Premier Inc. announced that it has entered into a definitive agreement to acquire substantially all the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., two indirect wholly owned subsidiaries of the Greater New York Hospital Association (GNYHA), for approximately $291.5 million, comprised of approximately $166.1 million in cash at close and additional estimated deferred payments of $125.4 million.
Acurity, a regional group purchasing organization (GPO), has been a customer and strategic partner of Premier for more than 24 years. With members comprising more than 300 hospitals and 2,700 health-related facilities, Acurity’s scale accounts for approximately $68.0 million, or 10 percent, of Premier’s total net administrative fees revenue in Premier’s FY2019. Nexera, a hospital financial improvement consulting firm, manages and co-manages supply chain operations for a number of Acurity client.
Under terms of the agreement, the $291.5 million purchase price is comprised of the following:
· Premier will pay the sellers $125.0 million for the Acurity and Nexera businesses at close and another $120.0 million over four years, payable in $30.0 million increments each year between FY2021 and FY2024.
· Premier will also pay approximately $46.5 million for the estimated discounted present value of the expected Tax Receivable Agreement value for all Premier Class B Common Units that will be exchanged by GNYHA through November 2, 2020, of which $41.1 million will be paid at close and an estimated $5.4 million will be paid when a final calculation can be made.
Separately, a contingent payment opportunity of up to $30.0 million may be made to the sellers in FY2025, based on Premier’s achievement of a range of member renewals on terms to be agreed to by Premier and the sellers based on prevailing market conditions in December 2023.
“We have built a strong, mutually-beneficial relationship with GNYHA and its member hospitals over more than two decades, and today’s announcement is a testament to the unique strategic alignment, close collaboration and the overall strength of these relationships,” said Susan DeVore, Chief Executive Officer of Premier. “Through these acquisitions, we expect to build upon the significant revenue that Acurity currently drives to Premier and unlock significant added value by providing Premier’s technology and services to these member hospitals. This transaction underscores the confidence that GNYHA and Acurity’s members have in our highly differentiated, total-value approach driven by our industry-leading GPO, data and analytics and consulting capabilities.”
DeVore added, “Consistent with our focus on helping our members effectively manage their supply chain costs and improve patient care, we are eager to extend Nexera’s capabilities to our broader channel of member health systems. Nexera has deep relationships with its members, outstanding management expertise and proven hospital co-management capabilities that we expect to leverage to streamline our contracting processes and further enhance our end-to-end supply chain strategy. We are excited to scale Nexera’s business outside the New York tri-state market and expect to unlock significant opportunities by connecting Nexera’s value analysis services with Premier’s clinical comparative effectiveness analytics.”
In a joint statement, Jody Lomeo, Chairman of GNYHA Ventures and Chief Executive Officer of Buffalo, N.Y.-based Kaleida Health, and Lee Perlman, President of GNYHA Ventures, said: “The time was right to fully align Premier’s vision and leadership, GNYHA’s business assets and expertise, and the hospital community’s need to better leverage all the resources of a world-class healthcare improvement company. We are confident that Acurity and Nexera are in terrific hands, and that Kaleida Health and all Acurity member hospitals will greatly benefit from this transaction.”
Acurity and Nexera are headquartered in New York and together employ approximately 200 professionals. Upon closing, the Acurity and Nexera businesses will continue to operate out of New York and be integrated into and reported as part of Premier’s Supply Chain Services segment.
Pursuant to the agreement, Premier intends to fund the transaction with borrowings under its revolving credit facility, and GNYHA will cease to be a limited partner in Premier on November 2, 2020. The transaction is expected to close on or about February 28, 2020, subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
