Premier, Inc. Q3 2025 Earnings: A Turnaround Tale or a False Dawn?

The market is a fickle beast, but sometimes it rewards patience—and a sharp eye for hidden gems. Premier, Inc. (NASDAQ: PINC) just delivered its Q3 2025 earnings, and the numbers are a mixed bag. Let’s dive into the details and see if this healthcare supply chain giant is finally turning the corner or just kicking the can down the road.

The Numbers: A Rocky Road, But Signs of Life

First, the top line: Q3 revenue fell 9% year-over-year to $261.4 million, a hit exacerbated by the ongoing wind-down of its Contigo Health division. Excluding Contigo, revenue dropped 8% to $255.3 million. Yikes. But here’s where the story gets interesting: revenue jumped 9% sequentially from Q2, a sign that the company’s core operations—Supply Chain Services and Performance Services—are finally gaining traction.

The real magic happened below the line. GAAP net income swung to a profit of $27.6 million ($0.32 per share) after a disastrous Q3 2024 loss of $0.36 per share. That turnaround was fueled by the absence of goodwill impairments from Contigo, which dragged down last year’s results. But adjusted EPS—excluding Contigo—rose 76% sequentially to $0.46, even though it dipped 10% year-over-year.

The Good, the Bad, and the Ugly

Supply Chain Services: This segment is the cash cow. Revenue grew sequentially thanks to higher member purchasing and co-management contracts. CEO Michael Alkire called it a “key driver” of the improved outlook—a bullish signal for investors.

Performance Services: Not so rosy. Excluding Contigo, revenue here dropped 10% to $100.5 million, reflecting softer demand for clinical and financial analytics tools. This is a red flag. Can Premier reignite growth here, or is this division in secular decline?

Guidance: Raising the Bar, but by How Much?

Premier raised its full-year adjusted EBITDA guidance to $247–255 million (up $6 million midpoint) and adjusted EPS to $1.37–1.43 (up $0.10 midpoint). The revenue outlook stayed steady, but cash flow metrics improved: free cash flow is now projected to hit 50–60% of adjusted EBITDA, up from a prior 45–55%. That’s a win for shareholders.

But here’s the catch: Contigo’s exit is still a wild card. The division, which contributed $6.1 million in revenue in Q3, is set to close by December 2025. The company’s non-GAAP metrics exclude Contigo’s results, so investors need to ask: Is the core business strong enough to sustain growth without it?

The Buyback Blitz: Fueling Shareholder Value

Premier has been aggressive with its $1 billion share repurchase program. In Q3 alone, it bought back $200 million in shares, reducing diluted shares by 3 million. A new accelerated repurchase program (ASR) added another $200 million in February 2025. This is textbook Cramer territory—shrinking the float and boosting EPS per share. If the stock dips, this could be a buying opportunity.

The Risks: Don’t Forget the Pitfalls

• Contigo’s ghost: Even after its closure, lingering costs or customer attrition could haunt results.
• Supply chain dependency: Premier’s revenue is tied to hospital purchasing volumes, which are volatile.
• Performance Services slump: If analytics tools keep underperforming, margins could suffer.

Verdict: Buy the Dip, But Keep an Eye on the Horizon

Here’s the deal: PINC is not out of the woods yet, but the sequential improvements and raised guidance are undeniable positives. The stock has underperformed the S&P 500 over the past year, but with free cash flow improving and share buybacks in full swing, the fundamentals are stabilizing.

Action Alert! If you’re a long-term investor, this could be a time to nibble on shares near $18–$20, especially if the stock dips further. But if you’re a trader, wait for clarity on Performance Services and Contigo’s final exit.

Final Takeaway

Premier’s Q3 results are a mixed bag, but the sequential momentum and cost discipline give me hope. The company’s focus on its core supply chain business—where it’s a leader—could pay off. Just don’t forget: healthcare’s a tough industry, and execution matters more than ever. For now, this is a “hold” with a cautiously optimistic bias—buy the dips, but don’t bet the ranch.

Data-Backed Conclusion: With adjusted EBITDA guidance up to $255 million and free cash flow conversion improving to 50–60%, Premier’s path to profitability is clearer. However, investors must weigh this against Contigo’s lingering risks and Performance Services’ slump. The stock trades at ~15x forward adjusted EPS, a discount to peers, but only time will tell if this is a bargain or a trap. Stay vigilant!