☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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
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Charlotte,
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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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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, $0.01 Par Value
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PINC
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NASDAQ Global Select Market
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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(Do not check if a smaller reporting company)
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Page
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Item 5.
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•
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the impact of the continuing financial and operational uncertainty due to the coronavirus pandemic or other pandemics;
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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 impact on us if members of our group purchasing organization (“GPO”) programs reduce activity levels or terminate or elect not to renew their contracts on substantially similar terms or at all;
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•
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the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services 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 non-controlling investments in other businesses or other joint ventures that we do not control, particularly early-stage companies;
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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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our dependency on contract manufacturing facilities located in various parts of the world;
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•
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inventory risk we face in the event of a potential material price decline for the personal protective equipment products we may have purchased at elevated market prices;
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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, anticipated tax benefits, deferred tax assets, cash flows and profitability;
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•
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our indebtedness and our ability to obtain additional financing on favorable terms, including our ability to renew or replace our existing long-term credit facility at maturity;
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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;
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•
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our compliance with complex international, 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 applicable to our software applications that may be considered medical devices;
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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 GPO members or between us and our GPO members;
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•
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the ability of our GPO members to exercise significant influence over us;
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•
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the terms of agreements between us and our GPO members;
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•
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the impact of payments required under the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under the Unit Exchange Agreements;
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•
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provisions in our certificate of incorporation and bylaws 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 over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;
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•
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the impact to us or the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;
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•
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the number of shares of Class A common stock repurchased by us pursuant to any Class A common stock repurchase program and the timing of any such repurchases;
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•
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the number of shares of Class A common stock eligible for sale after the issuance of Class A common stock in our August 2020 restructuring and the potential impact of such sales; and
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•
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the risk factors discussed under the heading “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (the “2020 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).
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September 30, 2020
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June 30, 2020
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||||
Assets
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||||
Cash and cash equivalents
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$
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120,416
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$
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99,304
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Accounts receivable (net of $1,984 and $731 allowance for doubtful accounts, respectively)
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131,783
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135,063
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Contract assets
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245,099
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215,660
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Inventory
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143,305
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70,997
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Prepaid expenses and other current assets
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77,450
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97,338
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Total current assets
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718,053
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618,362
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Property and equipment (net of $469,767 and $452,609 accumulated depreciation, respectively)
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214,166
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206,728
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Intangible assets (net of $258,364 and $245,160 accumulated amortization, respectively)
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404,218
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417,422
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Goodwill
|
942,870
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941,965
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Deferred income tax assets
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827,676
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430,025
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Deferred compensation plan assets
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50,499
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49,175
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Investments in unconsolidated affiliates
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139,263
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133,335
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Operating lease right-of-use assets
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55,316
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57,823
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Other assets
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89,522
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93,680
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Total assets
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$
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3,441,583
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$
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2,948,515
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|
|
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||||
Liabilities, redeemable limited partners' capital and stockholders' equity
|
|
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||||
Accounts payable
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$
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68,213
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$
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54,841
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Accrued expenses
|
46,560
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53,500
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Revenue share obligations
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170,345
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145,777
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Limited partners' distribution payable
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—
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8,012
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Accrued compensation and benefits
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50,076
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73,262
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Deferred revenue
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33,607
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35,446
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Current portion of tax receivable agreements
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—
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13,689
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Current portion of notes payable to members
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67,837
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—
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Line of credit and current portion of long-term debt
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154,372
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79,560
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Other liabilities
|
77,054
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31,987
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Total current liabilities
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668,064
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496,074
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Long-term debt, less current portion
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4,640
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4,640
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Tax receivable agreements, less current portion
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—
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279,981
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Notes payable to members, less current portion
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371,130
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—
|
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Deferred compensation plan obligations
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50,499
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49,175
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Deferred tax liabilities
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—
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17,508
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Deferred consideration, less current portion
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83,700
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112,917
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Operating lease liabilities, less current portion
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50,545
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52,990
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Other liabilities
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78,424
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75,658
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Total liabilities
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1,307,002
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1,088,943
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Commitments and contingencies (Note 16)
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|
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||||
Redeemable limited partners' capital
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—
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|
1,720,309
|
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||
Stockholders' equity:
|
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September 30, 2020
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June 30, 2020
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||||
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,080,741 shares issued and outstanding at September 30, 2020 and 71,627,462 shares issued and outstanding at June 30, 2020
|
1,221
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|
716
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Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively
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—
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—
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Additional paid-in-capital
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2,012,047
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|
138,547
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|
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Retained earnings
|
121,313
|
|
—
|
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||
Total stockholders' equity
|
2,134,581
|
|
139,263
|
|
||
Total liabilities, redeemable limited partners' capital and stockholders' equity
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$
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3,441,583
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|
$
|
2,948,515
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Three Months Ended
|
|||||
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September 30,
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|||||
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2020
|
2019
|
||||
Net revenue:
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|
||||
Net administrative fees
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$
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132,645
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$
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172,403
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Other services and support
|
98,827
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|
81,886
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|
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Services
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231,472
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|
254,289
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Products
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115,415
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|
48,121
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|
||
Net revenue
|
346,887
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|
302,410
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|
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Cost of revenue:
|
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|
||||
Services
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38,750
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|
47,536
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|
||
Products
|
113,428
|
|
43,475
|
|
||
Cost of revenue
|
152,178
|
|
91,011
|
|
||
Gross profit
|
194,709
|
|
211,399
|
|
||
Operating expenses:
|
|
|
||||
Selling, general and administrative
|
123,954
|
|
113,929
|
|
||
Research and development
|
576
|
|
379
|
|
||
Amortization of purchased intangible assets
|
13,204
|
|
13,044
|
|
||
Operating expenses
|
137,734
|
|
127,352
|
|
||
Operating income
|
56,975
|
|
84,047
|
|
||
Equity in net income of unconsolidated affiliates
|
5,927
|
|
3,607
|
|
||
Interest and investment (loss) income, net
|
(2,119
|
)
|
476
|
|
||
Loss on FFF put and call rights
|
(1,919
|
)
|
(7,839
|
)
|
||
Other income
|
3,683
|
|
262
|
|
||
Other income (expense), net
|
5,572
|
|
(3,494
|
)
|
||
Income before income taxes
|
62,547
|
|
80,553
|
|
||
Income tax (benefit) expense
|
(118,138
|
)
|
9,614
|
|
||
Net income from continuing operations
|
180,685
|
|
70,939
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
390
|
|
||
Net income
|
180,685
|
|
71,329
|
|
||
Net income from continuing operations attributable to non-controlling interest
|
(11,845
|
)
|
(41,710
|
)
|
||
Net income from discontinued operations attributable to non-controlling interest
|
—
|
|
(197
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
(11,845
|
)
|
(41,907
|
)
|
||
Adjustment of redeemable limited partners' capital to redemption amount
|
(26,685
|
)
|
694,309
|
|
||
Net income attributable to stockholders
|
$
|
142,155
|
|
$
|
723,731
|
|
|
|
|
||||
Comprehensive income:
|
|
|
||||
Net income
|
180,685
|
|
71,329
|
|
||
Less: comprehensive income attributable to noncontrolling interest
|
(11,845
|
)
|
(41,907
|
)
|
||
Comprehensive income attributable to stockholders
|
$
|
168,840
|
|
$
|
29,422
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
||||
Basic
|
99,575
|
|
62,785
|
|
||
Diluted
|
100,130
|
|
126,632
|
|
||
|
|
|
|
Three Months Ended
|
|||||
|
September 30,
|
|||||
|
2020
|
2019
|
||||
Earnings per share attributable to stockholders:
|
|
|
||||
Basic earnings per share attributable to stockholders
|
$
|
1.43
|
|
$
|
11.53
|
|
Diluted earnings per share attributable to stockholders
|
$
|
1.42
|
|
$
|
0.49
|
|
|
Class A
Common Stock |
Class B
Common Stock |
Treasury Stock
|
Additional Paid-In Capital
|
Retained Earnings
|
Total Stockholders' Equity
|
||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||
Balance at June 30, 2020
|
71,627
|
|
$
|
716
|
|
50,213
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
138,547
|
|
$
|
—
|
|
$
|
139,263
|
|
Balance at July 1, 2020
|
71,627
|
|
716
|
|
50,213
|
|
—
|
|
—
|
|
—
|
|
138,547
|
|
—
|
|
139,263
|
|
||||||
Impact of change in accounting principle
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,228
|
)
|
(1,228
|
)
|
||||||
Adjusted balance at July 1, 2020
|
71,627
|
|
716
|
|
50,213
|
|
—
|
|
—
|
|
—
|
|
138,547
|
|
(1,228
|
)
|
138,035
|
|
||||||
Exchange of Class B common units for Class A common stock by member owners
|
70
|
|
1
|
|
(70
|
)
|
—
|
|
—
|
|
—
|
|
2,436
|
|
—
|
|
2,437
|
|
||||||
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
37,319
|
|
—
|
|
37,319
|
|
||||||
Increase in additional paid-in capital related to final exchange by member owners, including TRA termination
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
517,526
|
|
—
|
|
517,526
|
|
||||||
Issuance of Class A common stock under equity incentive plan
|
241
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
642
|
|
—
|
|
644
|
|
||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,229
|
|
—
|
|
7,229
|
|
||||||
Repurchase of vested restricted units for employee tax-withholding
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,023
|
)
|
—
|
|
(3,023
|
)
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
180,685
|
|
180,685
|
|
||||||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(11,845
|
)
|
(11,845
|
)
|
||||||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(26,685
|
)
|
(26,685
|
)
|
||||||
Reclassification of redeemable limited partners' capital to permanent equity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,750,840
|
|
3,767
|
|
1,754,607
|
|
||||||
Final exchange of Class B common units for Class A common stock by member owners
|
50,143
|
|
502
|
|
(50,143
|
)
|
—
|
|
—
|
|
—
|
|
(502
|
)
|
—
|
|
—
|
|
||||||
Early Termination Payments to former member owners
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(438,967
|
)
|
—
|
|
(438,967
|
)
|
||||||
Dividends ($0.19 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,381
|
)
|
(23,381
|
)
|
||||||
Balance at September 30, 2020
|
122,081
|
|
$
|
1,221
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
$
|
2,012,047
|
|
$
|
121,313
|
|
2,134,581
|
|
|
Class A
Common Stock |
Class B
Common Stock |
Treasury Stock
|
Additional Paid-In Capital
|
Accumulated Deficit
|
Total Stockholders’ Deficit
|
||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||
Balance at June 30, 2019
|
61,938
|
|
$
|
644
|
|
64,548
|
|
$
|
—
|
|
2,419
|
|
$
|
(87,220
|
)
|
$
|
—
|
|
$
|
(775,674
|
)
|
$
|
(862,250
|
)
|
Balance at July 1, 2019
|
61,938
|
|
644
|
|
64,548
|
|
—
|
|
2,419
|
|
(87,220
|
)
|
—
|
|
(775,674
|
)
|
(862,250
|
)
|
||||||
Impact of change in accounting principle
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(899
|
)
|
(899
|
)
|
||||||
Adjusted balance at July 1, 2019
|
61,938
|
|
644
|
|
64,548
|
|
—
|
|
2,419
|
|
(87,220
|
)
|
—
|
|
(776,573
|
)
|
(863,149
|
)
|
||||||
Exchange of Class B common units for Class A common stock by member owners
|
1,311
|
|
—
|
|
(1,311
|
)
|
—
|
|
(1,311
|
)
|
47,258
|
|
3,534
|
|
—
|
|
50,792
|
|
||||||
Redemption of limited partners
|
—
|
|
—
|
|
(782
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12,272
|
|
—
|
|
12,272
|
|
||||||
Issuance of Class A common stock under equity incentive plan
|
485
|
|
5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,749
|
|
—
|
|
1,754
|
|
||||||
Treasury stock
|
(1,055
|
)
|
—
|
|
—
|
|
—
|
|
1,055
|
|
(35,649
|
)
|
—
|
|
—
|
|
(35,649
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,704
|
|
—
|
|
3,704
|
|
||||||
Repurchase of vested restricted units for employee tax-withholding
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8,311
|
)
|
—
|
|
(8,311
|
)
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
71,329
|
|
71,329
|
|
||||||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(41,907
|
)
|
(41,907
|
)
|
||||||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(12,948
|
)
|
707,257
|
|
694,309
|
|
||||||
Balance at September 30, 2019
|
62,679
|
|
$
|
649
|
|
62,455
|
|
$
|
—
|
|
2,163
|
|
$
|
(75,611
|
)
|
$
|
—
|
|
$
|
(39,894
|
)
|
(114,856
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
180,685
|
|
$
|
71,329
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Income from discontinued operations, net of tax
|
—
|
|
(390
|
)
|
||
Depreciation and amortization
|
30,678
|
|
37,579
|
|
||
Equity in net income of unconsolidated affiliates
|
(5,927
|
)
|
(3,607
|
)
|
||
Deferred income taxes
|
(129,543
|
)
|
(1,985
|
)
|
||
Stock-based compensation
|
7,229
|
|
3,704
|
|
||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
4,674
|
|
||
Loss on FFF put and call rights
|
1,919
|
|
7,839
|
|
||
Other
|
201
|
|
2,562
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions:
|
|
|
||||
Accounts receivable, inventories, prepaid expenses and other assets
|
(45,469
|
)
|
6,972
|
|
||
Contract assets
|
(29,568
|
)
|
(8,768
|
)
|
||
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities
|
20,577
|
|
(23,830
|
)
|
||
Net cash provided by operating activities from continuing operations
|
30,782
|
|
96,079
|
|
||
Net cash provided by operating activities from discontinued operations
|
—
|
|
11,196
|
|
||
Net cash provided by operating activities
|
30,782
|
|
107,275
|
|
||
Investing activities
|
|
|
||||
Purchases of property and equipment
|
(24,982
|
)
|
(21,983
|
)
|
||
Investments in unconsolidated affiliates
|
—
|
|
(4,665
|
)
|
||
Proceeds from sale of assets
|
—
|
|
3,632
|
|
||
Other
|
29
|
|
(5,250
|
)
|
||
Net cash used in investing activities
|
(24,953
|
)
|
(28,266
|
)
|
||
Financing activities
|
|
|
||||
Payments made on notes payable
|
(188
|
)
|
(1,513
|
)
|
||
Proceeds from credit facility
|
100,000
|
|
—
|
|
||
Payments on credit facility
|
(25,000
|
)
|
(25,000
|
)
|
||
Distributions to limited partners of Premier LP
|
(9,949
|
)
|
(13,202
|
)
|
||
Payments to limited partners of Premier LP related to tax receivable agreements
|
(24,218
|
)
|
(17,425
|
)
|
||
Cash dividends paid
|
(23,195
|
)
|
—
|
|
||
Repurchase of Class A common stock (held as treasury stock)
|
—
|
|
(31,123
|
)
|
||
Other
|
(2,167
|
)
|
(6,557
|
)
|
||
Net cash provided by (used in) financing activities
|
15,283
|
|
(94,820
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
21,112
|
|
(15,811
|
)
|
||
Cash and cash equivalents at beginning of year
|
99,304
|
|
141,055
|
|
||
Cash and cash equivalents at end of period
|
$
|
120,416
|
|
$
|
125,244
|
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
||||
Increase (decrease) in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease (increase) in stockholders' equity
|
$
|
26,685
|
|
$
|
(694,309
|
)
|
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners
|
(2,437
|
)
|
(50,792
|
)
|
||
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments
|
331
|
|
7,140
|
|
||
Net increase in deferred tax assets related to final exchange by member owners
|
284,852
|
|
—
|
|
||
Reclassification of redeemable limited partners' capital to additional paid in capital
|
1,754,607
|
|
—
|
|
||
Decrease in additional paid-in capital related to notes payable to members, net of discounts
|
438,967
|
|
—
|
|
||
Increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments
|
37,319
|
|
12,272
|
|
||
Increase in additional paid-in capital related to final exchange by member owners
|
517,526
|
|
—
|
|
||
Increase in treasury stock related to a payable as a result of applying trade date accounting when recording the repurchase of Class A common stock
|
—
|
|
4,526
|
|
||
Accrued dividend equivalents
|
186
|
|
—
|
|
|
June 30, 2020
|
||
Assets
|
|
||
Current
|
$
|
610,990
|
|
Noncurrent
|
1,900,137
|
|
|
Total assets of Premier LP
|
$
|
2,511,127
|
|
|
|
||
Liabilities
|
|
||
Current
|
$
|
580,430
|
|
Noncurrent
|
296,801
|
|
|
Total liabilities of Premier LP
|
$
|
877,231
|
|
|
Three Months Ended September 30, 2019
|
||
Premier LP net income
|
$
|
84,140
|
|
|
Three Months Ended September 30, 2019
|
||
Net cash provided by (used in):
|
|
||
Operating activities
|
$
|
92,634
|
|
Investing activities
|
(28,266
|
)
|
|
Financing activities
|
(79,150
|
)
|
|
Net decrease in cash and cash equivalents
|
(14,782
|
)
|
|
Cash and cash equivalents at beginning of year
|
131,210
|
|
|
Cash and cash equivalents at end of period
|
$
|
116,428
|
|
|
Three Months Ended September 30, 2019
|
||
Net revenue
|
$
|
—
|
|
Cost of revenue
|
—
|
|
|
Gross profit
|
—
|
|
|
Selling, general and administrative expense
|
1,936
|
|
|
Operating expenses
|
1,936
|
|
|
Operating loss from discontinued operations
|
(1,936
|
)
|
|
Net gain on disposal of assets
|
2,409
|
|
|
Income from discontinued operations before income taxes
|
473
|
|
|
Income tax expense
|
83
|
|
|
Income from discontinued operations, net of tax
|
390
|
|
|
Net income from discontinued operations attributable to non-controlling interest in Premier LP
|
(197
|
)
|
|
Net income from discontinued operations attributable to stockholders
|
$
|
193
|
|
|
Carrying Value
|
|
Equity in Net Income
|
||||||||||
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
September 30, 2020
|
June 30, 2020
|
|
2020
|
2019
|
||||||||
FFF
|
$
|
113,778
|
|
$
|
109,204
|
|
|
$
|
4,574
|
|
$
|
3,605
|
|
Prestige
|
12,246
|
|
11,194
|
|
|
1,052
|
|
—
|
|
||||
Other investments
|
13,239
|
|
12,937
|
|
|
301
|
|
2
|
|
||||
Total investments
|
$
|
139,263
|
|
$
|
133,335
|
|
|
$
|
5,927
|
|
$
|
3,607
|
|
September 30, 2020
|
Fair Value of Financial Assets and Liabilities
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Cash equivalents
|
$
|
75
|
|
$
|
75
|
|
$
|
—
|
|
$
|
—
|
|
Deferred compensation plan assets
|
53,904
|
|
53,904
|
|
—
|
|
—
|
|
||||
Total assets
|
53,979
|
|
53,979
|
|
—
|
|
—
|
|
||||
Earn-out liabilities
|
23,017
|
|
—
|
|
—
|
|
23,017
|
|
||||
FFF put right
|
38,677
|
|
—
|
|
—
|
|
38,677
|
|
||||
Total liabilities
|
$
|
61,694
|
|
$
|
—
|
|
$
|
—
|
|
$
|
61,694
|
|
June 30, 2020
|
Fair Value of Financial Assets and Liabilities
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Cash equivalents
|
$
|
13,272
|
|
$
|
13,272
|
|
$
|
—
|
|
$
|
—
|
|
Deferred compensation plan assets
|
52,538
|
|
52,538
|
|
—
|
|
—
|
|
||||
Total assets
|
65,810
|
|
65,810
|
|
—
|
|
—
|
|
||||
Earn-out liability
|
33,151
|
|
—
|
|
—
|
|
33,151
|
|
||||
FFF put right
|
36,758
|
|
—
|
|
—
|
|
36,758
|
|
||||
Total liabilities
|
$
|
69,909
|
|
$
|
—
|
|
$
|
—
|
|
$
|
69,909
|
|
|
September 30, 2020
|
June 30, 2020
|
||
Annual EBITDA Growth Rate
|
2.5-26.5%
|
|
2.5-26.5%
|
|
Annual Revenue Growth Rate
|
1.4-14.4%
|
|
1.4-14.4%
|
|
Correlation
|
80.0
|
%
|
80.0
|
%
|
Weighted Average Cost of Capital
|
14.5
|
%
|
14.5
|
%
|
Asset Volatility
|
29.0
|
%
|
28.0
|
%
|
Credit Spread
|
1.4
|
%
|
1.7
|
%
|
(i)
|
Annual EBITDA Growth Rate: The forecasted EBITDA growth range over 7 years;
|
(ii)
|
Annual Revenue Growth Rate: The forecasted Revenue growth range over 7 years;
|
(iii)
|
Correlation: The estimated correlation between future Business Enterprise Value and EBITDA of FFF;
|
(iv)
|
Weighted Average Cost of Capital: The expected rate paid to security holders to finance debt and equity;
|
(v)
|
Asset volatility: Based on the asset volatility of guideline public companies in the healthcare industry; and
|
(vi)
|
Credit Spread: Based on term-matched BBB yield curve.
|
Input Assumptions
|
As of September 30, 2020
|
As of June 30, 2020
|
||
Probability of Transferred Member Renewal Percentage < 50%
|
5.0
|
%
|
5.0
|
%
|
Probability of Transferred Member Renewal Percentage between 50% and 65%
|
10.0
|
%
|
10.0
|
%
|
Probability of Transferred Member Renewal Percentage between 65% and 80%
|
25.0
|
%
|
25.0
|
%
|
Probability of Transferred Member Renewal Percentage > 80%
|
60.0
|
%
|
60.0
|
%
|
Credit Spread
|
1.0
|
%
|
1.0
|
%
|
(a)
|
The Acurity and Nexera Earn-out was initially valued as of February 28, 2020.
|
|
Beginning Balance
|
Purchases (Settlements) (b)
|
Gain (Loss)
|
Ending Balance
|
||||||||
Three months ended September 30, 2020
|
|
|
|
|
||||||||
Earn-out liabilities
|
33,151
|
|
(9,073
|
)
|
1,061
|
|
23,017
|
|
||||
FFF put right
|
36,758
|
|
—
|
|
(1,919
|
)
|
38,677
|
|
||||
Total Level 3 liabilities
|
$
|
69,909
|
|
$
|
(9,073
|
)
|
$
|
(858
|
)
|
$
|
61,694
|
|
|
|
|
|
|
||||||||
Three months ended September 30, 2019
|
|
|
|
|
||||||||
FFF call right
|
$
|
204
|
|
$
|
—
|
|
$
|
(152
|
)
|
$
|
52
|
|
Total Level 3 assets
|
204
|
|
—
|
|
(152
|
)
|
52
|
|
||||
Earn-out liabilities
|
6,816
|
|
—
|
|
(2,574
|
)
|
9,390
|
|
||||
FFF put right
|
41,652
|
|
—
|
|
(7,687
|
)
|
49,339
|
|
||||
Total Level 3 liabilities
|
$
|
48,468
|
|
$
|
—
|
|
$
|
(10,261
|
)
|
$
|
58,729
|
|
(b)
|
Purchases (Settlements) include 100% of the Stanson earn-out, which has been earned but not yet paid as of September 30, 2020.
|
|
Supply Chain Services
|
Performance Services
|
Total
|
||||||
June 30, 2020
|
$
|
387,722
|
|
$
|
554,243
|
|
$
|
941,965
|
|
Adjustments to acquisition purchase price
|
780
|
|
125
|
|
905
|
|
|||
September 30, 2020
|
$
|
388,502
|
|
$
|
554,368
|
|
$
|
942,870
|
|
|
Useful Life
|
September 30, 2020
|
June 30, 2020
|
||||
Member relationships
|
14.7 years
|
$
|
386,100
|
|
$
|
386,100
|
|
Technology
|
5.6 years
|
164,117
|
|
164,117
|
|
||
Customer relationships
|
9.6 years
|
70,830
|
|
70,830
|
|
||
Trade names
|
7.5 years
|
24,160
|
|
24,160
|
|
||
Non-compete agreements
|
5.3 years
|
11,315
|
|
11,315
|
|
||
Other (a)
|
12.1 years
|
6,060
|
|
6,060
|
|
||
Total intangible assets
|
|
662,582
|
|
662,582
|
|
||
Accumulated amortization
|
|
(258,364
|
)
|
(245,160
|
)
|
||
Total intangible assets, net
|
|
$
|
404,218
|
|
$
|
417,422
|
|
|
September 30, 2020
|
June 30, 2020
|
||||
Credit Facility
|
$
|
150,000
|
|
$
|
75,000
|
|
Notes payable to members
|
438,967
|
|
—
|
|
||
Other notes payable
|
9,012
|
|
9,200
|
|
||
Total debt and notes payable
|
597,979
|
|
84,200
|
|
||
Less: current portion
|
(222,209
|
)
|
(79,560
|
)
|
||
Total long-term debt and notes payable
|
$
|
375,770
|
|
$
|
4,640
|
|
2021 (a)
|
$
|
55,714
|
|
2022
|
104,101
|
|
|
2023
|
103,629
|
|
|
2024
|
104,231
|
|
|
2025
|
103,419
|
|
|
Total principal payments
|
$
|
471,094
|
|
(a)
|
For the period from October 1, 2020 to June 30, 2021.
|
|
Receivables From Limited Partners
|
Redeemable Limited Partners' Capital
|
Total Redeemable Limited Partners' Capital
|
||||||
June 30, 2020
|
$
|
(995
|
)
|
$
|
1,721,304
|
|
$
|
1,720,309
|
|
Distributions applied to receivables from limited partners
|
141
|
|
—
|
|
141
|
|
|||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
11,845
|
|
11,845
|
|
|||
Distributions to limited partners
|
—
|
|
(1,936
|
)
|
(1,936
|
)
|
|||
Exchange of Class B common units for Class A common stock by member owners
|
—
|
|
(2,437
|
)
|
(2,437
|
)
|
|||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
26,685
|
|
26,685
|
|
|||
Reclassification to permanent equity
|
854
|
|
(1,755,461
|
)
|
(1,754,607
|
)
|
|||
September 30, 2020
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Receivables From Limited Partners
|
Redeemable Limited Partners’ Capital
|
Total Redeemable Limited Partners’ Capital
|
||||||
June 30, 2019
|
$
|
(1,204
|
)
|
$
|
2,524,474
|
|
$
|
2,523,270
|
|
Distributions applied to receivables from limited partners
|
69
|
|
—
|
|
69
|
|
|||
Redemption of limited partners
|
—
|
|
(1,371
|
)
|
(1,371
|
)
|
|||
Net income attributable to non-controlling interest in Premier LP
|
—
|
|
41,907
|
|
41,907
|
|
|||
Distributions to limited partners
|
—
|
|
(13,699
|
)
|
(13,699
|
)
|
|||
Exchange of Class B common units for Class A common stock by member owners
|
—
|
|
(50,792
|
)
|
(50,792
|
)
|
|||
Adjustment of redeemable limited partners' capital to redemption amount
|
—
|
|
(694,309
|
)
|
(694,309
|
)
|
|||
September 30, 2019
|
$
|
(1,135
|
)
|
$
|
1,806,210
|
|
$
|
1,805,075
|
|
Date of Quarterly Exchange
|
Number of Class B Common Units Exchanged
|
Reduction in Redeemable Limited Partners' Capital
|
|||
July 31, 2020
|
69,684
|
|
$
|
2,437
|
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Numerator for basic earnings per share:
|
|
|
||||
Net income from continuing operations attributable to stockholders (a)
|
$
|
142,155
|
|
$
|
723,538
|
|
Net income from discontinued operations attributable to stockholders
|
—
|
|
193
|
|
||
Net income attributable to stockholders
|
$
|
142,155
|
|
$
|
723,731
|
|
|
|
|
||||
Numerator for diluted earnings per share:
|
|
|
||||
Net income from continuing operations attributable to stockholders (a)
|
$
|
142,155
|
|
$
|
723,538
|
|
Adjustment of redeemable limited partners’ capital to redemption amount
|
—
|
|
(694,309
|
)
|
||
Net income from continuing operations attributable to non-controlling interest in Premier LP
|
—
|
|
41,710
|
|
||
Net income from continuing operations
|
142,155
|
|
70,939
|
|
||
Tax effect on Premier, Inc. net income (b)(c)
|
—
|
|
(9,398
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Adjusted net income from continuing operations
|
$
|
142,155
|
|
$
|
61,541
|
|
|
|
|
||||
Net income from discontinued operations attributable to stockholders
|
$
|
—
|
|
$
|
193
|
|
Net income from discontinued operations attributable to non-controlling interest in Premier LP
|
—
|
|
197
|
|
||
Adjusted net income from discontinued operations
|
$
|
—
|
|
$
|
390
|
|
|
|
|
||||
Adjusted net income
|
$
|
142,155
|
|
$
|
61,931
|
|
|
|
|
||||
Denominator for earnings per share:
|
|
|
||||
Basic weighted average shares outstanding (d)
|
99,575
|
|
62,785
|
|
||
Effect of dilutive securities: (e)
|
|
|
||||
Stock options
|
253
|
|
479
|
|
||
Restricted stock
|
302
|
|
280
|
|
||
Class B shares outstanding
|
—
|
|
63,088
|
|
||
Diluted weighted average shares and assumed conversions
|
100,130
|
|
126,632
|
|
||
|
|
|
||||
Earnings per share attributable to stockholders:
|
|
|
||||
Basic earnings per share attributable to stockholders
|
$
|
1.43
|
|
$
|
11.53
|
|
Diluted earnings per share attributable to stockholders
|
$
|
1.42
|
|
$
|
0.49
|
|
(a)
|
Net income from continuing operations attributable to stockholders was calculated as follows (in thousands):
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net income from continuing operations
|
$
|
180,685
|
|
$
|
70,939
|
|
Net income from continuing operations attributable to non-controlling interest in Premier LP
|
(11,845
|
)
|
(41,710
|
)
|
||
Adjustment of redeemable limited partners’ capital to redemption amount
|
(26,685
|
)
|
694,309
|
|
||
Net income from continuing operations attributable to stockholders
|
$
|
142,155
|
|
$
|
723,538
|
|
(b)
|
For the three months ended September 30, 2020, the tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in Premier, LP was calculated as a component of the income tax provision for the three months ended September 30, 2020.
|
(c)
|
For the three months ended September 30, 2019, represents income tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.
|
(d)
|
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, 2020 and 2019.
|
(e)
|
For the three months ended September 30, 2020, the effect of 0.7 million stock options and restricted stock units and 22.4 million Class B common units were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect.
|
(f)
|
For the three months ended September 30, 2019, the effect of 0.1 million stock options was excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect. Additionally, the effect of 0.8 million performance share awards was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.
|
(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)
|
The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program equity incentive plan (see Note 13 - Stock-Based Compensation).
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Pre-tax stock-based compensation expense
|
$
|
7,229
|
|
$
|
3,704
|
|
Deferred tax benefit (a)
|
1,110
|
|
959
|
|
||
Total stock-based compensation expense, net of tax
|
$
|
6,119
|
|
$
|
2,745
|
|
|
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, 2020
|
681,538
|
|
$
|
37.91
|
|
|
1,606,309
|
|
$
|
37.58
|
|
|
2,544,137
|
|
$
|
30.17
|
|
Granted
|
451,504
|
|
$
|
31.36
|
|
|
375,851
|
|
$
|
29.12
|
|
|
—
|
|
$
|
—
|
|
Vested/exercised
|
(148,477
|
)
|
$
|
33.20
|
|
|
(161,544
|
)
|
$
|
32.77
|
|
|
(27,003
|
)
|
$
|
30.47
|
|
Forfeited
|
(12,909
|
)
|
$
|
37.82
|
|
|
(16,301
|
)
|
$
|
38.31
|
|
|
(23,669
|
)
|
$
|
35.41
|
|
Outstanding at September 30, 2020
|
971,656
|
|
$
|
35.58
|
|
|
1,804,315
|
|
$
|
35.61
|
|
|
2,493,465
|
|
$
|
30.11
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock options outstanding and exercisable at September 30, 2020
|
|
|
|
|
|
|
2,487,960
|
|
$
|
30.11
|
|
|
Unrecognized Stock-Based Compensation Expense
|
Weighted Average Amortization Period
|
||
Restricted stock
|
$
|
23,167
|
|
2.4 years
|
Performance share awards
|
39,321
|
|
2.1 years
|
|
Stock options
|
18
|
|
0.4 years
|
|
Total unrecognized stock-based compensation expense
|
$
|
62,506
|
|
2.2 years
|
|
Intrinsic Value of Stock Options
|
||
Outstanding and exercisable
|
$
|
7,888
|
|
Expected to vest
|
13
|
|
|
Total outstanding
|
$
|
7,901
|
|
|
|
||
Exercised during the year ended September 30, 2020
|
120
|
|
|
September 30, 2020
|
June 30, 2020
|
||||
2021 (a)
|
$
|
9,010
|
|
$
|
12,171
|
|
2022
|
11,738
|
|
11,738
|
|
||
2023
|
12,012
|
|
12,012
|
|
||
2024
|
12,145
|
|
12,145
|
|
||
2025
|
12,177
|
|
12,177
|
|
||
Thereafter
|
10,171
|
|
10,171
|
|
||
Total future minimum lease payments
|
67,253
|
|
70,414
|
|
||
Less: imputed interest
|
6,955
|
|
7,567
|
|
||
Total operating lease liabilities (b)
|
$
|
60,298
|
|
$
|
62,847
|
|
(a)
|
As of September 30, 2020, future minimum lease payments are for the period from October 1, 2020 to June 30, 2021.
|
(b)
|
As of September 30, 2020, total operating lease liabilities included $9.8 million within other liabilities, current in the Condensed Consolidated Balance Sheets.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net revenue:
|
|
|
||||
Supply Chain Services
|
|
|
||||
Net administrative fees
|
$
|
132,645
|
|
$
|
172,403
|
|
Other services and support
|
5,592
|
|
2,560
|
|
||
Services
|
138,237
|
|
174,963
|
|
||
Products
|
115,415
|
|
48,121
|
|
||
Total Supply Chain Services (a)
|
253,652
|
|
223,084
|
|
||
Performance Services (a)
|
93,235
|
|
79,326
|
|
||
Net revenue
|
$
|
346,887
|
|
$
|
302,410
|
|
(a)
|
Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Depreciation and amortization expense (a):
|
|
|
||||
Supply Chain Services
|
$
|
8,802
|
|
$
|
4,825
|
|
Performance Services
|
19,757
|
|
30,620
|
|
||
Corporate
|
2,119
|
|
2,134
|
|
||
Total depreciation and amortization expense
|
$
|
30,678
|
|
$
|
37,579
|
|
|
|
|
||||
Capital expenditures:
|
|
|
||||
Supply Chain Services
|
$
|
2,876
|
|
$
|
1,477
|
|
Performance Services
|
18,371
|
|
18,504
|
|
||
Corporate
|
3,735
|
|
2,002
|
|
||
Total capital expenditures
|
$
|
24,982
|
|
$
|
21,983
|
|
|
September 30, 2020
|
June 30, 2020
|
||||
Total assets:
|
|
|
||||
Supply Chain Services
|
$
|
1,560,393
|
|
$
|
1,483,751
|
|
Performance Services
|
943,357
|
|
930,968
|
|
||
Corporate
|
939,977
|
|
538,248
|
|
||
Total assets
|
3,443,727
|
|
2,952,967
|
|
||
Eliminations (b)
|
(2,144
|
)
|
(4,452
|
)
|
||
Total assets, net
|
$
|
3,441,583
|
|
$
|
2,948,515
|
|
(a)
|
Includes amortization of purchased intangible assets.
|
(b)
|
Includes eliminations of intersegment transactions which occur during the ordinary course of business.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Income before income taxes
|
$
|
62,547
|
|
$
|
80,553
|
|
Equity in net income of unconsolidated affiliates (a)
|
(5,927
|
)
|
(3,607
|
)
|
||
Interest and investment loss (income), net
|
2,119
|
|
(476
|
)
|
||
Loss on FFF put and call rights (b)
|
1,919
|
|
7,839
|
|
||
Other income
|
(3,683
|
)
|
(262
|
)
|
||
Operating income
|
56,975
|
|
84,047
|
|
||
Depreciation and amortization
|
17,474
|
|
24,535
|
|
||
Amortization of purchased intangible assets
|
13,204
|
|
13,044
|
|
||
Stock-based compensation (c)
|
7,375
|
|
3,852
|
|
||
Acquisition and disposition related expenses
|
2,845
|
|
6,141
|
|
||
Strategic and financial restructuring expenses
|
3,942
|
|
55
|
|
||
Remeasurement of tax receivable agreement liabilities (d)
|
—
|
|
4,674
|
|
||
Equity in net income of unconsolidated affiliates (a)
|
5,927
|
|
3,607
|
|
||
Deferred compensation plan income (e)
|
2,907
|
|
241
|
|
||
Other expense, net
|
94
|
|
60
|
|
||
Non-GAAP Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
|
|
|
||||
Segment Non-GAAP Adjusted EBITDA:
|
|
|
||||
Supply Chain Services (f)
|
$
|
102,649
|
|
$
|
149,911
|
|
Performance Services (f)
|
37,116
|
|
20,376
|
|
||
Corporate
|
(29,022
|
)
|
(30,031
|
)
|
||
Non-GAAP Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
(a)
|
Refer to Note 5 - Investments for more information.
|
(b)
|
Refer to Note 6 - Fair Value Measurements for more information.
|
(c)
|
Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million during both of the three months ended September 30, 2020 and 2019.
|
(d)
|
The adjustments to TRA liabilities for the three months ended September 30, 2020 is primarily attributable to decreases in the Premier, Inc. effective tax rate related to state tax liabilities.
|
(e)
|
Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.
|
(f)
|
Includes intersegment revenue which is eliminated in consolidation.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net revenue
|
$
|
346,887
|
|
$
|
302,410
|
|
Net income from continuing operations
|
$
|
180,685
|
|
$
|
70,939
|
|
Non-GAAP Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
|
Three Months Ended September 30,
|
|
Change
|
|
% of Net Revenue
|
||||||||||||
Net revenue:
|
2020
|
2019
|
|
2020
|
2019
|
|
2020
|
2019
|
|||||||||
Supply Chain Services
|
$
|
253,652
|
|
$
|
223,084
|
|
|
$
|
30,568
|
|
14
|
%
|
|
73
|
%
|
74
|
%
|
Performance Services
|
93,235
|
|
79,326
|
|
|
13,909
|
|
18
|
%
|
|
27
|
%
|
26
|
%
|
|||
Net revenue
|
$
|
346,887
|
|
$
|
302,410
|
|
|
$
|
44,477
|
|
15
|
%
|
|
100
|
%
|
100
|
%
|
|
Three Months Ended September 30,
|
|||||||
|
2020
|
2019
|
||||||
Certain Non-GAAP Financial Data:
|
Amount
|
% of Net Revenue
|
Amount
|
% of Net Revenue
|
||||
Adjusted EBITDA
|
$
|
110,743
|
|
32%
|
$
|
140,256
|
|
46%
|
Non-GAAP Adjusted Net Income
|
$
|
70,159
|
|
20%
|
$
|
85,986
|
|
28%
|
Non-GAAP Adjusted Earnings Per Share
|
$
|
0.57
|
|
nm
|
$
|
0.68
|
|
nm
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net income from continuing operations
|
$
|
180,685
|
|
$
|
70,939
|
|
Interest and investment loss (income), net
|
2,119
|
|
(476
|
)
|
||
Income tax (benefit) expense
|
(118,138
|
)
|
9,614
|
|
||
Depreciation and amortization
|
17,474
|
|
24,535
|
|
||
Amortization of purchased intangible assets
|
13,204
|
|
13,044
|
|
||
EBITDA
|
95,344
|
|
117,656
|
|
||
Stock-based compensation
|
7,375
|
|
3,852
|
|
||
Acquisition and disposition related expenses
|
2,845
|
|
6,141
|
|
||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
4,674
|
|
||
Loss on FFF put and call rights
|
1,919
|
|
7,839
|
|
||
Other expense
|
3,260
|
|
94
|
|
||
Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
|
|
|
||||
Income before income taxes
|
$
|
62,547
|
|
$
|
80,553
|
|
Equity in net income of unconsolidated affiliates
|
(5,927
|
)
|
(3,607
|
)
|
||
Interest and investment loss (income), net
|
2,119
|
|
(476
|
)
|
||
Loss on FFF put and call rights
|
1,919
|
|
7,839
|
|
||
Other income
|
(3,683
|
)
|
(262
|
)
|
||
Operating income
|
56,975
|
|
84,047
|
|
||
Depreciation and amortization
|
17,474
|
|
24,535
|
|
||
Amortization of purchased intangible assets
|
13,204
|
|
13,044
|
|
||
Stock-based compensation
|
7,375
|
|
3,852
|
|
||
Acquisition and disposition related expenses
|
2,845
|
|
6,141
|
|
||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
4,674
|
|
||
Equity in net income of unconsolidated affiliates
|
5,927
|
|
3,607
|
|
||
Deferred compensation plan income
|
2,907
|
|
241
|
|
||
Other expense, net
|
4,036
|
|
115
|
|
||
Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Segment Adjusted EBITDA:
|
|
|
||||
Supply Chain Services
|
$
|
102,649
|
|
$
|
149,911
|
|
Performance Services
|
37,116
|
|
20,376
|
|
||
Corporate
|
(29,022
|
)
|
(30,031
|
)
|
||
Adjusted EBITDA
|
$
|
110,743
|
|
$
|
140,256
|
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net income attributable to stockholders
|
$
|
142,155
|
|
$
|
723,731
|
|
Adjustment of redeemable limited partners’ capital to redemption amount
|
26,685
|
|
(694,309
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
11,845
|
|
41,907
|
|
||
Income from discontinued operations, net of tax
|
—
|
|
(390
|
)
|
||
Income tax (benefit) expense
|
(118,138
|
)
|
9,614
|
|
||
Amortization of purchased intangible assets
|
13,204
|
|
13,044
|
|
||
Stock-based compensation
|
7,375
|
|
3,852
|
|
||
Acquisition and disposition related expenses
|
2,845
|
|
6,141
|
|
||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
4,674
|
|
||
Loss on FFF put and call rights
|
1,919
|
|
7,839
|
|
||
Other expense
|
4,424
|
|
94
|
|
||
Non-GAAP adjusted income before income taxes
|
92,314
|
|
116,197
|
|
||
Income tax expense on adjusted income before income taxes (a)
|
22,155
|
|
30,211
|
|
||
Non-GAAP Adjusted Net Income
|
$
|
70,159
|
|
$
|
85,986
|
|
|
|
|
||||
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share
|
||||||
Weighted Average:
|
|
|
||||
Basic weighted average shares outstanding
|
99,575
|
|
62,785
|
|
||
Dilutive securities
|
555
|
|
759
|
|
||
Class B shares outstanding (b)
|
—
|
|
63,088
|
|
||
Weighted average shares outstanding - diluted
|
100,130
|
|
126,632
|
|
||
Class B shares outstanding (c)
|
22,369
|
|
—
|
|
||
Non-GAAP weighted average shares outstanding - diluted
|
122,499
|
|
126,632
|
|
(a)
|
Reflects income tax expense at an estimated effective income tax rate of 24% of non-GAAP adjusted net income before income taxes for the three months ended September 30, 2020 and 26% of non-GAAP adjusted income before income taxes for the three months ended September 30, 2019.
|
(b)
|
For the three months ended September 30, 2020, the effect of 22.4 million Class B common units was excluded from the GAAP diluted weighted average shares outstanding as they had an anti-dilutive effect.
|
(c)
|
On a non-GAAP basis, the effect of 22.4 million Class B common units was included in the diluted weighted average shares outstanding for the three months ended September 30, 2020.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Earnings per share attributable to stockholders
|
$
|
1.43
|
|
$
|
11.53
|
|
Adjustment of redeemable limited partners’ capital to redemption amount
|
0.27
|
|
(11.06
|
)
|
||
Net income attributable to non-controlling interest in Premier LP
|
0.12
|
|
0.67
|
|
||
(Income) loss from discontinued operations, net of tax
|
—
|
|
(0.01
|
)
|
||
Income tax (benefit) expense
|
(1.19
|
)
|
0.15
|
|
||
Amortization of purchased intangible assets
|
0.13
|
|
0.21
|
|
||
Stock-based compensation
|
0.07
|
|
0.06
|
|
||
Acquisition and disposition related expenses
|
0.03
|
|
0.10
|
|
||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
0.07
|
|
||
Loss on FFF put and call rights
|
0.02
|
|
0.12
|
|
||
Other expense
|
0.04
|
|
—
|
|
||
Impact of corporation taxes (a)
|
(0.22
|
)
|
(0.48
|
)
|
||
Impact of dilutive shares (b)
|
(0.13
|
)
|
(0.68
|
)
|
||
Non-GAAP Adjusted Earnings Per Share
|
$
|
0.57
|
|
$
|
0.68
|
|
(a)
|
Reflects income tax expense at an estimated effective income tax rate of 24% of non-GAAP adjusted net income before income taxes for the three months ended September 30, 2020 and 26% of non-GAAP adjusted income before income taxes for the three months ended September 30, 2019.
|
(b)
|
Reflects impact of dilutive shares on a non-GAAP basis, 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
|
2020
|
2019
|
Change
|
|||||||
Net revenue:
|
|
|
|
|
||||||
Net administrative fees
|
$
|
132,645
|
|
$
|
172,403
|
|
$
|
(39,758
|
)
|
(23)%
|
Other services and support
|
5,592
|
|
2,560
|
|
3,032
|
|
118%
|
|||
Services
|
138,237
|
|
174,963
|
|
(36,726
|
)
|
(21)%
|
|||
Products
|
115,415
|
|
48,121
|
|
67,294
|
|
140%
|
|||
Net revenue
|
253,652
|
|
223,084
|
|
30,568
|
|
14%
|
|||
Cost of revenue:
|
|
|
|
|
|
|||||
Services
|
734
|
|
407
|
|
327
|
|
nm
|
|||
Products
|
113,428
|
|
43,475
|
|
69,953
|
|
161%
|
|||
Cost of revenue
|
114,162
|
|
43,882
|
|
70,280
|
|
160%
|
|||
Gross profit
|
139,490
|
|
179,202
|
|
(39,712
|
)
|
(22)%
|
|||
Operating expenses:
|
|
—
|
|
|
|
|
||||
Selling, general and administrative
|
44,424
|
|
36,067
|
|
8,357
|
|
23%
|
|||
Research and development
|
18
|
|
—
|
|
18
|
|
—%
|
|||
Amortization of purchased intangible assets
|
8,000
|
|
4,097
|
|
3,903
|
|
95%
|
|||
Operating expenses
|
52,442
|
|
40,164
|
|
12,278
|
|
31%
|
|||
Operating income
|
87,048
|
|
139,038
|
|
(51,990
|
)
|
(37)%
|
|||
Depreciation and amortization
|
802
|
|
728
|
|
|
|
|
|||
Amortization of purchased intangible assets
|
8,000
|
|
4,097
|
|
|
|
|
|||
Acquisition and disposition related expenses
|
884
|
|
2,475
|
|
|
|
|
|||
Equity in net income of unconsolidated affiliates
|
5,891
|
|
3,573
|
|
|
|
|
|||
Other expense
|
24
|
|
—
|
|
|
|
|
|||
Segment Adjusted EBITDA
|
$
|
102,649
|
|
$
|
149,911
|
|
$
|
(47,262
|
)
|
(32)%
|
|
Three Months Ended September 30,
|
|
|
|||||||
Performance Services
|
2020
|
2019
|
Change
|
|||||||
Net revenue:
|
|
|
|
|
||||||
Other services and support
|
$
|
93,235
|
|
$
|
79,326
|
|
$
|
13,909
|
|
18%
|
Net revenue
|
93,235
|
|
79,326
|
|
13,909
|
|
18%
|
|||
Cost of revenue:
|
|
|
|
|
|
|||||
Services
|
38,016
|
|
47,129
|
|
(9,113
|
)
|
(19)%
|
|||
Cost of revenue
|
38,016
|
|
47,129
|
|
(9,113
|
)
|
(19)%
|
|||
Gross profit
|
55,219
|
|
32,197
|
|
23,022
|
|
72%
|
|||
Operating expenses:
|
|
|
|
|
|
|||||
Selling, general and administrative
|
34,159
|
|
36,844
|
|
(2,685
|
)
|
(7)%
|
|||
Research and development
|
558
|
|
374
|
|
184
|
|
49%
|
|||
Amortization of purchased intangible assets
|
5,204
|
|
8,947
|
|
(3,743
|
)
|
(42)%
|
|||
Operating expenses
|
39,921
|
|
46,165
|
|
(6,244
|
)
|
(14)%
|
|||
Operating income (loss)
|
15,298
|
|
(13,968
|
)
|
29,266
|
|
(210)%
|
|||
Depreciation and amortization
|
14,553
|
|
21,673
|
|
|
|
|
|||
Amortization of purchased intangible assets
|
5,204
|
|
8,947
|
|
|
|
|
|||
Acquisition related expenses
|
1,961
|
|
3,666
|
|
|
|
|
|||
Equity in net income of unconsolidated affiliates
|
36
|
|
34
|
|
|
|
|
|||
Other expense
|
64
|
|
24
|
|
|
|
|
|||
Segment Adjusted EBITDA
|
$
|
37,116
|
|
$
|
20,376
|
|
$
|
16,740
|
|
82%
|
|
Three Months Ended September 30,
|
|
|
|||||||
Corporate
|
2020
|
2019
|
Change
|
|||||||
Operating expenses:
|
|
|
|
|
||||||
Selling, general and administrative
|
$
|
45,371
|
|
$
|
41,018
|
|
$
|
4,353
|
|
11%
|
Research and development
|
—
|
|
5
|
|
(5
|
)
|
nm
|
|||
Operating expenses
|
45,371
|
|
41,023
|
|
4,348
|
|
11%
|
|||
Operating loss
|
(45,371
|
)
|
(41,023
|
)
|
(4,348
|
)
|
11%
|
|||
Depreciation and amortization
|
2,119
|
|
2,134
|
|
|
|
|
|||
Stock-based compensation
|
7,375
|
|
3,852
|
|
|
|
|
|||
Remeasurement of tax receivable agreement liabilities
|
—
|
|
4,674
|
|
|
|
|
|||
Deferred compensation plan income
|
2,907
|
|
241
|
|
|
|
|
|||
Other income
|
3,948
|
|
91
|
|
|
|
|
|||
Adjusted EBITDA
|
$
|
(29,022
|
)
|
$
|
(30,031
|
)
|
$
|
1,009
|
|
(3)%
|
•
|
We have experienced and may continue to experience demand uncertainty from both significant increases in demand for PPE, drugs and other products related to the treatment of COVID-19 and decreases in demand for non-COVID-19 related products.
|
•
|
Our GPO member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities.
|
•
|
The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs.
|
•
|
We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us.
|
•
|
The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.
|
•
|
In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us and our members and suppliers.
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
30,782
|
|
$
|
96,079
|
|
Investing activities
|
(24,953
|
)
|
(28,266
|
)
|
||
Financing activities
|
15,283
|
|
(94,820
|
)
|
||
Operating activities from discontinued operations
|
—
|
|
11,196
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
21,112
|
|
$
|
(15,811
|
)
|
|
Three Months Ended September 30,
|
|||||
|
2020
|
2019
|
||||
Net cash provided by operating activities from continuing operations
|
$
|
30,782
|
|
$
|
96,079
|
|
Purchases of property and equipment
|
(24,982
|
)
|
(21,983
|
)
|
||
Distributions to limited partners of Premier LP (a)
|
(9,949
|
)
|
(13,202
|
)
|
||
Payments to limited partners of Premier LP related to tax receivable agreements (a)
|
(24,218
|
)
|
(17,425
|
)
|
||
Non-GAAP Free Cash Flow
|
$
|
(28,367
|
)
|
$
|
43,469
|
|
Exhibit No.
|
|
Description
|
3.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101
|
|
Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.*
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.*
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.*
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
|
104
|
|
The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (included in Exhibit 101).*
|
|
|
|
|
|
PREMIER, INC.
|
|
|
|
|
|
|
Date:
|
November 2, 2020
|
|
By:
|
|
/s/ Craig S. McKasson
|
|
|
|
Name:
|
|
Craig S. McKasson
|
|
|
|
Title:
|
|
Chief Administrative and 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
|
|
|
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
|
|
|
Chief Administrative and Financial Officer and Senior Vice President
|
|
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
|
|
|
Chief Executive Officer
|
|
|
|
|
|
November 2, 2020
|
|
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
|
|
|
Chief Administrative and Financial Officer and Senior Vice President
|
|
|
|
|
|
November 2, 2020
|