Philips realigns the composition of its reporting segments

Amsterdam, the Netherlands – To further align its businesses with customer needs, Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in health technology, today announced a realignment of its three reporting segments Diagnosis & Treatment, Connected Care & Health Informatics, and Personal Health.

The most notable changes are the shift of the Sleep & Respiratory Care business from the Personal Health segment to the renamed Connected Care segment and the shift of the Healthcare Informatics business from the Connected Care segment to the Diagnosis & Treatment segment. Moreover, recognizing the importance of, and investments in the Image-Guided Therapy businesses, their leader Bert van Meurs joins Philips’ Executive Committee, effective as of January 1, 2019.   

Effective as of January 1, 2019, Philips’ reporting segments are:

Diagnosis & Treatment, which unites the businesses related to the promise of precision diagnosis and disease pathway selection, and the businesses related to image-guided, minimally invasive treatments. This segment comprises the Diagnostic Imaging, Ultrasound, and Healthcare Informatics businesses led by Rob Cascella, and the Image-Guided Therapy businesses led by Bert van Meurs.

Connected Care, which focuses on patient care solutions, advanced analytics and patient and workflow optimization inside and outside the hospital, and aims to unlock synergies from integrating and optimizing patient care pathways, and leveraging provider-payer-patient business models. This segment comprises the Monitoring & Analytics, Therapeutic Care, Population Health Management, and Sleep & Respiratory Care (including the Home Respiratory Care business) businesses led by Carla Kriwet.

Personal Health, which focuses on healthy living and preventative care. This segment comprises the Personal Care, Domestic Appliances, Oral Healthcare, and Mother & Child Care businesses led by Roy Jakobs. 

Philips reaffirms its overall targets of 4-6% comparable sales growth and an Adjusted EBITA margin improvement of 100 basis points on average per year for the 2017–2020 period [1], and an improvement of the organic Return on Invested Capital (ROIC) to mid-to-high teens in 2020. The company expects to increase the annual free cash flow to above EUR 1.5 billion in 2020 [2]. 

Philips will provide further details on the changes as part of the presentation of its fourth quarter and full year 2018 results on January 29, 2019. 

[1] Comparable sales exclude the effect of currency movements and acquisitions and divestments (changes in consolidation). Philips believes that comparable sales information enhances understanding of sales performance; Adjusted EBITA is defined as Income from operations (EBIT) excluding amortization of acquired intangible assets, impairment of goodwill and other intangible assets, restructuring charges, acquisition-related costs and other one-time charges and gains.

[2] Free cash flow adjusted for one-time pension contributions and significant litigation.