UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________________________________________

FORM 10-Q

__________________________________________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36092

__________________________________________________________________________________________

Premier, Inc.

(Exact name of registrant as specified in its charter)

___________________________________________________________________________________________


Delaware		35-2477140
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13034 Ballantyne Corporate Place
Charlotte,	North Carolina	28277
(Address of principal executive offices)		(Zip Code)

(704) 357-0022

(Registrant’s telephone number, including area code)

__________________________________________________________________________________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 Par Value	PINC	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 29, 2021,~~January 27, 2022, there were ~~122,269,491~~119,082,893 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		6
Item 1.	Financial Statements	6
	Condensed Consolidated Balance Sheets ~~as of~~ ~~March 31, 2021~~ ~~and~~ ~~June 30, 2020~~(Unaudited)	6
	Condensed Consolidated Statements of Income and Comprehensive Income ~~for the~~ ~~three and nine months ended March 31, 2021~~ ~~and~~ ~~2020~~(Unaudited)	8
	Condensed Consolidated Statements of Stockholders' Equity ~~(Deficit) for the~~ ~~nine months ended March 31, 2021~~ ~~and~~ ~~2020~~(Unaudited)	109
	Condensed Consolidated Statements of Cash Flows ~~for the~~ ~~nine months ended March 31, 2021~~ ~~and~~ ~~2020~~(Unaudited)	1211
	Notes to Condensed Consolidated Financial Statements (Unaudited)	1312
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3526
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5846
Item 4.	Controls and Procedures	5847
PART II. OTHER INFORMATION		5948
Item 1.	Legal Proceedings	5948
Item 1A.	Risk Factors	5948
~~Item 5.~~	~~Other Information~~Item 2.	59Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6.	Exhibits	6049
	Signatures	6150

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this ~~Quarterly Report~~quarterly report for the six months ended December 31, 2021 for Premier, Inc. (this “Quarterly Report”) that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

•the impact of the continuing financial and operational uncertainty due to the coronavirus pandemic or other ~~pandemics;~~pandemics and associated supply chain disruptions and inflation;

•competition which could limit our ability to maintain or expand market share within our industry;

•consolidation in the healthcare industry;

•potential delays recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;

•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;

•the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services develop;

•the dependency of our members on payments from third-party payers;

•our reliance on administrative fees that we receive from GPO suppliers;

•our ability to maintain third-party provider and strategic alliances or enter into new alliances;

•our ability to timely offer new and innovative products and services;

•the portion of revenues we receive from our largest members;

•risks and expenses related to future acquisition opportunities and integration of acquisitions;

•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;

•potential litigation;

•our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;

•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;

•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;

•our ability to use, disclose, de-identify or license data and to integrate third-party technologies;

•our use of “open source” software;

•our dependency on contract manufacturing facilities located in various parts of the world;

•inventory risk we face in the event of a potential material price decline for the personal protective equipment or other products we may have purchased at elevated market prices or fixed prices;

•our ability to attract, hire, integrate and retain key personnel;

•adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;

•potential sales and use tax liability in certain jurisdictions;

•changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows and profitability;

•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;

•fluctuation of our quarterly cash flows, revenues and results of operations;

•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;~~2010 and pandemic-related public health and reimbursement measures;

•our compliance with complex international, federal and state laws governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;

•interpretation and enforcement of current or future antitrust laws and regulations;

•compliance with complex federal, state and ~~state~~international privacy, security and breach notification laws;

•compliance with current or future laws, rules or regulations relating to information blocking provisions of the 21st Century Cures Act issued by the Office of the National Coordinator for Health Information Technology (the “ONC Rules”) that may cause our certified Health Information Technology products to be regulated by the ONC Rules;

•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;

•~~our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. (“Premier LP”);~~

•~~different interests among our members or between us and our members;~~

•~~the ability of our members to exercise significant influence over us;~~

•~~the terms of agreements between us and our members;~~

•the impact of payments required under notes payable to former limited partners related to the early termination of the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our August 2020 Restructuring 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;~~those notes payable;

•provisions in our certificate of incorporation and bylaws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;

•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;

•the impact ~~to us or~~on the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;

•the number of shares of Class A common stock repurchased by us pursuant to any then existing Class A common stock repurchase program and the timing of any such repurchases;

•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~~Restructuring and the potential impact of such sales; and

•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~~2021 (the ~~“2020~~“2021 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).

More information on potential factors that could affect our financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available on our website at http://investors.premierinc.com/ (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

Certain Definitions

For periods prior to August 11, 2020, references ~~in this Quarterly Report~~ to “member owners” are references to ~~the~~ participants in our GPO ~~program~~programs that were also limited partners of Premier LPHealthcare Alliance L.P. (“Premier LP”), sometimes referred to as “LPs,” that held Class B common units of Premier LP and shares of our Class B common stock.

For periods on or after August 11, 2020, references ~~in this Quarterly Report~~ to “members” are references to ~~healthcare provider participants~~health systems and other customers that participate in our GPO ~~program~~programs, or utilize any of our programs or services, some of which were formerly referred to as member owners.

References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure, through an exchange under which member owners converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our Class A common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our 2021 Annual Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


		March 31, 2021		June 30, 2020			December 31, 2021		June 30, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	132,584	$	99,304	Cash and cash equivalents	$	86,161	$	129,141
Accounts receivable (net of $2,137 and $731 allowance for doubtful accounts, respectively)		188,519		135,063
Contract assets		259,331		215,660
Accounts receivable (net of $1,312 and $1,174 allowance for credit losses, respectively)						Accounts receivable (net of $1,312 and $1,174 allowance for credit losses, respectively)	137,902		142,557
Contract assets (net of $1,248 and $1,110 allowance for credit losses, respectively)						Contract assets (net of $1,248 and $1,110 allowance for credit losses, respectively)	289,136		266,173
Inventory	Inventory	225,231		70,997		Inventory	148,415		176,376
Prepaid expenses and other current assets	Prepaid expenses and other current assets	83,527		97,338		Prepaid expenses and other current assets	66,499		68,049
Total current assets	Total current assets	889,192		618,362		Total current assets	728,113		782,296
Property and equipment (net of $503,189 and $452,609 accumulated depreciation, respectively)		223,689		206,728
Intangible assets (net of $279,023 and $245,160 accumulated amortization, respectively)		407,531		417,422
Property and equipment (net of $559,269 and $518,332 accumulated depreciation, respectively)						Property and equipment (net of $559,269 and $518,332 accumulated depreciation, respectively)	225,470		224,271
Intangible assets (net of $311,650 and $289,912 accumulated amortization, respectively)						Intangible assets (net of $311,650 and $289,912 accumulated amortization, respectively)	374,904		396,642
Goodwill	Goodwill	999,777		941,965		Goodwill	999,913		999,913
Deferred income tax assets	Deferred income tax assets	821,439		430,025		Deferred income tax assets	761,934		781,824
Deferred compensation plan assets	Deferred compensation plan assets	55,952		49,175		Deferred compensation plan assets	57,172		59,581
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	153,747		133,335		Investments in unconsolidated affiliates	192,398		153,224
Operating lease right-of-use assets	Operating lease right-of-use assets	50,556		57,823		Operating lease right-of-use assets	44,122		48,199
Other assets	Other assets	80,082		93,680		Other assets	67,436		76,948
Total assets	Total assets	$	3,681,965	$	2,948,515	Total assets	$	3,451,462	$	3,522,898

Liabilities, redeemable limited partners' capital and stockholders' equity
Liabilities and stockholders' equity						Liabilities and stockholders' equity
Accounts payable	Accounts payable	$	100,348	$	54,841	Accounts payable	$	70,510	$	85,413
Accrued expenses	Accrued expenses	64,255		53,500		Accrued expenses	53,728		48,144
Revenue share obligations	Revenue share obligations	216,054		145,777		Revenue share obligations	230,109		226,883
Limited partners' distribution payable		0		8,012
Accrued compensation and benefits	Accrued compensation and benefits	80,234		73,262		Accrued compensation and benefits	62,815		100,713
Deferred revenue	Deferred revenue	35,933		35,446		Deferred revenue	33,367		34,058
Current portion of tax receivable agreements		0		13,689
Current portion of notes payable to members		95,483		0
Current portion of notes payable to former limited partners						Current portion of notes payable to former limited partners	96,877		95,948
Line of credit and current portion of long-term debt	Line of credit and current portion of long-term debt	203,964		79,560		Line of credit and current portion of long-term debt	128,005		78,295
Other liabilities		56,574		31,987
Other current liabilities						Other current liabilities	47,599		47,330
Total current liabilities	Total current liabilities	852,845		496,074		Total current liabilities	723,010		716,784
Long-term debt, less current portion	Long-term debt, less current portion	5,333		4,640		Long-term debt, less current portion	2,745		5,333
Tax receivable agreements, less current portion		0		279,981
Notes payable to members, less current portion		323,156		0
Notes payable to former limited partners, less current portion						Notes payable to former limited partners, less current portion	250,324		298,995
Deferred compensation plan obligations	Deferred compensation plan obligations	55,952		49,175		Deferred compensation plan obligations	57,172		59,581
Deferred tax liabilities		0		17,508

Deferred consideration, less current portion	Deferred consideration, less current portion	83,700		112,917		Deferred consideration, less current portion	57,444		56,809
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	45,654		52,990		Operating lease liabilities, less current portion	38,350		43,102
Other liabilities	Other liabilities	100,758		75,658		Other liabilities	43,615		112,401
Total liabilities	Total liabilities	1,467,398		1,088,943		Total liabilities	1,172,660		1,293,005

Commitments and contingencies (Note 16)		0
Redeemable limited partners' capital		0		1,720,309
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)	0		0

March 31, 2021 June 30, 2020
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,268,758 shares issued and outstanding at March 31, 2021 and 71,627,462 shares issued and outstanding at June 30, 2020 1,223 716
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively 0 0
Additional paid-in-capital 2,046,836 138,547
Retained earnings 166,508 0
Total stockholders' equity 2,214,567 139,263
Total liabilities, redeemable limited partners' capital and stockholders' equity $ 3,681,965 $ 2,948,515


	December 31, 2021		June 30, 2021
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 124,403,702 shares issued and 119,935,420 shares outstanding at December 31, 2021 and 122,533,051 shares issued and outstanding at June 30, 2021	1,244		1,225
Treasury stock, at cost; 4,468,282 and 0 shares at December 31, 2021 and June 30, 2021, respectively	(176,024)		—
Additional paid-in capital	2,135,687		2,059,194
Retained earnings	317,896		169,474
Accumulated other comprehensive loss	(1)		—
Total stockholders' equity	2,278,802		2,229,893
Total liabilities and stockholders' equity	$	3,451,462	$	3,522,898

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except per share data)

Three Months Ended Nine Months Ended
March 31, March 31,
2021 2020 2021 2020
Net revenue:
Net administrative fees $ 146,553 $ 174,049 $ 424,537 $ 518,566
Other services and support 107,375 99,591 304,020 270,929
Services 253,928 273,640 728,557 789,495
Products 215,995 61,183 511,080 167,344
Net revenue 469,923 334,823 1,239,637 956,839
Cost of revenue:
Services 46,980 49,007 125,852 143,965
Products 211,136 54,121 496,286 150,415
Cost of revenue 258,116 103,128 622,138 294,380
Gross profit 211,807 231,695 617,499 662,459
Operating expenses:
Selling, general and administrative 134,502 115,289 388,453 315,311
Research and development 715 628 2,013 1,808
Amortization of purchased intangible assets 10,400 13,966 33,864 38,948
Operating expenses 145,617 129,883 424,330 356,067
Operating income 66,190 101,812 193,169 306,392
Equity in net income of unconsolidated affiliates 5,524 4,442 16,023 11,038
Interest and investment loss, net (3,225) (9,966) (8,742) (9,849)
(Loss) gain on FFF put and call rights (5,195) (13,906) (21,621) 8,477
Other income (expense), net 1,594 (5,005) 10,167 (1,996)
Other (expense) income, net (1,302) (24,435) (4,173) 7,670
Income before income taxes 64,888 77,377 188,996 314,062
Income tax expense (benefit) 13,444 4,165 (88,037) 78,336
Net income from continuing operations 51,444 73,212 277,033 235,726
Income from discontinued operations, net of tax 0 5 0 1,009
Net income 51,444 73,217 277,033 236,735
Net income from continuing operations attributable to non-controlling interest (3,123) (35,055) (15,903) (132,189)
Net income from discontinued operations attributable to non-controlling interest 0 (3) 0 (480)
Net income attributable to non-controlling interest (3,123) (35,058) (15,903) (132,669)
Adjustment of redeemable limited partners' capital to redemption amount 0 302,569 (26,685) 516,725
Net income attributable to stockholders $ 48,321 $ 340,728 $ 234,445 $ 620,791
Comprehensive income:
Net income 51,444 73,217 277,033 236,735
Less: comprehensive income attributable to non-controlling interest (3,123) (35,058) (15,903) (132,669)
Comprehensive income attributable to stockholders $ 48,321 $ 38,159 $ 261,130 $ 104,066
Weighted average shares outstanding:
Basic 122,254 69,451 114,596 65,582
Diluted 123,116 122,470 115,365 124,030

Three Months Ended Nine Months Ended
March 31, March 31,
2021 2020 2021 2020
Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders $ 0.40 $ 4.91 $ 2.05 $ 9.47
Diluted earnings per share attributable to stockholders $ 0.39 $ 0.54 $ 2.03 $ 1.66


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Net revenue:
Net administrative fees	$	150,403	$	145,339	$	299,865	$	277,984
Other services and support	117,046		97,818		214,301		196,645
Services	267,449		243,157		514,166		474,629
Products	111,766		179,670		230,196		295,085
Net revenue	379,215		422,827		744,362		769,714
Cost of revenue:
Services	45,782		40,122		89,591		78,872
Products	96,933		171,722		206,295		285,150
Cost of revenue	142,715		211,844		295,886		364,022
Gross profit	236,500		210,983		448,476		405,692
Operating expenses:
Selling, general and administrative	146,840		129,997		274,654		253,951
Research and development	846		722		1,840		1,298
Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Operating expenses	158,536		140,979		298,233		278,713
Operating income	77,964		70,004		150,243		126,979
Equity in net income of unconsolidated affiliates	6,116		4,572		13,174		10,499
Interest expense, net	(2,873)		(3,398)		(5,661)		(5,517)
(Loss) gain on FFF Put and Call Rights	—		(14,507)		64,110		(16,426)
Other income, net	2,392		4,890		2,072		8,573
Other income (expense), net	5,635		(8,443)		73,695		(2,871)
Income before income taxes	83,599		61,561		223,938		124,108
Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Net income	77,232		44,904		198,538		202,432
Net income attributable to non-controlling interest	(1,687)		(935)		(989)		(12,780)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		(26,685)
Net income attributable to stockholders	$	75,545	$	43,969	$	197,549	$	162,967

Comprehensive income:
Net income	$	77,232	$	44,904	$	198,538	$	202,432
Comprehensive income attributable to non-controlling interest	(1,687)		(935)		(989)		(12,780)
Foreign currency translation loss	(1)		—		(1)		—
Comprehensive income attributable to stockholders	$	75,544	$	43,969	$	197,548	$	189,652

Weighted average shares outstanding:
Basic	121,181		122,127		122,063		110,851
Diluted	122,473		122,919		123,523		111,573

Earnings per share attributable to stockholders:
Basic	$	0.62	$	0.36	$	1.62	$	1.47
Diluted	$	0.62	$	0.36	$	1.61	$	1.46

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Stockholders' Equity ~~(Deficit)~~

~~Nine~~Six Months Ended ~~March~~December 31, 2021 and 2020

(Unaudited)

(In thousands)

Class A
Common Stock Class B
Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings / (Accumulated Deficit) Total Stockholders' Equity
Shares Amount Shares Amount Shares Amount
Balance at June 30, 2020 71,627 $ 716 50,213 $ 0 0 $ 0 $ 138,547 $ 0 $ 139,263
Balance at July 1, 2020 71,627 716 50,213 0 0 0 138,547 0 139,263
Impact of change in accounting principle — — — — — — — (1,228) (1,228)
Adjusted balance at July 1, 2020 71,627 716 50,213 0 0 0 138,547 (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 — — — — — — — (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) — 0
Early Termination Payments to members — — — — — — (438,967) — (438,967)
Dividends ($0.19 per share) — — — — — — — (23,381) (23,381)
Balance at September 30, 2020 122,081 1,221 0 0 0 0 2,012,047 121,313 2,134,581
Issuance of Class A common stock under equity incentive plan 102 1 — — — — 1,770 — 1,771
Issuance of Class A common stock under employee stock purchase plan 45 0 — — — — 1,597 — 1,597
Stock-based compensation expense — — — — — — 7,316 — 7,316
Repurchase of vested restricted units for employee tax-withholding — — — — — — (28) — (28)
Net income — — — — — — — 44,904 44,904
Net income attributable to non-controlling interest — — — — — — 935 (935) 0
Dividends ($0.19 per share) — — — — — — — (23,374) (23,374)
Adjustment in additional paid-in capital related to consolidated investment — — — — — — 318 (318) 0
Capital Contributions — — — — — — 1,959 — 1,959
Non-controlling interest in consolidated investments — — — — — — 3,690 — 3,690
Balance at December 31, 2020 122,228 1,222 0 0 0 0 2,029,604 141,590 2,172,416
Issuance of Class A common stock under equity incentive plan 40 1 — — — — 1,101 — 1,102
Stock-based compensation expense — — — — — — 13,056 — 13,056
Repurchase of vested restricted units for employee tax-withholding — — — — — — (48) — (48)
Net income — — — — — — — 51,444 51,444
Net income attributable to non-controlling interest — — — — — — 3,123 (3,123) 0
Dividends ($0.19 per share) — — — — — — — (23,403) (23,403)
Balance at March 31, 2021 122,268 $ 1,223 0 $ 0 0 $ 0 $ 2,046,836 $ 166,508 $ 2,214,567


	Class A Common Stock			Class B Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at June 30, 2021	122,533	$	1,225	—	$	—	—	$	—	$	2,059,194	$	—	$	169,474	$	2,229,893
Issuance of Class A common stock under equity incentive plan	1,239	13		—	—		—	—		22,851		—		—		22,864
Treasury stock	(1,091)	—		—	—		1,091	(42,628)		—		—		—		(42,628)
Stock-based compensation expense	—	—		—	—		—	—		7,554		—		—		7,554
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		—	—		(9,171)		—		—		(9,171)
Net income	—	—		—	—		—	—		—		—		121,306		121,306
Net loss attributable to non-controlling interest	—	—		—	—		—	—		(698)		—		698		—
Dividends ($0.20 per share)	—	—		—	—		—	—		—		—		(24,877)		(24,877)
Non-controlling interest related to acquisition	—	—		—	—		—	—		23,145		—		—		23,145
Balance at September 30, 2021	122,681	1,238		—	—		1,091	(42,628)		2,102,875		—		266,601		2,328,086
Issuance of Class A common stock under equity incentive plan	579	5		—	—		—	—		14,398		—		—		14,403
Issuance of Class A common stock under employee stock purchase plan	52	1		—	—		—	—		1,976		—		—		1,977
Treasury stock	(3,377)	—		—	—		3,377	(133,396)		—		—		—		(133,396)
Stock-based compensation expense	—	—		—	—		—	—		16,234		—		—		16,234
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		—	—		(1,495)		—		—		(1,495)
Net income	—	—		—	—		—	—		—		—		77,232		77,232
Net income attributable to non-controlling interest	—	—		—	—		—	—		1,687		—		(1,687)		—
Change in ownership of consolidated entity	—	—		—	—		—	—		12		—		—		12
Dividends ($0.20 per share)	—	—		—	—		—	—		—				(24,250)		(24,250)






Foreign currency translation loss	—	—		—	—		—	—		—		(1)		—		(1)
Balance at December 31, 2021	119,935	$	1,244	—	$	—	4,468	$	(176,024)	$	2,135,687	$	(1)	$	317,896	$	2,278,802

109

Class A
Common Stock Class B
Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)
Shares Amount Shares Amount Shares Amount
Balance at June 30, 2019 61,938 $ 644 64,548 $ 0 2,419 $ (87,220) $ 0 $ (775,674) $ (862,250)
Balance at July 1, 2019 61,938 644 64,548 0 2,419 (87,220) 0 (775,674) (862,250)
Impact of change in accounting principle — — — — — — — (899) (899)
Adjusted balance at July 1, 2019 61,938 644 64,548 0 2,419 (87,220) 0 (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) — — — — — 0
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 0 2,163 (75,611) 0 (39,894) (114,856)
Exchange of Class B units for Class A common stock by member owners 6,873 19 (6,873) — (5,031) 164,810 59,117 — 223,946
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation — — — — — — 1,103 — 1,103
Issuance of Class A common stock under equity incentive plan 146 1 — — — — 4,243 — 4,244
Issuance of Class A common stock under employee stock purchase plan 40 0 — — — — 1,540 — 1,540
Treasury stock (3,549) — — — 3,549 (112,917) — — (112,917)
Stock-based compensation expense — — — — — — 7,775 — 7,775
Repurchase of vested restricted units for employee tax-withholding — — — — — — (47) — (47)
Net income — — — — — — — 92,189 92,189
Net income attributable to non-controlling interest in Premier LP — — — — — — — (55,704) (55,704)
Adjustment of redeemable limited partner's capital to redemption amount — — — — — — (73,731) (406,422) (480,153)
Balance at December 31, 2019 66,189 669 55,582 0 681 (23,718) 0 (409,831) (432,880)
Exchange of Class B units for Class A common stock by member owners 4,866 41 (4,866) — (723) 25,245 143,908 — 169,194
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation — — — — — — 58,193 — 58,193
Issuance of Class A common stock under equity incentive plan 58 1 — — — — 308 — 309
Treasury stock (42) — — — 42 (1,527) — — (1,527)
Stock-based compensation expense — — — — — — 7,568 — 7,568
Repurchase of vested restricted units for employee tax-withholding — — — — — — (123) — (123)
Net income — — — — — — — 73,217 73,217
Net income attributable to non-controlling interest in Premier LP — — — — — — — (35,058) (35,058)
Adjustment of redeemable limited partner's capital to redemption amount — — — — — — (69,103) 371,672 302,569
Balance at March 31, 2020 71,071 $ 711 50,716 $ 0 0 $ 0 $ 140,751 $ 0 $ 141,462


	Class A Common Stock			Class B Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		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	—	—		—	—		—	—		—		157,528		157,528
Net income attributable to non-controlling interest	—	—		—	—		—	—		—		(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 members	—	—		—	—		—	—		(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		98,156		2,111,424
Issuance of Class A common stock under equity incentive plan	102	1		—	—		—	—		1,770		—		1,771
Issuance of Class A common stock under employee stock purchase plan	45	—		—	—		—	—		1,597		—		1,597
Stock-based compensation expense	—	—		—	—		—	—		7,316		—		7,316
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		—	—		(28)		—		(28)
Net income	—	—		—	—		—	—		—		44,904		44,904
Net income attributable to non-controlling interest	—	—		—	—		—	—		935		(935)		—
Dividends ($0.19 per share)	—	—		—	—		—	—		—		(23,374)		(23,374)
Adjustment in additional paid-in capital related to consolidated investment	—	—		—	—		—	—		318		(318)		—
Capital contributions	—	—		—	—		—	—		1,959		—		1,959
Non-controlling interest in consolidated investments	—	—		—	—		—	—		3,690		—		3,690
Balance at December 31, 2020	122,228	$	1,222	—	$	—	—	$	—	$	2,029,604	$	118,433	$	2,149,259

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended December 31,
	2021		2020
Operating activities
Net income	$	198,538	$	202,432
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	63,205		60,031
Equity in net income of unconsolidated affiliates	(13,174)		(10,499)
Deferred income taxes	19,890		(104,378)
Stock-based compensation	23,788		14,545
(Gain) loss on FFF call/put rights	(64,110)		16,426
Other	930		323
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets	50,164		(127,764)
Contract assets	(22,963)		(23,541)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	(58,741)		88,602
Net cash provided by operating activities	197,527		116,177
Investing activities
Purchases of property and equipment	(42,660)		(44,864)
Acquisition of businesses and equity method investments, net of cash acquired	(26,000)		(791)
Other	—		(1,228)
Net cash used in investing activities	(68,660)		(46,883)
Financing activities
Payments made on notes payable	(50,621)		(3,684)
Proceeds from credit facility	175,000		125,000
Payments on credit facility	(125,000)		(100,000)
Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Cash dividends paid	(49,044)		(46,396)
Repurchase of Class A common stock (held as treasury stock)	(173,916)		—

Proceeds from exercise of stock options	37,267		2,416
Other	14,468		(2,754)
Net cash used in financing activities	(171,846)		(59,585)
Effect of exchange rate changes on cash flows	(1)		—
Net increase in cash and cash equivalents	(42,980)		9,709
Cash and cash equivalents at beginning of period	129,141		99,304
Cash and cash equivalents at end of period	$	86,161	$	109,013

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

~~(In thousands)~~
Nine Months Ended March 31,
2021 2020
Operating activities
Net income $ 277,033 $ 236,735
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax 0 (1,009)
Depreciation and amortization 89,768 114,638
Equity in net income of unconsolidated affiliates (16,023) (11,038)
Deferred income taxes (123,307) 60,394
Stock-based compensation 27,601 19,048
Remeasurement of tax receivable agreement liabilities 0 (24,584)
Impairment of held to maturity investments 0 8,500
Loss (gain) on FFF put and call rights 21,621 (8,477)
Other 537 2,078
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets (181,263) (95,953)
Contract assets (43,733) (28,909)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities 140,131 (23,341)
Net cash provided by operating activities from continuing operations 192,365 248,082
Net cash provided by operating activities from discontinued operations 0 9,338
Net cash provided by operating activities 192,365 257,420
Investing activities
Purchases of property and equipment (66,911) (69,326)
Acquisition of businesses, net of cash acquired (81,152) (96,346)
Investments in unconsolidated affiliates 0 (10,165)
Other (1,228) 3,883
Net cash used in investing activities (149,291) (171,954)
Financing activities
Payments made on notes payable (31,692) (2,046)
Proceeds from credit facility 225,000 375,000
Payments on credit facility (100,000) (150,000)
Distributions to limited partners of Premier LP (9,949) (39,590)
Payments to limited partners of Premier LP related to tax receivable agreements (24,218) (17,425)
Cash dividends paid (69,647) 0
Repurchase of Class A common stock (held as treasury stock) 0 (150,093)
Other 712 (633)
Net cash (used in) provided by financing activities (9,794) 15,213
Net increase in cash and cash equivalents 33,280 100,679
Cash and cash equivalents at beginning of year 99,304 141,055
Cash and cash equivalents at end of period $ 132,584 $ 241,734

~~See accompanying notes to the unaudited condensed consolidated financial statements.~~

~~PREMIER, INC.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1) ORGANIZATION ~~AND BASIS OF PRESENTATION~~

Organization

Premier, Inc. (“Premier” or the “Company”) is a publicly held, for-profit Delaware corporation located in the United States. The Company is a holding company with no material business operations of its own. ~~The~~Following an internal legal entity reorganization of the Company’s corporate subsidiaries in December 2021 to simplify the Company’s subsidiary reporting structure (the “Subsidiary Reorganization”), the Company’s primary asset is its equity interest in its wholly owned subsidiary Premier ~~Services, LLC,~~Healthcare Solutions, Inc., a Delaware ~~limited liability company~~corporation (“~~Premier GP”~~PHSI”). ~~Premier GP is the sole general partner of Premier Healthcare Alliance, L.P. (“Premier LP”), a California limited partnership.~~ The Company conducts substantially all of its business operations through ~~Premier LP~~PHSI and its other consolidated ~~subsidiaries.~~subsidiaries, including Premier LP. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians and other healthcare providers to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. The Company also provides services to ~~non-healthcare businesses.~~other businesses including food service, schools and universities.

The Company’s business model and solutions are designed to provide its members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices to help the Company’s ~~member organizations~~members and other customers succeed in their transformation to higher quality and more cost-effective healthcare.

The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through 2 business segments: Supply Chain Services and Performance Services. See Note 1715 - Segments for further information related to the Company’s reportable business segments. The Supply Chain Services segment includes one of the largest healthcare group purchasing organization (“GPO”) programs in the United States, supply chain co-management and direct sourcing activities. The Performance Services segment ~~through its development, integration~~consists of 3 sub-brands: PINC AITM, the Company’s technology and ~~delivery of technology~~services platform with ~~wrap-around service~~ offerings ~~includes one of the largest~~that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting services for clinical and ~~cost analytics~~operational design, and ~~consulting services businesses~~workflow solutions to hardwire sustainable change in the ~~United States focused on healthcare providers. The Company is also expanding its capabilities to more fully address and coordinate care improvement and standardization in the employer, payor and~~provider, life sciences ~~markets. The Company’s software as a service (“SaaS”)~~ and licensed-based clinical analytics products utilize the Company’s comprehensive data set to provide actionable intelligence to its members and other customers, enabling them to benchmark, analyze and identify areas of improvement across the 3 main categories of cost management, quality and safety, and value-based care. While leveraging these tools, the Company also combines its consulting services and technology-enabled performance improvement collaboratives to provide a more comprehensive and holistic customer value proposition and overall experience. The Performance Services segment also includespayer markets; Contigo Health®, the Company’s direct-to-employer ~~initiative~~business which provides third party administrator services and ~~insurance~~ management ~~services.~~of health benefit programs; and RemitraTM, the Company’s digital invoicing and payables business.

~~Acquisitions and Divestitures~~

~~Acquisition of Invoice Delivery Services, LP Assets~~December 2021 Subsidiary Reorganization

On ~~March~~December 1, 2021, the Company ~~through a newly formed consolidated subsidiary, Premier IDS, LLC (“Premier IDS”), acquired substantially all~~completed the ~~assets and assumed certain liabilities~~Subsidiary Reorganization, an internal legal entity reorganization of ~~Invoice Delivery Services, LP (“IDS”) for an adjusted purchase price of $80.4 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under~~ the Company’s ~~Credit Facility (as defined below).~~

IDS offers digitization technologies that convert paper and portable document format (“PDF”) invoices to an electronic format to automate, streamline and simplify accounts payable processes in healthcare. IDS’ solutions include thosecorporate subsidiaries for ~~electronic invoicing and tracking, as well as digital payments. IDS will be integrated within Premier under~~ the ~~brand name Remitra~~TM ~~and reported as part~~purpose of ~~the Performance Services segment. See Note 3 - Business Acquisitions for further information.~~

~~Company Structure and Restructuring~~

The Company, through Premier GP and Premier Services II, LLC, a Delaware limited liability company that is a wholly owned subsidiary of the Company and the sole limited partner of Premier LP, held a 100% interest in Premier LP at March 31, 2021. At June 30, 2020, the Company held a 59% sole general partner interest in Premier LP. At March 31, 2021 and June 30, 2020, members held a 0% and 41% limited partner interest in Premier LP, respectively. On July 31, 2020, after the resignation of 3 directors affiliated withsimplifying the Company’s ~~members,~~subsidiary reporting structure. Pursuant to the Board of Directors consisted of 15 (15) directors, comprised of 8 (8) independent directors, 6 (6) member-directors and the Company’s Chief Executive Officer, thus having a majority of independent directors on the Board of Directors. Since the member-directors no longer comprised a majority of the Board of Directors as of July 31, 2020, the limited partner’s redemption feature was under the control of the Company (not the holders of

Class B common units). As a result, $1.8 billion representing the fair value of redeemable limited partners’ capital at July 31, 2020 was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as a component of permanent equity.

On August 11, 2020, the Company entered into an Agreement and Plan of Merger dated as of August 11, 2020 (the “Merger Agreement”), by and among the Company, Premier LP and BridgeCo, LLC (“BridgeCo”), a wholly owned subsidiary ofSubsidiary Reorganization, (i) Premier Services, LLC ~~formed for the sole purpose of merging with and into~~(“Prior Premier ~~LP. Pursuant to the Merger Agreement, effective August 11, 2020, (i) BridgeCo~~GP”) merged with and into Premier, ~~LP,~~ with Premier LP being the surviving ~~entity (the “Merger”), and~~entity; (ii) ~~each~~Premier LP distributed 99% of the ~~issued and outstanding Class B common units~~equity interest of PHSI to Premier on a tax-free basis; (iii) Premier LP ~~was canceled and converted automatically into a right to receive 1 share~~distributed 1% of the ~~Company’s Class A common stock. In conjunction with~~equity interest of PHSI to Premier Services II, LLC (“Premier Services”); (iv) Premier Services distributed the ~~Merger, all~~1% of the ~~issued~~equity interest of PHSI to Premier; and ~~outstanding shares of Class B common stock of the Company beneficially held by the former limited partners of~~(v) Premier ~~LP (individually a “LP”~~contributed (a) its membership interest in Premier Services and collectively, the “LPs”) were canceled in accordance with the Company’s Certificate of Incorporation. The exchange agreement (“Exchange Agreement”), which allowed the Company to settle Class B common units submitted for exchange by LPs for cash, Class A common stock or a combination thereof at(b) its ~~discretion, was terminated in connection with the restructuring activity discussed above.~~

Furthermore, on August 10, 2020, the Company exercised its right to terminate the Tax Receivable Agreement (“TRA”). See Note 9 - Debt and Notes Payable and Note 14 - Income Taxes for further information.

~~Basis of Presentation and Consolidation~~

~~Basis of Presentation~~

At March 31, 2021, the Company was wholly owned by public investors, which included member owners that received shares of Class A common stock in connection with the aforementioned restructuring as well as previous exchanges of Class B common units and associated Class B common stock.

~~At June 30, 2020, the member owners’~~partnership interest in Premier LP was reflected as redeemable limited partners’ capital in the Company’s accompanying Condensed Consolidated Balance Sheets, and the limited partners’ proportionate share of income in Premier LP was reflected within net income attributable to ~~non-controlling interest and within comprehensive income attributable to non-controlling interest in the Company’s accompanying Condensed Consolidated Statements of Income and Comprehensive Income.~~

At June 30, 2020, public investors, which included member owners that received shares of Class A common stock in connection with previous exchanges of their Class B common units and associated Class B common shares, owned 59%PHSI. As a result of the ~~Company’s outstanding common stock~~Subsidiary Reorganization, (i) the Company conducts substantially all of its business operations through ~~their ownership~~PHSI and PHSI’s direct and indirect subsidiaries and (ii) PHSI became the sole general partner of ~~Class A common stock. The member owners owned 41% of the Company’s combined Class A and Class B common stock through their ownership of Class B common stock.~~Premier LP.

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, ~~including~~consisting of normal recurring ~~adjustments.~~adjustments unless otherwise disclosed. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the ~~2020~~2021 Annual Report.

1412

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 (in thousands):

Nine Months Ended March 31,
2021 2020
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 $ (516,725)
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners (2,437) (443,931)
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments 331 63,958
Net increase in deferred tax assets related to final exchange by member owners 284,852 0
Reclassification of redeemable limited partners' capital to additional paid in capital 1,754,607 0
Decrease in additional paid-in capital related to notes payable to members, net of discounts 438,967 0
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments 37,319 71,568
Increase in additional paid-in capital related to final exchange by member owners 517,526 0
Accrued dividend equivalents 513 0

~~Variable Interest Entities~~

At March 31, 2021, as a result of the aforementioned restructuring, Premier LP no longer meets the definition of a variable interest entity (“VIE”), as defined in Accounting Standards Codification (“ASC”) Topic 810. The results of operations of Premier LP are included in the condensed consolidated financial statements.

At June 30, 2020, Premier LP was a VIE as the limited partners did not have the ability to exercise a substantive removal right with respect to the general partner. The Company, through Premier GP, had the exclusive power and authority to manage the business and affairs of Premier LP, to make all decisions with respect to driving the economic performance of Premier LP, and had both an obligation to absorb losses and a right to receive benefits. As such, the Company was the primary beneficiary of the VIE and consolidated the operations of Premier LP under the Variable Interest Model.

~~The assets and liabilities of Premier LP at June 30, 2020, including assets and liabilities of discontinued operations, consisted of the following (in thousands):~~


	~~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~~

Net income attributable to Premier LP, including income and expense that has been classified as discontinued operations, during the three and nine months ended March 31, 2020 was as follows (in thousands):

Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020
Premier LP net income $ 84,185 $ 290,430

~~Premier LP’s cash flows, including cash flows attributable to discontinued operations, for the nine months ended March 31, 2020 consisted of the following (in thousands):~~


	~~Nine Months Ended March 31, 2020~~
~~Net cash provided by (used in):~~
~~Operating activities~~	$	~~252,566~~
~~Investing activities~~	~~(171,954)~~
~~Financing activities~~	~~24,790~~
~~Net increase in cash and cash equivalents~~	~~105,402~~
~~Cash and cash equivalents at beginning of year~~	~~131,210~~
~~Cash and cash equivalents at end of period~~	$	~~236,612~~


	Six Months Ended December 31,
	2021		2020
Supplementary non-cash investing and financing activities:
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	$	2,108	$	—
Non-cash additions to property and equipment	8		—
Accrued dividend equivalents	244		363
Increase in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease in stockholders' equity	—		26,685
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners	—		(2,437)
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments	—		331
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 former limited partners, net of discounts	—		438,967
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments	—		37,319
Increase in additional paid-in capital related to final exchange by member owners	—		517,526

Use of Estimates in the Preparation of Financial Statements

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including estimates for net administrative fees revenue, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for ~~doubtful accounts,~~credit losses, useful lives of property and equipment, stock-based compensation, deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, projected future cash flows used in the evaluation of asset impairments, values of put and call rights, values of earn-out liabilities and the allocation of purchase prices. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

(2) SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as described in the ~~2020~~2021 Annual Report, except as described below.

~~Accounts Receivable~~

Financial instruments, other than marketable securities, that subject the Company to potential concentrations of credit risk consist primarily of the Company's receivables. Receivables consist primarily of amounts due from hospital and healthcare system members for services and products. The Company maintains an allowance for expected credit losses. This allowance is an estimate and is regularly evaluated by the Company for adequacy by taking into consideration factors such as past experience, credit quality of the member and other customer base and age of the receivable balances, both individually and in the aggregate. As receivables are generally due within one year, changes to economic conditions are not expected to have a significant impact on our estimate of expected credit losses. However, we will monitor economic conditions on a quarterly basis to determine if any adjustments are deemed necessary. Provisions for the allowance for expected credit losses attributable to bad debt are recorded in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income. Accounts deemed uncollectible are written off, net of actual recoveries. If circumstances related to specific customers change, the Company's estimate of the recoverability of receivables could be further adjusted.

~~Contract Assets~~

Supply Chain Services contract assets represents estimated member and other customer purchases on supplier contracts for which administrative fees have been earned, but not collected. Performance Services contract assets represents revenue earned for services provided but which the company is not contractually able to bill as of the end of the respective reporting period. Historically, we have not recognized a provision for contract assets. Under ASC Topic 326, we include Performance Services’ contract assets in our reserving process and assess the risk of loss similar to our methodology of the Company’s receivables, since the contract assets are reclassified to receivables when we become entitled to payment. Accordingly, a reserve is applied upon recognition of the contract asset.

Recently ~~Adopted~~Issued Accounting Standards Not Yet Adopted

In ~~June 2016,~~October 2021, the FASB issued ASU ~~2016-13,~~ ~~Financial Instruments-Credit Losses~~No. 2021-08 Business Combinations (Topic ~~326)~~805): ~~Measurement of Credit Losses on Financial Instruments~~,Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, (“ASU ~~2016-13”~~2021-08”), which ~~modifies~~requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. ASU 2021-08 will be effective for the ~~measurement~~Company for the fiscal year beginning July 1, 2023. Early adoption is permitted including adoption in interim periods. The Company is currently evaluating the impact of ~~expected credit losses~~the adoption of the new standard on ~~certain~~its consolidated financial statements and related disclosures.

1613

instruments and the timing of when such losses are recorded. The Company adopted ASU 2016-13 effective July 1, 2020 on a modified retrospective basis which resulted in a reduction to retained earnings of $1.2 million.

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~, (“ASU 2018-13”), which improves the effectiveness of fair value measurement disclosures by eliminating, adding and modifying certain disclosure requirements for fair value measurements as part of its disclosure framework project. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The Company adopted ASU 2018-13 effective July 1, 2020 and has updated the financial statements accordingly to reflect the updates in the disclosure requirements (see Note 6 - Fair Value Measurements). The implementation of ASU 2018-13 did not have a material effect on the Company’s condensed consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles- Goodwill and Other-Internal Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~,(“ASU 2018-15”), which requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize or expense. The Company adopted ASU 2018-15 effective July 1, 2020 on a prospective basis. The implementation of ASU 2018-15 did not have a material effect on the Company’s condensed consolidated financial statements.

(3) BUSINESS ACQUISITIONS

Acquisition of Invoice Delivery Services, LP Assets

On March 1, 2021, the Company acquired, through its indirect, wholly-owned subsidiary Premier IDS, ~~acquired~~LLC, substantially all the assets and assumed certain liabilities of ~~IDS~~Invoice Delivery Services, LP (“IDS”) for an adjusted purchase price of ~~$80.4~~$80.7 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under the Company’s Credit Facility ~~(the “IDS Acquisition”)~~(as defined in Note 8 - Debt and Notes Payable).

The Company has accounted for the IDS ~~Acquisition~~acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. The total fair value assigned to intangible assets acquired was $22.4 million, consisting primarily of developed technology.

The IDS ~~Acquisition~~acquisition resulted in the recognition of ~~$57.5~~$57.7 million of goodwill ~~(see Note 8 - Goodwill and Intangible Assets) attributable~~based on the purchase price paid in the acquisition compared to the ~~anticipated profitability~~fair value of ~~IDS.~~the tangible assets acquired. The IDS ~~Acquisition~~acquisition was considered an asset acquisition for income tax purposes. Accordingly, the Company expects tax goodwill to be deductible for tax purposes. The initial purchase price allocation for the IDS ~~Acquisition~~acquisition is preliminary and subject to changes in ~~fair value of working capital and~~the valuation of the assets ~~acquired.~~acquired and liabilities assumed. IDS ~~will be~~is being integrated within Premier under the brand name RemitraTM and is reported as part of the Performance Services segment.

~~Acquisition~~Pro forma results of ~~Health Design Plus, LLC~~

On May 4, 2020, the Company, through its consolidated subsidiary Premier Healthcare Solutions, Inc. (“PHSI”), acquired 97% of the equity of Health Design Plus, LLC (“HDP”) for an adjusted purchase price of $23.8 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Company’s Credit Facility.

~~The purchase price allocation was finalized during the three months ended December 31, 2020.~~

~~Acquisition of Acurity and Nexera Assets~~

On February 28, 2020, the Company acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”). The Company agreed to pay an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Credit Facility. An additional $120.0 million will be paid in 4 equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $4.7 million was paid to GNYHA during the three months ended September 30, 2020.

In addition, the asset purchase agreement provides an earn-out opportunity for Acurity, Inc. of up to $30.0 million based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. As of March 31, 2021, the fair value of the earn-out liability was $24.0 million (see Note 6 - Fair Value Measurements).

Prior to entering into the purchase agreement, Acurity, Inc. agreed to provide one-time rebates of $93.8 million to certain of its then members based on their pre-closing purchasing volume. The Company concluded that these one-time rebates should be excluded from the purchase price and capitalized as prepaid contract administrative fee share at closing. As a result, the total fair value of consideration paid as part of the acquisition totaled $202.6 million.

~~The purchase price allocation was finalized during the three months ended September 30, 2020.~~

~~Acquisition of Medpricer~~

On October 28, 2019, the Company, through its consolidated subsidiary Premier Supply Chain Improvement, Inc. (“PSCI”), acquired all of the outstanding capital stock in Medpricer.com, Inc. (“Medpricer”) for an adjusted purchase price of $38.5 million. The transaction was funded with borrowings under the Credit Facility.

The acquisition provides the sellers an earn-out opportunity of up to $5.0 million based on Medpricer’s achievement of a revenue target for the calendar year ended December 31, 2020. As of March 31, 2021, the value of the earn-out liability was $4.8 million.

~~The purchase price allocation was finalized during the three months ended September 30, 2020.~~

~~(4) DISCONTINUED OPERATIONS AND EXIT ACTIVITIES~~

In connection with the sale of certain assets and wind down and exit from the specialty pharmacy business, the Company met the criteria for classifying certain assets and liabilities of its specialty pharmacy business as a discontinued operation as of June 30, 2019. Prior to its classification as a discontinued operation, the specialty pharmacy business was included as part of the Supply Chain Services segment.

~~As of June 30, 2020, the Company had completed the wind down and exit from the specialty pharmacy business and had 0 net income or loss from discontinued~~ operations for the ~~three~~acquisition have not been presented because the effects on revenue and ~~nine months ended March 31, 2021.~~

~~The following table summarizes the major components of~~ net income ~~from discontinued operations (in thousands):~~

Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020
Operating gain from discontinued operations $ 0 $ 0
Net gain on disposal of assets 24 1,399
Income from discontinued operations before income taxes 24 1,399
Income tax expense 19 390
Income from discontinued operations, net of tax 5 1,009
Net income from discontinued operations attributable to non-controlling interest in Premier LP (3) (480)
Net income from discontinued operations attributable to stockholders $ 2 $ 529
were not material to the Company’s historic consolidated financial statements.

~~(5)~~(4) INVESTMENTS

Investments in Unconsolidated Affiliates

The Company’s investments in unconsolidated affiliates consisted of the following (in thousands):

Carrying Value Equity in Net Income
Three Months Ended Nine Months Ended
March 31, March 31,
March 31, 2021 June 30, 2020 2021 2020 2021 2020
FFF $ 117,591 $ 109,204 $ 806 $ 4,340 $ 8,387 $ 10,830
Prestige 18,276 11,194 4,436 0 7,082 0
Other investments 17,880 12,937 282 102 554 208
Total investments $ 153,747 $ 133,335 $ 5,524 $ 4,442 $ 16,023 $ 11,038


	Carrying Value				Equity in Net Income
					Three Months Ended				Six Months Ended
					December 31,				December 31,
	December 31, 2021		June 30, 2021		2021		2020		2021		2020
FFF	$	129,947	$	120,548	$	3,454	$	3,007	$	9,399	$	7,581
Exela	27,003		—		1,003		—		1,003		—
Prestige	16,815		14,478		1,579		1,594		2,337		2,646
Other investments	18,633		18,198		80		(29)		435		272
Total investments	$	192,398	$	153,224	$	6,116	$	4,572	$	13,174	$	10,499

The Company, through ~~PSCI,~~Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of stock of FFF at ~~March~~December 31, 2021 and June 30, ~~2020. The Company records~~2021. On July 29, 2021, the ~~fair value~~FFF shareholders’ agreement was amended resulting in the termination of the FFF put right, which had previously provided the majority shareholder of FFF a right to require the Company to purchase such shareholder’s interest in FFF, on an all or nothing basis, on or after April 15, 2023 (“FFF Put Right”). The termination of the FFF Put Right resulted in the derecognition of the FFF Put Right liability and ~~call rights~~the recognition of a corresponding non-cash gain of $64.1 million in the accompanying Condensed Consolidated ~~Balance Sheets~~Statements of Income and Comprehensive Income (see Note 65 - Fair Value Measurements for additional information).

The Company, ~~accounts for~~through its ~~investment~~consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in ~~FFF using the equity method~~Exela Holdings, Inc. (“Exela”), through its ownership of ~~accounting and includes the investment as part~~Exela Class A common stock at December 31, 2021. The Company owns approximately 15% of the ~~Supply Chain Services segment.~~membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates.

The Company, through its consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through its ownership of Prestige limited partnership units at ~~March~~December 31, 2021. The Company owns approximately 26% of the membership interest of PRAM, with the remainder of the membership interests held by 16 member health ~~systems.~~ systems or their affiliates.

The Company accounts for its ~~investment~~investments in FFF, Exela and Prestige using the equity method of accounting and includes ~~the~~each investment as part of the Supply Chain Services ~~segment.~~Segment.

~~(6)~~

(5) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following ~~tables provide for the periods presented a summary of~~table represents the Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

March 31, 2021 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 $ 0 $ 0
Deferred compensation plan assets 61,107 61,107 0 0
Total assets 61,182 61,182 0 0
Earn-out liabilities 23,954 0 0 23,954
FFF put right 58,379 0 0 58,379
Total liabilities $ 82,333 $ 0 $ 0 $ 82,333


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)
											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)
December 31, 2021										December 31, 2021
Cash equivalents	Cash equivalents	$	13,272	$	13,272	$	0	$	0	Cash equivalents	$	75	$	75	$	—	$	—

Deferred compensation plan assets	Deferred compensation plan assets	52,538		52,538		0		0		Deferred compensation plan assets	63,395		63,395		—		—
Total assets	Total assets	65,810		65,810		0		0		Total assets	63,470		63,470		—		—
Earn-out liability		33,151		0		0		33,151

Earn-out liabilities										Earn-out liabilities	24,139		—		—		24,139

Total liabilities										Total liabilities	$	24,139	$	—	$	—	$	24,139

June 30, 2021										June 30, 2021
Cash equivalents										Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets										Deferred compensation plan assets	65,051		65,051		—		—
Total assets										Total assets	65,126		65,126		—		—

Earn-out liabilities										Earn-out liabilities	24,249		—		—		24,249
FFF put right	FFF put right	36,758		0		0		36,758		FFF put right	64,110		—		—		64,110
Total liabilities	Total liabilities	$	69,909	$	0	$	0	$	69,909	Total liabilities	$	88,359	$	—	$	—	$	88,359

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($~~5.2~~6.2 million and ~~$3.4~~$5.5 million at ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, respectively) was included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets.

Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

FFF ~~put~~Put and ~~call rights~~Call Rights

~~In connection with~~On July 29, 2021, the ~~Company’s equity investment in~~ FFF ~~the Company entered into a~~ shareholders’ agreement ~~that provides, among other things, that~~was amended resulting in the majority shareholder of FFF holds a put right that requires the Company to purchase the majority shareholder’s interest in FFF, on an all or nothing basis, on or after April 15, 2023. Any required purchase by the Company upon exercisetermination of the ~~put right by FFF’s majority shareholder must be made at a per share price equal to FFF’s earnings before interest, taxes, depreciation~~FFF Put Right and ~~amortization (“EBITDA”) over~~ the ~~twelve calendar months prior to~~derecognition of the ~~purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents (“Equity Value per Share”).~~ FFF Put Right liability.

In ~~addition, in~~ the event of a Key Man Event (generally defined in the FFF shareholders’ agreement as the resignation, termination for cause, death or disability of the majority shareholder), the Company has a call right that requires the majority shareholder to sell its remaining interest in FFF to the Company, and is exercisable at any time within ~~the later of~~

180 calendar days after ~~(i)~~ the date of a Key Man Event ~~or (ii) January 30, 2021.~~(the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, the ~~call right~~Call Right had 0zero value. In the event that ~~either of these rights are~~the Call Right is exercised, the purchase price for the additional interest in FFF will be at a per share price equal to FFF’s earnings before interest, taxes, depreciation and amortization (“FFF EBITDA”) over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents, divided by the number of shares of FFF common stock then outstanding (“Equity Value per ~~Share.~~Share”).

~~The~~At June 30, 2021, the fair values of the ~~FFF put~~Put and ~~call rights~~Call Rights were determined using a Monte Carlo simulation in a risk-neutral framework based on the Equity Value per Share calculation using unobservable inputs, which included the estimated ~~FFF put~~Put and ~~call rights’~~Call Rights expiration dates, the forecast of FFF’s EBITDA and enterprise value over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. FFF’s enterprise value over the option period was valued utilizing expected annual FFF EBITDA and ~~Revenue~~revenue growth rates, among other assumptions. The resulting FFF enterprise value was an assumption utilized in the valuation of the ~~put~~Put and call rights. Significant increases to weighted average cost of capital, business enterprise value, correlation and credit spread could significantly decrease the liability while a significant increase to asset volatility, EBITDA growth rate and revenue growth rate could significantly increase the liability.Call Rights.

The Company utilized the following assumptions to estimate the fair value of ~~FFF~~the Put and Call ~~Rights:~~Rights at June 30, 2021:

March 31, 2021 June 30, 2020
Annual EBITDA growth rate 2.5-10.8% 2.5-26.5%
Annual revenue growth rate 2.5-6.3% 1.4-14.4%
Correlation 80.0 % 80.0 %
Weighted average cost of capital 14.0 % 14.5 %
Asset volatility 30.0 % 28.0 %
Credit spread 0.9 % 1.7 %


	June 30, 2021
Annual FFF EBITDA growth rate	2.5-10.8%
Annual revenue growth rate	2.5-6.3%
Correlation	80.0	%
Weighted average cost of capital	14.0	%
Asset volatility	30.0	%
Credit spread	0.8	%

The significant assumptions using the Monte Carlo simulation approach for valuation of the Put and Call Rights are:

(i)Annual EBITDA Growth Rate: The forecasted EBITDA growth range over six years;

(ii)Annual Revenue Growth Rate: The forecasted Revenue growth range over six 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.

~~The~~At June 30, 2021, the Company recorded the ~~FFF put~~Put and ~~call rights~~Call Rights within long-term other liabilities and long-term other assets, respectively, within the accompanying Condensed Consolidated Balance Sheets. Net changes in the fair values of the Put and Call Rights, including the gain recorded as a result of the termination of the FFF ~~put and call rights~~Put Right, were recorded within other income (expense) ~~income,~~, net in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

Earn-out liabilities

~~Earn-out liabilities were~~An earn-out liability was established in connection with the acquisition of substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset ~~acquisition and the Stanson Health, Inc. (“Stanson”~~acquisition”) ~~and Medpricer acquisitions.~~in February 2020. The earn-out liability ~~associated with the Acurity and Nexera asset acquisition~~ was classified as Level 3 of the fair value hierarchy. The earn-out liability associated with the Medpricer acquisition is no longer measured at fair value as of March 31, 2021, given Medpricer’s achievement of a portion of the earn-out. The full earn-out associated with the Stanson acquisition was paid to former employees and shareholders as of December 31, 2020.

The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition ~~were~~was measured on the acquisition date using a probability-weighted expected payment model and are remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the ~~respective~~ acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of ~~1.0%~~0.9% at ~~March~~both December 31, 2021 and June 30, ~~2020.~~2021. As of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, the undiscounted range of outcomes is between $0 and $30.0 million. A significant decrease in the probability could result in a significant decrease in the value of the earn-out liability. The fair value of the Acurity and Nexera earn-out liability at ~~March~~December 31, 2021 and June 30, ~~2020~~2021 was ~~$24.0~~$24.1 million and ~~$22.7~~$24.2 million, respectively.

Acurity and Nexera Earn-out (a)


Input assumptions	Input assumptions	As of March 31, 2021		As of June 30, 2020		Input assumptions	As of December 31, 2021		As of June 30, 2021
Probability of transferred member renewal percentage < 50%	Probability of transferred member renewal percentage < 50%	5.0	%	5.0	%	Probability of transferred member renewal percentage < 50%	5.0	%	5.0	%
Probability of transferred member renewal percentage between 50% and 65%	Probability of transferred member renewal percentage between 50% and 65%	10.0	%	10.0	%	Probability of transferred member renewal percentage between 50% and 65%	10.0	%	10.0	%
Probability of transferred member renewal percentage between 65% and 80%	Probability of transferred member renewal percentage between 65% and 80%	25.0	%	25.0	%	Probability of transferred member renewal percentage between 65% and 80%	25.0	%	25.0	%
Probability of transferred member renewal percentage > 80%	Probability of transferred member renewal percentage > 80%	60.0	%	60.0	%	Probability of transferred member renewal percentage > 80%	60.0	%	60.0	%
Credit spread	Credit spread	1.0	%	1.0	%	Credit spread	0.9	%	0.9	%

(a)The Acurity and Nexera earn-out liability was initially valued as of February 28, 2020.

A reconciliation of the Company’s ~~FFF put and call rights~~Put Right and earn-out liabilities is as follows (in thousands):


		Beginning Balance		Purchases (Settlements) (a)		Gain (Loss) (b)		Ending Balance			Beginning Balance		Purchases (Settlements) (a)(b)		(Gain)/Loss (c)		Ending Balance
Three Months Ended March 31, 2021
Three Months Ended December 31, 2021										Three Months Ended December 31, 2021
Earn-out liabilities										Earn-out liabilities	$	24,368	$	—	$	(229)	$	24,139

Total Level 3 liabilities										Total Level 3 liabilities	$	24,368	$	—	$	(229)	$	24,139

Three Months Ended December 31, 2020										Three Months Ended December 31, 2020
Earn-out liabilities	Earn-out liabilities	$	22,700	0		(1,254)		23,954		Earn-out liabilities	$	23,017	$	(4,660)	$	4,343	$	22,700
FFF put right	FFF put right	53,184		0		(5,195)		58,379		FFF put right	38,677		—		14,507		53,184
Total Level 3 liabilities	Total Level 3 liabilities	$	75,884	$	0	$	(6,449)	$	82,333	Total Level 3 liabilities	$	61,694	$	(4,660)	$	18,850	$	75,884

Three Months Ended March 31, 2020

Six Months Ended December 31, 2021										Six Months Ended December 31, 2021
Earn-out liabilities	Earn-out liabilities	$	13,420	$	22,700	$	1,233	$	34,887	Earn-out liabilities	$	24,249	$	—	$	(110)	$	24,139
FFF put right	FFF put right	19,065		0		(13,906)		32,971		FFF put right	64,110		(64,110)		—		—
Total Level 3 liabilities	Total Level 3 liabilities	$	32,485	$	22,700	$	(12,673)	$	67,858	Total Level 3 liabilities	$	88,359	$	(64,110)	$	(110)	$	24,139

Nine Months Ended March 31, 2021

Six Months Ended December 31, 2020										Six Months Ended December 31, 2020
Earn-out liabilities	Earn-out liabilities	$	33,151	$	(13,733)	$	(4,536)	$	23,954	Earn-out liabilities	$	33,151	$	(13,733)	$	3,282	$	22,700
FFF put right	FFF put right	36,758		0		(21,621)		58,379		FFF put right	36,758		—		16,426		53,184
Total Level 3 liabilities	Total Level 3 liabilities	$	69,909	$	(13,733)	$	(26,157)	$	82,333	Total Level 3 liabilities	$	69,909	$	(13,733)	$	19,708	$	75,884

Nine Months Ended March 31, 2020
FFF call right		$	204	$	0	$	(204)	$	0
Total Level 3 assets		204		0		(204)		0
Earn-out liabilities		6,816		26,481		(1,590)		34,887
FFF put right		41,652		0		8,681		32,971
Total Level 3 liabilities		$	48,468	$	26,481	$	7,091	$	67,858

(a)Purchases (Settlements) for the ~~nine~~six months ended ~~March~~December 31, 2021 includes non-cash gain recognized as a result the termination of the FFF Put Right and the derecognition of the FFF Put Right liability.

(b)Purchases (Settlements) for the three months ended December 31, 2020 includes the Medpricer earnout, which ~~has~~had been earned ~~in part~~ but not yet paid as of ~~March~~December 31, ~~2021~~2020. Purchases (Settlements) for the six months ended December 31, 2020 includes the Medpricer earnout and the Stanson earnout, which was paid in full as of December 31, 2020.

~~(b)~~ (c)A ~~gain on level 3 asset balances will increase the asset ending balance whereby a~~ gain on level 3 liability balances will decrease the liability ending ~~balance. A loss on level 3 asset balances will decrease the asset ending~~ balance ~~whereby~~whereas a loss on level 3 liability balance will increase the liability ending balance.

Non-Recurring Fair Value Measurements

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company recorded notes payable to ~~members resulting from the deferral of the early termination payments associated with the termination of the TRA~~former limited partners as ~~part~~a result of the August 2020 ~~restructuring. These~~Restructuring. Although these notes are non-interest bearing, they include a Level 2 input associated with the implied interest rate of 1.8% and are calculated as of August 11, 2020. (see Note 98 - Debt and Notes Payable).

During the ~~nine~~six months ended ~~March~~December 31, 2021, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The preliminary fair values of the acquired intangible assets resulting from the IDS Acquisition was determined using the income approach (see Note 3 - Business Acquisitions).

Financial Instruments For Which Fair Value Only is Disclosed

The fair values of non-interest bearing notes payable, classified as Level 2, were less than their carrying value by ~~$0.2~~$0.1 million at ~~March~~both December 31, 2021 and June 30, ~~2020,~~2021 based on assumed market interest rates of 1.6% for both periods.

Other Financial Instruments

The fair values of cash, accounts receivable, accounts payable, accrued liabilities, and the Credit Facility (as defined in Note 98 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

~~(7)~~(6) CONTRACT BALANCES

Deferred Revenue

Revenue recognized during the ~~nine~~six months ended ~~March~~December 31, 2021 that was included in the opening balance of deferred revenue at June 30, ~~2020~~2021 was ~~$16.5~~$13.0 million, which is a result of satisfying performance obligations.

Performance Obligations

A performance obligation is a promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services is not separately identifiable from other promises and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, implementation fees, maintenance and support fees, professional fees for consulting services), including certain performance guarantees.

Net revenue of $8.1 million and $3.7 million was recognized during the three and six months ended ~~March~~December 31, 2021, respectively, from performance obligations that were satisfied or partially satisfied in prior ~~periods~~periods. The net revenue recognized was ~~$8.5 million.~~driven by an increase of $7.3 million and $3.1 million, respectively, in net administrative fees revenue related to under-forecasted cash receipts received in the current period. There was also an increase of $0.8 million and $0.6 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Net revenue of $3.1 million was recognized during the three months ended December 31, 2020 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by a ~~$11.4~~$4.9 million increase in net administrative fees revenue related to under-forecasted cash receipts received in the current period partially offset by a reduction of ~~$2.9~~$1.8 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

~~The reduction~~A decrease to net revenue of $3.2 million was recognized during the ~~nine~~six months ended ~~March~~December 31, ~~2021~~2020 from performance obligations that were ~~satisfied or~~ partially satisfied in prior ~~periods was $3.9 million.~~periods. The ~~reduction~~decrease in net revenue recognized was driven by a ~~$0.9~~$2.5 million decrease in net administrative fees revenue related to over-forecasted cash receipts received in the current period and a reduction of ~~$3.0~~$0.7 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Reduction in net revenue recognized during the three and nine months ended March 31, 2020 from performance obligations that were satisfied or partially satisfied in prior periods was $0.1 million and $1.4 million, respectively. The reduction was driven by $3.8 million and $6.9 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This was offset by $3.7 million and $5.5 million, respectively, of net administrative fees revenue related to under-forecasted cash receipts received in the current period.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of ~~March~~December 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$589.5~~$654.1 million. The Company expects to recognize approximately ~~45%~~44% of the remaining performance obligations over the next 12 months and an additional 26% over the following 12 months, with the remainder recognized thereafter.

~~(8)~~(7) GOODWILL AND INTANGIBLE ASSETS

Goodwill

~~Goodwill consisted of the following (in thousands):~~

Supply Chain Services Performance Services Total
June 30, 2020 $ 387,722 $ 554,243 $ 941,965
Acquisition of businesses and assets 0 57,514 57,514
Adjustments to acquisition purchase price 780 (482) 298
March 31, 2021 $ 388,502 $ 611,275 $ 999,777

~~The initial purchase price allocation for the IDS Acquisition is preliminary~~At December 31, 2021 and ~~subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed.~~

~~Adjustments to acquisition purchase price since~~ June 30, ~~2020 are a result~~2021, we had goodwill balances recorded at Supply Chain Services and Performance Services of ~~measurement period adjustments from the Acurity~~$388.5 million and ~~Nexera asset acquisition and the HDP acquisition. See Note 3 - Business Acquisitions for more information.~~$611.4 million, respectively.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):


		Useful Life	March 31, 2021		June 30, 2020			Useful Life	December 31, 2021		June 30, 2021
Member relationships	Member relationships	14.7 years	$	386,100	$	386,100	Member relationships	14.7 years	$	386,100	$	386,100
Technology	Technology	6.1 years	186,017		164,117		Technology	6.1 years	186,017		186,017
Customer relationships	Customer relationships	9.6 years	70,830		70,830		Customer relationships	9.6 years	70,830		70,830
Trade names	Trade names	7.4 years	24,610		24,160		Trade names	7.4 years	24,610		24,610
Non-compete agreements	Non-compete agreements	5.3 years	11,315		11,315		Non-compete agreements	5.3 years	11,315		11,315
Other (a)	Other (a)	10.2 years	7,682		6,060		Other (a)	10.2 years	7,682		7,682
Total intangible assets	Total intangible assets		686,554		662,582		Total intangible assets		686,554		686,554
Accumulated amortization	Accumulated amortization		(279,023)		(245,160)		Accumulated amortization		(311,650)		(289,912)
Total intangible assets, net	Total intangible assets, net		$	407,531	$	417,422	Total intangible assets, net		$	374,904	$	396,642

(a) Includes a $1.0 million indefinite-lived ~~asset that was acquired through the HDP acquisition.~~asset.

~~Total intangible assets increased due to the IDS Acquisition (see Note 3 - Business Acquisitions).~~ Intangible asset amortization was ~~$10.4~~$21.7 million and ~~$14.0~~$23.5 million for the ~~three~~six months ended ~~March 31, 2021 and 2020, respectively, and $33.9 million and $38.9 million for the nine months ended March~~December 31, 2021 and 2020, respectively.

~~(9)~~

(8) DEBT AND NOTES PAYABLE

Long-term debt and notes payable consisted of the following (in thousands):


		March 31, 2021		June 30, 2020			December 31, 2021		June 30, 2021
Credit Facility		$	200,000	$	75,000
Notes payable to members		418,639		0
Credit facility						Credit facility	$	125,000	$	75,000
Notes payable to members, net of discount						Notes payable to members, net of discount	347,201		394,943
Other notes payable	Other notes payable	9,297		9,200		Other notes payable	5,750		8,628
Total debt and notes payable	Total debt and notes payable	627,936		84,200		Total debt and notes payable	477,951		478,571
Less: current portion	Less: current portion	(299,447)		(79,560)		Less: current portion	(224,882)		(174,243)
Total long-term debt and notes payable	Total long-term debt and notes payable	$	328,489	$	4,640	Total long-term debt and notes payable	$	253,069	$	304,328

Credit Facility

~~Premier LP,~~PHSI, along with its consolidated subsidiaries, ~~PSCI~~Premier LP and ~~PHSI,~~PSCI, as Co-Borrowers, Prior Premier GP and certain domestic subsidiaries of ~~Premier GP,~~the Co-Borrowers, as guarantors, entered into an unsecured Credit Facility, dated as of November 9, 2018 (the “Credit

Facility”). ~~The Credit Facility has a maturity date of November 9, 2023, subject to up to 2 one-year extensions at~~On December 1, 2021, in connection with the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments underSubsidiary Reorganization, the Credit Facility ~~together up~~was amended to an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increases. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility byremove Prior Premier GP ~~certain domestic subsidiaries of Premier GP and future guarantors, if any.~~as a guarantor. Premier, Inc. is not a guarantor under the Credit Facility.

Outstanding borrowings under the Credit Facility bear interest on a variable rate structure with borrowings bearing interest at either London Interbank Offered Rate (“LIBOR”) plus an applicable margin ~~ranging~~ranging from 1.000% to 1.500% or the prime lending rate plus an applicable margin ranging from 0.000% to 0.500%. At ~~March~~December 31, 2021, the weighted average interest rate on outstanding borrowings under the Credit Facility was ~~1.115%~~1.110% and the annual commitment fee, based on the actual daily unused amount of commitments under the Credit Facility, was 0.100%.

The Credit Facility contains customary representations and warranties as well as customary affirmative and negative ~~covenants. Premier GP~~covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments. The Company was in compliance with all such covenants at ~~March~~December 31, 2021. The Credit Facility also contains customary events of default, including a cross-default of any indebtedness or guarantees in excess of $75.0 million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, repurchases of Class A common stock pursuant to stock repurchase programs, dividend payments, if and when declared, and other general corporate activities. During the nine months ended March 31, 2021, the Company borrowed $225.0 million and repaid $100.0 million of borrowings under the Credit Facility. The Company had ~~$200.0~~$125.0 million in outstanding borrowings under the Credit Facility at ~~March~~December 31, 2021 with ~~$799.9~~$874.9 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. ~~In April~~For the six months ended December 31, 2021, the Company borrowed $175.0 million and repaid ~~$75.0~~$125.0 million of outstanding borrowings under the Credit Facility.

Notes Payable

Notes Payable to ~~Members~~

On August 10, 2020, the Company exercised its right to terminate the TRA by and among the Company and the former limited partners of Premier LP by providing all former LPs a notice of the termination and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA (each such amount an “Early Termination Payment”) with a determination date of August 10, 2020 (the “Determination Date”). The valuation of the Early Termination Payment is based on the average of the closing prices of a share of Class A common stock on the stock exchange over the 20 trading days ending three days prior to the Determination Date. The aggregate amount of the Early Termination Payments was $472.6 million. Of that amount, $10.5 million was paid on September 15, 2020, to LPs that did not elect to execute a Unit Exchange and Tax Receivable Acceleration Agreement (“Unit Exchange Agreement”) in connection with the Company’s August 2020 restructuring. The remaining amount payable, $462.1 million in the aggregate, will be paid, without interest, to certain LPs that elected to execute a Unit Exchange Agreement, which deferred the Early Termination Payments over 18 quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025. While non-interest bearing, pursuant to GAAP requirements, the notes payable to members were recorded net of imputed interest of 1.8%. During the quarter ended March 31, 2021, the Company paid the first quarterly installment of $25.7 million.Former Limited Partners

At ~~March~~December 31, 2021, the Company had ~~$418.6~~$347.2 million of notes payable to ~~members,~~former LPs, net of discounts on notes payable of ~~$17.8~~$12.2 million, of which ~~$95.5~~$96.9 million was recorded to current portion of notes payable to ~~members~~former limited partners in the accompanying Condensed Consolidated Balance Sheets. At June 30, 2021, the Company had $394.9 million of notes payable to former LPs, net of discounts on notes payable of $15.8 million, of which $95.9 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to former LPs were issued in connection with the early termination of the TRA as part of the August 2020 Restructuring. Although the notes payable to former LPs are non-interest bearing, pursuant to GAAP requirements, they were recorded net of imputed interest at a fixed annual rate of 1.8%.

Other

At ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, the Company had ~~$9.3~~$5.8 million and ~~$9.2~~$8.6 million in other notes payable, respectively, of which ~~$4.0~~$3.0 million and ~~$4.6~~$3.3 million, respectively, were included in current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets. Other notes payable do not bear interest and generally have stated maturities of three to five years from their date of issuance.

2419

~~Future minimum principal payments on total outstanding notes payable as of March 31, 2021 are as follows (in thousands):~~

2021 (a)
$ 29,218
2022 105,211
2023 103,629
2024 104,231
2025 103,419
Total principal payments $ 445,708

~~(a) For the period from April 1, 2021 to June 30, 2021.~~

~~(10)~~(9) REDEEMABLE LIMITED PARTNERS' CAPITAL

On July 31, 2020, after the resignation of 3 directors affiliated with the Company’s members, the Board of Directors consisted of 15 (15) directors, comprised of 8 (8) independent directors, 6 (6) member-directors and the Company’s Chief Executive Officer, thus having a majority of independent directors on the Board of Directors. Since the member-directors no longer comprised a majority of the Board of Directors, as of July 31, 2020, the limited partner’s redemption feature was under the control of the Company (not the holders of Class B common units). As a result, $1.8 billion representing theThe fair value of redeemable limited partners’ capital ~~at July 31, 2020~~ was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as a component of permanent ~~equity.~~equity at July 31, 2020. As a result, there were no adjustments to the fair value of redeemable limited partners’ capital for the six months ended December 31, 2021.

For the ~~nine~~six months ended ~~March~~December 31, ~~2021 and~~ 2020, the Company recorded ~~adjustments~~an adjustment of $(26.7) million to the fair value of redeemable limited partners’ capital as an adjustment of redeemable limited partners’ capital to redemption amount in the accompanying Condensed Consolidated Statements of Income and Comprehensive ~~Income in the amounts of $(26.7) million and $516.7 million, respectively. With respect~~Income. Subsequent to ~~the nine months ended March~~July 31, ~~2021, 0~~2020, there were no adjustments to the fair value of redeemable limited partners’ capital as an adjustment of redeemable limited partners’ capital to redemption amount were recorded ~~subsequent to July 31, 2020~~ in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. ~~Refer to “Company Structure and Restructuring” in Note 1 - Organization and Basis of Presentation.~~

The tables below provide a summary of the changes in redeemable limited partners’ capital from June 30, 2020 to September 30, 2020 ~~and June 30, 2019 to March 31, 2020~~ (in thousands). There were 0no changes in redeemable limited partner’s capital from September 30, 2020 to ~~March~~December 31, ~~2021.~~2020.

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 $ 0 $ 0 $ 0

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
Distributions applied to receivables from limited partners 70 — 70
Net income attributable to non-controlling interest in Premier LP — 55,704 55,704
Distributions to limited partners — (12,689) (12,689)
Exchange of Class B common units for Class A common stock by member owners — (223,946) (223,946)
Adjustment of redeemable limited partners' capital to redemption amount — 480,153 480,153
December 31, 2019 (1,065) 2,105,432 2,104,367
Distributions applied to receivables from limited partners 71 — 71
Net income attributable to non-controlling interest in Premier LP — 35,058 35,058
Distributions to limited partners — (9,314) (9,314)
Exchange of Class B common units for Class A common stock by member owners — (169,194) (169,194)
Adjustment of redeemable limited partners' capital to redemption amount — (302,569) (302,569)
March 31, 2020 $ (994) $ 1,659,413 $ 1,658,419

Pursuant to the Exchange Agreement in place prior to the August 2020 restructuring, each limited partner had the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units for shares of Class A common stock, cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee of the Board of Directors. During the nine months ended March 31, 2021, the Company recorded total reductions of $2.4 million to redeemable limited partners' capital prior to the August 2020 restructuring to reflect the exchange of 0.1 million Class B common units and surrender and retirement of a corresponding number of shares of Class B common stock by member owners for a like number of shares of the Company's Class A common stock (see Note 12 - Earnings Per Share for more information). On August 11, 2020, the Exchange Agreement was terminated in connection with the restructuring as discussed in Note 1 - Organization and Basis of Presentation.

~~Quarterly exchanges during the nine months ended March 31, 2021 were as follows (in thousands, except Class B common units):~~

Date of Quarterly Exchange Number of Class B Common Units Exchanged Reduction in Redeemable Limited Partners' Capital
July 31, 2020 69,684 $ 2,437

~~As a result of the August 2020 restructuring, there were 0 quarterly exchanges subsequent to the July 31, 2020 exchange.~~


	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	$	—	$	—	$	—

~~(11)~~(10) STOCKHOLDERS' EQUITY

As of ~~March~~December 31, 2021, there were ~~122,268,758~~119,935,420 shares of the Company's Class A common stock, par value $0.01 per share, outstanding.

~~Holders~~On August 5, 2021, the Company’s Board of Directors authorized the repurchase of up to $250.0 million of our outstanding Class A common stock during fiscal year 2022 through open market purchases or privately negotiated transactions. As of December 31, 2021, the Company had purchased approximately 4.5 million shares of Class A common stock ~~are entitled to (i) 1 vote~~at an average price of $39.37 per share for ~~each share held~~a total purchase price of ~~record on all matters submitted to a vote of stockholders, (ii) receive dividends, when and if declared by~~$176.0 million. There can be no assurances regarding the ~~Board of Directors out of funds legally available, subject to any statutory~~timing or ~~contractual restrictions on the payment of dividends and subject to any restrictions on the payment of dividends~~

imposed by the terms of any outstanding preferred stock or any class of series of stock having a preference over or the right to participate with the Class A common stock with respect to the payment of dividends or other distributions and (iii) receive pro rata, based on the number of shares of Class A common stock ~~held,~~purchased under this authorization. The repurchase authorization may be suspended, delayed or discontinued at any time at the remaining assets available for distribution upon the dissolution or liquidation of Premier, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any.

On July 31, 2020, $1.8 billion representing the fair value of redeemable limited partners capital on July 31, 2020 was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as a component of permanent equity. Refer to Note 10 - Redeemable Limited Partners' Capital for further discussion.

~~On August 11, 2020, pursuant to the Merger Agreement, each of the issued and outstanding Class B common units was canceled and converted automatically into a right to receive 1 share~~discretion of the Company’s ~~Class A common stock. In conjunction with~~Board of Directors.

During the Merger, all of the issued and outstanding shares of Class B common stock of the Company beneficially held by the LPs were canceled in accordance with the Company’s Certificate of Incorporation. On August 11, 2020, the Company issued 50,143,414 shares of Class A common stock pursuant to the Merger.

~~On September 15, 2020,~~six months ended December ~~15, 2020, and March 15,~~31, 2021, the Company paid a cash ~~dividend~~dividends of ~~$0.19~~$0.20 per share on outstanding shares of Class A common stock to stockholders on each of ~~record on~~ September ~~1, 2020,~~15, 2021 and December ~~1, 2020, and March 1, 2021, respectively.~~15, 2021. On ~~April 23, 2021,~~January 20, 2022, the Board of Directors declared a cash dividend of ~~$0.19~~$0.20 per share, payable on ~~June~~March 15, ~~2021~~2022 to stockholders of record on ~~June~~March 1, ~~2021.~~2022.

~~(12)~~(11) EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Net income attributable to stockholders includes the adjustment recorded in the period to reflect redeemable limited partners’ capital at the redemption amount, which iswas due to the exchange benefit obtained by limited partners through the ownership of Class B common ~~units.~~units, which were canceled in conjunction with the August 2020 Restructuring. Except when the effect would be anti-dilutive, the diluted earnings ~~(loss)~~ per share calculation, which is calculated using the treasury stock method, includes the impact of shares that could be issued under the outstanding stock options, non-vested restricted stock units and awards, shares of non-vested performance share awards and the effect of the assumed redemption of Class B common units through the issuance of Class A common shares.

On August 11, 2020, pursuant to the Merger Agreement, each of the issued and outstanding Class B common units (and corresponding shares of the Company’s Class B common stock) was canceled and converted automatically into a right to receive 1 share of the Company’s Class A common stock, and the Company issued an aggregate of 50,143,414all potentially issuable dilutive shares of Class A common stock. ~~Refer to Note 1 - Organization and Basis of Presentation for further discussion.~~

The following table provides a reconciliation of the numerator and denominator used for basic and diluted ~~(loss)~~ earnings per share (in thousands, except per share amounts):

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Numerator for basic earnings per share:
Net income from continuing operations attributable to stockholders (a)
$ 48,321 $ 340,726 $ 234,445 $ 620,262
Net income from discontinued operations attributable to stockholders 0 2 0 529
Net income attributable to stockholders $ 48,321 $ 340,728 $ 234,445 $ 620,791
Numerator for diluted earnings per share:
Net income from continuing operations attributable to stockholders (a)
$ 48,321 $ 340,726 $ 234,445 $ 620,262
Adjustment of redeemable limited partners’ capital to redemption amount 0 (302,569) 0 (516,725)
Net income from continuing operations attributable to non-controlling interest in Premier LP 0 35,055 0 132,189
Net income from continuing operations 48,321 73,212 234,445 235,726
Tax effect on Premier, Inc. net income (b)(c)
0 (7,067) 0 (30,007)
Adjusted net income from continuing operations $ 48,321 $ 66,145 $ 234,445 $ 205,719


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Numerator for basic earnings per share:
Net income attributable to stockholders (a)	$	75,545	$	43,969	$	197,549	$	162,967

Numerator for diluted earnings per share:
Net income attributable to stockholders (a)	$	75,545	$	43,969	$	197,549	$	162,967

Net income attributable to non-controlling interest	—		—		989		—
Net income for diluted earnings per share	$	75,545	$	43,969	$	198,538	$	162,967



Denominator for earnings per share:
Basic weighted average shares outstanding (b)	121,181		122,127		122,063		110,851
Effect of dilutive securities: (c)
Stock options	267		321		288		287
Restricted stock	540		333		516		318
Performance share awards	485		138		656		117
Diluted weighted average shares and assumed conversions	122,473		122,919		123,523		111,573

Earnings per share attributable to stockholders:
Basic	$	0.62	$	0.36	$	1.62	$	1.47
Diluted	$	0.62	$	0.36	$	1.61	$	1.46

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Net income from discontinued operations attributable to stockholders $ 0 $ 2 $ 0 $ 529
Net income from discontinued operations attributable to non-controlling interest in Premier LP 0 3 0 480
Adjusted net income from discontinued operations $ 0 $ 5 $ 0 $ 1,009
Adjusted net income $ 48,321 $ 66,150 $ 234,445 $ 206,728
Denominator for earnings per share:
Basic weighted average shares outstanding (d)
122,254 69,451 114,596 65,582
Effect of dilutive securities: (e)
Stock options 325 232 300 357
Restricted stock 373 216 336 239
Performance share awards 164 197 133 66
Class B shares outstanding 0 52,374 0 57,786
Diluted weighted average shares and assumed conversions 123,116 122,470 115,365 124,030
Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders $ 0.40 $ 4.91 $ 2.05 $ 9.47
Diluted earnings per share attributable to stockholders $ 0.39 $ 0.54 $ 2.03 $ 1.66

(a)Net income ~~from continuing operations~~ attributable to stockholders was calculated as follows (in thousands):

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Net income from continuing operations $ 51,444 $ 73,212 $ 277,033 $ 235,726
Net income from continuing operations attributable to non-controlling interest (3,123) (35,055) (15,903) (132,189)
Adjustment of redeemable limited partners’ capital to redemption amount 0 302,569 (26,685) 516,725
Net income from continuing operations attributable to stockholders $ 48,321 $ 340,726 $ 234,445 $ 620,262


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Net income	$	77,232	$	44,904	$	198,538	$	202,432
Net income attributable to non-controlling interest	(1,687)		(935)		(989)		(12,780)
Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		(26,685)
Net income attributable to stockholders	$	75,545	$	43,969	$	197,549	$	162,967

(b)For the three months ended March 31, 2021, the tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in PRAM and DePre Holdings, LLC (“DPH”) was calculated as a component of the income tax provision for the three months ended March 31, 2021.

~~(c)~~For the nine months ended March 31, 2021, 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, PRAM and DPH was calculated as a component of the income tax provision for the nine months ended March 31, 2021.

~~(d)~~For the three and nine months ended March 31, 2020, 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.

~~(e)~~Weighted average number of common shares used for basic earnings per share excludes ~~weighted average~~the impact of all potentially issuable dilutive shares of ~~non-vested~~Class A common stock ~~options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding~~ for the ~~three and nine~~six months ended ~~March~~December 31, 2021 and 2020.

~~(f)~~(c)For the ~~three~~six months ended ~~March~~December 31, 2021, the effect of ~~0.4~~0.3 million ~~stock options and~~ restricted stock units ~~were~~was excluded from diluted weighted average shares outstanding as ~~they~~it had an anti-dilutive effect.

~~For the nine months ended March 31, 2021,~~ Additionally, the effect of ~~1.5~~0.2 million ~~stock options~~ and ~~restricted stock units and 7.5~~0.4 million ~~Class B common units were~~performance share awards was excluded from diluted weighted average shares outstanding as ~~they~~the awards had ~~an anti-dilutive effect.~~not satisfied the applicable performance criteria at the end of the period.

For the three and ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the effect of ~~0.7~~0.4 million and 1.1 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect. Additionally, the effect of 0.6 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.

For the ~~three and nine~~six months ended ~~March~~December 31, 2020, the effect of ~~0.8~~11.2 million ~~stock options and restricted stock~~Class B common units was excluded from the diluted weighted average shares outstanding as ~~they~~it had an anti-dilutive effect. Additionally, the effect of less than 0.1 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.

Pursuant to the Exchange Agreement in place prior to the August 2020 restructuring, on a quarterly basis, the Company had the option, as determined by the Audit and Compliance Committee, to settle the exchange of Class B common units of Premier LP by member owners for cash, an equal number of Class A common shares of Premier, Inc. or a combination of cash and shares

of Class A common stock. In connection with the exchange of Class B common units by member owners, regardless of the consideration used to settle the exchange, an equal number of shares of Premier's Class B common stock were surrendered by member owners and retired (see Note 10 - Redeemable Limited Partners' Capital). On August 11, 2020, the Exchange Agreement was terminated in connection with the restructuring as discussed in Note 1 - Organization and Basis of Presentation.

The following table presents certain information regarding the exchange of Class B common units and associated Class B common stock for Premier's Class A common stock and/or cash in connection with the quarterly exchange pursuant to the terms of the Exchange Agreement, including activity related to the Class A and Class B common units and Class A and Class B common stock through the date of the applicable quarterly exchange:

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 (b)
Percentage of Combined Voting Power Class B/Class A Common Stock
July 31, 2020 69,684 50,143,414 71,724,149 41%/59%

~~(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).~~

~~(13)~~(12) STOCK-BASED COMPENSATION

Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. The associated deferred tax benefit was calculated at a rate of 26% for the ~~three~~six months ended ~~March~~December 31, 2021 and ~~25% for the three months ended March 31,~~ 2020, which represents the expected effective income tax rate at the time of the compensation expense deduction and differs from the Company’s current effective income tax ~~rate which includes the impact of the Merger.~~rate. See Note 1413 - Income Taxes for further information.

Stock-based compensation expense and the resulting deferred tax benefits were as follows (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Pre-tax stock-based compensation expense	Pre-tax stock-based compensation expense	$	13,056	$	7,568	$	27,601	$	19,048	Pre-tax stock-based compensation expense	$	16,234	$	7,316	$	23,788	$	14,545
Deferred tax benefit (a)	Deferred tax benefit (a)	2,521		1,915		4,641		4,819		Deferred tax benefit (a)	3,650		1,011		4,725		2,120
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax	$	10,535	$	5,653	$	22,960	$	14,229	Total stock-based compensation expense, net of tax	$	12,584	$	6,305	$	19,063	$	12,425

(a)For the three and ~~nine~~six months ended ~~March~~December 31, 2021, the deferred tax benefit was reduced by ~~$0.9~~$0.8 million and ~~2.5~~$1.5 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the “2013 Equity Incentive Plan”) provides for grants of up to 14.8 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. As of ~~March~~December 31, 2021, there were ~~5.3~~4.6 million shares available for grant under the 2013 Equity Incentive Plan.

The following table includes information related to restricted stock, performance share awards and stock options for the ~~nine~~six months ended ~~March~~December 31, 2021:


		Restricted Stock			Performance Share Awards			Stock Options				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			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
Outstanding at June 30, 2021											Outstanding at June 30, 2021	990,301	$	35.27	1,731,002	$	35.56	2,163,006	$	30.32
Granted	Granted	571,761	$	31.94	695,233	$	29.20	0	$	0	Granted	617,505	$	37.79	651,392	$	37.18	—	$	—
Vested/exercised	Vested/exercised	(200,384)	$	34.40	(161,544)	$	32.77	(124,390)	$	30.96	Vested/exercised	(281,142)	$	40.41	(588,142)	$	43.74	(1,236,015)	$	30.17
Forfeited	Forfeited	(57,813)	$	36.26	(401,425)	$	33.71	(33,184)	$	35.13	Forfeited	(117,122)	$	33.57	(168,127)	$	31.87	(12,025)	$	36.54
Outstanding at March 31, 2021		995,102	$	35.28	1,738,573	$	35.57	2,386,563	$	30.05
Outstanding at December 31, 2021											Outstanding at December 31, 2021	1,209,542	$	35.53	1,626,125	$	33.63	914,966	$	30.45

Stock options outstanding and exercisable at March 31, 2021								2,386,563	$	30.05
Stock options outstanding and exercisable at December 31, 2021											Stock options outstanding and exercisable at December 31, 2021							914,966	$	30.45

Restricted stock units and restricted stock awards issued and outstanding generally vest over a three-year period for employees and a one-year period for directors. Performance share awards issued and outstanding generally vest over a three-year period if performance targets are met. Stock options have a term of ten years from the date of grant. Vested stock options will generally expire either twelve months after an employee’s termination with ~~Premier~~the Company or ~~immediately upon~~90 days after an employee’s termination with ~~Premier,~~the Company, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years.

Unrecognized stock-based compensation expense at ~~March~~December 31, 2021 was as follows (in thousands):. At December 31, 2021, there was no unrecognized stock-based compensation expense for outstanding stock options.


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	~~19,926~~28,795	~~2.0~~2.2 years
Performance share awards	~~27,191~~29,291		~~1.8~~1.9 years

Total unrecognized stock-based compensation expense	$	~~47,117~~58,086	~~1.9~~2.1 years

The aggregate intrinsic value of stock options at ~~March~~December 31, 2021 was as follows (in thousands):


	Intrinsic Value of Stock Options
Outstanding and exercisable	$	~~9,757~~9,810
~~Expected to vest~~	0
~~Total outstanding~~	$	~~9,757~~

Exercised during the year ended ~~March~~December 31, 2021	~~527~~$	9,697

~~(14)~~(13) INCOME TAXES

~~On August 11,~~Income tax expense for the three months ended December 31, 2021, and 2020 was $6.4 million and $16.7 million, respectively, which reflects effective tax rates of 8% and 27%, respectively. The change in the ~~Company entered into~~effective tax rate for the ~~Merger Agreement and pursuant~~three months ended December 31, 2021 is primarily attributable to the ~~Merger Agreement, each~~Subsidiary Reorganization which was completed on December 1, 2021.

Income tax expense for the six months ended December 31, 2021 was $25.4 million, which reflects an effective tax rate of ~~the issued and outstanding Class B common units was canceled and converted automatically into a right~~11% compared to receive one share of the Company’s Class A common stock. In conjunction with the Merger, all the issued and outstanding shares of Class B common stock of the Company beneficially held by the LPs were canceled in accordance with the Company’s Certificate of Incorporation.

At the consummation of the Merger, the Company simplified its tax structure, resulting in the Company and its subsidiaries forming one consolidated filing group for tax purposes. As a result, the Company recorded a one-time deferredan income tax benefit of ~~$131.4~~$78.3 million for the six months ended December 31, 2020 which reflects an effective tax rate of (63)%. The change in the effective tax rate for the six months ended December 31, 2021 is primarily driven by the prior year deferred tax remeasurement due to the change in the state statutory rate and valuation allowance ~~release.~~

~~Income~~release resulting from the Company and its subsidiaries forming one consolidated filing group for tax ~~expense for~~purposes at the three months ended March 31, 2021 and 2020 was $13.4 million and $4.2 million, respectively, which reflects effective tax rates of 21% and 5%, respectively. The effective tax rate for the three months ended March 31, 2021 increased compared to the prior year period as a resultconsummation of the prior year impact of the income tax benefit associated with the NOL carryback provisions under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the associated release of the valuation allowance in March 2020. Income tax (benefit) expense for the nine months ended March 31, 2021 andAugust 2020 was $(88.0) million and $78.3 million, respectively, which reflects effective tax rates of (47)% and 25%, respectively. The change in the effective tax rate for the nine months ended March 31, 2021 is primarily driven by the aforementioned one-time deferred tax remeasurement and valuation allowance release as a result of the Merger.Restructuring. Excluding the one-time deferred tax benefit, the effective tax rate would have been ~~23%~~24% for the ~~nine~~six months ended ~~March~~December 31, ~~2021.~~2020.

~~Net~~During the first quarter of fiscal year 2022, the Company assessed the future realization of its deferred tax assets increased by $408.9 million to $821.4 million at March 31, 2021 from $412.5 million at June 30, 2020. The increase in net deferred tax assets was largely driven by an increase of $285.0 million in deferred tax assets related to the final exchange of all outstanding Class B common units for the Company’s Class A common stock on August 11, 2020 and $131.4 million deferred tax remeasurement and valuation allowance release as a result of its plan to complete the ~~Merger.~~

Subsidiary Reorganization by the end of the second quarter of fiscal year 2022. On ~~August 10, 2020,~~December 1, 2021, the Company ~~exercised its right to terminate~~completed the ~~TRA by~~Subsidiary Reorganization and ~~among~~reassessed the valuation allowance release. In fiscal year 2022, the Company expects to release $32.3 million of deferred tax asset valuation allowance primarily related to finite-lived net operating losses and ~~the former limited partners of Premier LP by providing all former LPs a notice of the termination~~research and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA on the Determination Date (see Note 9 - Debt and Notes Payable for further information).development credit carryforwards. As a result of the ~~TRA termination, TRA liabilities~~Subsidiary Reorganization, the Company has included $6.4 million of ~~$293.7~~tax benefit in its annualized effective tax rate calculation based on the amount that is expected to offset ordinary income during fiscal year 2022. The remaining $25.9 million ~~at June 30, 2020 were extinguished~~of valuation allowance expected to be released relates to carryforwards expected to be utilized in future years and is being recognized as a ~~liability was recorded to current portion of notes payable to members and notes payable to members, less current portion~~discrete item in the ~~accompanying Condensed Consolidated Balance Sheets for amounts payable pursuant to the Unit Exchange Agreements.~~six months ended December 31, 2021.

~~(15) RELATED PARTY TRANSACTIONS~~

The Company’s 49% ownership share of net income of FFF, which was acquired on July 26, 2016, included in equity in net income of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income was $0.8 million and $4.3 million for the three months ended March 31, 2021 and 2020, respectively, and $8.4 million and $10.8 million for the nine months ended March 31, 2021 and 2020, respectively. The Company maintains group purchasing agreements with FFF and receives administrative fees for purchases made by the Company’s members and other customers pursuant to those agreements. Net administrative fees revenue recorded from purchases under those agreements was $1.1 million and $1.2 million during the three months ended March 31, 2021 and 2020, respectively, and $4.6 million and $5.8 million for the nine months ended March 31, 2021 and 2020.

~~(16)~~(14) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for the three months ended ~~March~~December 31, 2021 and 2020 was ~~$2.6~~$2.5 million and $2.7 million, respectively. Operating lease expense for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 ~~were both $8.2 million.~~was $5.1 million and $5.6 million, respectively. As of ~~March~~December 31, 2021, the weighted average remaining lease term was ~~5.0~~4.3 years and the weighted average discount rate was 4%.

Future minimum lease payments under ~~noncancelable~~noncancellable operating leases with initial lease terms in excess of one year were as follows (in thousands):


		March 31, 2021		June 30, 2020			December 31, 2021		June 30, 2021
2021 (a)		$	2,995	$	12,171
2022		11,738		11,738
2022 (a)						2022 (a)	$	6,003	$	11,738
2023	2023	12,012		12,012		2023	12,131		12,012
2024	2024	12,145		12,145		2024	12,267		12,145
2025	2025	12,177		12,177		2025	12,301		12,177
2026						2026	9,005		8,878
Thereafter	Thereafter	10,171		10,171		Thereafter	1,324		1,293
Total future minimum lease payments	Total future minimum lease payments	61,238		70,414		Total future minimum lease payments	53,031		58,243
Less: imputed interest	Less: imputed interest	5,820		7,567		Less: imputed interest	4,351		5,289
Total operating lease liabilities (b)	Total operating lease liabilities (b)	$	55,418	$	62,847	Total operating lease liabilities (b)	$	48,680	$	52,954

(a)As of ~~March~~December 31, 2021, future minimum lease payments are for the period from ~~April~~January 1, ~~2021~~2022 to June 30, ~~2021.~~2022.

(b)As of ~~March~~December 31, 2021, total operating lease liabilities included ~~$9.8~~$10.3 million within other current liabilities ~~current~~ in the Condensed Consolidated Balance Sheets.

3123

Other Matters

The Company is not currently involved in any litigation it believes to be material. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. Furthermore, as a public company, the Company may become subject to stockholder derivative or other similar litigation. If current or future government regulations, ~~specifically,~~including but not limited to those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the Company may be subject to regulatory inquiries or investigations, enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company’s business, financial condition and results of operations.

~~(17)~~(15) SEGMENTS

The Company delivers its solutions and manages its business through 2 reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company’s GPO, supply chain co-management and direct sourcing activities. The Performance Services segment ~~includes~~consists of 3 sub-brands: PINC AITM, the Company’s ~~informatics, collaborative, consulting~~technology and services platform; Contigo Health®, the Company’s direct-to-employer ~~initiative~~business; and ~~insurance management services businesses.~~RemitraTM, the Company’s digital invoicing and payables business.

The following table presents disaggregated revenue by business segment and underlying source (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Net revenue:	Net revenue:									Net revenue:
Segment net revenue										Segment net revenue
Supply Chain Services	Supply Chain Services									Supply Chain Services
Net administrative fees	Net administrative fees	$	146,553	$	174,049	$	424,537	$	518,566	Net administrative fees	$	150,403	$	145,339	$	299,865	$	277,984
Other services and support	Other services and support	8,630		3,396		18,307		8,439		Other services and support	9,326		4,086		18,251		9,677
Services	Services	155,183		177,445		442,844		527,005		Services	159,729		149,425		318,116		287,661
Products	Products	215,995		61,183		511,080		167,344		Products	111,766		179,670		230,196		295,085
Total Supply Chain Services (a)	Total Supply Chain Services (a)	371,178		238,628		953,924		694,349		Total Supply Chain Services (a)	271,495		329,095		548,312		582,746
Performance Services (a)	Performance Services (a)	98,745		96,195		285,713		262,490		Performance Services (a)	107,729		93,732		196,059		186,968
Total segment net revenue										Total segment net revenue	379,224		422,827		744,371		769,714
Eliminations (a)										Eliminations (a)	(9)		—		(9)		—
Net revenue	Net revenue	$	469,923	$	334,823	$	1,239,637	$	956,839	Net revenue	$	379,215	$	422,827	$	744,362	$	769,714

(a)Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.

3224

Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Depreciation and amortization expense (a):	Depreciation and amortization expense (a):									Depreciation and amortization expense (a):
Supply Chain Services	Supply Chain Services	$	9,389	$	6,896	$	27,608	$	16,592	Supply Chain Services	$	13,452	$	9,417	$	26,596	$	18,219
Performance Services	Performance Services	18,196		30,950		55,763		91,862		Performance Services	16,076		17,810		32,186		37,567
Corporate	Corporate	2,152		1,897		6,397		6,184		Corporate	2,192		2,126		4,423		4,245
Total depreciation and amortization expense	Total depreciation and amortization expense	$	29,737	$	39,743	$	89,768	$	114,638	Total depreciation and amortization expense	$	31,720	$	29,353	$	63,205	$	60,031

Capital expenditures:	Capital expenditures:									Capital expenditures:
Supply Chain Services	Supply Chain Services	$	2,486	$	2,485	$	8,061	$	4,571	Supply Chain Services	$	7,315	$	2,699	$	15,472	$	5,575
Performance Services	Performance Services	18,835		20,840		54,118		57,956		Performance Services	12,363		16,912		23,386		35,283
Corporate	Corporate	726		1,233		4,732		6,799		Corporate	1,932		271		3,802		4,006
Total capital expenditures	Total capital expenditures	$	22,047	$	24,558	$	66,911	$	69,326	Total capital expenditures	$	21,610	$	19,882	$	42,660	$	44,864


		March 31, 2021		June 30, 2020			December 31, 2021		June 30, 2021
Total assets:	Total assets:					Total assets:
Supply Chain Services	Supply Chain Services	$	1,698,254	$	1,483,751	Supply Chain Services	$	1,475,941	$	1,550,300
Performance Services	Performance Services	1,043,065		930,968		Performance Services	1,034,427		1,043,608
Corporate	Corporate	940,706		538,248		Corporate	941,097		928,939
Total assets	Total assets	3,682,025		2,952,967		Total assets	3,451,465		3,522,847
Eliminations (b)	Eliminations (b)	(60)		(4,452)		Eliminations (b)	(3)		51
Total assets, net	Total assets, net	$	3,681,965	$	2,948,515	Total assets, net	$	3,451,462	$	3,522,898

(a)Includes amortization of purchased intangible assets.

(b)Includes eliminations of intersegment transactions which occur during the ordinary course of business.

The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles (“Non-GAAP”)) as its primary measure of profit or loss to assess segment performance and to determine the allocation of resources. The Company also uses Segment Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Adjusted EBITDA as the segment’s net revenue ~~and equity in net income~~less cost of ~~unconsolidated affiliates less~~revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses, and non-recurring or non-cash ~~items.~~items, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see “Our Use of Non-GAAP Financial Measures” within Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

3325

A reconciliation of income before income taxes to unaudited Segment Adjusted EBITDA, a Non-GAAP financial measure, is as follows (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Income before income taxes	Income before income taxes	$	64,888	$	77,377	$	188,996	$	314,062	Income before income taxes	$	83,599	$	61,561	$	223,938	$	124,108
Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	(5,524)		(4,442)		(16,023)		(11,038)		Equity in net income of unconsolidated affiliates (a)	(6,116)		(4,572)		(13,174)		(10,499)
Interest and investment loss, net	Interest and investment loss, net	3,225		9,966		8,742		9,849		Interest and investment loss, net	2,873		3,398		5,661		5,517

Loss (gain) on FFF put and call rights (b)		5,195		13,906		21,621		(8,477)
Loss (gain) on FFF Put and Call Rights (b)										Loss (gain) on FFF Put and Call Rights (b)	—		14,507		(64,110)		16,426
Other (income) expense	Other (income) expense	(1,594)		5,005		(10,167)		1,996		Other (income) expense	(2,392)		(4,890)		(2,072)		(8,573)
Operating income	Operating income	66,190		101,812		193,169		306,392		Operating income	77,964		70,004		150,243		126,979
Depreciation and amortization	Depreciation and amortization	19,337		25,777		55,904		75,690		Depreciation and amortization	20,870		19,093		41,466		36,567
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,400		13,966		33,864		38,948		Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Stock-based compensation (c)	Stock-based compensation (c)	13,180		7,668		27,970		19,358		Stock-based compensation (c)	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	Acquisition and disposition related expenses	4,126		7,287		14,889		16,263		Acquisition and disposition related expenses	3,746		7,918		7,167		10,763

Remeasurement of tax receivable agreement liabilities (d)		0		(902)		0		(24,584)

Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	5,524		4,442		16,023		11,038		Equity in net income of unconsolidated affiliates (a)	6,116		4,572		13,174		10,499

Deferred compensation plan income (expense) (e)		1,521		(5,476)		9,231		(2,484)
Deferred compensation plan income (d)										Deferred compensation plan income (d)	2,389		4,803		2,071		7,710
Other expense, net	Other expense, net	929		1,315		5,718		3,929		Other expense, net	3,751		753		3,778		4,789
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	121,207	$	155,889	$	356,768	$	444,550	Non-GAAP Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

Segment Non-GAAP Adjusted EBITDA:	Segment Non-GAAP Adjusted EBITDA:									Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (f)		$	117,949	$	149,212	$	339,538	$	447,081
Performance Services (f)		35,950		34,634		109,675		84,977
Supply Chain Services (e)										Supply Chain Services (e)	$	134,280	$	118,939	$	263,549	$	221,590
Performance Services (e)										Performance Services (e)	39,010		36,609		62,725		73,724
Corporate	Corporate	(32,692)		(27,957)		(92,445)		(87,508)		Corporate	(31,274)		(30,730)		(62,555)		(59,753)
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	121,207	$	155,889	$	356,768	$	444,550	Non-GAAP Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

(a)Refer to Note 54 - Investments for more information.

(b)Refer to Note 65 - Fair Value Measurements for more information.

(c)Includes non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million ~~during~~for both of the three months ended ~~March~~December 31, 2021 and ~~2020. Also includes $0.4 million~~ 2020and $0.3 million ~~during~~and $0.2 million for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively.

(d)~~The adjustments to TRA liabilities for the three and nine months ended March 31, 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)~~(e)Includes intersegment revenue which is eliminated in consolidation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report. This discussion is designed to provide the reader with information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements. In addition, the following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see the discussions under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” herein and in our Form 10-K for the fiscal year ended June 30, ~~2020~~2021 (the ~~“2020~~“2021 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).

Business Overview

Our Business

Premier, Inc. (“Premier”, the “Company”, “we”, or “our”) is a leading healthcare improvement company, uniting an alliance of ~~more than 4,100~~ U.S. hospitals, ~~and~~ health systems and ~~approximately 200,000~~ other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians and other healthcare providers and organizations with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial,

operational and value-based care software-as-a-service (“SaaS”) ~~and~~as well as licensed-based clinical analytics products, enterprise analytics licenses, consulting services, ~~and~~ performance improvement collaborative ~~programs.~~programs, third-party administrator services and digital invoicing and payment processes for healthcare providers and vendors. We also provide services to ~~non-healthcare businesses.~~other businesses including food service, schools and universities.

We generated net revenue, net income ~~from continuing operations~~ and Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles (“Non-GAAP”)) for the periods presented as follows (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Net revenue	Net revenue	$	469,923	$	334,823	$	1,239,637	$	956,839	Net revenue	$	379,215	$	422,827	$	744,362	$	769,714
Net income from continuing operations		$	51,444	$	73,212	$	277,033	$	235,726
Net income										Net income	77,232		44,904		198,538		202,432
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	121,207	$	155,889	$	356,768	$	444,550	Non-GAAP Adjusted EBITDA	142,016		124,818		263,719		235,561

See “Our Use of Non-GAAP Financial Measures” and “Results of Operations” below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net income ~~from continuing operations~~ to Non-GAAP Adjusted EBITDA.

Our Business Segments

Our business model and solutions are designed to provide our members and other customers access to scale efficiencies while focusing on optimization of information resources and cost containment, provide actionable intelligence derived from anonymized data in our data warehouse provided by our members, mitigate the risk of innovation, and disseminate best practices that will help our member organizations and other customers succeed in their transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of total cost management, quality and safety improvement and population health management through two business segments: Supply Chain Services and Performance Services.

Segment net revenue for the three months ended ~~March~~December 31, 2021 and 2020 was as follows (in thousands):

Three Months Ended March 31, Change % of Net Revenue
Net revenue: 2021 2020 2021 2020 2021 2020
Supply Chain Services $ 371,178 $ 238,628 $ 132,550 56 % 79 % 71 %
Performance Services 98,745 96,195 2,550 3 % 21 % 29 %
Net revenue $ 469,923 $ 334,823 $ 135,100 40 % 100 % 100 %


	Three Months Ended December 31,				Change				% of Net Revenue
Net revenue:	2021		2020		2021		2020		2021		2020
Supply Chain Services	$	271,495	$	329,095	$	(57,600)	(18)	%	72	%	78	%
Performance Services	107,729		93,732		13,997		15	%	28	%	22	%
Net revenue	$	379,224	$	422,827	$	(43,603)	(10)	%	100	%	100	%

Segment net revenue for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 was as follows (in thousands):


		Nine Months Ended March 31,				Change				% of Net Revenue					Six Months Ended December 31,				Change				% of Net Revenue
Net revenue:	Net revenue:	2021		2020		2021		2020		2021		2020		Net revenue:	2021		2020		2021		2020		2021		2020
Supply Chain Services	Supply Chain Services	$	953,924	$	694,349	$	259,575	37	%	77	%	73	%	Supply Chain Services	$	548,312	$	582,746	$	(34,434)	(6)	%	74��	%	76	%
Performance Services	Performance Services	285,713		262,490		23,223		9	%	23	%	27	%	Performance Services	196,059		186,968		9,091		5	%	26	%	24	%
Net revenue	Net revenue	$	1,239,637	$	956,839	$	282,798	30	%	100	%	100	%	Net revenue	$	744,371	$	769,714	$	(25,343)	(3)	%	100	%	100	%

Our Supply Chain Services segment includes one of the largest healthcare group purchasing organization ~~programs~~ (“GPO”) programs in the United States, serving acute, non-acute and non-healthcare sites and ~~alternate sites,~~providing supply chain co-management and our direct sourcing activities. We generate revenue in our Supply Chain Services segment from administrative fees received from suppliers based on the total dollar volume of supplies purchased by our members and other customers, fees from supply chain co-management and through product sales in connection with our direct sourcing activities.

Our Performance Services segment ~~includes one~~consists of ~~the largest~~three sub-brands: PINC AITM, our technology and services platform with offerings that help optimize performance in three main areas – clinical ~~and cost analytics and consulting services businesses in the United States focused on healthcare providers. We are also expanding our capabilities to more fully address and coordinate care~~intelligence, margin improvement and ~~standardization in the employer, payor and life sciences markets. Our SaaS-based clinical~~value-based care – using advanced analytics ~~products and technology licenses utilize our comprehensive data set~~ to ~~provide actionable intelligence to our members and other customers, enabling them to benchmark, analyze and~~ identify ~~areas of~~ improvement across three main categories: cost management, quality and safety, and value based care. The Performance Services segment also includes our technology-enabled performance improvement collaboratives, consulting services, direct to employer initiative and insurance management services.

~~CEO Transition~~

In February 2021, we announced that Susan D. DeVore is retiring on June 30, 2021 and will step down as our chief executive officer and from the Board of Directors effective May 1, 2021, and that our president, Michael J. Alkire, will become our chief executive officer and a member of the Board of Directors effective May 1, 2021. Ms. DeVore is expected to provideopportunities, consulting services for ~~a period~~clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, life sciences and payer markets; Contigo Health®, our direct-to-employer business which provides third party administrator services and management of ~~twenty-four (24) months after her separation.~~health benefit programs; and RemitraTM, our digital invoicing and payables business. Each sub-brand serves different markets but are all united in our vision to optimize provider performance and accelerate industry innovation for better, smarter healthcare. For additional information, please see “Performance Services Realignment for Fiscal 2022” under “Item 1. Business” in our 2021 Annual Report.

Acquisitions

Acquisition of Invoice Delivery Services, LP Assets

On March 1, 2021, we acquired, through ~~a newly formed consolidated~~our indirect, wholly-owned subsidiary, Premier IDS, LLC, ~~acquired~~ substantially all the assets and assumed certain liabilities of Invoice Delivery Services, LP (“IDS”) for an adjusted purchase price of ~~$80.4~~$80.7 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under our Credit Facility (as defined in Note 98 - Debt and Notes Payable to the accompanying condensed consolidated financial statements).

IDS offers digitization technologies that convert paper and portable document format (“PDF”) invoices to an electronic format to automate, streamline, and simplify accounts payable processes in healthcare. IDS’ solutions include those for electronic invoicing and tracking, as well as digital payments. IDS will beis being integrated within Premier under the brand name RemitraTM ~~and reported as part of the Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.~~

~~Acquisition of Health Design Plus, LLC~~

On May 4, 2020, we, through our consolidated subsidiary, Premier Healthcare Solutions, Inc. (“PHSI”), acquired 97% of the equity of Health Design Plus, LLC (“HDP”) for an adjusted purchase price of $23.8 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under our Credit Facil~~ity.~~ ~~HDP is a third-party administrator and arranges care for employees through its Centers of Excellence program. Shortly after closing, HDP was renamed Contigo Health, LLC (“Contigo Health”)~~ and is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

~~Acquisition of Acurity and Nexera Assets~~

On February 28, 2020, we, through two newly formed consolidated subsidiaries, Prince A Purchaser, LLC (“PAP”) and Prince N Purchaser, LLC (“PNP”), acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., both indirect wholly owned subsidiaries of Greater New York Hospital Association (“GYNHA”), for an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under our Credit Facility (the “Acurity and Nexera asset acquisition”). Pursuant to the terms of the asset purchase agreement (as amended, the “Purchase Agreement”), an additional

$120.0 million will be paid to the sellers in four equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $4.7 million was paid to GNYHA during the three months ended March 31, 2021. In addition, the Purchase Agreement provides a graduated earn-out opportunity to Acurity, Inc. of up to $30.0 million based upon our achievement of a range of member renewals on terms to be agreed to by us and GNYHA based on prevailing market conditions in December 2023.

After the closing of the transaction, we changed the names of PAP and PNP to Acurity, LLC (“Acurity”) and Nexera, LLC (“Nexera”), respectively. Acurity is a regional group purchasing organization and has been a customer and strategic partner of ours for more than 24 years. Nexera is a hospital financial improvement consulting firm which partners with healthcare organizations to improve hospital and health system performance, with a significant focus on supply chain enhancement and transformation. We report the operations of Acurity and Nexera as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

~~Acquisition of Medpricer~~

On October 28, 2019, we, through our consolidated subsidiary, Premier Supply Chain Improvement, Inc. (“PSCI”), acquired all of the outstanding capital stock in Medpricer.com, Inc. (“Medpricer”) for an adjusted purchase price of $38.5 million giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Credit Facility. Medpricer is a SaaS-based provider of technology solutions that enable hospitals and other organizations to analyze, benchmark and source purchased services contracts independent of any existing GPO affiliation. During the fourth quarter of fiscal year 2020, Medpricer changed its name to Conductiv, Inc. (“Conductiv”) and is reported as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industrywide factors will continue to affect our business, in both in the short- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the ~~2020~~2021 Annual Report.

Trends in the U.S. healthcare market affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current healthcare business include the impact of the implementation of current or future healthcare legislation, particularly the ~~uncertainty regarding the status of~~potential for the Affordable Care Act (“ACA”) ~~and the potential for the ACA~~ to be ~~struck down as unconstitutional~~materially altered by Congress, through regulatory action by government agencies, or in the ~~U.S. Supreme Court or significantly altered by~~event of a change of party control in Congress. Actions related to the ACA could be disruptive for Premier and our customers, impacting revenue, reporting requirements, payment reforms, shift in care to the alternate site market and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment and healthcare providers will need to measure and report on and bear financial risk for outcomes. Over the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and value-based care, however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services or related assumptions on our business. See “Cautionary Note Regarding Forward-Looking Statements” for more information.

COVID-19 Pandemic, Variants Thereof, Recurrences or Similar Pandemics

In addition to the trends in the U.S. healthcare market discussed above, we face known and unknown uncertainties arising from the outbreak of the novel coronavirus (“COVID-19”) and the resulting global pandemic and financial and operational uncertainty, including its impact on the overall economy, our sales, operations and supply chains, our members and other customers, workforce and suppliers, and countries. As a result of the COVID-19 pandemic, variants thereof, and potential future pandemic outbreaks, we face significant risks including, but not limited to:

•Changes in the demand for our products and services. We ~~have~~ experienced and may continue to experience demand uncertainty from both ~~significant~~material increases and decreases in demand as a result of ~~COVID-19.~~the COVID-19 pandemic. There ~~has been~~was a ~~significant~~material increase in demand for personal protective equipment (“PPE”), drugs and other supplies directly related to treating and preventing the spread of ~~COVID-19. However, either voluntarily or due to government orders or advisories, patients,~~COVID-19 and variants thereof during fiscal 2020 and 2021. Patients, hospitals and other medical facilities have deferred and continue to defer some elective procedures and routine medical visits during the crisis ~~which~~due to ongoing and continuing volatility or as the result of government orders or advisories. This created a material decline in the demand for supplies and services not related to COVID-19 ~~through~~during 2020, 2021 and the ~~third quarter~~first half of ~~fiscal 2021~~2022, and such lower demand ~~is expected to~~may continue through fiscal ~~2021.~~2022 and beyond if COVID-19 vaccine protection wanes due to COVID-19 variants. In addition, as a result of our ~~members' and other customers’~~members’ focus on managing the effects of COVID-19 on patients and ~~its impacts,~~their businesses, we

~~may experience uncertain~~ have experienced a decrease in demand for our consulting and other performance service engagements. Furthermore, ~~during~~as a result of the COVID-19 pandemic, many of our ~~members'~~members’ non-acute or non-healthcare facilities, such as education and hospitality businesses, closed or operated on a limited or reduced ~~basis and~~basis. These facilities have ~~delayed re-opening,~~re-opened at a slower pace and, as a result, we may see a material reduction in product sales to those facilities. The extent to which these impacts on demand ~~will~~may continue, and the effect ~~that~~ they ~~will~~may have on our business and operating results, will depend upon future developments that are highly uncertain and cannot be accurately predicted.

•Limited access to our ~~members'~~members’ facilities that impacts our ability to fulfill our contractual requirements. Our member hospitals and non-acute care sites have experienced, and continue to experience, reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our ~~employees'~~employees’ ability to travel to our ~~members' facilities.~~members’ facilities and our performance under our existing contracts. The ~~long-term~~long-

term continuation, or any future recurrence of these circumstances may negatively impact the ability of our employees to ~~more~~ effectively deliver existing or sell new products and services to our members and could affect our performance of our existing contracts.

•Materials and personnel shortages and disruptions in supply chain, including manufacturing and shipping. The global supply chain has been ~~significantly~~materially disrupted due to ~~stay at home~~personnel shortages associated with ongoing COVID-19 rates of infection, stay-at-home orders, border closings, ~~and~~ rapidly escalating shipping ~~costs. Borders~~costs and material logistical delays due to port congestion. Border closings and restrictions in response to COVID-19, particularly regarding China, ~~and India,~~ have impacted our access to products for our ~~members and other customers.~~members. Staffing or personnel shortages due to ~~shelter in place~~shelter-in-place orders and quarantines, or other public health measures, have led to material logistical delays and an increase in shipping costs which have impacted and ~~in the future~~ may continue to impact us and our members, other customers or suppliers. In addition, due to unprecedented demand during the COVID-19 pandemic, there ~~are~~have been widespread shortages in certain product categories. During the COVID-19 pandemic, we lost revenue when member healthcare systems chose to source products directly themselves rather than through our GPO when incumbent suppliers could not deliver products in a timely manner or at all, and we were not able to locate reputable alternative suppliers. In the food service line, COVID-19 related illnesses ~~have~~ impacted food processing suppliers and led to plant closures. If the supply ~~chains~~chain for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing business ~~are~~continue to be adversely impacted by ~~restrictions resulting from~~the COVID-19 pandemic, our supply ~~chains~~chain may continue to be disrupted. In addition, due to the volatility of the price and supply of products, including PPE, there is risk that we may purchase products from suppliers at that we cannot recover in the event of a potential material price decline. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our members, other customers or to us, or ~~significant~~material disruptions in their ability to do so due to their own financial or operational difficulties, may adversely impact our operations.

•Requests for contract modifications, payment deferrals or exercises of force majeure clauses. 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. We have and may continue to receive requests to delay service or payment on performance service contracts. In addition, we have and may continue to receive requests from our suppliers for increases to their contracted prices, and such requests may be implemented in the future. Inflation in such contract prices may impact member utilization of items and services available through our GPO contracts, which could adversely impact our net administrative fees revenue and direct sourcing revenue. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us because they are unable to obtain raw materials for manufacturing from India and China. The standard failure to supply language in our contracts contains financial penalties to suppliers if they are unable to supply products, which such suppliers may not be able to pay. In addition, we may not be able to source products from alternative suppliers on commercially reasonable terms, or at all.

•Overall economic and capital markets decline. The impact of the COVID-19 pandemic and variants thereof and associated supply chain disruptions and inflation 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~~foreseen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices on the public stock market, ~~including~~as well as that of our Class A common stock, have been highly volatile as a result of the COVID-19 pandemic.

•Managing the evolving regulatory environment. In response to the COVID-19 pandemic and variants thereof, 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~~ other customers and suppliers.

The ultimate impact of COVID-19, variants thereof, recurrences, or similar pandemics on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of any pandemic and the related length of its impact on the United States and global economies, which are uncertain and cannot be predicted at this time. The impact of the COVID-19 pandemic, variants thereof, recurrences, or future similar pandemics may also exacerbate many of the other risks described in Item 1A. “Risk Factors” section of the ~~2020~~2021 Annual Report. Despite our efforts to manage these impacts, their ultimate impact depends on factors beyond our knowledge or control, including the duration and severity of any outbreak and actions taken to contain its spread and mitigate its public health effects. The foregoing and other continued disruptions in our business as a

result of the COVID-19 pandemic, variants thereof, recurrences or similar pandemics could result in a material adverse effect on our business, results of operations, financial condition, cash flows, prospects and the trading prices of our securities in the near-term and through ~~some or all of~~ fiscal ~~2021~~2022 and beyond.

Critical Accounting Policies and Estimates

Refer to Note 1 - Organization ~~and Basis of Presentation~~ and Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements for more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our ~~2020~~2021 Annual Report.

New Accounting Standards

New accounting standards that we have recently adopted as well as those that have been recently issued but not yet adopted by us are included in Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements, which is incorporated herein by reference.

Key Components of Our Results of Operations

Net Revenue

Net revenue consists of service revenue, which includes net administrative fees revenue and other services and support revenue, and ~~product~~products revenue. Net administrative fees revenue consists of GPO administrative fees in our Supply Chain Services segment. Other services and support revenue consists primarily of fees generated by our Performance Services segment ~~as discussed below. Product~~and supply chain co-management revenue generated by our Supply Chain Services segment. Products revenue consists of direct sourcing product sales, which are included in ~~the~~our Supply Chain Services segment.

Supply Chain Services

Supply Chain Services revenue consists of GPO net administrative fees (gross administrative fees received from suppliers, reduced by the amount of revenue share paid to members), supply chain co-management and direct sourcing revenue.

The success of our Supply Chain Services revenue streams are influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, as well as the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans and the number of members and other customers that purchase products through our direct sourcing activities and the impact of competitive pricing.

Performance Services

Performance Services revenue consists ~~of SaaS~~of:

•Health care information technology license and SaaS-based clinical, ~~analytics~~margin improvement and value-based care products subscriptions, license fees, performance improvement collaborative and other service subscriptions and professional fees for consulting services ~~third party administrator fees for~~under our ~~direct to employer initiative,~~ PINC AI technology and services platform;

•insurance services management fees and commissions from endorsed commercial insurance ~~programs.~~programs;

•third party administrator fees for our Contigo Health direct to employer business; and

•customer fees for our Remitra digital invoicing and payables business.

Our Performance Services growth will depend upon the expansion of our ~~SaaS clinical analytics products, performance improvement collaboratives~~PINC AI technology and ~~consulting~~ services platform to new and existing members and other customers, expansion of our Contigo Health and Remitra businesses to new and existing members, renewal of existing subscriptions to our SaaS and licensed ~~informatics~~software products, ~~and~~ our ability to generate additional applied sciences engagements, our ability to sell enterprise analytics licenses to new and ~~expand~~existing customers at rates sufficient to offset the loss of recurring SaaS-based revenue due to the conversion to an enterprise analytics license and expansion into new markets.

Cost of Revenue

Cost of revenue consists of cost of service revenue and cost of ~~product~~products revenue.

Cost of service revenue includes expenses related to employees (including compensation and benefits) and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and other customers, third-party administrator services and implementation services related to our SaaS ~~clinical analytics~~and licensed software products along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. Amortization of contract costs included within cost of service revenue include costs related to implementing SaaS informatics tools. Cost of service revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internally developed software applications.

3930

Cost of ~~product~~products revenue consists of purchase and shipment costs for direct sourced medical and commodity products. Our cost of ~~product~~products revenue is influenced by the manufacturing and transportation costs associated with direct sourced medical and commodity products.

Operating Expenses

Operating expenses includes selling, general and administrative expenses, research and development expenses and amortization of purchased intangible assets.

Selling, general and administrative expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. Selling, general and administrative expenses primarily consist of compensation and benefits related costs, travel-related expenses, business development expenses, including costs for business acquisition opportunities, ~~business disposition related expenses,~~ indirect costs such as insurance, professional fees and other general overhead expenses, and amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract.

Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, net of capitalized labor, incurred to develop our software-related products and ~~services.~~services prior to reaching technological feasibility.

Amortization of purchased intangible assets includes the amortization of all identified intangible assets.

Other Income (Expense) ~~Income,~~, Net

Other income (expense) income, net, includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our interests in FFF Enterprises, Inc. (“FFF”), Exela Holdings, Inc. (“Exela”), and Prestige Ameritech Ltd. (“Prestige”) (see Note 4 - Investments). Other income (expense) ~~income,~~, net, also includes the change in the fair value of ~~our~~the FFF ~~put~~Call Right and ~~call rights~~the gain recognized due to the termination of the FFF Put Right and derecognition of the associated liability (see Note 65 - Fair Value Measurements), interest income and expense, realized and unrealized gains or losses on deferred compensation plan assets, gains or losses on the disposal of assets, and any impairment on our held-to-maturity investments.

Income Tax Expense

On August 11, 2020, we entered into the Merger Agreement by and among us, Premier Healthcare Alliance, LP (“Premier LP”) and BridgeCo, a wholly owned subsidiary of Premier Services, LLC formed for the sole purpose of merging with and into Premier LP. Pursuant to the Merger Agreement, (i) each of the issued and outstanding Class B common units of Premier LP was canceled and converted automatically into a right to receive one share of our Class A common stock, and (ii) all of the issued and outstanding shares of our Class B common stock beneficially held by the limited partners of Premier LP were canceled in accordance with our Certificate of Incorporation. As a result of the Merger, we simplified our tax structure whereby we and our subsidiaries formed one consolidated filing group for federal income tax purposes. See Note 14 - Income Taxes. (Benefit)

Adjusted Net Income, a Non-GAAP financial measure as defined below in “Our Use of Non-GAAP Financial Measures”, is calculated net of taxes based on our estimated annual effective tax rate for federal and state income tax, adjusted for unusual or infrequent items, as we are a consolidated filing group for federal income tax purposes with all of our subsidiaries’ activities included. ~~Prior to August 11, 2020, Adjusted Net Income was calculated as if we were one consolidated group for~~The tax ~~purposes. The~~ rate used to compute Adjusted Net Income was ~~22%~~25% and 24% for the ~~three and nine~~six months ended ~~March~~December 31, 2021 and ~~26%~~2020, respectively. The change in the tax rate used to compute Adjusted Net Income is due to our internal legal entity reorganization of our corporate subsidiaries for the ~~three~~purpose of simplifying our subsidiary reporting structure on December 1, 2021 (the “Subsidiary Reorganization”) resulting in the release of $32.3 million of valuation allowance of our deferred tax asset in the fiscal year ending June 30, 2022. As a result of the Subsidiary Reorganization, one of our consolidated subsidiaries is expected to have sufficient income to utilize its net operating loss and ~~nine~~research and development credit carryforwards.

During the first quarter of fiscal 2022, we made substantial progress on the Subsidiary Reorganization and as we expected to complete it prior to December 31, 2021, we released the valuation allowance. On December 1, 2021, we completed the Subsidiary Reorganization and reassessed the portion of the valuation allowance benefited through fiscal 2022 ordinary income and the portion included as a discrete item. Of the $32.3 million valuation allowance expected to be released, $6.4 million is included in the estimated annual effective tax rate calculation to the extent such carryforwards are projected to offset fiscal 2022 ordinary income. The remaining $25.9 million of valuation allowance expected to be released has been included as a discrete item in the six months ended ~~March~~December 31, ~~2020.~~2021.

Net Income Attributable to Non-Controlling Interest

~~For the nine months ended March 31, 2021, we recognized~~We recognize net income attributable to ~~the limited partners of Premier LP through August 11, 2020, the date of the Merger.~~non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments. At ~~March~~December 31, 2021, we ~~through Premier Services, LLC (“Premier GP), the sole general partner of Premier LP, and Premier Services II, LLC, a Delaware limited liability company, wholly~~ owned subsidiary of us and sole limited partner of Premier LP, held 100% interest in Premier LP. At June 30, 2020, we held 59% sole general partner interest in Premier LP. In addition to their equity ownership interest in us, our members held a 0% and 41% limited partner interest in Premier LP at March 31, 2021 and June 30, 2020, respectively (see Note 10 - Redeemable Limited Partners' Capital to the accompanying condensed consolidated financial statements).

Through our consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), we hold an approximate 20% interest in Prestige through PRAM’s ownership of Prestige limited partnership units at March 31, 2021. We own approximately 26%, 21% and 15% of the membership interest of PRAM ~~with~~Holdings, LLC (“PRAM”), DePre Holdings, LLC (“DePre”) and ExPre Holdings, LLC (“ExPre”), respectively. We recognized net income attributable to non-controlling interest for the ~~remainder~~74%, 79% and 85% interest held in PRAM, DePre and ExPre, respectively, by 16 member health systems or their affiliates. PRAM, DePre and ExPre are investments we made as part of our long-term supply chain resiliency program to promote domestic and geographically diverse manufacturing and to help ensure a robust and resilient supply chain for essential medical products.

As of December 31, 2021, we own 92% of the equity interest in Contigo Health and recognized net income attributable to non-controlling interest for the ~~74% interest~~4% of equity held by ~~the 16~~an affiliate of a member health ~~systems.~~

~~Through our consolidated subsidiary, DePre Holdings, LLC (“DPH”), we hold an approximate 49% interest~~system in ~~DePre, LLC (“DePre”) through DPH’s ownership of DePre membership interests at March 31, 2021. We own approximately 21% of the membership interest of DPH, with the remainder~~addition to 4% held by ~~34 member health systems, and recognized net income attributable to non-controlling interest for the 79% interest held by the 34 member health systems.~~

Ascertain customers of ~~March 31, 2021, we own 97% of the equity interest in HDP and recognized net income attributable to non-controlling interest for the 3% of equity retained by University Hospitals Holdings, Inc.~~Contigo Health.

Our Use of Non-GAAP Financial Measures

The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, ~~(historically referenced as “Adjusted Fully Distributed Net Income”),~~ Adjusted Earnings per Share ~~(historically referenced as “Adjusted Fully Distributed Earnings per Share”)~~ and Free Cash Flow, which are all Non-GAAP financial measures.

We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic and financial restructuring expenses. Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

We define Segment Adjusted EBITDA as the segment’s net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

We define Adjusted Net Income as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iv) excluding the effect of non-recurring or non-cash items, including certain strategic and financial restructuring expenses, (v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and (vi) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items. We define Adjusted Earnings per Share as Adjusted Net Income divided by diluted weighted average shares (see Note 1211 - Earnings Per Share).

We define Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and Tax Receivable Agreement (“TRA”) payments to limited partners, early termination payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Acceleration Agreement (“Unit Exchange Agreement”) in connection with our August 2020 Restructuring and purchases of property and equipment. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.

Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and Free Cash Flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, Segment Adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.

We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization), certain items outside the control of our management team, e.g. taxes, other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), ~~and~~ non-recurring items (such as strategic and financial restructuring expenses) and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Net Income and Adjusted Earnings per Share assist our Board of Directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such

as strategic and financial restructuring expenses), and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units for shares of Class A common stock. We believe Free Cash Flow is an

important measure because it represents the cash that we generate after payment of tax distributions to limited partners, payments to certain former limited partners that elected to execute a Unit Exchange Agreement and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow allows us to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.

Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.

Some of the limitations of the EBITDA, Adjusted EBITDA and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.

Some of the limitations of the Adjusted Net Income and Adjusted Earnings per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Net Income and Adjusted Earnings per Share are not measures of profitability under GAAP.

We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Net Income consist of stock-based compensation, acquisition and disposition related expenses, remeasurement of TRA liabilities, gain on or loss on the FFF ~~put~~Put and ~~call rights,~~Call Rights, income and expense that has been classified as discontinued operations and other expense. More information about certain of the more significant items follows below.

Stock-based compensation

In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million for both the three months ended ~~March~~December 31, 2021 and 2020 and ~~$0.4~~$0.3 million and ~~$0.3~~$0.2 million for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively (see Note 1312 - Stock-Based Compensation to the accompanying condensed consolidated financial statements).

Acquisition and disposition related expenses

Acquisition related expenses include legal, accounting, and other expenses related to acquisition activities and gains and losses on the change in fair value of earn-out liabilities. Disposition related expenses include severance and retention benefits and financial advisor fees and legal fees related to disposition activities.

~~Remeasurement of TRA liabilities~~

On August 10, 2020, we exercised our right to terminate the TRA entered into as of September 25, 2013 and effective as of October 1, 2013 by and among us and the former limited partners of Premier LP by providing all former LPs a notice of the termination and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020.

Prior to termination of the TRA, we recorded TRA liabilities based on 85% of the estimated amount of tax savings we expected to receive, generally over a 15-year period, which were attributable to the initial purchase of Class B common units from the member owners made concurrently with the IPO and subsequent exchanges by member owners of Class B common units into Class A common stock or cash. Tax payments made under the TRA were made to the member owners as we realized tax benefits. Determining the estimated amount of tax savings we expected to receive required judgment as deductibility of goodwill amortization expense was not assured and the estimate of tax savings was dependent upon the actual realization of the tax benefit and the tax rates in effect at that time.

Gain or loss on FFF ~~put~~Put and ~~call rights~~Call Rights

See Note 65 - Fair Value Measurements to the accompanying condensed consolidated financial statements.

4333

Results of Operations

~~Results of operations for all periods presented have been retrospectively adjusted to reflect continuing operations unless otherwise indicated.~~

The following table presents our results of operations for the periods presented (in thousands, except per share data):


		Three Months Ended March 31,						Nine Months Ended March 31,							Three Months Ended December 31,						Six Months Ended December 31,
		2021			2020			2021			2020				2021			2020			2021			2020
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
Net revenue:	Net revenue:													Net revenue:
Net administrative fees	Net administrative fees	$	146,553	31%	$	174,049	52%	$	424,537	34%	$	518,566	54%	Net administrative fees	$	150,403	40%	$	145,339	34%	$	299,865	40%	$	277,984	36%
Other services and support	Other services and support	107,375		23%	99,591		30%	304,020		25%	270,929		29%	Other services and support	117,046		31%	97,818		23%	214,301		29%	196,645		26%
Services	Services	253,928		54%	273,640		82%	728,557		59%	789,495		83%	Services	267,449		71%	243,157		58%	514,166		69%	474,629		62%
Products	Products	215,995		46%	61,183		18%	511,080		41%	167,344		17%	Products	111,766		29%	179,670		42%	230,196		31%	295,085		38%
Net revenue	Net revenue	469,923		100%	334,823		100%	1,239,637		100%	956,839		100%	Net revenue	379,215		100%	422,827		100%	744,362		100%	769,714		100%
Cost of revenue:	Cost of revenue:													Cost of revenue:
Services	Services	46,980		10%	49,007		15%	125,852		10%	143,965		15%	Services	45,782		12%	40,122		9%	89,591		12%	78,872		10%
Products	Products	211,136		45%	54,121		16%	496,286		40%	150,415		16%	Products	96,933		26%	171,722		41%	206,295		28%	285,150		37%
Cost of revenue	Cost of revenue	258,116		55%	103,128		31%	622,138		50%	294,380		31%	Cost of revenue	142,715		38%	211,844		50%	295,886		40%	364,022		47%
Gross profit	Gross profit	211,807		45%	231,695		69%	617,499		50%	662,459		69%	Gross profit	236,500		62%	210,983		50%	448,476		60%	405,692		53%
Operating expenses:
Selling, general and administrative		134,502		29%	115,289		34%	388,453		31%	315,311		33%
Research and development		715		—%	628		—%	2,013		—%	1,808		—%
Amortization of purchased intangible assets		10,400		2%	13,966		4%	33,864		3%	38,948		4%
Operating expenses	Operating expenses	145,617		31%	129,883		38%	424,330		34%	356,067		37%	Operating expenses	158,536		42%	140,979		33%	298,233		40%	278,713		36%
Operating income	Operating income	66,190		14%	101,812		30%	193,169		16%	306,392		32%	Operating income	77,964		21%	70,004		17%	150,243		20%	126,979		16%
Other (expense) income, net		(1,302)		—%	(24,435)		(7)%	(4,173)		—%	7,670		1%
Other income (expense), net														Other income (expense), net	5,635		1%	(8,443)		(2)%	73,695		10%	(2,871)		—%
Income before income taxes	Income before income taxes	64,888		14%	77,377		23%	188,996		15%	314,062		33%	Income before income taxes	83,599		22%	61,561		15%	223,938		30%	124,108		16%
Income tax expense (benefit)	Income tax expense (benefit)	13,444		3%	4,165		1%	(88,037)		(7)%	78,336		8%	Income tax expense (benefit)	6,367		2%	16,657		4%	25,400		3%	(78,324)		(10)%
Net income from continuing operations		51,444		11%	73,212		22%	277,033		22%	235,726		25%
Income from discontinued operations, net of tax		—		—%	5		—%	—		—%	1,009		—%
Net income	Net income	51,444		11%	73,217		22%	277,033		22%	236,735		25%	Net income	77,232		20%	44,904		11%	198,538		27%	202,432		26%
Net income from continuing operations attributable to non-controlling interest		(3,123)		(1)%	(35,055)		(10)%	(15,903)		(1)%	(132,189)		(14)%
Net income from discontinued operations attributable to non-controlling interest		—		—%	(3)		—%	—		—%	(480)		—%
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	(3,123)		(1)%	(35,058)		(10)%	(15,903)		(1)%	(132,669)		(14)%	Net income attributable to non-controlling interest	(1,687)		—%	(935)		—%	(989)		—%	(12,780)		(2)%
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		nm	302,569		nm	(26,685)		nm	516,725		nm	Adjustment of redeemable limited partners’ capital to redemption amount	—		—%	—		—%	—		—%	(26,685)		(3)%
Net income attributable to stockholders	Net income attributable to stockholders	$	48,321	nm	$	340,728	nm	$	234,445	nm	$	620,791	nm	Net income attributable to stockholders	$	75,545	nm	$	43,969	nm	$	197,549	nm	$	162,967	nm

Weighted average shares outstanding:
Earnings per share attributable to stockholders:														Earnings per share attributable to stockholders:
Basic	Basic	122,254			69,451			114,596			65,582			Basic	$	0.62		$	0.36		$	1.62		$	1.47
Diluted	Diluted	123,116			122,470			115,365			124,030			Diluted	$	0.62		$	0.36		$	1.61		$	1.46

Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders		$	0.40		$	4.91		$	2.05		$	9.47
Diluted earnings per share attributable to stockholders		$	0.39		$	0.54		$	2.03		$	1.66

nm = Not meaningful

The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data). Refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.


		Three Months Ended March 31,						Nine Months Ended March 31,							Three Months Ended December 31,					Six Months Ended December 31,
		2021			2020			2021			2020				2021			2020		2021			2020
Certain Non-GAAP Financial Data:	Certain Non-GAAP Financial Data:	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Certain Non-GAAP Financial Data:	Amount		% of Net Revenue	Amount	% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
Adjusted EBITDA	Adjusted EBITDA	$	121,207	26%	$	155,889	47%	$	356,768	29%	$	444,550	46%	Adjusted EBITDA	$	142,016	37%	124,818	30%	$	263,719	35%	$	235,561	31%
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	$	78,535	17%	$	88,908	27%	$	232,023	19%	$	265,668	28%	Non-GAAP Adjusted Net Income	90,011		24%	79,394	19%	165,145		22%	149,553		19%
Non-GAAP Adjusted Earnings Per Share	Non-GAAP Adjusted Earnings Per Share	$	0.64	nm	$	0.73	nm	$	1.89	nm	$	2.14	nm	Non-GAAP Adjusted Earnings Per Share	0.73		nm	0.65	nm	1.34		nm	1.22		nm

nm = Not meaningful

The following tables provide the reconciliation of net income ~~from continuing operations~~ to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (in thousands). Refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Net income from continuing operations		$	51,444	$	73,212	$	277,033	$	235,726
Interest and investment loss, net		3,225		9,966		8,742		9,849
Net income										Net income	$	77,232	$	44,904	$	198,538	$	202,432
Interest expense, net										Interest expense, net	2,873		3,398		5,661		5,517
Income tax expense (benefit)	Income tax expense (benefit)	13,444		4,165		(88,037)		78,336		Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Depreciation and amortization	Depreciation and amortization	19,337		25,777		55,904		75,690		Depreciation and amortization	20,870		19,093		41,466		36,567
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,400		13,966		33,864		38,948		Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
EBITDA	EBITDA	97,850		127,086		287,506		438,549		EBITDA	118,192		94,312		292,804		189,656
Stock-based compensation	Stock-based compensation	13,180		7,668		27,970		19,358		Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	Acquisition and disposition related expenses	4,126		7,287		14,889		16,263		Acquisition and disposition related expenses	3,746		7,918		7,167		10,763

Remeasurement of tax receivable agreement liabilities		—		(902)		—		(24,584)

Loss (gain) on FFF put and call rights		5,195		13,906		21,621		(8,477)
Loss (gain) on FFF Put and Call Rights										Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net	Other expense, net	856		844		4,782		3,441		Other expense, net	3,748		666		3,777		3,926
Adjusted EBITDA	Adjusted EBITDA	$	121,207	$	155,889	$	356,768	$	444,550	Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

Income before income taxes	Income before income taxes	$	64,888	$	77,377	$	188,996	$	314,062	Income before income taxes	$	83,599	$	61,561	$	223,938	$	124,108
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(5,524)		(4,442)		(16,023)		(11,038)		Equity in net income of unconsolidated affiliates	(6,116)		(4,572)		(13,174)		(10,499)
Interest and investment loss, net		3,225		9,966		8,742		9,849

Loss (gain) on FFF put and call rights		5,195		13,906		21,621		(8,477)
Other (income) expense		(1,594)		5,005		(10,167)		1,996
Interest expense, net										Interest expense, net	2,873		3,398		5,661		5,517
Loss (gain) on FFF Put and Call Rights										Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net										Other expense, net	(2,392)		(4,890)		(2,072)		(8,573)
Operating income	Operating income	66,190		101,812		193,169		306,392		Operating income	77,964		70,004		150,243		126,979
Depreciation and amortization	Depreciation and amortization	19,337		25,777		55,904		75,690		Depreciation and amortization	20,870		19,093		41,466		36,567
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,400		13,966		33,864		38,948		Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Stock-based compensation	Stock-based compensation	13,180		7,668		27,970		19,358		Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	Acquisition and disposition related expenses	4,126		7,287		14,889		16,263		Acquisition and disposition related expenses	3,746		7,918		7,167		10,763

Remeasurement of tax receivable agreement liabilities		—		(902)		—		(24,584)

Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	5,524		4,442		16,023		11,038		Equity in net income of unconsolidated affiliates	6,116		4,572		13,174		10,499
Deferred compensation plan income (expense)		1,521		(5,476)		9,231		(2,484)
Deferred compensation plan income										Deferred compensation plan income	2,389		4,803		2,071		7,710
Other expense, net	Other expense, net	929		1,315		5,718		3,929		Other expense, net	3,751		753		3,778		4,789
Adjusted EBITDA	Adjusted EBITDA	$	121,207	$	155,889	$	356,768	$	444,550	Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Segment Adjusted EBITDA:
Supply Chain Services	$	134,280	$	118,939	$	263,549	$	221,590
Performance Services	39,010		36,609		62,725		73,724
Corporate	(31,274)		(30,730)		(62,555)		(59,753)
Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

4535

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Segment Adjusted EBITDA:
Supply Chain Services $ 117,949 $ 149,212 $ 339,538 $ 447,081
Performance Services 35,950 34,634 109,675 84,977
Corporate (32,692) (27,957) (92,445) (87,508)
Adjusted EBITDA $ 121,207 $ 155,889 $ 356,768 $ 444,550

The following table provides the reconciliation of net income attributable to stockholders to Non-GAAP Adjusted Net Income and the reconciliation of the numerator and denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share for the periods presented (in thousands). Refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings per Share.


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Net income attributable to stockholders	Net income attributable to stockholders	$	48,321	$	340,728	$	234,445	$	620,791	Net income attributable to stockholders	$	75,545	$	43,969	$	197,549	$	162,967
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		(302,569)		26,685		(516,725)		Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		26,685
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	3,123		35,058		15,903		132,669		Net income attributable to non-controlling interest	1,687		935		989		12,780
Income from discontinued operations, net of tax		—		(5)		—		(1,009)
Income tax expense (benefit)	Income tax expense (benefit)	13,444		4,165		(88,037)		78,336		Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,400		13,966		33,864		38,948		Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Stock-based compensation	Stock-based compensation	13,180		7,668		27,970		19,358		Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	Acquisition and disposition related expenses	4,126		7,287		14,889		16,263		Acquisition and disposition related expenses	3,746		7,918		7,167		10,763

Remeasurement of tax receivable agreement liabilities		—		(902)		—		(24,584)

Loss (gain) on FFF put and call rights		5,195		13,906		21,621		(8,477)

Loss (gain) on FFF Put and Call Rights										Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net	Other expense, net	2,897		844		10,126		3,441		Other expense, net	5,490		2,805		7,378		7,229
Non-GAAP adjusted income before income taxes	Non-GAAP adjusted income before income taxes	100,686		120,146		297,466		359,011		Non-GAAP adjusted income before income taxes	120,015		104,466		220,193		196,780
Income tax expense on adjusted income before income taxes (a)	Income tax expense on adjusted income before income taxes (a)	22,151		31,238		65,443		93,343		Income tax expense on adjusted income before income taxes (a)	30,004		25,072		55,048		47,227
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	$	78,535	$	88,908	$	232,023	$	265,668	Non-GAAP Adjusted Net Income	$	90,011	$	79,394	$	165,145	$	149,553

Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share	Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share									Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share
Weighted Average:	Weighted Average:									Weighted Average:
Basic weighted average shares outstanding	Basic weighted average shares outstanding	122,254		69,451		114,596		65,582		Basic weighted average shares outstanding	121,181		122,127		122,063		110,851
Dilutive securities	Dilutive securities	862		645		769		662		Dilutive securities	1,292		792		1,460		722
Class B shares outstanding (b)		—		52,374		—		57,786

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	123,116		122,470		115,365		124,030		Weighted average shares outstanding - diluted	122,473		122,919		123,523		111,573
Dilutive securities		—		—		—		—

Class B shares outstanding (b)	Class B shares outstanding (b)	—		—		7,511		—		Class B shares outstanding (b)	—		—		—		11,185
Non-GAAP weighted average shares outstanding - diluted	Non-GAAP weighted average shares outstanding - diluted	123,116		122,470		122,876		124,030		Non-GAAP weighted average shares outstanding - diluted	122,473		122,919		123,523		122,758

(a)Reflects income tax expense at an estimated effective income tax rate of ~~22%~~25% of non-GAAP adjusted net income before income taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2021 and ~~26%~~24% of non-GAAP adjusted net income before income taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2020.

(b)For the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the effect of ~~7.5~~11.2 million Class B ~~commons were~~common shares was excluded from the GAAP diluted weighted average shares outstanding as they had an anti-dilutive ~~effect. On~~effect and on a non-GAAP basis, the effect of ~~7.5~~11.2 million Class B common ~~units~~shares was included in the non-GAAP diluted weighted average shares outstanding.

4636

The following table provides the reconciliation of earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share for the periods presented. Refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Non-GAAP Adjusted Earnings per Share.


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended December 31,				Six Months Ended December 31,
		2021		2020		2021		2020			2021		2020		2021		2020
Earnings per share attributable to stockholders	Earnings per share attributable to stockholders	$	0.40	$	4.91	$	2.05	$	9.47	Earnings per share attributable to stockholders	$	0.62	$	0.36	$	1.62	$	1.47
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		(4.36)		0.23		(7.88)		Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		0.24
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	0.03		0.50		0.14		2.02		Net income attributable to non-controlling interest	0.01		0.01		0.01		0.12
Income from discontinued operations, net of tax		—		—		—		(0.02)
Income tax expense (benefit)	Income tax expense (benefit)	0.11		0.06		(0.77)		1.19		Income tax expense (benefit)	0.05		0.14		0.21		(0.71)
Amortization of purchased intangible assets	Amortization of purchased intangible assets	0.09		0.20		0.30		0.59		Amortization of purchased intangible assets	0.09		0.08		0.18		0.21
Stock-based compensation	Stock-based compensation	0.11		0.11		0.24		0.30		Stock-based compensation	0.13		0.06		0.20		0.13
Acquisition and disposition related expenses	Acquisition and disposition related expenses	0.03		0.10		0.13		0.25		Acquisition and disposition related expenses	0.03		0.06		0.06		0.10

Remeasurement of tax receivable agreement liabilities		—		(0.01)		—		(0.37)

Loss (gain) on FFF put and call rights		0.04		0.20		0.19		(0.13)

Loss (gain) on FFF Put and Call Rights										Loss (gain) on FFF Put and Call Rights	—		0.12		(0.53)		0.15
Other expense, net	Other expense, net	0.02		0.01		0.09		0.05		Other expense, net	0.06		0.02		0.06		0.07
Impact of corporation taxes (a)	Impact of corporation taxes (a)	(0.19)		(0.45)		(0.57)		(1.42)		Impact of corporation taxes (a)	(0.25)		(0.20)		(0.45)		(0.43)
Impact of dilutive shares (b)	Impact of dilutive shares (b)	—		(0.54)		(0.14)		(1.91)		Impact of dilutive shares (b)	(0.01)		—		(0.02)		(0.13)
Non-GAAP Adjusted Earnings Per Share	Non-GAAP Adjusted Earnings Per Share	$	0.64	$	0.73	$	1.89	$	2.14	Non-GAAP Adjusted Earnings Per Share	$	0.73	$	0.65	$	1.34	$	1.22

(a)Reflects income tax expense at an estimated effective income tax rate of ~~22%~~25% ofnon-GAAP adjusted net income before income taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2021 and ~~26%~~24% of non-GAAP adjusted net income before income taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2020.

(b)Reflects impact of dilutive shares on a non-GAAP basis, primarily attributable to the assumed conversion of ~~all~~the weighted average outstanding Class B common units for the six months ended December 31, 2020 for Class A common stock.

Consolidated Results - Comparison of the Three Months Ended ~~March~~December 31, 2021 to 2020

~~Net Revenue~~

Net revenue increased by $135.1 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an increase of $154.8 million in product revenue and an increase of $7.8 million in other services and support revenue, partially offset by a decrease of $27.5 million in net administrative fees revenue. The variances in the material factors contributing to the changes in the consolidated ~~net revenue~~results are discussed further in “Segment Results” below.

~~Cost of~~Net Revenue

~~Cost of~~Net revenue ~~increased~~decreased by ~~$155.0~~$43.6 million during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020, primarily due to a decrease of $67.9 million in products revenue partially offset by an increase of $5.1 million in net administrative fees revenue and an increase of $19.2 million in other services and support revenue.

Cost of Revenue

Cost of revenue decreased by $69.1 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to a decrease of $74.8 million in cost of products revenue partially offset by an increase of $5.7 million in cost of services revenue.

Operating Expenses

Operating expenses increased by $17.5 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to an increase of $157.0 million in cost of product revenue, partially offset by a decrease of $2.0 million in cost of services revenue. The variances in the material factors contributing to the changes in consolidated cost of revenue are discussed further in “Segment Results” below.

~~Operating Expenses~~

~~Operating expenses increased by $15.7 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an increase of $19.2~~$16.8 million in selling, general and administrative ~~expenses. The variances~~expenses and an increase of $0.6 million in ~~the material factors contributing to the changes in consolidated operating expenses are discussed further in “Segment Results” below.~~amortization of purchased intangible assets.

Other Income, Net

Other income, net increased by ~~$23.1~~$14.0 million during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020, primarily due to ~~a decrease in~~ the loss on the FFF ~~put and call rights~~Put Right in the prior year period. There was no gain or loss on the FFF Put Right recognized in the current period as a result of the termination and corresponding derecognition of the FFF Put Right liability on July 29, 2021 (see Note 65 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information) ~~and the other than temporary impairment charges associated with held-to-maturity investments in the prior year period.~~.

Income Tax Expense

For the three months ended ~~March~~December 31, 2021, we recorded tax expense of ~~$13.4~~$6.4 million compared to tax expense of ~~$4.2~~$16.7 million recorded during the three months ended ~~March~~December 31, 2020. The tax expense recorded during the three months ended ~~March~~December 31, 2021 and 2020 resulted in effective tax rates of 7.6% and 27.1%, respectively. The change in the effective tax

4737

~~2021 and 2020 results in effective tax rates of 21% and 5%, respectively. The increase in the effective tax~~ rate is ~~largely driven by~~attributable to the ~~prior year impact of the income tax benefit associated with the NOL carryback provisions under the CARES Act~~Subsidiary Reorganization. (See Note 1 - Organization and ~~the associated release of the valuation allowance in March 2020. See~~ Note 1413 - Income Taxes to the accompanying condensed consolidated financial statements for more information.)

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest ~~decreased~~increased by ~~$32.0~~$0.8 million during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020, primarily due to ~~the Merger, whereby net income attributable to non-controlling interest~~an increase in Premier LP was not recorded after the Merger date of August 11, 2020. As of March 31, 2021, we owned a 99.999% controlling general partner interest and a 0.001% limited partnership interest in Premier GP. At June 30, 2020, the portion of net income attributable to the ~~limited partners of Premier LP was 41%.~~

~~Partially offsetting the decrease was the addition of~~ non-controlling interest ~~for the portion of net income attributable to~~in PRAM, ~~DPH~~DePre and ~~HDP, which was 74%, 79% and 3%, respectively.~~ExPre.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, ~~decreased~~increased by ~~$34.7~~$17.2 million during the three months ended ~~March~~December 31, 2021, compared to the three months ended ~~March~~December 31, 2020. The increase was driven by increases of $15.4 million and $2.4 million in Supply Chain Services and Performance Services Adjusted EBITDA, respectively, partially offset by a decrease of $0.6 million in Corporate Adjusted EBITDA.

Consolidated Results - Comparison of the Six Months Ended December 31, 2021 to 2020

The variances in the material factors contributing to the changes in the consolidated ~~Non-GAAP Adjusted EBITDA~~results are discussed further in “Segment Results” below.

~~Consolidated Results - Comparison of the Nine Months Ended March 31, 2021 to 2020~~

Net Revenue

Net revenue ~~increased~~decreased by ~~$282.8~~$25.3 million during the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020, primarily due to decrease of $64.9 million in products revenue partially offset by an increase of $21.9 million in net administrative fees revenue and an increase of $17.7 million in other services and support revenue.

Cost of Revenue

Cost of revenue decreased by $68.1 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to a decrease of $78.9 million in cost of products revenue partially offset by an increase of $10.7 million in cost of services revenue.

Operating Expenses

Operating expenses increased by $19.5 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to an increase of ~~$343.7~~$20.7 million in ~~product revenue~~selling, general and ~~an increase of $33.1 million in other services and support revenue,~~administrative expenses partially offset by a decrease of ~~$94.0~~$1.8 million in ~~net administrative fees revenue. The variances in the material factors contributing to the changes in consolidated net revenue are discussed further in “Segment Results” below.~~

~~Cost~~amortization of ~~Revenue~~

Cost of revenue increased by $327.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to an increase of $345.9 million in cost of product revenue, partially offset by a decrease of $18.1 million in cost of services revenue. The variances in the material factors contributing to the changes in consolidated cost of revenue are discussed further in “Segment Results” below.

~~Operating Expenses~~

Operating expenses increased by $68.3 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to an increase of $73.1 million in selling, general and administrative expenses. The variances in the material factors contributing to the changes in consolidated operating expenses are discussed further in “Segment Results” below.purchased intangible assets.

Other Income, Net

Other income, net ~~decreased~~increased by ~~$11.8~~$76.6 million during the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020, primarily due to the current period gain on the FFF Put Right as a result of the termination and corresponding derecognition of the FFF Put Right liability on July 29, 2021 compared to a loss on the FFF ~~put and call rights in the current period compared to the gain on the FFF put and call rights~~Put Right recognized in the prior year period (see Note 65 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information) as well as an increase in equity in net income of unconsolidated affiliates (see Note 4 - Investments to the accompanying condensed consolidated financial statements for further information). The increases were partially offset by ~~an increase~~a decrease in deferred compensation plan ~~income and the other than temporary impairment charges associated with held-to-maturity investments in the prior year period.~~income.

Income Tax Expense (Benefit) ~~Expense~~

For the ~~nine~~six months ended ~~March~~December 31, 2021, we recorded a tax ~~benefit~~expense of ~~$88.0~~$25.4 million compared to a tax ~~expense~~benefit of $78.3 million recorded during the ~~nine~~six months ended ~~March~~December 31, 2020. The tax ~~benefit~~expense and ~~expense~~benefit recorded during the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 ~~results~~resulted in effective tax rates of ~~(47)%~~11.3% and ~~25%~~(63.1)%, respectively. The change in the effective tax rate is primarily attributable to the prior year one-time deferred tax benefit associated with the remeasurement of the deferred tax asset and valuation allowance release as a result of the ~~Merger. See~~August 2020 Restructuring. (See Note 1413 - Income Taxes to the accompanying condensed consolidated financial statements for more information.

)

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest decreased by ~~$116.8~~$11.8 million during the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020, primarily due to the ~~Merger,~~August 2020 Restructuring, whereby net income attributable to non-controlling interest in Premier LP was not recorded after ~~the Merger date of~~ August 11, 2020.

~~Partially offsetting the decrease was the addition of non-controlling interest for the portion of net income attributable to PRAM, DPH and HDP, which was 74%, 79% and 3%, respectively.~~

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure ~~decreased~~as defined in “Our Use of Non-GAAP Financial Measures”, increased by ~~$87.8~~$28.2 million during the ~~nine~~three months ended ~~March~~December 31, 2021, compared to the ~~nine~~six months ended ~~March~~December 31, ~~2020. The variances~~2020 driven by an increase of $42.0 million in ~~the material factors contributing to the changes in consolidated Non-GAAP~~Supply Chain Services Adjusted EBITDA ~~are discussed further~~partially offset by decreases of $11.0 million and $2.8 million in ~~“Segment Results” below.~~

Performance Services and Corporate Adjusted EBITDA, respectively.

Segment Results

Supply Chain Services

The following table presents our results of operations and Adjusted EBITDA, a Non-GAAP financial measure, in the Supply Chain Services segment for the periods presented (in thousands):


		Three Months Ended March 31,							Nine Months Ended March 31,									Three Months Ended December 31,							Six Months Ended December 31,
Supply Chain Services	Supply Chain Services	2021		2020		Change			2021		2020		Change				Supply Chain Services	2021		2020		Change			2021		2020		Change
Net revenue:	Net revenue:																Net revenue:
Net administrative fees	Net administrative fees	$	146,553	$	174,049	$	(27,496)	(16)%	$	424,537	$	518,566	$	(94,029)	(18)	%	Net administrative fees	$	150,403	$	145,339	$	5,064	3%	$	299,865	$	277,984	$	21,881	8	%
Other services and support	Other services and support	8,630		3,396		5,234		154%	18,307		8,439		9,868		117	%	Other services and support	9,326		4,086		5,240		128%	18,251		9,677		8,574		89	%
Services	Services	155,183		177,445		(22,262)		(13)%	442,844		527,005		(84,161)		(16)	%	Services	159,729		149,425		10,304		7%	318,116		287,661		30,455		11	%
Products	Products	215,995		61,183		154,812		253%	511,080		167,344		343,736		205	%	Products	111,766		179,670		(67,904)		(38)%	230,196		295,085		(64,889)		(22)	%
Net revenue	Net revenue	371,178		238,628		132,550		56%	953,924		694,349		259,575		37	%	Net revenue	271,495		329,095		(57,600)		(18)%	548,312		582,746		(34,434)		(6)	%
Cost of revenue:	Cost of revenue:																Cost of revenue:
Services	Services	1,120		123		997		nm	2,627		278		2,349		845	%	Services	3,267		774		2,493		322%	6,638		1,508		5,130		340	%
Products	Products	211,136		54,121		157,015		290%	496,286		150,415		345,871		230	%	Products	96,933		171,722		(74,789)		(44)%	206,295		285,150		(78,855)		(28)	%
Cost of revenue	Cost of revenue	212,256		54,244		158,012		291%	498,913		150,693		348,220		231	%	Cost of revenue	100,200		172,496		(72,296)		(42)%	212,933		286,658		(73,725)		(26)	%
Gross profit	Gross profit	158,922		184,384		(25,462)		(14)%	455,011		543,656		(88,645)		(16)	%	Gross profit	171,295		156,599		14,696		9%	335,379		296,088		39,291		13	%
Operating expenses:	Operating expenses:																Operating expenses:
Selling, general and administrative	Selling, general and administrative	49,714		45,512		4,202		9%	144,511		119,179		25,332		21	%	Selling, general and administrative	48,454		50,372		(1,918)		(4)%	96,498		94,796		1,702		2	%
Research and development	Research and development	72		—		72		—%	199		6		193		—	%	Research and development	72		109		(37)		(34)%	236		127		109		86	%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,151		6,125		2,026		33%	24,205		14,318		9,887		69	%	Amortization of purchased intangible assets	8,116		8,055		61		1%	16,252		16,054		198		1	%
Operating expenses	Operating expenses	57,937		51,637		6,300		12%	168,915		133,503		35,412		27	%	Operating expenses	56,642		58,536		(1,894)		(3)%	112,986		110,977		2,009		2	%
Operating income	Operating income	100,985		132,747		(31,762)		(24)%	$	286,096	$	410,153	$	(124,057)	(30)	%	Operating income	114,653		98,063		16,590		17%	222,393		185,111		37,282		20	%
Depreciation and amortization	Depreciation and amortization	1,238		771					3,403		2,274						Depreciation and amortization	5,336		1,363					10,344		2,165
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,151		6,125					24,205		14,318						Amortization of purchased intangible assets	8,116		8,054					16,252		16,054
Acquisition and disposition related expenses	Acquisition and disposition related expenses	2,053		4,871					9,684		9,204						Acquisition and disposition related expenses	56		6,747					1,608		7,632
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	5,319		4,431					15,907		10,865						Equity in net income of unconsolidated affiliates	6,116		4,697					12,946		10,588
Other expense	Other expense	203		267					243		267						Other expense	3		15					6		40
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	117,949	$	149,212	$	(31,263)	(21)%	$	339,538	$	447,081	$	(107,543)	(24)	%	Segment Adjusted EBITDA	$	134,280	$	118,939	$	15,341	13%	$	263,549	$	221,590	$	41,959	19	%

Comparison of the Three Months Ended ~~March~~December 31, 2021 to 2020

Net Revenue

Supply Chain Services segment net revenue ~~increased~~decreased by ~~$132.6~~$57.6 million, or ~~56%~~18%, during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, ~~2020~~2020. The decrease in net revenue was primarily due to a decrease in products revenue of $67.9 million driven by lower demand for and pricing of personal protective equipment (“PPE”) and other high demand supplies as a result of the state of the COVID-19 pandemic partially offset by growth in commodity products under our PREMIERPRO® brand. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period products revenue growth rates.

The decrease in net revenue was partially offset by an increase in net administrative fees of $5.1 million driven by an increase in the demand for supplies and services, increased utilization of our contracts by our existing members and the addition of new

categories and suppliers. In addition, the decrease was partially offset by an increase of $5.2 million in other services and support revenue largely due to an increase in ~~product~~supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue ~~of $154.8~~decreased by $72.3 million ~~that was~~during the three months ended December 31, 2021 compared to the three months ended December 31, 2020 primarily driven by ~~growth~~the aforementioned decrease in ~~commodity~~ products ~~and aggregated purchasing of certain products~~revenue due to the prior year increase in demand as well as fluctuations in product costs. This was partially offset by an increase in cost of services revenue due to the ~~aggregated purchasing~~aforementioned increase in other services and support revenue and rapidly escalating shipping costs. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period cost of products revenue.

Operating Expenses

Supply Chain Services segment operating expenses decreased by $1.9 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. The decrease was primarily due to a decrease of $1.9 million in selling, general and administrative expenses driven by a decrease in acquisition and disposition related expenses partially offset by an increase in personnel costs and depreciation and amortization expense.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by $15.3 million, or 13%, during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to the aforementioned increase in net administrative fees revenue and favorable product mix in our direct sourcing activities business.

Comparison of the Six Months Ended December 31, 2021 to 2020

Net Revenue

Supply Chain Services segment net revenue decreased by $34.4 million, or 6%, during the six months ended December 31, 2021 compared to the six months ended December 31, 2020. The decrease in net revenue was primarily due to a decrease in products revenue of $64.9 million driven by lower demand for and pricing of PPE and other high demand supplies as a result of the ~~COVID-19 pandemic. The increase in Supply Chain~~

~~Services segment net revenue is also due to a $5.2 million increased supply chain co-management fees as a result~~state of the ~~asset acquisition of Nexera.~~

~~These increases were~~COVID-19 pandemic partially offset by growth in commodity products under our PREMIERPRO® brand. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period products revenue growth rates.

The decrease was partially offset by an increase in net administrative fees of ~~$27.5~~$21.9 million ~~as a result of amendments to GPO Participation Agreements, effective as of July 1, 2020, lower utilization of GPO contracts and the related decline~~driven by an increase in the demand for supplies and services, ~~as a result~~increased utilization of ~~COVID-19~~our contracts by our existing members and amortization of the prepaid contract administrative fee share for one-time rebates paid by Acurity, Inc. to certain of its then members, as agreed to by Acurity, Inc. prior to entering into the Purchase Agreement (“Acurity prepaid contract administrative fee share”). These decreases in net administrative fees were partially offset by growth from further penetration of member purchased services, the addition of new categories and ~~suppliers~~suppliers. In addition, the decrease was partially offset by an increase of $8.6 million in other services and ~~the addition of new members~~support revenue due to ~~our contract portfolio.~~an increase in supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue ~~increased~~decreased by ~~$158.0~~$73.7 million during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended ~~March~~December 31, ~~2020. The~~2020 primarily driven by the decrease in products revenue due to the prior year increase in ~~cost of revenue, driven~~demand partially offset by the aforementioned increase in ~~product revenue, was greater than~~other services and support revenue. As the ~~increase in product revenue of $154.8 million primarily due to product costs in excess~~COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the ~~selling price that we incurred as~~market for some of these products and, accordingly, a ~~result~~decrease in period over period cost of ~~COVID-19.~~products revenue.

Operating Expenses

Supply Chain Services segment operating expenses increased by ~~$6.3~~$2.0 million during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended ~~March~~December 31, ~~2020. The increase was~~2020 primarily due to an increase in selling, general and administrative expenses of ~~$4.2~~$1.7 million driven by an increase in ~~expenses associated with our fiscal year 2020 acquisition of Medpricer~~depreciation and ~~the Acurity and Nexera asset acquisition~~amortization expense. The increases were partially offset by a decrease in ~~employee travel~~acquisition and ~~meeting expenses due to COVID-19. In addition, operating expenses increased by $2.0 million as a result of increased amortization of purchased intangible assets~~disposition related ~~to the fiscal year 2020 acquisitions.~~expenses.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA ~~decreased~~increased by ~~$31.3~~$42.0 million, or 19%, during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended March 31, 2020, primarily due to the aforementioned decrease in net administrative fees and the increase in selling, general and administrative expenses largely due to our fiscal year 2020 acquisitions.

~~Comparison of the Nine Months Ended March 31, 2021 to 2020~~

~~Net Revenue~~

Supply Chain Services segment net revenue increased by $259.6 million, or 37%, during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 largely driven by an increase in product revenue of $343.7 million due primarily to the aggregated purchasing of PPE as a result of COVID-19 and growth in commodity products and aggregated purchasing of certain products. Supply Chain Services segment revenue also increased by $9.9 million due to supply chain co-management fees as a result of the asset acquisition of Nexera.

There has been a significant increase in demand for PPE and other supplies directly related to treating and preventing the spread of COVID-19, as well as replenishing and maintaining certain inventory levels, that has contributed significantly to the increase in product revenue. To the extent the COVID-19 pandemic subsides or becomes more manageable, we expect the market for these high demand products to stabilize and, accordingly, we anticipate product revenue growth rates to correspondingly decrease.

These increases were partially offset by a decrease in net administrative fees of $94.0 million primarily as a result of amendments to GPO Participation Agreements, effective as of July 1, 2020, lower utilization of GPO contracts and the related decline in the demand for supplies and services as a result of COVID-19 and amortization of the Acurity prepaid contract administrative fee share. These decreases in net administrative fees were partially offset by further penetration of member purchased services and the addition of new categories and suppliers.

We anticipate lower net administrative fees for the remainder of fiscal year 2021 due to amendments to GPO Participation Agreements and the ongoing impact from COVID-19. However, once the COVID-19 pandemic subsides and we move into fiscal year 2022, we expect our net administrative fees revenue to grow to the extent our existing members increase the utilization of our contracts and new members convert to our contract portfolio. Due to competitive market trends, we have experienced, and expect to continue to experience, requests, at times, to provide existing and prospective members and other

~~customers increases in revenue share on incremental or overall purchasing volume that could, if materially increased, adversely impact our revenues and overall financial performance.~~

~~Cost of Revenue~~

~~Supply Chain Services segment cost of revenue increased by $348.2 million during the nine months ended March 31, 2021 compared to the nine months ended March~~December 31, 2020, primarily due to the aforementioned increase in product revenue as well as higher costs for products that we incurred as a result of COVID-19. As a result of the COVID-19 pandemic, we expect higher costs in fiscal year 2021 due to increased demand in PPE. To the extent the COVID-19 pandemic subsides or becomes more manageable, we expect the market for these high demand products to stabilize and, accordingly, we anticipate our product costs to correspondingly decrease. However, once the COVID-19 pandemic subsides, we expect our cost of non-COVID-19-related product revenue to increase to the extent we are able to sell additional direct-sourced medical products to new and existing members and other customers. Depending on the underlying product sales mix in the future, increases in product revenues could reduce our gross profit as a percentage of our net revenue.

~~Operating Expenses~~

Supply Chain Services segment operating expenses increased by $35.4 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The increase was primarily due to an increase in selling, general and administrative expenses of $25.3 million driven by an increase in expenses associated with our fiscal year 2020 acquisition of Medpricer and the Acurity and Nexera asset acquisition partially offset by a decrease in employee travel and meeting expenses due to the COVID-19 pandemic. In addition, operating expenses increased by $9.9 million as a result of increased amortization of purchased intangible assets related to the fiscal year 2020 acquisitions.

~~Segment Adjusted EBITDA~~

Supply Chain Services Segment Adjusted EBITDA decreased by $107.5 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to the aforementioned decrease in net administrative fees revenue and ~~the increase~~favorable product mix in ~~selling, general and administrative expenses largely due to~~ our ~~fiscal year 2020 acquisitions.~~direct sourcing activities business.

Performance Services

The following table presents our results of operations and Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):

Three Months Ended March 31, Nine Months Ended March 31,
Performance Services 2021 2020 Change 2021 2020 Change
Net revenue:
Other services and support $ 98,745 $ 96,195 $ 2,550 3% $ 285,713 $ 262,490 $ 23,223 9%
Net revenue 98,745 96,195 2,550 3% 285,713 262,490 23,223 9%
Cost of revenue:
Services 45,860 48,884 (3,024) (6)% 123,225 143,687 (20,462) (14)%
Cost of revenue 45,860 48,884 (3,024) (6)% 123,225 143,687 (20,462) (14)%
Gross profit 52,885 47,311 5,574 12% 162,488 118,803 43,685 37%
Operating expenses:
Selling, general and administrative 34,517 37,586 (3,069) (8)% 102,488 106,522 (4,034) (4)%
Research and development 643 628 15 2% 1,814 1,797 17 1%
Amortization of purchased intangible assets 2,249 7,841 (5,592) (71)% 9,659 24,630 (14,971) (61)%
Operating expenses 37,409 46,055 (8,646) (19)% 113,961 132,949 (18,988) (14)%
Operating income (loss) 15,476 1,256 14,220 nm $ 48,527 $ (14,146) $ 62,673 nm
Depreciation and amortization 15,947 23,109 46,104 67,232
Amortization of purchased intangible assets 2,249 7,841 9,659 24,630
Acquisition related expenses 2,073 2,416 5,205 7,059
Equity in net income of unconsolidated affiliates 205 11 116 173
Other expense — 1 64 29
Segment Adjusted EBITDA $ 35,950 $ 34,634 $ 1,316 4% $ 109,675 $ 84,977 $ 24,698 29%


	Three Months Ended December 31,							Six Months Ended December 31,
Performance Services	2021		2020		Change			2021		2020		Change
Net revenue:
Other services and support	$	107,729	$	93,732	$	13,997	15%	$	196,059	$	186,968	$	9,091	5%
Net revenue	107,729		93,732		13,997		15%	196,059		186,968		9,091		5%
Cost of revenue:
Services	42,515		39,348		3,167		8%	82,953		77,364		5,589		7%
Cost of revenue	42,515		39,348		3,167		8%	82,953		77,364		5,589		7%
Gross profit	65,214		54,384		10,830		20%	113,106		109,604		3,502		3%
Operating expenses:
Selling, general and administrative	42,462		33,813		8,649		26%	81,263		67,972		13,291		20%
Research and development	774		613		161		26%	1,604		1,171		433		37%
Amortization of purchased intangible assets	2,734		2,205		529		24%	5,487		7,410		(1,923)		(26)%
Operating expenses	45,970		36,631		9,339		25%	88,354		76,553		11,801		15%
Operating income	19,244		17,753		1,491		8%	24,752		33,051		(8,299)		(25)%
Depreciation and amortization	13,342		15,604					26,699		30,157
Amortization of purchased intangible assets	2,734		2,206					5,487		7,410
Acquisition related expenses	3,690		1,171					5,559		3,131
Equity in net income of unconsolidated affiliates	—		(125)					228		(89)
Other expense	—		—					—		64
Segment Adjusted EBITDA	$	39,010	$	36,609	$	2,401	7%	$	62,725	$	73,724	$	(10,999)	(15)%

Comparison of the Three Months Ended ~~March~~December 31, 2021 to 2020

Net Revenue

Net revenue in our Performance Services segment increased by ~~$2.6~~$14.0 million, or 15%, during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020. The increase was primarily driven by higher revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period, incremental revenue from our Remitra business and growth in our Contigo Health business.

Cost of Revenue

Performance Services segment cost of revenue increased by $3.2 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to an increase in personnel costs related to growth in our Contigo Health business and incremental expenses associated with our Remitra business.

Operating Expenses

Performance Services segment operating expenses increased by $9.3 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. The increase was primarily due to an increase of $8.6 million in selling, general and administrative expenses driven by an increase in professional fees and a decrease in capitalized labor costs as well as an increase of $0.5 million in amortization of purchased intangible assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA increased by $2.4 million, or 7%, during the three months ended December 31, 2021 compared to the three months ended December 31, 2020 primarily due to the aforementioned increase in revenue partially offset by the aforementioned increases in cost of revenue and operating expenses.

Comparison of the Six Months Ended December 31, 2021 to 2020

Net Revenue

Net revenue in our Performance Services segment increased by $9.1 million, or 5%, during the six months ended December 31, 2021 compared to the six months ended December 31, 2020. The increase was primarily driven by incremental revenue ~~associated with~~from our ~~acquisition of HDP in May 2020, growth in life sciences~~Remitra business, ~~and growth in the cost management and consulting services. This increase was partially offset by a reduction in the technology businesses due to lower~~higher revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period and ~~lower revenue as a result of the planned reduction and subsequent discontinuance of the Hospital Improvement Innovation Network (“HIIN”) contract~~growth in ~~March 2020.~~our Contigo Health business.

Cost of Revenue

Performance Services segment cost of revenue ~~decreased~~increased by ~~$3.0~~$5.6 million during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended ~~March~~December 31, 2020, primarily due to ~~a decrease~~an increase in ~~amortization of internally developed software applications, lower consulting expenses due~~personnel costs related to ~~decreased utilization of third-party contractors~~growth in our Contigo Health business and ~~lower expenses as a result of the planned reduction and subsequent discontinuance of the HIIN contract in March 2020. These decreases were partially offset by~~ incremental expenses associated with ~~the HDP acquisition.~~our Remitra business.

Operating Expenses

Performance Services segment operating expenses ~~decreased~~increased by ~~$8.6~~$11.8 million during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended ~~March~~December 31, ~~2020~~2020. The increase was primarily due to ~~$5.6~~an increase of $13.3 million in selling, general and administrative expenses driven by an increase in professional fees as well as a decrease in capitalized labor costs. The increase was partially offset by $1.9 million of lower amortization of purchased intangible assets during the current period and decreased selling, general and administrative expenses of $3.1 million. The decrease in selling, general and administrative expenses was driven by a decrease in amortization of internally developed software applications and a decrease in employee travel and meeting expenses as a result of the COVID-19 pandemic.assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA ~~increased~~decreased by ~~$1.3~~$11.0 million, or 15%, during the ~~three~~six months ended ~~March~~December 31, 2021 compared to the ~~three~~six months ended ~~March~~December 31, 2020 primarily due to the aforementioned ~~increase~~increases in cost of revenue and ~~lower employee travel and meeting~~operating expenses ~~due to the COVID-19 pandemic offset by incremental expenses associated with the HDP acquisition.~~

~~Comparison of the Nine Months Ended March 31, 2021 to 2020~~

~~Net Revenue~~

Other services and support revenue in our Performance Services segment increased by $23.2 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The increase was primarily driven by growth across the technology businesses, including new enterprise analytics license agreements, as well as incremental revenue associated with our fiscal year 2020 acquisition of HDP. These increases were partially offset by ~~lower demand in consulting services as a result of~~ the ~~COVID-19 pandemic and lower revenue as a result of the planned reduction and subsequent discontinuance of the HIIN contract in March 2020.~~

We expect our other services and support revenue to grow over the long-term to the extent we are able to expand our sales to existing members and as additional members and other customers, employer, payor and life sciences markets, begin to utilize our integrated platform of products and services.

~~Cost of Revenue~~

Performance Services segment cost of revenue decreased by $20.5 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to a decrease in amortization of internally developed software applications, lower consulting expenses due to decreased utilization of third-party contractors and lower expenses as a result of the planned reduction and subsequent discontinuance of the HIIN contract in March 2020. These decreases were partially offset by incremental expenses associated with the HDP acquisition.

~~Operating Expenses~~

Performance Services segment operating expenses decreased by $19.0 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The decrease was primarily due to a reduction in amortization of

purchased intangible assets of $15.0 million and a decrease in selling, general and administrative expenses of $4.0 million driven by a decrease in employee travel and meeting expenses due to COVID-19 and a decrease in amortization of internally developed software applications partially offset by an increase in ~~expenses associated with the HDP acquisition.~~

~~Segment Adjusted EBITDA~~

Performance Services Segment Adjusted EBITDA increased by $24.7 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 primarily due to the aforementioned increase in revenue and decrease in selling, general and administrative expenses offset by incremental expenses associated with the HDP acquisition.revenue.

Corporate

The following table presents corporate expenses and Adjusted EBITDA for the periods presented (in thousands):


		Three Months Ended March 31,							Nine Months Ended March 31,								Three Months Ended December 31,							Six Months Ended December 31,
Corporate	Corporate	2021		2020		Change			2021		2020		Change			Corporate	2021		2020		Change			2021		2020		Change
Operating expenses:	Operating expenses:															Operating expenses:
Selling, general and administrative	Selling, general and administrative	$	50,271	$	32,191	$	18,080	56%	$	141,454	$	89,610	$	51,844	58%	Selling, general and administrative	$	55,933	$	45,812	$	10,121	22%	$	96,902	$	91,183	$	5,719	6%
Research and development		—		—		—		nm	—		5		(5)		nm

Operating expenses	Operating expenses	50,271		32,191		18,080		56%	141,454		89,615		51,839		58%	Operating expenses	55,933		45,812		10,121		22%	96,902		91,183		5,719		6%
Operating loss	Operating loss	(50,271)		(32,191)		(18,080)		56%	(141,454)		(89,615)		(51,839)		58%	Operating loss	(55,933)		(45,812)		(10,121)		22%	(96,902)		(91,183)		(5,719)		6%
Depreciation and amortization	Depreciation and amortization	2,152		1,897					6,397		6,184					Depreciation and amortization	2,192		2,126					4,423		4,245
Stock-based compensation	Stock-based compensation	13,180		7,668					27,970		19,358					Stock-based compensation	16,330		7,415					24,081		14,790
Remeasurement of tax receivable agreement liabilities		—		(902)					—		(24,584)
Deferred compensation plan income	Deferred compensation plan income	1,521		(5,476)					9,231		(2,484)					Deferred compensation plan income	2,389		4,803					2,071		7,710
Other income		726		1,047					5,411		3,633
Other expense, net																Other expense, net	3,748		738					3,772		4,685
Adjusted EBITDA	Adjusted EBITDA	$	(32,692)	$	(27,957)	$	(4,735)	17%	$	(92,445)	$	(87,508)	$	(4,937)	6%	Adjusted EBITDA	$	(31,274)	$	(30,730)	$	(544)	(2)%	$	(62,555)	$	(59,753)	$	(2,802)	(5)%

Comparison of the Three Months Ended ~~March~~December 31, 2021 to 2020

Operating Expenses

Corporate operating expenses increased by ~~$18.1~~$10.1 million during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020, primarily due to an increase in ~~deferred~~stock-based compensation ~~plan~~ expense due to ~~market changes and incremental personnel costs~~higher achievement of performance share awards, an increase in professional fees related to ~~the fiscal year 2020 acquisitions. These increases to operating~~strategic and financial restructuring expenses ~~were partially offset by a decrease~~in support of growth and strategic initiatives, and an increase in employee travel and meeting expenses as travel and meeting limitations due to the COVID-19 ~~pandemic.~~pandemic began to subside.

Adjusted EBITDA

Adjusted EBITDA decreased by ~~$4.7~~$0.5 million, or 2%, during the three months ended ~~March~~December 31, 2021 compared to the three months ended ~~March~~December 31, 2020, primarily due to ~~incremental personnel costs related to the fiscal year 2020 acquisitions offset by a decrease~~an increase in employee-related expenses, including employee travel and meeting ~~expenses due to the COVID-19 pandemic.~~expenses.

Comparison of the ~~Nine~~Six Months Ended ~~March~~December 31, 2021 to 2020

Operating Expenses

Corporate operating expenses increased by ~~$51.8~~$5.7 million during the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020, primarily due to ~~the prior period net remeasurement of the TRA as a result of the change~~increases in North Carolina state income tax law, costs incurred in connection with our August 2020 restructuring, incremental personnel costs related to the fiscal year 2020 acquisitions and an increase in deferredstock-based compensation ~~plan~~ expense due to ~~market changes. These increases to operating~~higher achievement of performance share awards and employee-related expenses, ~~were partially offset by a decrease in~~including employee travel and meeting expenses as travel and meeting limitations due to the COVID-19 ~~pandemic.~~pandemic began to subside.

Adjusted EBITDA

Adjusted EBITDA decreased by ~~$4.9~~$2.8 million, or 5%, during the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020, primarily due to ~~incremental personnel costs related to the fiscal year 2020 acquisitions offset by a decrease~~an increase in professional fees and employee-related expenses, including employee travel and meeting ~~expenses due to the COVID-19 pandemic.~~expenses.

Off-Balance Sheet Arrangements

As of ~~March~~December 31, 2021, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has primarily been cash provided by operating activities. From time to time we have used, and expect to use in the future, borrowings under our Credit Facility (as defined below and Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information) as a source of liquidity. Our primary cash requirements involve operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, dividend payments on our Class A common stock, if and when declared, repurchases of Class A common stock pursuant to stock repurchase programs in place from time to time, acquisitions and related business investments, and general corporate activities. Our capital expenditures typically consist of internally developed software costs, software purchases and computer hardware purchases.

As of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$132.6~~$86.2 million and ~~$99.3~~$129.1 million, respectively. As of ~~March~~December 31, 2021 and June 30, ~~2020,~~2021, there were ~~$200.0~~$125.0 million and $75.0 million, respectively, of outstanding borrowings under ~~the~~our Credit Facility. During the ~~nine~~six months ended ~~March~~December 31, 2021, we borrowed ~~$225.0~~$175.0 million and repaid ~~$100.0~~$125.0 million of borrowings under ~~the~~our Credit Facility, which was used for other general corporate purposes. ~~In April 2021, we repaid $75.0 million of outstanding borrowings under the Credit Facility.~~

We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, dividend payments on our Class A common stock, if and when declared, and repurchases of Class A common stock pursuant to stock repurchase programs in place from time to time. Our capital requirements depend on numerous factors, including funding requirements for our product and service development and commercialization efforts, our information technology requirements, and the amount of cash generated by our operations. We believe that we have adequate capital resources at our disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. However, strategic growth initiatives will likely require the use of one or a combination of various forms of capital resources including available cash on hand, cash generated from operations, borrowings under our Credit Facility and other long-term debt and, potentially, proceeds from the issuance of additional equity or debt securities.

~~During the second half of fiscal 2020,~~The COVID-19 ~~became a~~ global pandemic ~~that spread~~and its variants continue to create challenges throughout the United States and much of the rest of the world. The full extent to which the COVID-19 pandemic ~~will~~may impact our business, operating results, financial condition and liquidity in the future will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants thereof, the continued actions to contain it orand treat its impact, including the ~~timing, development and deployment~~success of ~~an effective vaccine,~~the COVID-19 vaccination program, or recurrences of COVID-19, variants thereof or similar pandemics. As discussed in Item 1A. “Risk Factors” in our ~~2020~~2021 Annual Report as well as in this Quarterly Report under “Market and Industry Trends and Outlook” within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation, as a result of the COVID-19 pandemic and potential future pandemic outbreaks, we face significant risks including but not limited to the following:

•We have experienced and may continue to experience demand uncertainty from both ~~significant~~material increases and decreases in demand for PPE, drugs and other ~~products~~supplies directly related to the ~~treatment~~treating and preventing the spread of COVID-19 and any variants thereof and decreases in demand for non-COVID-19-related ~~products.~~supplies and services.

•Our ~~GPO~~ member hospitals and non-acute care sites have experienced and continue to experience, reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our ~~employees'~~employees’ ability to travel to our ~~members'~~members’ facilities.

•The global supply chain has been ~~significantly~~materially disrupted due to ~~stay at home~~personnel shortages associated with ongoing COVID-19 rates of infection, stay-at-home orders, border closings, ~~and~~ rapidly escalating shipping ~~costs.~~costs and material logistical delays due to port congestion.

•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. Inflation in such contract prices may impact member utilization of items and services available through our GPO contracts, with uncertain impact on our net administrative fees revenue and direct sourcing revenue. 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 and any variants thereof 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~~foreseen and unforeseen events and circumstances, all of which could negatively impact us.

•In response to ~~the~~ COVID-19 ~~pandemic,~~and variants thereof, 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, our members, other customers and suppliers.

Discussion of Cash Flows for the ~~Nine~~Six Months Ended ~~March~~December 31, 2021 and 2020

A summary of net cash flows follows (in thousands):


		Nine Months Ended March 31,					Six Months Ended December 31,
		2021		2020			2021		2020
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	192,365	$	248,082	Operating activities	$	197,527	$	116,177
Investing activities	Investing activities	(149,291)		(171,954)		Investing activities	(68,660)		(46,883)
Financing activities	Financing activities	(9,794)		15,213		Financing activities	(171,846)		(59,585)
Operating activities from discontinued operations		—		9,338
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	$	33,280	$	100,679	Net increase in cash and cash equivalents	$	(42,979)	$	9,709

Net cash provided by operating activities ~~decreased~~increased by ~~$55.7~~$81.4 million ~~for the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The decrease in net cash provided by operating activities was~~ primarily due to ~~lower profitability~~a decrease of ~~our Supply Chain Services segment~~$151.6 million in cash paid for cost of revenue. This increase was partially offset by a decrease of $43.6 million in cash received from ~~lower~~ net ~~administrative fees revenue as a result~~revenues and increase of ~~amendments to GPO Participation Agreements, effective as~~$34.4 million in payments of July 1, 2020, lower utilization of GPO contracts and the related decline in the demand for supplies and services as a result of the COVID-19 pandemic and amortization of the Acurity prepaid contract administrative fee share. In addition, net cash provided by operating activities was impacted by changes in our net working capital, including higher levels of inventory, primarily driven by the impact of the aggregated purchasing of PPE as a result of the COVID-19 pandemic.expenses.

Net cash used in investing activities ~~decreased~~increased by ~~$22.7~~$21.8 million for the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020. The ~~decrease~~increase in net cash used in investing activities iswas primarily due to $26.0 million of cash paid by ExPre for an ownership interest in Exela Holdings, Inc., which was partially offset by a ~~$15.2~~$2.2 million reduction in cash paid for business acquisitions and a reduction of $10.2 million in investments in unconsolidated affiliates as a result of no investments in unconsolidated affiliates in the current year. These decreases were offset by cash proceeds of $3.6 million received in the prior year from the liquidationpurchases of property and ~~equipment in connection with our exit from specialty pharmacy operations in June 2019.~~equipment.

Net cash used in financing activities ~~changed~~increased by ~~$25.0~~$112.3 million for the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020. ~~The change in net~~Net cash used in financing activities was driven by ~~a $100.0~~$173.9 million decrease in net borrowings under the Credit Facility, cash dividends payments of $69.6 million and a $25.7 million payment on the outstanding notes payable to members (see Note 9 - Debt and Notes Payable). These were offset by a decrease of $150.1 million for ~~prior year~~ repurchases of Class A common stock under the fiscal ~~year 2020~~2022 stock repurchase program, an increase of $46.9 million in payments made on notes payable and an increase in cash dividend payments of $2.7 million. The net cash used in financing activities was partially offset by an increase of $25.0 million in net borrowings under our Credit Facility, a ~~$29.6~~reduction of $34.2 million ~~reduction~~ in distributions to limited partners of Premier LP and payments to limited partners of Premier LP related to tax receivable agreements as ~~a result of the elimination of~~both distributions and payments were eliminated in connection with the August 2020 ~~restructuring.~~Restructuring, an increase of $34.8 million in proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options and an increase of $17.2 million in other financing activities. Other financing activities is primarily driven by proceeds from member health systems that acquired membership interests in ExPre.

Net cash provided by operating activities attributable to discontinued operations decreased by $9.3 million for the nine months ended March 31, 2021, compared to the nine months ended March 31, 2020 primarily due to payments on liabilities that were outstanding as of March 31, 2020.

Discussion of Non-GAAP Free Cash Flow for the ~~Nine~~Six Months Ended ~~March~~December 31, 2021 and 2020

We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRA payments to limited partners, early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and purchases of property and equipment. Non-GAAP Free ~~cash flow~~Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt ~~repayments.~~ repayments under our Credit Facility.

A summary of Non-GAAP Free Cash Flow and reconciliation to net cash provided by operating activities for the periods presented follows (in thousands):


	Six Months Ended December 31,
	2021		2020
Net cash provided by operating activities	$	197,527	$	116,177
Purchases of property and equipment	(42,660)		(44,864)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)	(47,741)		—
Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Non-GAAP Free Cash Flow	$	107,126	$	37,146

(a)

Nine Months Ended March 31,
2021 2020
Net cash provided by operating activities from continuing operations (a)
$ 192,365 $ 340,228
Purchases of property and equipment (66,911) (69,326)
Distributions to limited partners of Premier LP (b)
(9,949) (39,590)
Payments to limited partners of Premier LP related to tax receivable agreements (b)
(24,218) (17,425)
Non-GAAP Free Cash Flow $ 91,287 $ 213,887

~~(a) Net~~Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring are presented in our Condensed Consolidated Statements of Cash Flows under “Payments made on notes payable.” We paid $51.3 million to members including imputed interest of $3.6 million which is included in net cash provided by operating ~~activities from continuing operations for the nine months ended March 31, 2020 excludes the impact of the Acurity prepaid contract administrative fee share, as defined above.~~

~~(b) Limited partners refers to member owners prior~~activities. See Note 8 - Debt and Notes Payable to the ~~August 2020 restructuring.~~accompanying condensed consolidated financial statements for further information.

Non-GAAP Free Cash Flow ~~decreased~~increased by ~~$122.6~~$70.0 million for the ~~nine~~six months ended ~~March~~December 31, 2021 compared to the ~~nine~~six months ended ~~March~~December 31, 2020. The ~~decrease~~increase in Non-GAAP Free Cash Flow was ~~primarily due to~~driven by the aforementioned ~~decrease~~$81.4 million increase in net cash provided by operating activities ~~which was driven by lower net administrative fees revenue as a result of amendments to GPO Participation Agreements and lower utilization of GPO contracts as a result of COVID-19~~ as well as changes in our net working capital, including higher levels of inventory, primarily driven by the impact of the aggregated purchasing of PPE as a result of the COVID-19 pandemic. The net cash provided by operating activities for continuing operations for the nine months ended March 31, 2020 also includes the impact of the Acurity prepaid contract administrative fee share.

In addition, the change in Non-GAAP Free Cash Flow was due to higher TRA payments during the nine months ended March 31, 2021 which include the $10.5 million that was paid to limited partners of Premier LP who did not elect to execute a Unit Exchange and Tax Receivable Acceleration Agreement in connection with the August 2020 restructuring offset by the elimination ofno distributions to limited partners of Premier LP or payments to limited partners of Premier LP related to tax receivable agreements in the six months ended December 31, 2021 as both were eliminated in connection with the August 2020 ~~restructuring.~~

Restructuring. These ~~decreases in Non-GAAP Free Cash Flow~~increases were partially offset by ~~lower distributions~~$47.7 million of early termination payments to certain former limited partners ~~of Premier LP as a result of~~in connection with the August 2020 ~~restructuring.~~Restructuring.

See “Our Use of Non-GAAP Financial Measures” above for additional information regarding our use of Non-GAAP Free Cash Flow.

Contractual Obligations

Notes Payable to ~~Members~~Former Limited Partners

At ~~March~~December 31, 2021, ~~we had commitments of $418.6~~$359.4 million ~~net of imputed interest of $17.8 million for obligations under notes payable which represents the aggregate early termination payments due~~remains to ~~members in connection with the early termination of the TRA. Notes payable to members will~~ be paid without interest in 1814 equal quarterly installments ~~commencing during~~to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended ~~March 31, 2021 and ending in the quarter ending~~ June 30, 2025. See Note 98 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

Other Notes Payable

At ~~March~~December 31, 2021, we had commitments of ~~$9.3~~$5.8 million for other obligations under notes payable. Other notes payable have stated maturities between three to five years from the date of issuance and are non-interest bearing. See Note 98 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

Credit Facility

~~Premier LP, along with its consolidated subsidiaries, PSCI and PHSI, as Co-Borrowers, Premier GP and certain domestic subsidiaries of Premier GP, as guarantors, entered into~~We maintain an unsecured ~~Credit Facility, dated~~credit facility which provides for borrowings of up to $1.0 billion with a $50.0 million sub-facility for standby letters of credit and a $100.0 million sub-facility for swingline loans as well as the ability to incur incremental term loans from time to time and request an increase in the revolving commitments up to an aggregate of ~~November 9, 2018.~~$350.0 million, subject to certain conditions (the “Credit Facility”). The Credit Facility ~~has a maturity date of~~matures on November 9, 2023, subject to up to two one-year extensions atwhich require the ~~request of the Co-Borrowers and~~ approval of a majority of the lenders under the Credit Facility. ~~The Credit Facility provides for~~

Outstanding borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments under the Credit Facility together up to an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increase. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.

~~At our option, committed loans may be in the form of Eurodollar rate loans (“Eurodollar Loans”) or base rate loans (“Base Rate Loans”). Eurodollar Loans~~ bear interest on a variable rate structure with borrowings bearing interest at ~~the Eurodollar rate (defined as~~either the London Interbank Offered Rate or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Net Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50%, the one-month LIBOR plus 1.0% and 0.0%(“LIBOR”) plus ~~the Applicable Rate. The Applicable Rate ranges~~an applicable margin ranging from 1.000% to 1.500% ~~for Eurodollar Loans and~~or the prime lending rate plus an applicable margin ranging from 0.000% to 0.500% for Base Rate Loans. In the event that LIBOR is no longer available, the Credit Facility states that interest will be calculated based upon rates offered to leading banks for comparable loans by leading banks in the London interbank market. At March 31, 2021, the interest rate for one-month Eurodollar Loans was 1.148% and the interest rate for Base Rate Loans was 3.250%. ~~The Co-Borrowers are required to~~We pay a commitment fee ranging from 0.100% to 0.200% ~~per annum on the actual daily~~for unused ~~amount of commitments~~capacity under the Credit Facility. At ~~March~~December 31, 2021, the interest rate on outstanding borrowings under the Credit Facility was 1.110% and the commitment fee was 0.100%.

The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments. Under the terms of the Credit Facility, Premier GP’s consolidated total net leverage ratio (as defined in the Credit Facility) may not exceed 3.75 to 1.00 for four consecutive quarters, provided that, in connection with any acquisition for which the aggregate consideration exceeds $250.0 million, the maximum consolidated total net leverage ratio may increase to 4.25 to 1.00 for the four consecutive fiscal quarters beginning with the quarter in which such acquisition is completed. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 2.50 to 1.00 at the end of every fiscal quarter. Premier GP wascovenants. We were in compliance with all such covenants at ~~March~~December 31, 2021.

The Credit Facility also contains customary events of default, including ~~among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults~~a cross-default of any indebtedness or guarantees in excess of $75.0 million, bankruptcy and other insolvency events, ERISA-related liabilities and judgment defaults in excess of $50.0 million, and the occurrence of a change of control (as defined in the Credit Facility).million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority

of the lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. We may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, ~~cash dividends, if and when declared,~~ repurchases of Class A common stock pursuant to stock repurchase programs, in place from time to time, dividend payments, if and when declared, and other general corporate activities. WeAt December 31, 2021, we had ~~$200.0 million~~ outstanding borrowings of $125.0 million under the Credit Facility ~~at March 31, 2021~~ with ~~$799.9~~$874.9 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. ~~In April 2021, we repaid $75.0 million of outstanding borrowings under the Credit Facility.~~

The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, as amended, which is filed as Exhibit ~~10.21~~10.1 to ~~the 2020 Annual~~this Quarterly Report. See also Note 98 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.

Cash Dividends

OnIn each of September ~~15, 2020,~~2021 and December ~~15, 2020, and March 15,~~ 2021, we paid a cash dividend of ~~$0.19~~$0.20 per share on outstanding shares of Class A common ~~stock to stockholders of record on September 1, 2020, December 1, 2020, and March 1, 2021 respectively.~~stock. On ~~April 23, 2021,~~January 20, 2022, our Board of Directors declared a cash dividend of ~~$0.19~~$0.20 per share, payable on ~~June~~March 15, ~~2021~~2022 to stockholders of record on ~~June~~March 1, ~~2021.~~2022.

We currently expect quarterly dividends to continue to be paid on or about December 15, March 15, June 15, and September 15. However, the actual declaration of any future cash dividends, and the setting of record and payment dates as well as the per share amounts, will be at the discretion of our Board of Directors each quarter after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current credit facility and any future financing arrangements, legal restrictions on the payment of dividends and other factors our Board of Directors deems relevant.

Stock Repurchase Program

On August 5, 2021, our Board of Directors authorized the repurchase of up to $250.0 million of our outstanding Class A common stock during fiscal year 2022 through open market purchases or privately negotiated transactions. At December 31, 2021, we had purchased approximately 4.5 million shares of Class A common stock at an average price of $39.37 per share for a total purchase price of $176.0 million. The purchase authorization may be suspended, delayed, or discontinued at any time at the discretion of our Board of Directors. Repurchases are subject to compliance with applicable federal securities laws and our management may, at its discretion, suspend, delay, or discontinue repurchases at any time, based on market conditions, alternate uses of capital, or other factors.

57Impact of Inflation

The U.S. economy is experiencing significant inflation. Historically, we have not experienced significant inflation risk in our business arising from fluctuations in market prices across our diverse product portfolio. However, our ability to raise our selling prices depends on market conditions and there may be periods during which we are unable to fully recover increases in our costs. Our GPO business has largely been unaffected by pricing inflation as we use our members’ aggregated purchasing power to negotiate firm prices in many of our contracts. In our Direct Sourcing business, we have historically been able to adjust our selling prices to pass through increases in cost or offset them through various cost reduction initiatives.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market risk ~~related~~relates primarily to the increase or decrease in the amount of any interest expense we must pay with respect to outstanding variable-rate debt instruments. At ~~March~~December 31, 2021, we had ~~$200.0~~$125.0 million outstanding borrowings under our Credit Facility. ~~At March~~Based on the weighted average interest rate charged on outstanding borrowings under our Credit Facility at December 31, 2021, a one-percent change in the weighted average interest rate charged on outstanding borrowings ~~under the Credit Facility~~ would ~~result in a net change in~~increase or decrease interest expense over the next twelve months by ~~$2.0~~$1.3 million.

We invest our excess cash in a portfolio of individual cash equivalents. We do not ~~currently~~ hold ~~and have never held,~~ any material derivative financial instruments. We do not expect changes in interest rates to have a material impact on our results of operations or financial position. We plan to ~~ensure the safety~~mitigate default, market, and ~~preservation~~investment risks of our invested funds by ~~limiting default, market, and investment risks. We plan to mitigate default risk by~~ investing in low-risk securities.

Foreign Currency Risk

Substantially all of our financial transactions are conducted in U.S. dollars. We do not have significant foreign operations and, accordingly, do not believe we have market risk associated with foreign currencies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange ~~Act)~~Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of ~~March~~December 31, 2021.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March~~December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5847

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We ~~participate in~~operate businesses that are subject to substantial litigation from time to time. We are periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to contractual disputes, product liability, tort or personal injury, employment, antitrust, intellectual property or other commercial or regulatory matters. If current or future government regulations are interpreted or enforced in a manner adverse to us or our business, including without limitation those with respect to antitrust or healthcare laws, we may be subject to enforcement actions, penalties, damages and material limitations on our business.

Furthermore, as a public company, we may become subject to stockholder inspection demands under Delaware law and derivative or other similar litigation.

From time to time we have been named as a defendant in class action or other antitrust lawsuits brought by suppliers or purchasers of medical products. Typically, these lawsuits have alleged the existence of a conspiracy among manufacturers of competing products, distributors and/or operators of GPOs, including us, to deny the plaintiff access to a market for certain products, to raise the prices for products and/or limit the plaintiff’s choice of products to buy. We believe that we have at all times conducted our business affairs in an ethical and legally compliant manner and have successfully resolved all such actions. No assurance can be given that we will not be subjected to similar actions in the future or that any such existing or future matters will be resolved in a manner satisfactory to us or which will not harm our business, financial condition or results of operations.

Additional information relating to certain legal proceedings in which we are involved is included in Note 1614 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which information is incorporated herein by reference.

Item 1A. Risk Factors

During the quarter ended ~~March~~December 31, 2021, there were no material changes to the risk factors disclosed in Item 1A. “Risk Factors” in the ~~2020~~2021 Annual Report.

Item ~~5. Other Information~~2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

On ~~April 23,~~August 5, 2021, our Board of Directors ~~declared a cash dividend~~authorized the repurchase of ~~$0.19~~up to $250.0 million of our outstanding Class A common stock during fiscal year 2022 through open market purchases or privately negotiated transactions. All repurchases of our Class A common stock were recorded as treasury shares. The following table summarizes information relating to repurchases of our Class A common stock for the quarter ended December 31, 2021.


Period	Total Number of Share Purchased	Average Price Paid per Share ($)(a)		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)(b)
October 1 through October 31, 2021	1,031,268	$	39.16	1,031,268	$	167
November 1 through November 30, 2021	1,262,046	40.44		1,262,046	116
December 1 through December 31. 2021	1,083,606	38.67		1,083,606	74
Total	3,376,920			3,376,920	$	74

(a)Average price per share ~~payable on June 15,~~excludes fees and commissions.

(b)From the stock repurchase program's inception through December 31, 2021, ~~to stockholders~~we purchased approximately 4.5 million shares of ~~record on June 1, 2021. Declaration~~Class A common stock at an average price of ~~any future cash dividends will be at the discretion~~$39.37 per share for a total of our Board of Directors after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current credit facility and any future financing arrangements, legal restrictions on the payment of dividends and other factors our Board of Directors deems relevant.$176.0 million.

5948

Item 6. Exhibits


Exhibit No.						Description
10.1						First Amendment to ~~Senior Executive Employment~~Credit Agreement, ~~effective February~~dated as of December 1, 2021 by and ~~between Susan D. DeVore~~among Premier Healthcare Alliance, L.P., Premier Supply Chain Improvement, Inc. and Premier Healthcare Solutions, Inc., as Co-Borrowers, Premier Services, LLC, the other Guarantors party thereto and, Wells Fargo Bank, National Association, as Administrative Agent (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on ~~February 2,~~December 1, 2021)~~. +~~
~~10.2~~						Senior Executive Employment Agreement, effective May 1, 2021, by and between Michael J. Alkire and Premier Healthcare Solutions, Inc. (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on February 2, 2021). +
31.1						Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2						Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1						Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
32.2						Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
101						Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~March~~December 31, 2021, 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~~December 31, 2021, formatted in Inline XBRL (included in Exhibit 101).*

* Filed herewith.

+ Indicates a management contract or compensatory plan or arrangement

‡ Furnished herewith.

6049

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

PREMIER, INC.

Date:

~~May 4, 2021~~February 1, 2022

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

6150


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2021		2020		2021		2020
Net revenue:
Net administrative fees	$	146,553	$	174,049	$	424,537	$	518,566
Other services and support	107,375		99,591		304,020		270,929
Services	253,928		273,640		728,557		789,495
Products	215,995		61,183		511,080		167,344
Net revenue	469,923		334,823		1,239,637		956,839
Cost of revenue:
Services	46,980		49,007		125,852		143,965
Products	211,136		54,121		496,286		150,415
Cost of revenue	258,116		103,128		622,138		294,380
Gross profit	211,807		231,695		617,499		662,459



Operating expenses:
Selling, general and administrative	134,502		115,289		388,453		315,311
Research and development	715		628		2,013		1,808
Amortization of purchased intangible assets	10,400		13,966		33,864		38,948
Operating expenses	145,617		129,883		424,330		356,067
Operating income	66,190		101,812		193,169		306,392
Equity in net income of unconsolidated affiliates	5,524		4,442		16,023		11,038
Interest and investment loss, net	(3,225)		(9,966)		(8,742)		(9,849)
(Loss) gain on FFF put and call rights	(5,195)		(13,906)		(21,621)		8,477
Other income (expense), net	1,594		(5,005)		10,167		(1,996)
Other (expense) income, net	(1,302)		(24,435)		(4,173)		7,670
Income before income taxes	64,888		77,377		188,996		314,062
Income tax expense (benefit)	13,444		4,165		(88,037)		78,336
Net income from continuing operations	51,444		73,212		277,033		235,726
Income from discontinued operations, net of tax	0		5		0		1,009
Net income	51,444		73,217		277,033		236,735
Net income from continuing operations attributable to non-controlling interest	(3,123)		(35,055)		(15,903)		(132,189)
Net income from discontinued operations attributable to non-controlling interest	0		(3)		0		(480)
Net income attributable to non-controlling interest	(3,123)		(35,058)		(15,903)		(132,669)
Adjustment of redeemable limited partners' capital to redemption amount	0		302,569		(26,685)		516,725
Net income attributable to stockholders	$	48,321	$	340,728	$	234,445	$	620,791

Comprehensive income:
Net income	51,444		73,217		277,033		236,735
Less: comprehensive income attributable to non-controlling interest	(3,123)		(35,058)		(15,903)		(132,669)
Comprehensive income attributable to stockholders	$	48,321	$	38,159	$	261,130	$	104,066

Weighted average shares outstanding:
Basic	122,254		69,451		114,596		65,582
Diluted	123,116		122,470		115,365		124,030


	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Premier LP net income	$	84,185	$	290,430


	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020






Operating gain from discontinued operations	$	0	$	0
Net gain on disposal of assets	24		1,399
Income from discontinued operations before income taxes	24		1,399
Income tax expense	19		390
Income from discontinued operations, net of tax	5		1,009
Net income from discontinued operations attributable to non-controlling interest in Premier LP	(3)		(480)
Net income from discontinued operations attributable to stockholders	$	2	$	529


	March 31, 2021		June 30, 2020
Annual EBITDA growth rate	2.5-10.8%		2.5-26.5%
Annual revenue growth rate	2.5-6.3%		1.4-14.4%
Correlation	80.0	%	80.0	%
Weighted average cost of capital	14.0	%	14.5	%
Asset volatility	30.0	%	28.0	%
Credit spread	0.9	%	1.7	%


2021 (a)	$	29,218
2022	105,211
2023	103,629
2024	104,231
2025	103,419
Total principal payments	$	445,708


	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
Distributions applied to receivables from limited partners	70		—		70

Net income attributable to non-controlling interest in Premier LP	—		55,704		55,704
Distributions to limited partners	—		(12,689)		(12,689)
Exchange of Class B common units for Class A common stock by member owners	—		(223,946)		(223,946)
Adjustment of redeemable limited partners' capital to redemption amount	—		480,153		480,153
December 31, 2019	(1,065)		2,105,432		2,104,367
Distributions applied to receivables from limited partners	71		—		71
Net income attributable to non-controlling interest in Premier LP	—		35,058		35,058
Distributions to limited partners	—		(9,314)		(9,314)
Exchange of Class B common units for Class A common stock by member owners	—		(169,194)		(169,194)
Adjustment of redeemable limited partners' capital to redemption amount	—		(302,569)		(302,569)
March 31, 2020	$	(994)	$	1,659,413	$	1,658,419


Date of Quarterly Exchange	Number of Class B Common Units Exchanged	Reduction in Redeemable Limited Partners' Capital
July 31, 2020	69,684	$	2,437