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With it being a fairly slow news day, we wanted to profile a name that topped our YIELD Leaders rankings last Friday. Premier (PINC) is a healthcare improvement company. Basically, it partners with hospitals, health systems, physicians, employers, product suppliers to scale efficiencies, lower costs, improve supply chain processes etc.
- PINC concedes that it's operating in a challenging environment marked by rising costs, workforce shortages and reimbursement challenges. Its platform helps providers as they navigate the evolving landscape, from data and insights to AI-enabled decision support in the workflow. PINC has two operating segments, Supply Chain Services and Performance Services and they are each facing challenges.
- On the Supply Chain Services side, tariffs remain top of mind for its members and suppliers. Premier says it is the only healthcare company offering a fully integrated digital supply chain platform from sourcing to purchasing to payment. Its tech-first model is enabling faster, smarter, data-driven decisions that improve margins and support quality care delivery.
- In Performance Services, PINC is taking aggressive steps to reinvigorate the business amid short-term headwinds. PINC says it has recruited some of the industry's most seasoned operators, with track records of delivering enterprise-wide transformations with a focus on supply chain, labor reduction and quality improvement at large, complex health systems. PINC is rolling out more comprehensive offerings.
- PINC recently noted that a lot of people talk about nursing shortages, but it goes far beyond that to include radiation techs, pharm techs, core people that keep a hospital running. PINC says it clients are struggling quite a bit with labor shortages. Also, the possibility of Medicaid cuts are a concern with a potential $80 bln annual impact. As such, health care systems are going to have to think about how are they going to realign themselves so that they can absorb that kind of impact.
- Given the difficult conditions, Premier's recent earnings results have not been the greatest. The company has posted three consecutive quarters with yr/yr revenue declines. The silver lining is that revenue and profitability for Q3 (Mar) saw meaningful sequential growth and exceeded expectations, most notably in its Supply Chain Services segment.
The reason PINC tops our YIELD rankings is because management has been using the downturn to aggressively repurchase shares, which has resulted in a 22.3% share buyback yield. In addition, PINC pays a solid 3.7% dividend yield. The purpose of our YIELD report is to find companies that are returning cash to shareholders via buybacks and dividends. PINC's financial performance has struggled, but it is a god sign that it's buying back shares at a good clip.