PINC - Embedded Expectations Analysis - 2020 03 03
ï€ Premier, Inc. (PINC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with an 8.4x Uniform P/E. At these levels, the market is pricing in expectations for the firm to see historically low profitability, but management is excited about their ability to manage the coronavirus and is confident about Acurity revenue and their Contigo Health initiativeï€ Specifically, management generated an excitement marker when saying their continued management of recalls and coronavirus provides a path to continue their strong first half performance. In addition, they are confident that they can manage the expenses associated with reduced revenue growth expectations and that their recent acquisition secures the long-term revenue streams of Acurity members. Moreover, they are that confident their Contigo Health pilot initiative will roll-out in the back half of the year
ï€ Given management's positive sentiment, market expectations for Uniform ROA compression to historical lows appear far too bearish, and as such, multiple expansion and equity upside continue to be warranted
Premier is a holding company. The company, together with its subsidiaries and affiliates, is a healthcare performance improvement company. The company provides technology-enabled platform that provides supply chain services, clinical, financial, operational and value based care software-as-a-service informatics products, consulting services and performance improvement collaborative programs. The company has two business segments: Supply Chain Services, which assists its members in managing their non-labor expense and capital spend through a combination of products, services and technologies; and Performance Services, which provides information technology analytics and workflow automation and consulting services.
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