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PI

Premier, Inc. (PINC)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered a clean beat versus Wall Street on revenue and adjusted EPS, driven by Supply Chain Services outperformance: Revenue $262.9M vs $247.7M consensus*, Adjusted EPS $0.43 vs $0.34 consensus*; Adjusted EBITDA ex-Contigo $71.1M vs $64.0M consensus* .
  • Sequential progress continued: Revenue +1% vs Q3, Adjusted EBITDA margin 27.6% (vs 28.4% in Q3) with beats flowing through from higher GPO penetration despite fee-share resets .
  • FY26 guidance initiated (ex-Contigo): Total net revenue $940M–$1.0B, Adjusted EBITDA $230M–$245M, Adjusted EPS $1.33–$1.43; Q1 FY26 guide implies a first-half margin dip from advisory hiring before back-half ramp .
  • Strategic catalysts: advisory momentum (four large wins), IllumiCare acquisition (10:1 ROI; ~$100 savings per discharge), and fee-share stabilization expected by FY26 with growth resuming in FY27 .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Supply Chain Services beat internal midpoint and drove the quarter: segment revenue $170.0M, with net administrative fees $150.1M (growth in gross admin fees and new member onboarding) .
  • Advisory pipeline inflecting: recently signed four very large deals; FY26 advisory growth expected ≥25% on multi‑year engagements .
  • Capital returns and cash generation: FY25 operating cash flow $417.8M; free cash flow $180.5M; completed $200M ASR and repurchased $800M under the 2024/2025 programs; dividend $0.21 declared .

“Strong finish to the year despite the contract renewal headwinds… overall revenue and profitability exceeded expectations largely due to better-than-anticipated results in our Supply Chain Services segment.” — Michael J. Alkire, CEO .

What Went Wrong

  • Performance Services softer YoY: revenue $92.9M (-20% YoY) on consulting and timing of license revenue; segment adjusted EBITDA $17.2M (-48% YoY) .
  • Fee-share reset still compressing margins: adjusted EBITDA margin at 27.6% vs 28.4% in Q3; Supply Chain EBITDA margin expected down in FY26 before stabilizing later .
  • FY25 adjusted EPS and EBITDA declined YoY on lower net revenue and increased operating costs (stock comp; asset impairments); adjusted EPS $0.43 vs $0.61 prior year .

Financial Results

Consolidated performance (Q2 → Q3 → Q4 FY25)

MetricQ2 FY25Q3 FY25Q4 FY25
Revenue ($USD Millions)$240.266 $261.382 $262.857
GAAP Diluted EPS (Continuing) ($)$(0.60) $0.32 $0.22
Adjusted EPS ($)$0.25 $0.44 $0.43
Adjusted EPS ex-Contigo ($)$0.27 $0.46 $0.46
Adjusted EBITDA ($USD Millions)$50.090 $71.746 $68.856
Adjusted EBITDA ex-Contigo ($USD Millions)$52.066 $72.606 $71.108
Adjusted EBITDA Margin %20.8% 28.4% 27.6%

Segments and drivers (Q2 → Q3 → Q4 FY25)

Segment Metric ($USD Millions)Q2 FY25Q3 FY25Q4 FY25
Supply Chain Services Revenue$148.746 $160.905 $170.000
Net Administrative Fees$131.417 $142.234 $150.052
Software/Other Revenue (SCS)$17.329 $18.671 $19.948
Performance Services Revenue$91.520 $100.477 $92.857
Segment Adjusted EBITDA – SCS$73.740 $85.665 $89.986
Segment Adjusted EBITDA – PS$9.123 $19.450 $17.170

Cash flow and liquidity (as of period-end)

KPI ($USD Millions)Q2 FY25 (Dec 31)Q3 FY25 (Mar 31)Q4 FY25 (Jun 30)
Operating Cash Flow (FYTD/FY)$193.733 (H1) $307.780 (9M) $417.809 (FY)
Free Cash Flow$73.899 (H1) $130.321 (9M) $180.529 (FY)
Cash & Equivalents$85.850 $71.327 $83.725
Credit Facility Outstanding$100.0 $255.0 $280.0

Results vs Wall Street Consensus (Q4 FY25)

MetricConsensus*Actual
Revenue ($USD Millions)$247.7*$262.9
Adjusted EPS ($)$0.34*$0.43
Adjusted EBITDA ex-Contigo ($USD Millions)$64.0*$71.1
# of EPS Estimates7*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Net Revenue (ex-Contigo)FY26N/A$940M–$1,000M New
Supply Chain Services RevenueFY26N/A$590M–$620M New
Performance Services Revenue (ex-Contigo)FY26N/A$350M–$380M New
Adjusted EBITDAFY26N/A$230M–$245M New
Adjusted Net IncomeFY26N/A$110M–$120M New
Adjusted EPSFY26N/A$1.33–$1.43 New
Diluted SharesFY26N/A81M–83M New
Net Admin Fees (assumption)FY26N/A$520M–$540M incl. $65M–$75M non‑healthcare New
SCS software/otherFY26N/A$70M–$80M New
CapexFY26N/A~$80M New
Effective Tax RateFY26N/A23%–25% New
Cash Tax RateFY26N/A<5% New
FCF ConversionFY26N/A70%–80% of Adjusted EBITDA New
Q1 FY26 Revenue (ex-Contigo)Q1 FY26Not provided$230M–$245M New
Q1 FY26 Adjusted EBITDAQ1 FY26Not provided$45M–$50M New
Q1 FY26 Adjusted EPSQ1 FY26Not provided$0.27–$0.32 New
DividendQ4 FY25Prior $0.21$0.21 declared Aug 17, 2025 Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q2 FY25)Q-1 (Q3 FY25)Current (Q4 FY25)Trend
Tariffs / macroContracts “firm for the term”; diversification to reduce tariff impact Monitoring; no material disruption; member-led contracting No significant pull-forward; ongoing mitigation; stable impact Stable execution; continued vigilance
Advisory momentumSegment soft; plan to reinvigorate; new president hired Sequential improvement; stronger pipeline Four large deals closed; ≥25% FY26 growth expected Accelerating
Digital/AI initiativesDigital supply chain partner; automation and data Epic partnership for coding/documentation (late 2025 go-live) IllumiCare acquired; 10:1 ROI; ~$100 savings per discharge Expanding scope & monetization
Fee-share reset / GPOProgressing; low‑60% FY25; high‑60s eventual Low‑60% FY25; <20% contracts remain; stabilize high‑60s Mid‑60% in FY26; ramp through FY26; stabilization by FY26 end Nearing stabilization
Cash flow & TRAH1 FCF $73.9M; TRA payments ~$100M/yr through FY25 9M FCF $130.3M; final TRA payment by FY25 end FY25 FCF $180.5M; ~$100M TRA benefit from July 2025 Strong FCF; TRA tailwind begins
Contigo HealthNetwork assets sold; wind-down ongoing Excluded from guidance; continued wind-down Expect ~$9M rev and $(6)M EBITDA in FY26; substantial transition/wind-down by 12/31/25 Exit nearing completion

Management Commentary

  • “Supply Chain Services… continued to perform above expectations despite the increase in the aggregate blended fee share… broad growth across Medsurg, pharmacy, food and purchase services.” — Glenn Coleman, CAFO .
  • “We recently acquired IllumiCare… delivers about $100 savings per inpatient discharge… ~10:1 ROI for customers; expected breakeven in FY26 and to be a growth engine.” — Michael J. Alkire & Glenn Coleman .
  • “We expect FY26 to be a year of stabilization and transition… and expect an inflection back to growth in total net revenue, adjusted EBITDA and adjusted EPS in fiscal year 2027.” — Glenn Coleman .

Q&A Highlights

  • Tariffs: No significant pull-forward of purchasing; member-led contracting helps minimize impacts; stable to date .
  • Advisory ramp and hiring: Added ~10 senior leaders; ~20 additional hires planned; milestone-based revenue recognition back-end loaded in FY26 .
  • Fee-share cadence: FY25 ended low‑60%; FY26 expected mid‑60%; stabilization by FY26 end; margin pressure in SCS near term .
  • IllumiCare sizing: FY26 revenue $8–$10M; breakeven bottom line; synergistic with Stanson .
  • Contigo FY26 modeling: ~$9M revenue with $(6)M EBITDA loss; guidance excludes contributions given wind-down .

Estimates Context

  • Q4 FY25 beats vs consensus*: Revenue beat by ~$15.2M; Adjusted EPS beat by ~$0.09; Adjusted EBITDA ex-Contigo beat by ~$7.1M. Supply Chain Services outperformance and lower share count from ASR drove upside .
  • Estimate revisions likely: Upward for SCS revenue/EBITDA given stronger contract penetration; cautious on PS near term (consulting softness, license timing) but constructive for FY26 advisory ramp .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quarter delivered broad-based beats vs consensus* on revenue, adjusted EPS, and adjusted EBITDA ex-Contigo; core GPO demand remains resilient despite fee-share resets .
  • Near-term setup: FY26 first half margin headwinds from advisory hiring and mid‑60% fee-share; back-half improvement as milestones are met and renewals stabilize .
  • Medium-term thesis: Management guides to a return to growth in FY27 across revenue, EBITDA and EPS as fee-share headwinds fade and Performance Services scales .
  • Strategic optionality: IllumiCare + Stanson creates a differentiated clinical decision support stack with tangible ROIs; incremental revenue streams in Performance Services .
  • FCF strength and capital allocation: FY25 FCF $180.5M and a ~$100M annual TRA tailwind starting FY26 underpin investment capacity (organic/tuck-ins) while supporting dividends .
  • Watch list: cadence of advisory revenue recognition; SCS margin progression through fee-share stabilization; Contigo wind-down execution by 12/31/25 .

Appendix: Non-GAAP notes

Adjusted EBITDA, adjusted EPS, and free cash flow exclude items such as stock-based compensation, impairments, OMNIA-related revenue sold and associated effects, and contributions/exclusions related to Contigo Health, per the company’s definitions and reconciliations .