Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal year 2023 fourth quarter and full year ended June 30, 2023.
"I would like to express my gratitude to our employees for their hard work and ongoing commitment as we continue to serve our vital role as a trusted and embedded partner for our healthcare provider members and other customers as they navigate a very challenging market environment," said Michael J. Alkire, Premier's President and CEO. "Leveraging our unique vantage point at the intersection of providers, suppliers, employers, government agencies and other stakeholders, we continued to focus on innovating around the capabilities that our members and other customers will need in the future as they deliver high-quality, cost-effective healthcare to the communities they serve."
"Our Board of Directors and management team continue to make progress related to our ongoing evaluation of potential strategic alternatives and I am pleased to announce that we closed on the sale of our non-healthcare GPO operations," Alkire continued. "Through this transaction we were able to unlock substantial value for our stockholders by selling a non-core asset and we plan to evaluate the highest return opportunities for deploying the proceeds, including reinvesting in the business, acquisitions that enhance the value of our business and/or the potential to return capital to stockholders."
Consolidated Financial Highlights | ||||||||||||||||||||||
Three Months Ended June 30, | Year Ended June 30, | |||||||||||||||||||||
(in thousands, except per share data) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||
Net revenue: | ||||||||||||||||||||||
Supply Chain Services: | ||||||||||||||||||||||
Net administrative fees | $ | 158,165 | $ | 152,867 | 3 | % | $ | 611,035 | $ | 601,128 | 2 | % | ||||||||||
Software licenses, other services and support | 8,298 | 10,146 | (18 | %) | 44,261 | 37,312 | 19 | % | ||||||||||||||
Services and software licenses | 166,463 | 163,013 | 2 | % | 655,296 | 638,440 | 3 | % | ||||||||||||||
Products | 61,593 | 69,681 | (12 | %) | 244,659 | 393,506 | (38 | %) | ||||||||||||||
Total Supply Chain Services | 228,056 | 232,694 | (2 | %) | 899,955 | 1,031,946 | (13 | %) | ||||||||||||||
Performance Services | 112,317 | 108,021 | 4 | % | 436,177 | 400,983 | 9 | % | ||||||||||||||
Total segment net revenue | 340,373 | 340,715 | — | % | 1,336,132 | 1,432,929 | (7 | %) | ||||||||||||||
Eliminations | (9 | ) | (9 | ) | — | % | (37 | ) | (28 | ) | 32 | % | ||||||||||
Net revenue | $ | 340,364 | $ | 340,706 | — | % | $ | 1,336,095 | $ | 1,432,901 | (7 | %) | ||||||||||
Net income | $ | 18,905 | $ | 30,711 | (38 | %) | $ | 174,887 | $ | 268,318 | (35 | %) | ||||||||||
Net income attributable to stockholders | $ | 21,463 | $ | 29,903 | (28 | %) | $ | 175,026 | $ | 265,867 | (34 | %) | ||||||||||
Diluted earnings per share attributable to stockholders | $ | 0.18 | $ | 0.25 | (28 | %) | $ | 1.46 | $ | 2.19 | (33 | %) | ||||||||||
Consolidated Financial Highlights | ||||||||||||||||||||||
Three Months Ended June 30, | Year Ended June 30, | |||||||||||||||||||||
(in thousands, except per share data) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||
NON-GAAP FINANCIAL MEASURES*: | ||||||||||||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||||
Supply Chain Services | $ | 128,203 | $ | 119,269 | 7 | % | $ | 499,431 | $ | 500,854 | — | % | ||||||||||
Performance Services | 36,272 | 37,661 | (4 | %) | 123,859 | 126,938 | (2 | %) | ||||||||||||||
Total segment adjusted EBITDA | 164,475 | 156,930 | 5 | % | 623,290 | 627,792 | (1 | %) | ||||||||||||||
Corporate | (31,894 | ) | (34,155 | ) | 7 | % | (123,507 | ) | (129,110 | ) | 4 | % | ||||||||||
Total | $ | 132,581 | $ | 122,775 | 8 | % | $ | 499,783 | $ | 498,682 | — | % | ||||||||||
Adjusted net income | $ | 81,680 | $ | 73,490 | 11 | % | $ | 299,330 | $ | 302,738 | (1 | %) | ||||||||||
Adjusted earnings per share (EPS) | $ | 0.68 | $ | 0.61 | 11 | % | $ | 2.50 | $ | 2.49 | — | % | ||||||||||
* Refer to the supplemental financial information at the end of this release for reconciliation of reported GAAP results to non-GAAP results. | ||||||||||||||||||||||
Results of Operations for the Three Months Ended June 30, 2023
(As compared with the three months ended June 30, 2022)
GAAP net revenue of $340.4 million was flat compared to $340.7 million in the year-ago period. GAAP net revenue was impacted by a decline in direct sourcing products revenue as a result of the impact of excess market supply and members' and other customers' inventory levels and the continued normalization of COVID-19 pandemic-driven demand and pricing for personal protective equipment (PPE) and other related supplies partially offset by growth in net administrative fees and Performance Services segment revenue.
GAAP net income of $18.9 million decreased 38% from $30.7 million in the prior-year period primarily due to the increase in impairment of assets as a result of the goodwill impairment in the current year period primarily attributable to Contigo Health. This decrease in net income was partially offset by lower stock-based compensation expense resulting from lower achievement of performance share awards, lower cost of revenue in the company's direct sourcing business, primarily driven by logistics costs and reduction of inventory reserves, and the impact of the cost-savings plan enacted in the third quarter of fiscal 2023.
GAAP diluted EPS of $0.18 decreased 28% from $0.25 in the same period a year ago due to the aforementioned drivers affecting GAAP net income quarter-over-quarter growth.
Adjusted EBITDA of $132.6 million increased 8% from $122.8 million for the same period a year ago primarily due to an increase in Supply Chain Services adjusted EBITDA and lower corporate expenses partially offset by a decrease in Performance Services adjusted EBITDA. Refer to Supply Chain Services and Performance Services sections below for further discussion on the factors that impacted each segment during the quarter.
Adjusted net income of $81.7 million increased 11% from $73.5 million for the same period a year ago. Adjusted EPS of $0.68 increased 11% from $0.61 for the same period a year ago primarily as a result of the same factors that impacted adjusted EBITDA.
Segment Results
(For the fiscal fourth quarter of 2023 as compared with the fiscal fourth quarter of 2022)
Supply Chain Services
Supply Chain Services segment net revenue of $228.1 million decreased 2% from $232.7 million for the same quarter a year ago, primarily reflecting lower products revenue that was partially offset by higher net administrative fees revenue in the fourth quarter of fiscal 2023, as described below.
Net administrative fees revenue of $158.2 million increased 3% from the year ago quarter driven by growth in both Premier's acute and non-acute, or "Continuum of Care," group purchasing organization ("GPO") programs primarily due to recovery of member volumes and further penetration of existing member spend. These increases were partially offset by the following factors: the continued normalization of demand and pricing across certain categories; continued regional variation in patient utilization trends affecting member purchasing; and an increase in aggregate blended mem
