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Dec 31, 2022
Premier Q2 2023 Earnings Report
Premier's Q2 2023 financial performance was largely in line with expectations, as the company continued to advance its business strategy and implemented a cost-savings plan.
Key Takeaways
Premier, Inc. reported a 5% decrease in net revenue compared to the prior year period, primarily due to the normalization of COVID-19 pandemic-driven demand and pricing for personal protective equipment (PPE) and other related supplies. The company is implementing cost-savings measures, including a workforce reduction, to mitigate the impact of these headwinds.
Supply Chain Services segment saw a 13% decrease in net revenue, mainly due to lower products revenue.
Performance Services segment net revenue increased by 15%, driven by enterprise license agreements and growth in consulting services.
The company implemented a cost-savings plan expected to produce $18 million to $20 million in fiscal 2023 savings.
Fiscal year 2023 guidance was updated to reflect market conditions and the impact of interest and depreciation expense.
Premier
Premier
Premier Revenue by Segment
Revenue by Segment
Supply Chain Services Revenue
CapyFin.comPerformance Services Revenue
CapyFin.com Forward Guidance
Premier is revising its fiscal year 2023 segment revenue guidance to reflect its outlook for the remainder of this fiscal year and its adjusted earnings per share guidance due to the impact of interest and depreciation expense.
Positive Outlook
- Performance Services net revenue guidance increased to a range of $450 million to $470 million.
- This increase primarily reflects contributions from the acquisition of key assets from TRPN Direct Pay, Inc. and Devon Health, Inc. in October 2022.
- Tax benefit is expected as the company anticipates its effective tax rate to be at the low-end of its 26% to 27% guidance range.
- Free cash flow of 45% to 55% of adjusted EBITDA
- Stable cash flows, a flexible balance sheet, and strong relationships with members and other customers, the company remains confident in its longer-term prospects.
Challenges Ahead
- Supply Chain Services net revenue guidance lowered to a range of $930 million to $980 million.
- This reflects lower direct sourcing products revenue due to excess market supply and member inventory levels.
- Lower net administrative fees revenue as overall healthcare utilization has not yet returned to the anticipated level.
- Slower ramp in new domestic manufacturing capabilities than initially planned due to manufacturing factory delays.
- Adjusted earnings per share (EPS) guidance lowered to a range of $2.53 to $2.65.
Revenue & Expenses
Visualization of income flow from segment revenue to net income