Philips (PHG) stock fell more than 16% Monday after the Dutch medical device giant lowered its sales outlook on continued lower demand in China.

The company reported revenue of $4.6 billion in the third quarter ending Sept. 30, which missed Wall Street expectations of $4.9 billion. Philips beat on earnings per share by more than 14%, reporting $0.32 per share compared to an expected $0.28.

Despite an increase in profit margins in the quarter, Philips expects sales growth of 0.5% to 1.5%, down from 3% to 5% for the year. But ex-China markets will maintain the original outlook — signifying the impact a single market has had on the company this year.

The slump in shares is the biggest one-day loss in 26 years and comes as the company has regained footing after a massive recall of breathing machines used to help treat sleep apnea weighed on the company's stock in the last few years.

CEO Roy Jakobs told Yahoo Finance in an interview that despite softness in the China market, North America has been a key area of growth.

"In particular in North America, we see a strong order flow, we see a very strong sales momentum, as the underlying demand in hospitals is growing for innovations — because they don't have the staff to deal with the current demand," said Jakobs.

The innovations include a number of artificial intelligence connected medical devices that either help clinicians process their work faster or process images faster to help with patient diagnoses.

The increase in the North American market, particularly in the US, has been validated by negative impacts to major health insurance companies. Increased utilization has squeezed their margins as pent-up demand from the pandemic is still filtering through hospital systems. The company also recently received FDA clearance for AI use in enhanced cardiovascular ultrasounds.

Jakobs said comparing the past three years, 2022 saw a decrease in use and sales of medical devices at hospitals, while 2023 began a slight uptick. This year has been its strongest post-pandemic.

"The number of procedures is still growing, the number of patients needing an image is growing, and unfortunately the wait lists are long," he said of the North American market.

Countries other than the US are also relying on innovative solutions to meet a shortage of qualified doctors and to help modernize older systems, Jakobs said.

Jakobs remains bullish on a near-term turnaround for China, meanwhile, as it's a market the company has been in for a long time.

"We actually think that China will come back. It's not if, it's when," he told Yahoo Finance, reiterating his comments from previous quarters.