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.
