Premier(PINC) - 2025 Q3 - Quarterly Results

Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Third Quarter Fiscal 2025 Financial Highlights Premier's Q3 FY2025 saw a 9% revenue decrease to $261.4M, but net income improved, exceeding expectations from strong Supply Chain Services Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | $261.4M | -9% | +9% | | Net Income (Cont. Ops) | $27.6M | NM | NM | | Adjusted EBITDA* | $71.7M | -25% | +43% | | Adjusted EPS* | $0.44 | -10% | +76% | - The CEO attributed the better-than-expected results to the Supply Chain Services segment and highlighted the ongoing return of capital to stockholders through a $1B share repurchase authorization, including a new $200M accelerated share repurchase program[3] - Financial results are presented for continuing operations following the divestiture of the S2S Global direct sourcing business. The company is in the process of winding down its Contigo Health business and provides certain financial measures excluding its contributions for clarity[3][48] Fiscal-Year 2025 Guidance Premier raised its full-year FY2025 Adjusted EBITDA and EPS guidance, reaffirming revenue midpoint, driven by strong Q3 performance and share repurchases Updated Fiscal-Year 2025 Guidance (as of May 6, 2025) | Guidance Metric | New FY2025 Range | Previous FY2025 Range | Change | | :--- | :--- | :--- | :--- | | Total Net Revenue Excl. Contigo | $955M - $995M | $940M - $1.01B | Midpoint Unchanged | | Adjusted EBITDA | $247M - $255M | $237M - $253M | Midpoint Increased $6M | | Adjusted EPS | $1.37 - $1.43 | $1.26 - $1.34 | Midpoint Increased $0.10 | | Diluted Weighted Avg. Shares | 91M - 93M | 94M - 96M | Reduced by 3M shares | - Key guidance assumptions were updated, including an increase in the expected range for net administrative fees revenue and an improved free cash flow conversion rate of 50% to 60% of adjusted EBITDA[13] Segment Performance Both Supply Chain Services and Performance Services segments experienced revenue and adjusted EBITDA declines in Q3 FY2025, primarily due to higher member fee share and lower consulting revenue respectively Supply Chain Services Supply Chain Services revenue decreased 8% YoY to $160.9M, with net administrative fees down due to higher member fee share, while adjusted EBITDA declined 16% Supply Chain Services Q3 FY2025 Results (YoY) | Metric | Q3 FY2025 | YoY Change | | :--- | :--- | :--- | | Net Revenue | $160.9M | -8% | | Net Administrative Fees | $142.2M | -10% | | Software & Other Services | $18.7M | +5% | | Segment Adjusted EBITDA | $85.7M | -16% | - The decline in net administrative fees was an expected result of an increased member fee share, while software revenue growth was driven by new co-management engagements and expanded digital solutions[16][17] Performance Services Performance Services revenue decreased 10% YoY to $100.5M due to lower consulting business revenue, leading to a 28% decline in adjusted EBITDA Performance Services Q3 FY2025 Results (YoY) | Metric | Q3 FY2025 | YoY Change | | :--- | :--- | :--- |\ | Net Revenue | $100.5M | -10% | | Segment Adjusted EBITDA | $19.5M | -28% | - The revenue decline was mainly driven by the consulting business, with some offset from the applied sciences business[19] Financial Position and Cash Flow Premier's cash position was $71.3M with $255.0M credit facility outstanding, while nine-month operating cash flow significantly increased to $307.8M due to lower taxes and a legal settlement - Cash and cash equivalents stood at $71.3M, while the outstanding balance on the $1.0B revolving credit facility was $255.0M, with the increase in borrowings largely funding share repurchases[21] - For the first nine months of FY25, net cash provided by operating activities from continuing operations increased to $307.8M from $160.9M YoY. This was mainly due to lower cash taxes paid, a $57.0M cash receipt from a derivative lawsuit settlement, and a $17.6M cash distribution from a minority investment[22] - Non-GAAP free cash flow for the nine months ended March 31, 2025, was $130.3M, a decrease from $143.1M in the prior-year period[24] Capital Allocation Premier actively returned capital via a $1B share repurchase authorization, including a new $200.0M ASR program, and declared a $0.21 per share quarterly dividend - A new $200.0M Accelerated Share Repurchase program (the "2025 ASR") was initiated in February 2025, resulting in an initial delivery of approximately 9.0M shares[27] - The company completed a separate $200.0M market repurchase program in January 2025, buying back approximately 9.5M shares[26] - The Board of Directors declared a quarterly cash dividend of $0.21 per share, payable by June 15, 2025[28] Consolidated Financial Statements](index=9&type=section&id=Consolidated%20Financial%20Statements) Condensed Consolidated Statements of Income For the nine months ended March 31, 2025, net revenue decreased to $749.8M, operating income turned to a loss, but net income from continuing operations increased to $54.7M Income Statement Summary (Nine Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Revenue | $749,790 | $835,763 | | Gross Profit | $544,795 | $635,305 | | Operating Income (Loss) | $(23,748) | $43,665 | | Net Income from Cont. Ops | $54,716 | $43,358 | | Diluted EPS from Cont. Ops | $0.46 | $0.48 | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $3.07B, liabilities increased to $1.55B due to borrowings, and stockholders' equity declined to $1.52B from share repurchases Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $576,425 | $755,257 | | Total Assets | $3,071,792 | $3,401,449 | | Total Current Liabilities | $880,707 | $746,563 | | Total Liabilities | $1,548,807 | $1,439,218 | | Total Stockholders' Equity | $1,522,985 | $1,962,231 | Condensed Consolidated Statements of Cash Flows For the nine months ended March 31, 2025, operating cash flow was $293.4M, while significant cash was used in financing activities, primarily for $400.2M in share repurchases Cash Flow Summary (Nine Months Ended March 31, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $293,444 | $190,270 | | Net Cash used in Investing Activities | $(40,495) | $(54,903) | | Net Cash used in Financing Activities | $(306,721) | $(163,311) | | Net Decrease in Cash | $(53,819) | $(27,937) | Non-GAAP Financial Measures and Reconciliations](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Use and Definitions of Non-GAAP Measures Premier uses non-GAAP measures like Adjusted EBITDA and Free Cash Flow for consistent performance comparison, with revised definitions and supplemental figures excluding Contigo Health for guidance alignment - Management believes non-GAAP measures like Adjusted EBITDA and Adjusted Net Income assist investors in comparing operating performance period-to-period by removing non-cash, non-recurring, and certain other items[32][34][35] - The definitions for Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow were revised to exclude impacts related to the sale of non-healthcare GPO member contracts to OMNIA, ensuring better comparability[47] - Supplemental non-GAAP measures excluding Contigo Health are provided because the business is expected to be wound down by December 31, 2025, and this presentation aligns with the company's financial guidance[48] Reconciliation of Non-GAAP Measures The report provides detailed reconciliations of non-GAAP measures to GAAP, including Q3 FY25 Adjusted EBITDA of $71.7M and nine-month Free Cash Flow of $130.3M, with separate Contigo Health adjustments Reconciliation to Free Cash Flow (Nine Months Ended March 31, 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities from continuing operations | $307,780 | | Less: Early termination payments, Purchases of property/equipment, etc. | $(177,459) | | Free cash flow | $130,321 | Reconciliation to Adjusted EBITDA (Q3 FY2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income (loss) from continuing operations | $27,613 | | Plus: Interest, Taxes, D&A, and other adjustments | $44,133 | | Adjusted EBITDA | $71,746 | Reconciliation to Adjust for Contigo Health (Q3 FY2025, in thousands) | Metric | As Reported | Contigo Impact | Excluding Contigo | | :--- | :--- | :--- | :--- | | Net Revenue | $261,382 | $(6,118) | $255,264 | | Adjusted EBITDA | $71,746 | $860 | $72,606 | | Adjusted EPS | $0.44 | $0.02 | $0.46 | Other Information](index=5&type=section&id=Other%20Information) Conference Call and Webcast Premier held a conference call and webcast on May 6, 2025, to discuss financial performance and outlook, with access details provided for the event and replay - A conference call and webcast were held at 8:00 a.m. ET on the day of the earnings release to discuss the results[29] Cautionary Note Regarding Forward-Looking Statements This section cautions that forward-looking statements, including financial guidance and strategic plans, are subject to risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements concerning future financial performance, business strategies (including the Contigo Health wind-down), and capital allocation, which are subject to significant risks and uncertainties[52]