Healthcare technology giant Philips is cutting 4,000 roles globally, as newly-appointed CEO Roy Jakobs deals with a 5% decline in comparable sales.
Jakobs was appointed president and CEO of Philips October 15. Philips, headquartered in Amsterdam, offers imaging systems, patient care and clinical informatics, home healthcare solutions and more in the healthcare space.
The company recently released disappointing third quarter earnings results, including groups sales of EUR 4.3 billion, representing a 5% decline in comparable sales. The company reported a loss of EUR 1.5 billion.
“We face multiple challenges and our Q3 2022 performance reflects this. Although Philips’ strategy and solutions resonate with our stakeholders, we have not lived up to their expectations in recent years,” Jakobs said in the quarterly earnings release. “My immediate priority is therefore to improve execution so that we can start rebuilding the trust of patients, consumers and customers, as well as shareholders and our other stakeholders.”
Jakobs noted that the company is still addressing various facets of its recall of the Philips Respironics, ventilators that were recalled early this year by the U.S. Food and Drug Administration (FDA). The company is also facing challenges related to supply chain and is currently “urgently improving” operations. Jakobs also addressed job cuts as the company moves to streamline its workforce by immediately cutting 4,000 roles.
“These initial actions are needed to start turning the company around in order to realize Philips’ profitable growth potential and create value for all our stakeholders,” Jakobs said.
The company noted that operational and supply challenges, inflation, as well as the COVID-19 situation in China, plus the illegal Russian war on Ukraine all had an impact on the decline in sales for the third quarter.
Despite losses, Philips signed a new, 10-year agreement with a large university hospital in Japan for the expansion of its eICU program for centralized, remote surveillance of high-risk ICU patients. The company also signed several agreements with hospitals in China and gained market clearance from the FDA for its new Ultrasound 5000 Compact system to deliver cart-based premium image quality in compact form for point-of-care, cardiology, general imaging, and obstetrics and gynecology applications.
Philips stated it is uncertain about the outcome of its ongoing issue with Respironics as it faces legal battles and an investigation by the U.S. Department of Justice.
Looking to the end of the year and beyond, Philips doesn’t expect things to get better anytime soon, predicting “prolonged operational and supply challenges, a worsening macro-economic environment and continued uncertainty related to COVID-19 measures in China.” Philips expects is sales to decline in the last three months of 2022, as well.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."