Philips
(NYSE: PHG)
shares took a hit today on fourth-quarter results that included potentially concerning performance in China.
Shares of PHG fell nearly 12% to $24.92 apiece by midday trading on the NYSE today.
The Amsterdam-based medtech giant company reported losses of approximately $347.3 million. That equals 38¢ per share on sales of about $5.3 billion for the three months ended Dec. 31, 2024. Adjusted to exclude one-time items, earnings per share came in at 53¢.
Philips recorded a massive bottom-line slide into the red on a sales decline of 0.4%. However, sales still topped expectations of $4.4 billion on Wall Street.
For the full year, Philips recorded nearly $19 billion in revenue, marking 1% year-over-year growth. However, the company saw double-digit declines in China revenues, potentially contributing to the negative investor reaction. The China decline offset growth in the rest of the world for Philips, which expects market conditions there to “remain uncertain.”
The company projects 1–3% comparable sales growth in 2025, but expects a mid- to high-single-digit decline in China.
While the company’s Diagnosis & Treatment and Personal Health units saw slight sales declines, Connected Care reported 7% sales growth in the quarter.
Philips also noted that, in the quarter, its Respironics business obtained the final approval for its recall-related medical monitoring settlement as it seeks to resolve a massive recall of CPAPs and other respiratory devices. This month, the personal injury settlement became final following a successful registration process. The company reports a $1.1 billion aggregate settlement payment expected in the first half of 2025.
Commentary from CEO Roy Jakobs
Philips CEO Roy Jakobs issued the following statement on the quarterly performance:
“We delivered better care for more people by enhancing execution and focusing on driving improvements in profitability and cash flow, as well as order and sales growth. We strengthened our fundamentals and resolved significant U.S. litigation relating to the Respironics recall.
“Despite double-digit declines in demand in both consumer and health systems in China, we returned to positive order growth and continued to drive margin expansion and cash-flow generation. With our strong balance sheet we are pleased to offer shareholders the option to receive the dividend in shares or cash.
“Within a persistently challenging macro environment, our focus remains on executing our value creation plan, bringing industry-leading innovations to the market and driving a simplified, more agile operating model. We strengthened our team and culture of impact with care, with patient safety and quality as our number one priority.
“Looking ahead, we remain confident in our long-term plan and will continue to work closely with customers as we build on our strong innovation pipeline and focus on execution excellence to drive profitable growth.”
Philips makes board appointments
In addition to the quarterly results, Philips announced today that it plans to appoint longtime Medtronic executive Bob White to its board of directors.
David Pyott plans to retire from Philips’ supervisory board at the end of the company’s Annual General Meeting of Shareholders. He joined the board in 2015 and served for three consecutive terms. Pyott also became chair of the board’s Quality & Regulatory Committee in May 2020.
The supervisory board plans to propose the appointment of Bob White as a new member and as chair of the Quality & Regulatory Committee. White, the former EVP and president of Medtronic’s Medical Surgical portfolio, left the medtech giant about a year ago amid reorganization efforts. He also had stints at GE HealthCare, IBM and other health technology companies.
Philips also said its supervisory board plans to propose the reappointments of Indra Nooyi and Chua Sock Koong. It also plans to recommend the reappointment of Marnix van Ginneken as a member of the Philips board of management.
“On behalf of the supervisory board and the board of management, I would like to express my gratitude to David Pyott for the counsel he provided over the past ten years,” said Feike Sijbesma, chair of Philips’ supervisory board. “At the same time, we look forward to Bob White joining Philips’ supervisory board and becoming chair of the Quality & Regulatory Committee. He is a recognized global business leader with deep expertise in health technology. Based on their exceptional expertise, we propose the reappointment of Indra Nooyi and Chua Sock Koong so they can continue to add valuable contributions to the supervisory board, for which I am grateful.
