© Reuters. FILE PHOTO: Logo of Dutch technology company Philips is seen at its company headquarters in Amsterdam, Netherlands, January 29, 2019. REUTERS/Eva Plevier/File Photo
By Toby Sterling
AMSTERDAM (Reuters) -Dutch medical equipment company Philips has recalled some breathing devices and ventilators because of a foam part that might degrade and become toxic, potentially causing cancer, it said on Monday.
Foam used to dampen the machines’ sound can when it degrades turn into small, inhaled particles, irritating airways, the group said as it announced the recall. Gases released by the degrading foam may also be toxic or carry cancer risks.
Philips Chief Executive Frans van Houten said between three and four million sleep apnea machines and ventilators would be targeted.
The group took a second 250 million euro ($303 million) charge for the issue after announcing an identical provision in its first quarter-earnings report in April, bringing the total cost of the problem to 500 million euros to date.
Shares in the group were down 4.2% to 44.43 euros by 0757 GMT in Amsterdam.
“We’re going to put all our capacity to focus entirely on replacing and repairing these units,” Van Houten said in a call. He said the process would likely take a year.
That “has a consequence that we will not be able to serve new customers, so there’s going to be a shortage in the field”.
The company’s guidance is for users of so-called CPAP machines, which help people with sleep apnea, to halt usage. Around two-thirds of Philips CPAP machines are sold in the United States.
Doctors with patients using life-sustaining ventilators should first consider whether the potential danger from the foam outweighs other risks, the company said.
Philips said that though the matter would cause “revenue headwinds” in the division making the devices, that would be compensated by strength in other businesses.
It left its full-year financial guidance of “low-to-mid-single-digit” comparable sales growth unchanged.
Philips spokesman Steve Klink said the company was working with health authorities on a safe replacement for the foam, but must first clear testing and regulatory hurdles.
In April Philips said first-quarter core earnings surged 74% to 362 million euros compared with the same period a year earlier, on a 9% rise in comparable sales.
($1 = 0.8263 euros)
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.