Premier, Inc. (NASDAQ:PINC) is a leading technology-driven healthcare improvement company that unites an alliance of over 4,100 U.S. hospitals and 200,000 other providers to transform healthcare. The company's comprehensive platform offers critical supply chain services, clinical, financial, operational and value-based care software-as-a-service (SaaS) as well as clinical and enterprise analytics licenses, consulting services, performance improvement collaborative programs, third-party administrator services, access to centers of excellence programs, cost containment and wrap network, and digital invoicing and payment automation processes for healthcare suppliers and providers.

Financials

For the fiscal year ended June 30, 2023, Premier reported annual net income of $175,026,000, annual revenue of $1,336,095,000, annual operating cash flow of $444,543,000, and annual free cash flow of $362,241,000. The company's strong financial performance demonstrates its ability to consistently deliver value to its members and other customers.

In the latest third quarter of fiscal 2024, Premier reported total net revenue of $342,596,000, up from $322,232,000 in the prior year period. This increase was driven by growth in both the company's Supply Chain Services and Performance Services segments.

Supply Chain Services Segment

The Supply Chain Services segment reported net revenue of $227,666,000, up 5% year-over-year, primarily due to a $8,378,000 increase in net administrative fees revenue and a $3,225,000 increase in software licenses, other services and support revenue. The increase in net administrative fees was driven by continued growth in member purchasing and one-time payments from certain members due to early termination of their agreements, partially offset by an expected increase in the aggregate blended member fee share to the mid-50% level.

Performance Services Segment

The Performance Services segment reported net revenue of $115,003,000, up 9% year-over-year, primarily due to a $12,133,000 increase in software licenses revenue, partially offset by a $1,058,000 decrease in SaaS-based products subscriptions revenue and a $526,000 decrease in consulting services revenue.

Premier's GAAP net loss for the third quarter was $49,162,000, primarily due to a $140 million impairment charge related to the company's Contigo Health business. Adjusted EBITDA for the quarter was $107,282,000, down from $112,656,000 in the prior year period, with the decrease driven by lower profitability in the Supply Chain Services segment, partially offset by improved performance in the Performance Services segment.

Outlook

Looking ahead, Premier is reaffirming its fiscal 2024 guidance. For fiscal 2025, the company expects revenue in the Supply Chain Services segment, excluding the S2S Global direct sourcing business, to decline primarily due to a further increase in the aggregate blended member fee share from the current mid-50% level to the low-60% range as the company continues to renew and extend GPO agreements with its members. In the Performance Services segment, excluding Contigo Health, Premier expects revenue to grow in the mid-single-digit range, driven by double-digit growth in its adjacent markets businesses and low single-digit growth in the healthcare provider business.

Liquidity

Premier's balance sheet remains flexible, with $61.9 million in cash and cash equivalents as of March 31, 2024 and no outstanding borrowings under its $1 billion revolving credit facility. The company continues to generate substantial cash flow and remains committed to returning value to stockholders, having paid $73.1 million in dividends during the first nine months of fiscal 2024 and executing a $400 million accelerated share repurchase program during the third quarter.

Business Overview

The company's unique combination of capabilities, including its AI-enabled technology solutions powered by vast data sets and deeply embedded member relationships, positions Premier as a strategic partner in driving healthcare improvement. Premier's Supply Chain Services segment leverages its leading national GPO program and supply chain co-management expertise to help members optimize their supply chain operations, while the Performance Services segment's PINC AI, Contigo Health, and Remitra offerings provide advanced analytics, third-party administrator services, and digital invoicing and payables automation to support healthcare providers, payers, and life sciences companies.

Premier's long-term growth strategy focuses on technology-enabling its supply chain capabilities and leveraging its data and AI-driven solutions to drive performance improvement across the healthcare ecosystem. The company's recent announcements of new partnerships, such as Beebe Healthcare's selection of Premier as its supply chain operations partner and Community Health Network's deployment of Premier's AI-enabled clinical documentation solution, demonstrate the value proposition Premier offers to its members and other customers.

Conclusion

Despite the near-term headwinds from increasing member fee share in the Supply Chain Services segment, Premier's diversified business model, strong balance sheet, and commitment to innovation position the company well to navigate the evolving healthcare landscape and continue delivering consistent financial performance and value to its stakeholders.