Jehoshaphat Research took a short position in Premier Inc, a healthcare services company valued at approximately $2 billion.
The research group raised concerns about the quality of Premier’s earnings and the sustainability of its business model.
According to Jehoshaphat Research, Premier Inc’s revenue recognition methods rely heavily on projections of future contract performance, which could lead to inflated revenue recognition if optimistic forecasts are used.
This claim is supported both by interviews with former employees and by a quantitative review of the company’s financial statements and footnotes.
The analysis suggests a significant gap between Premier’s reported adjusted EBITDA and a “cleaned” version that Jehoshaphat Research believes more accurately reflects the company’s economic reality. According to their estimates, the adjusted figure could be around 40% lower than what is currently presented to investors.
Additionally, Jehoshaphat Research highlights a potential decline in Premier’s free cash flow and suggests the company’s financial health could be compromised as long-term contracts with health systems near expiration, leading to departures of members.
The research group also notes significant insider selling and departures of high-level executives over the past year, including the CFO, COO, board chairman and several vice-presidents. -presidents. These actions are interpreted by Jehoshaphat Research as potential indicators of underlying problems within the company.
Jehoshaphat Research expects Premier to potentially cut its guidance or miss its earnings estimates in the coming quarters, leading to a contraction in business and a normalization of its revenue numbers.
This article was generated and translated with the help of AI and reviewed by an editor. For more information, see our T&Cs.
