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PI

Premier, Inc. (PINC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 came in ahead of expectations on a sequential basis, with total net revenue up 9% q/q to $261.4M and adjusted EPS of $0.44; management raised FY25 adjusted EBITDA and EPS guidance while reaffirming the midpoint of revenue guidance .
  • Both segments outperformed internal expectations; Supply Chain Services led the upside despite lower net administrative fees from fee-share resets, while Performance Services improved sequentially; adjusted EBITDA grew 43% q/q to $71.7M .
  • Estimate context: Q3 revenue and normalized/adjusted EPS materially beat Wall Street consensus ($261.4M vs $242.1M*, $0.44 vs $0.30*), a positive catalyst alongside a $200M ASR launched in February and a lower full-year share count assumption (91–93M) .
  • Guidance mix-shift: SCS revenue midpoint raised; Performance Services trimmed; FY25 adjusted EPS midpoint +$0.10 (to $1.40) on better SCS performance and buybacks; management highlighted tariff mitigation via firm-for-term pricing and supplier/member processes .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • “Our overall revenue and profitability grew sequentially and exceeded our expectations…largely due to better-than-anticipated results in our Supply Chain Services segment,” said CEO Michael Alkire; FY25 adjusted EBITDA and EPS guidance increased, and revenue guidance midpoint reaffirmed .
    • Management cited broad-based gross administrative fee growth across medsurg, diagnostics, food, and pharmacy, and early traction in supply chain co‑management and digital solutions; adjusted EBITDA margin excluding Contigo reached 28.4%, the highest this fiscal year .
    • Strategic progress: Epic partnership for documentation/coding expected to go live in late 2025, supporting AI-enabled solutions and a tech-first model that spans sourcing to payment .

  • What Went Wrong

    • Year-over-year declines persisted: total net revenue −9% y/y, adjusted EBITDA −25% y/y, and adjusted EPS −10% y/y due primarily to higher member fee share and weaker consulting revenue .
    • Performance Services still faces short-term headwinds (consulting softness, applied sciences mix), though sequential improvement and a rebuilt pipeline were noted .
    • Interest expense rose with higher revolver borrowings (used to fund repurchases); cash declined to $71.3M while revolver borrowings were $255M at quarter end (repaid $70M in April) .

Financial Results

Consolidated results (oldest → newest)

MetricQ1 FY2025Q2 FY2025Q3 FY2025Q3 FY2025 Consensus*
Revenue ($M)$248.1 $240.3 $261.4 $242.1*
GAAP Diluted EPS – Continuing Ops ($)$0.72 $(0.60) $0.32 n/a
Adjusted EPS ($)$0.34 $0.25 $0.44 $0.30*
Adjusted EBITDA ($M)$62.4 $50.1 $71.7 n/a

Note: *Values retrieved from S&P Global.

Q3 FY2025 vs prior periods

MetricQ3 FY2024Q2 FY2025Q3 FY2025
Revenue ($M)$286.9 $240.3 $261.4
GAAP Diluted EPS – Continuing Ops ($)$(0.36) $(0.60) $0.32
Adjusted EPS ($)$0.49 $0.25 $0.44
Adjusted EBITDA ($M)$95.2 $50.1 $71.7

Segment revenue (oldest → newest)

Metric ($M)Q1 FY2025Q2 FY2025Q3 FY2025
SCS – Net Administrative Fees$132.6 $131.4 $142.2
SCS – Software, Other & Support$18.8 $17.3 $18.7
SCS – Total$151.4 $148.7 $160.9
Performance Services – Total$96.8 $91.5 $100.5

Selected KPIs

KPIQ1 FY2025Q2 FY2025Q3 FY2025
Cash & Cash Equivalents ($M)$87.0 $85.9 $71.3
Free Cash Flow (period-to-date)$16.2M (Q1) $73.9M (6M) $130.3M (9M)
Diluted Weighted Avg Shares (M)101.0 95.2 87.7
Adj. EBITDA Margin excl. Contigo (%)n/a20.8% (Adj. EBITDA) 28.4% (ex‑Contigo)

Guidance Changes

MetricPeriodPrevious (Feb 4, 2025)Current (May 6, 2025)Change
Supply Chain Services RevenueFY2025$590–$630M $600–$620M Midpoint +$5M; expected above midpoint
Performance Services (ex‑Contigo) RevenueFY2025$350–$380M $355–$375M Range tightened; expected below midpoint
Total Net Revenue (ex‑Contigo)FY2025$940M–$1.01B $955M–$995M Midpoint unchanged
Adjusted EBITDAFY2025$237–$253M $247–$255M Midpoint +$6M
Adjusted Net IncomeFY2025$119–$129M $125–$133M Midpoint +$5M
Adjusted EPSFY2025$1.26–$1.34 $1.37–$1.43 Midpoint +$0.10
Diluted Weighted Avg SharesFY202594–96M 91–93M Midpoint −3M
Key AssumptionsFY2025NA fees $525–$545M; SCS software $65–$85M; capex $90–$100M NA fees $535–$545M; SCS software $65–$75M; capex $80–$90M; ETR 24–26%; cash tax <5%; FCF 50–60% Adj. EBITDA NA fees ↑; capex ↓; FCF conversion ↑

Note: Guidance and “ex‑Contigo” metrics are non‑GAAP and exclude Contigo contributions as explained in filings .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY25)Previous Mentions (Q2 FY25)Current Period (Q3 FY25)Trend
AI/Tech enablementInvesting in digital supply chain (Remitra), AI-enabled performance improvement; building ordering/analytics capabilities Digital supply chain moved beyond pilot; new major partner; automation, data access subscriptions rising Epic partnership for documentation/coding to go live late 2025; “only fully integrated digital supply chain” positioning reinforced Accelerating
Supply chain/tariffsResilience initiatives; IV fluid shortage response; hurricane impacts Firm‑for‑term pricing buffers tariffs; diversification away from single-country reliance Tariffs “top of mind”; no material disruption; member‑led committee on supplier price increases; modeling tools to mitigate Heightened focus, mitigated near-term
GPO fee share resetsExpected to low‑60s in FY25; renewals underway ~69% through renewals; aggregate blended fee share low‑60s; stable q/q >75% complete; expect <20% remaining by FY‑end; likely stabilize in high‑60s after completion Nearing completion
Performance ServicesConsulting softness; pipeline building Applied sciences mix; shift to subscriptions; new leader Dave Zito Sequential rebound; rebuilding pipeline and go‑to‑market; advisory hires Gradual improvement
Capital allocationASR ($400M) completed; additional $200M authorization in market Completed $200M market buyback (Jan); dividend continued New $200M ASR (Feb); qtrly dividend $0.21 declared; >38M shares repurchased since Feb ’24 Accretive EPS tailwind

Management Commentary

  • “Our overall revenue and profitability for the third quarter experienced meaningful sequential growth and exceeded our expectations, most notably in our supply chain services segment…we are increasing our full year guidance for adjusted EBITDA and adjusted EPS” – Michael Alkire, CEO .
  • “Adjusted EPS excluding Contigo Health of $0.46 was well ahead of our expectations due to better‑than‑expected revenue and a lower share count” – Glenn Coleman, CAFO .
  • On tariffs: “Most of our contracts…have firm for the term pricing…we’ve set up a special committee…suppliers are required to provide transparency regarding the need for any price increases and…it’s decided upon by our members” .
  • Strategic positioning: “We remain the only healthcare company offering a fully integrated digital supply chain solution from sourcing to purchasing to payment” .

Q&A Highlights

  • Beat drivers: Outperformance driven by SCS (conservative modeling for gross admin fees; broad category growth 4%+), and enterprise license/software rebound; higher‑margin revenue flowed through to profitability .
  • Tariffs: No notable purchasing pull‑forward; emphasis on firm‑for‑term protection, diversification, analytics to guide substitutions; member-led governance on supplier price requests .
  • Fee share/renewals: >75% complete; progress ahead of plan; fee shares broadly in line with expectations .
  • Pharma mix: ~18.5% of gross admin fees YTD from pharmaceuticals; EO aims to expedite domestic drug manufacturing .
  • One‑timers: No cancellation payments or one‑time items in Q3 net admin fees; a member termination payment expected in Q4 (amount undisclosed; embedded in guidance) .

Estimates Context

  • Q3 FY2025 vs S&P Global consensus: Revenue $261.4M vs $242.1M* (beat); EPS (Adjusted/Normalized) $0.44 vs $0.30* (beat) .
  • Looking ahead, FY25 adjusted EPS midpoint increased by $0.10 to $1.40 on higher SCS contribution and a lower share count; Street EPS estimates may need to rise to reflect guidance and the reduced 91–93M diluted share base .
  • Target price consensus remained at $28.25 during the period referenced*.

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 delivered quality beats vs Street on revenue and normalized/adjusted EPS, with strong sequential recovery and higher‑margin mix as SCS outperformed internal plans .
  • Guidance raised for FY25 adjusted EBITDA and EPS, with diluted share count lowered by 3M at the midpoint—supportive for EPS trajectory into FY25/FY26 .
  • Tariff risks are actively mitigated (firm‑for‑term contracts, diversification, data‑driven substitution, member governance); management reports no material disruption to date .
  • Fee‑share reset cycle is largely behind the company (>75% complete), providing improved visibility; management expects stabilization in high‑60s post‑completion .
  • Performance Services is being rebuilt (leadership, pipeline, shift to subscriptions, Epic partnership) and improved sequentially; watch for sustained recovery into Q4/FY26 .
  • Capital returns remain a tailwind (>$600M cumulative repurchases across programs; $200M ASR in 2025; 4% dividend yield context per disclosures), but leverage increased modestly to fund buybacks .
  • Near‑term trading: positive reaction skew from beats/raise; medium‑term thesis hinges on SCS digital flywheel (data/AI), PS turnaround execution, and tariff backdrop management .