United States cuts Philips ventilator orders in 2020
On Monday, Philips (PHG.AS) announced that the U.S. Department of Health canceled a bulk order of 43,000 hospital ventilators leading the Dutch medical equipment maker to cut its 2020 earnings outlook.
The termination was based on the July 2020 report by the U.S. Congress House Subcommittee on Economic and Consumer Policy.
The report stipulated that the White House overpaid Philips by at least $500 Million. However, Philips denied all the accusations about the overpaid ventilators.
Philips was one of several companies contracted by the United States to supply 187,000 ventilators to the strategic national stockpile to help treat coronavirus-stricken patients.
“The reduction in our ventilator deliveries to HHS will obviously impact Philips’ financial performance, but we continue to expect to return to growth and improved profitability in the second half of the year, starting in the third quarter,” Philips’ Chief Executive Officer Frans van Houten stated.
“We continue to expect to return to growth and improved profitability in the second half of the year, starting in the third quarter,” he added.
The electrical equipment company said that it would deliver just 12,300 hospital ventilators by the end of 2020.
Philips’ sales were down by 6% to 4.4 billion Euros from April to June 2020.