Premier slips 14% after another cut to guidance
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Shares of group purchasing organization, Premier, Inc. (NASDAQ:PINC) shed ~14% in the morning hours Tuesday after slashing its outlook with its quarterly results for the second time this year, prompting Raymond James to downgrade the stock.
Premier (PINC) of Charlotte, North Carolina, reported $322.2M revenue for Q3 fiscal 2023, indicating a ~7% YoY decline as excess market supply and member inventory levels hurt demand and pricing in its direct sourcing business.
“….our group purchasing organization business performed in line with our expectations, with our non-acute, or Continuum of Care, GPO business producing mid-single digit growth in the quarter,” Chief Executive Michael Alkire remarked.
Total Supply Chain Services added $216.7M in net revenue with ~14% YoY contraction, while the Performance Services division had $25.1M net revenue with ~6% YoY growth.
However, PINC’s GAAP net income improved ~24% YoY to $48.6M during the quarter, driven by lower performance-related compensation expenses and offset by factors including higher interest expenses and restructuring costs linked to a cost-saving plan implemented during the quarter.
Citing a cut to the outlook for both Supply Chain Services and Performance Services segments, Premier (PINC) slashed its FY 23 net revenue outlook to $1.34B – $1.39B compared to $1.40B in the consensus.
About three months ago, stating an underperformance during the first six months and macro concerns, PINC lowered its fiscal 2023 guidance with its Q2 FY23 results in February.
However, the latest revision has prompted Raymond James analysts to downgrade the stock to Market Perform from Outperform. The firm noted that the guidance “presages stiffer than originally expected headwinds” in the Supply Chain Services division.