Shares of Philips (PHG) are plunging after the medical device company cut its full-year sales target after weak demand from China weighed on its third quarter results. Philips CEO Roy Jakobs joins Brad Smith and Anjalee Khemlani on Morning Brief to discuss the latest earnings report and how it is navigating the China market.

"When we look at third quarter results, we saw two parts. One, we saw strong margin delivery. So we stepped up 160 basis points in margin. Despite that, we had flat sales growth. And that flat sales growth indeed was driven out of further deterioration in China, where actually we saw two underlying trends unfolding. One was the consumer market, where further drop in consumer sentiment led to further sell-out drop and sell-in drop... But also we had the hospital market, where actually we expected the stabilization of demand, and that also further deteriorated," Jakobs tells Yahoo Finance.

He notes that the weak macro environment in China has weighed on Philips, leading the company to slash its full-year outlook despite seeing growth in other parts of the world. Jakobs explains that the consumer segment of the business saw a "significant drop-off," as did the diagnosis and treatment segment.

However, he is not too discouraged by these issues, believing that the market in China will recover. "The question is not if, but it's when. And currently, the visibility is just very low and that we had to reflect back in our forecast also moving forward to the full year," Jakobs says.

Meanwhile, he sees growth in the North American market as "a structural improvement." He explains, "The number of procedures are still growing. The number of patients needing an image is growing. And unfortunately, the waitlists are long. So actually we still see significant strengthening of that demand in North America. And on top of that, also on the consumer side, actually, we have seen North America gaining momentum."

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This post was written by Melanie Riehl