In the wake of disappointing second-quarter results from its Philips Healthcare business, Royal Philips is implementing a new management model to secure more direct involvement in its operations. Philips Healthcare CEO Deborah DiSanzo has also left the company to pursue other opportunities.
Philips Healthcare is expected to post second-quarter earnings before interest, taxes, and amortization (EBITA) of approximately 220 million euros ($299.1 million U.S.), which was below market expectations, according to Philips. As a whole, Royal Philips will still meet current market expectations with group EBITA of 400 million euros ($543.8 million U.S.), the firm said.
To improve performance in the healthcare business, the new management structure will have all healthcare business groups report directly to Royal Philips CEO Frans van Houten. In a statement, van Houten said that Philips expects Philips Healthcare's EBITA performance to improve in the second half of 2014, as its Cleveland manufacturing facility gradually resumes production in the third quarter. In April, Philips announced a halt in production at the Cleveland facility after an inspection by the U.S. Food and Drug Administration (FDA).
The company noted that the healthcare business contributes more than 40% of Philips' overall revenue.