Premier to acquire Stanson Health in $51.5 million deal

Premier will acquire Stanson Health for $51.5 million as it looks to bolster its data-driven consulting arm related to reducing care variation, the company announced Tuesday in its latest earnings report.

Stanson Health, which was founded by Cedars-Sinai Medical Center and Dr. Scott Weingarten, provides software that feeds real-time clinical data into electronic health records to guide the most appropriate care.

Stanson is also developing an automated prior authorization tool that is expected to significantly reduce administrative burden and costs.

Premier's cash acquisition would include a $15 million bonus if the company reaches certain revenue targets. The transaction is expected to close by the end of the year, subject to the customary regulatory review.

Building out Premier's end-to-end supply chain analytics along with its performance improvement strategies is critical to the company's growth, said Susan DeVore, president and CEO of Premier.

"This highly strategic acquisition, which includes intelligent clinical decision support technology, will permit evidence-based content along with our data and analytics to be channeled directly into the physician workflow," DeVore said during an earnings call Tuesday morning. "Doing this expands the reach of our solutions directly to the point of care."

The group purchasing and consulting organization reported adjusted fully distributed income of $86.9 million in its first quarter of 2019 earnings, up from $61.7 million over the same period prior.

The adjusted income figure reflects ongoing exchanges of shareholders' 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. Its unadjusted net income increased to $82 million, up from $60.6 million.

Premier benefited from modest growth in its supply chain and performance services segments. Its net administrative fees revenue on the supply chain side grew by 7% to $162 million.

According to generally accepted accounting principles, Premier's fiscal 2019 and 2018 first-quarter net income attributable to stockholders included non-cash adjustments of -$708.2 million and $320.4 million, respectively, which are a result of changes in the number of Class B common shares outstanding and the company's stock price between periods. They do not reflect results of the company's business operations, the company said in its earnings report. After these non-cash adjustments, the company reported a net loss attributable to stockholders of $681.3 million.

Looking forward, policy shifts will likely drive demand for Premier's services, executives said on the earnings call.

Premier will be able to offer more pharmaceuticals at cheaper prices and better manage drug shortages as the U.S. Food and Drug Administration continues to speed the approval of generics and biosimilars, DeVore said.

The CMS' focus on alternative payment models, evidenced by its recent launch of its advanced bundled payment model, will also help Premier, she said. While providers take on more risk, they will also look to reduce costs to accommodate changes to the340B drug discount program, site-neutral payment and ongoing Medicare payment reductions.

"We are building and leveraging our relationships and resources to enable future success in a value-based data insights-driven healthcare environment," DeVore said on the call.