- Move reinforces strategic focus on core businesses
-
Consolidated non-GAAP adjusted EBITDA margin expected to increase
to approximately 45% from its recent 34% level -
Related impairment and exit-cost charges expected to be recorded in
current quarter
CHARLOTTE, N.C.–(BUSINESS WIRE)–Premier Inc. (NASDAQ: PINC), a leading healthcare improvement company,
is exiting its specialty pharmacy business to enhance the company’s
focus on the continuing evolution of its core supply chain, enterprise
analytics and performance improvement capabilities.
On May 6, 2019, certain of Premier’s consolidated subsidiaries entered
into a definitive asset purchase and sale agreement with ProCare
Pharmacy, L.L.C., a subsidiary of CVS Health Corporation, under which
Premier will sell certain assets related to its specialty pharmacy
business for $22.5 million, plus up to an additional $20.0 million for
inventory, each subject to adjustment. The transaction is expected to
close in the current quarter ending June 30, 2019. The sale was made in
connection with the company’s plans to discontinue its specialty
pharmacy operations conducted by both Acro Pharmaceutical Services and
Commcare Pharmacy by June 30, 2019. Net proceeds from the transaction
will be used primarily to fund costs associated with the transaction and
wind down and exit from the specialty pharmacy operations, and for
general corporate purposes.
“Premier’s long-term strategy is to provide our member health systems
with best-in-class solutions while at the same time actively managing
our portfolio as we seek to deliver superior financial performance and
long-term value for stockholders,” said Susan DeVore, Chief Executive
Officer, Premier.
“Although specialty pharmacy continues to be an important component in
healthcare, today’s market dynamics are challenging and have resulted in
new pressures across the industry,” said Michael Alkire, President,
Premier. “Exiting the business better positions Premier to capitalize on
our strengths and enhance our focus on core, growing business lines
encompassing our supply chain, enterprise analytics and performance
improvement capabilities.”
DeVore added: “Looking ahead, the Board and management team remain
committed to improving outcomes for our member health systems and
delivering sustained, profitable growth and value creation. We will
be available to our current specialty pharmacy customers to help assist
a smooth transition. One of the reasons we selected CVS Health, one of
the nation’s leading health innovation companies, is because of its
strong track record of providing outstanding patient care, and
commitment to helping people on their path to better health.”
In connection with Premier’s exit from the specialty pharmacy business,
the company expects to record a non-cash impairment charge of
approximately $87.0 million to $92.0 million related to goodwill,
purchased intangibles and other assets of the specialty pharmacy
business. Including costs incurred to date, it also expects to incur
one-time, transaction and exit-related pre-tax charges of approximately
$11.0 million to $15.0 million, primarily related to severance and
retention benefits and financial advisor and legal fees. These expenses
are expected to be recorded in the fiscal fourth quarter ending June 30,
2019.
These actions are expected to increase Premier’s consolidated non-GAAP
adjusted EBITDA margin to approximately 45 percent for the full 2019
fiscal year compared to approximately 34 percent for the fiscal 2019
six-month period ended December 31, 2018, while reducing annual
consolidated net revenue by approximately $470 million and increasing
annual pre-tax income by approximately $6 million.
Premier’s specialty pharmacy business currently serves 367 hospitals
across 66 health systems. The business consists of Acro Pharmaceutical
Services and Commcare Pharmacy, which operate facilities in
Philadelphia, Pa. (Acro), Memphis, Tenn. (Acro) and Plantation, Fla.
(Commcare).
About Premier Inc.
Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company,
uniting an alliance of more than 4,000 U.S. hospitals and health systems
and approximately 165,000 other providers and organizations to transform
healthcare. With integrated data and analytics, collaboratives, supply
chain solutions, and consulting and other services, Premier enables
better care and outcomes at a lower cost. Premier plays a critical role
in the rapidly evolving healthcare industry, collaborating with members
to co-develop long-term innovations that reinvent and improve the way
care is delivered to patients nationwide. Headquartered in Charlotte,
N.C., Premier is passionate about transforming American healthcare.
Please visit Premier’s news and investor sites on www.premierinc.com;
as well as Twitter,
Facebook,
LinkedIn,
Instagram
and Premier’s
blog for more information about the company.
Forward-Looking Statements
Statements made in this release that are not statements of historical or
current facts, such as those related to the expected closing date of the
transaction, the consideration ultimately received by Premier in the
transaction, the anticipated financial and operational success from
Premier’s ability to focus on its core, higher-margin supply chain,
enterprise analytics and performance improvement capabilities, the
timing and accuracy of Premier’s expected and actual impairment charges
and exit costs, the expected impact of the transaction on Premier’s
consolidated non-GAAP adjusted EBITDA margin, annual consolidated net
revenue and annual pre-tax income, above are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Premier to be materially
different from historical results or from any future results or
projections expressed or implied by such forward-looking statements.
Accordingly, readers should not place undue reliance on any forward
looking statements.
In addition to statements that explicitly describe such risks and
uncertainties, readers are urged to consider statements in the
conditional or future tenses or that include terms such as “believes,”
“belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to
be uncertain and forward-looking. The company may not be able to
complete the transaction on the terms described above or other
acceptable terms or at all because of a number of factors, including
without limitation, the following: (i) the occurrence of any event,
change or other circumstances that could give rise to the termination of
the asset purchase agreement; (ii) the failure to satisfy the closing
conditions set forth in the asset purchase agreement; and (iii) risks
related to disruption of management’s attention from the company’s
ongoing specialty pharmacy business operations due to the transaction
and the wind-down and exit of the specialty pharmacy business that
result in a material adverse change under the asset purchase and sale
agreement.
Forward-looking statements may include comments as to Premier’s beliefs
and expectations as to future events and trends affecting its business
and are necessarily subject to uncertainties, many of which are outside
Premier’s control. More information on potential factors that could
affect Premier’s financial results is included from time to time in the
“Cautionary Note Regarding Forward Looking Statements,” “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of Premier’s periodic and current
filings with the SEC and also made available on Premier’s website at
investors.premierinc.com. Forward looking statements speak only as of
the date they are made, and Premier undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise that occur after that date.
Contacts
News Media – Amanda Forster, Premier Inc.; Amanda_Forster@PremierInc.com;
202.879.8004
Investors – Jim Storey, Premier Inc.; Jim_Storey@PremierInc.com;
704.816.5958