Premier (NASDAQ: PINC) reported Q3 EPS of $0.66, $0.05 worse than the analyst estimate of $0.71. Revenue for the quarter came in at $334.8 million versus the consensus estimate of $313.46 million.

Q3 2020 Highlights:

• GAAP net revenue increased 11% to $334.8 million from $301.2 million a year ago; Supply Chain Services segment revenue increased 14% to $238.6 million from $208.6 million a year ago; and Performance Services segment revenue increased 4% to $96.2 million from $92.6 million a year ago.
• GAAP net income was $73.2 million, compared with $75.3 million a year ago; diluted earnings per share was $0.54 compared with income of $0.49 per share a year ago.
• Non-GAAP adjusted EBITDA* increased 12% to $155.9 million from $138.7 million a year ago.
• Non-GAAP adjusted fully distributed net income* increased 4% to $88.9 million from $85.7 million a year ago and non-GAAP adjusted fully distributed earnings per share increased 10% to $0.73 from $0.66.
• To expand Premier’s long-term Contigo Health direct-to-employer, high-value care initiative, on May 4, 2020, the company acquired Health Design Plus (HDP), a third-party administrator and care management company specializing in the development and administration of innovative health benefits solutions for employer clients and health system partners, for a total consideration of approximately $25.0 million, including a 3% equity stake in the combined Contigo Health-HDP company.

“Premier delivered a solid financial performance in the fiscal third quarter, reflecting continued momentum in our Supply Chain Services segment and revenue growth in our Performance Services segment that exceeded our expectations,” said Susan DeVore, chief executive officer. “I am proud that Premier is successfully managing through the COVID-19 pandemic, mobilizing our full resources for our member health systems and the patients they serve. Our teams responded quickly to implement our business continuity and disaster preparedness protocols, rapidly addressing our members’ critical supply chain, clinical and technology needs.

“We believe Premier will continue adding significant value to our members through the duration of the COVID-19 pandemic and beyond, given our unique position as the nexus between healthcare providers, distributors, manufacturers and government agencies, as well as our differentiated ability to facilitate supply, aggregate demand and provide critical flow of timely and accurate information for the industry,” DeVore continued. “We have also been leveraging our unique combination of analytics and technology capabilities to help clinicians deliver informed, coordinated patient care during the COVID-19 pandemic, to predict disease progression and resurgence as the nation begins its recovery, and ultimately to improve the quality of medical interventions and the spread of this and other diseases in the future.

“Looking ahead, we will continue to operate from a position of financial strength and stability and expect to deliver results generally within our full-year guidance range, subject to the ultimate impact of COVID-19, which we expect to pressure profitability in the fourth quarter even as we experience positive net revenue trends,” DeVore said. “Our solid balance sheet, ample liquidity and strong free cash flow give us the financial flexibility to continue creating value for our members and stockholders.”

GUIDANCE:

Premier sees FY2020 EPS of $2.76-$2.89, versus the consensus of $2.84. Premier sees FY2020 revenue of $1.235-1.284 billion, versus the consensus of $1.26 billion.

Based on results for the nine months ended March 31, 2020, management’s expectations for the remainder of fiscal 2020, the realization in all material respects of the company’s underlying guidance assumptions and the estimated financial impact of COVID-19 on the company, Premier currently expects to complete fiscal 2020 within its previously announced guidance ranges. However, due to uncertainty regarding the extent and duration of the unprecedented COVID-19 pandemic, it is possible that Supply Chain Services revenue might slightly exceed the top end of its current range, while non-GAAP adjusted EBITDA and fully distributed earnings per share could finish below their respective ranges. Current expectations are as follows:

• Supply Chain Services segment revenue is currently expected to perform at or above the top end of the current range of $895.0 million to $930.0 million for the fiscal year. This outlook assumes that strong gains in direct sourcing revenue from ongoing COVID-19-related efforts to secure certain personal protective equipment and other high-demand supplies, will more than offset anticipated softness in net administrative fees revenue due to the pandemic-induced interruption of elective procedures, lower overall occupancy and utilization and the slowdown of alternate site spending in non-healthcare related areas.
• Performance Services segment revenue is expected to be at the low end of the current range of $340.0 million to $354.0 million, due to pressure on new and existing consulting and technology engagements, which are being delayed and extended as healthcare providers focus on the pandemic.
• Consolidated revenue is projected to be in the upper end of the current range of $1.235 billion to $1.284 billion.
• Non-GAAP adjusted EBITDA is currently anticipated to be near or potentially a few million dollars below the low end of the current range of $566.0 million to $589.0 million, due to the pandemic-related expectation that fourth-quarter Supply Chain Services revenue growth will be largely driven by a mix shift to the low-margin direct sourcing products business, while Performance Services revenues will be further pressured by delays in consulting and technology projects as healthcare providers focus on the pandemic.
• As a result, non-GAAP adjusted fully distributed earnings per share is currently expected to be near or potentially a few cents below the low end of the current range of $2.76 to $2.89.

For earnings history and earnings-related data on Premier (PINC) click here.