Premier, Inc. Reports Fiscal-Year 2025 Third-Quarter Financial Results

• Total net revenue of $261.4 million (total net revenue excluding Contigo Health* of $255.3 million)
• GAAP net income from continuing operations of $27.6 million, or $0.32 per fully diluted share
• Adjusted earnings per share excluding Contigo Health* of $0.46
• Net cash provided by operating activities from continuing operations of $307.8 million and free cash flow* of $130.3 million for the first nine months of fiscal-year 2025
• Increasing adjusted EBITDA and adjusted EPS guidance; reaffirming guidance midpoint for total net revenue excluding Contigo Health ^[1][2]

CHARLOTTE, N.C.--(BUSINESS WIRE)--Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal-year 2025 third quarter ended March 31, 2025.

Fiscal-year 2025 third quarter total net revenue of $261.4 million decreased 9% from the prior-year period, but increased 9% from the fiscal-year 2025 second quarter. Net income from continuing operations was $27.6 million, or $0.32 per share, compared to a net loss from continuing operations of $48.9 million, or a loss of $0.36 per share, in the prior-year period. Adjusted EBITDA* of $71.7 million decreased 25% from the prior-year period, but increased 43% from the fiscal-year 2025 second quarter. Adjusted EPS* of $0.44 decreased 10% from the prior-year period, but increased 76% from the fiscal-year 2025 second quarter.

"Our overall revenue and profitability grew sequentially and exceeded our expectations for the third quarter largely due to better-than-anticipated results in our Supply Chain Services segment," said Michael J. Alkire, Premier's President and CEO. "As a result, we are increasing our adjusted EBITDA and adjusted EPS guidance and reaffirming the midpoint of our consolidated revenue guidance range. In addition, adjusted EPS also benefited from share repurchases under our $1 billion share repurchase authorization, including the initiation of a $200 million accelerated share repurchase program announced in February as we continue to return capital to stockholders."

On October 1, 2024, the company announced that it had divested the S2S Global direct sourcing business. As such, and unless stated otherwise, all results presented in the following release reflect those of continuing operations. In addition, as the company's efforts to transfer to partners or wind down certain components of the Contigo Health business remain ongoing, results presented in this release continue to include contributions from that business. However, because of the expected transition and/or wind-down, the company is providing certain financial measures that exclude contributions from this business, and tables are included at the end of this release that reconcile the impact of the Contigo Health business on certain financial measures in the periods presented.

Fiscal-Year 2025 Guidance

Certain statements in this release, including without limitation, those in this section, are forward-looking statements. For additional information regarding the use and limitations of such statements, refer to "Cautionary Note Regarding Forward-Looking Statements" below.

Based on actual results for the first nine months of fiscal-year 2025 and the current outlook for the remainder of the fiscal year, the company is updating its guidance to the following: 

Results of Operations for the Three Months Ended March 31, 2025

(As compared with the three months ended March 31, 2024)

GAAP net revenue of $261.4 million decreased 9% from $286.9 million in the prior-year period. Refer to the "Supply Chain Services" and "Performance Services" sections below for discussion on the factors that impacted the net revenue of each segment during the quarter.

GAAP net income from continuing operations of $27.6 million increased $76.5 million from net loss from continuing operations of $48.9 million in the prior-year period primarily due to goodwill, intangibles and other long-lived asset impairment charges related to the company's Contigo Health business in the prior-year period, partially offset by lower net revenue in the current-year period.

GAAP diluted EPS from continuing operations of $0.32 increased $0.68 from a loss of $0.36 in the prior-year period due to the aforementioned drivers affecting GAAP net income from continuing operations, as well as a decrease in the diluted weighted average shares outstanding as a result of share repurchases under the company's $1 billion share repurchase authorization announced in February 2024 ("Share Repurchase Authorization"), further discussed below under "Return of Capital to Stockholders".

Adjusted EBITDA of $71.7 million decreased 25% from $95.2 million in the prior-year period primarily due to a decrease in net administrative fees revenue as well as lower revenue in the Performance Services segment.

Adjusted net income of $39.0 million decreased 29% from $54.9 million in the prior-year period primarily as a result of the same factors that impacted adjusted EBITDA and an increase in interest expense due to higher borrowings on the company's revolving credit facility, partially offset by a decrease in the effective income tax rate in the current-year period. Adjusted EPS of $0.44 decreased 10% from $0.49 in the prior-year period.

Segment Results

(For the fiscal third quarter of 2025 as compared with the fiscal third quarter of 2024)

Supply Chain Services

Supply Chain Services segment net revenue of $160.9 million decreased 8% from $175.5 million in the prior-year period due to lower net administrative fees revenue.

Net administrative fees revenue of $142.2 million decreased 10% from $157.7 million in the prior-year period, primarily driven by the expected increase in the aggregate blended member fee share, partially offset by continued growth in member purchasing as a result of increased penetration of contract spend with existing members and from the recruitment and onboarding of new members.

Software licenses, other services and support revenue of $18.7 million increased 5% from $17.8 million in the prior-year period mainly driven by continued growth from new engagements in the supply chain co-management business and further expansion of the company's digital supply chain solutions to providers and suppliers.

Segment adjusted EBITDA of $85.7 million decreased 16% from $102.1 million in the prior-year period largely due to the decrease in net administrative fees revenue and additional investments in the supply chain co-management business to support ongoing growth.

Performance Services

Performance Services segment net revenue of $100.5 million decreased 10% from $111.4 million in the prior-year period primarily due to lower revenue in the consulting business, partially offset by better performance in the applied sciences business.

Segment adjusted EBITDA of $19.5 million decreased 28% from $26.9 million in the prior-year period mainly due to the decrease in revenue.

Liquidity and Cash Flows

As of March 31, 2025, cash and cash equivalents were $71.3 million compared with $125.1 million as of June 30, 2024, and the company's five-year, $1.0 billion revolving credit facility ("Credit Facility") had an outstanding balance of $255.0 million, of which the company repaid $70.0 million in April. The increase in borrowings during the quarter was largely due to share repurchases under the Share Repurchase Authorization.

Net cash provided by operating activities from continuing operations ("operating cash flow") for the nine months ended March 31, 2025 of $307.8 million increased from $160.9 million in the prior-year period mainly due to a decrease in cash taxes paid related to the sale of non-healthcare GPO operations and higher contract receivables in the prior-year period, cash received from the derivative lawsuit settlement of $57.0 million in the current-year period and a $17.6 million cash distribution received from a minority investment. These items were partially offset by higher performance-related compensation payments.

Net cash used in investing activities for the nine months ended March 31, 2025 of $40.5 million decreased from the prior-year period due to cash received from the sale of certain assets and liabilities associated with Contigo Health’s wrap network and a decrease in purchases of property and equipment. Net cash used in financing activities for the nine months ended March 31, 2025 increased from the prior-year period due to the timing of net cash proceeds from the sale of the company's non-healthcare GPO operations received in the prior-year period. The change was offset by the current-year net borrowings and the prior year repayment under the company's Credit Facility, as well as a decrease in cash dividends paid in the current-year period as a result of share repurchases.

Non-GAAP free cash flow for the nine months ended March 31, 2025 was $130.3 million compared with $143.1 million in the prior-year period. In addition to some of the factors that affected operating cash flow, the decrease was due to the timing of cash payments to OMNIA related to our non-healthcare channel partnership agreement, partially offset by lower purchases of property and equipment. Refer to "Premier's Use and Definitions of Non-GAAP Measures" below and the supplemental financial information at the end of this release for information on the company's use of this and other non-GAAP financial measures and a reconciliation of reported GAAP results to non-GAAP results.

Return of Capital to Stockholders

In February 2024, the company announced that its Board of Directors ("Board") approved the Share Repurchase Authorization and that it entered into an accelerated share repurchase program (the "2024 ASR"). Under the 2024 ASR, in February 2024, the company received initial deliveries of an aggregate of 15.0 million shares of Common Stock. On July 11, 2024, as final settlement, the company received an additional 4.8 million shares of Common Stock, resulting in a total of approximately 19.9 million shares repurchased under the 2024 ASR for a total of $400.0 million.

In August 2024, the company announced execution of $200.0 million of repurchases under the Share Repurchase Authorization. The company completed this program on January 6, 2025, repurchasing an aggregate of approximately 9.5 million shares of Common Stock for $200.0 million in market transactions in addition to the 2024 ASR repurchases.

On February 18, 2025, the company announced a new accelerated share repurchase program (the "2025 ASR") to repurchase an aggregate of $200.0 million of shares of Common Stock under the Share Repurchase Authorization. Under the 2025 ASR, in February 2025, the company received initial deliveries of an aggregate of approximately 9.0 million shares of Common Stock. The final settlement of the 2025 ASR is expected to be completed no later than the end of the first quarter of the company's 2026 fiscal year.

During the first nine months of fiscal-year 2025, the company paid aggregate dividends of $59.7 million to holders of its Common Stock. On April 24, 2025, the Board declared a quarterly cash dividend of $0.21 per share, payable no later than June 15, 2025 to stockholders of record on June 1, 2025.

Conference Call and Webcast

Premier will host a conference call to provide additional detail around the company's performance and outlook today at 8:00 a.m. ET. The call will be webcast live from the company's website and, along with the accompanying presentation, will be available at the following link to the company's Events and Presentations page at https://investors.premierinc.com/overview/default.aspx: Premier Events. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company's website under Events and Presentations at https://investors.premierinc.com/overview/default.aspx.

For those parties who do not have internet access, the conference call may be accessed by calling one of the below telephone numbers and asking to join the Premier, Inc. call:

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading technology-driven healthcare improvement company, providing solutions to two-thirds of all healthcare providers in the U.S. Playing a critical role in the rapidly evolving healthcare industry, Premier unites providers, suppliers, payers and policymakers to make healthcare better with national scale, smarter with actionable intelligence and faster with novel technologies. Headquartered in Charlotte, N.C., Premier offers integrated data and analytics, collaboratives, supply chain solutions, consulting and other services in service of our mission to improve the health of communities. Please visit Premier’s news and investor sites on www.premierinc.com, as well as X, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.

Premier’s Use and Definitions of Non-GAAP Measures

Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow. These are non-GAAP financial measures that are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP financial measures used by other companies. We include these non-GAAP financial measures to facilitate a comparison of the company’s operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with its results prepared in accordance with GAAP, we believe allow for a more complete understanding of factors and trends affecting the company’s business than GAAP measures alone.

Management believes EBITDA, adjusted EBITDA and segment adjusted EBITDA assist the company’s board of directors, management and investors in comparing the company’s operating performance on a consistent basis from period to period by removing the impact of the company’s earnings elements attributable to the company's asset base (primarily depreciation and amortization), certain items outside the control of management, e.g., taxes, other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), non-recurring items (such as strategic initiative and restructuring-related expenses) and income and expense that have been classified as discontinued operations from operating results.

Management believes adjusted net income and adjusted earnings per share assist the company's board of directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such as strategic initiative and restructuring-related expenses) and eliminate the variability of non-controlling interest and equity in net income of unconsolidated affiliates.

Management believes free cash flow is an important measure because it represents the cash that the company generates after payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Agreement (“Unit Exchange Agreement") in connection with our August 2020 restructuring, capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth and cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. Free cash flow is important because it enables the company to seek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related or complementary businesses and/or debt reduction.

Also, adjusted EBITDA and free cash flow are supplemental financial measures used by the company and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and free cash flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, segment adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.

Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include acquisition- and disposition-related expenses, strategic initiative- and restructuring-related expenses, loss on disposal of long-lived assets, income and expense that has been classified as discontinued operations and other reconciling items.

Non-cash items include stock-based compensation expense and asset impairments.

Non-operating items include gains or losses on the disposal of assets, interest and investment income or expense, equity in net income of unconsolidated affiliates and operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained.

EBITDA is defined as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets.

Adjusted EBITDA is defined as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash or non-operating items.

Segment adjusted EBITDA is defined as the segment’s net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition-related expenses and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment.

Investor contact:
Ben Krasinski
Senior Director, Investor Relations
704.816.5644
ben_krasinski@premierinc.com

Media contact:
Amanda Forster
Vice President, Integrated Communications
202.879.8004
amanda_forster@premierinc.com