Premier Inc (PINC)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 115,272 | 127,972 | 264,468 | 338,042 | 262,605 |
| Interest expense | US$ in thousands | 17,223 | 662 | 14,470 | 11,142 | 11,964 |
| Interest coverage | 6.69 | 193.31 | 18.28 | 30.34 | 21.95 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $115,272K ÷ $17,223K
= 6.69
The interest coverage ratios for Premier Inc, spanning from June 30, 2021, through June 30, 2025, reveal significant fluctuations over this period.
In fiscal year 2021, the ratio stood at 21.95, indicating a strong ability to meet interest obligations, with earnings well above interest expenses. This high level of coverage persisted into FY 2022, with an increased ratio of 30.34, further strengthening the company's capacity to cover interest payments, suggesting robust earnings relative to interest obligations.
However, in FY 2023, there was a notable decline to 18.28. Despite this decrease, the ratio remains comfortably above 1.0, signifying that the company continues to generate significantly more earnings than needed to cover interest expenses, though the margin of safety has narrowed somewhat compared to previous years.
A dramatic change occurs in FY 2024, where the interest coverage ratio surges to 193.31, indicating an extraordinary improvement in earnings relative to interest expenses. Such a spike could suggest a substantial increase in earnings, a significant reduction in interest expense, or a combination of both. This level of coverage is extraordinarily high and generally signals an exceptionally strong financial position regarding debt servicing.
Conversely, in FY 2025, the ratio drops sharply to 6.69, though it remains comfortably above 1.0. This reduction may point to a decrease in earnings, an increase in interest expenses, or both, reflecting a potential weakening in the company's relative ability to cover interest obligations compared to the previous year.
Overall, the trend shows high interest coverage ratios throughout the period, indicating that Premier Inc has historically maintained a strong capacity to meet its interest obligations. Nonetheless, the notable fluctuations, especially the extraordinary surge in FY 2024 and the decline in FY 2025, suggest dynamic changes in earnings power or interest costs that warrant further investigation into the underlying factors driving these shifts.
Peer comparison
Jun 30, 2025