Premier Q3 2020 Earnings Report
Key Takeaways
Premier Inc. reported an 11% increase in GAAP net revenue to $334.8 million and a net income of $73.2 million. The company acquired Health Design Plus (HDP) to expand its Contigo Health direct-to-employer initiative.
GAAP net revenue increased 11% to $334.8 million year-over-year.
Supply Chain Services segment revenue increased 14% to $238.6 million year-over-year.
Performance Services segment revenue increased 4% to $96.2 million year-over-year.
Non-GAAP adjusted EBITDA increased 12% to $155.9 million year-over-year.
Premier
Premier
Premier Revenue by Segment
Forward Guidance
Premier expects to deliver results generally within its full-year guidance range, subject to the ultimate impact of COVID-19, which they expect to pressure profitability in the fourth quarter even as they experience positive net revenue trends.
Positive Outlook
- Supply Chain Services segment revenue is expected to perform at or above the top end of the current range of $895.0 million to $930.0 million for the fiscal year, driven by strong gains in direct sourcing revenue from COVID-19-related efforts.
- Consolidated revenue is projected to be in the upper end of the current range of $1.235 billion to $1.284 billion.
- Strong gains in direct sourcing revenue from ongoing COVID-19-related efforts to secure certain personal protective equipment and other high-demand supplies.
- Solid balance sheet, ample liquidity and strong free cash flow give the financial flexibility to continue creating value for members and stockholders.
- Management will continue to assess the course of the pandemic and evaluate additional trends and data to inform its approach for establishing fiscal 2021 guidance.
Challenges Ahead
- Performance Services segment revenue is expected to be at the low end of the current range of $340.0 million to $354.0 million, due to pressure on new and existing consulting and technology engagements.
- Non-GAAP adjusted EBITDA is anticipated to be near or potentially a few million dollars below the low end of the current range of $566.0 million to $589.0 million.
- Non-GAAP adjusted fully distributed earnings per share is expected to be near or potentially a few cents below the low end of the current range of $2.76 to $2.89.
- Anticipated softness in net administrative fees revenue due to the pandemic-induced interruption of elective procedures, lower overall occupancy and utilization and the slowdown of alternate site spending in non-healthcare related areas.
- Performance Services revenues will be further pressured by delays in consulting and technology projects as healthcare providers focus on the pandemic.
Revenue & Expenses
Visualization of income flow from segment revenue to net income