July 8, 2014

Royal Philips said on Tuesday it has restructured its healthcare unit management team to improve the company’s performance in the industry.

Philips Chief Executive Officer Frans van Houten said the management restructuring is part of the company’s strategy to stay competitive in the industry by refocusing its healthcare unit to deliver better and meaningful innovation that meet consumers’ demands.

In this new model, the Healthcare business unit will report directly to van Houten.

The company said current Philips Healthcare Chief Executive Officer Deborah DiSanzo will leave to pursue other opportunities.

The restructuring is in part due to Philips Healthcare business unit’s second quarter results, which was below market expectations. Van Houten said the company expects the changes to take effect and give it the turnaround it needs to improve its performance result in the second half compared to the same period in 2013.

“The performance in our Healthcare sector is disappointing, with second-quarter EBITA expected to be approximately EUR 220 million, while expected Group EBITA of approximately EUR 400 million in the second quarter is in line with current market expectations,” said van Houten. “We anticipate, however, EBITA performance in Healthcare to improve in the second half compared to the same period in 2013 as, among others, Cleveland gradually resumes production in the course of the third quarter.”

The Philips Healthcare business represents more than 40 percent of the company’s revenue.

As the global healthcare industry undergoes a paradigm shift, healthcare companies and businesses are looking for ways to seize on growing market demands and remain competitive by offering and delivering more integrated systems and solutions to both professional care facilities and in consumer’s homes via continuum of health systems.

The Amsterdam-based company said the restructuring will also allow it to respond better to evolving customer demands in a changing healthcare landscape. It plans on leveraging, among others, its integrated systems and solutions—from prevention, diagnosis and treatment, to monitoring and after care–to deliver more integrated products.

“Our integrated systems and solutions in both professional care facilities and in people’s homes are making us an attractive partner for hospitals and health systems, which position us well to create more multi-year partnerships with medical institutions such as the recently announced partnership with New Karolinska University Hospital in Sweden,” said van Houten.

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