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  "documentTitle": "Premier, Inc. (PINC)",
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  "authorName": "Spruce Point Capital Management",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-09-25 00:00:00",
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  "notes": "The slide uses a table of financial estimates alongside a snippet from the PINC S-1 filing to highlight a discrepancy between analyst expectations and contractual reality.",
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      "text": "Sell-side analysts see no change in Premier economics despite contractual cliffs",
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      "text": "PINC S-1: Aug 26, 2013",
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      "text": "In connection with the Reorganization and this offering, our member owners have entered into GPO participation agreements with Premier LP which will become effective upon the completion of the Reorganization and this offering. Pursuant to the terms of its GPO participation agreement, each member owner will receive cash sharebacks, or revenue share, from Premier LP equal to 30% of all gross administrative fees collected by Premier LP based upon purchasing by such member owner's member facilities through our GPO supplier contracts. In addition, our two largest regional GPO member owners, which represented approximately 17% of our gross administrative fees revenue for fiscal year 2013, will each remit all gross administrative fees collected by such member owner based upon purchasing by such member owner's member facilities through the member owner's own GPO supplier contracts and receive revenue share from Premier LP equal to 30% of such gross administrative fees remitted to us. Subject to certain termination rights, these GPO participation agreements will be for an initial five-year term, although our two largest regional GPO member owners have entered into agreements with seven-year terms.",
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      "text": "Spruce Point believes that consensus estimates reflect highly unrealistic assumptions regarding the sustainability of Premier's current economic model. If Premier is forced to adopt shareback rates more in-line with industry standards, future sales and earnings performance will diverge significantly from current Street projections.",
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      "text": "Sell-side forecasts suggest that analysts see Premier's unique post-IPO economics lasting indefinitely into the future: revenue, earnings, and EPS are all projected to grow steadily through the next several years, with little variation in margins. Recall, however, that its post-IPO contracts featuring reduced shareback rates were structured to last only temporarily, for five or seven years (beginning Sep 2013). Industry experts also report that, excluding temporary contractual barriers, GPO switching costs are generally not high for hospitals. Is it really reasonable to believe that Premier's drastically off-market economics are sustainable when competing GPOs offer sharebacks at least two times higher on average?",
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      "kind": "source-note",
      "text": "Source: Bloomberg",
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      "text": "Premier Consensus Estimates table showing Revenue, Gross Profit, Operating Profit, EBITDA, and EPS from FY19A to FY23E.",
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      "text": "Do Sell-Side Analysts Believe Post-IPO Economics Will Last Forever?",
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