Koninklijke Philips N.V. (NYSE:PHG) shares were trading higher in Tuesday premarket trading after the company beat third-quarter earnings estimates, driven by commercial momentum and a strong order intake.
Financial Performance
Philips reported adjusted earnings of 46 cents (40 euro cents), beating the consensus of 37 cents. Sales reached $5.06 billion (4.39 billion euros), beating the analysts’ consensus of $4.99 billion.
Comparable sales increased by 3%, mainly driven by mid-single-digit growth in Connected Care and high-single-digit growth in Personal Health.
Income from operations decreased by 50% to 165 million euros, mainly due to a 288-million-euro provision for the Respironics settlement with the U.S. Department of Justice, partly offset by higher sales and lower cost of sales. Payment is expected in the first quarter of 2027.
Adjusted EBITA increased to 569 million euros, and the margin improved to 13.0%, mainly driven by higher sales, higher gross margin, and productivity measures, partly offset by cost inflation.
Diagnosis & Treatment Faces Ultrasound and China Headwinds
Diagnosis & Treatment sales reached 2.09 billion euros, with comparable sales flat.
Mid-single-digit growth in Image Guided Therapy was offset by a mid-single-digit decline in Precision Diagnosis, mainly due to phasing of Ultrasound sales and lower sales in China.
Connected Care revenues were 1.18 billion euros, with comparable sales increasing by 5%, driven by growth in Monitoring and Sleep & Respiratory Care, and Enterprise Informatics.
Comparable sales in Mature geographies showed mid-single-digit growth, and Growth geographies recorded double-digit growth.
Personal Health sales were 953 million euros, with comparable sales increasing by 8%, driven by double-digit growth in Growth geographies and mid-single-digit growth in Mature geographies.
2026 Financial Outlook and Long-Term Targets
Philips reiterated its 2026 outlook for comparable sales growth of 3% to 4.5%. Guidance reflects that Diagnosis & Treatment segment growth is at the upper end of the low single-digit range, while Connected Care is within the 3% to 4.5% range, and Personal Health is at the lower end of the high single-digit growth rate.
Philips reaffirmed its adjusted EBITA margin outlook of 13.5% to 14% and raised its free cash flow outlook to 1.5 billion to 1.7 billion euros, from 1.3 billion to 1.5 billion euros, to reflect a 200-million-euro U.S. tariff refund.
In an earnings call, CEO Roy Jakobs said, “We are seeing a positive response from customers and consumers to our focus segment strategies and AI-enabled platform innovation. Together with our disciplined execution, this keeps us on track to achieve our capital markets ambitions: mid-single-digit comparable sales growth CAGR over ’26 to ’28 and a mid-teen adjusted EBITDA margin by 2028.”
PHG Stock Price Activity: Koninklijke Philips shares are trading higher by 6.05% at $29.26 during premarket trading on Tuesday, according to Benzinga Pro data.
Photo by Mats Wiklund via Shutterstock
