Premier Leaders Praise Growth Potential of IllumiCare Acquisition
Executives of Premier Inc. say their recent acquisition of clinical decision support software company IllumiCare has the potential to grow at a double-digit pace as it gets integrated with the Charlotte-based company’s Stanson Health division.
Premier in June announced the purchase of Birmingham-based IllumiCare as “a game changer” that will help Premier customers both lower the cost of the care they provide and close care gaps. Speaking on Premier’s Aug. 19 quarterly earnings conference call with analysts, President and CEO Mike Alkire and Chief Administrative and Financial Officer Glenn Coleman added some numerical detail to their acquisition and spoke highly of its potential—including by giving customers an “almost immediate” tenfold return on their investment.
“It drives demonstratable difference in terms of delivering about $100 savings per inpatient discharge,” Alkire said. “I think it has a huge opportunity to have significant penetration in our health systems and importantly can really help our healthcare systems perform in a very difficult time.”
Premier paid $39.8 million in cash for IllumiCare, whose former owners could earn another $15 million if the business hits certain goals going forward. Coleman said the business should bring in $8 million to $10 million in revenue in Premier’s current fiscal year, which started July 1, but not add or subtract to profits during that time.
“We’re expecting this to be one of the growth engines for us going forward as it integrates with our Stanson business,” Coleman said. “Between the clinical decision support and financial decision support now, we have a really nice synergistic business that we’re expecting to generate double-digit growth moving forward.”
IllumiCare and Stanson are part of Premier’s Performance Services group, which accounts for about 35 percent of the company’s total revenues. In Premier’s fiscal fourth quarter that ended June 30, the group produced adjusted EBITDA of nearly $15 million on $88 million in sales, excluding the unprofitable Contigo Health direct-to-employer business Alkire and his team are looking to sell. Premier as a whole earned an adjusted net profit of $35.7 million on revenues of $263 million.
Shares of Premier (Ticker: PINC) ended Aug. 26’s trading session at $25.86, up slightly on the day. They have surged more than 40 percent over the past six months, which has grown the company’s market capitalization to about $2.1 billion.
About the Author
Geert De Lombaerde
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post for more than a decade and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.