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November 07, 2016 12:00 AM

Premier reports jump in Q1 profits, announces new physician analytics product

Adam Rubenfire
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    Premier reported a rise in its fiscal 2017 first-quarter results thanks to growing revenue across both its supply chain and performance improvement services. CEO Susan DeVore also announced the launch of a new analytics product geared toward physicians.

    The Charlotte, N.C.-based group purchasing and performance technology company reported adjusted, fully distributed income of $58.9 million, up 8% from a year ago. Revenue was up 16% at $313.3 million, relying more on supply chain growth than the performance-improvement business.

    The adjusted income figure reflects ongoing exchanges of GPO member-owners' Class B stock into Class A stock after the company's initial public offering in 2013. This figure reports the financials as if all members have exchanged their stock and the company was fully public. Under standard accounting rules, Premier's first-quarter profit increased 11% to $58 million.

    DeVore announced that the company will soon offer a performance-improvement platform geared specifically toward physicians, in light of new demands from the CMS under the Medicare Access and CHIP Reauthorization Act, or MACRA. The platform, expected to debut in December, will help health systems work with both employed and independent clinicians on clinical and financial performance metrics, taking cues from CECity, the practice-analytics platform that Premier acquired in 2015.

    Premier reported a 7% spike in revenue from performance-improvement services, including an 11% jump in technology revenue from the company's software offerings. There wasn't significant growth in revenue from consulting, according to the company.

    DeVore said the company's consultants were busy helping clients prepare for changes that are coming from MACRA.

    But DeVore also acknowledged that both the technology and advisory businesses have been affected by longer sales and implementation cycles, in part due to more complex needs.

    Premier reported a 19% increase in revenue from supply chain services, driven by 7% growth in GPO administrative fees from both new and existing members. That also includes a 36% increase in revenue from Premier products like specialty pharmaceuticals, due in part to the company's August acquisition of Acro Pharmaceutical Services, a specialty pharmacy company.

    Supply chain product revenue was offset in part by a continuing decline in specialty pharmacy revenue from hepatitis C treatments, Premier said. Those declines have been felt across the industry, including at Gilead Sciences, the maker of hepatitis C drugs Harvoni and Solvadi.

    Premier raised its guidance for fiscal 2017 profits by 5 cents, expecting $1.76 to $1.87 in fully distributed earnings per diluted share. That range would represent 9% to 16% growth from fiscal 2016, and comes in part due to a 1% reduction in North Carolina's corporate income tax rate that occurred during the first quarter, as well as a cash settlement during Premier's latest exchange of Class B stock.

    The company affirmed its previous fiscal 2016 revenue guidance of $1.45 billion to $1.52 billion, an increase of 25% to 30% from fiscal 2016 largely due to supply-chain revenue growth.

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