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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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth 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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Condensed Consolidated Balance Sheets as of September 30, 2017 and June 30, 2017 (Unaudited)
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Condensed Consolidated Statements of Income for the three months ended September 30, 2017 and 2016 (Unaudited)
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Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2017 and 2016 (Unaudited)
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Condensed Consolidated Statement of Stockholders' Deficit for the three months ended September 30, 2017 (Unaudited)
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Condensed Consolidated Statements of Cash Flow for the three months ended September 30, 2017 and 2016 (Unaudited)
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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 5.
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Other Information
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Item 6.
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•
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competition which could limit our ability to maintain or expand market share within our industry;
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•
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consolidation in the healthcare industry;
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•
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potential delays recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;
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•
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the terminability of member participation in our group purchasing organization ("GPO") programs with limited or no notice, or the failure of a significant number of members to renew their GPO participation agreements;
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•
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the rate at which the markets for our non-GPO services and products develop;
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•
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the dependency of our members on payments from third-party payers;
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•
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our reliance on administrative fees that we receive from GPO suppliers;
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•
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our ability to maintain third-party provider and strategic alliances or enter into new alliances;
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•
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our ability to timely offer new and innovative products and services;
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•
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the portion of revenues we receive from our largest members;
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•
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risks and expenses related to future acquisition opportunities and integration of acquisitions;
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•
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financial and operational risks associated with investments in, or partnerships or joint ventures with, other businesses, particularly those that we do not control;
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•
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potential litigation;
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•
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our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;
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•
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data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;
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•
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the financial, operational and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;
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•
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our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
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•
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our use of "open source" software;
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•
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changes in industry pricing benchmarks;
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•
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our inability to grow our integrated pharmacy business or maintain current patients due to increases in the safety risk profiles of prescription drugs or the withdrawal of prescription drugs from the market, or our inability to maintain and expand our existing base of drugs in our integrated pharmacies;
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•
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our dependency on contract manufacturing facilities located in various parts of the world;
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•
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our ability to attract, hire, integrate and retain key personnel;
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•
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adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;
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•
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potential sales and use tax liability in certain jurisdictions;
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•
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changes in tax laws that materially impact our tax rate, income tax expense, cash flows or tax receivable agreement ("TRA") liabilities;
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•
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our indebtedness and our ability to obtain additional financing on favorable terms;
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•
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fluctuation of our quarterly cash flows, revenues and results of operations;
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•
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changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010, collectively referred to as the "ACA";
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•
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our compliance with complex federal and state laws governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;
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•
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interpretation and enforcement of current or future antitrust laws and regulations;
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•
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compliance with complex federal and state privacy, security and breach notification laws;
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•
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compliance with current or future laws, rules or regulations adopted by the Food & Drug Administration ("FDA") applicable to our software applications that are considered medical devices;
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•
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compliance with, and potential changes to, extensive federal, state and local laws, regulations and procedures governing our integrated pharmacy operations;
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risks inherent in the filling, packaging and distribution of pharmaceuticals, including the counseling required to be provided by our pharmacists for dispensing of products;
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•
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our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. ("Premier LP");
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•
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different interests among our member owners or between us and our member owners;
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•
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the ability of our member owners to exercise significant control over us, including through the election of all of our directors;
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•
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exemption from certain corporate governance requirements due to our status as a "controlled company" within the meaning of the NASDAQ rules;
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•
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the terms of agreements between us and our member owners;
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•
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payments made under the TRAs to Premier LP's limited partners and our ability to realize the expected tax benefits related to the acquisition of Class B common units from Premier LP's limited partners;
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•
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changes to Premier LP's allocation methods or examinations or changes in interpretation of applicable tax laws and regulations by various taxing authorities that may increase a tax-exempt limited partner's risk that some allocated income is unrelated business taxable income;
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•
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provisions in our certificate of incorporation and bylaws and the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement") and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;
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•
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failure to maintain an effective system of internal controls;
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•
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the number of shares of Class A common stock that will be eligible for sale or exchange in the near future and the dilutive effect of such issuances;
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our intention not to pay cash dividends on our Class A common stock;
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•
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when or whether we implement our recently announced Class A common stock repurchase program and the number of shares of Class A common stock, if any, purchased under the program;
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•
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possible future issuances of common stock, preferred stock, limited partnership units or debt securities and the dilutive effect of such issuances; and
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the risk factors discussed under the heading "Risk Factors" in Item 1A of Part II herein and under Item 1A of our Annual Report on Form 10-K for the fiscal year ended
June 30, 2017
(the "
2017
Annual Report"), filed with the Securities and Exchange Commission ("SEC").
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September 30, 2017
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June 30, 2017
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Assets
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Cash and cash equivalents
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$
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132,120
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$
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156,735
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Accounts receivable (net of $2,007 and $1,812 allowance for doubtful accounts, respectively)
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173,869
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159,745
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Inventory
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57,604
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50,426
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Prepaid expenses and other current assets
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29,787
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35,164
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Due from related parties
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487
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6,742
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Total current assets
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393,867
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408,812
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Property and equipment (net of $252,840 and $236,460 accumulated depreciation, respectively)
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186,179
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187,365
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Intangible assets (net of $113,096 and $99,198 accumulated amortization, respectively)
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364,064
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377,962
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Goodwill
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906,545
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906,545
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Deferred income tax assets
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506,166
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482,484
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Deferred compensation plan assets
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40,906
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41,518
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Investments in unconsolidated affiliates
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97,131
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92,879
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Other assets
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9,484
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10,271
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Total assets
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$
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2,504,342
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$
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2,507,836
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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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47,449
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$
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42,815
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Accrued expenses
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56,891
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55,857
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Revenue share obligations
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69,535
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72,078
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Limited partners' distribution payable
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20,752
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24,951
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Accrued compensation and benefits
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37,259
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53,506
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Deferred revenue
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41,102
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44,443
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Current portion of tax receivable agreements
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17,925
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17,925
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Current portion of long-term debt
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173,023
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227,993
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Other liabilities
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26,198
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32,019
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Total current liabilities
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490,134
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571,587
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Long-term debt, less current portion
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6,275
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6,279
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Tax receivable agreements, less current portion
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362,093
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321,796
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Deferred compensation plan obligations
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40,906
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|
41,518
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Deferred tax liabilities
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51,363
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48,227
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Other liabilities
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42,599
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|
42,099
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Total liabilities
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993,370
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|
1,031,506
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||
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September 30, 2017
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June 30, 2017
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Redeemable limited partners' capital
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2,799,533
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3,138,583
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Stockholders' deficit:
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Class A common stock, $0.01 par value, 500,000,000 shares authorized; 53,558,451 and 51,943,281 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively
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536
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|
519
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Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 86,067,478 and 87,298,888 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively
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—
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—
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Additional paid-in-capital
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—
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—
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Accumulated deficit
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(1,289,097
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)
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(1,662,772
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)
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Accumulated other comprehensive loss
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—
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—
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Total stockholders' deficit
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(1,288,561
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)
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(1,662,253
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)
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Total liabilities, redeemable limited partners' capital and stockholders' deficit
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$
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2,504,342
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$
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2,507,836
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Three Months Ended September 30,
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|||||
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2017
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2016
|
||||
Net revenue:
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|
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Net administrative fees
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$
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150,991
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$
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125,976
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Other services and support
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86,911
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81,167
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Services
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237,902
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207,143
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Products
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152,662
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|
106,129
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Net revenue
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390,564
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|
313,272
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Cost of revenue:
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Services
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46,936
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|
42,690
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Products
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144,440
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|
95,813
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Cost of revenue
|
191,376
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|
138,503
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Gross profit
|
199,188
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|
174,769
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|
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Operating expenses:
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|
|
||||
Selling, general and administrative
|
114,321
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|
92,238
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Research and development
|
489
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|
806
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Amortization of purchased intangible assets
|
13,898
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|
9,209
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Operating expenses
|
128,708
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|
102,253
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|
||
Operating income
|
70,480
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|
72,516
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|
||
Equity in net income of unconsolidated affiliates
|
4,252
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|
9,579
|
|
||
Interest and investment loss, net
|
(1,495
|
)
|
(152
|
)
|
||
Loss on disposal of long-lived assets
|
(1,320
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)
|
(1,518
|
)
|
||
Other income
|
1,463
|
|
1,006
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|
||
Other income, net
|
2,900
|
|
8,915
|
|
||
Income before income taxes
|
73,380
|
|
81,431
|
|
||
Income tax expense
|
12,764
|
|
23,336
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|
||
Net income
|
60,616
|
|
58,095
|
|
||
Net income attributable to non-controlling interest in Premier LP
|
(44,610
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)
|
(49,601
|
)
|
||
Adjustment of redeemable limited partners' capital to redemption amount
|
320,424
|
|
61,808
|
|
||
Net income attributable to stockholders
|
$
|
336,430
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|
$
|
70,302
|
|
|
|
|
||||
Weighted average shares outstanding:
|
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|
||||
Basic
|
52,909
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|
47,214
|
|
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Diluted
|
140,046
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|
142,962
|
|
||
|
|
|
||||
Earnings per share attributable to stockholders:
|
|
|
||||
Basic
|
$
|
6.36
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|
$
|
1.49
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|
Diluted
|
$
|
0.36
|
|
$
|
0.26
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net income
|
$
|
60,616
|
|
$
|
58,095
|
|
Net unrealized gain on marketable securities
|
—
|
|
128
|
|
||
Total comprehensive income
|
60,616
|
|
58,223
|
|
||
Less: comprehensive income attributable to non-controlling interest
|
(44,610
|
)
|
(49,686
|
)
|
||
Comprehensive income attributable to stockholders
|
$
|
16,006
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|
$
|
8,537
|
|
|
Class A
Common Stock |
Class B
Common Stock |
Additional Paid-In Capital
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Accumulated Deficit
|
Total Stockholders' Deficit
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||||||||||||||
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Shares
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Amount
|
Shares
|
Amount
|
|||||||||||||||
Balance at June 30, 2017
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51,943
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|
$
|
519
|
|
87,299
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(1,662,772
|
)
|
$
|
(1,662,253
|
)
|
Exchange of Class B units for Class A common stock by member owners
|
1,232
|
|
13
|
|
(1,232
|
)
|
—
|
|
42,963
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|
—
|
|
42,976
|
|
|||||
Decrease in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation
|
—
|
|
—
|
|
—
|
|
—
|
|
(11,452
|
)
|
—
|
|
(11,452
|
)
|
|||||
Issuance of Class A common stock under equity incentive plan
|
383
|
|
4
|
|
—
|
|
—
|
|
2,648
|
|
—
|
|
2,652
|
|
|||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
8,815
|
|
—
|
|
8,815
|
|
|||||
Repurchase of vested restricted units for employee tax-withholding
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,729
|
)
|
—
|
|
(5,729
|
)
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
60,616
|
|
60,616
|
|
|||||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(44,610
|
)
|
(44,610
|
)
|
|||||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
—
|
|
—
|
|
—
|
|
(37,245
|
)
|
357,669
|
|
320,424
|
|
|||||
Balance at September 30, 2017
|
53,558
|
|
$
|
536
|
|
86,067
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(1,289,097
|
)
|
$
|
(1,288,561
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
60,616
|
|
$
|
58,095
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
30,405
|
|
23,227
|
|
||
Equity in net income of unconsolidated affiliates
|
(4,252
|
)
|
(9,579
|
)
|
||
Deferred income taxes
|
8,298
|
|
17,074
|
|
||
Stock-based compensation
|
8,815
|
|
5,800
|
|
||
Adjustment to tax receivable agreement liability
|
—
|
|
(5,722
|
)
|
||
Loss on disposal of long-lived assets
|
1,320
|
|
1,518
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Accounts receivable, prepaid expenses and other current assets
|
(8,748
|
)
|
(8,119
|
)
|
||
Other assets
|
1,379
|
|
(1,112
|
)
|
||
Inventories
|
(7,178
|
)
|
(827
|
)
|
||
Accounts payable, accrued expenses and other current liabilities
|
(21,933
|
)
|
(38,463
|
)
|
||
Long-term liabilities
|
(111
|
)
|
322
|
|
||
Other operating activities
|
6,422
|
|
(387
|
)
|
||
Net cash provided by operating activities
|
75,033
|
|
41,827
|
|
||
Investing activities
|
|
|
||||
Proceeds from sale of marketable securities
|
—
|
|
48,013
|
|
||
Acquisition of Acro Pharmaceuticals, net of cash acquired
|
—
|
|
(68,745
|
)
|
||
Investments in unconsolidated affiliates
|
—
|
|
(65,660
|
)
|
||
Distributions received on equity investments in unconsolidated affiliates
|
—
|
|
6,550
|
|
||
Purchases of property and equipment
|
(16,647
|
)
|
(16,966
|
)
|
||
Other investing activities
|
1
|
|
5
|
|
||
Net cash used in investing activities
|
(16,646
|
)
|
(96,803
|
)
|
||
Financing activities
|
|
|
||||
Payments made on notes payable
|
(4,974
|
)
|
(218
|
)
|
||
Payments on credit facility
|
(50,000
|
)
|
—
|
|
||
Proceeds from exercise of stock options under equity incentive plan
|
2,652
|
|
2,317
|
|
||
Repurchase of vested restricted units for employee tax-withholding
|
(5,729
|
)
|
(17,435
|
)
|
||
Distributions to limited partners of Premier LP
|
(24,951
|
)
|
(22,493
|
)
|
||
Net cash used in financing activities
|
(83,002
|
)
|
(37,829
|
)
|
||
Net decrease in cash and cash equivalents
|
(24,615
|
)
|
(92,805
|
)
|
||
Cash and cash equivalents at beginning of year
|
156,735
|
|
248,817
|
|
||
Cash and cash equivalents at end of period
|
$
|
132,120
|
|
$
|
156,012
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
|
|
|
||||
Supplemental schedule of non cash investing and financing activities:
|
|
|
||||
Decrease in redeemable limited partners' capital for adjustment to fair value, with offsetting increases in additional paid-in-capital and accumulated deficit
|
$
|
320,424
|
|
$
|
61,808
|
|
Reduction in redeemable limited partners' capital, with offsetting increases in common stock and additional paid-in capital related to quarterly exchanges by member owners
|
$
|
42,976
|
|
$
|
43,072
|
|
Reduction in redeemable limited partners' capital for limited partners' distribution payable
|
$
|
20,752
|
|
$
|
22,137
|
|
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners
|
$
|
492
|
|
$
|
558
|
|
Net increase in deferred tax assets related to quarterly exchanges by member owners and other adjustments
|
$
|
28,844
|
|
$
|
16,863
|
|
Net increase in tax receivable agreement liabilities related to quarterly exchanges by member owners and other adjustments
|
$
|
40,296
|
|
$
|
10,286
|
|
Net increase (decrease) in additional paid-in capital related to quarterly exchanges by member owners and other adjustments
|
$
|
(11,452
|
)
|
$
|
6,577
|
|
|
September 30, 2017
|
June 30, 2017
|
||||
Assets
|
|
|
||||
Current
|
$
|
361,578
|
|
$
|
385,477
|
|
Noncurrent
|
1,604,275
|
|
1,616,539
|
|
||
Total assets of Premier LP
|
$
|
1,965,853
|
|
$
|
2,002,016
|
|
|
|
|
||||
Liabilities
|
|
|
||||
Current
|
$
|
479,916
|
|
$
|
560,582
|
|
Noncurrent
|
137,119
|
|
134,635
|
|
||
Total liabilities of Premier LP
|
$
|
617,035
|
|
$
|
695,217
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Premier LP net income
|
$
|
72,291
|
|
$
|
73,915
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
88,407
|
|
$
|
12,865
|
|
Investing activities
|
(16,613
|
)
|
(96,805
|
)
|
||
Financing activities
|
(100,476
|
)
|
(22,168
|
)
|
||
Net decrease in cash and cash equivalents
|
(28,682
|
)
|
(106,108
|
)
|
||
Cash and cash equivalents at beginning of year
|
133,451
|
|
210,048
|
|
||
Cash and cash equivalents at end of period
|
$
|
104,769
|
|
$
|
103,940
|
|
|
Acquisition Date Fair Value
|
||
Cash paid at closing
|
$
|
227,500
|
|
Cash paid on January 10, 2017
|
97,500
|
|
|
Purchase price
|
325,000
|
|
|
Additional cash paid at closing
|
10,984
|
|
|
Adjusted purchase price
|
335,984
|
|
|
Earn-out liability
|
16,662
|
|
|
Receivable from GNYHA Holdings, LLC
|
(3,000
|
)
|
|
Total consideration paid
|
349,646
|
|
|
Cash acquired
|
(16,267
|
)
|
|
Net consideration
|
333,379
|
|
|
50% ownership interest in Innovatix
|
218,356
|
|
|
Payable to Innovatix and Essensa
|
(5,765
|
)
|
|
Enterprise value
|
545,970
|
|
|
|
|
||
Accounts receivable
|
21,242
|
|
|
Prepaid expenses and other current assets
|
686
|
|
|
Fixed assets, net
|
3,476
|
|
|
Intangible assets
|
241,494
|
|
|
Total assets acquired
|
266,898
|
|
|
Accrued expenses
|
5,264
|
|
|
Revenue share obligations
|
7,011
|
|
|
Other current liabilities
|
694
|
|
|
Total liabilities assumed
|
12,969
|
|
|
Deferred tax liability
|
42,636
|
|
|
Goodwill
|
$
|
334,677
|
|
|
Carrying Value
|
|
Equity in Net Income (Loss)
|
||||||||||
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
September 30, 2017
|
June 30, 2017
|
|
2017
|
2016
|
||||||||
FFF
|
$
|
89,857
|
|
$
|
85,520
|
|
|
$
|
4,337
|
|
$
|
3,059
|
|
Bloodbuy
|
2,033
|
|
2,066
|
|
|
(33
|
)
|
(19
|
)
|
||||
PharmaPoint
|
4,180
|
|
4,232
|
|
|
(52
|
)
|
(77
|
)
|
||||
Innovatix
|
—
|
|
—
|
|
|
—
|
|
6,616
|
|
||||
Other investments
|
1,061
|
|
1,061
|
|
|
—
|
|
—
|
|
||||
Total investments
|
$
|
97,131
|
|
$
|
92,879
|
|
|
$
|
4,252
|
|
$
|
9,579
|
|
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
September 30, 2017
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
9,322
|
|
$
|
9,322
|
|
$
|
—
|
|
$
|
—
|
|
FFF call right
|
4,593
|
|
—
|
|
—
|
|
4,593
|
|
||||
Deferred compensation plan assets
|
44,567
|
|
44,567
|
|
—
|
|
—
|
|
||||
Total assets
|
$
|
58,482
|
|
$
|
53,889
|
|
$
|
—
|
|
$
|
4,593
|
|
Earn-out liabilities
|
$
|
21,675
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,675
|
|
FFF put right
|
24,008
|
|
—
|
|
—
|
|
24,008
|
|
||||
Total liabilities
|
$
|
45,683
|
|
$
|
—
|
|
$
|
—
|
|
$
|
45,683
|
|
|
|
|
|
|
||||||||
June 30, 2017
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
22,218
|
|
$
|
22,218
|
|
$
|
—
|
|
$
|
—
|
|
FFF call right
|
4,655
|
|
—
|
|
—
|
|
4,655
|
|
||||
Deferred compensation plan assets
|
47,202
|
|
47,202
|
|
—
|
|
—
|
|
||||
Total assets
|
$
|
74,075
|
|
$
|
69,420
|
|
$
|
—
|
|
$
|
4,655
|
|
Earn-out liabilities
|
$
|
21,310
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,310
|
|
FFF put right
|
24,050
|
|
—
|
|
—
|
|
24,050
|
|
||||
Total liabilities
|
$
|
45,360
|
|
$
|
—
|
|
$
|
—
|
|
$
|
45,360
|
|
|
Beginning Balance
|
Purchases
|
Gain (Loss)
|
Ending Balance
|
||||||||
Three Months Ended September 30, 2017
|
|
|
|
|
||||||||
FFF call right
|
$
|
4,655
|
|
$
|
—
|
|
$
|
(62
|
)
|
$
|
4,593
|
|
Total Level 3 assets
|
$
|
4,655
|
|
$
|
—
|
|
$
|
(62
|
)
|
$
|
4,593
|
|
Earn-out liabilities
|
$
|
21,310
|
|
$
|
—
|
|
$
|
(365
|
)
|
$
|
21,675
|
|
FFF put right
|
24,050
|
|
—
|
|
42
|
|
24,008
|
|
||||
Total Level 3 liabilities
|
$
|
45,360
|
|
$
|
—
|
|
$
|
(323
|
)
|
$
|
45,683
|
|
|
|
|
|
|
||||||||
Three Months Ended September 30, 2016
|
|
|
|
|
||||||||
FFF call right
|
$
|
—
|
|
$
|
10,361
|
|
$
|
(45
|
)
|
$
|
10,316
|
|
Total Level 3 assets
|
$
|
—
|
|
$
|
10,361
|
|
$
|
(45
|
)
|
$
|
10,316
|
|
Earn-out liabilities
|
$
|
4,128
|
|
$
|
—
|
|
$
|
1,769
|
|
$
|
2,359
|
|
FFF put right
|
—
|
|
25,821
|
|
10
|
|
25,811
|
|
||||
Total Level 3 liabilities
|
$
|
4,128
|
|
$
|
25,821
|
|
$
|
1,779
|
|
$
|
28,170
|
|
|
Useful Life
|
September 30, 2017
|
June 30, 2017
|
||||
Member relationships
|
14.7 years
|
$
|
220,100
|
|
$
|
220,100
|
|
Technology
|
5.0 years
|
143,727
|
|
143,727
|
|
||
Customer relationships
|
8.3 years
|
48,120
|
|
48,120
|
|
||
Trade names
|
8.3 years
|
22,710
|
|
22,710
|
|
||
Distribution network
|
10.0 years
|
22,400
|
|
22,400
|
|
||
Favorable lease commitments
|
10.1 years
|
11,393
|
|
11,393
|
|
||
Non-compete agreements
|
5.9 years
|
8,710
|
|
8,710
|
|
||
Total intangible assets
|
|
477,160
|
|
477,160
|
|
||
Accumulated amortization
|
|
(113,096
|
)
|
(99,198
|
)
|
||
Intangible assets, net
|
|
$
|
364,064
|
|
$
|
377,962
|
|
|
September 30, 2017
|
June 30,
2017
|
||||
Supply Chain Services
|
$
|
400,348
|
|
$
|
400,348
|
|
Performance Services
|
506,197
|
|
506,197
|
|
||
Total goodwill
|
$
|
906,545
|
|
$
|
906,545
|
|
|
Commitment Amount
|
Due Date
|
September 30, 2017
|
June 30, 2017
|
||||||
Credit Facility
|
$
|
750,000
|
|
June 24, 2019
|
$
|
170,000
|
|
$
|
220,000
|
|
Notes payable
|
—
|
|
Various
|
9,298
|
|
14,272
|
|
|||
Total debt
|
|
|
179,298
|
|
234,272
|
|
||||
Less: Current portion
|
|
|
(173,023
|
)
|
(227,993
|
)
|
||||
Total long-term debt
|
|
|
$
|
6,275
|
|
$
|
6,279
|
|
|
Receivables From Limited Partners
|
Redeemable Limited Partners' Capital
|
Total Redeemable Limited Partners' Capital
|
||||||
June 30, 2017
|
$
|
(4,177
|
)
|
$
|
3,142,760
|
|
$
|
3,138,583
|
|
Distributions applied to receivables from limited partners
|
492
|
|
—
|
|
492
|
|
|||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
44,610
|
|
44,610
|
|
|||
Distributions to limited partners
|
—
|
|
(20,752
|
)
|
(20,752
|
)
|
|||
Exchange of Class B common units for Class A common stock by member owners
|
—
|
|
(42,976
|
)
|
(42,976
|
)
|
|||
Adjustment to redemption amount
|
—
|
|
(320,424
|
)
|
(320,424
|
)
|
|||
September 30, 2017
|
$
|
(3,685
|
)
|
$
|
2,803,218
|
|
$
|
2,799,533
|
|
Date
|
Distribution
(a)
|
||
August 24, 2017
|
$
|
24,951
|
|
(a)
|
Distributions are equal to Premier LP’s total taxable income from the preceding fiscal quarter-to-date period for each respective distribution date multiplied by the Company's standalone effective combined federal, state and local income tax rate. Premier LP expects to make a
$20.8 million
quarterly distribution on or before November 22, 2017. The distribution is reflected in limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at September 30, 2017.
|
Date of Quarterly Exchange
|
Number of Class B Common Units Exchanged
|
Reduction in Redeemable Limited Partners' Capital
|
|||
July 31, 2017
|
1,231,410
|
|
$
|
42,976
|
|
Total
|
1,231,410
|
|
$
|
42,976
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Numerator for basic earnings per share:
|
|
|
||||
Net income attributable to stockholders
|
$
|
336,430
|
|
$
|
70,302
|
|
|
|
|
||||
Numerator for diluted earnings per share:
|
|
|
||||
Net income attributable to stockholders
|
$
|
336,430
|
|
$
|
70,302
|
|
Adjustment of redeemable limited partners' capital to redemption amount
|
(320,424
|
)
|
(61,808
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
44,610
|
|
49,601
|
|
||
Net income
|
60,616
|
|
58,095
|
|
||
Tax effect on Premier, Inc. net income
(a)
|
(10,551
|
)
|
(20,951
|
)
|
||
Adjusted net income
|
$
|
50,065
|
|
$
|
37,144
|
|
|
|
|
||||
Denominator for basic earnings per share:
|
|
|
||||
Weighted average shares
(b)
|
52,909
|
|
47,214
|
|
||
|
|
|
||||
Denominator for diluted earnings per share:
|
|
|
||||
Weighted average shares
(b)
|
52,909
|
|
47,214
|
|
||
Effect of dilutive securities:
(c)
|
|
|
||||
Stock options
|
351
|
|
302
|
|
||
Restricted stock
|
304
|
|
171
|
|
||
Performance share awards
|
—
|
|
466
|
|
||
Class B shares outstanding
|
86,482
|
|
94,809
|
|
||
Weighted average shares and assumed conversions
|
140,046
|
|
142,962
|
|
||
|
|
|
||||
Basic earnings per share
|
$
|
6.36
|
|
$
|
1.49
|
|
Diluted earnings per share
|
$
|
0.36
|
|
$
|
0.26
|
|
(a)
|
Represents income tax expense related to Premier, Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.
|
(b)
|
Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for
the three months ended September 30, 2017 and 2016
.
|
(c)
|
For
the three months ended September 30, 2017
, the effect of
1.4 million
stock options was excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect, and the effect of
0.6 million
performance share awards was excluded from diluted weighted average shares outstanding as they had not satisfied the applicable performance criteria at the end of the period.
|
Quarterly Exchange by Member Owners
|
Class B Common Shares Retired Upon Exchange
(a)
|
Class B Common Shares Outstanding After Exchange
(a)
|
Class A Common Shares Outstanding After Exchange
|
Percentage of Combined Voting Power Class B/Class A Common Stock
|
|||
July 31, 2017
|
1,231,410
|
|
86,067,478
|
|
53,212,057
|
|
62%/38%
|
October 31, 2017
(b)
|
3,651,294
|
|
82,416,184
|
|
57,215,143
|
|
59%/41%
|
(a)
|
The number of Class B common shares retired or outstanding is equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.
|
(b)
|
As the quarterly exchange occurred on October 31, 2017, the impact of the exchange is not reflected in the condensed consolidated financial statements for the quarter ended
September 30, 2017
.
|
|
Restricted Stock
|
|
Performance Share Awards
|
|
Stock Options
|
||||||||||||
|
Number of Awards
|
Weighted Average Fair Value at Grant Date
|
|
Number of Awards
|
Weighted Average Fair Value at Grant Date
|
|
Number of Options
|
Weighted Average Exercise Price
|
|||||||||
Outstanding at June 30, 2017
|
576,988
|
|
$
|
32.92
|
|
|
1,085,872
|
|
$
|
32.79
|
|
|
3,372,499
|
|
$
|
30.31
|
|
Granted
|
202,532
|
|
$
|
32.90
|
|
|
678,340
|
|
$
|
32.70
|
|
|
538,413
|
|
$
|
32.90
|
|
Vested/exercised
|
(107,764
|
)
|
$
|
31.64
|
|
|
(352,867
|
)
|
$
|
31.73
|
|
|
(96,137
|
)
|
$
|
28.12
|
|
Forfeited
|
(15,930
|
)
|
$
|
32.37
|
|
|
(37,131
|
)
|
$
|
32.35
|
|
|
(71,191
|
)
|
$
|
34.24
|
|
Outstanding at September 30, 2017
|
655,826
|
|
$
|
33.14
|
|
|
1,374,214
|
|
$
|
33.02
|
|
|
3,743,584
|
|
$
|
30.66
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock options outstanding and exercisable at September 30, 2017
|
|
|
|
|
|
|
2,628,081
|
|
$
|
29.66
|
|
|
Unrecognized Stock-Based Compensation Expense
|
Weighted Average Amortization Period
|
||
Restricted stock
|
$
|
13,180
|
|
2.19 years
|
Performance share awards
|
31,492
|
|
2.20 years
|
|
Stock options
|
11,920
|
|
2.21 years
|
|
Total unrecognized stock-based compensation expense
|
$
|
56,592
|
|
2.20 years
|
|
Intrinsic Value of Stock Options
|
||
Outstanding and exercisable
|
$
|
9,107
|
|
Expected to vest
|
349
|
|
|
Total outstanding
|
$
|
9,456
|
|
|
|
||
Exercised during the three months ended September 30, 2017
|
$
|
566
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Expected life
(a)
|
6 years
|
|
6 years
|
|
||
Expected dividend
(b)
|
—
|
|
—
|
|
||
Expected volatility
(c)
|
32.26%
|
|
33.00%
|
|
||
Risk-free interest rate
(d)
|
1.89%
|
|
1.31%
|
|
||
Weighted average option grant date fair value
|
$
|
11.42
|
|
$
|
10.80
|
|
(a)
|
The
six
-year expected life (estimated period of time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of Premier's employees.
|
(b)
|
No
dividends are expected to be paid over the contractual term of the stock options granted, resulting in the use of a
zero
expected dividend rate.
|
(c)
|
The expected volatility rate is based on the observed historical volatilities of comparable companies.
|
(d)
|
The risk-free interest rate was interpolated from the
five
-year and
seven
-year Constant Maturity Treasury rate published by the United States Treasury as of the date of the grant.
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net revenue:
|
|
|
||||
Supply Chain Services
|
|
|
||||
Net administrative fees
|
$
|
150,991
|
|
$
|
125,976
|
|
Other services and support
|
2,149
|
|
1,645
|
|
||
Services
|
153,140
|
|
127,621
|
|
||
Products
|
152,662
|
|
106,129
|
|
||
Total Supply Chain Services
|
305,802
|
|
233,750
|
|
||
Performance Services
|
84,762
|
|
79,522
|
|
||
Net revenue
|
$
|
390,564
|
|
$
|
313,272
|
|
|
|
|
||||
Depreciation and amortization expense
(a)
:
|
|
|
||||
Supply Chain Services
|
$
|
5,495
|
|
$
|
466
|
|
Performance Services
|
22,918
|
|
20,875
|
|
||
Corporate
|
1,992
|
|
1,886
|
|
||
Total depreciation and amortization expense
|
$
|
30,405
|
|
$
|
23,227
|
|
|
|
|
||||
Capital expenditures:
|
|
|
||||
Supply Chain Services
|
$
|
307
|
|
$
|
—
|
|
Performance Services
|
13,549
|
|
16,851
|
|
||
Corporate
|
2,791
|
|
115
|
|
||
Total capital expenditures
|
$
|
16,647
|
|
$
|
16,966
|
|
|
|
|
||||
Total assets:
|
September 30,
2017
|
June 30,
2017
|
||||
Supply Chain Services
|
$
|
991,569
|
|
$
|
1,017,023
|
|
Performance Services
|
879,564
|
|
888,862
|
|
||
Corporate
|
633,209
|
|
601,951
|
|
||
Total assets
|
$
|
2,504,342
|
|
$
|
2,507,836
|
|
(a)
|
Includes amortization of purchased intangible assets.
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Income before income taxes
|
$
|
73,380
|
|
$
|
81,431
|
|
Equity in net income of unconsolidated affiliates
(a)
|
(4,252
|
)
|
(9,579
|
)
|
||
Interest and investment loss, net
(b)
|
1,495
|
|
152
|
|
||
Loss on disposal of long-lived assets
|
1,320
|
|
1,518
|
|
||
Other income
|
(1,463
|
)
|
(1,006
|
)
|
||
Operating income
|
70,480
|
|
72,516
|
|
||
Depreciation and amortization
|
16,507
|
|
14,018
|
|
||
Amortization of purchased intangible assets
|
13,898
|
|
9,209
|
|
||
Stock-based compensation
(c)
|
8,957
|
|
5,896
|
|
||
Acquisition related expenses
|
3,099
|
|
2,937
|
|
||
Adjustment to tax receivable agreement liabilities
(d)
|
—
|
|
(5,722
|
)
|
||
ERP implementation expenses
(e)
|
335
|
|
1,094
|
|
||
Acquisition related adjustment - revenue
|
105
|
|
151
|
|
||
Equity in net income of unconsolidated affiliates
(a)
|
4,252
|
|
9,579
|
|
||
Deferred compensation plan income
(f)
|
1,539
|
|
1,095
|
|
||
Other expense
|
(1
|
)
|
—
|
|
||
Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
|
|
|
||||
Segment Adjusted EBITDA:
|
|
|
||||
Supply Chain Services
|
$
|
125,620
|
|
$
|
117,304
|
|
Performance Services
|
21,221
|
|
22,311
|
|
||
Corporate
|
(27,670
|
)
|
(28,842
|
)
|
||
Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
(a)
|
Refer to
Note 4 - Investments
for further information regarding equity in net income of unconsolidated affiliates.
|
(b)
|
Represents interest expense, net and realized gains and losses on our marketable securities.
|
(c)
|
Represents non-cash employee stock-based compensation expense and
$0.1 million
of stock purchase plan expense during both of
the three months ended September 30, 2017 and 2016
.
|
(d)
|
Represents adjustment to TRA liabilities for a
1%
decrease in the North Carolina state income tax rate during
the three months ended September 30, 2016
.
|
(e)
|
Represents implementation and other costs associated with the implementation of our enterprise resource planning ("ERP") system.
|
(f)
|
Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net revenue
|
$
|
390,564
|
|
$
|
313,272
|
|
Net income
|
$
|
60,616
|
|
$
|
58,095
|
|
Non-GAAP Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
|
Three Months Ended September 30,
|
|||||||
|
2017
|
2016
|
||||||
|
Amount
|
% of Net Revenue
|
Amount
|
% of Net Revenue
|
||||
Net revenue:
|
|
|
|
|
||||
Net administrative fees
|
$
|
150,991
|
|
39%
|
$
|
125,976
|
|
40%
|
Other services and support
|
86,911
|
|
22%
|
81,167
|
|
26%
|
||
Services
|
237,902
|
|
61%
|
207,143
|
|
66%
|
||
Products
|
152,662
|
|
39%
|
106,129
|
|
34%
|
||
Net revenue
|
390,564
|
|
100%
|
313,272
|
|
100%
|
||
Cost of revenue:
|
|
|
|
|
||||
Services
|
46,936
|
|
13%
|
42,690
|
|
14%
|
||
Products
|
144,440
|
|
37%
|
95,813
|
|
31%
|
||
Cost of revenue
|
191,376
|
|
49%
|
138,503
|
|
44%
|
||
Gross profit
|
199,188
|
|
51%
|
174,769
|
|
56%
|
||
Operating expenses:
|
|
|
|
|
||||
Selling, general and administrative
|
114,321
|
|
28%
|
92,238
|
|
29%
|
||
Research and development
|
489
|
|
—%
|
806
|
|
—%
|
||
Amortization of purchased intangible assets
|
13,898
|
|
4%
|
9,209
|
|
3%
|
||
Operating expenses
|
128,708
|
|
32%
|
102,253
|
|
33%
|
||
Operating income
|
70,480
|
|
18%
|
72,516
|
|
23%
|
||
Other income, net
|
2,900
|
|
1%
|
8,915
|
|
3%
|
||
Income before income taxes
|
73,380
|
|
19%
|
81,431
|
|
26%
|
||
Income tax expense
|
12,764
|
|
3%
|
23,336
|
|
7%
|
||
Net income
|
60,616
|
|
16%
|
58,095
|
|
19%
|
||
Net income attributable to non-controlling interest in Premier LP
|
(44,610
|
)
|
(11)%
|
(49,601
|
)
|
(16)%
|
||
Adjustment of redeemable limited partners' capital to redemption amount
|
320,424
|
|
nm
|
61,808
|
|
nm
|
||
Net income attributable to stockholders
|
$
|
336,430
|
|
nm
|
$
|
70,302
|
|
nm
|
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
|
|
||||
Basic
|
52,909
|
|
|
47,214
|
|
|
||
Diluted
|
140,046
|
|
|
142,962
|
|
|
||
|
|
|
|
|
||||
Earnings per share attributable to stockholders:
|
|
|
|
|||||
Basic
|
$
|
6.36
|
|
|
$
|
1.49
|
|
|
Diluted
|
$
|
0.36
|
|
|
$
|
0.26
|
|
|
|
Three Months Ended September 30,
|
|||||||
|
2017
|
2016
|
||||||
|
Amount
|
% of Net Revenue
|
Amount
|
% of Net Revenue
|
||||
Certain Non-GAAP Financial Data:
|
|
|
|
|
||||
Adjusted EBITDA
|
$
|
119,171
|
|
31%
|
$
|
110,773
|
|
35%
|
Non-GAAP Adjusted Fully Distributed Net Income
|
$
|
61,713
|
|
16%
|
$
|
58,928
|
|
19%
|
Non-GAAP Adjusted Fully Distributed Earnings Per Share
|
$
|
0.44
|
|
n/a
|
$
|
0.41
|
|
n/a
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net income
|
$
|
60,616
|
|
$
|
58,095
|
|
Interest and investment loss, net
|
1,495
|
|
152
|
|
||
Income tax expense
|
12,764
|
|
23,336
|
|
||
Depreciation and amortization
|
16,507
|
|
14,018
|
|
||
Amortization of purchased intangible assets
|
13,898
|
|
9,209
|
|
||
EBITDA
|
105,280
|
|
104,810
|
|
||
Stock-based compensation
|
8,957
|
|
5,896
|
|
||
Acquisition related expenses
|
3,099
|
|
2,937
|
|
||
Adjustment to tax receivable agreement liabilities
|
—
|
|
(5,722
|
)
|
||
ERP implementation expenses
|
335
|
|
1,094
|
|
||
Acquisition related adjustment - revenue
|
105
|
|
151
|
|
||
Loss on disposal of long-lived assets
|
1,320
|
|
1,518
|
|
||
Loss on FFF put and call rights
|
20
|
|
—
|
|
||
Other expense
|
55
|
|
89
|
|
||
Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
|
|
|
||||
Income before income taxes
|
$
|
73,380
|
|
$
|
81,431
|
|
Equity in net income of unconsolidated affiliates
|
(4,252
|
)
|
(9,579
|
)
|
||
Interest and investment loss, net
|
1,495
|
|
152
|
|
||
Loss on disposal of long-lived assets
|
1,320
|
|
1,518
|
|
||
Other income
|
(1,463
|
)
|
(1,006
|
)
|
||
Operating income
|
70,480
|
|
72,516
|
|
||
Depreciation and amortization
|
16,507
|
|
14,018
|
|
||
Amortization of purchased intangible assets
|
13,898
|
|
9,209
|
|
||
Stock-based compensation
|
8,957
|
|
5,896
|
|
||
Acquisition related expenses
|
3,099
|
|
2,937
|
|
||
Adjustment to tax receivable agreement liabilities
|
—
|
|
(5,722
|
)
|
||
ERP implementation expenses
|
335
|
|
1,094
|
|
||
Acquisition related adjustment - revenue
|
105
|
|
151
|
|
||
Equity in net income of unconsolidated affiliates
|
4,252
|
|
9,579
|
|
||
Deferred compensation plan income
|
1,539
|
|
1,095
|
|
||
Other expense
|
(1
|
)
|
—
|
|
||
Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
|
|
|
||||
Segment Adjusted EBITDA:
|
|
|
||||
Supply Chain Services
|
$
|
125,620
|
|
$
|
117,304
|
|
Performance Services
|
21,221
|
|
22,311
|
|
||
Corporate
|
(27,670
|
)
|
(28,842
|
)
|
||
Adjusted EBITDA
|
$
|
119,171
|
|
$
|
110,773
|
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net income attributable to stockholders
|
$
|
336,430
|
|
$
|
70,302
|
|
Adjustment of redeemable limited partners' capital to redemption amount
|
(320,424
|
)
|
(61,808
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
44,610
|
|
49,601
|
|
||
Income tax expense
|
12,764
|
|
23,336
|
|
||
Amortization of purchased intangible assets
|
13,898
|
|
9,209
|
|
||
Stock-based compensation
|
8,957
|
|
5,896
|
|
||
Acquisition related expenses
|
3,099
|
|
2,937
|
|
||
Adjustment to tax receivable agreement liabilities
|
—
|
|
(5,722
|
)
|
||
ERP implementation expenses
|
335
|
|
1,094
|
|
||
Acquisition related adjustment - revenue
|
105
|
|
151
|
|
||
Loss on disposal of long-lived assets
|
1,320
|
|
1,518
|
|
||
Loss on FFF put and call rights
|
20
|
|
—
|
|
||
Other expense
|
55
|
|
89
|
|
||
Non-GAAP adjusted fully distributed income before income taxes
|
101,169
|
|
96,603
|
|
||
Income tax expense on fully distributed income before income taxes
(a)
|
39,456
|
|
37,675
|
|
||
Non-GAAP Adjusted Fully Distributed Net Income
|
$
|
61,713
|
|
$
|
58,928
|
|
|
|
|
||||
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings per Share
|
||||||
Weighted Average:
|
|
|
||||
Common shares used for basic and diluted earnings per share
|
52,909
|
|
47,214
|
|
||
Potentially dilutive shares
|
655
|
|
939
|
|
||
Conversion of Class B common units
|
86,482
|
|
94,809
|
|
||
Weighted average fully distributed shares outstanding - diluted
|
140,046
|
|
142,962
|
|
(a)
|
Reflects income tax expense at an estimated effective income tax rate of
39%
of Non-GAAP adjusted fully distributed income before income taxes for
the three months ended September 30, 2017 and 2016
.
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Earnings per share attributable to stockholders
|
$
|
6.36
|
|
$
|
1.49
|
|
Adjustment of redeemable limited partners' capital to redemption amount
|
(6.05
|
)
|
(1.31
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
0.84
|
|
1.05
|
|
||
Income tax expense
|
0.24
|
|
0.49
|
|
||
Amortization of purchased intangible assets
|
0.26
|
|
0.20
|
|
||
Stock-based compensation
|
0.17
|
|
0.12
|
|
||
Acquisition related expenses
|
0.06
|
|
0.06
|
|
||
Adjustment to tax receivable agreement liabilities
|
—
|
|
(0.12
|
)
|
||
ERP implementation expenses
|
0.01
|
|
0.02
|
|
||
Loss on disposal of long-lived assets
|
0.02
|
|
0.03
|
|
||
Impact of corporation taxes
(a)
|
(0.74
|
)
|
(0.80
|
)
|
||
Impact of dilutive shares
(b)
|
(0.73
|
)
|
(0.84
|
)
|
||
Non-GAAP Adjusted Fully Distributed Earnings Per Share
|
$
|
0.44
|
|
$
|
0.41
|
|
(a)
|
Reflects income tax expense at an estimated effective income tax rate of
39%
of Non-GAAP adjusted fully distributed income before income taxes for
the three months ended September 30, 2017 and 2016
.
|
(b)
|
Reflects impact of dilutive shares, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.
|
|
Three Months Ended September 30,
|
|||||
Supply Chain Services
|
2017
|
2016
|
||||
Net revenue:
|
|
|
||||
Net administrative fees
|
$
|
150,991
|
|
$
|
125,976
|
|
Other services and support
|
2,149
|
|
1,645
|
|
||
Services
|
153,140
|
|
127,621
|
|
||
Products
|
152,662
|
|
106,129
|
|
||
Net revenue
|
305,802
|
|
233,750
|
|
||
Cost of revenue:
|
|
|
||||
Services
|
1,063
|
|
1,206
|
|
||
Products
|
144,440
|
|
95,813
|
|
||
Cost of revenue
|
145,503
|
|
97,019
|
|
||
Gross profit
|
160,299
|
|
136,731
|
|
||
Operating expenses:
|
|
|
||||
Selling, general and administrative
|
41,935
|
|
32,503
|
|
||
Amortization of purchased intangible assets
|
5,040
|
|
212
|
|
||
Operating expenses
|
46,975
|
|
32,715
|
|
||
Operating income
|
$
|
113,324
|
|
$
|
104,016
|
|
Depreciation and amortization
|
454
|
|
254
|
|
||
Amortization of purchased intangible assets
|
5,040
|
|
212
|
|
||
Acquisition related expenses
|
2,550
|
|
3,243
|
|
||
Equity in net income of unconsolidated affiliates
|
4,252
|
|
9,579
|
|
||
Non-GAAP Segment Adjusted EBITDA
|
$
|
125,620
|
|
$
|
117,304
|
|
|
Three Months Ended September 30,
|
|||||
Performance Services
|
2017
|
2016
|
||||
Net revenue:
|
|
|
||||
Other services and support
|
$
|
84,762
|
|
$
|
79,522
|
|
Net revenue
|
84,762
|
|
79,522
|
|
||
Cost of revenue:
|
|
|
||||
Services
|
45,872
|
|
41,440
|
|
||
Cost of revenue
|
45,872
|
|
41,440
|
|
||
Gross profit
|
38,890
|
|
38,082
|
|
||
Operating expenses:
|
|
|
||||
Selling, general and administrative
|
31,911
|
|
26,908
|
|
||
Research and development
|
472
|
|
586
|
|
||
Amortization of purchased intangible assets
|
8,858
|
|
8,996
|
|
||
Operating expenses
|
41,241
|
|
36,490
|
|
||
Operating income
|
$
|
(2,351
|
)
|
$
|
1,592
|
|
Depreciation and amortization
|
14,060
|
|
11,878
|
|
||
Amortization of purchased intangible assets
|
8,858
|
|
8,996
|
|
||
Acquisition related expenses
|
549
|
|
(306
|
)
|
||
Acquisition related adjustment - revenue
|
105
|
|
151
|
|
||
Non-GAAP Segment Adjusted EBITDA
|
$
|
21,221
|
|
$
|
22,311
|
|
|
Three Months Ended September 30,
|
|||||
Corporate
|
2017
|
2016
|
||||
Operating expenses:
|
|
|
||||
Selling, general and administrative
|
$
|
40,476
|
|
$
|
32,872
|
|
Research and development
|
16
|
|
219
|
|
||
Operating loss
|
$
|
(40,492
|
)
|
$
|
(33,091
|
)
|
Depreciation and amortization
|
1,992
|
|
1,886
|
|
||
Stock-based compensation
|
8,957
|
|
5,896
|
|
||
Adjustment to tax receivable agreement liabilities
|
—
|
|
(5,722
|
)
|
||
ERP implementation expenses
|
334
|
|
1,093
|
|
||
Deferred compensation plan income
|
1,539
|
|
1,096
|
|
||
Non-GAAP Corporate Adjusted EBITDA
|
$
|
(27,670
|
)
|
$
|
(28,842
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
75,033
|
|
$
|
41,827
|
|
Investing activities
|
(16,646
|
)
|
(96,803
|
)
|
||
Financing activities
|
(83,002
|
)
|
(37,829
|
)
|
||
Net increase (decrease) in cash
|
$
|
(24,615
|
)
|
$
|
(92,805
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2017
|
2016
|
||||
Net cash provided by operating activities
|
$
|
75,033
|
|
$
|
41,827
|
|
Purchases of property and equipment
|
(16,647
|
)
|
(16,966
|
)
|
||
Distributions to limited partners of Premier LP
|
(24,951
|
)
|
(22,493
|
)
|
||
Non-GAAP Free Cash Flow
|
$
|
33,435
|
|
$
|
2,368
|
|
Exhibit No.
|
|
Description
|
10.1
|
|
|
10.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101
|
|
Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, 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.*
|
|
|
|
|
|
PREMIER, INC.
|
|
|
|
|
|
|
Date:
|
November 6, 2017
|
|
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
|
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 Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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 Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
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
|
(d)
|
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 6, 2017
|
|
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 6, 2017
|