The effect of a cybersecurity attack on UnitedHealth Group subsidiary Change Healthcare is now showing up on the bottom line of other companies.
UnitedHealth data breach dings earnings for Mendota Heights-based Patterson
Patterson’s first-quarter sales and earnings missed expectations as it adjusted to the cybersecurity effects on its dental clinic customers.
The Minnesota Star Tribune
August 28, 2024 at 6:47PM
Mendota Heights-based Patterson Cos., which supplies dental offices and animal care clinics, reported quarterly results Thursday that were short of expectations, “primarily due to the greater than anticipated impact of the Change Healthcare cybersecurity attack on the value-added services category in our dental segment,” said Don Zurbay, Patterson’s chief executive.
Hospitals, doctors’ offices and dental practices all faced a backlog of billing — and had to find expensive work adjustments while UnitedHealth secured Change’s system. UnitedHealth, Minnesota’s largest public company, said in July that expenses were mounting related to the cyberattack and could reach $2.46 million for the year.
Change Healthcare and UnitedHealth Group have since faced multiple class-action suits by clinics.
Patterson, the state’s 16th largest public company, sells software to dental clinics that integrates with Change Healthcare and helps those clinics submit claims for reimbursement.
Patterson had to develop one of those adjustments, but it took longer than expected and diverted resources that had cascading effects for the company.
“Both the transition time to a new provider and inability to sell new products and services during this transition time were greater than our initial expectations,” Zurbay told analysts on the company’s earnings call.
The other half of Patterson’s business — providing products and services to animal health markets — also had lower-than-expected sales, contributing to the disappointing first-quarter results. Continued inflation and elevated interest rates both contributed to a difficult economic environment for the veterinary business.
Patterson earned $13.7 million, or 15 cents a share, in May, June and July, down more than 50% from the same quarter a year ago. Sales for the company’s first fiscal quarter decreased 2.2% to $1.5 billion, and missed analyst expectations by 3%.
Adjusted earnings for the first quarter were 24 cents a share. Analysts were expecting 32 cents.
As a result of the lower financial results, the company initiated cost and expense reduction programs throughout the company, Zurbay told analysts during the quarterly earnings call.
Zurbay said, though, the company is confident in the strength of the business and is maintaining its financial guidance and goals for the rest of the fiscal year. The company is expecting adjusted EPS for the full fiscal year to be in the range of $2.33 to $2.43 diluted share.
Shares of Patterson closed at $22.48 a share, down 12.5% on Wednesday.
Health care spending rose by 15%, driven by higher prices. Officials say solutions are needed to prevent Minnesotans from being priced out or delaying care they need.
