April 10, 2024
Philips confirms that further to communicating the main terms of the Philips
Respironics consent decree on January 29, 2024, Philips' subsidiaries Philips
Holding USA and Philips Respironics have now reached final agreement on the
consent decree with the DOJ and FDA. As previously stated:

  * The consent decree primarily focuses on Philips Respironics' business
    operations in the US.
  * It provides clarity and a roadmap to demonstrate compliance with regulatory
    requirements and to restore the Philips Respironics business.

* Philips Respironics is committed to meeting the consent decree requirements,

    while continuing to service healthcare providers and their patients under
    agreed conditions in the US and outside the US.
  * The 2023 - 2025 Group financial outlook takes the consent decree into
    account and remains unchanged.

Amsterdam, the Netherlands - Following the FDA's inspection of Philips
Respironics' facility in Murrysville in 2021 and the subsequent inspectional
observations, the US Department of Justice (DOJ), representing the US Food and
Drug Administration (FDA), began discussions with Royal Philips
(http://www.philips.com/newscenter) (NYSE: PHG, AEX: PHIA) in July 2022
regarding the terms of a proposed consent decree. On January 29, 2024, Philips
announced that it agreed with the DOJ and FDA on the terms of the proposed
consent decree.
Philips' subsidiaries Philips Holding USA and Philips Respironics have now
reached final agreement on the consent decree with the DOJ and FDA, that
primarily focuses on Philips Respironics' business operations in the US,
including its manufacturing facilities in Murrysville and New Kensington, its
service center in Mount Pleasant and its Respironics headquarters in Pittsburgh
in Pennsylvania.
The consent decree provides Philips Respironics with a roadmap of defined
actions, milestones, and deliverables to meet relevant regulatory requirements,
as previously communicated by Philips on January 29, 2024, including:

  * Philips Respironics will continue to prioritize completing the remediation
    of the sleep and respiratory care devices under Respironics' voluntary June
    2021 recall (https://www.philips.com/a-w/about/news/src-recall-explained).
    More than 99% of the actionable registered CPAP and BiPAP sleep therapy
    devices have been remediated globally, while the remediation of the
    ventilators is ongoing in coordination with the relevant competent
    authorities. Philips Respironics will retain independent experts to review
    various aspects of the recall remediation.
  * Philips Respironics' business operations must demonstrate continued
    compliance with the FDA's Quality System Regulation (current good
    manufacturing practice requirements for medical devices). Philips
    Respironics will retain independent experts to supervise the compliance
    improvement program.
  * In the US, millions of patients are currently using Philips Respironics

sleep and respiratory care devices. Philips Respironics will be permitted to continue servicing these sleep and respiratory care devices that are already

    with healthcare providers and patients, and to sell accessories (including
    masks), consumables (including patient circuits), and replacement parts
    (including repair kits).
  * In 2021, Philips Respironics voluntarily stopped selling CPAP and BiPAP
    sleep therapy devices and other respiratory care devices in the US, as it

prioritized the production for the remediation of the affected devices under

    the June 2021 recall. Until the relevant requirements of the consent decree
    are met, Philips Respironics will not resume selling new CPAP or BiPAP
    devices or other respiratory care devices in the US.

* The consent decree includes provisions to allow for exports. Outside the US,

    Philips Respironics will continue to provide new sleep and respiratory care
    devices, accessories (including masks), consumables (including patient
    circuits), replacement parts (including repair kits) and services, subject
    to certain requirements that Philips Respironics will meet.

Philips Respironics' devices with the new silicone sound abatement foam
(https://www.philips.com/a-
w/about/news/archive/standard/news/articles/2023/explained-silicone-sound-
abatement-foam-used-in-dreamstation-2-and-the-sleep-and-respiratory-care-
devices-remediated-as-part-of-the-june-2021-philips-respironics-recall.html)
have been subject to extensive testing in accordance with the applicable
industry testing standards, and Philips Respironics has not identified any
safety issues. These devices may continue to be used in accordance with the
instructions for use.
Roy Jakobs, CEO at Philips said: "Strengthening patient safety and quality
remains Philips' highest priority and the increased scrutiny will help us to
improve even more. With the agreement on a consent decree for Philips
Respironics in place, we now have a clear path (https://www.philips.com/a-
w/about/patient-safety-and-quality/the-philips-respironics-consent-decree-
provides-a-clear-path-forward) forward to gradually restore the business,
serving patients around the world."
Philips Chief Patient Safety and Quality Officer Steve C de Baca said: "Patient
safety and quality (https://www.philips.com/a-w/about/patient-safety-and-
quality.html) is our number one priority. We know what we must do to meet the
consent decree requirements. Philips Respironics has been working with the FDA,
and is already making significant changes in its organization, quality
management systems and operations. This includes strengthening the quality
management processes and deepening the competencies of the relevant teams. We
are fully committed to meeting the terms of the consent decree and continuing to
serve the millions of patients who rely on our devices every day."
Financial impact
As previously stated on January 29, 2024, as a consequence of addressing this
consent decree, which is a multi-year plan, Philips expects costs of around 100
basis points in 2024 that relate to remediation activities and profit
disgorgement payments for Philips Respironics sales in the US.
The previously stated (https://www.philips.com/a-
w/about/news/archive/standard/news/press/2023/20230130-philips-presents-its-
plan-to-create-value-with-sustainable-impact.html) 2023-2025 Group financial
outlook of mid-single-digit comparable sales growth, low-teens Adjusted EBITA
margin, and EUR 1.4-1.6 billion free cash flow now takes the consent decree into
account and remains unchanged. It excludes the investigation by the US DOJ
related to the Respironics field action and the impact of the ongoing
litigation.
General information about this consent decree can be found here
(https://www.philips.com/a-w/about/patient-safety-and-quality/explained-philips-
respironics-consent-decree.html). Further information about this consent decree
for investors and financial analysts can be found here
(https://www.philips.com/c-dam/corporate/about-philips/investors/financial-
results/Philips_Respironics_consent_decree_FAQ_10_April_2024.pdf) and here
(https://www.philips.com/c-dam/corporate/about-philips/investors/financial-
results/Philips_Respironics_Consent_Decree_April_10_2024.pdf).
For further information, please contact:
Philips External Relations
Steve Klink
Tel.: +31 6 1088 8824
E-mail: steve.klink@philips.com (mailto:steve.klink@philips.com)
Philips Investor Relations
Leandro Mazzoni
Tel.: +31 20 5977055
E-mail: leandro.mazzoni@philips.com (mailto:leandro.mazzoni@philips.com)
About Royal Philips
Royal Philips (NYSE: PHG, AEX: PHIA) is a leading health technology company
focused on improving people's health and well-being through meaningful
innovation. Philips' patient- and people-centric innovation leverages advanced
technology and deep clinical and consumer insights to deliver personal health
solutions for consumers and professional health solutions for healthcare
providers and their patients in the hospital and the home. Headquartered in the
Netherlands, the company is a leader in diagnostic imaging, ultrasound, image-
guided therapy, monitoring and enterprise informatics, as well as in personal
health. Philips generated 2023 sales of EUR 18.2 billion and employs
approximately 69,700 employees with sales and services in more than 100
countries. News about Philips can be found at www.philips.com/newscenter
(https://www.philips.com/a-w/about/news/home.html).
Forward-looking statements
This release contains certain forward-looking statements with respect to the
financial condition, results of operations and business of Philips and certain
of the plans and objectives of Philips with respect to these items. Examples of
forward-looking statements include statements made about the strategy, estimates
of sales growth, future EBITA, future developments in Philips' organic business
and the completion of acquisitions and divestments. By their nature, these
statements involve risk and uncertainty because they relate to future events and
circumstances and there are many factors that could cause actual results and
developments to differ materially from those expressed or implied by these
statements.
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