Premier goes public in IPO valued at $760 million

(Article updated at 11:50 a.m. ET.)

Premier, one of the nation's largest group purchasing organizations, went public today with an initial stock offering valued at $760.1 million. The IPO steers nearly 20% of the proceeds, after underwriters' standard 6% take, to the company for working capital.

About three-quarters will go to Premier's 181 member-owner hospitals in the form of stock that can be sold over the next seven years.

Shares were priced at $27—exceeding Premier's upper estimate of $26—and were trading at $30 Thursday morning on Nasdaq under the ticker symbol PINC.

The Charlotte, N.C.-based company suggested a price range of $23 to $26 in a Sept. 16 regulatory filing. Premier said it expected to raise about $648.3 million, or $745.6 million if underwriters exercise their overallotment option. Underwriters have a 30-day option to purchase another 4.2 million shares at the IPO price.

Premier, which provides a range of GPO, supply chain, consulting, pharmacy and insurance services, was previously owned by its hospital members, who will continue to have a significant stake in the company and its subsidiaries.

In recent years, Premier has rolled out quality initiatives and developed data and analytics tools used by hospitals to manage supply costs, improve quality and safety, and promote better population health management. The company is competing aggressively with its GPO peers and also a variety of other healthcare players racing to satisfy this growing demand.

“We believe the future for healthcare providers in the United States will require transformational change, due to intense cost pressures, a shifting competitive landscape, a changing regulatory environment, the evolving use of data and analytics and the transition to a fundamentally different payment model,” the company said in an Aug. 26 regulatory filing laying the groundwork for the IPO.

New investors were issued Class A shares, while Premier's hospital owners received Class B shares. Under a new organizational structure, Premier's owners will retain about 80% of the voting power in the company. Class A shareholders will have about 20% of the voting power and all of the economic interest.

Proceeds from the IPO will be used for working capital and general corporate purposes, including potential acquisitions and unspecified development opportunities, according to the IPO prospectus.

Follow Beth Kutscher on Twitter: @MHbkutscher