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Mar 31, 2023
Premier Q3 2023 Earnings Report
Premier reported third quarter results, showing a decrease in revenue due to lower direct sourcing revenue, but an increase in net income driven by lower performance-related compensation expense.
Key Takeaways
Premier, Inc. reported a 7% decrease in net revenue, totaling $322.232 million for the third quarter of fiscal year 2023. However, net income increased by 24% to $48.649 million, and diluted EPS increased by 22% to $0.39. The decrease in revenue was primarily due to a decline in direct sourcing products revenue, while the increase in net income was mainly due to lower performance-related compensation expense.
Supply Chain Services segment net revenue decreased by 14% due to lower products revenue.
Performance Services segment net revenue increased by 9% due to growth in consulting services and adjacent markets businesses.
Net administrative fees revenue was flat compared to the year-ago quarter.
Premier updated its fiscal year 2023 guidance, lowering revenue and adjusted EBITDA expectations.
Premier
Premier
Premier Revenue by Segment
Revenue by Segment
Supply Chain Services Revenue
CapyFin.comPerformance Services Revenue
CapyFin.com Forward Guidance
Premier is lowering its fiscal 2023 guidance ranges for revenue, adjusted EBITDA, and adjusted EPS due to lower direct sourcing revenue, softening demand in performance services, and an accounting methodology change related to FFF Enterprises.
Positive Outlook
- Net administrative fees revenue guidance remains unchanged at $600 million to $620 million.
- Effective income tax rate guidance remains unchanged at 26% to 27%.
- Free cash flow guidance remains unchanged at 45% to 55% of adjusted EBITDA.
- The accounting methodology change related to FFF Enterprises will not have an impact on cash flow.
- Company remains focused on executing multi-year growth strategy.
Challenges Ahead
- Supply Chain Services segment net revenue lowered to $895 million to $925 million.
- Performance Services segment net revenue lowered to $440 million to $460 million.
- Total net revenue expected to be in the range of $1.34 billion to $1.39 billion.
- Adjusted EBITDA lowered to $490 million to $510 million.
- Adjusted EPS lowered to $2.43 to $2.55.
Revenue & Expenses
Visualization of income flow from segment revenue to net income