Strong 2nd-quarter growth seen in Premier's non-GPO business

Premier, one of the dominant group purchasing organizations in healthcare, reported strong growth in its non-GPO business in its fiscal 2014 second quarter ended Dec. 31, 2013, as well as the first half of its fiscal year, showing it has made inroads in health technology.

Sales in its performance-services segment, which includes healthcare informatics and advisory services, rose 13% in the six months ended in December, faster than overall company revenue, which rose 11%, and supply-chain services segment revenue, which rose 10% in the same six-month period.

The results are the second the company has reported since becoming a publicly traded company last September.

Premier is forecasting performance services segment revenue growth of 13%-16% for the entire fiscal 2014 while projecting growth of 11%-13% in supply-chain services and 11%-13% growth for overall company revenue.

“In Performance Services, demand for our SaaS-based (software-as-a-service) subscriptions, advisory services and performance-improvement collaborative programs delivered 15% revenue growth from a year ago, with segment adjusted EBITDA increasing 29%,” said Susan DeVore, president and CEO, speaking specifically about second-quarter results. “We are helping prepare for changing delivery and payment models that are part of this industry's shift toward population health management.”

Performance-services revenue rose 15% to $58 million in the second quarter. The segment accounted for 28% of the company's $208.9 million in total revenue for the quarter.

Net income for the three months ended Dec. 31 hit $51.5 million compared with $85.4 million in the same period last year. Net income for the first six months of its fiscal year stood at $164 million compared with $170 million in the same period the prior year.

The company reported actual and pro forma financials because it believes actual data do not reflect the impact of the company's reorganization and IPO, it said. Looking at pro forma numbers for past performance, it realized a 3% increase in adjusted fully distributed net income to $43.3 million.

Charlotte, N.C.-based Premier launched a $760 million IPO last September. Shares carried an offering price of $27 but quickly rose. Premier common closed at $35.01 Friday after the company's earnings announcement. About three-quarters of the IPO proceeds were scheduled to go to Premier's 181 member-owner hospitals in the form of stock that could be sold over seven years.