Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 30 Apr, 25 | PINC | Buy | USD 20.39 | USD 21.41 | USD 22.63 | 6 days | 11.0% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Premier, Inc., together with its subsidiaries, operates as a healthcare improvement company in the United States. It operates in two segments, Supply Chain Services and Performance Services. The Supply Chain Services segment offers its members with an access to a range of products and services, including medical and surgical products, pharmaceuticals, laboratory supplies, capital equipment, information technology, facilities and construction, and food and nutritional products, as well as purchased services, such as clinical engineering and workforce solutions. This segment also provides the ASCENDrive programs for members to receive group purchasing programs, tiers, and prices; SURPASS Performance Group services; and STOCKD, an e-commerce platform, as well as direct sourcing business; SaaS informatics products; supply chain co-management services; purchased services contracts; direct sourcing solutions; and supply chain resiliency programs. The Performance Services segment provides technology and services platform with offerings that help optimize performance in three main areas, including clinical intelligence, margin improvement, and value-based care under the PINC AI brand; third party administrator services and management of health benefit programs under the Contigo Health brand; and digital invoicing and payables services that offers financial support services to healthcare product suppliers and service providers under the Remitra brand. The company was incorporated in 2013 and is based in Charlotte, North Carolina.
Shareholder Returns: A total of $592.1 million was returned to shareholders through $400 million in ASR and $192.1 million in market repurchases during the first half of fiscal 2025
Cash Flow Strength: Operating cash flow rose sharply to $193.7 million from just $15.5 million in the prior-year period
Performance Services Weakness: Segment adjusted EBITDA in Performance Services dropped 71% to $9.1 million, reflecting substantial revenue and operational strain
Earnings Decline: Adjusted EBITDA declined 48% year-over-year in Q2 to $50.1 million, reflecting broad-based margin pressure
Premier, Inc. faces heightened investor risk from declining profitability and revenue contraction in its Performance Services segment, compounded by one-time impairment charges and execution risks in its ongoing business divestitures.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 20.39 | 18.76 | 21.41 | 22.63 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Revenue Performance and Business Segmentation
For the fiscal second quarter ended December 31, 2024, Premier, Inc. reported total net revenue from continuing operations of $240.3 million, marking a 14% year-over-year decline from $279.9 million. When excluding the Contigo Health business, net revenue stood at $232.2 million, reflecting similar contraction. The Supply Chain Services segment generated $148.7 million in revenue, down 11% year-over-year, mainly due to a 13% drop in net administrative fees. However, revenue from software licenses and other services in this segment rose by 10% to $17.3 million.
Performance Services and Segment Challenges
Revenue from the Performance Services segment declined by 19% to $91.5 million, primarily driven by reduced demand in the consulting business and less favorable product mix in applied sciences. Excluding Contigo Health, segment revenue was $83.5 million. The Performance Services segment experienced a sharp 71% drop in adjusted EBITDA, from $31.2 million to $9.1 million, reflecting operational pressures within the division.
Profitability and Impairment Charges
Premier reported a GAAP net loss from continuing operations of $45.8 million, or $(0.60) per diluted share, compared to net income of $50.4 million, or $0.43 per diluted share, in the prior-year quarter. This significant decline was largely due to a $126.8 million impairment charge to goodwill related to the data and technology business within the Performance Services segment. The loss was somewhat offset by a $17.6 million cash distribution from a minority investment and lower SG&A expenses excluding the impairment.
Non-GAAP Earnings and Cash Flow
Adjusted EBITDA for the quarter declined 48% year-over-year to $50.1 million, with a slightly better performance excluding Contigo Health at $52.1 million. Adjusted net income fell 61% to $23.8 million, and adjusted EPS dropped to $0.25 from $0.51 in the prior-year period. Adjusted EPS excluding Contigo Health was $0.27. Despite weaker earnings, the company generated $193.7 million in net cash from operating activities during the first six months of fiscal 2025 and reported free cash flow of $73.9 million, up from $40.7 million in the prior-year period.
Updated Fiscal 2025 Guidance
Premier reaffirmed the midpoints for its fiscal 2025 revenue and adjusted EBITDA guidance excluding Contigo Health, while increasing its adjusted EPS midpoint by $0.08 to reflect the favorable impact of share repurchases. The Supply Chain Services revenue guidance midpoint was raised by $25 million, while the midpoint for Performance Services revenue excluding Contigo Health was reduced by $25 million. The company introduced new guidance metrics for adjusted net income ($119–$129 million) and diluted weighted average shares (94–96 million).
Shareholder Returns and Liquidity Management
Premier actively returned capital to shareholders through its $1 billion share repurchase authorization. In the first half of fiscal 2025, it completed a $400 million accelerated share repurchase (ASR) program, acquiring 19.9 million shares. An additional $192.1 million worth of shares were repurchased in open market transactions. The company also paid $42.4 million in dividends and declared a quarterly dividend of $0.21 per share payable in March 2025. As of December 31, 2024, cash and cash equivalents stood at $85.9 million, with $100 million drawn on its revolving credit facility.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Premier, Inc (NASDAQ: PINC) at the closing market price of USD 20.39, as on April 29, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Health Information Services
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PINC Premier Inc |
0.17 0.76% | 23.27 | 27.90 | 9.28 | 1.92 | 1.06 | 1.77 | 6.22 |
| GEHC GE HealthCare Technologies Inc. |
-1.58 2.20% | 70.27 | 22.91 | 20.12 | 2.01 | 5.52 | 2.39 | 13.30 |
| VEEV Veeva Systems Inc Class A |
-4.5 1.87% | 236.28 | 54.61 | 33.22 | 12.83 | 6.73 | 11.14 | 58.84 |
| MTHRF M3 Inc |
- -% | 12.95 | 29.72 | 25.00 | 0.05 | 4.38 | 0.04 | 0.12 |
| MTHRY M3 Inc |
-0.05 0.73% | 6.78 | 31.84 | 26.25 | 0.05 | 4.60 | 0.04 | 0.12 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 29,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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