Acquisitions contributed to a strong quarter for Premier, a publicly traded healthcare supply chain and performance services company. Now with more than $1 billion to invest in growth, the company is looking for more deals.
Charlotte, N.C.-based Premier, one of two publicly traded group purchasing organizations, ended its second quarter last December with net income of $65.8 million on revenue of $249.4 million, the company reported. Net income increased roughly 28% from the same three months a year ago; revenue was up about 19%.
Susan DeVore, Premier's president and chief executive, told analysts that the company would consider “larger, transformative” deals. “It's very much a part of our strategic DNA,” she said. The company has roughly $1.2 billion in cash and debt to invest in growth and deals, she said.
Premier is one of the largest healthcare GPOs and has worked aggressively to expand its footprint in data and analytics services, The company rapidly reached a string of deals after its October 2013 initial public offering and told analysts Monday that those acquisitions contributed to its results and increased revenue for its performance service segment.
The latest deal gave Premier full ownership of S2S Global, a direct sourcing company that competes against manufacturers and distributors to directly supply hospitals.
The company's other acquisitions include a data integration company, one that manages physician preference contracts and a capital planning analytics provider.
Premier isn't the sector's only dealmaker. VHA and UHC—the owners behind the joint venture Novation, a rival GPO—announced a merger last week. The deal is expected to close in March.
Premier raised net revenue expectations for the year but said its advisory services would see a slowdown after the December 2014 end of the CMS Innovation Center's Partnership for Patients initiative. Premier had expected to see revenue from the partnership continue because the company intended to keep it going with participating hospitals. But the hospitals have declined, DeVore said, because they believe HHS may extend federal support.
Premier's bottom line for the quarter was bolstered by a significant decrease in its income tax expense, which declined to $4.2 million for the second quarter from $14.3 million in the second quarter a year earlier.
For the six months that ended in December, Premier reported net income of $130.7 million on revenue of $478.6 million.
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