Koninklijke Philips’ ( PHG Quick Quote PHG - Free Report) subsidiary Philips Respironics recently issued a warning for users of CPAP or Bi-Level PAP therapy masks with magnetic headgear that the devices should not be used near other patients, household members, caregivers and bed partners who have metallic implanted devices or metallic objects (such as metallic splinters) in the body.
The metallic implanted devices, which might be affected by the headgear’s magnetic field are pacemakers, implantable cardioverter defibrillators (ICD), neurostimulators, embolic coils, ocular implants, aneurysm clips, etc.
To date, PHG has distributed more than 17 million masks containing magnetic clips and as of Aug 30, 2022, Philips Respironics received 14 patient reports with complaints that the mask magnets impacted their medical devices, causing disturbances, such as pacemaker interference, failure, seizures, irregular blood pressure, change in heartbeat and cognitive issues.
The complaints raised even though are very few. However, the issues raised are quite serious and after the Philips Respironics recall of its’ certain bi-level positive airway pressure machines as the U.S. Food and Drug Administration stated the health hazards of using it, the newly arised situation is a headwind.
Philip’s top-line growth is facing major headwinds due to decreasing demand for its products. Further, the recent news is expected to make investors wary of the stock.
Global Macroeconomic Challenges: Major Bane for Price Growth
Philips top-line growth in the second quarter of 2022 was negatively impacted by global supply shortages and lockdowns in China due to the resurgence of the COVID-19 pandemic in Shanghai and adjoined areas. Additionally, adjusted EBITDA was negatively impacted by lower sales volumes as rising inflation reduced demand for its products in high-margin businesses like patient monitoring, ultrasound and image-guided therapy systems.
Demand for Connected Care declined 13% in the last reported quarter, induced primarily by a substantial decrease in sleep and respiratory care product sales. News of certain health hazards caused by therapy masks are further going to make buyers pessimistic of the product.
Due to the current macro-economic scenario, prospects are sluggish in the healthcare market worldwide, as evident from the negative share price movement of Philips and its peers operating in the broader medical sector, including
Acer Therapeutics ( ACER Quick Quote ACER - Free Report) , Abeona Therapeutics ( ABEO Quick Quote ABEO - Free Report) and the General Electric ( GE Quick Quote GE - Free Report) subsidiary GE Healthcare.
Philips’ prospects look tepid in the near-term. The stock currently has a Zacks Rank # 4 (Sell). Shares of PHG have fallen 53.9% in the year-to-date period compared with the Zacks
Medical-Products industry and the Medical sector’s decline of 43.8% and 21.7%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, ACER shares have fallen 39% in the year-to-date period compared with the Zacks
Medical - Drugs industry’s decline of 24.4%.
Abeona’ stock has plunged 55.7% in the year-to-date period compared with the Zacks
Medical - Biomedical and Genetics industry’s decline of 25.7%.
General Electric’s shares have slumped 23.6% in the year-to-date period compared with the Zacks
Diversified Operations industry’s decline of 19.4%.
However, the Russia-Ukraine war and the pandemic exposed various issues in healthcare and highlighted how new, trending technologies like AI and virtual care solutions are required to support patients in these trying times effectively.
To align with the changing market demands, Philips is developing AI-based products, which will aid in providing diagnosis faster.
The development of its AI-based solutions separates PHG’s services from its peers and is likely to aid it in winning market share as the healthcare industry bounces back in the long run.