x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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35-2477140
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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13034 Ballantyne Corporate Place
Charlotte, North Carolina
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28277
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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x
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Smaller reporting company
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o
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(Do not check if a smaller reporting company)
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 6.
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September 30, 2014
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June 30, 2014
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||||
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||||
Assets
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|
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||||
Cash and cash equivalents
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$
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94,522
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$
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131,786
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Marketable securities
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174,116
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159,820
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Accounts receivable (net of $721 and $1,054 allowance for doubtful accounts, respectively)
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81,027
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67,577
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Inventories - finished goods
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22,480
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20,823
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Prepaid expenses and other current assets
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44,596
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31,175
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Due from related parties
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1,416
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1,228
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Deferred tax assets
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8,456
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9,647
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Total current assets
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426,613
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422,056
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Property and equipment (net of $196,817 and $186,582 accumulated depreciation, respectively)
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139,277
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134,551
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Restricted cash
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5,000
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5,000
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Marketable securities
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129,579
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248,799
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Deferred tax assets
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277,960
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286,936
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Goodwill
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214,625
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94,451
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Intangible assets (net of $21,203 and $20,302 accumulated amortization, respectively)
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45,966
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10,855
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Other assets
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43,925
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44,008
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Total assets
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$
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1,282,945
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$
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1,246,656
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||||
Liabilities, redeemable limited partners' capital and stockholders' deficit
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||||
Accounts payable
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$
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25,993
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$
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28,007
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Accrued expenses
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27,799
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25,536
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Revenue share obligations
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51,962
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56,531
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Limited partners' distribution payable
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22,691
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22,351
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Accrued compensation and benefits
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26,833
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46,713
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Deferred revenue
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23,932
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15,694
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Current portion of tax receivable agreement
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10,970
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11,035
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Current portion of notes payable and line of credit
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17,872
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17,696
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Other current liabilities
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3,123
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319
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Total current liabilities
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211,175
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223,882
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Notes payable, less current portion
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17,227
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16,051
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Tax receivable agreement, less current portion
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180,248
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181,256
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Deferred compensation plan obligations
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33,098
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32,872
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Deferred rent
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15,999
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15,960
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Other long-term liabilities
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2,216
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2,272
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Total liabilities
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459,963
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472,293
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Commitments and contingencies (Note 18)
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Redeemable limited partners' capital
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3,659,514
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3,244,674
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Stockholders' deficit:
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Series A Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding
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—
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—
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Class A common stock, $0.01 par value, 500,000,000 shares authorized; 32,383,848 and 32,375,390 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively
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324
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324
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Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 111,866,539 and 112,510,905 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively
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—
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—
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Additional paid-in capital
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—
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—
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Accumulated deficit
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(2,836,874
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)
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(2,469,873
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)
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Accumulated other comprehensive income
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25
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43
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Noncontrolling interest
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(7
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)
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(805
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)
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Total stockholders' deficit
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(2,836,532
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)
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(2,470,311
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)
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Total liabilities, redeemable limited partners' capital and stockholders' deficit
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$
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1,282,945
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$
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1,246,656
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Three Months Ended September 30,
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|||||
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2014
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2013
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Net revenue:
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Net administrative fees
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$
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106,523
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$
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143,576
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Other services and support
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59,221
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53,252
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Services
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165,744
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196,828
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Products
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63,564
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43,748
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Net revenue
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229,308
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240,576
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Cost of revenue:
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Services
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32,764
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27,488
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Products
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57,257
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40,038
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Cost of revenue
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90,021
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67,526
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Gross profit
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139,287
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173,050
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Operating expenses:
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Selling, general and administrative
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71,166
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62,643
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Research and development
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1,073
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852
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Amortization of purchased intangible assets
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903
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601
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Total operating expenses
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73,142
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64,096
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Operating income
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66,145
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108,954
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Equity in net income of unconsolidated affiliates
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4,866
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4,114
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Interest and investment income, net
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191
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220
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Other (expense) income, net
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(504
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)
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4
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Other income, net
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4,553
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4,338
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Income before income taxes
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70,698
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113,292
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Income tax expense
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5,811
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764
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Net income
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64,887
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112,528
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Net (income) loss attributable to noncontrolling interest in S2S Global
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(798
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)
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210
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Net income attributable to noncontrolling interest in Premier LP
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(54,816
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)
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(113,214
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)
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Net income attributable to noncontrolling interest
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(55,614
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)
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(113,004
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)
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Net income (loss) attributable to shareholders
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9,273
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(476
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)
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Adjustment of redeemable limited partners' capital to redemption amount
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(382,657
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)
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—
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Net loss attributable to shareholders after adjustment of redeemable limited partners' capital to redemption amount
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$
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(373,384
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)
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$
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(476
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)
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Weighted average shares outstanding:
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Basic
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32,376
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5,627
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Diluted
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32,376
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5,627
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Loss per share attributable to shareholders after adjustment to redeemable limited partners' capital to redemption amount:
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Basic
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$
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(11.53
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)
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$
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(0.08
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)
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Diluted
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$
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(11.53
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)
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$
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(0.08
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)
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Three Months Ended September 30,
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|||||
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2014
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2013
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Net income
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$
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64,887
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$
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112,528
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Net unrealized (loss) gain on marketable securities
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(80
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)
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26
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Total comprehensive income
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64,807
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112,554
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Less: Comprehensive income attributable to noncontrolling interest
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(55,552
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)
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(113,030
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)
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Comprehensive income (loss) attributable to Premier, Inc.
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$
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9,255
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$
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(476
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)
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Class A Common Stock
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Class B Common Stock
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Additional Paid-In Capital
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Accumulated Deficit
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Noncontrolling Interest
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Accumulated Other Comprehensive Income
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Total Stockholders' Deficit
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||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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|||||||||||||||||||||
Balance at June 30, 2014
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32,375
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$
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324
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|
112,511
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$
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—
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$
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—
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$
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(2,469,873
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)
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$
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(805
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)
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$
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43
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|
$
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(2,470,311
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)
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Redemption of limited partner
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—
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—
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(644
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)
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—
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|
—
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|
—
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|
—
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|
—
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|
—
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|||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
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|
6,439
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|
—
|
|
—
|
|
—
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|
6,439
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|
|||||||
Repurchase of vested restricted stock
|
—
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|
—
|
|
—
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|
—
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|
(19
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)
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—
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|
—
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|
—
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|
(19
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)
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|||||||
Net income attributable to shareholders
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9,273
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|
—
|
|
—
|
|
9,273
|
|
|||||||
Net income attributable to noncontrolling interest in S2S Global
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
798
|
|
—
|
|
798
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|
|||||||
Net unrealized loss on marketable securities
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(18
|
)
|
(18
|
)
|
|||||||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,420
|
)
|
(376,274
|
)
|
—
|
|
—
|
|
(382,694
|
)
|
|||||||
Balance at September 30, 2014
|
32,375
|
|
$
|
324
|
|
111,867
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(2,836,874
|
)
|
$
|
(7
|
)
|
$
|
25
|
|
$
|
(2,836,532
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2014
|
2013
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
64,887
|
|
$
|
112,528
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
11,211
|
|
8,957
|
|
||
Equity in net income of unconsolidated affiliates
|
(4,866
|
)
|
(4,114
|
)
|
||
Deferred taxes
|
4,409
|
|
2,461
|
|
||
Stock-based compensation
|
6,439
|
|
325
|
|
||
Adjustment to tax receivable agreement liability
|
1,073
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Accounts receivable, prepaid expenses and other current assets
|
(17,590
|
)
|
(8,582
|
)
|
||
Other assets
|
128
|
|
(10
|
)
|
||
Inventories
|
(1,657
|
)
|
—
|
|
||
Accounts payable, accrued expenses, revenue share obligations and other current liabilities
|
(17,732
|
)
|
(44,205
|
)
|
||
Long-term liabilities
|
(1,025
|
)
|
(590
|
)
|
||
Other operating activities
|
596
|
|
22
|
|
||
Net cash provided by operating activities
|
45,873
|
|
66,792
|
|
||
Investing activities
|
|
|
||||
Purchase of marketable securities
|
(34,412
|
)
|
(19,151
|
)
|
||
Proceeds from sale of marketable securities
|
138,660
|
|
18,974
|
|
||
Acquisition of SYMMEDRx, net of cash acquired
|
—
|
|
(28,740
|
)
|
||
Acquisition of Aperek, net of cash acquired
|
(47,446
|
)
|
—
|
|
||
Acquisition of TheraDoc, net of cash acquired
|
(108,561
|
)
|
—
|
|
||
Distributions received on equity investment
|
5,050
|
|
—
|
|
||
Purchases of property and equipment
|
(14,360
|
)
|
(12,299
|
)
|
||
Other investing activities
|
481
|
|
—
|
|
||
Net cash used in investing activities
|
(60,588
|
)
|
(41,216
|
)
|
||
Financing activities
|
|
|
||||
Payments made on notes payable
|
(322
|
)
|
(1,475
|
)
|
||
Proceeds from S2S Global revolving line of credit
|
200
|
|
—
|
|
||
Proceeds from senior secured line of credit
|
—
|
|
63,800
|
|
||
Payments made in connection with the IPO
|
—
|
|
(2,822
|
)
|
||
Proceeds from issuance of PHSI common stock
|
—
|
|
300
|
|
||
Repurchase of restricted units
|
(19
|
)
|
—
|
|
||
Distributions to limited partners of Premier LP
|
(22,408
|
)
|
(208,324
|
)
|
||
Net cash used in financing activities
|
(22,549
|
)
|
(148,521
|
)
|
||
Net decrease in cash and cash equivalents
|
(37,264
|
)
|
(122,945
|
)
|
||
Cash and cash equivalents at beginning of period
|
131,786
|
|
198,296
|
|
||
Cash and cash equivalents at end of period
|
$
|
94,522
|
|
$
|
75,351
|
|
|
|
|
||||
Supplemental schedule of non cash investing and financing activities:
|
|
|
||||
Issuance of limited partnership interest for notes receivable
|
$
|
—
|
|
$
|
7,860
|
|
Payable to member owners incurred upon repurchase of ownership interest
|
$
|
1,515
|
|
$
|
1,652
|
|
Reduction in redeemable limited partners' capital to reduce outstanding receivable
|
$
|
—
|
|
$
|
28,009
|
|
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners
|
$
|
3,112
|
|
$
|
6,186
|
|
Reduction in redeemable limited partners' capital for limited partners' distribution payable
|
$
|
22,691
|
|
$
|
—
|
|
Increase in redeemable limited partners' capital for adjustment to redemption amount, with offsetting decrease in additional paid-in-capital and accumulated deficit
|
$
|
382,657
|
|
$
|
—
|
|
Reduction in prepaid expenses and other current assets for IPO costs capitalized to additional paid-in-capital
|
$
|
—
|
|
$
|
2,822
|
|
•
|
Premier became the sole member of Premier GP and Premier GP became the general partner of Premier LP. Through Premier GP, Premier exercises indirect control over the business operated by Premier LP, subject to certain limited partner approval rights. Premier GP has no employees and acts solely through its board of managers and appointed officers in directing the affairs of Premier LP;
|
•
|
the member owners held
112,607,832
shares of Class B common stock and
112,607,832
Class B common units;
|
•
|
Premier GP held
32,374,751
Class A common units;
|
•
|
through their holdings of Class B common stock, the member owners had approximately
78%
of the voting power in Premier;
|
•
|
the investors in the IPO collectively owned all of Premier's outstanding shares of Class A common stock and collectively had approximately
22%
of the voting power in Premier; and
|
•
|
Premier LP was the operating partnership and parent company to all of Premier's other operating subsidiaries, including Premier Supply Chain Improvement, Inc. ("PSCI") and PHSI.
|
•
|
(i) the issuance of
32,374,751
shares of Class A common stock in the IPO, or approximately
22%
of the Class A common stock and Class B common stock, collectively, outstanding after the Reorganization and IPO, at an IPO price of
$27.00
per share and the use of the net proceeds therefrom to purchase (A) Class A common units from Premier LP, (B) Class B common units from PHSI and (C) Class B common units from Premier's member owners, (ii) the entry by Premier LP, Premier GP and the member owners into the LP Agreement and (iii) the issuance of
112,607,832
shares of Class B common stock to the member owners;
|
•
|
the change from the
99%
noncontrolling interest held by the limited partners of Premier LP prior to the Reorganization to the approximately
78%
noncontrolling interest held by the limited partners of Premier LP subsequent to the Reorganization and IPO;
|
•
|
the change in the allocation of Premier LP's income from
1%
of operating income and
5%
of investment income to PHSI prior to the Reorganization and IPO to approximately
22%
of Premier LP's income to Premier (indirectly through Premier GP) subsequent to the Reorganization and IPO as the result of the modified income allocation provisions of the LP Agreement and Premier's purchase of approximately
22%
of the common units;
|
•
|
adjustments to reflect redeemable limited partners' capital at the greater of the book value or redemption amount per the LP Agreement;
|
•
|
adjustments that give effect to the tax receivable agreement, including the effects of the increase in the tax basis of Premier LP's assets resulting from Premier's purchase of Class B common units from the member owners; and
|
•
|
estimated payments due to member owners pursuant to the tax receivable agreement equal to
85%
of the amount of cash savings, if any, in U.S. federal, foreign, state and local income and franchise tax that Premier actually realizes (or is deemed to realize in the case of certain payments required to be made upon certain occurrences under such tax receivable agreement) as a result of the increases in the tax basis of Premier LP's assets resulting from Premier's purchase of Class B common units from the member owners and of certain other tax benefits related to Premier entering into the tax receivable agreement.
|
Assets
|
|
|
||
Cash and cash equivalents
|
$
|
277,814
|
|
(1)
|
Prepaid expenses and other current assets
|
(5,911
|
)
|
(2)
|
|
Total current assets
|
271,903
|
|
|
|
Deferred tax assets
|
282,972
|
|
(3)
|
|
Total assets
|
$
|
554,875
|
|
|
|
|
|
||
Liabilities, redeemable limited partners' capital and stockholders' deficit
|
|
|
||
Payable pursuant to tax receivable agreement
|
$
|
6,966
|
|
(3)
|
Total current liabilities
|
6,966
|
|
|
|
Payable pursuant to tax receivable agreement, less current portion
|
179,111
|
|
(3)
|
|
Total liabilities
|
186,077
|
|
|
|
Redeemable limited partners' capital
|
2,799,121
|
|
(4)
|
|
Stockholders' deficit:
|
|
|
||
Common stock, par value $0.01, 12,250,000 shares authorized; no shares outstanding
|
(56
|
)
|
(5)
|
|
Class A common stock, par value $0.01, 500,000,000 shares authorized; 32,374,751 shares issued and outstanding
|
324
|
|
(5)
|
|
Class B common stock, par value $0.000001, 600,000,000 shares authorized; 112,607,832 shares issued and outstanding
|
—
|
|
(5)
|
|
Additional paid-in capital
|
(28,828
|
)
|
(6)
|
|
Accumulated deficit
|
(2,401,766
|
)
|
(7)
|
|
Accumulated other comprehensive income
|
3
|
|
(4)
|
|
Total stockholders' deficit
|
(2,430,323
|
)
|
|
|
Total liabilities, redeemable limited partners' capital and stockholders' deficit
|
$
|
554,875
|
|
|
(1)
|
Reflects net effect on cash and cash equivalents of the receipt of gross proceeds from the IPO of
$874.1 million
(with an IPO price of
$27.00
per share of Class A common stock) and the purchase of units from the member owners described above, as follows (in thousands):
|
Gross proceeds from the IPO
|
$
|
874,118
|
|
Underwriting discounts, commissions and other expenses
|
(52,447
|
)
|
|
Purchases of Class B common units from the member owners
|
(543,857
|
)
|
|
Net cash proceeds from IPO
|
$
|
277,814
|
|
(2)
|
Reflects the reduction of prepaid expenses related to the IPO, with an offset to the proceeds of the IPO in additional paid-in capital.
|
(3)
|
Premier LP intends to have in effect an election under Section 754 of the Internal Revenue Code of 1986, as amended, or the Code, and comparable elections under state and local tax law, such that the initial sale of Class B common units by PHSI and the member owners will result in adjustments to the tax basis of the assets of Premier LP. These increases in tax basis increase (for tax purposes) the depreciation and amortization deductions by Premier LP, and therefore, reduce the amount of income tax that Premier would otherwise be required to pay in the future. In connection with the Reorganization and IPO, Premier has entered into a tax receivable agreement with the member owners which became effective upon the completion of the Reorganization and IPO, pursuant to which Premier agreed to pay to the member owners, generally over a
15
-year period (under current law),
85%
of the amount of cash savings, if any, in U.S. federal, foreign, state and local and franchise income tax that Premier actually realizes (or is deemed to realize, in the case of payments required to be made upon certain occurrences under such tax receivable agreement) as a result of the increases in tax basis resulting from the sale or exchange of Class B common units by the member owners. The unaudited adjustments give effect to the Section 754 election and the tax receivable agreement based on the following assumptions:
|
•
|
The increase in deferred tax assets representing the income tax effects of the increases in the tax basis as a result of Premier LP's election under Section 754 of the Code in connection with the initial sale of Class B common units described above. This adjustment is calculated based on an effective income tax rate for Premier of approximately
39%
, which includes a provision for U.S. federal income taxes and assumes (i) Premier's statutory rates apportioned to each state and local tax jurisdiction, (ii) that there are no material changes in the relevant tax law, and (iii) that Premier earns sufficient taxable income in each year to realize the full tax benefit of the amortization of its assets.
|
•
|
Premier determined the adjustments in connection with the Section 754 election by first calculating the excess of each selling member owner's and PHSI's selling price over such person's share of Premier LP's tax basis in its assets attributable to the Class B common units sold to Premier. Premier then allocated the aggregate excess among Premier LP's assets following applicable tax regulations governing adjustments that result from the Section 754 election. Premier determined each selling member owner's share of the tax basis in Premier LP's assets attributable to the Class B common units sold to Premier by multiplying the member owner's tax capital account balance as of the date of sale as maintained in Premier LP's books and records by a fraction, the numerator of which was the number of Class B common units sold to Premier,
|
•
|
Premier LP's election under Section 754 of the Code is at the discretion of Premier LP and is not subject to review or approval by the IRS or other tax authorities. The computation of the adjustments resulting from the Section 754 election and Premier's tax liability is subject to audit by the IRS and other tax authorities in the same manner as all other items reported on income tax returns.
|
•
|
Upon the Reorganization and IPO, the cumulative adjustments of
$186.1 million
, of which
$7.0 million
was expected to be paid over the next 12 months, and was reflected as a current liability with the remaining balance classified as a long-term liability, to reflect a liability equal to
85%
of the estimated realizable tax benefit resulting from the increase in tax basis due to Premier LP's Section 754 election in connection with the initial sale by the member owners of the Class B common units described above as an increase to payable pursuant to the tax receivable agreement.
|
•
|
Deferred tax assets are measured based on the difference in tax basis of Premier's investment in Premier LP as compared to its GAAP carrying value and include the change in allocations in connection with the Reorganization. The adjustments related to Premier LP's Section 754 election described above are a component of Premier's tax basis in Premier LP.
|
(4)
|
Reflects the increase in the noncontrolling interest held by the limited partners in Premier L.P. resulting from the net proceeds from the IPO used to purchase Class A common units from Premier LP of
$247.7 million
and Class B common units from PHSI of
$30.1 million
, and the contribution of the common stock of PHSI in connection with the Reorganization of
$76.9 million
. This is offset by an adjustment of
$131.0 million
to reflect the approximately
78%
controlling interest held by the redeemable limited partners of Premier LP subsequent to the Reorganization and IPO, which is reflected in redeemable limited partners' capital on the unaudited consolidated balance sheets. Immediately following the effective date of the LP Agreement, all of Premier LP's limited partners that approved the Reorganization received Class B common units and capital account balances in Premier LP equal to their percentage interests and capital account balances in Premier LP immediately preceding the Reorganization. Premier used a portion of the net proceeds from the IPO to purchase (i) Class A common units, (ii) Class B common units from PHSI and (iii) Class B common units from the member owners, resulting in a reduction in the noncontrolling interest attributable to the limited partners from
99%
to approximately
78%
.
|
(5)
|
Reflects (i) the exchange of the existing PHSI shares of common stock, common stock subscribed and related subscriptions receivable for Class B common units, (ii) the issuance of Class B common stock in connection with the Reorganization and (iii) the issuance of Class A common stock in connection with the IPO.
|
(6)
|
Reflects the impact of the adjustments in notes (1), (2), (3), (4) and (5) above to additional paid-in capital:
|
•
|
an increase of
$96.9 million
due to an increase in deferred tax assets described in note (3) of
$283.0 million
offset by an increase in payables pursuant to the tax receivable agreement of
$186.1 million
;
|
•
|
an increase of
$821.7 million
from the net proceeds from the IPO less the par value of the shares of Class A common stock sold in the IPO of
$0.3 million
and less prepaid offering expenses of
$5.9 million
;
|
•
|
a decrease of
$767.5 million
to reflect the difference between the consideration paid to acquire the Class A common units and B common units and the adjustment to the carrying value of the noncontrolling interest described in note (4) above; and
|
•
|
a decrease in the remaining balance of additional paid-in-capital related to the increase in redeemable limited partners' capital to its redemption value, as described in note (4) above.
|
(7)
|
Reflects the decrease in retained earnings and increase in accumulated deficit related to the increase in redeemable limited partners' capital to its redemption value, as described in note (4) above.
|
•
|
Premier LP became contractually required under the GPO participation agreements to pay each member owner revenue share from Premier LP equal to
30%
of all gross administrative fees collected by Premier LP based upon purchasing by such member owner's member facilities through Premier LP's GPO supplier contracts. Historically, Premier LP did not generally have a contractual requirement to pay revenue share to member owners participating in its GPO programs, but paid semi-annual distributions of partnership income.
|
•
|
Premier records redeemable limited partners' capital at redemption value, which represents the greater of the book value or redemption amount per the LP Agreement, at the reporting date.
|
•
|
Premier became subject to additional U.S. federal, state and local income taxes with respect to its additional allocable share of any taxable income of Premier LP.
|
•
|
Noncontrolling interest in Premier LP decreased from
99%
to approximately
78%
.
|
|
Net Revenue
|
Segment Adjusted EBITDA
|
Depreciation & Amortization Expense
|
Capital Expenditures
|
||||||||
Three Months Ended September 30, 2014
|
|
|
|
|
||||||||
Supply Chain Services:
|
|
|
|
|
||||||||
Net administrative fees
|
$
|
106,523
|
|
|
|
|
||||||
Other services and support
|
215
|
|
|
|
|
|||||||
Services
|
106,738
|
|
|
|
|
|||||||
Products
|
63,564
|
|
|
|
|
|||||||
Total Supply Chain Services
|
170,302
|
|
$
|
91,268
|
|
$
|
412
|
|
$
|
655
|
|
|
Performance Services
|
59,006
|
|
18,362
|
|
9,553
|
|
13,539
|
|
||||
Corporate
|
—
|
|
(19,112
|
)
|
1,246
|
|
166
|
|
||||
Total
|
$
|
229,308
|
|
$
|
90,518
|
|
$
|
11,211
|
|
$
|
14,360
|
|
|
|
|
|
|
||||||||
Three Months Ended September 30, 2013
|
|
|
|
|
||||||||
Supply Chain Services:
|
|
|
|
|
||||||||
Net administrative fees
|
$
|
143,576
|
|
|
|
|
||||||
Other services and support
|
134
|
|
|
|
|
|||||||
Services
|
143,710
|
|
|
|
|
|||||||
Products
|
43,748
|
|
|
|
|
|||||||
Total Supply Chain Services
|
187,458
|
|
$
|
125,480
|
|
$
|
327
|
|
$
|
300
|
|
|
Performance Services
|
53,118
|
|
16,329
|
|
7,435
|
|
11,979
|
|
||||
Corporate
|
—
|
|
(17,475
|
)
|
1,195
|
|
20
|
|
||||
Total
|
$
|
240,576
|
|
$
|
124,334
|
|
$
|
8,957
|
|
$
|
12,299
|
|
|
Total Assets
|
||
September 30, 2014
|
|
||
Supply Chain Services
|
$
|
341,191
|
|
Performance Services
|
426,434
|
|
|
Corporate
|
515,320
|
|
|
Total
|
$
|
1,282,945
|
|
|
|
||
June 30, 2014
|
|
||
Supply Chain Services
|
$
|
373,746
|
|
Performance Services
|
266,567
|
|
|
Corporate
|
606,343
|
|
|
Total
|
$
|
1,246,656
|
|
|
Three Months Ended September 30,
|
|||||
|
2014
|
2013
|
||||
Segment Adjusted EBITDA
|
$
|
90,518
|
|
$
|
124,334
|
|
Depreciation and amortization
|
(10,308
|
)
|
(8,356
|
)
|
||
Amortization of purchased intangible assets
|
(903
|
)
|
(601
|
)
|
||
Merger and acquisition related expenses
(a)
|
(1,278
|
)
|
(142
|
)
|
||
Strategic and financial restructuring expenses
(b)
|
(96
|
)
|
(1,842
|
)
|
||
Stock-based compensation expense
|
(6,439
|
)
|
(325
|
)
|
||
Adjustment to tax receivable agreement liability
|
1,073
|
|
—
|
|
||
Acquisition related adjustment - deferred revenue
|
(2,065
|
)
|
—
|
|
||
Equity in net income of unconsolidated affiliates
(c)
|
(4,866
|
)
|
(4,114
|
)
|
||
Deferred compensation plan expense
|
509
|
|
—
|
|
||
Operating income
|
$
|
66,145
|
|
$
|
108,954
|
|
Equity in net income of unconsolidated affiliates
(c)
|
4,866
|
|
4,114
|
|
||
Interest and investment income, net
|
191
|
|
220
|
|
||
Other (expense) income, net
|
(504
|
)
|
4
|
|
||
Income before income taxes
|
$
|
70,698
|
|
$
|
113,292
|
|
(a)
|
Represents legal, accounting and other expenses related to acquisition activities.
|
(b)
|
Represents legal, accounting and other expenses directly related to strategic and financial restructuring expenses.
|
(c)
|
Represents equity in net income from unconsolidated affiliates generated by the Company's
50%
ownership interest in Innovatix, LLC ("Innovatix"), a privately held limited liability company that provides group purchasing services to alternate site providers in specific classes of trade, all of which is included in the supply chain services segment.
|
|
Weighted Average Useful Life
|
September 30, 2014
|
June 30, 2014
|
||||
Identifiable intangible assets acquired:
|
|
|
|
||||
Technology
|
5.0 years
|
$
|
44,779
|
|
$
|
20,257
|
|
Member relationships
|
8.3 years
|
16,080
|
|
6,830
|
|
||
Non-compete agreements
|
3.0 years
|
80
|
|
80
|
|
||
Trade names
|
5.0 years
|
6,230
|
|
3,990
|
|
||
|
5.8 years
|
67,169
|
|
31,157
|
|
||
Accumulated amortization
|
|
(21,203
|
)
|
(20,302
|
)
|
||
Total identifiable intangible assets acquired, net
|
|
$
|
45,966
|
|
$
|
10,855
|
|
Description
|
Total
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
||||||||
September 30, 2014
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
19,776
|
|
$
|
19,776
|
|
$
|
—
|
|
$
|
—
|
|
Commercial paper
|
20,698
|
|
—
|
|
20,698
|
|
—
|
|
||||
U.S. government debt securities
|
54,134
|
|
—
|
|
54,134
|
|
—
|
|
||||
Corporate debt securities
|
137,722
|
|
—
|
|
137,722
|
|
—
|
|
||||
Asset-backed securities
|
91,141
|
|
—
|
|
91,141
|
|
—
|
|
||||
Deferred compensation plan assets
|
35,635
|
|
35,635
|
|
—
|
|
—
|
|
||||
Total assets
|
$
|
359,106
|
|
$
|
55,411
|
|
$
|
303,695
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
June 30, 2014
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
64,207
|
|
$
|
64,207
|
|
$
|
—
|
|
$
|
—
|
|
Commercial paper
|
33,572
|
|
—
|
|
33,572
|
|
—
|
|
||||
U.S. government debt securities
|
116,744
|
|
—
|
|
116,744
|
|
—
|
|
||||
Corporate debt securities
|
166,452
|
|
—
|
|
166,452
|
|
—
|
|
||||
Asset-backed securities
|
91,851
|
|
|
91,851
|
|
—
|
|
|||||
Deferred compensation plan assets
|
33,256
|
|
33,256
|
|
—
|
|
—
|
|
||||
Total assets
|
$
|
506,082
|
|
$
|
97,463
|
|
$
|
408,619
|
|
$
|
—
|
|
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Market Value
|
||||||||
September 30, 2014
|
|
|
|
|
||||||||
Commercial paper
|
$
|
20,697
|
|
$
|
1
|
|
$
|
—
|
|
$
|
20,698
|
|
U.S. government debt securities
|
54,080
|
|
54
|
|
—
|
|
54,134
|
|
||||
Corporate debt securities
|
137,679
|
|
65
|
|
(22
|
)
|
137,722
|
|
||||
Asset-backed securities
|
91,129
|
|
20
|
|
(8
|
)
|
91,141
|
|
||||
|
$
|
303,585
|
|
$
|
140
|
|
$
|
(30
|
)
|
$
|
303,695
|
|
June 30, 2014
|
|
|
|
|
||||||||
Commercial paper
|
$
|
33,561
|
|
$
|
12
|
|
$
|
(1
|
)
|
$
|
33,572
|
|
U.S. government debt securities
|
116,620
|
|
124
|
|
—
|
|
116,744
|
|
||||
Corporate debt securities
|
166,424
|
|
69
|
|
(41
|
)
|
166,452
|
|
||||
Asset-backed securities
|
91,824
|
|
34
|
|
(7
|
)
|
91,851
|
|
||||
|
$
|
408,429
|
|
$
|
239
|
|
$
|
(49
|
)
|
$
|
408,619
|
|
|
Cost
|
Fair Market Value
|
||||
Due in one year or less
|
$
|
174,023
|
|
$
|
174,116
|
|
Due after one year through five years
|
129,562
|
|
129,579
|
|
||
|
303,585
|
|
303,695
|
|
|
Receivables From Limited Partners
|
Redeemable Limited Partners' Capital
|
Accumulated Other Comprehensive (Loss) Income
|
Total Redeemable Limited Partners' Capital
|
||||||||
June 30, 2014
|
$
|
(18,139
|
)
|
$
|
3,262,666
|
|
$
|
147
|
|
$
|
3,244,674
|
|
Distributions applied to receivables from limited partners
|
1,635
|
|
—
|
|
—
|
|
1,635
|
|
||||
Repurchase of redeemable limited partnership interest
|
—
|
|
(1,515
|
)
|
—
|
|
(1,515
|
)
|
||||
Net income attributable to Premier LP
|
—
|
|
54,816
|
|
—
|
|
54,816
|
|
||||
Distributions to limited partners
|
—
|
|
(22,691
|
)
|
—
|
|
(22,691
|
)
|
||||
Net unrealized gain on marketable securities
|
—
|
|
—
|
|
(62
|
)
|
(62
|
)
|
||||
Adjustment to redemption amount
|
—
|
|
382,657
|
|
—
|
|
382,657
|
|
||||
September 30, 2014
|
$
|
(16,504
|
)
|
$
|
3,675,933
|
|
$
|
85
|
|
$
|
3,659,514
|
|
|
Three Months Ended September 30,
|
||||||
|
2014
(d)
|
|
2013
(e)
|
||||
Numerator for Basic and Diluted Income Per Share:
|
|
|
|
||||
Net loss attributable to shareholders after adjustment of redeemable partners' capital to redemption amount
|
$
|
(373,384
|
)
|
|
$
|
(476
|
)
|
Denominator for basic income per share weighted average shares
(a)
|
32,376
|
|
|
5,627
|
|
||
|
|
|
|
||||
Effect of dilutive securities:
(b)
|
|
|
|
||||
Stock options
|
—
|
|
|
—
|
|
||
Restricted stock units
(c)
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Denominator for diluted income per share-adjusted:
|
|
|
|
||||
Weighted average shares and assumed conversions
|
32,376
|
|
|
5,627
|
|
||
|
|
|
|
||||
Basic net loss per share
|
$
|
(11.53
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
||||
Diluted net loss per share
|
$
|
(11.53
|
)
|
|
$
|
(0.08
|
)
|
(a)
|
Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested restricted stock units and non-vested performance share awards for the three months ended September 30, 2014.
|
(b)
|
The exchange of
111,867
Class B common units for Class A common shares was excluded from the dilutive weighted average shares outstanding because to do so would have been anti-dilutive for the periods presented.
|
(c)
|
The conversion of
252
Class A common shares was excluded from the dilutive weighted average shares outstanding for the three months ended September 30, 2014, because to do so would have been anti-dilutive for the period presented.
|
(d)
|
The weighted average shares calculation is based on the Premier, Inc. common shares outstanding for the three months ended September 30, 2014.
|
(e)
|
The weighted average shares calculation is based on the PHSI common shares outstanding for the three months ended September 30, 2013.
|
|
Number of Shares
|
Weighted Average Fair Value at Grant Date
|
|||
Outstanding at June 30, 2014
|
717,304
|
|
$
|
27.29
|
|
Granted
|
138,470
|
|
$
|
31.58
|
|
Vested
|
(16,951
|
)
|
$
|
27.05
|
|
Forfeited
|
(13,512
|
)
|
$
|
27.28
|
|
Outstanding at September 30, 2014
|
825,311
|
|
$
|
28.01
|
|
|
Number of Shares
|
Weighted Average Fair Value at Grant Date
|
|||
Outstanding at June 30, 2014
|
827,174
|
|
$
|
27.00
|
|
Granted
|
266,673
|
|
$
|
31.58
|
|
Vested
|
—
|
|
$
|
—
|
|
Forfeited
|
(7,800
|
)
|
$
|
27.00
|
|
Outstanding at September 30, 2014
|
1,086,047
|
|
$
|
28.12
|
|
|
Number of Options
|
Weighted Average Fair Value at Grant Date
|
|||
Outstanding at June 30, 2014
|
1,364,654
|
|
$
|
11.46
|
|
Granted
|
628,873
|
|
$
|
12.82
|
|
Vested
|
(8,692
|
)
|
$
|
11.46
|
|
Forfeited
|
(9,988
|
)
|
$
|
11.46
|
|
Outstanding at September 30, 2014
|
1,974,847
|
|
$
|
11.89
|
|
For options granted during the three months ended:
|
September 30, 2014
|
September 30, 2013
|
||||
Expected life
(1)
|
6 years
|
|
6 years
|
|
||
Expected dividend
(2)
|
—
|
|
—
|
|
||
Expected volatility
(3)
|
39.50
|
%
|
42.00
|
%
|
||
Risk-free interest rate
(4)
|
1.84
|
%
|
1.71
|
%
|
||
Weighted average option grant date fair value
|
$
|
12.82
|
|
$
|
11.46
|
|
•
|
Net administrative fee revenue - The number of members that utilize our GPO supplier contracts and the volume of their purchases.
|
•
|
Specialty pharmacy revenue - The number of members that utilize our specialty pharmacy, as well as the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans.
|
•
|
Direct sourcing revenue - The number of members that purchase products through our direct sourcing activities and the impact of competitive pricing.
|
•
|
The contractual requirement under the GPO participation agreements to pay each member owner revenue share from Premier LP equal to
30%
of all gross administrative fees collected by Premier LP based upon purchasing by such member owner's member facilities through Premier LP's GPO supplier contracts. Historically, Premier LP did not generally have a contractual requirement to pay revenue share to member owners participating in its GPO programs, but paid semi-annual distributions of partnership income.
|
•
|
Additional U.S. federal, state and local income taxes with respect to its additional allocable share of any taxable income of Premier LP.
|
•
|
A decrease in noncontrolling interest in Premier LP from
99%
to approximately
78%
.
|
|
Three Months Ended September 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Actual
|
|
Actual
|
|
Adjustments
|
|
Non-GAAP Pro Forma
|
||||||||||||||
|
Amount
|
% of Net Revenue
|
|
Amount
|
% of Net Revenue
|
|
Amount
|
|
Amount
|
% of Net Revenue
|
|||||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net administrative fees
|
$
|
106,523
|
|
46
|
%
|
|
$
|
143,576
|
|
60
|
%
|
|
$
|
(41,263
|
)
|
(1)
|
$
|
102,313
|
|
51
|
%
|
Other services and support
|
59,221
|
|
26
|
%
|
|
53,252
|
|
22
|
%
|
|
—
|
|
|
53,252
|
|
27
|
%
|
||||
Services
|
165,744
|
|
72
|
%
|
|
196,828
|
|
82
|
%
|
|
(41,263
|
)
|
|
155,565
|
|
78
|
%
|
||||
Products
|
63,564
|
|
28
|
%
|
|
43,748
|
|
18
|
%
|
|
—
|
|
|
43,748
|
|
22
|
%
|
||||
Net revenue
|
229,308
|
|
100
|
%
|
|
240,576
|
|
100
|
%
|
|
(41,263
|
)
|
|
199,313
|
|
100
|
%
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Services
|
32,764
|
|
14
|
%
|
|
27,488
|
|
11
|
%
|
|
—
|
|
|
27,488
|
|
14
|
%
|
||||
Products
|
57,257
|
|
25
|
%
|
|
40,038
|
|
17
|
%
|
|
—
|
|
|
40,038
|
|
20
|
%
|
||||
Cost of revenue
|
90,021
|
|
39
|
%
|
|
67,526
|
|
28
|
%
|
|
—
|
|
|
67,526
|
|
34
|
%
|
||||
Gross profit
|
139,287
|
|
61
|
%
|
|
173,050
|
|
72
|
%
|
|
(41,263
|
)
|
|
131,787
|
|
66
|
%
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Selling, general and administrative
|
71,166
|
|
31
|
%
|
|
62,643
|
|
26
|
%
|
|
—
|
|
|
62,643
|
|
31
|
%
|
||||
Research and development
|
1,073
|
|
1
|
%
|
|
852
|
|
—
|
%
|
|
—
|
|
|
852
|
|
—
|
%
|
||||
Amortization of purchased intangible assets
|
903
|
|
—
|
%
|
|
601
|
|
—
|
%
|
|
—
|
|
|
601
|
|
—
|
%
|
||||
Total operating expenses
|
73,142
|
|
32
|
%
|
|
64,096
|
|
27
|
%
|
|
—
|
|
|
64,096
|
|
32
|
%
|
||||
Operating income
|
66,145
|
|
29
|
%
|
|
108,954
|
|
45
|
%
|
|
(41,263
|
)
|
|
67,691
|
|
34
|
%
|
||||
Other income, net
|
4,553
|
|
2
|
%
|
|
4,338
|
|
2
|
%
|
|
—
|
|
|
4,338
|
|
2
|
%
|
||||
Income before income taxes
|
70,698
|
|
31
|
%
|
|
113,292
|
|
47
|
%
|
|
(41,263
|
)
|
|
72,029
|
|
36
|
%
|
||||
Income tax expense
|
5,811
|
|
2
|
%
|
|
764
|
|
—
|
%
|
|
5,997
|
|
(2)
|
6,761
|
|
3
|
%
|
||||
Net income
|
64,887
|
|
28
|
%
|
|
112,528
|
|
47
|
%
|
|
(47,260
|
)
|
|
65,268
|
|
33
|
%
|
||||
Net (income) loss attributable to noncontrolling interest in S2S Global
|
(798
|
)
|
—
|
%
|
|
210
|
|
—
|
%
|
|
—
|
|
|
210
|
|
—
|
%
|
||||
Net income attributable to noncontrolling interest in Premier LP
|
(54,816
|
)
|
(24
|
)%
|
|
(113,214
|
)
|
(47
|
)%
|
|
57,691
|
|
(3)
|
(55,523
|
)
|
(28
|
)%
|
||||
Net income attributable to noncontrolling interest
|
(55,614
|
)
|
(24
|
)%
|
|
(113,004
|
)
|
(47
|
)%
|
|
57,691
|
|
|
(55,313
|
)
|
(28
|
)%
|
||||
Net income (loss) attributable to shareholders
|
$
|
9,273
|
|
4
|
%
|
|
$
|
(476
|
)
|
—
|
%
|
|
$
|
10,431
|
|
|
$
|
9,955
|
|
5
|
%
|
Adjustment of redeemable limited partners' capital to redemption amount
|
$
|
(382,657
|
)
|
nm
|
|
|
$
|
—
|
|
nm
|
|
|
$
|
—
|
|
|
$
|
—
|
|
nm
|
|
Net (loss) income attributable to shareholders after adjustment of redeemable partners' capital to redemption amount
|
$
|
(373,384
|
)
|
nm
|
|
|
$
|
(476
|
)
|
nm
|
|
|
nm
|
|
|
$
|
9,955
|
|
nm
|
|
|
Adjusted EBITDA
(4)
|
$
|
90,518
|
|
39
|
%
|
|
$
|
124,334
|
|
52
|
%
|
|
na
|
|
|
$
|
83,071
|
|
42
|
%
|
|
Adjusted Fully Distributed Net Income
(5)
|
$
|
47,765
|
|
21
|
%
|
|
na
|
|
na
|
|
|
na
|
|
|
$
|
45,089
|
|
23
|
%
|
(4)
|
The table that follows shows the reconciliation of net income to Adjusted EBITDA and the reconciliation of Segment Adjusted EBITDA to income before income taxes for the periods presented (in thousands):
|
|
Three Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Actual
|
|
Actual
|
Adjustments
(a)
|
Non-GAAP Pro Forma
|
||||||||
Net income
|
$
|
64,887
|
|
|
$
|
112,528
|
|
$
|
(47,260
|
)
|
$
|
65,268
|
|
Interest and investment income, net
(b)
|
(191
|
)
|
|
(220
|
)
|
—
|
|
(220
|
)
|
||||
Income tax expense
|
5,811
|
|
|
764
|
|
5,997
|
|
6,761
|
|
||||
Depreciation and amortization
|
10,308
|
|
|
8,356
|
|
—
|
|
8,356
|
|
||||
Amortization of purchased intangible assets
|
903
|
|
|
601
|
|
—
|
|
601
|
|
||||
EBITDA
|
81,718
|
|
|
122,029
|
|
(41,263
|
)
|
80,766
|
|
||||
Stock-based compensation
|
6,439
|
|
|
325
|
|
—
|
|
325
|
|
||||
Acquisition related expenses
(c)
|
1,278
|
|
|
142
|
|
—
|
|
142
|
|
||||
Strategic and financial restructuring expenses
(d)
|
96
|
|
|
1,842
|
|
—
|
|
1,842
|
|
||||
Adjustment to tax receivable agreement liability
(e)
|
(1,073
|
)
|
|
—
|
|
—
|
|
—
|
|
||||
Other (income) expense, net
(f)
|
(5
|
)
|
|
(4
|
)
|
—
|
|
(4
|
)
|
||||
Acquisition related adjustment - deferred revenue
(g)
|
2,065
|
|
|
—
|
|
—
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
90,518
|
|
|
$
|
124,334
|
|
$
|
(41,263
|
)
|
$
|
83,071
|
|
|
|
|
|
|
|
||||||||
Segment Adjusted EBITDA:
|
|
|
|
|
|
||||||||
Supply Chain Services
|
$
|
91,268
|
|
|
$
|
125,480
|
|
$
|
(41,263
|
)
|
$
|
84,217
|
|
Performance Services
|
18,362
|
|
|
16,329
|
|
—
|
|
16,329
|
|
||||
Corporate
(h)
|
(19,112
|
)
|
|
(17,475
|
)
|
—
|
|
(17,475
|
)
|
||||
Adjusted EBITDA
|
90,518
|
|
|
124,334
|
|
(41,263
|
)
|
83,071
|
|
||||
Depreciation and amortization
|
(10,308
|
)
|
|
(8,356
|
)
|
—
|
|
(8,356
|
)
|
||||
Amortization of purchased intangible assets
|
(903
|
)
|
|
(601
|
)
|
—
|
|
(601
|
)
|
||||
Stock-based compensation
|
(6,439
|
)
|
|
(325
|
)
|
—
|
|
(325
|
)
|
||||
Acquisition related expenses
(c)
|
(1,278
|
)
|
|
(142
|
)
|
—
|
|
(142
|
)
|
||||
Strategic and financial restructuring expenses
(d)
|
(96
|
)
|
|
(1,842
|
)
|
—
|
|
(1,842
|
)
|
||||
Adjustment to tax receivable agreement liability
(e)
|
1,073
|
|
|
—
|
|
—
|
|
—
|
|
||||
Acquisition related adjustment - deferred revenue
(g)
|
(2,065
|
)
|
|
—
|
|
—
|
|
—
|
|
||||
Equity in net income of unconsolidated affiliates
|
(4,866
|
)
|
|
(4,114
|
)
|
—
|
|
(4,114
|
)
|
||||
Deferred compensation plan expense
|
509
|
|
|
—
|
|
—
|
|
—
|
|
||||
Operating income
|
66,145
|
|
|
108,954
|
|
(41,263
|
)
|
67,691
|
|
||||
Equity in net income of unconsolidated affiliates
|
4,866
|
|
|
4,114
|
|
—
|
|
4,114
|
|
||||
Interest and investment income, net
(b)
|
191
|
|
|
220
|
|
—
|
|
220
|
|
||||
Other (expense) income, net
(f)
|
(504
|
)
|
|
4
|
|
—
|
|
4
|
|
||||
Income before income taxes
|
70,698
|
|
|
113,292
|
|
(41,263
|
)
|
72,029
|
|
(a)
|
Represents the adjustments related to the Reorganization and IPO described above.
|
(b)
|
Represents interest income, net and realized gains and losses on our marketable securities.
|
(c)
|
Represents legal, accounting and other expenses related to acquisition activities.
|
(d)
|
Represents legal, accounting and other expenses directly related to strategic and financial restructuring expenses.
|
(e)
|
Represents adjustment to tax receivable agreement liability due to impact of departing member owners during the three months ended September 30, 2014.
|
(f)
|
Represents gains and losses on investments and other assets.
|
(g)
|
Represents non-cash adjustment to deferred revenue of acquired entities. Business combination accounting rules require us to account for the fair values of software license updates and product support contracts and hardware systems support contracts assumed in connection with our acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to our acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment to our software license updates and product support revenues is intended to include, and thus reflect, the full amount of such revenues.
|
(h)
|
Corporate consists of general and administrative corporate expenses that are not specific to either of our segments.
|
(5)
|
The table that follows shows the reconciliation of net income attributable to shareholders to non-GAAP pro forma Adjusted Fully Distributed Net Income for the periods presented (in thousands):
|
|
Three Months Ended September 30,
|
|||||
|
2014
|
2013
|
||||
Net income (loss) attributable to shareholders
|
$
|
9,273
|
|
$
|
(476
|
)
|
Non-GAAP Pro forma adjustment for revenue share post-IPO
|
—
|
|
(41,263
|
)
|
||
Income tax expense
|
5,811
|
|
764
|
|
||
Stock-based compensation
|
6,439
|
|
325
|
|
||
Acquisition related expenses
(a)
|
1,278
|
|
142
|
|
||
Strategic and financial restructuring expenses
(b)
|
96
|
|
1,842
|
|
||
Adjustment to tax receivable agreement liability
|
(1,073
|
)
|
—
|
|
||
Acquisition related adjustment - deferred revenue
|
2,065
|
|
—
|
|
||
Amortization of purchased intangible assets
|
903
|
|
601
|
|
||
Net income attributable to noncontrolling interest in Premier LP
(c)
|
54,816
|
|
113,214
|
|
||
Non-GAAP pro forma fully adjusted distributed income before income taxes
|
79,608
|
|
75,149
|
|
||
Income tax expense on fully distributed income before income taxes
(d)
|
31,843
|
|
30,060
|
|
||
Non-GAAP Pro Forma Adjusted Fully Distributed Net Income
|
$
|
47,765
|
|
$
|
45,089
|
|
(a)
|
Represents legal, accounting and other expenses related to acquisition activities.
|
(b)
|
Represents legal, accounting and other expenses directly related to strategic and financial restructuring expenses.
|
(c)
|
Reflects the elimination of the noncontrolling interest in Premier LP as if all member owners of Premier LP had fully exchanged their Class B common units for shares of Class A common stock.
|
(d)
|
Reflects income tax expense at an estimated effective income tax rate of 40% of income before income taxes assuming the conversion of all Class B common units into shares of Class A common stock and the tax impact of excluding strategic and financial restructuring expenses.
|
|
Three Months Ended September 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Actual
|
|
Actual
|
|
Adjustments
|
|
Non-GAAP Pro Forma
|
||||||||||||||
|
Amount
|
% of Net Revenue
|
|
Amount
|
% of Net Revenue
|
|
Amount
|
|
Amount
|
% of Net Revenue
|
|||||||||||
Supply Chain Services:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net administrative fees
|
$
|
106,523
|
|
46
|
%
|
|
$
|
143,576
|
|
60
|
%
|
|
$
|
(41,263
|
)
|
(a)
|
$
|
102,313
|
|
51
|
%
|
Other services and support
|
215
|
|
—
|
%
|
|
134
|
|
—
|
%
|
|
—
|
|
|
134
|
|
—
|
%
|
||||
Services
|
106,738
|
|
46
|
%
|
|
143,710
|
|
60
|
%
|
|
(41,263
|
)
|
|
102,447
|
|
51
|
%
|
||||
Products
|
63,564
|
|
28
|
%
|
|
43,748
|
|
18
|
%
|
|
—
|
|
|
43,748
|
|
22
|
%
|
||||
Total Supply Chain Services
|
170,302
|
|
74
|
%
|
|
187,458
|
|
78
|
%
|
|
(41,263
|
)
|
|
146,195
|
|
73
|
%
|
||||
Performance Services:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other services and support
|
59,006
|
|
26
|
%
|
|
53,118
|
|
22
|
%
|
|
—
|
|
|
53,118
|
|
27
|
%
|
||||
Total net revenue
|
$
|
229,308
|
|
100
|
%
|
|
$
|
240,576
|
|
100
|
%
|
|
$
|
(41,263
|
)
|
|
$
|
199,313
|
|
100
|
%
|
|
Three Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
Amount
|
|
Amount
|
||||
Cost of revenue:
|
|
|
|
||||
Products
|
$
|
57,257
|
|
|
$
|
40,038
|
|
Services
|
32,764
|
|
|
27,488
|
|
||
Total cost of revenue
|
$
|
90,021
|
|
|
$
|
67,526
|
|
Cost of revenue by segment:
|
|
|
|
||||
Supply Chain Services
|
$
|
57,447
|
|
|
$
|
40,968
|
|
Performance Services
|
32,574
|
|
|
26,558
|
|
||
Total cost of revenue
|
$
|
90,021
|
|
|
$
|
67,526
|
|
|
Three Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
|
Actual
|
|
Actual
|
||||
|
Amount
|
|
Amount
|
||||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative
|
$
|
71,166
|
|
|
$
|
62,643
|
|
Research and development
|
1,073
|
|
|
852
|
|
||
Amortization of purchased intangible assets
|
903
|
|
|
601
|
|
||
Total operating expenses
|
73,142
|
|
|
64,096
|
|
||
Operating expenses by segment:
|
|
|
|
||||
Supply Chain Services
|
$
|
26,866
|
|
|
$
|
25,451
|
|
Performance Services
|
20,965
|
|
|
17,667
|
|
||
Total segment operating expenses
|
47,831
|
|
|
43,118
|
|
||
Corporate
|
25,311
|
|
|
20,978
|
|
||
Total operating expenses
|
$
|
73,142
|
|
|
$
|
64,096
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||
|
Actual
|
|
Actual
|
|
Adjustments
|
|
Non-GAAP Pro Forma
|
||||||||||||||
|
Amount
|
% of Net Revenue
|
|
Amount
|
% of Net Revenue
|
|
Amount
|
|
Amount
|
% of Net Revenue
|
|||||||||||
Non-GAAP Adjusted EBITDA by segment:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Supply Chain Services
|
91,268
|
|
40
|
%
|
|
125,480
|
|
52
|
%
|
|
(41,263
|
)
|
(a)
|
84,217
|
|
42
|
%
|
||||
Performance Services
|
18,362
|
|
8
|
%
|
|
16,329
|
|
7
|
%
|
|
—
|
|
|
16,329
|
|
8
|
%
|
||||
Total Segment Adjusted EBITDA
|
109,630
|
|
48
|
%
|
|
141,809
|
|
59
|
%
|
|
(41,263
|
)
|
|
100,546
|
|
50
|
%
|
||||
Corporate
|
(19,112
|
)
|
(8
|
)%
|
|
(17,475
|
)
|
(7
|
)%
|
|
—
|
|
|
(17,475
|
)
|
(8
|
)%
|
||||
Total Adjusted EBITDA
|
$
|
90,518
|
|
40
|
%
|
|
$
|
124,334
|
|
52
|
%
|
|
$
|
(41,263
|
)
|
|
$
|
83,071
|
|
42
|
%
|
|
Three Months Ended September 30,
|
|||||
|
2014
|
2013
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
45,873
|
|
$
|
66,792
|
|
Investing activities
|
(60,588
|
)
|
(41,216
|
)
|
||
Financing activities
|
(22,549
|
)
|
(148,521
|
)
|
||
Net decrease in cash
|
$
|
(37,264
|
)
|
$
|
(122,945
|
)
|
|
|
|
|
PREMIER, INC.
|
|
|
|
|
|
Date: November 12, 2014
|
|
By:
|
|
/s/ Craig S. McKasson
|
|
|
Name:
|
|
Craig S. McKasson
|
|
|
Title:
|
|
Chief Financial Officer and Senior Vice President
|
|
|
|
|
Signing on behalf of the registrant and as principal financial officer and principal accounting officer
|
Exhibit
No.
|
|
Description
|
2.1
|
|
Stock Purchase Agreement dated August 4, 2014, by and between Hospira, Inc. and Premier Healthcare Solutions, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Premier, Inc. filed on August 5, 2014 - Commission File No. 001-36092)
|
10.1
|
|
Premier Healthcare Solutions, Inc. Deferred Compensation Plan, effective January 1, 2015+*
|
10.2
|
|
First Amendment to Amended and Restated Limited Partnership Agreement of Premier Healthcare Alliance, L.P. entered into as of January 27, 2014.*
|
31.1
|
|
Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
31.2
|
|
Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
32.1
|
|
Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
|
32.2
|
|
Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
|
101
|
|
Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, formatted in XBRL (eXtensible Business Reporting Language), submitted in the following files:
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith.
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
‡
|
Furnished herewith.
|
|
|
|
|
|
Page
|
ARTICLE I
|
Definitions
|
|
1.01
|
Annual Addition
|
1
|
1.02
|
Beneficiary
|
1
|
1.03
|
Company
|
2
|
1.04
|
Compensation
|
2
|
1.05
|
Compensation Committee
|
2
|
1.06
|
Compensation Limitation
|
2
|
1.07
|
Deferral Account
|
2
|
1.08
|
Deferral Agreement
|
2
|
1.09
|
Disability
|
3
|
1.10
|
Elective Contributions Account
|
3
|
1.11
|
Eligible Compensation
|
3
|
1.12
|
Employer
|
3
|
1.13
|
ERISA
|
3
|
1.14
|
E-Team Member
|
3
|
1.15
|
Excess Contribution
|
3
|
1.16
|
401(k) Contribution
|
3
|
1.17
|
401(k) Plan
|
3
|
1.18
|
Participant
|
3
|
1.19
|
Participating Employer
|
3
|
1.20
|
Pension Plan
|
3
|
1.21
|
Pension Contributions
|
4
|
1.22
|
Performance-Based Compensation
|
4
|
1.23
|
Plan Year
|
5
|
1.24
|
Qualified Plans
|
5
|
1.25
|
Regulations
|
5
|
1.26
|
Related Entity(ies)
|
5
|
1.27
|
Retirement
|
5
|
1.28
|
Retirement Committee
|
5
|
1.29
|
Separation from Service
|
5
|
1.30
|
Spouse
|
6
|
1.31
|
Unforeseeable Emergency
|
6
|
1.32
|
Year of Service
|
6
|
ARTICLE II
|
Eligibility for Participation
|
|
2.01
|
Participation
|
6
|
2.02
|
Participation Date and Notice
|
7
|
ARTICLE III
|
Election to Defer and Employer Contributions
|
|
3.01
|
Election to Defer
|
7
|
3.02
|
Election Period
|
8
|
|
i
#
|
|
3.03
|
Employer Contributions
|
9
|
ARTICLE IV
|
Accounting
|
|
4.01
|
Crediting Deferred Compensation
|
10
|
4.02
|
Earnings
|
10
|
4.03
|
Distributions
|
11
|
ARTICLE V
|
Benefits
|
|
5.01
|
Separation from Service
|
11
|
5.02
|
Payment Date
|
11
|
5.03
|
Vesting
|
11
|
5.04
|
Form of Payment
|
11
|
5.05
|
Unforeseeable Emergency
|
12
|
5.06
|
Election of Form and Time of Payment
|
12
|
5.07
|
Withholding; Payroll Taxes
|
12
|
5.08
|
Specified Employee Delay
|
12
|
5.09
|
Change in Control
|
12
|
ARTICLE VI
|
Administration
|
|
6.01
|
Administrator
|
13
|
6.02
|
Agents
|
13
|
6.03
|
Binding Effect
|
13
|
6.04
|
Claims Procedure
|
13
|
ARTICLE VII
|
Amendment and Termination of the Plan
|
13
|
7.01
|
Amendment
|
18
|
7.02
|
Termination
|
18
|
ARTICLE VIII
|
Miscellaneous
|
|
8.01
|
ERISA Exemption
|
18
|
8.02
|
Unsecured Creditor
|
18
|
8.03
|
Participant Obligation
|
19
|
8.04
|
Non-Assignability
|
19
|
8.05
|
Not a Contract of Employment
|
19
|
8.06
|
Cooperation
|
19
|
8.07
|
Terms
|
19
|
8.08
|
Construction
|
19
|
8.09
|
Governing Law
|
20
|
8.10
|
Validity
|
20
|
8.11
|
Notice
|
20
|
8.12
|
Successors
|
20
|
8.13
|
409A Compliance
|
20
|
|
ii
|
|
|
i
|
|
|
ii
|
|
|
iii
|
|
|
iv
|
|
|
v
|
|
|
vi
|
|
|
vii
|
|
|
viii
|
|
|
ix
|
|
|
x
|
|
|
xi
|
|
|
xii
|
|
|
xiii
|
|
|
xiv
|
|
|
xv
|
|
(1)
|
The Plan will provide a review that does not afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the appeal, nor is a subordinate of the individual who made the determination.
|
(2)
|
The appropriate named fiduciary of the Plan will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment before making a decision on review of any adverse initial determination based in whole or in part on a medical judgment. The professional engaged for purposes of a consultation in the preceding sentence shall not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or the subordinate of any such individual.
|
|
xvi
|
|
(3)
|
The Plan will identify to the Claimant the medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the review, without regard to whether the advice was relied upon in making the benefit review determination.
|
(4)
|
The decision on review will be made within forty-five (45) days after the Retirement Committee’s or delegate’s receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than ninety (90) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial forty-five (45) day period and must explain the special circumstances and provide an expected date of decision.
|
(1)
|
its decision;
|
(2)
|
the specific reasons for the decision;
|
(3)
|
the relevant Plan provisions or insurance contract provisions on which its decision is based;
|
(4)
|
a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits;
|
(5)
|
a statement describing the Claimant’s right to bring an action for judicial review under ERISA §502(a); and
|
(6)
|
if an internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimant upon request.
|
|
xvii
|
|
|
xviii
|
|
|
xix
|
|
|
xx
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Premier, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Susan D. DeVore
|
|
|
Susan D. DeVore
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Premier, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Craig S. McKasson
|
|
|
Craig S. McKasson
|
|
|
Senior Vice President and Chief Financial Officer
|
|
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
|
|
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
|
|
|
/s/ Susan D. DeVore
|
|
|
Susan D. DeVore
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
November 12, 2014
|
|
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
|
|
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
|
|
|
/s/ Craig S. McKasson
|
|
|
Craig S. McKasson
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
November 12, 2014
|