- Good morning mates, I hope you're all safe and well.
Doing the best you can in this crazy old world of ours.
Now, over night, Philips shares dropped around 15%,
their biggest one day drop since, I think, around 1980.
A big drop and this was mainly due to a profit downgrade,
but they also had some information in there
about the recall.
So, I listened to the analysts' call,
where the analysts ask Frans Van recall all these questions
took out some interesting points
and I thought I'd share them with you.
So, following a comprehensive patient
and customer outreach program, we expanded the eligibility
of certain older devices in the interest of patients
and in alignment with the relevant competent authorities.
Consequently, Philips now expects to remediate
a total of 5.2 million registered devices globally.
And that's up for around 4 million.
And I'd just like to know if any of you
were part of that patient and customer outreach program.
I haven't heard of anyone who was part of that program,
but if you were part of that, I'd love to hear about it.
Drop a comment down below.
All made, Frans Van recall was asked a question
on the 12 month timeline
and he said it was still about intact.
So to date there's been around 700,000 customers
that have received repairs or replacement, DS1s, DS2s,
700,000 and that's about 14% of units replaced
in five months since the FDA approved the initial recall.
So they've got 86% to go in seven months
if they wanna meet that timeline,
I don't think they'll do it,
I think it's gonna be an 18 plus month recall.
That's just my personal opinion.
So I went back, had a look at the original recall devices
that Phil's recall page changes every week,
every week I look at it, there's some new information.
They're backflipping on bits and pieces,
it's always changing,
but I went back and had a look at the original devices
and then compared them with that of today.
And I think those extra 1 million devices
that they've added to the recall, the System One 50 series,
CPAP, IPAP and BiPAP devices.
Okay, so if you are someone who has a System One 50 series,
maybe you registered your device initially,
and it wasn't approved, maybe go back and check again,
because I think this time if you enter your serial number,
you might get a different outcome.
And if you do that, you'll probably get an upgrade
to either a refurbished DS1
or perhaps even a new DreamStation 2.
So definitely worthwhile.
If you have an old 50 series kicking about,
go and register it, get yourself a new device.
So here's some interesting parts
that I took out of the analyst call.
Lisa Clark asked about the VOC testing
and why it's taking so long.
It's taking an awfully long time.
Frans replied with the regulator, FDA,
increase the scope of the testing.
So let's just say a broader test with more ISO standards
as if a particulate is an implanted device.
If a particulate would remain in the body,
then what's the consequence of that?
That's a longer test protocol.
So they're not just testing the machines,
they're doing tests to see what happens
if the foam is implanted in your lungs, which unfortunately,
there will be many of you that have foam particles
down there in your lungs.
So they're trying to figure out what the outcome,
the health outcomes of that are.
He went on to say that the new silicone foam is safe,
but the FDA has asked for a comprehensive suite of tests
around the silicone foams.
So that'll be interesting to see what happens
in regards to the silicone foam found in the DS2
and that in the refurbished DreamStation ones.
James Vane-Tempest asked a great question regarding
the extra 250 million Euro provision.
So the provision is originally they quoted 500 million Euro,
which was gonna be the cost to do the recall,
centered all the replacements,
but they've just added another 250 million million Euro
onto that provision, so 750 million Euro now,
and that doesn't include any potential litigation,
any legal costs.
So it'll be interesting to see as well,
if that blows out any further,
but that was one of the reasons as well
for the big downgrade today.
So James asked the question, "You stayed in the release,
"it's more to do with the effected devices,
"but I also noticed there's a provision for quality actions
"and other matters in connected care, what are these?"
And Frans dodged the question a little bit,
basically saying that they're taking quality actions
across the whole company, after the sleep issue,
to take proactive action also in other product areas.
So they've got the sleep problems.
The FDA has gone in there, done that big 483 investigation,
and then Philips has gone, "Oh, oh, we better go
and have a look what's going on with all the other products
to make shit doesn't hit the fan,"
which I think it will.
All made, Frans continues, "There are, let's say,
"some actions that require provisions for which we've taken
"that at this time, we can not identify,
"let's say publicly."
So basically what Frans is saying there is,
there's a whole bunch of products
that Philips is doing provisions for
that he can't name right now.
And I have a big feeling there,
the ventilators that are used around the world
to keep people breathing,
I think there's problems with them,
and this is adding to the costs.
James asked another great question regarding
what was the driver behind the expansion 5.2 million units?
Why did they suddenly add all the System One 50 series?
They weren't originally part of the recall.
Frans was a bit vague in his response
as he pretty much always is,
but he basically said there's a lot of patients
using older devices who had registered for the recall.
But I think that it's probably a legal matter
or maybe the FDA has forced their hands.
I'm sure Philips is not doing this out of the goodness
of their dear sweet hearts,
they're not adding 250 million Euro just for fun.
Someone's pulled the trigger on that.
The update on the recall came
as Philips gave a profit warning.
Philips attributed the wake-up figures
to supply chain strains,
including shortages for electronic components
and freight capacity,
as well as equipment installation postponements.
Now this is something that is being talked about
a lot in pretty much every industry,
electronic component shortages, ResMed,
they've done two videos on their YouTube about this now.
One where (indistinct) was basically pleading
with suppliers to give me more chips.
And then the last one, which was only done in December,
I'll put links to these videos,
if you wanna watch one, just click the link above,
where he buttons back up his shirt.
The first one he had these buttons down here.
And I like that look on Mick.
You know, it's just showing,
well, a lack of chest here, should I say?
But now he's buttoned it up again for the sake of video.
Old Mike sexy Mick.
And in that video, once again, he sort of saying,
yep, there's all these component shortages,
there's all these freight problems, supply chain issues.
He's calling out companies going five, six, seven deep
back into the supply chain, just trying to get more chips.
And he's also talking a lot about the prices
of the components, but also the price of shipping,
shipping all the products around the world has gone up.
And I think what he's doing there,
is he's laying the groundwork
for an increase in price of the products.
I think that's what we're gonna see,
hitting into 2022 and beyond.
We're gonna see those price of ResMed products going up
because they're not gonna weigh those costs guys,
they're going to pass them on to you.
Mick does sign that video,
expect those shortages to remain right through 2022.
So there's gonna be a real shortage of CPAP machines.
And it's really unfortunate,
but that's the world we're living in at the moment.
So we just have to see what we can do about that.
Anyway, guys, I will leave it at that,
have yourself a wonderful day.
Thanks for tuning in, hit the subscribe button if you like
and make sure you like the video.
And I've got plenty more videos coming up.
I'll see you say, bye.
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