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Philips (PHG) Agrees to a Consent Decree With DOJ and FDA
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Koninklijke Philips (PHG - Free Report) recently announced a final consent decree with the FDA and the U.S. Department of Justice (“DOJ”).
The consent decree primarily focuses on Philips Respironics’ business operations in the United States. It offers clarity and a defined roadmap to demonstrate compliance with regulatory requirements and restore the Philips Respironics business.
Price Performance
Over the past six months, PHG’s shares have gained 7.3% compared with the industry’s rise of 16.1%. The S&P 500 increased 17% in the same time frame.
Image Source: Zacks Investment Research
More on the News
In the middle of 2021, Philips started addressing issues with their continuous positive airway pressure (CPAP) equipment in its Respironics division. Recurring issues with sleep apnea gadgets cost the corporation a large portion of its market share. Over 5 million Philips devices were recalled in April 2021 because of the sound abatement foam's hazardous deterioration. More than 100,000 reports of issues pertaining to the recall were received by the FDA.
Philips started discussions with the DOJ in July 2022 over the terms of a proposed consent decree. On Jan 29, 2024, the company agreed on the terms of the consent decree ahead of the final agreement.
The consent decree mainly addresses the company's Respironics division, which is situated in Pennsylvania and has been the target of a significant recall over the previous few years for Philips. This comprises its Pittsburgh-based Respironics headquarters, as well as production plants in Murrysville and New Kensington, as well as a Mount Pleasant service facility.
More on the Consent Decree
Per a statement made by Philips on Jan 29, 2024, the consent decree gives Philips Respironics a schedule of specified tasks, deadlines, and deliverables to fulfill pertinent regulatory obligations.
Per the agreements made with the FDA and DOJ, Philips plans to continue giving the remediation of its respiratory and sleep aids top priority. According to the company, more than 99% of CPAP and BiPAP devices that are now in use have already been resolved.
Per the decree, the business operations of Philips Respironics are required to exhibit continuous adherence to the FDA's Quality System Regulation, which outlines the current good manufacturing practice criteria for medical devices. The compliance improvement effort is likely to be supervised by independent specialists that Philips Respironics has retained.
The consent decree includes provisions to allow for exports. Philips Respironics plans to continue providing new sleep and respiratory care devices outside the United States. The company said it had not identified any safety issues. In the United States, as many patients continue to use the company’s sleep and respiratory care devices, Philips may continue servicing these devices and selling accessories.
The Financial Impact
Philips anticipates expenditures of about 100 basis points in 2024 related to remediation actions and profit disgorgement payments for sales of Philips Respironics in the United States as a result of addressing the consent decree, which is a multi-year plan.
Including the consent decree, Philips projects a free cash flow between 1.4 and 1.6 billion euros. A DOJ investigation into the Respironics field action and the effects of current litigation are not included in the financial projections.
Notable Developments
Philips and SyntheticMR recently announced the launch of Smart Quant Neuro 3D, which is likely to be a significant development in the objective decision support field for the diagnosis and treatment evaluation of brain illnesses such as dementia, traumatic brain injury, and multiple sclerosis.
The company also announced the launch of its new Azurion neuro biplane system, which is likely to be a major improvement in its Image Guided Therapy System.
In December 2023, Philips announced three new ultra-lightweight magnetic resonance Smart Fit coils, namely Smart Fit TorsoCardiac 1.5T, Smart Fit 1.5T shoulder and Smart Fit Knee 3.0T at RSNA 2023. Each of these coils enhances flexibility, reduces patient setup time, and improves image quality resolution with SmartSpeed AI solution.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 58.3% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 51.9% compared with the industry’s 3.2% rise in the past year.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 51.5% compared with the industry’s 3.6% rise in the past year.
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Philips (PHG) Agrees to a Consent Decree With DOJ and FDA
Koninklijke Philips (PHG - Free Report) recently announced a final consent decree with the FDA and the U.S. Department of Justice (“DOJ”).
The consent decree primarily focuses on Philips Respironics’ business operations in the United States. It offers clarity and a defined roadmap to demonstrate compliance with regulatory requirements and restore the Philips Respironics business.
Price Performance
Over the past six months, PHG’s shares have gained 7.3% compared with the industry’s rise of 16.1%. The S&P 500 increased 17% in the same time frame.
Image Source: Zacks Investment Research
More on the News
In the middle of 2021, Philips started addressing issues with their continuous positive airway pressure (CPAP) equipment in its Respironics division. Recurring issues with sleep apnea gadgets cost the corporation a large portion of its market share. Over 5 million Philips devices were recalled in April 2021 because of the sound abatement foam's hazardous deterioration. More than 100,000 reports of issues pertaining to the recall were received by the FDA.
Philips started discussions with the DOJ in July 2022 over the terms of a proposed consent decree. On Jan 29, 2024, the company agreed on the terms of the consent decree ahead of the final agreement.
The consent decree mainly addresses the company's Respironics division, which is situated in Pennsylvania and has been the target of a significant recall over the previous few years for Philips. This comprises its Pittsburgh-based Respironics headquarters, as well as production plants in Murrysville and New Kensington, as well as a Mount Pleasant service facility.
More on the Consent Decree
Per a statement made by Philips on Jan 29, 2024, the consent decree gives Philips Respironics a schedule of specified tasks, deadlines, and deliverables to fulfill pertinent regulatory obligations.
Per the agreements made with the FDA and DOJ, Philips plans to continue giving the remediation of its respiratory and sleep aids top priority. According to the company, more than 99% of CPAP and BiPAP devices that are now in use have already been resolved.
Per the decree, the business operations of Philips Respironics are required to exhibit continuous adherence to the FDA's Quality System Regulation, which outlines the current good manufacturing practice criteria for medical devices. The compliance improvement effort is likely to be supervised by independent specialists that Philips Respironics has retained.
The consent decree includes provisions to allow for exports. Philips Respironics plans to continue providing new sleep and respiratory care devices outside the United States. The company said it had not identified any safety issues. In the United States, as many patients continue to use the company’s sleep and respiratory care devices, Philips may continue servicing these devices and selling accessories.
The Financial Impact
Philips anticipates expenditures of about 100 basis points in 2024 related to remediation actions and profit disgorgement payments for sales of Philips Respironics in the United States as a result of addressing the consent decree, which is a multi-year plan.
Including the consent decree, Philips projects a free cash flow between 1.4 and 1.6 billion euros. A DOJ investigation into the Respironics field action and the effects of current litigation are not included in the financial projections.
Notable Developments
Philips and SyntheticMR recently announced the launch of Smart Quant Neuro 3D, which is likely to be a significant development in the objective decision support field for the diagnosis and treatment evaluation of brain illnesses such as dementia, traumatic brain injury, and multiple sclerosis.
The company also announced the launch of its new Azurion neuro biplane system, which is likely to be a major improvement in its Image Guided Therapy System.
In December 2023, Philips announced three new ultra-lightweight magnetic resonance Smart Fit coils, namely Smart Fit TorsoCardiac 1.5T, Smart Fit 1.5T shoulder and Smart Fit Knee 3.0T at RSNA 2023. Each of these coils enhances flexibility, reduces patient setup time, and improves image quality resolution with SmartSpeed AI solution.
Koninklijke Philips N.V. Price
Koninklijke Philips N.V. price | Koninklijke Philips N.V. Quote
Zacks Rank & Stocks to Consider
PHG carries a Zacks Rank #4 (Sell) at present.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 58.3% compared with the industry’s 18.9% rise in the past year.
Cardinal Health, flaunting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 51.9% compared with the industry’s 3.2% rise in the past year.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 51.5% compared with the industry’s 3.6% rise in the past year.