In the first months of 2014 Premier saw double-digit revenue growth in its core group-purchasing business as well as in the performance services segment that the company is working aggressively to grow.
Net revenue was up 16% in the quarter that ended March 31, the third of Premier's fiscal 2014, due to increased product sales and fees associated with higher volume in its GPO business.
The Charlotte, N.C.-based company went public last year seeking to strengthen its position providing services to hospitals under increasing pressure to cut costs and improve quality. Premier and Alpharetta, Ga.-based MedAssets are the only two publicly traded GPOs.
Net revenue was $225.6 million in the third quarter of 2014, up 16.2% compared with pro forma net revenue of $194.1 million for the same period a year ago. Net income rose 9% to $47.8 million during same period.
The growth was led by 17% revenue growth in the supply chain service segment, which makes up about 75% of Premier’s business. Revenue for this segment was $167.8 million in the third quarter of 2014. Revenue in the company’s performance services segment, which includes its informatics and advisory services, increased 13% to $58.6 million.
Net administrative fees rose 3% to $108.1 million on a pro-forma basis, an increase that Premier President and CEO Susan DeVore described as “healthy” during a call with investors. GPOs can earn up to 3% in administrative fees on contracts they negotiate with medical suppliers for their hospital members.
Premier said it expects total net revenue between $859 million and $869 million in 2014.
DeVore told investors that the company continues to look for new acquisitions that can help healthcare providers improve performance in categories such as population health, quality or costs. Premier has made three deals since it went public in 2013, most recently acquiring capital equipment sourcing and analytics company MEMdata in April.
“The pipeline of potential acquisitions is very active,” she said.
Follow Jaimy Lee on Twitter: @MHjlee
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