What Happened?
Shares of healthcare tech company Premier (NASDAQ: PINC) jumped 9% in the morning session after reports surfaced that private equity firm Patient Square Capital is exploring an acquisition of the healthcare services company.
The news, first reported by Bloomberg, cited sources familiar with the matter, though it was noted that deliberations are in the early stages and a deal is not guaranteed. An analyst from Leerink Partners commented that another sale process isn't "shocking" and that a transaction would be reasonable, suggesting the company's underlying business is stronger than its stock price reflects. The potential for a buyout is driving investor optimism.
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What Is The Market Telling Us
Premier’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 14.3% on the news that the company reported weak fourth-quarter results, with its revenue and EPS falling short of Wall Street's estimates. Sales declined year on year, partly reflecting the exit from the S2S Global direct sourcing business. And although it raised its full-year EPS forecast, its EBITDA guidance (more important) missed. Overall, this was a weaker quarter.
Premier is up 31.2% since the beginning of the year, and at $28.03 per share, has set a new 52-week high. Investors who bought $1,000 worth of Premier’s shares 5 years ago would now be looking at an investment worth $870.77.
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