Philips shares rise after tests show 'unlikely' health risk from recalled products

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By Scott Kanowsky 

AiVIF.com -- Koninklijke Philips NV (AS:PHG) shares jumped on Wednesday after the medical equipment maker unveiled the results from new testing that showed limited health risks from its recalled sleep-therapy devices.

According to the Dutch firm, the findings suggested that exposure to some particles from degraded foam found in its so-called "DreamStation" machines is unlikely to lead to "appreciable harm."

Philips issued a shock recall in 2021 of 5.5 million of its respirator and ventilator units used to treat sleep apnoea from the U.S. market following research that connected this foam to cancer and other possible health issues.

Shares have fallen sharply since the recall was first announced, shaving off around €30 billion ($1 = €0.9428) in value.

The company carried out the latest tests in conjunction with five independent laboratories, it said. The results have also been reviewed and assessed by Philips Respironics, third-party experts, and an external medical panel.

"The comprehensive test and research program has yielded extensive data and results for the first-generation DreamStation devices," said chief executive officer Roy Jakobs in a statement. "[W]e now have a better understanding of the potential health risks compared to the limited insights that we had in early 2021."

He added that 90% of the replacements for devices impacted by the recall have now been produced.

However, Philips noted that the U.S. Food and Drug Administration is still considering the data and may reach different conclusions. The FDA has previously blamed Philips for the issues around the sleep-aid devices.

Analysts at Citi said that while the update represents a "modest positive" for Philips, they continue to see "significant" uncertainties surrounding the company.