Philips posts 8% order intake growth in Q3 and books a EUR 288 million Respironics provision

Royal Philips reported 8% comparable order intake growth for the third quarter of 2026, driven by its Diagnosis & Treatment segment, with comparable sales up 3% to EUR 4.4 billion and an adjusted EBITA margin of 13.0%, up 70 basis points. The company reiterated its full-year outlook. Separately, Philips Respironics reached an agreement in principle with the US Department of Justice to resolve previously disclosed investigations related to its recall, and Philips recorded a EUR 288 million provision in the quarter.

Orders and sales by segment

Order intake growth matched the 8% posted a year earlier. According to Investing.com's account of the earnings call, management said Diagnosis & Treatment orders grew nearly 20%, with double-digit growth in both Image Guided Therapy and Precision Diagnosis, while Connected Care order intake declined by a mid-single-digit percentage against more than 20% growth in the prior-year period, which it attributed to the timing of large orders. The equipment order book stands at about 40% of revenue.

Sales told a slightly different story. Diagnosis & Treatment comparable sales were flat at EUR 2,085 million, as growth in Image Guided Therapy was offset by a decline in Precision Diagnosis that Philips attributed to the phasing of ultrasound sales and lower sales in China, as it had flagged at the second quarter. Connected Care sales rose 5% on a comparable basis to EUR 1,176 million, with growth in all businesses. Personal Health rose 8% to EUR 953 million. Adjusted EBITA margins improved in all three segments: 12.3% in Diagnosis & Treatment, 13.3% in Connected Care and 17.7% in Personal Health.

Philips reported EUR 170 million of net productivity savings in the quarter and EUR 427 million year to date, and said it remains on track for EUR 1.5 billion under its 2026 to 2028 program. Free cash flow was EUR 384 million, up from EUR 172 million a year earlier, on operating cash flow of EUR 544 million. The company also placed a EUR 650 million green bond due 2034 that was 2.7 times oversubscribed.

The Respironics agreement in principle

In its results statement, Philips said Respironics reached an agreement in principle with the DOJ to resolve the previously disclosed criminal and civil investigations related to the Respironics recall. The settlement is subject to finalization of the relevant documentation, and payment is expected in the first quarter of 2027. The EUR 288 million provision was the main reason income from operations fell to EUR 165 million from EUR 330 million a year earlier, and net income was EUR 28 million against EUR 187 million. Philips also noted that the Enterprise Chamber of the Amsterdam Court of Appeal denied requests from certain investors for an investigation into the company's affairs in connection with the recall.

Chief executive Roy Jakobs called the agreement in principle an important step and said the company continues to make progress in resolving the consequences of the Sleep & Respiratory Care recall. The 2026 outlook assumes the DOJ payment in the first quarter of 2027 and excludes other ongoing Respironics-related proceedings, including the investigation by US state attorneys general.

Outlook

Philips reiterated guidance for 3% to 4.5% comparable sales growth, an adjusted EBITA margin of 13.5% to 14.0% including a US tariff refund benefit of about 1%, and free cash flow of EUR 1.5 billion to EUR 1.7 billion including a net tariff refund benefit of about EUR 200 million. The outlook includes currently known tariffs. Shares rose about 5% in US premarket trading after the release, Investing.com reported.

What it means for hospitals and device makers

The order numbers are the signal for the imaging and interventional market. Near-20% order growth in Diagnosis & Treatment, with strength in both image-guided therapy and diagnostic imaging, points to hospitals continuing to commit capital to cath labs, imaging suites and ultrasound even as China procurement and tariffs weigh on the near term. The Connected Care order dip is one quarter and tied to large-order timing, by the company's account. For suppliers and integrators, an order book at 40% of revenue means a visible installation pipeline into 2027.