Premier(PINC) - 2025 Q4 - Annual Results

Executive Summary & Highlights Fiscal-Year 2025 Fourth Quarter Highlights Premier's Q4 FY2025 total net revenue decreased 12% year-over-year, with net income and Adjusted EBITDA also declining Fiscal-Year 2025 Fourth Quarter Highlights (in millions of USD) | Metric | FY2025 Q4 | FY2024 Q4 | % Change (YoY) | % Change (QoQ) | | :-------------------------------- | :-------- | :-------- | :-------------- | :-------------- | | Total Net Revenue | $262.9 | $300.2 | (12%) | 1% | | Net Income from Continuing Operations | $18.0 | $60.9 | (70%) | N/A | | Diluted EPS from Continuing Operations | $0.22 | $0.57 | (61%) | N/A | | Adjusted EBITDA | $68.9 | $104.0 | (34%) | (4%) | | Adjusted EPS | $0.43 | $0.61 | (30%) | (2%) | - Fourth-quarter total net revenue of $262.9 million (or $258.0 million excluding Contigo Health) exceeded company expectations[4] - Fourth-quarter adjusted EPS of $0.46 (excluding Contigo Health) contributed to full-year adjusted EPS above the high end of guidance[4] Fiscal-Year 2025 Full-Year Highlights For FY2025, Premier's overall revenue and profitability exceeded expectations, driven by Supply Chain Services, with strong cash flow Fiscal-Year 2025 Full-Year Highlights (in millions of USD) | Metric | FY2025 | FY2024 | % Change (YoY) | | :-------------------------------- | :------- | :------- | :-------------- | | Total Net Revenue | $1,012.6 | $1,136.0 | (11%) | | Net Income from Continuing Operations | $72.7 | $104.2 | (30%) | | Diluted EPS from Continuing Operations | $0.68 | $1.02 | (33%) | | Adjusted EBITDA | $253.1 | $389.0 | (35%) | | Adjusted EPS | $1.46 | $2.08 | (30%) | | Net Cash Provided by Operating Activities (Continuing Operations) | $417.8 | $278.1 | 50% | | Free Cash Flow | $180.5 | $228.0 | (21%) | - Full-year net cash provided by operating activities from continuing operations of $417.8 million and free cash flow of $180.5 million were better than anticipated[4] CEO Commentary & Strategic Updates The CEO highlighted strong year-end performance, exceeding expectations due to Supply Chain Services, returning capital, and divesting businesses - Overall revenue and profitability for the year exceeded expectations, largely due to better-than-anticipated results in the Supply Chain Services segment[3] - The company returned capital to stockholders through quarterly cash dividends and completed a $200 million accelerated share repurchase program[3] - Premier divested the S2S Global direct sourcing business on October 1, 2024[3] - Efforts to transfer to partners or wind down certain components of the Contigo Health business are ongoing, with results continuing to include contributions from this business[3] Consolidated Financial Results (Continuing Operations) GAAP Financial Highlights Premier's GAAP results for Q4 and full-year FY2025 show declines in net revenue, net income, and diluted EPS Three Months Ended June 30, 2025 vs 2024 (GAAP, in thousands of USD) | Metric | 2025 (in thousands of USD) | 2024 (in thousands of USD) | % Change | | :------------------------------------------------- | :------------------ | :------------------ | :------- | | Net revenue | $262,857 | $300,246 | (12%) | | Supply Chain Services: Net administrative fees | $150,052 | $166,146 | (10%) | | Supply Chain Services: Software licenses, other services and support | $19,948 | $18,262 | 9% | | Total Supply Chain Services | $170,000 | $184,408 | (8%) | | Performance Services | $92,857 | $115,838 | (20%) | | Net income from continuing operations | $18,018 | $60,861 | (70%) | | Diluted earnings per share from continuing operations | $0.22 | $0.57 | (61%) | Year Ended June 30, 2025 vs 2024 (GAAP, in thousands of USD) | Metric | 2025 (in thousands of USD) | 2024 (in thousands of USD) | % Change | | :------------------------------------------------- | :------------------ | :------------------ | :------- | | Net revenue | $1,012,647 | $1,136,009 | (11%) | | Supply Chain Services: Net administrative fees | $556,328 | $624,168 | (11%) | | Supply Chain Services: Software licenses, other services and support | $74,711 | $65,200 | 15% | | Total Supply Chain Services | $631,039 | $689,368 | (8%) | | Performance Services | $381,608 | $446,641 | (15%) | | Net income from continuing operations | $72,734 | $104,219 | (30%) | | Diluted earnings per share from continuing operations | $0.68 | $1.02 | (33%) | Non-GAAP Financial Highlights Non-GAAP measures, including Adjusted EBITDA and Adjusted EPS, experienced significant year-over-year decreases for Q4 and FY2025 Three Months Ended June 30, 2025 vs 2024 (Non-GAAP, in thousands of USD) | Metric | 2025 (in thousands of USD) | 2024 (in thousands of USD) | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | | Adjusted EBITDA | $68,856 | $104,013 | (34%) | | Adjusted EBITDA excluding Contigo Health | $71,108 | $106,045 | (33%) | | Adjusted net income | $35,743 | $64,482 | (45%) | | Adjusted EPS | $0.43 | $0.61 | (30%) | | Adjusted EPS excluding Contigo Health | $0.46 | $0.64 | (28%) | Year Ended June 30, 2025 vs 2024 (Non-GAAP, in thousands of USD) | Metric | 2025 (in thousands of USD) | 2024 (in thousands of USD) | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | | Adjusted EBITDA | $253,120 | $388,985 | (35%) | | Adjusted EBITDA excluding Contigo Health | $260,435 | $396,191 | (34%) | | Adjusted net income | $133,752 | $237,846 | (44%) | | Adjusted EPS | $1.46 | $2.08 | (30%) | | Adjusted EPS excluding Contigo Health | $1.54 | $2.17 | (29%) | Fiscal-Year 2026 Guidance Key Guidance Metrics Premier projects FY2026 total net revenue (excluding Contigo Health) between $940 million and $1 billion, with Adjusted EBITDA of $230-245 million Fiscal-Year 2026 Guidance Range (as of August 19, 2025, in millions of USD) | Guidance Metric | Range | | :-------------------------------- | :-------------------- | | Supply Chain Services Net Revenue | $590 million to $620 million | | Performance Services Net Revenue Excluding Contigo Health | $350 million to $380 million | | Total Net Revenue Excluding Contigo Health | $940 million to $1 billion | | Adjusted EBITDA | $230 million to $245 million | | Adjusted Net Income | $110 million to $120 million | | Adjusted EPS | $1.33 to $1.43 | | Diluted Weighted Average Shares | 81 million to 83 million | Key Assumptions FY2026 guidance relies on specific revenue targets for Supply Chain Services, $80 million in capital expenditures, and a 23-25% effective income tax rate - Net administrative fees revenue of $520 million to $540 million, including $65 million to $75 million from non-healthcare member purchasing[13] - Supply Chain Services segment software licenses, other services and support revenue of $70 million to $80 million[13] - Capital expenditures of approximately $80 million[13] - Effective income tax rate in the range of 23% to 25%, with a cash income tax rate of less than 5%[13] - Free cash flow conversion of 70% to 80% of adjusted EBITDA[13] - Guidance excludes financial contributions from Contigo Health, as its remaining operations are expected to be transitioned or wound down by December 31, 2025[13] Results of Operations (Q4 2025 vs Q4 2024) GAAP Performance Analysis Q4 FY2025 GAAP net revenue decreased 12% year-over-year, with net income from continuing operations falling 70% due to lower revenue and increased operating expenses - GAAP net revenue decreased 12% to $262.9 million from $300.2 million in the prior-year period[9] - GAAP net income from continuing operations decreased by $42.8 million (70%) to $18.0 million, primarily due to lower net revenue and increased operating expenses (stock-based compensation, asset impairments)[10] - GAAP diluted EPS from continuing operations decreased by $0.35 to $0.22, driven by lower net income, partially offset by a decrease in diluted weighted average shares outstanding due to share repurchases[11] Non-GAAP Performance Analysis Q4 FY2025 Adjusted EBITDA decreased 34% year-over-year, with Adjusted net income declining 45% and Adjusted EPS decreasing 30% - Adjusted EBITDA decreased 34% to $68.9 million from $104.0 million in the prior-year period[12] - Adjusted net income decreased 45% to $35.7 million, primarily due to factors impacting adjusted EBITDA and an increase in interest expense, partially offset by a decrease in the effective income tax rate[13] - Adjusted EPS decreased 30% to $0.43 from $0.61 in the prior-year period[13] Segment Results (Q4 2025 vs Q4 2024) Supply Chain Services The Supply Chain Services segment experienced an 8% decrease in net revenue in Q4 FY2025, primarily due to lower net administrative fees - Supply Chain Services segment net revenue decreased 8% to $170.0 million from $184.4 million, largely due to lower net administrative fees revenue[14] - Net administrative fees revenue decreased 10% to $150.1 million, driven by an expected increase in aggregate blended member fee share, partially offset by growth in member purchasing[15] - Software licenses, other services and support revenue increased 9% to $19.9 million, driven by new engagements in supply chain co-management and expansion of digital supply chain solutions[16] - Segment adjusted EBITDA decreased 18% to $90.0 million, mainly due to the decrease in net administrative fees revenue and additional investments in the supply chain co-management business[17] Performance Services The Performance Services segment saw a 20% decrease in net revenue in Q4 FY2025, mainly due to lower consulting business revenue and timing of license revenue - Performance Services segment net revenue decreased 20% to $92.9 million from $115.8 million, primarily due to lower consulting business revenue and timing of license revenue[18] - Segment adjusted EBITDA decreased 48% to $17.2 million from $32.8 million, mainly due to the decrease in revenue, partially offset by a decrease in employee-related costs[18] Liquidity and Cash Flows As of June 30, 2025, Premier's cash and cash equivalents decreased to $83.7 million, with operating cash flow increasing significantly, but free cash flow declined Liquidity and Cash Flow Summary (Year Ended June 30, in thousands of USD) | Metric | 2025 (in thousands of USD) | 2024 (in thousands of USD) | % Change | | :------------------------------------------------- | :------------------ | :------------------ | :------- | | Cash and cash equivalents (period end) | $83,725 | $125,146 | (33%) | | Revolving credit facility outstanding balance | $280,000 | $1,008 | >100% | | Net cash provided by operating activities from continuing operations | $417,809 | $278,143 | 50% | | Net cash used in investing activities | $(102,095) | $(68,466) | (49%) | | Net cash used in financing activities | $(340,733) | $(192,720) | (77%) | | Non-GAAP free cash flow | $180,529 | $228,046 | (21%) | - Net cash provided by operating activities from continuing operations increased to $417.8 million, mainly due to lower cash taxes paid in the prior year, a $57.0 million derivative lawsuit settlement, and a $17.6 million cash distribution from a minority investment[20] - Net cash used in investing activities increased to $102.1 million, primarily due to the acquisition of IllumiCare, Inc., partially offset by net cash from asset sales[21] - Net cash used in financing activities increased to $340.7 million, largely due to the timing of net cash proceeds from the sale of non-healthcare GPO operations received in the prior year, offset by current-year net borrowings and decreased cash dividends[22] Return of Capital to Stockholders Premier completed $800.0 million in common stock repurchases, including a $200.0 million accelerated share repurchase program, and paid $77.4 million in dividends - Repurchased an aggregate of $800.0 million of Common Stock under the Share Repurchase Authorization, which expired on June 30, 2025[24] - Completed a $200.0 million accelerated share repurchase program in August 2025[24] - Paid aggregate dividends of $77.4 million to holders of Common Stock during fiscal-year 2025[25] - Declared a quarterly cash dividend of $0.21 per share, payable on September 15, 2025[25] Company Information & Non-GAAP Measures About Premier, Inc. Premier, Inc. is a technology-driven healthcare improvement company providing solutions to two-thirds of U.S. healthcare providers - Premier, Inc. is a leading technology-driven healthcare improvement company[28] - Provides solutions to two-thirds of all healthcare providers in the U.S[28] - Offers integrated data and analytics, collaboratives, supply chain solutions, and consulting services[28] Premier's Use and Definitions of Non-GAAP Measures Premier uses non-GAAP measures like Adjusted EBITDA and Free Cash Flow for consistent performance comparison, with definitions revised in FY2025 - Non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Free Cash Flow) are used to compare operating performance consistently and provide a more complete understanding of business factors and trends[29] - Adjusted EBITDA and segment adjusted EBITDA definitions were revised to exclude operating income from revenues sold to OMNIA[44] - Adjusted net income definition was revised to exclude operating income from revenues sold to OMNIA, imputed interest expense, and associated income tax expense[44] - Free cash flow definition was revised to exclude cash payments to OMNIA for the sale of future revenues and related tax payments[44] - Supplemental non-GAAP measures (e.g., excluding Contigo Health) are provided to align with FY2025 guidance, given the expected transition or wind-down of Contigo Health by December 31, 2025[45] Premier's Use of Forward-Looking Non-GAAP Measures Premier does not fully reconcile forward-looking non-GAAP guidance to GAAP due to estimation difficulties for non-core items, and excludes Contigo Health contributions - The company does not meaningfully reconcile forward-looking non-GAAP guidance to GAAP measures due to the inability to reasonably estimate certain significant reconciling items without unreasonable effort[47] - Forward-looking guidance excludes financial contributions from Contigo Health, as its remaining businesses are expected to be substantially transitioned or wound down by December 31, 2025[48] Cautionary Note Regarding Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, and readers should not place undue reliance on them - Statements regarding future financial performance, business strategies, Contigo Health transition, share repurchases, and dividends are forward-looking and subject to risks and uncertainties[49] - Readers should not place undue reliance on forward-looking statements, as actual results may differ materially[50] - Premier undertakes no obligation to publicly update or revise any forward-looking statements[50] Financial Statements Consolidated Statements of Income The Consolidated Statements of Income detail Premier's revenues, costs, operating expenses, and net income for Q4 and full-year FY2025 and FY2024 Consolidated Statements of Income (Selected Data, in thousands of USD, except per share data) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | :------ | :------ | | Net revenue | $262,857 | $300,246 | $1,012,647 | $1,136,009 | | Gross profit | $198,564 | $231,819 | $743,359 | $867,124 | | Operating income | $24,864 | $82,981 | $1,116 | $126,646 | | Net income from continuing operations | $18,018 | $60,861 | $72,734 | $104,219 | | Net income attributable to stockholders | $18,435 | $60,676 | $20,269 | $119,544 | | Diluted earnings per share from continuing operations | $0.22 | $0.57 | $0.68 | $1.02 | Consolidated Balance Sheets The Consolidated Balance Sheets present Premier's financial position as of June 30, 2025, and 2024, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (Selected Data, in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $83,725 | $125,146 | | Total current assets | $585,803 | $755,257 | | Total assets | $3,097,074 | $3,401,449 | | Total current liabilities | $910,633 | $746,563 | | Total liabilities | $1,566,497 | $1,439,218 | | Total stockholders' equity | $1,530,577 | $1,962,231 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows outline Premier's cash generated and used by operating, investing, and financing activities for FY2025 and FY2024 Consolidated Statements of Cash Flows (Selected Data, in thousands of USD) | Metric | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | | Net cash provided by operating activities | $401,429 | $296,560 | | Net cash used in investing activities | $(102,095) | $(68,466) | | Net cash used in financing activities | $(340,733) | $(192,720) | | Net (decrease) increase in cash and cash equivalents | $(41,421) | $35,353 | | Cash and cash equivalents at end of period | $83,725 | $125,146 | Supplemental Financial Information & Reconciliations Free Cash Flow Reconciliation This section reconciles net cash provided by operating activities from continuing operations to free cash flow, detailing key adjustments Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Free Cash Flow (in thousands of USD) | Metric | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | | Net cash provided by operating activities from continuing operations | $417,809 | $278,143 | | Early termination payments to certain former limited partners | $(101,524) | $(99,665) | | Purchases of property and equipment | $(82,649) | $(81,189) | | Cash payments to OMNIA for the sale of future revenues | $(53,107) | $(31,535) | | Cash tax payments on proceeds received from the sale of future revenues | — | $162,292 | | Free cash flow | $180,529 | $228,046 | - Early termination payments to former limited partners were paid in full by June 30, 2025[59] Adjusted EBITDA Reconciliation This reconciliation details adjustments from net income from continuing operations to Adjusted EBITDA, including various non-cash and non-recurring items, and provides segment-level Adjusted EBITDA Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA (in thousands of USD) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | :------ | :------ | | Net income from continuing operations | $18,018 | $60,861 | $72,734 | $104,219 | | EBITDA | $60,957 | $117,087 | $232,903 | $275,937 | | Stock-based compensation | $7,669 | $205 | $23,700 | $23,876 | | Impairment of assets | $10,810 | — | $144,481 | $140,053 | | Operating income from revenues sold to OMNIA | $(16,840) | $(15,624) | $(62,469) | $(55,283) | | Adjusted EBITDA | $68,856 | $104,013 | $253,120 | $388,985 | | Adjusted EBITDA excluding Contigo Health | $71,108 | $106,045 | $260,435 | $396,191 | Segment Adjusted EBITDA (in thousands of USD) | Segment | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Supply Chain Services | $89,986 | $109,617 | $326,902 | $409,669 | | Performance Services | $17,170 | $32,820 | $60,692 | $113,845 | | Corporate | $(38,300) | $(38,424) | $(134,474) | $(134,529) | | Total Adjusted EBITDA | $68,856 | $104,013 | $253,120 | $388,985 | Adjusted Net Income Reconciliation This section reconciles net income attributable to stockholders to adjusted net income by adjusting for various non-recurring and non-operating items Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income (in thousands of USD) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | :------ | :------ | | Net income attributable to stockholders | $18,435 | $60,676 | $20,269 | $119,544 | | Net loss (income) from discontinued operations, net of tax | $137 | $256 | $41,901 | $(2,500) | | Income tax expense | $7,083 | $25,723 | $25,315 | $42,302 | | Amortization of purchased intangible assets | $9,499 | $9,794 | $38,189 | $47,026 | | Stock-based compensation | $7,669 | $205 | $23,700 | $23,876 | | Impairment of assets | $10,810 | — | $144,481 | $140,053 | | Operating income from revenues sold to OMNIA | $(16,840) | $(15,624) | $(62,469) | $(55,283) | | Adjusted income before income taxes | $47,030 | $88,331 | $175,989 | $325,816 | | Income tax expense on adjusted income before income taxes | $11,287 | $23,849 | $42,237 | $87,970 | | Adjusted net income | $35,743 | $64,482 | $133,752 | $237,846 | Adjusted EPS Reconciliation This reconciliation details adjustments from GAAP EPS to Adjusted EPS, accounting for various non-recurring and non-operating items, corporate taxes, and dilutive shares Reconciliation of GAAP EPS to Adjusted EPS (in thousands of USD, except per share data) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :------------------------------------------------- | :------ | :------ | :------ | :------ | | Net income attributable to stockholders | $18,435 | $60,676 | $20,269 | $119,544 | | Adjusted net income | $35,743 | $64,482 | $133,752 | $237,846 | | Basic earnings per share attributable to stockholders | $0.22 | $0.58 | $0.22 | $1.05 | | Adjusted earnings per share | $0.43 | $0.61 | $1.46 | $2.08 | | Adjusted earnings per share excluding Contigo Health | $0.46 | $0.64 | $1.54 | $2.17 | Contigo Health Adjustments Reconciliation This section reconciles net revenue, Adjusted EBITDA, and Adjusted EPS to exclude Contigo Health's financial contributions, providing a clearer view of continuing operations Reconciliation of Certain Financial Measures to Adjust for Contigo Health (in thousands of USD, except per share data) | Metric | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net revenue | $262,857 | $300,246 | $1,012,647 | $1,136,009 | | Less: Contigo Health | $(4,885) | $(8,585) | $(26,694) | $(39,846) | | Net revenue excluding Contigo Health | $257,972 | $291,661 | $985,953 | $1,096,163 | | Adjusted EBITDA | $68,856 | $104,013 | $253,120 | $388,985 | | Add: Loss from Contigo Health | $2,252 | $2,032 | $7,315 | $7,206 | | Adjusted EBITDA excluding Contigo Health | $71,108 | $106,045 | $260,435 | $396,191 | | Adjusted EPS | $0.43 | $0.61 | $1.46 | $2.08 | | Add: Loss from Contigo Health | $0.03 | $0.03 | $0.08 | $0.09 | | Adjusted EPS excluding Contigo Health | $0.46 | $0.64 | $1.54 | $2.17 |