Scripps records Q3 operating loss, notes cyberattack cost of $112.7M

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Scripps Health said it incurred $112.7 million in lost revenue and added expenses from a May 1 cyberattack.

The San Diego-based health system discovered unusual network activity on some of its IT systems May 1, prompting Scripps to take those systems, including its Epic EHR, offline. During nearly one month of EHR downtime, the health system operated using established backup processes, including offline documentation methods. Its systems were restored by May 26.

In its financial report released Aug. 10, Scripps said its operating revenues and expenses for the quarter ending June 30 were negatively affected by the ransomware attack. Scripps estimates that it lost $91.6 million in revenue and incurred $21.1 million in added expenses related to ransomware attack recovery.

In addition to direct costs and lost revenue, Scripps faces several proposed class-action lawsuits from the patients affected in the ransomware attack. 

In its financial report for the third quarter of fiscal year 2021, Scipps recorded revenue of $775.3 million, down 3 percent from the same quarter one year prior. 

The health system's expenses also rose in the third quarter to $847.1 million, up 13.2 percent from the same quarter in fiscal 2020. 

After factoring in corporate overhead allocation and income tax, Scripps ended the third quarter with an operating loss of $71.6 million. In the same quarter in 2020, Scripps had an operating income of $50.9 million. 

Scripps ended the third quarter with a net income of $91.2 million, driven by nonoperating gains. In the third quarter of fiscal 2020, Scripps recorded a net income of $308.6 million. 

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