Charlotte, N.C.-based Premier saw profits rise in the quarter ended Sept. 30 on strong gains from the company's group purchasing operations as well as its growing analytics business.
The purchasing and performance-improvement company reported $56 million in adjusted, fully distributed net income during the first quarter, up 17% from $47.8 million during the same period last fiscal year.
That adjusted figure reflects ongoing exchanges of GPO member-owners' Class B stock into Class A stock after the company's initial public offering in late 2013. Premier reports the financials as if all members have exchanged their stock and the company was fully public, though member-owners still retained about 74% of ownership in Class B stock at the end of fiscal 2015.
Without the adjustment, Premier reported $52.3 million in profit, down from $64.9 million. Premier attributes that decline to higher stock-based compensation resulting from an increase in projections for the executives' performance incentives, as well as some changes in state taxes. Premier, however, says the non-adjusted figures don't accurately portray the company's operating performance, in part due to the Class B stock exchange process.
Revenue grew 18% to $270.8 million year over year. That's thanks to a 26% jump in revenue from Premier's performance-improvement services and a 15% gain in GPO and supply chain service revenue.
Premier continues to see strong subscriptions and renewals of its PremierConnect software-as-a-service, which, in addition to consulting services, contributed to strong gains in the company's performance services segment.
The supply chain segment, which accounts for nearly three-quarters of the company's total receipts, benefited from an 11% increase in administrative fees paid by vendors and a 22% rise in product sales due to growth in the company's direct sourcing and specialty pharmacy businesses, according to its earnings report.
Premier, which has a GPO serving 3,600 hospitals, will soon face heightened competition from VHA-UHC Alliance. The Irving, Texas-based organization has entered an agreement to ">acquire MedAssets' GPO and consulting business
Premier Chief Operating Officer Mike Alkire said during a conference call that the company continues to look for potential M&A targets, including companies that can help it expand its presence in the non-acute space, integrated pharmacy, management of physician-preference items and population health management.
The company affirmed its fiscal 2016 guidance of $1.1 billion to $1.2 billion in revenue, a 14% to 17% increase from fiscal 2015. The company expects adjusted fully distributed earnings of $1.54 to $1.62 per share, an increase of about 8% to 13% from the year before.
