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  "documentTitle": "Premier, Inc. (PINC)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-09-25 00:00:00",
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  "notes": "The slide uses a combination of historical trend data and specific contract evidence to challenge the company's narrative on shareback growth.",
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      "kind": "callout",
      "text": "Maricopa Integrated Health System (Nov 24, 2014) 40% Shareback Rising to 60% Shareback. Shareback: The current agreement with MedAssets stipulates a 40/60 shareback. MIHS receives 40% of the administrative fees from Suppliers while MedAssets retains 60% of the administrative fees and MedAssets will retain 40%. Last calendar year MIHS received approximately $300,000 in shareback dollars from MedAssets. With the new agreement, MIHS should see an increase of 20% in the shareback received or $60,000 in additional revenue. Maybe the “gradual” increase in MedAssets’ shareback rate wasn’t really so gradual on a contract-by-contract basis... If even MedAssets was offering 60% sharebacks on new contracts shortly before being acquired, this is a much better indicator of the market shareback rate at that point in time than its aggregate blended shareback.",
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      "kind": "callout",
      "text": "Maybe the \"gradual\" increase in MedAssets' shareback rate wasn't really so gradual on a contract-by-contract basis...",
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      "text": "MedAssets Aggregate Shareback Rate",
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      "text": "shareback rate: 65-85%",
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      "kind": "paragraph",
      "text": "Through the early 2010s, prior to its acquisition by VHA-UHC Alliance, MedAssets' management noted that competitive pressures were driving industry-wide sharebacks up by 100-200 bps per year. As five years have passed since MedAssets was taken over by Vizient (private), market-rate sharebacks could plausibly be 500-1,000 bps higher than they were when MedAssets was acquired in 2014-15, and 600-1,200 bps higher than they were when Premier went public in 2013. Extrapolating this pace of shareback expansion forward to 2019 and applying it to a “non-bundled” shareback rate would suggest that current market-rate sharebacks could potentially be as high as 65-85%.",
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      "text": "I know we have discussed this in the past, but we do see continued pressure, as we said, in the 100-basis-point to 200-basis-point range for the revenue share obligation -- that’s an industry trend. - Haley Wise – Chairman & CEO, MedAssets",
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      "text": "Our gross administrative fees will grow at a faster rate than net admin fees, as we forecast increases in our revenue share obligation due to renewal pricing, shift of fixed fee to shareback agreements, and the impact of performance related fees on the percentage of shareback. - Mike Nolte – COO, MedAssets",
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      "kind": "quote",
      "text": "\"Our gross administrative fees will grow at a faster rate than net admin fees, as we forecast increases in our revenue share obligation due to renewal pricing, shift of fixed fee to shareback agreements, and the impact of performance related fees on the percentage of shareback.\" — Mike Nolte, COO, MedAssets; \"I know we have discussed this in the past, but we do see continued pressure, as we said, in the 100-basis-point to 200-basis-point range for the revenue share obligation -- that's an industry trend.\" — Haley Wise, Chairman & CEO, MedAssets",
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      "kind": "title",
      "text": "Could The Current Fair-Market Shareback Rate Be Even Higher?",
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      "evidence": "Contrasting CEO/COO quotes with actual contract data to expose a gap in reported vs. actual shareback rates.",
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