CHARLOTTE, N.C. — Premier Inc. (NASDAQ: PINC), a leading healthcare improvement company, today acquired substantially all the assets and certain liabilities of Invoice Delivery Services, LP (IDS), a leading provider of procure-to-pay solutions in healthcare for $80 million. The acquisition was funded with borrowings under Premier’s existing credit facility.
IDS offers digitization technologies that convert paper and PDF invoices to an electronic format to automate, streamline and simplify accounts payable processes in healthcare. IDS’s solutions include those for electronic invoicing and tracking, as well as digital payments, where the business currently processes 365,000+ transactions per month. Going forward, IDS will be integrated within Premier under the brand name of Remitra™.
According to Premier’s data, complex processes and fragmented back-office technology platforms used in healthcare have impeded the adoption of automated purchasing and payment solutions. Today, Premier data shows that as many as 70 percent of all invoices are paper-based, and nearly 85 percent of healthcare purchasing is still done manually via paper checks. These processes can almost double transaction and processing fees, which add costs to healthcare. For example, the average cost associated with processing a paper check totals more than $7 per transaction, compared to $4 for electronic payments. Non-automated invoices also take nearly four times longer to process than electronic versions. Across healthcare, these manual, paper-based processes may add as much as $18 billion to $22 billion in unnecessary annual expenses.
“We believe Remitra will help advance our position as a leading provider of healthcare supply chain technology and services, and drive long-term, sustainable growth,” said Michael J. Alkire, President and incoming Chief Executive Officer of Premier. “Through this acquisition, we will meaningfully strengthen our capabilities to help eliminate unnecessary waste and technology-enable administrative processes. Starting with the contracting and ordering process, moving all the way through to digital invoicing and payment, we expect to deliver an automated, seamless and paperless procurement experience for both health systems and suppliers.
“Remitra will help unlock significant value for health systems by reducing their expenses and enabling them to capture additional prompt pay discounts,” Alkire added. “At the same time, suppliers will also benefit, as manual processes can delay payments by 120 to180 days. Using this technology will cut this time to the bare minimum, making cash flows more predictable and consistent, while lowering administrative costs.”
Premier has been a reseller of IDS’s technologies for more than three years. The company’s capabilities integrate with every major commercially available enterprise resource planning (ERP) technology on the market – including Premier’s. As a result, Premier will be able to offer these capabilities to any health system, regardless of ERP or GPO affiliation. Also starting immediately, Premier will collaborate with a core group of its largest members (AdventHealth, Adventist Health, Banner Health, Baptist Health, CommonSpirit Health, Texas Health Resources, and others) to enhance the capabilities of Remitra and ensure the offering provides the greatest possible value to providers.
“As one of Premier’s largest ERP customers and members, we are excited about using this technology to automate our current ordering and payment processes,” said Scott Wooten, Executive Vice President and Chief Financial Officer of Baptist Health in Jacksonville, FL. “Paper-based invoicing and payment by check are not only outdated, they are more expensive and introduce opportunity for error. Using this technology has the potential to cut our transaction costs, ensure greater visibility into our cash flows and free up staff to focus on other, more important duties – flexibility and savings that help us grow for the future.”
“Today, different technologies can automate pieces and parts of the procure-to-pay process, but unless it’s all singularly managed from end to end, we can still end up with disconnects and missed opportunities,” said Daniel Morissette, Chief Financial Officer of CommonSpirit Health. “With this acquisition, Premier will be able to manage and automate everything from contracting, to ordering, through to prompt payment on a single, integrated platform. Because all the supply chain information will be in one place, it will be much easier for us to mine data for insights and savings opportunities, as well as ensure accurate ordering off best-price contracts. At the same time, electronic payment will ensure more rebates and discounts are captured so that we don’t leave any dollars on the table.”
Premier does not expect the transaction to materially impact the company’s current fiscal year 2021 financial guidance that was initiated on Feb. 2, 2021, or as previously announced, beginning in fiscal 2022, its expected multi-year, compound annual growth targets, adjusted for the impact of the COVID-19 pandemic on its business, of mid-to-high single digits for total net revenue, adjusted EBITDA and adjusted earnings per share (as such terms are defined in Premier’s most recent Form 10-Q filed with the Securities and Exchange Commission).
Statements made in this release that are not statements of historical or current facts, such as those related to the anticipated rapid integration of IDS’s capabilities and expected benefits from such capabilities, and the impact of the acquisition on (i) fiscal 2021 financial guidance and (ii) the expected target multi-year, compound annual growth rate in the mid-to-high single digits for consolidated net revenue, adjusted EBITDA and adjusted earnings per share beginning in fiscal year 2022 are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier’s control. More information on potential factors that could affect Premier’s financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Premier’s periodic and current filings with the SEC. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise.