PHG Shares Rise Despite Posting Flat Y/Y Earnings & Revenue Dip in Q3

Koninklijke Philips PHG reported earnings of €0.19 per share, which remained flat year over year.

The company’s sales decreased 1.7% on a year-over-year basis to €4.3 billion. Comparable sales increased 3% year over year, which was driven by growth across all segments. The Diagnosis & Treatment segment recorded 1% growth, Connected Care recorded 5% growth, and Personal Health showed 11% growth.

Further, Philips’ comparable order intake increased 8% year over year in the reported quarter.

Sales increased 3% year over year on a comparable basis in growth geographies. Growth geographies showed 5% growth, mainly driven by Personal Health. Comparable sales in Mature geographies grew 3% in the reported quarter, mainly driven by North America and with contributions from all segments.

Koninklijke Philips N.V. Price, Consensus and EPS Surprise

Koninklijke Philips N.V. price-consensus-eps-surprise-chart | Koninklijke Philips N.V. Quote

Philips’ stock gained 2.06% in pre-market trading. The uptick can be attributed to growth across all segments.

PHG’s Segmental Update

Diagnosis & Treatment revenues declined 3.3% from the year-ago quarter to €2.08 billion. Comparable sales increased 1%. Image Guided Therapy showed low-single-digit growth, while Precision Diagnosis was flat.

Connected Care revenues decreased 0.9% year over year to €1.20 billion. Comparable sales increased 5% year over year, mainly due to double-digit growth in Monitoring.

Personal Health revenues grew 5.7% year over year to €883 million. Comparable sales increased 11%, driven by double-digit growth in Growth geographies and mid-single-digit growth in Mature geographies.

Other segment sales amounted to €140 million, down 22.7% on a year-over-year basis.

PHG’s Operating Details

Gross margin contracted 140 basis points (bps) on a year-over-year basis to 44.4% in the reported quarter.

General & administrative expenses, as a percentage of sales, were 3.6%, which expanded 10 bps on a year-over-year basis. Moreover, selling expenses decreased 80 bps year over year to 23.8%. Research & development expenses decreased 30 bps to 9.6%.

Restructuring, acquisition-related, and other items amounted to a loss of €122 million against a gain of €113 million a year ago. 

Philips achieved €222 million in savings this quarter through disciplined cost management and robust productivity initiatives. The company remains on track to deliver its three-year €2.5 billion productivity program, including €800 million in savings in 2025.

Phillips adjusted EBITA — the company’s preferred measure of operational performance — increased 2.9% year over year to €531 million. EBITA margin expanded 50 bps on a year-over-year basis to 12.3% in the reported quarter.

Diagnosis & Treatment’s adjusted EBITA margin contracted 80 bps on a year-over-year basis to 11.8%.

Connected Care’s adjusted EBITA margin was 11.4% in the reported quarter, which expanded 410 bps year over year.

Personal Health’s adjusted EBITA margin expanded 60 bps on a year-over-year basis to 17.1%.

PHG’s Balance Sheet

As of Sept. 30, 2025, Philips’ cash and cash equivalents were €1.91 billion compared with €1.82 billion as of June 30, 2025. 

Total debt was €8.385 billion compared with €8.425 billion as of June 30, 2025.

Operating cash flow was €327 million compared with the year-ago quarter’s €192 million.

In the quarter under review, free cash flow was €172 million compared with the year-ago quarter’s €22 million.

PHG Initiates 2025 Guidance

Philips expects to deliver 1-3% of comparable sales growth.

Further, the adjusted EBITA margin is expected to be between 11.3% and 11.8%

Free cash flow is expected to be between €0.2 billion and €0.4 billion in 2025, including the payout in the first quarter of 2025 of EUR 1,025 million for Philips Respironics recall-related medical monitoring and personal injury settlements in the United States.

PHG’s Zacks Rank & Other Stocks to Consider

Philips currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Medical sector are Akamai Technologies AKAM, KE Holdings BEKE, and Analog Devices ADI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Akamai Technologies is set to report third-quarter 2025 results on Nov. 06. AKAM shares have plunged 23.3% year to date.

KE Holdings is slated to report third-quarter 2025 results on Nov. 10. BEKE shares have plunged 11.2% year to date.

Analog Devices is set to report fiscal fourth-quarter 2025 results on Nov. 25. ADI shares have gained 8.4% year to date.

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