Philips sets aside $393 million to settle for its sleep apnea devices that may have caused 385 deaths

The setback indicates a prolonged hiatus for Philips in the US market, with Jefferies analysts noting that it will "likely take years" to resume sales of sleep apnea products.

The company initiated a recall over two years ago, affecting around 5.5 million devices due to concerns related to disintegrating noise-dampening foam.

Despite allocating approximately 1 billion euros for the issue and reaching a $479 million settlement in September, Philips faces potential class-action lawsuits and thousands of individual legal claims. The US Department of Justice is also investigating the matter.

The consent decree deal, currently in the finalisation stage, is pending court approval in the US. Philips said that it will continue serving existing customers of its Respironics division with accessories and replacement parts but will refrain from selling new products in the US until specific conditions are met, anticipating an additional impact of around 100 basis points of costs this year.

Bloomberg Intelligence analyst Holly Froum suggests that Philips may face a substantial financial burden, estimating potential settlements between $2 billion and $4.5 billion for personal injury claims tied to the devices. The compensation claims to each customer would range from about $50 to $1,500, in addition to $100 for each device returned to Philips.

Jakobs, who assumed the role in October 2022 amid the recall, indicated last year that the consequences of the consent decree could linger for another seven years. Exor NV, the largest shareholder in Philips, expressed confidence in November that safety issues are resolvable.