Philips (NYSE:PHG) shares ticked up today on third-quarter results that came in ahead of the consensus forecast on Wall Street.
Shares of PHG rose 2.8% at $18.77 apiece in late-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — fell 0.14%.
The Amsterdam-based company posted profits of $95.6 million, or 10¢ per share. Philips reported sales of $4.75 billion for the three months ended Sept. 30, 2023. The company’s bottom line returned to the green compared to losses of $1.4 billion this time last year.
Adjusted to exclude one-time items, earnings per share totaled 35¢. That landed 2¢ ahead of expectations on Wall Street. Sales also topped analysts’ expectations of $4.69 billion.
Philips attributed its improved performance to increased sales, pricing and productivity measures. The company also cited higher earnings and improved working capital management. To date, it also reduced its workforce by 7,500 roles as part of a shift in management efforts. The company plans to eliminate 10,000 total roles by 2025.
“Our improved operational performance was driven by our focus on execution to enhance patient safety and quality, strengthen our supply chain reliability and establish a simplified operating model,” Philips CEO Roy Jakobs said in a news release. “The order book remains strong, and we are taking the necessary actions to improve order intake by shortening lead times from order to delivery and building on the positive impact we are making with our innovations, for example in predictive data analytics and artificial intelligence across our portfolio, to help improve the quality and efficiency of care delivery.
2023 outlook increased
Based on improved performance, its strong order book and ongoing actions, Philips raised its full-year 2023 outlook. However, it said it recognizes uncertainties amid an “increasingly volatile geopolitical environment.”
The company now expects to deliver 6%-7% comparable sales growth. It projects an adjusted EBITA margin of 10%-11% for the full year. Philips anticipates free cash flow at the upper end of its target range of $744.5 million to $957.3 million. The company said it reinforces its confidence in “delivering on its three-year plan to create value with sustainable impact.”
“Based on our improved performance, we are further raising the outlook for both sales and profitability for the full year 2023, although recognizing uncertainties remain in an increasingly volatile geopolitical environment,” Jakobs said. “The progress we are making reinforces our confidence in delivering on the three-year plan to create value with sustainable impact.”
Philips continues Respironics recall efforts
Additionally, the company reports that it completed more than 99% of its sleep therapy device remediations for devices with complete and actionable registrations. It continues its remediation of the ventilator devices involved in the massive Respironics recall.
Philips continues to work with the FDA, agreeing to implement additional testing after the agency requested more data. The company also received preliminary court approval to resolve all economic loss claims in the U.S. Multidistrict Litigation related to the recall. Philips’ settlement does not include or constitute an admission of liability, wrongdoing or fault. Litigation, including an investigation by the U.S. Justice Department, and the discussion of a proposed consent decree, remain ongoing.
“Completing the Philips Respironics recall remains our highest priority, with the remediation of the sleep therapy devices almost complete and remediation of the ventilators ongoing,” Jakobs said.