch medical device maker Philips announced Monday that it has reached a $1.1 billion settlement in the United States to settle lawsuits over faulty sleeping machines in a case that shook the company.
Since 2021, Philips has been grappling with a series of crises linked to its DreamStation machines for sleep apnea, a disorder in which breathing stops and starts during sleep.
Earlier this year, the company announced that it stop new machine sales in the United States following a series of recalls of devices manufactured by the subsidiary Philips Respironics.
Philips said in a statement Monday that it had reached an agreement with the plaintiffs “to resolve the personal injury and medical oversight class action litigation to end the uncertainty associated with litigation in the United States.”
He added that he “did not admit any fault or liability, nor that any injuries were caused by Respironics’ devices.”
The settlement addresses claims filed in U.S. courts and other potential cases, it said.
“Relevant payments are expected in 2025 and will be funded by Philips’ cash flow generation,” the statement said, adding that the company had made a provision of $1.05 billion in the first quarter to cover the settlement.
Philips said it also reached an agreement with insurers to pay Philips $578 million to cover claims related to the Respironics recall.
Philips recorded losses of $501 million for the whole of 2023.
The company had to cut thousands of jobs.
Reuters reports that the settlement amount was lower than analysts’ expectations and Philips shares soared when the deal was announced.
“This settlement is significantly lower than expectations of $2 billion to $4 billion and a worst-case scenario of $10 billion,” Reuters cited Barclays analysts as saying. “This comes much sooner than expected and eliminates a problem that many feared would persist for years.”
Grub5
