Premier Boosts Health IT Capabilities with $400M CECity Acquisition

Xconomy Raleigh-Durham — 

Healthcare technologies company Premier hasn’t been shy about using acquisitions to build a portfolio that can offer more services to hospitals. Now the Charlotte, NC-based company is bolstering its capabilities to measure and improve hospital care with a $400 million deal to acquire CECity, marking the company’s sixth—and biggest—acquisition since going public in 2013.

Under terms of the agreement, Premier (NASDAQ: PINC) will purchase Pittsburgh-based CECity’s outstanding stock for $400 million, using $250 million of cash on hand and borrowing $150 million from the company’s untapped $750 million revolving credit facility. Premier expects to close the deal in the company’s fiscal first quarter ending Sept. 30.

Premier divides its business into two segments: supply chain services and performance services. Supply chain services is the bigger of the two, generating $542 million in revenue for the nine months ending March 31, according to company filings. In the same period, performance services accounted for $198 million in revenue. Privately held CECity, which offers software in performance management and improvement, pay-for-value reporting, and professional education, will slide into Premier’s performance service division. The deal brings Premier additional scale; CECity claims a customer base of 1.2 million healthcare professionals.

When Premier raised $821.7 million in a 2013 initial public offering, the company said some proceeds from the offering would be used on acquisitions. Last year, Premier bought SYMMEDRx, a company that uses analytics to measure physician preference, as well as data integration company Meddius. On the supply chain side, Premier acquired MEMdata, a College Station, TX, company whose software and analytics helps with capital equipment planning and sourcing for existing medical facilities, as well as those under construction. Last fall, Premier acquired Raleigh, NC-based Aperek for $48.5 million. Aperek’s cloud-based software helps hospitals plan and automate their supply purchases.

Before the CECity announcement, Premier’s biggest acquisition was its $117 deal last year to buy Hospira (NYSE: HOSP) subsidiary TheraDoc. TheraDoc’s software collects and monitors patient safety data, warning healthcare providers if there is a problem.

While Premier is a publicly traded company, it still calls itself a “national healthcare alliance.” Premier was owned by member hospitals and health systems including Banner Health, Geisinger Health System, members and affiliates of the Greater New York Hospital Association, and the University of Texas MD Anderson Cancer Center. Members in this alliance, comprised of approximately 3,400 U.S. hospitals and 110,000 other healthcare providers, still control 74 percent of Premier’s common stock. Premier was originally based in San Diego but relocated to Charlotte in 2009. At that time, the alliance encompassed more than 2,200 U.S. hospitals and 63,000 other healthcare sites.

When the CECity deal closes, Premier says, CECity’s 134 employees and contractors will continue to work from Pittsburgh. In a written statement, Premier CEO Susan DeVore said that CECity’s capabilities will help Premier to hospitals the ability provide higher quality, more cost-effective care. “These capabilities are critical given the ongoing movement toward population health, as well as emerging Medicare requirements for all physicians to start reporting on a range of new performance measurements,” she said.