Premier (PINC) FY25 Earnings: Strong Beat
Hello! Today, I've brought this topic to you! We're diving deep into the latest earnings report from Premier (NASDAQ: PINC), a key player in healthcare improvement. The company just dropped its fourth-quarter and full-year 2025 results, and spoiler alert: they've exceeded expectations!
Premier (PINC -1.72%) recently announced its stellar fourth-quarter and full-year 2025 results on August 19, 2025. The company reported a robust revenue of $986 million and an adjusted EPS of $1.54, both comfortably surpassing their initial guidance. This impressive performance signals a strong close to their fiscal year.
The positive outcome was largely fueled by margin outperformance within its Supply Chain Services segment, demonstrating the company's operational efficiency. Furthermore, the Performance Services segment is now strategically positioned for accelerated growth, thanks to significant advisory contract wins and a forward-thinking technology acquisition. This sets the stage for exciting developments in the coming fiscal years.
Premier's total revenue didn't just meet guidance; it soared past the midpoint by $21 million! This was primarily driven by its Supply Chain Services segment, where gross administrative fees (GAF) saw over 3% year-over-year growth. This growth wasn't accidental; it was supported by expanded contract penetration and the successful onboarding of new members.
A significant contributor to this success was the continued attraction of both existing and non-member organizations to Premier's pharmacy and food programs. This solidifies Premier's competitive edge in the highly dynamic group purchasing organization (GPO) market.
As Glenn Coleman, Chief Administrative and Financial Officer, highlighted:
"We closed out fiscal year 2025 on a positive note with net revenue of $986 million being $11 million above the midpoint of the guidance range, while adjusted EPS of 1.54 was $0.11 above the high end of our guidance range... Adjusted EBITDA of $71 million was flat sequentially and translated to a margin of 27.6%. This was better than expected as the revenue outperformance in Supply Chain Services had high margin flow through to profitability."
This margin outperformance truly underscores Premier's ability to translate top-line growth into robust profitability, even amidst temporary revenue pressures from contract renewals.
Beyond the impressive supply chain performance, Premier's Performance Services segment is undergoing a significant transformation, poised for accelerated growth. The advisory business within this segment, estimated to generate $50 million to $100 million, is projected to grow by more than 25% in fiscal year 2026. This growth is backed by multi-year contracts with major health systems and strategic investments in leadership.
A notable development is the recent acquisition of Illumicare. This strategic move is set to significantly enhance Premier’s clinical decision support and artificial intelligence (AI) capabilities, expanding its addressable market and enabling real-time insights at the point of care.
Mike Alkire, President and CEO, articulated this vision:
"We are seeing meaningful momentum in our advisory business, a strong validation of the differentiated expertise and capabilities we bring to our members. These health systems are turning to Premier for enterprise-wide transformation. In June, we were excited to announce the acquisition of Illumicare, a strategic move that significantly strengthens our ability to deliver real-time insights at the point of care leveraging our AI capabilities. This solution not only complements our existing clinical decision support offering but also expands our addressable market, especially as providers face mounting pressure to improve clinical and financial performance simultaneously."
Premier's expanded technology platform and a robust pipeline of advisory projects are building a strong foundation for sustainable, long-term business growth and enhanced market relevance.
One of the multi-year headwinds Premier has faced is its contract renewal cycle. However, this challenge is nearing its completion. As of June 30, 2025, less than 20% of contracts from the August 2020 member renegotiation still involve restructuring fees, with most expected to be resolved in fiscal year 2026.
Once the administrative fee share stabilizes in the high-60% range, management anticipates a significant relief from this pressure. This stabilization is expected to pave the way for a return to consolidated revenue and EBITDA growth starting in fiscal year 2027.
Glenn Coleman confirmed the nearing completion:
"As such, we anticipate fee share will increase to the mid-sixty percent range in fiscal year 2026 and will stabilize in the high-60s on an annualized basis once we've addressed all renewals. Lastly, given we are on the back end of renewals, this will be our final report on the process."
The conclusion of this contract renewal cycle is crucial, as it will reduce future margin compression and support renewed growth in key financial metrics, setting Premier on an improved earnings trajectory from fiscal year 2027 onward.
Looking ahead, Premier has provided an optimistic outlook for fiscal year 2026. The company projects total net revenue to be between $940 million and $1 billion, adjusted EBITDA in the range of $230 million to $245 million, and adjusted EPS of $1.33 to $1.43. They also expect a healthy free cash flow conversion of 70% to 80%.
A significant financial tailwind will be the cessation of tax receivable agreement (TRA) payments starting July 1, 2025, which will free up an impressive $100 million annually. This, combined with the abating legacy GPO headwinds and accelerating performance segments, has management reiterating that fiscal year 2027 will mark a definitive return to growth in total revenue, adjusted EBITDA, and adjusted EPS.
Q1. What were the key financial highlights of Premier's Q4 and full-year 2025 report?
A. Premier exceeded guidance with $986 million in revenue and $1.54 adjusted EPS for the full year 2025. The Supply Chain Services segment notably drove margin outperformance.
Q2. How is Premier positioning itself for future growth, particularly in its Performance Services segment?
A. Premier is accelerating growth in Performance Services through expected >25% growth in its advisory business, securing multi-year contracts with major health systems, and strategically acquiring Illumicare to bolster AI and clinical decision support capabilities. Additionally, the completion of the contract renewal cycle is expected to remove a significant headwind, enabling broader growth from FY2027.
Premier's latest earnings report paints a picture of a company successfully navigating challenges and strategically positioning itself for future expansion. With strong performance in Supply Chain Services, accelerated growth initiatives in Performance Services, and the upcoming completion of its contract renewal cycle, Premier appears poised for a significant rebound and sustained growth in the coming years. Investors will be watching closely as the company aims to deliver on its promising fiscal year 2027 outlook.