Dutch medical device manufacturer Philips announced on Monday that it had reached a $1.1 billion agreement in the United States to settle lawsuits concerning defective sleep machines, a development that has had a significant impact on the company. Since 2021, Philips has been embroiled in a series of crises regarding its DreamStation machines used for sleep apnea, a condition characterized by interruptions in breathing during sleep.
The related payments are expected in 2025 and will be funded from Philips’ cash flow generation
Earlier this year, the company announced that it would cease the sale of new machines in the United States following a string of recalls affecting devices manufactured by its subsidiary, Philips Respironics. Philips stated in a press release on Monday that it had reached a deal with the plaintiffs “to resolve the personal injury litigation and the medical monitoring class action to put an end to the uncertainty associated with litigation in the US.”
The company clarified that it did not “admit any fault or liability, or that any injuries were caused by Respironics’ devices.” The settlement covers claims filed in US courts as well as potential future cases.
“The related payments are expected in 2025 and will be funded from Philips’ cash flow generation,” the statement added, noting that the company had set aside 982 million euros ($1.05 billion) in the first quarter to cover the settlement. Furthermore, the company disclosed that it had reached an agreement with insurers to provide Philips with 540 million euros to address claims related to Respironics recalls. Philips reported losses of 463 million euros ($501 million) over the full year in 2023. and has been forced to reduce its workforce by thousands of jobs.