June Cyberattack Bites Into Nuance Revenues

The NotPetya malware hit Nuance's cloud-based dictation and transcription services for hospitals and health systems, costing it $53 million in Q4 r...
Matthew HellerDecember 1, 2017

Healthcare IT solutions provider Nuance Communications took a $53 million revenue hit from a global malware attack but the damage was less than initially anticipated.

The June cyberattack known as “NotPetya” affected Nuance’s cloud-based dictation and transcription services for hospitals and health systems. For the fourth quarter, the company posted sales of $465.9 million, compared to $506.2 million a year ago.

It had previously estimated a negative impact of $65.0 million to $75.0 million from the malware.

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“Notwithstanding the incident, we delivered strong net new bookings growth of 10% for the year, at the high end of our guidance range, and met our recurring revenue target of 73%,” Nuance said in a news release. “Most notably, our healthcare business delivered a record net new bookings quarter in Q4 17 despite the challenges the business faced as a result of the cyberattack.”

Nuance also reported that non-GAAP earnings per share fell to $0.20 in the fourth quarter from $0.31, “primarily as a result of the impact on revenue and operating expenses attributable to the malware incident.”

The NotPetya bug wreaked worldwide havoc, affecting everything from Ukraine’s power grid to pharmaceutical giant Merck. The healthcare industry was hit hard, with Nuance customers unable to use such products as eScription, which allows physicians to dictate notes from a phone.

For full year 2017, Nuance estimated the malware incident had a negative impact of about $68 million, compared to its previous guidance of $80 million to $90 million impact. The transcription business generated about $300 million for the year, down approximately $100 million year-over-year, due to the malware incident and erosion.

The fallout from is expected to continue into next year, with CFO Dan Tempesta estimating NotPetya would have a negative impact on revenue of $60 million to $65 million.