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 ~~September 30, 2021~~March 31, 2022


☐			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 ~~October~~April 28, ~~2021,~~2022, there were ~~121,860,329~~117,986,674 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this quarterly report for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 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;

•global economic and political instability and conflicts, such as the conflict between Russia and Ukraine, could adversely affect our business, financial condition or results of operations, including issues such as rising inflation and global supply-chain disruption;

•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 previous or future 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;

•pending and 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”);~~

•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 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 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, 2021 (the “2021 Annual Report”), filed with the Securities and Exchange Commission (“SEC”). and this Quarterly Report on Form 10-Q.

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 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.

~~“August~~References to the “August 2020 Restructuring” ~~means~~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~~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 ~~of Premier LP~~ 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.

References to the “Subsidiary Reorganization” are references to an internal legal organization of our corporate subsidiaries in December 2021 for the purpose of simplifying our subsidiary reporting structure. For additional information and details regarding the Subsidiary Reorganization, see our Quarterly Report for the period ended December 31, 2021.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


		September 30, 2021		June 30, 2021			March 31, 2022		June 30, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	184,421	$	129,141	Cash and cash equivalents	$	179,503	$	129,141
Accounts receivable (net of $1,283 and $1,174 allowance for credit losses, respectively)		139,111		142,557
Contract assets (net of $1,014 and $1,110 allowance for credit losses, respectively)		272,049		266,173
Accounts receivable (net of $852 and $1,174 allowance for credit losses, respectively)						Accounts receivable (net of $852 and $1,174 allowance for credit losses, respectively)	125,632		142,557
Contract assets (net of $1,251 and $1,110 allowance for credit losses, respectively)						Contract assets (net of $1,251 and $1,110 allowance for credit losses, respectively)	255,693		266,173
Inventory	Inventory	169,019		176,376		Inventory	130,275		176,376
Prepaid expenses and other current assets	Prepaid expenses and other current assets	68,125		68,049		Prepaid expenses and other current assets	64,897		68,049
Total current assets	Total current assets	832,725		782,296		Total current assets	756,000		782,296
Property and equipment (net of $538,399 and $518,332 accumulated depreciation, respectively)		226,349		224,271
Intangible assets (net of $300,801 and $289,912 accumulated amortization, respectively)		385,753		396,642
Property and equipment (net of $574,185 and $518,332 accumulated depreciation, respectively)						Property and equipment (net of $574,185 and $518,332 accumulated depreciation, respectively)	222,583		224,271
Intangible assets (net of $322,802 and $289,912 accumulated amortization, respectively)						Intangible assets (net of $322,802 and $289,912 accumulated amortization, respectively)	373,752		396,642
Goodwill	Goodwill	999,913		999,913		Goodwill	999,913		999,913
Deferred income tax assets	Deferred income tax assets	763,125		781,824		Deferred income tax assets	744,899		781,824
Deferred compensation plan assets	Deferred compensation plan assets	54,572		59,581		Deferred compensation plan assets	53,914		59,581
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	186,282		153,224		Investments in unconsolidated affiliates	209,205		153,224
Operating lease right-of-use assets	Operating lease right-of-use assets	46,432		48,199		Operating lease right-of-use assets	41,764		48,199
Other assets	Other assets	71,769		76,948		Other assets	113,429		76,948
Total assets	Total assets	$	3,566,920	$	3,522,898	Total assets	$	3,515,459	$	3,522,898

Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Accounts payable	Accounts payable	$	89,533	$	85,413	Accounts payable	$	53,720	$	85,413
Accrued expenses	Accrued expenses	42,540		48,144		Accrued expenses	58,129		48,144
Revenue share obligations	Revenue share obligations	223,748		226,883		Revenue share obligations	240,152		226,883
Accrued compensation and benefits	Accrued compensation and benefits	47,957		100,713		Accrued compensation and benefits	79,621		100,713
Deferred revenue	Deferred revenue	33,211		34,058		Deferred revenue	33,755		34,058
Current portion of notes payable to members		96,412		95,948
Current portion of notes payable to former limited partners						Current portion of notes payable to former limited partners	97,342		95,948
Line of credit and current portion of long-term debt	Line of credit and current portion of long-term debt	175,416		78,295		Line of credit and current portion of long-term debt	253,053		78,295
Other current liabilities	Other current liabilities	48,224		47,330		Other current liabilities	47,403		47,330
Total current liabilities	Total current liabilities	757,041		716,784		Total current liabilities	863,175		716,784
Long-term debt, less current portion	Long-term debt, less current portion	5,333		5,333		Long-term debt, less current portion	2,280		5,333
Notes payable to members, less current portion		274,717		298,995
Notes payable to former limited partners, less current portion						Notes payable to former limited partners, less current portion	225,814		298,995
Deferred compensation plan obligations	Deferred compensation plan obligations	54,572		59,581		Deferred compensation plan obligations	53,914		59,581

Deferred consideration, less current portion	Deferred consideration, less current portion	57,126		56,809		Deferred consideration, less current portion	57,762		56,809
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	40,979		43,102		Operating lease liabilities, less current portion	35,678		43,102
Other liabilities	Other liabilities	49,066		112,401		Other liabilities	43,234		112,401
Total liabilities	Total liabilities	1,238,834		1,293,005		Total liabilities	1,281,857		1,293,005
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)	0		0		Commitments and contingencies (Note 14)	0		0


		September 30, 2021		June 30, 2021			March 31, 2022		June 30, 2021
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 123,772,055 shares issued and 122,680,693 shares outstanding at September 30, 2021 and 122,533,051 shares issued and outstanding at June 30, 2021		1,238		1,225
Treasury stock, at cost; 1,091,362 and 0 shares at September 30, 2021 and June 30, 2021, respectively		(42,628)		—
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 124,415,319 shares issued and 117,985,944 shares outstanding at March 31, 2022 and 122,533,051 shares issued and outstanding at June 30, 2021						Class A common stock, $0.01 par value, 500,000,000 shares authorized; 124,415,319 shares issued and 117,985,944 shares outstanding at March 31, 2022 and 122,533,051 shares issued and outstanding at June 30, 2021	1,244		1,225
Treasury stock, at cost; 6,429,375 and 0 shares at March 31, 2022 and June 30, 2021, respectively						Treasury stock, at cost; 6,429,375 and 0 shares at March 31, 2022 and June 30, 2021, respectively	(250,129)		—
Additional paid-in capital	Additional paid-in capital	2,102,875		2,059,194		Additional paid-in capital	2,150,313		2,059,194
Retained earnings	Retained earnings	266,601		169,474		Retained earnings	332,171		169,474
Accumulated other comprehensive income						Accumulated other comprehensive income	3		—
Total stockholders' equity	Total stockholders' equity	2,328,086		2,229,893		Total stockholders' equity	2,233,602		2,229,893
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,566,920	$	3,522,898	Total liabilities and stockholders' equity	$	3,515,459	$	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				Three Months Ended				Nine Months Ended
		September 30,				March 31,				March 31,
		2021		2020				2022		2021		2022		2021
Net revenue:	Net revenue:						Net revenue:
Net administrative fees	Net administrative fees	$	149,462	$	132,645		Net administrative fees	$	148,396	$	146,553	$	448,261	$	424,537
Other services and support	Other services and support	97,255		98,827			Other services and support	105,808		107,375		320,109		304,020
Services	Services	246,717		231,472			Services	254,204		253,928		768,370		728,557
Products	Products	118,430		115,415			Products	93,629		215,995		323,825		511,080
Net revenue	Net revenue	365,147		346,887			Net revenue	347,833		469,923		1,092,195		1,239,637
Cost of revenue:	Cost of revenue:						Cost of revenue:
Services	Services	43,809		38,750			Services	46,735		46,980		136,326		125,852
Products	Products	109,362		113,428			Products	88,621		211,136		294,916		496,286
Cost of revenue	Cost of revenue	153,171		152,178			Cost of revenue	135,356		258,116		431,242		622,138
Gross profit	Gross profit	211,976		194,709			Gross profit	212,477		211,807		660,953		617,499
Operating expenses:	Operating expenses:						Operating expenses:
Selling, general and administrative	Selling, general and administrative	127,814		123,954			Selling, general and administrative	143,676		134,502		418,330		388,453
Research and development	Research and development	994		576			Research and development	826		715		2,666		2,013
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,889		13,204			Amortization of purchased intangible assets	11,151		10,400		32,890		33,864
Operating expenses	Operating expenses	139,697		137,734			Operating expenses	155,653		145,617		453,886		424,330
Operating income	Operating income	72,279		56,975			Operating income	56,824		66,190		207,067		193,169
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	7,058		5,927			Equity in net income of unconsolidated affiliates	3,991		5,524		17,165		16,023
Interest expense, net	Interest expense, net	(2,788)		(2,119)			Interest expense, net	(2,804)		(3,225)		(8,465)		(8,742)
Gain (loss) on FFF put and call rights		64,110		(1,919)
(Loss) gain on FFF Put and Call Rights							(Loss) gain on FFF Put and Call Rights	—		(5,195)		64,110		(21,621)
Other (expense) income, net	Other (expense) income, net	(320)		3,683			Other (expense) income, net	(4,248)		1,594		(2,176)		10,167
Other income, net		68,060		5,572
Other (expense) income, net							Other (expense) income, net	(3,061)		(1,302)		70,634		(4,173)
Income before income taxes	Income before income taxes	140,339		62,547			Income before income taxes	53,763		64,888		277,701		188,996
Income tax expense (benefit)	Income tax expense (benefit)	19,033		(94,981)			Income tax expense (benefit)	14,694		13,444		40,094		(64,880)
Net income	Net income	121,306		157,528			Net income	39,069		51,444		237,607		253,876
Net loss (income) attributable to non-controlling interest		698		(11,845)
Net income attributable to non-controlling interest							Net income attributable to non-controlling interest	(654)		(3,123)		(1,643)		(15,903)
Adjustment of redeemable limited partners' capital to redemption amount	Adjustment of redeemable limited partners' capital to redemption amount	—		(26,685)			Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		(26,685)
Net income attributable to stockholders	Net income attributable to stockholders	$	122,004	$	118,998		Net income attributable to stockholders	$	38,415	$	48,321	$	235,964	$	211,288

Comprehensive income:	Comprehensive income:						Comprehensive income:
Net income	Net income	121,306		157,528			Net income	$	39,069	$	51,444	$	237,607	$	253,876
Comprehensive loss (income) attributable to non-controlling interest		698		(11,845)
Comprehensive income attributable to non-controlling interest							Comprehensive income attributable to non-controlling interest	(654)		(3,123)		(1,643)		(15,903)
Foreign currency translation gain							Foreign currency translation gain	4		—		3		—
Comprehensive income attributable to stockholders	Comprehensive income attributable to stockholders	$	122,004	$	145,683		Comprehensive income attributable to stockholders	$	38,419	$	48,321	$	235,967	$	237,973

Weighted average shares outstanding:	Weighted average shares outstanding:						Weighted average shares outstanding:
Basic	Basic	122,945		99,575			Basic	118,697		122,254		120,957		114,596
Diluted	Diluted	124,573		100,130			Diluted	119,813		123,116		122,302		115,365

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:						Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders		$	0.99	$	1.20
Diluted earnings per share attributable to stockholders		$	0.97	$	1.19
Basic							Basic	$	0.32	$	0.40	$	1.95	$	1.84
Diluted							Diluted	$	0.32	$	0.39	$	1.94	$	1.83

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Stockholders' Equity

~~Three~~Nine Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(Unaudited)

(In thousands)


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

Foreign currency translation loss																			Foreign currency translation loss	—				—						—			—		—				(1)				—				(1)
Balance at December 31, 2021																			Balance at December 31, 2021	119,935				1,244						4,468			(176,024)		2,135,687				(1)				317,896				2,278,802
Issuance of Class A common stock under equity incentive plan																			Issuance of Class A common stock under equity incentive plan	12				—						—			—		118				—				—				118

Treasury stock																			Treasury stock	(1,961)				—						1,961			(74,105)		—				—				—				(74,105)
Stock-based compensation expense																			Stock-based compensation expense	—				—						—			—		14,004				—				—				14,004
Repurchase of vested restricted units for employee tax-withholding																			Repurchase of vested restricted units for employee tax-withholding	—				—						—			—		(174)				—				—				(174)
Net income																			Net income	—				—						—			—		—				—				39,069				39,069
Net income attributable to non-controlling interest																			Net income attributable to non-controlling interest	—				—						—			—		654				—				(654)				—
Change in ownership of consolidated entity																			Change in ownership of consolidated entity	—				—						—			—		24				—				—				24
Dividends ($0.20 per share)																			Dividends ($0.20 per share)	—				—						—			—		—				—				(24,140)				(24,140)

Foreign currency translation gain																			Foreign currency translation gain	—				—						—			—		—				4				—				4
Balance at March 31, 2022																			Balance at March 31, 2022	117,986				$	1,244					6,429			$	(250,129)	$	2,150,313			$	3			$	332,171			$	2,233,602

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

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

~~PREMIER, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

~~(In thousands)~~
Three Months Ended September 30,
2021 2020
Operating activities
Net income $ 121,306 $ 157,528
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 31,485 30,678
Equity in net income of unconsolidated affiliates (7,058) (5,927)
Deferred income taxes 18,700 (106,386)
Stock-based compensation 7,554 7,229
(Gain) loss on FFF call/put rights (64,110) 1,919
Other 518 201
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets 22,682 (45,469)
Contract assets (5,876) (29,568)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other current liabilities (70,014) 20,577
Net cash provided by operating activities 55,187 30,782
Investing activities
Purchases of property and equipment (21,050) (24,982)
Acquisition of businesses and equity method investments, net of cash acquired (26,000) —
Other — 29
Net cash used in investing activities (47,050) (24,953)
Financing activities
Payments made on notes payable (26,692) (188)
Proceeds from credit facility 175,000 100,000
Payments on credit facility (75,000) (25,000)
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 (24,852) (23,195)
Repurchase of Class A common stock (held as treasury stock) (38,151) —
Other 36,838 (2,167)
Net cash provided by financing activities 47,143 15,283
Net increase in cash and cash equivalents 55,280 21,112
Cash and cash equivalents at beginning of period 129,141 99,304
Cash and cash equivalents at end of period $ 184,421 $ 120,416


	Class A Common Stock			Class B Common Stock			Additional Paid-In Capital	Retained Earnings / (Accumulated Deficit)		Total Stockholders' Equity
	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
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)		—
Dividends ($0.19 per share)	—	—		—	—			—		(23,403)		(23,403)
Balance at March 31, 2021	122,268	$	1,223	—	$	—		$	2,046,836	$	143,351	$	2,191,410

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,
	2022		2021
Operating activities
Net income	$	237,607	$	253,876
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	95,764		89,768
Equity in net income of unconsolidated affiliates	(17,165)		(16,023)
Deferred income taxes	36,926		(100,150)
Stock-based compensation	37,792		27,601
(Gain) loss on FFF call/put rights	(64,110)		21,621
Other	4,578		537
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets	91,418		(181,263)
Contract assets	(39,139)		(43,733)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	(48,882)		140,131
Net cash provided by operating activities	334,789		192,365
Investing activities
Purchases of property and equipment	(61,061)		(66,911)
Acquisition of businesses and equity method investments, net of cash acquired	(26,000)		(81,152)
Investment in unconsolidated affiliates	(16,000)		—
Other	(10,000)		(1,228)
Net cash used in investing activities	(113,061)		(149,291)
Financing activities
Payments made on notes payable	(75,082)		(31,692)
Proceeds from credit facility	300,000		225,000
Payments on credit facility	(125,000)		(100,000)
Cash dividends paid	(72,861)		(69,647)
Repurchase of Class A common stock (held as treasury stock)	(250,129)		—

Proceeds from exercise of stock options	37,385		—
Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Other	14,318		712
Net cash used in financing activities	(171,369)		(9,794)
Effect of exchange rate changes on cash flows	3		—
Net increase in cash and cash equivalents	50,362		33,280
Cash and cash equivalents at beginning of period	129,141		99,304
Cash and cash equivalents at end of period	$	179,503	$	132,584

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) ORGANIZATION

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 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.~~industry and continues to expand its capabilities to more fully address and coordinate care improvement and standardization in the employer, payor and life sciences markets. The Company also ~~provides~~provide services to 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 15 - 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 consists of 3 sub-brands: PINC AITM, the Company’s technology and services platform with offerings 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 operational design, and workflow solutions to hardwire sustainable change in the provider, life sciences and payer markets; Contigo Health®, the Company’s ~~direct~~direct-to-employer business which provides third party administrator services and management of health benefit programs that allow employers to ~~employer business~~contract directly with healthcare providers; and RemitraTM, the Company’s ~~electronic~~digital invoicing and payables ~~business.~~business which provides services to healthcare providers and their suppliers.

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, consisting of normal recurring 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 2021 Annual Report.

~~Prior Periods’ Financial Statement Revision~~

As disclosed in the Company’s 2021 Annual Report, during the fourth quarter of fiscal year 2021, we identified and corrected an error to “Income tax (benefit) expense” resulting in additional income tax expense in the Condensed Consolidated Statements of Income and Comprehensive Income in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. As a result, the Company has revised the Condensed Consolidated Statements of Stockholders' Equity and the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2020.

1112

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the ~~three~~nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Three Months Ended September 30,					Nine Months Ended March 31,
		2021		2020			2022		2021
Supplementary non-cash investing and financing activities:	Supplementary non-cash investing and financing activities:					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		$	4,477	$	—

Non-cash additions to property and equipment	Non-cash additions to property and equipment	1,628		1,083		Non-cash additions to property and equipment	$	129	$	—
Accrued dividend equivalents	Accrued dividend equivalents	149		186		Accrued dividend equivalents	738		513
Increase in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease in stockholders' equity	Increase in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease in stockholders' equity	—		26,685		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	Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners	—		(2,437)		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	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 departures and quarterly exchanges by member owners and other adjustments	—		331
Net increase in deferred tax assets related to final exchange by member owners	Net increase in deferred tax assets related to final exchange by member owners	—		284,852		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	Reclassification of redeemable limited partners' capital to additional paid in capital	—		1,754,607		Reclassification of redeemable limited partners' capital to additional paid in capital	—		1,754,607
Decrease in additional paid-in capital related to notes payable to members, net of discounts		—		438,967
Decrease in additional paid-in capital related to notes payable to former limited partners, net of discounts						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	Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments	—		37,319		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	Increase in additional paid-in capital related to final exchange by member owners	—		517,526		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, but not limited to, estimates for net administrative fees revenue, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for credit losses, reserves for net realizable value of inventory, obsolete inventory, 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 2021 Annual Report.

Recently Issued Accounting Standards Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, (“ASU 2021-08”), which 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 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 the adoption of the new standard on its consolidated financial statements and related disclosures.

(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, LLC, ~~(“Premier IDS”), acquired~~ substantially all the assets and assumed certain liabilities of Invoice Delivery Services, LP (“IDS”) for an adjusted purchase price of $80.7

million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under the Company’s Credit Facility (as defined in Note 8 - Debt and Notes Payable).

The Company has accounted for the IDS 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 resulted in the recognition of $57.7 million of goodwill based on the purchase price paid in the acquisition compared to the fair value of the tangible assets acquired. The IDS 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~~was finalized during the three months ended March 31, 2022. IDS ~~acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed. IDS was~~has been integrated within Premier under the brand name RemitraTM and is reported as part of the Performance Services segment.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company’s historic consolidated financial statements.

(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				Carrying Value		Equity in Net Income
						Three Months Ended September 30,								Three Months Ended March 31,				Nine Months Ended March 31,
		September 30, 2021		June 30, 2021		2021		2020				March 31, 2022		June 30, 2021		2022		2021		2022		2021
FFF	FFF	$	126,493	$	120,548	$	5,945	$	4,574		FFF	$	132,384	$	120,548	$	2,437	$	806	$	11,836	$	8,387
Exela	Exela	26,000		—		—		—			Exela	27,504		—		501		—		1,504		—
Prestige	Prestige	15,236		14,478		758		1,052			Prestige	14,566		14,478		935		4,436		3,272		7,082
Qventus											Qventus	16,000		—		—		—		—		—
Other investments	Other investments	18,553		18,198		355		301			Other investments	18,751		18,198		118		282		553		554
Total investments	Total investments	$	186,282	$	153,224	$	7,058	$	5,927		Total investments	$	209,205	$	153,224	$	3,991	$	5,524	$	17,165	$	16,023

The Company, through ~~PSCI,~~its indirect, wholly owned subsidiary Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of stock of FFF at ~~September 30, 2021~~March 31, 2022 and June 30, 2021. On July 29, 2021, the 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 the recognition of a corresponding non-cash gain of $64.1 million in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (see Note 5 - Fair Value Measurements for additional information). ~~The Company accounts for its investment in FFF using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.~~

The Company, through its consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in Exela Holdings, Inc. (“Exela”), through its ownership of Exela Class A common stock at ~~September 30, 2021. The~~March 31, 2022. At March 31, 2022, the Company ~~owns~~owned approximately 15% of the membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates. ~~The Company accounts for its investment in Exela using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.~~

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 ~~September 30, 2021. The~~March 31, 2022. At March 31, 2022, the Company ~~owns~~owned approximately 26% of the membership interest of PRAM, with the remainder of the membership interests held by 16 member health 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.

On January 31, 2022, the Company, through PHSI, purchased an approximate 7% interest in Qventus, Inc. (“Qventus”) through its ownership of Qventus Series C preferred stock. The Company accounts for its investment in Qventus at initial cost less impairments, if any, plus or minus any observable changes in fair value. The Company includes Qventus as part of the Performance Services segment.

(5) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table represents the Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):


		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)
September 30, 2021
March 31, 2022										March 31, 2022
Cash equivalents	Cash equivalents	$	75	$	75	$	—	$	—	Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets	Deferred compensation plan assets	60,559		60,559		—		—		Deferred compensation plan assets	59,803		59,803		—		—
Total assets	Total assets	60,634		60,634		—		—		Total assets	59,878		59,878		—		—

Earn-out liabilities	Earn-out liabilities	24,368		—		—		24,368		Earn-out liabilities	23,194		—		—		23,194

Total liabilities	Total liabilities	$	24,368	$	—	$	—	$	24,368	Total liabilities	$	23,194	$	—	$	—	$	23,194

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

Earn-out liabilities	Earn-out liabilities	24,249		—		—		24,249		Earn-out liabilities	24,249		—		—		24,249
FFF put right	FFF put right	64,110		—		—		64,110		FFF put right	64,110		—		—		64,110
Total liabilities	Total liabilities	$	88,359	$	—	$	—	$	88,359	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 ($~~6.0~~5.9 million and $5.5 million at ~~September 30, 2021~~March 31, 2022 and June 30, 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 the Company’s equity investment in FFF,~~On July 29, 2021, the FFF shareholders’ agreement was amended ~~which resulted~~resulting in the termination of the FFF Put Right ~~on July 29, 2021.~~and the derecognition of the FFF Put Right liability.

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 ~~September 30, 2021~~March 31, 2022 and June 30, 2021, the Call Right had zero value. In the event that the Call Right is exercised, the purchase price for the additional interest in FFF will be at a ~~per share price equal to the~~ 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”).

~~At September 30, 2021, the fair value of the Call Right was zero.~~ At June 30, 2021, the fair values of the Put and 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 Put and 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 growth rates, among other assumptions. The resulting FFF enterprise value was an assumption utilized in the valuation of the Put and Call Rights.

1415

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


	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.

At ~~September 30, 2021, the fair value of the Call Right was zero. At~~ June 30, 2021, the Company recorded the Put and 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 Right, were recorded within other (expense) income, net in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

Earn-out liabilities

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”) in February 2020. The earn-out liability was classified as Level 3 of the fair value hierarchy.

The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and ~~are~~is 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 acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of ~~0.8%~~1.1% at March 31, 2022 and 0.9% at ~~September 30, 2021 and~~ June 30, ~~2021, respectively.~~2021. As of ~~September 30, 2021~~March 31, 2022 and June 30, 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 ~~September 30, 2021~~March 31, 2022 and June 30, 2021 was ~~$24.4~~$23.2 million and $24.2 million, respectively.

Acurity and Nexera Earn-out (a)


Input assumptions	Input assumptions	As of September 30, 2021		As of June 30, 2021		Input assumptions	As of March 31, 2022		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	0.8	%	0.9	%	Credit spread	1.1	%	0.9	%

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

1516

A reconciliation of the Company’s 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 September 30, 2021
Three Months Ended March 31, 2022										Three Months Ended March 31, 2022
Earn-out liabilities										Earn-out liabilities	$	24,139	$	—	$	(945)	$	23,194

Total Level 3 liabilities										Total Level 3 liabilities	$	24,139	$	—	$	(945)	$	23,194

Three Months Ended March 31, 2021										Three Months Ended March 31, 2021
Earn-out liabilities	Earn-out liabilities	$	24,249	—		119		24,368		Earn-out liabilities	$	22,700	$	—	$	(1,254)	$	23,954
FFF put right	FFF put right	64,110		(64,110)		—		—		FFF put right	53,184		—		(5,195)		58,379
Total Level 3 liabilities	Total Level 3 liabilities	$	88,359	$	(64,110)	$	119	$	24,368	Total Level 3 liabilities	$	75,884	$	—	$	(6,449)	$	82,333

Three Months Ended September 30, 2020
Nine Months Ended March 31, 2022										Nine Months Ended March 31, 2022
Earn-out liabilities	Earn-out liabilities	$	33,151	$	(9,073)	$	(1,061)	$	23,017	Earn-out liabilities	$	24,249	$	—	$	(1,055)	$	23,194
FFF put right	FFF put right	36,758		—		1,919		38,677		FFF put right	64,110		(64,110)		—		—
Total Level 3 liabilities	Total Level 3 liabilities	$	69,909	$	(9,073)	$	858	$	61,694	Total Level 3 liabilities	$	88,359	$	(64,110)	$	(1,055)	$	23,194

Nine Months Ended March 31, 2021										Nine Months Ended March 31, 2021
Earn-out liabilities										Earn-out liabilities	$	33,151	$	(13,733)	$	(4,536)	$	23,954
FFF put right										FFF put right	36,758		—		(21,621)		58,379
Total Level 3 liabilities										Total Level 3 liabilities	$	69,909	$	(13,733)	$	(26,157)	$	82,333

(a)Purchases (Settlements) for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 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~~nine months ended ~~September 30, 2020~~March 31, 2021 includes the ~~full earn-out from the acquisition of Stanson Health, Inc. in November 2018,~~Medpricer earnout, which had been earned but not yet paid as of ~~September 30, 2020.~~March 31, 2021, and the Stanson earnout, which was paid in full as of March 31, 2021.

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

Non-Recurring Fair Value Measurements

During the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, the Company recorded notes payable to ~~members~~former limited partners as a result of the August 2020 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 8 - Debt and Notes Payable).

During the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment.

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 $0.1 million at both ~~September 30, 2021~~March 31, 2022 and June 30, 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 8 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

(6) CONTRACT BALANCES

Deferred Revenue

Revenue recognized during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 that was included in the opening balance of deferred revenue at June 30, 2021 was ~~$7.3~~$24.2 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.

Refer to the Company’s significant accounting policies in the 2021 Annual Report for discussion of revenue recognition on contracts with customers.

Net revenue of ~~$1.4~~$5.7 million and $3.6 million was recognized during the three and nine months ended ~~September 30, 2021~~March 31, 2022, respectively, from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by ~~a $1.8~~an increase of $5.4 million ~~increase~~and $3.3 million, respectively, in net administrative fees revenue related to under-forecasted cash receipts received in the current ~~period partially offset~~period. In addition, net revenue recognized in both periods was driven by ~~a reduction~~an increase of ~~$0.4~~$0.3 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.

~~A decrease to net~~Net revenue of ~~$2.5~~$8.5 million was recognized during the three months ended ~~September 30, 2020~~March 31, 2021 from performance obligations that were satisfied or partially satisfied in prior periods. The ~~decrease in~~ net revenue recognized was driven by a ~~$2.7~~$11.4 million ~~decrease~~increase in net administrative fees revenue related to ~~over-forecasted~~under-forecasted cash receipts received in the current period partially offset by ~~$0.2~~a reduction of $2.9 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~~business.

A decrease to net revenue of $3.9 million was recognized during the nine months ended March 31, 2021 from performance obligations that were partially satisfied in prior periods. The decrease to net revenue recognized was driven by a $0.9 million decrease in net administrative fees revenue related to over-forecasted cash receipts received in the current period and a reduction of $3.0 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.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of ~~September 30, 2021,~~March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$588.8~~$614.0 million. The Company expects to recognize approximately ~~47%~~46% of the remaining performance obligations over the next 12 months and an additional 27% over the following 12 months, with the remainder recognized thereafter.

(7) GOODWILL AND INTANGIBLE ASSETS

Goodwill

At ~~September 30, 2021~~March 31, 2022 and June 30, 2021, wethe Company had goodwill balances recorded at Supply Chain Services and Performance Services of $388.5 million and $611.4 million, respectively.

Intangible Assets, Net

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


		Useful Life	September 30, 2021		June 30, 2021			Useful Life	March 31, 2022		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		186,017		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		24,610		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	5.2 years	21,315		11,315
Other (a)	Other (a)	10.2 years	7,682		7,682		Other (a)	10.2 years	7,682		7,682
Total intangible assets	Total intangible assets		686,554		686,554		Total intangible assets		696,554		686,554
Accumulated amortization	Accumulated amortization		(300,801)		(289,912)		Accumulated amortization		(322,802)		(289,912)
Total intangible assets, net	Total intangible assets, net		$	385,753	$	396,642	Total intangible assets, net		$	373,752	$	396,642

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

Intangible asset amortization was ~~$10.9~~$32.9 million and ~~$13.2~~$33.9 million for the ~~three~~nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

(8) DEBT AND NOTES PAYABLE

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


		September 30, 2021		June 30, 2021			March 31, 2022		June 30, 2021
Credit Facility		$	175,000	$	75,000
Notes payable to members		371,129		394,943
Credit facility						Credit facility	$	250,000	$	75,000
Notes payable to members, net of discount						Notes payable to members, net of discount	323,156		394,943
Other notes payable	Other notes payable	5,749		8,628		Other notes payable	5,333		8,628
Total debt and notes payable	Total debt and notes payable	551,878		478,571		Total debt and notes payable	578,489		478,571
Less: current portion	Less: current portion	(271,828)		(174,243)		Less: current portion	(350,395)		(174,243)
Total long-term debt and notes payable	Total long-term debt and notes payable	$	280,050	$	304,328	Total long-term debt and notes payable	$	228,094	$	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”). On December 1, 2021, in connection with the Subsidiary Reorganization, the Credit Facility was amended to remove Prior Premier GP 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 from 1.000% to 1.500% or the prime lending rate plus an applicable margin ranging from 0.000% to 0.500%. At ~~September 30, 2021,~~March 31, 2022, the weighted average interest rate on outstanding borrowings under the Credit Facility was ~~1.090%. At September 30, 2021~~1.303% and, the annual commitment fee, ~~which the Co-Borrowers are required to pay~~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, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments. ~~Premier GP~~The Company was in compliance with all such covenants at ~~September 30, 2021.~~March 31, 2022. 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.

The Company had ~~$175.0~~$250.0 million in outstanding borrowings under the Credit Facility at ~~September 30, 2021~~March 31, 2022 with ~~$824.9~~$749.9 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. For the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, the Company borrowed ~~$175.0~~$300.0 million and repaid $125.0 million of outstanding borrowings under the Credit Facility. In April 2022, the Company repaid $75.0 million of outstanding borrowings under the Credit Facility. ~~In October 2021, the Company repaid $50.0 million of outstanding borrowings under the Credit Facility.~~

Notes Payable

Notes Payable to ~~Members~~Former Limited Partners

At ~~September 30, 2021,~~March 31, 2022, the Company had ~~$371.1~~$323.2 million of notes payable to ~~members,~~former LPs, net of discounts on notes payable of ~~$13.9~~$10.6 million, of which ~~$96.4~~$97.3 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 ~~members,~~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 ~~members~~former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to ~~members~~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 ~~members~~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 ~~September 30, 2021~~March 31, 2022 and June 30, 2021, the Company had ~~$5.7~~$5.3 million and $8.6 million in other notes payable, respectively, of which ~~$0.4~~$3.1 million and $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.

(9) REDEEMABLE LIMITED PARTNERS' CAPITAL

The fair value of redeemable limited partners’ capital 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 at July 31, 2020. As a result, there were no adjustments to the fair value of redeemable limited partners’ capital for the ~~three~~nine months ended ~~September 30, 2021.~~March 31, 2022.

For the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, the Company recorded 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. Subsequent to July 31, 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 in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

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


	Receivables From Limited Partners		Redeemable Limited Partners' Capital		Total Redeemable Limited Partners' Capital
June 30, 2020	$	(995)	$	1,721,304	$	1,720,309
Distributions applied to receivables from limited partners	141		—		141
Net income attributable to non-controlling interest in Premier LP	—		11,845		11,845
Distributions to limited partners	—		(1,936)		(1,936)
Exchange of Class B common units for Class A common stock by member owners	—		(2,437)		(2,437)
Adjustment of redeemable limited partners' capital to redemption amount	—		26,685		26,685
Reclassification to permanent equity	854		(1,755,461)		(1,754,607)
September 30, 2020	$	—	$	—	$	—

(10) STOCKHOLDERS' EQUITY

As of ~~September 30, 2021,~~March 31, 2022, there were ~~122,680,693~~117,985,944 shares of the Company's Class A common stock, par value $0.01 per share, outstanding.

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 ~~September 30, 2021,~~

March 31, 2022, the Company ~~had~~completed its stock repurchase program and purchased approximately ~~1.1~~6.4 million shares of Class A common stock at an average price of ~~$39.04~~$38.88 per share for a total purchase price of ~~$42.6~~$250.0 million. There can be no assurances regarding the timing or number of shares of Class A common stock purchased under this authorization. The repurchase authorization may be suspended, delayed or discontinued at any time at the discretion of the Company’s Board of Directors.

~~During the three months ended September 30, 2021, the~~The Company paid a cash ~~dividend~~dividends of $0.20 per share on outstanding shares of Class A common stock to stockholders on each of ~~record on~~ September ~~1, 2021.~~15, 2021, December 15, 2021, and March 15, 2022. On ~~October~~April 21, ~~2021,~~2022, the Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on ~~December~~June 15, ~~2021~~2022 to stockholders of record on ~~December~~June 1, ~~2021.~~2022.

(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 was due to the exchange benefit obtained by limited partners through the ownership of Class B common units, which were canceled in conjunction with the August ~~2020.~~2020 Restructuring. Except when the effect would be anti-dilutive, the diluted earnings per share calculation, which is calculated using the treasury stock method, includes the impact of all potentially issuable dilutive shares of Class A common stock.

1921

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


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Numerator for basic earnings per share:	Numerator for basic earnings per share:						Numerator for basic earnings per share:
Net income attributable to stockholders (a)	Net income attributable to stockholders (a)	$	122,004	$	118,998		Net income attributable to stockholders (a)	$	38,415	$	48,321	$	235,964	$	211,288

Numerator for diluted earnings per share:	Numerator for diluted earnings per share:						Numerator for diluted earnings per share:
Net income attributable to stockholders (a)	Net income attributable to stockholders (a)	$	122,004	$	118,998		Net income attributable to stockholders (a)	$	38,415	$	48,321	$	235,964	$	211,288

Net loss attributable to non-controlling interest		(698)		—
Net income (b)		121,306		118,998
Net income attributable to non-controlling interest							Net income attributable to non-controlling interest	—		—		1,643		—
Net income for diluted earnings per share							Net income for diluted earnings per share	$	38,415	$	48,321	$	237,607	$	211,288

Denominator for earnings per share:	Denominator for earnings per share:						Denominator for earnings per share:
Basic weighted average shares outstanding ~~(c)~~(b)	Basic weighted average shares outstanding ~~(c)~~(b)	122,945		99,575			Basic weighted average shares outstanding ~~(c)~~(b)	118,697		122,254		120,957		114,596
Effect of dilutive securities: ~~(d)~~(c)	Effect of dilutive securities: ~~(d)~~(c)						Effect of dilutive securities: ~~(d)~~(c)
Stock options	Stock options	310		253			Stock options	98		325		225		300
Restricted stock	Restricted stock	492		302			Restricted stock	465		373		499		336
Performance share awards	Performance share awards	826		—			Performance share awards	553		164		621		133

Diluted weighted average shares and assumed conversions	Diluted weighted average shares and assumed conversions	124,573		100,130			Diluted weighted average shares and assumed conversions	119,813		123,116		122,302		115,365

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:						Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders		$	0.99	$	1.20
Diluted earnings per share attributable to stockholders		$	0.97	$	1.19
Basic							Basic	$	0.32	$	0.40	$	1.95	$	1.84
Diluted							Diluted	$	0.32	$	0.39	$	1.94	$	1.83

(a)Net income attributable to stockholders was calculated as follows (in thousands):


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Net income	Net income	$	121,306	$	157,528		Net income	$	39,069	$	51,444	$	237,607	$	253,876
Net loss (income) attributable to non-controlling interest		698		(11,845)
Net income attributable to non-controlling interest							Net income attributable to non-controlling interest	(654)		(3,123)		(1,643)		(15,903)
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		(26,685)			Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		(26,685)
Net income attributable to stockholders	Net income attributable to stockholders	$	122,004	$	118,998		Net income attributable to stockholders	$	38,415	$	48,321	$	235,964	$	211,288

(b)For the three months ended September 30, 2021 and 2020, the tax expense related to the Company retaining the portion of net loss (income) attributable to income from non-controlling interest was calculated as a component of the income tax provision for the three months ended September 30, 2021 and 2020.

~~(c)~~Weighted average number of common shares used for basic earnings per share excludes the impact of all potentially issuable dilutive shares of Class A common stock for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

~~(d)~~(c)For the three and nine months ended ~~September 30, 2021,~~March 31, 2022, the effect of 0.3 million and 0.6 million stock options and restricted stock units ~~were~~was excluded from diluted weighted average shares outstanding as ~~they~~it had an anti-dilutive effect. ~~Additionally,~~

For the nine months ended March 31, 2022, the effect of ~~0.2~~0.3 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 months ended ~~September 30, 2020,~~March 31, 2021, the effect of ~~0.7~~0.4 million and 1.5 million stock options and restricted stock units, ~~and 22.4 million Class B common units were~~respectively, was excluded from diluted weighted average shares outstanding as ~~they~~it had an anti-dilutive effect. Additionally, the effect of ~~0.6~~0.7 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 nine months ended March 31, 2021, the effect of 7.5 million Class B common units was excluded from the diluted weighted average shares outstanding as it had an anti-dilutive effect.

(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~~nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 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. See Note 13 - Income Taxes for further information.

2022

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


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Pre-tax stock-based compensation expense	Pre-tax stock-based compensation expense	$	7,554	$	7,229		Pre-tax stock-based compensation expense	$	14,004	$	13,056	$	37,792	$	27,601
Deferred tax benefit (a)	Deferred tax benefit (a)	1,281		1,110			Deferred tax benefit (a)	3,288		2,521		8,013		4,641
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax	$	6,273	$	6,119		Total stock-based compensation expense, net of tax	$	10,716	$	10,535	$	29,779	$	22,960

(a)For the three and nine months ended ~~September 30, 2021 and 2020,~~March 31, 2022, the deferred tax benefit was reduced by ~~$0.7~~$0.4 million and ~~$0.8~~$1.8 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 ~~September 30, 2021,~~March 31, 2022, there were ~~4.6~~4.7 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 ~~three~~nine months ended ~~September 30, 2021:~~March 31, 2022:


		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, 2021	Outstanding at June 30, 2021	990,301	$	35.27	1,731,002	$	35.56	2,163,006	$	30.32	Outstanding at June 30, 2021	990,301	$	35.27	1,731,002	$	35.56	2,163,006	$	30.32
Granted	Granted	576,575	$	37.76	651,392	$	37.18	—	$	—	Granted	624,256	37.79		651,392	37.22		—	—
Vested/exercised	Vested/exercised	(156,158)	$	42.73	(588,142)	$	43.74	(745,407)	$	30.71	Vested/exercised	(293,691)	40.19		(588,142)	43.74		(1,239,656)	30.18
Forfeited	Forfeited	(103,034)	$	33.41	(147,825)	$	31.75	(12,025)	$	36.54	Forfeited	(139,811)	33.80		(199,985)	32.06		(12,025)	36.54
Outstanding at September 30, 2021		1,307,684	$	35.63	1,646,427	$	33.62	1,405,574	$	30.07
Outstanding at March 31, 2022											Outstanding at March 31, 2022	1,181,055	$	35.55	1,594,267	$	33.66	911,325	$	30.44

Stock options outstanding and exercisable at September 30, 2021								1,405,574	$	30.07
Stock options outstanding and exercisable at March 31, 2022											Stock options outstanding and exercisable at March 31, 2022							911,325	$	30.44

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 ~~September 30, 2021~~March 31, 2022 was as follows (in thousands). At ~~September 30, 2021,~~March 31, 2022, there was no unrecognized stock-based compensation expense for outstanding stock options.


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	~~31,788~~24,950	~~2.5~~2.1 years
Performance share awards	~~33,266~~23,590		~~2.1~~1.7 years
Total unrecognized stock-based compensation expense	$	~~65,054~~48,540	~~2.3~~1.9 years

2123

The aggregate intrinsic value of stock options at ~~September 30, 2021~~March 31, 2022 was as follows (in thousands):


	Intrinsic Value of Stock Options
Outstanding and exercisable	$	~~12,218~~4,727



Exercised during the year ended ~~September 30, 2021~~March 31, 2022	$	~~4,748~~9,716

(13) INCOME TAXES

Income tax expense for the three months ended ~~September 30,~~March 31, 2022, and 2021 was ~~$19.0~~$14.7 million and $13.4 million, respectively, which reflects effective tax rates of 27% and 21%, respectively. The change in the effective tax rate for the three months ended March 31, 2022 is primarily attributable to the Subsidiary Reorganization which was completed on December 1, 2021.

Income tax expense for the nine months ended March 31, 2022 was $40.1 million, which reflects an effective tax rate of 14% compared to an income tax benefit of ~~$95.0~~$64.9 million for the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021 which reflects an effective tax rate of ~~(152)~~(34)%. The change in the effective tax rate for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 is primarily driven by the prior year deferred tax remeasurement due to the change in the state statutory rate and valuation allowance release resulting from the Company and its subsidiaries forming one consolidated filing group for tax purposes at the consummation of the August 2020 Restructuring. Excluding the one-time deferred tax benefit, the effective tax rate would have been ~~24%~~23% for the ~~three~~nine months ended ~~September 30, 2020.~~March 31, 2021.

During the first quarter of fiscal year 2022, the Company assessed the future realization of its deferred tax ~~assets. As~~assets as a result of ~~Premier’s~~its plan to ~~reorganize and simplify~~complete the ~~Company’s subsidiary reporting structure~~Subsidiary Reorganization by the end of the second quarter of fiscal year 2022. On December 1, 2021, the Company completed the Subsidiary Reorganization. The Company reassessed its valuation allowance release and in fiscal year 2022, the Company expects to release ~~$32.9~~$32.3 million of deferred tax asset valuation allowance ~~in fiscal year 2022. The release~~ primarily ~~relates~~related to finite-lived net operating losses and research and development credit carryforwards. ~~The~~As a result of the Subsidiary Reorganization, the Company has included ~~$17.6~~$10.6 million of tax benefit in ~~Premier’s~~its annualized effective tax rate calculation based on the amount that is expected to offset ordinary income during fiscal year ~~2022, as a result of the reorganization.~~2022. The remaining ~~$15.3~~$21.7 million of valuation allowance ~~being~~expected to be released relates to carryforwards expected to be utilized in future years and is being recognized as a discrete item in the ~~first quarter of fiscal~~nine months ended March 31, 2022.

(14) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 was $2.5 million and ~~2020 was~~ $2.6 million, respectively. Operating lease expense for the nine months ended March 31, 2022 and ~~$3.4~~2021 was $7.6 million and $8.2 million, respectively. As of ~~September 30, 2021,~~March 31, 2022, the weighted average remaining lease term was ~~4.6~~4.1 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):


		September 30, 2021		June 30, 2021			March 31, 2022		June 30, 2021
2022 (a)	2022 (a)	$	8,910	$	11,738	2022 (a)	$	3,017	$	11,738
2023	2023	12,131		12,012		2023	12,131		12,012
2024	2024	12,267		12,145		2024	12,267		12,145
2025	2025	12,301		12,177		2025	12,301		12,177
2026	2026	9,005		8,878		2026	9,005		8,878
Thereafter	Thereafter	1,324		1,293		Thereafter	1,323		1,293
Total future minimum lease payments	Total future minimum lease payments	55,938		58,243		Total future minimum lease payments	50,044		58,243
Less: imputed interest	Less: imputed interest	4,840		5,289		Less: imputed interest	3,885		5,289
Total operating lease liabilities (b)	Total operating lease liabilities (b)	$	51,098	$	52,954	Total operating lease liabilities (b)	$	46,159	$	52,954

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

(b)As of ~~September 30, 2021,~~March 31, 2022, total operating lease liabilities included ~~$10.1~~$10.5 million within other current liabilities in the Condensed Consolidated Balance Sheets.

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 stockholder derivative or other similar litigation, 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, 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.

(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 consists of 3 sub-brands: PINC AITM, the Company’s technology and services ~~platform,~~platform; Contigo Health®, the Company’s ~~direct to employer business~~direct-to-employer business; and RemitraTM, the Company’s ~~electronic~~digital invoicing and payables business.

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


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
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	$	149,462	$	132,645		Net administrative fees	$	148,396	$	146,553	$	448,261	$	424,537
Other services and support	Other services and support	8,924		5,592			Other services and support	8,914		8,630		27,165		18,307
Services	Services	158,386		138,237			Services	157,310		155,183		475,426		442,844
Products	Products	118,430		115,415			Products	93,629		215,995		323,825		511,080
Total Supply Chain Services (a)	Total Supply Chain Services (a)	276,816		253,652			Total Supply Chain Services (a)	250,939		371,178		799,251		953,924
Performance Services (a)	Performance Services (a)	88,331		93,235			Performance Services (a)	96,903		98,745		292,962		285,713
Total segment net revenue							Total segment net revenue	347,842		469,923		1,092,213		1,239,637
Eliminations (a)							Eliminations (a)	(9)		—		(18)		—
Net revenue	Net revenue	$	365,147	$	346,887		Net revenue	$	347,833	$	469,923	$	1,092,195	$	1,239,637

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

2325

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


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Depreciation and amortization expense (a):	Depreciation and amortization expense (a):						Depreciation and amortization expense (a):
Supply Chain Services	Supply Chain Services	$	13,144	$	8,802		Supply Chain Services	$	14,114	$	9,389	$	40,710	$	27,608
Performance Services	Performance Services	16,109		19,757			Performance Services	16,163		18,196		48,349		55,763
Corporate	Corporate	2,232		2,119			Corporate	2,282		2,152		6,705		6,397
Total depreciation and amortization expense	Total depreciation and amortization expense	$	31,485	$	30,678		Total depreciation and amortization expense	$	32,559	$	29,737	$	95,764	$	89,768

Capital expenditures:	Capital expenditures:						Capital expenditures:
Supply Chain Services	Supply Chain Services	$	8,157	$	2,876		Supply Chain Services	$	6,740	$	2,486	$	22,212	$	8,061
Performance Services	Performance Services	11,023		18,371			Performance Services	10,926		18,835		34,312		54,118
Corporate	Corporate	1,870		3,735			Corporate	735		726		4,537		4,732
Total capital expenditures	Total capital expenditures	$	21,050	$	24,982		Total capital expenditures	$	18,401	$	22,047	$	61,061	$	66,911


		September 30, 2021		June 30, 2021			March 31, 2022		June 30, 2021
Total assets:	Total assets:					Total assets:
Supply Chain Services	Supply Chain Services	$	1,593,084	$	1,550,300	Supply Chain Services	$	1,507,056	$	1,550,300
Performance Services	Performance Services	1,014,850		1,043,608		Performance Services	1,065,974		1,043,608
Corporate	Corporate	958,990		928,939		Corporate	942,431		928,939
Total assets	Total assets	3,566,924		3,522,847		Total assets	3,515,461		3,522,847
Eliminations (b)	Eliminations (b)	(4)		51		Eliminations (b)	(2)		51
Total assets, net	Total assets, net	$	3,566,920	$	3,522,898	Total assets, net	$	3,515,459	$	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 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. 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.

2426

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 September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Income before income taxes	Income before income taxes	$	140,339	$	62,547		Income before income taxes	$	53,763	$	64,888	$	277,701	$	188,996
Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	(7,058)		(5,927)			Equity in net income of unconsolidated affiliates (a)	(3,991)		(5,524)		(17,165)		(16,023)
Interest and investment loss, net	Interest and investment loss, net	2,788		2,119			Interest and investment loss, net	2,804		3,225		8,465		8,742
(Gain) loss on FFF put and call rights (b)		(64,110)		1,919
Loss (gain) on FFF Put and Call Rights (b)							Loss (gain) on FFF Put and Call Rights (b)	—		5,195		(64,110)		21,621
Other (income) expense	Other (income) expense	320		(3,683)			Other (income) expense	4,248		(1,594)		2,176		(10,167)
Operating income	Operating income	72,279		56,975			Operating income	56,824		66,190		207,067		193,169
Depreciation and amortization	Depreciation and amortization	20,596		17,474			Depreciation and amortization	21,408		19,337		62,874		55,904
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,889		13,204			Amortization of purchased intangible assets	11,151		10,400		32,890		33,864
Stock-based compensation (c)	Stock-based compensation (c)	7,751		7,375			Stock-based compensation (c)	14,149		13,180		38,229		27,970
Acquisition and disposition related expenses		3,421		2,845
Acquisition- and disposition-related expenses							Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889
Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	7,058		5,927			Equity in net income of unconsolidated affiliates (a)	3,991		5,524		17,165		16,023
Deferred compensation plan income (expense) (d)		(318)		2,907
Deferred compensation plan (expense) income (d)							Deferred compensation plan (expense) income (d)	(3,994)		1,521		(1,923)		9,231
Other expense, net	Other expense, net	27		4,036			Other expense, net	5,544		929		9,323		5,718
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	121,703	$	110,743		Non-GAAP Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768

Segment Non-GAAP Adjusted EBITDA:	Segment Non-GAAP Adjusted EBITDA:						Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (e)	Supply Chain Services (e)	$	129,269	$	102,649		Supply Chain Services (e)	$	118,034	$	117,949	$	381,586	$	339,538
Performance Services (e)	Performance Services (e)	23,715		37,116			Performance Services (e)	26,552		35,950		89,277		109,675
Corporate	Corporate	(31,281)		(29,022)			Corporate	(32,398)		(32,692)		(94,956)		(92,445)
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	121,703	$	110,743		Non-GAAP Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768

(a)Refer to Note 4 - Investments for more information.

(b)Refer to Note 5 - Fair Value Measurements for more information.

(c)Includes non-cash employee stock-based compensation expense and stock purchase plan expense of ~~$0.2 million and~~ $0.1 million for both the three months ended ~~September 30,~~March 31, 2022 and 2021and ~~2020,~~$0.4 million for both the nine months ended March 31, 2022 and 2021, respectively.

(d)Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.

(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 Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “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 U.S. hospitals, health systems and 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~~

2527

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 and continue to expand our capabilities to more fully address and coordinate care improvement and standardization in the employer, payor and life sciences markets. We also provide services to other businesses including food service, schools and universities.

We generated net revenue, net income 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 September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Net revenue	Net revenue	$	365,147	$	346,887		Net revenue	$	347,833	$	469,923	$	1,092,195	$	1,239,637
Net income	Net income	121,306		157,528			Net income	39,069		51,444		237,607		253,876
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	121,703		110,743			Non-GAAP Adjusted EBITDA	112,188		121,207		375,907		356,768

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 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 ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was as follows (in thousands):


		Three Months Ended September 30,				Change				% of Net Revenue					Three Months Ended March 31,				Change				% of Net Revenue
Net revenue:	Net revenue:	2021		2020		2021		2020		2021		2020		Net revenue:	2022		2021		2022		2021		2022		2021
Supply Chain Services	Supply Chain Services	$	276,816	$	253,652	$	23,164	9	%	76	%	73	%	Supply Chain Services	$	250,939	$	371,178	$	(120,239)	(32)	%	72	%	79	%
Performance Services	Performance Services	88,331		93,235		(4,904)		(5)	%	24	%	27	%	Performance Services	96,903		98,745		(1,842)		(2)	%	28	%	21	%
Net revenue	Net revenue	$	365,147	$	346,887	$	18,260	5	%	100	%	100	%	Net revenue	$	347,842	$	469,923	$	(122,081)	(26)	%	100	%	100	%

Segment net revenue for the nine months ended March 31, 2022 and 2021 was as follows (in thousands):


	Nine Months Ended March 31,				Change				% of Net Revenue
Net revenue:	2022		2021		2022		2021		2022		2021
Supply Chain Services	$	799,251	$	953,924	$	(154,673)	(16)	%	73	%	77	%
Performance Services	292,962		285,713		7,249		3	%	27	%	23	%
Net revenue	$	1,092,213	$	1,239,637	$	(147,424)	(12)	%	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 consists of three sub-brands: PINC AITM, ~~the Company’s~~our technology and services platform with offerings 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 operational design, and workflow solutions to hardwire sustainable change in the provider, life sciences and payer markets; Contigo Health®, our ~~direct~~direct-to-employer business which provides third party administrator services and management of health benefit programs that allow employers to ~~employer business~~contract directly with healthcare providers; and RemitraTM, our ~~electronic~~digital invoicing and payables ~~business.~~business which provides services to healthcare providers and their suppliers. 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 $80.7 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under our Credit Facility (as defined in Note 8 - 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 is beinghas been integrated within Premier under the brand name RemitraTM 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.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industrywide factors will continue to affect our business, in both 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” herein and in the 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 potential for the Affordable Care Act (“ACA”) to be materially altered by Congress, through regulatory action by government agencies, or in the 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 experienced and may continue to experience demand uncertainty from both material increases and decreases in demand as a result of the COVID-19 pandemic. There was a material increase in demand for personal protective equipment (“PPE”), drugs and other supplies directly related to treating and preventing the spread of COVID-19 and variants thereof during fiscal 2020 and 2021. ~~However, either voluntarily or due to government orders or advisories, patients,~~Patients, hospitals and other medical facilities have deferred and continue to defer some elective procedures and routine medical visits during the ~~crisis.~~crisis 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 during 2020, 2021 and ~~2021~~the first half of 2022, and such lower demand may continue ~~into~~through the remainder of fiscal 2022 and beyond if COVID-19 vaccine ~~programs are not as successful as anticipated, or if~~protection wanes due to COVID-19 ~~variants become widespread.~~variants. In addition, as a result of our members’ focus on managing the effects of COVID-19 on patients and their businesses, we ~~have experienced a decrease~~continue to experience constraints in demand for our consulting and other performance service engagements. Furthermore, ~~during~~as a result of the COVID-19 pandemic, many of our 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 may continue, and the effect they may have on our business and operating results, will depend upon future developments that are highly uncertain and cannot be accurately predicted.

2729

•Limited access to our 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’ ability to travel to our members’ facilities and our performance under our existing contracts. The long-term continuation, or any future recurrence of these circumstances may negatively impact the ability of our employees to 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 materially disrupted due to 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 and continue to impact our access to products for our members. Staffing or personnel shortages due to shelter-in-place orders and quarantines, or other public health measures, continue to create 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 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 impacted food processing suppliers and led to plant closures. If the supply chain for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing business continue to be adversely impacted by ~~restrictions resulting from~~ the COVID-19 pandemic, our supply chain may continue to be disrupted. 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 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 foreseen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 and variants thereof 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, 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, 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 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 fiscal 2022 and beyond.

Russia-Ukraine War

In February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including rising inflation and global supply-chain disruption. We will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See “Risk Factors — Risks Related to Our Business” below.

Critical Accounting Policies and Estimates

Refer to Note 1 - Organization 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 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~~well as supply chain co-management and purchased services 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, purchased services 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. Refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our Supply Chain Services’ businesses.

Performance Services

Performance Services revenue consists of:

•~~SaaS~~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 ~~and insurance services management fees and commissions from endorsed commercial insurance programs~~ under our PINC AI technology and services platform;

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

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

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

Our Performance Services growth will depend upon the expansion of our PINC AI technology and 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, our ability to generate additional applied sciences engagements, our ability to sell enterprise analytics licenses to new and existing customers at rates sufficient to offset the loss of recurring ~~SaaS based~~SaaS-based revenue due to the conversion to an enterprise analytics license and ~~expand~~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~~including 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.

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. Refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our Supply Chain Services’ businesses.

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, non-recurring strategic initiative and financial restructuring-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 prior to reaching technological feasibility.

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

Other (Expense) Income, Net

Other (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 (expense) income, net, also includes the fiscal 2021 change in the fair value of the FFF ~~call right~~Put and Call Rights and the fiscal 2022 gain recognized ~~as a result of~~due to the termination of the FFF Put Right and derecognition of the associated liability (see Note 5 - 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 (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. The tax rate used to compute Adjusted Net Income was ~~21%~~24% and ~~24%~~22% for the ~~three~~nine months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The change in the tax rate used to compute Adjusted Net Income is due to our ~~plan to reorganize and simplify our subsidiary reporting structure~~Subsidiary Reorganization resulting in the release of ~~$32.9~~$32.3 million of valuation allowance of our deferred tax asset in the fiscal year ending June 30, 2022.

As a result of the ~~planned restructure,~~Subsidiary Reorganization, one of our consolidated subsidiaries is expected to have sufficient income to ~~enable it to~~ utilize its net operating loss and research and development credit carryforwards. Of

During the ~~$32.9 million release~~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. On March 31, 2022, we reassessed the portion of the valuation allowance ~~$17.6~~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, $10.6 million is ~~being~~ included in the estimated annual effective tax rate calculation to the extent such carryforwards are projected to offset fiscal 2022 ordinary ~~income and $15.3~~income. The remaining $21.7 million of valuation allowance expected to be released has been included as a discrete item in ~~our first quarter of fiscal 2022 to~~ the ~~extent that the carryforwards are projected to offset income in future years beyond fiscal~~nine months ended March 31, 2022.

Given the uncertainty of the plan to reorganize and simplify our subsidiary reporting structure as of June 30, 2021, we did not release any portion of the valuation allowance on June 30, 2021. We have made substantial progress on the plan to reorganize and simplify our subsidiary reporting structure in the first quarter of fiscal 2022 and expect to complete the plan prior to December 31, 2021. However, as there can be no assurance that all components of the plan will be completed in a timely manner or at all, and if not timely completed, we would be required to reverse the release of the $32.9 million deferred tax asset valuation allowance discussed above.

Net ~~Loss (Income)~~Income Attributable to Non-Controlling Interest

We recognize net ~~loss (income)~~income attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments. At ~~September 30, 2021,~~March 31, 2022, we ~~owned approximately 26%~~recognized net income attributable to non-controlling interest for the 74%, ~~21%~~79% and ~~15% of the membership~~85% interest ofheld in PRAM Holdings, LLC (“PRAM”), DePre Holdings, LLC (“DePre”) and ExPre Holdings, LLC (“ExPre”), ~~respectively. We recognized net loss (income) attributable to non-controlling interest for the 74%, 79% and 85% interest held in PRAM, DePre and ExPre,~~ respectively, by 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 ~~September 30, 2021,~~March 31, 2022, we ~~own 97%~~owned 94% of the equity interest in Contigo Health and recognized net ~~loss (income)~~income attributable to non-controlling interest for the 3%4% of equity ~~retained~~held by an affiliate toof a member health ~~system.~~system in addition to 2% held by certain customers of 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, Adjusted 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 initiative and financial ~~restructuring~~restructuring-related 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 initiative and financial ~~restructuring~~restructuring-related 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 11 - 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), non-recurring items (such as strategic initiative and financial ~~restructuring~~restructuring-related 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 initiative and financial ~~restructuring~~restructuring-related 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~~acquisition- and ~~disposition related~~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 ~~$0.2 million and~~ $0.1 million for both the three months ended ~~September 30,~~March 31, 2022 and 2021 and ~~2020, respectively~~$0.4 million for both the nine months ended

March 31, 2022 and 2021 (see Note 12 - Stock-Based Compensation to the accompanying condensed consolidated financial statements).

~~Acquisition~~Acquisition- and ~~disposition related~~disposition-related expenses

~~Acquisition related~~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~~Disposition-related expenses include severance and retention benefits and financial advisor fees and legal fees related to disposition activities.

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

See Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements.

Other expense

Other expense includes, but is not limited to, strategic initiative and financial restructuring-related expenses, which represent legal, accounting and other expenses directly related to strategic initiative and financial restructuring-related activities and gains and losses on disposal of long-lived assets.

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 September 30,						Three Months Ended March 31,					Nine Months Ended March 31,
		2021			2020				2022		2021			2022			2021
		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	$	149,462	41%	$	132,645	38%			Net administrative fees	$	148,396	43%	$	146,553	31%	$	448,261	41%	$	424,537	34%
Other services and support	Other services and support	97,255		27%	98,827		28%			Other services and support	105,808		30%	107,375		23%	320,109		29%	304,020		25%
Services	Services	246,717		68%	231,472		67%			Services	254,204		73%	253,928		54%	768,370		70%	728,557		59%
Products	Products	118,430		32%	115,415		33%			Products	93,629		27%	215,995		46%	323,825		30%	511,080		41%
Net revenue	Net revenue	365,147		100%	346,887		100%			Net revenue	347,833		100%	469,923		100%	1,092,195		100%	1,239,637		100%
Cost of revenue:	Cost of revenue:									Cost of revenue:
Services	Services	43,809		12%	38,750		11%			Services	46,735		13%	46,980		10%	136,326		12%	125,852		10%
Products	Products	109,362		30%	113,428		33%			Products	88,621		25%	211,136		45%	294,916		27%	496,286		40%
Cost of revenue	Cost of revenue	153,171		42%	152,178		44%			Cost of revenue	135,356		39%	258,116		55%	431,242		39%	622,138		50%
Gross profit	Gross profit	211,976		58%	194,709		56%			Gross profit	212,477		61%	211,807		45%	660,953		61%	617,499		50%
Operating expenses	Operating expenses	139,697		38%	137,734		40%			Operating expenses	155,653		45%	145,617		31%	453,886		42%	424,330		34%
Operating income	Operating income	72,279		20%	56,975		16%			Operating income	56,824		16%	66,190		14%	207,067		19%	193,169		16%
Other income, net		68,060		19%	5,572		2%
Other (expense) income, net										Other (expense) income, net	(3,061)		(1)%	(1,302)		—%	70,634		6%	(4,173)		—%
Income before income taxes	Income before income taxes	140,339		38%	62,547		18%			Income before income taxes	53,763		15%	64,888		14%	277,701		25%	188,996		15%
Income tax expense (benefit)	Income tax expense (benefit)	19,033		5%	(94,981)		(27)%			Income tax expense (benefit)	14,694		4%	13,444		3%	40,094		4%	(64,880)		(5)%
Net income	Net income	121,306		33%	157,528		45%			Net income	39,069		11%	51,444		11%	237,607		22%	253,876		20%
Net loss (income) attributable to non-controlling interest		698		—%	(11,845)		(3)%
Net income attributable to non-controlling interest										Net income attributable to non-controlling interest	(654)		��%	(3,123)		(1)%	(1,643)		—%	(15,903)		(1)%
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		—%	(26,685)		(8)%			Adjustment of redeemable limited partners’ capital to redemption amount	—		—%	—		—%	—		—%	(26,685)		(2)%
Net income attributable to stockholders	Net income attributable to stockholders	$	122,004	nm	$	118,998	nm			Net income attributable to stockholders	$	38,415	nm	$	48,321	nm	$	235,964	nm	$	211,288	nm

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:									Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders		$	0.99		$	1.20
Diluted earnings per share attributable to stockholders		$	0.97		$	1.19
Basic										Basic	$	0.32		$	0.40		$	1.95		$	1.84
Diluted										Diluted	$	0.32		$	0.39		$	1.94		$	1.83

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 September 30,						Three Months Ended March 31,					Nine Months Ended March 31,
		2021			2020				2022		2021			2022			2021
Certain Non-GAAP Financial Data:	Certain Non-GAAP Financial Data:	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	$	121,703	33%	$	110,743	32%			Adjusted EBITDA	$	112,188	32%	$	121,207	26%	$	375,907	34%	$	356,768	29%
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	79,141		22%	70,159		20%			Non-GAAP Adjusted Net Income	68,098		20%	78,535		17%	235,444		22%	232,023		19%
Non-GAAP Adjusted Earnings Per Share	Non-GAAP Adjusted Earnings Per Share	0.64		nm	0.57		nm			Non-GAAP Adjusted Earnings Per Share	0.57		nm	0.64		nm	1.93		nm	1.89		nm

nm = Not meaningful

3336

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 September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Net income	Net income	$	121,306	$	157,528		Net income	$	39,069	$	51,444	$	237,607	$	253,876
Interest expense, net	Interest expense, net	2,788		2,119			Interest expense, net	2,804		3,225		8,465		8,742
Income tax expense (benefit)	Income tax expense (benefit)	19,033		(94,981)			Income tax expense (benefit)	14,694		13,444		40,094		(64,880)
Depreciation and amortization	Depreciation and amortization	20,596		17,474			Depreciation and amortization	21,408		19,337		62,874		55,904
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,889		13,204			Amortization of purchased intangible assets	11,151		10,400		32,890		33,864
EBITDA	EBITDA	174,612		95,344			EBITDA	89,126		97,850		381,930		287,506
Stock-based compensation	Stock-based compensation	7,751		7,375			Stock-based compensation	14,149		13,180		38,229		27,970
Acquisition and disposition related expenses		3,421		2,845
(Gain) loss on FFF put and call rights		(64,110)		1,919
Acquisition- and disposition-related expenses							Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889
Loss (gain) on FFF Put and Call Rights							Loss (gain) on FFF Put and Call Rights	—		5,195		(64,110)		21,621
Other expense, net	Other expense, net	29		3,260			Other expense, net	5,798		856		9,576		4,782
Adjusted EBITDA	Adjusted EBITDA	$	121,703	$	110,743		Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768

Income before income taxes	Income before income taxes	$	140,339	$	62,547		Income before income taxes	$	53,763	$	64,888	$	277,701	$	188,996
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(7,058)		(5,927)			Equity in net income of unconsolidated affiliates	(3,991)		(5,524)		(17,165)		(16,023)
Interest expense, net	Interest expense, net	2,788		2,119			Interest expense, net	2,804		3,225		8,465		8,742
(Gain) loss on FFF put and call rights		(64,110)		1,919
Other expense, net		320		(3,683)
Loss (gain) on FFF Put and Call Rights							Loss (gain) on FFF Put and Call Rights	—		5,195		(64,110)		21,621
Other expense (income), net							Other expense (income), net	4,248		(1,594)		2,176		(10,167)
Operating income	Operating income	72,279		56,975			Operating income	56,824		66,190		207,067		193,169
Depreciation and amortization	Depreciation and amortization	20,596		17,474			Depreciation and amortization	21,408		19,337		62,874		55,904
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,889		13,204			Amortization of purchased intangible assets	11,151		10,400		32,890		33,864
Stock-based compensation	Stock-based compensation	7,751		7,375			Stock-based compensation	14,149		13,180		38,229		27,970
Acquisition and disposition related expenses		3,421		2,845
Acquisition- and disposition-related expenses							Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	7,058		5,927			Equity in net income of unconsolidated affiliates	3,991		5,524		17,165		16,023
Deferred compensation plan (expense) income	Deferred compensation plan (expense) income	(318)		2,907			Deferred compensation plan (expense) income	(3,994)		1,521		(1,923)		9,231
Other expense, net	Other expense, net	27		4,036			Other expense, net	5,544		929		9,323		5,718
Adjusted EBITDA	Adjusted EBITDA	$	121,703	$	110,743		Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768


		Three Months Ended September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Segment Adjusted EBITDA:	Segment Adjusted EBITDA:						Segment Adjusted EBITDA:
Supply Chain Services	Supply Chain Services	$	129,269	$	102,649		Supply Chain Services	$	118,034	$	117,949	$	381,586	$	339,538
Performance Services	Performance Services	23,715		37,116			Performance Services	26,552		35,950		89,277		109,675
Corporate	Corporate	(31,281)		(29,022)			Corporate	(32,398)		(32,692)		(94,956)		(92,445)
Adjusted EBITDA	Adjusted EBITDA	$	121,703	$	110,743		Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768

3437

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 September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Net income attributable to stockholders	Net income attributable to stockholders	$	122,004	$	118,998		Net income attributable to stockholders	$	38,415	$	48,321	$	235,964	$	211,288
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		26,685			Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		26,685
Net (loss) income attributable to non-controlling interest		(698)		11,845
Net income attributable to non-controlling interest							Net income attributable to non-controlling interest	654		3,123		1,643		15,903
Income tax expense (benefit)	Income tax expense (benefit)	19,033		(94,981)			Income tax expense (benefit)	14,694		13,444		40,094		(64,880)
Amortization of purchased intangible assets	Amortization of purchased intangible assets	10,889		13,204			Amortization of purchased intangible assets	11,151		10,400		32,890		33,864
Stock-based compensation	Stock-based compensation	7,751		7,375			Stock-based compensation	14,149		13,180		38,229		27,970
Acquisition and disposition related expenses		3,421		2,845
(Gain) loss on FFF put and call rights		(64,110)		1,919
Acquisition- and disposition-related expenses							Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889
Loss (gain) on FFF Put and Call Rights							Loss (gain) on FFF Put and Call Rights	—		5,195		(64,110)		21,621
Other expense, net	Other expense, net	1,888		4,424			Other expense, net	7,425		2,897		14,803		10,126
Non-GAAP adjusted income before income taxes	Non-GAAP adjusted income before income taxes	100,178		92,314			Non-GAAP adjusted income before income taxes	89,603		100,686		309,795		297,466
Income tax expense on adjusted income before income taxes (a)	Income tax expense on adjusted income before income taxes (a)	21,037		22,155			Income tax expense on adjusted income before income taxes (a)	21,505		22,151		74,351		65,443
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	$	79,141	$	70,159		Non-GAAP Adjusted Net Income	$	68,098	$	78,535	$	235,444	$	232,023

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	122,945		99,575			Basic weighted average shares outstanding	118,697		122,254		120,957		114,596
Dilutive securities	Dilutive securities	1,628		555			Dilutive securities	1,116		862		1,345		769

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	124,573		100,130			Weighted average shares outstanding - diluted	119,813		123,116		122,302		115,365

Class B shares outstanding (b)	Class B shares outstanding (b)	—		22,369			Class B shares outstanding (b)	—		—		—		7,511
Non-GAAP weighted average shares outstanding - diluted	Non-GAAP weighted average shares outstanding - diluted	124,573		122,499			Non-GAAP weighted average shares outstanding - diluted	119,813		123,116		122,302		122,876

(a)Reflects income tax expense at an estimated effective income tax rate of ~~21% and~~ 24% of non-GAAP adjusted net income before income taxes for the three and nine months ended ~~September 30, 2021~~March 31, 2022 and ~~2020, respectively.~~22% of non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2021.

(b)For the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, the effect of ~~22.4~~7.5 million Class B common shares was excluded from the GAAP diluted weighted average shares outstanding as they had an anti-dilutive effect. On a non-GAAP basis, the effect of ~~22.4~~7.5 million Class B common shares was included in the non-GAAP diluted weighted average shares outstanding.

3538

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 September 30,				Three Months Ended March 31,				Nine Months Ended March 31,
		2021		2020				2022		2021		2022		2021
Earnings per share attributable to stockholders	Earnings per share attributable to stockholders	$	0.99	$	1.20		Earnings per share attributable to stockholders	$	0.32	$	0.40	$	1.95	$	1.84
Adjustment of redeemable limited partners’ capital to redemption amount	Adjustment of redeemable limited partners’ capital to redemption amount	—		0.27			Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		0.23
Net (loss) income attributable to non-controlling interest		(0.01)		0.12
Net income attributable to non-controlling interest							Net income attributable to non-controlling interest	0.01		0.03		0.01		0.14
Income tax expense (benefit)	Income tax expense (benefit)	0.15		(0.96)			Income tax expense (benefit)	0.12		0.11		0.33		(0.56)
Amortization of purchased intangible assets	Amortization of purchased intangible assets	0.09		0.13			Amortization of purchased intangible assets	0.09		0.09		0.27		0.30
Stock-based compensation	Stock-based compensation	0.06		0.07			Stock-based compensation	0.12		0.11		0.32		0.24
Acquisition and disposition related expenses		0.03		0.03
(Gain) loss on FFF put and call rights		(0.52)		0.02
Acquisition- and disposition-related expenses							Acquisition- and disposition-related expenses	0.03		0.03		0.09		0.13
Loss (gain) on FFF Put and Call Rights							Loss (gain) on FFF Put and Call Rights	—		0.04		(0.53)		0.19
Other expense, net	Other expense, net	0.02		0.04			Other expense, net	0.06		0.02		0.12		0.09
Impact of corporation taxes (a)	Impact of corporation taxes (a)	(0.17)		(0.22)			Impact of corporation taxes (a)	(0.18)		(0.19)		(0.61)		(0.57)
Impact of dilutive shares (b)	Impact of dilutive shares (b)	—		(0.13)			Impact of dilutive shares (b)	—		—		(0.02)		(0.14)
Non-GAAP Adjusted Earnings Per Share	Non-GAAP Adjusted Earnings Per Share	$	0.64	$	0.57		Non-GAAP Adjusted Earnings Per Share	$	0.57	$	0.64	$	1.93	$	1.89

(b)Reflects impact of dilutive shares on a non-GAAP basis, primarily attributable to the assumed conversion of the weighted average outstanding Class B common units for the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021 for Class A common stock.

Consolidated Results - Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 to 2021 ~~to 2020~~

The variances in the material factors contributing to the changes in the consolidated results are discussed further in “Segment Results” below.

Net Revenue

Net revenue ~~increased~~decreased by ~~$18.2~~$122.1 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020, primarily~~March 31, 2021, due to decreases of $122.4 million and $1.6 million in products revenue and other services and support revenue, respectively, partially offset by an increase of ~~$16.9~~$1.9 million in net administrative fees ~~revenue and an increase of $3.0 million in products revenue partially offset by a decrease of $1.5 million in other services and support~~ revenue.

Cost of Revenue

Cost of revenue ~~increased~~decreased by ~~$1.0~~$122.7 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020, primarily~~March 31, 2021, due to ~~an increase~~decreases of ~~$5.0~~$122.5 million ~~in cost of services revenue, partially offset by a decrease of $4.0~~and $0.2 million in cost of products ~~revenue.~~revenue and cost of services revenue, respectively.

Operating Expenses

Operating expenses increased by ~~$2.0~~$10.1 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020,~~March 31, 2021, primarily due to ~~an increase~~increases of ~~$3.8~~$9.2 million and $0.8 million in selling, general and administrative expenses ~~partially offset by a decrease of $2.3 million in~~and amortization of purchased intangible ~~assets.~~assets, respectively.

Other (Expense) Income, Net

Other (expense) income, net ~~increased~~decreased by ~~$62.5~~$1.8 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020,~~March 31, 2021, primarily due toan increase in expense of $5.8 million in other (expense), income, net and the ~~gain~~decrease of $1.5 million in equity in net income of unconsolidated affiliates. These decreases were offset by loss on the FFF ~~put right~~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 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information).

Income Tax Expense ~~(Benefit)~~

For the three months ended ~~September 30, 2021,~~March 31, 2022, we recorded tax expense of ~~$19.0~~$14.7 million compared to tax expense of $13.4 million recorded during the three months ended March 31, 2021. The tax expense recorded during the three months ended March 31, 2022 and 2021 resulted in effective tax rates of 27.3% and 20.7%, respectively. The change in the effective tax rate

is attributable to the impact of the Subsidiary Reorganization. (See Note 13 - 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 $2.4 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to an decrease in the portion of net income attributable to non-controlling interests in PRAM, DePre, ExPre and Contigo Health.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, decreased by $9.0 million during the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease was driven by a decrease of $9.4 million in Performance Services Adjusted EBITDA partially offset by increases of $0.1 million and $0.3 million in Supply Chain Services and Corporate Adjusted EBITDA, respectively.

Consolidated Results - Comparison of the Nine Months Ended March 31, 2022 to 2021

The variances in the material factors contributing to the changes in the consolidated results are discussed further in “Segment Results” below.

Net Revenue

Net revenue decreased by $147.4 million during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, due to a decrease of $187.3 million in products revenue partially offset by increases of $23.8 million and $16.1 million in net administrative fees revenue and other services and support revenue, respectively.

Cost of Revenue

Cost of revenue decreased by $190.9 million during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, due to a decrease of $201.4 million in cost of products revenue partially offset by an increase of $10.5 million in cost of services revenue.

Operating Expenses

Operating expenses increased by $29.6 million during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, due to increases of $29.9 million and $0.7 million in selling, general and administrative expenses and research and development, respectively, partially offset by a decrease of $1.0 million in amortization of purchased intangible assets.

Other (Expense) Income, Net

Other (expense) income, net increased by $74.8 million during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, primarily due to the current year 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 Right recognized in the prior year period (see Note 5 - 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 a decrease in deferred compensation plan income.

Income Tax Expense (Benefit)

For the nine months ended March 31, 2022, we recorded tax expense of $40.1 million compared to a tax benefit of ~~$(95.0)~~$64.9 million recorded during the ~~three~~nine months ended ~~September 30, 2020.~~March 31, 2021. The tax expense and benefit recorded during the ~~three~~nine months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ resulted in effective tax rates of ~~13.6%~~14.4% and ~~(151.9)~~(34.3)%, 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 August 2020 Restructuring. (See Note 13 - Income Taxes to the accompanying condensed consolidated financial statements for more information.)

3640

Net ~~Loss (Income)~~Income Attributable to Non-Controlling Interest

Net ~~loss (income)~~income attributable to non-controlling interest decreased by ~~$12.5~~$14.3 million during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, primarily due to the August 2020 Restructuring, whereby net ~~loss (income)~~income attributable to non-controlling interest in Premier LP was not recorded after August 11, 2020.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, increased by ~~$11.0~~$19.1 million during the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, compared to the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021 driven by an increase of ~~$26.7~~$42.1 million in Supply Chain Services Adjusted EBITDA partially offset by decreases of ~~$13.4~~$20.4 million and ~~$2.3~~$2.6 million in 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 September 30,								Three Months Ended March 31,								Nine Months Ended March 31,
Supply Chain Services	Supply Chain Services	2021		2020		Change			Supply Chain Services	2022		2021		Change				2022	2021		Change
Net revenue:	Net revenue:										Net revenue:
Net administrative fees	Net administrative fees	$	149,462	$	132,645	$	16,817	13%			Net administrative fees	$	148,396	$	146,553	$	1,843	1%	$	448,261	$	424,537	$	23,724	6	%
Other services and support	Other services and support	8,924		5,592		3,332		60%			Other services and support	8,914		8,630		284		3%	27,165		18,307		8,858		48	%
Services	Services	158,386		138,237		20,149		15%			Services	157,310		155,183		2,127		1%	475,426		442,844		32,582		7	%
Products	Products	118,430		115,415		3,015		3%			Products	93,629		215,995		(122,366)		(57)%	323,825		511,080		(187,255)		(37)	%
Net revenue	Net revenue	276,816		253,652		23,164		9%			Net revenue	250,939		371,178		(120,239)		(32)%	799,251		953,924		(154,673)		(16)	%
Cost of revenue:	Cost of revenue:										Cost of revenue:
Services	Services	3,370		734		2,636		359%			Services	3,835		1,120		2,715		242%	10,472		2,627		7,845		299	%
Products	Products	109,362		113,428		(4,066)		(4)%			Products	88,621		211,136		(122,515)		(58)%	294,916		496,286		(201,370)		(41)	%
Cost of revenue	Cost of revenue	112,732		114,162		(1,430)		(1)%			Cost of revenue	92,456		212,256		(119,800)		(56)%	305,388		498,913		(193,525)		(39)	%
Gross profit	Gross profit	164,084		139,490		24,594		18%			Gross profit	158,483		158,922		(439)		—%	493,863		455,011		38,852		9	%
Operating expenses:	Operating expenses:										Operating expenses:
Selling, general and administrative	Selling, general and administrative	48,044		44,424		3,620		8%			Selling, general and administrative	49,954		49,714		240		—%	146,453		144,511		1,942		1	%
Research and development	Research and development	164		18		146		811%			Research and development	65		72		(7)		(10)%	301		199		102		51	%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,137		8,000		137		2%			Amortization of purchased intangible assets	8,093		8,151		(58)		(1)%	24,344		24,205		139		1	%
Operating expenses	Operating expenses	56,345		52,442		3,903		7%			Operating expenses	58,112		57,937		175		—%	171,098		168,915		2,183		1	%
Operating income	Operating income	$	107,739	$	87,048	20,691		24%			Operating income	100,371		100,985		(614)		(1)%	322,765		286,096		36,669		13	%
Depreciation and amortization	Depreciation and amortization	5,007		802							Depreciation and amortization	6,021		1,238					16,365		3,403
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,137		8,000							Amortization of purchased intangible assets	8,093		8,151					24,345		24,205
Acquisition and disposition related expenses		1,553		884
Acquisition- and disposition-related expenses											Acquisition- and disposition-related expenses	(180)		2,053					1,428		9,684
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	6,830		5,891							Equity in net income of unconsolidated affiliates	3,726		5,319					16,672		15,907
Other expense	Other expense	3		24							Other expense	3		203					11		243
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	129,269	$	102,649	$	26,620	26%			Segment Adjusted EBITDA	$	118,034	$	117,949	$	85	—%	$	381,586	$	339,538	$	42,048	12	%

Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 to 2021 ~~to 2020~~

Net Revenue

Supply Chain Services segment net revenue ~~increased~~decreased by ~~$23.2~~$120.2 million, or 9%32%, during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020~~March 31, 2021. The decrease in net revenue was primarily due to a decline in products revenue of $122.4 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. As the COVID-19 pandemic continues to subside and

become 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 products revenue was partially offset by an increase in net administrative fees of ~~$16.8~~$1.8 million primarily 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.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by $119.8 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to the aforementioned decline in products revenue due to the prior year increase in demand as well as fluctuations in product costs. The decline in cost of products revenue was partially offset by escalating shipping costs due to continued global supply chain issues as well as an increase in cost of services revenue due to an increase in depreciation and amortization expense. As the COVID-19 pandemic continues to subside and become 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 increased by $0.2 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase of $0.2 million in selling, general and administrative expenses driven by increases in personnel costs and depreciation and amortization expense partially offset by a decrease in acquisition- and disposition-related expenses.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by $0.1 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to the aforementioned increase in net administrative fees revenue partially offset by a decrease in equity in net income of unconsolidated affiliates.

Comparison of the Nine Months Ended March 31, 2022 to 2021

Net Revenue

Supply Chain Services segment net revenue decreased by $154.7 million, or 16%, during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021. The decrease in net revenue was primarily due to a decrease in products revenue of $187.3 million driven by lower demand for and pricing of 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 continues to subside and become 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 products revenue was partially offset by an increase in net administrative fees of $23.7 million driven by an increase in the demand for supplies and services, ~~and our existing members~~ increased utilization of our contracts ~~as well as~~ by our existing members and the addition of new categories and suppliers ~~and the addition of new members to our contract portfolio.~~

~~Supply Chain Services segment net revenue also increased due to~~which was partially offset by an increase in ~~product~~ revenue ~~of $3.0 million and~~share paid to members.

In addition, the decrease was partially offset by an increase of $8.9 million in other services and support revenue ~~of $3.3 million. Product revenue increased~~primarily due to ~~growth in commodity products under our PREMIERPRO~~® ~~brand partially offset by a decrease in demand as the industry slowly normalizes to pre-pandemic levels.~~

~~Other services and support revenue increased due~~ an increase in ~~administrative support service revenue and~~ supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by ~~$1.4~~$193.5 million during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021 primarily ~~driven~~attributable to the decrease in products revenue due to the prior year increase in demand as well as fluctuations in product costs. The decrease in cost of products revenue was partially offset by escalating shipping costs due to continued global supply chain issues as well as the aforementioned increase in other services and support ~~revenue offset by~~revenue. As the COVID-19 pandemic continues to subside and become 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 due to the decrease in demand as the industry slowly normalizes to pre-pandemic levels.~~revenue.

Operating Expenses

Supply Chain Services segment operating expenses increased by ~~$3.9~~$2.2 million during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020. The increase was~~March 31, 2021 primarily due to an increase in selling, general and administrative expenses

of ~~$3.6~~$1.9 million driven by ~~an increase~~increases in depreciation and amortization ~~expense.~~expense and personnel costs partially offset by a decrease in acquisition- and disposition-related expenses.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by ~~$26.6~~$42.0 million, or ~~26%~~12%, during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, primarily due to the aforementioned increase in net ~~revenue.~~administrative fees revenue and favorable product mix in our 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 September 30,								Three Months Ended March 31,								Nine Months Ended March 31,
Performance Services	Performance Services	2021		2020		Change			Performance Services	2022		2021		Change				2022	2021		Change
Net revenue:	Net revenue:										Net revenue:
Other services and support	Other services and support	$	88,331	$	93,235	$	(4,904)	(5)%			Other services and support	$	96,903	$	98,745	$	(1,842)	(2)%	$	292,962	$	285,713	$	7,249	3%
Net revenue	Net revenue	88,331		93,235		(4,904)		(5)%			Net revenue	96,903		98,745		(1,842)		(2)%	292,962		285,713		7,249		3%
Cost of revenue:	Cost of revenue:										Cost of revenue:
Services	Services	40,439		38,016		2,423		6%			Services	42,900		45,860		(2,960)		(6)%	125,854		123,225		2,629		2%
Cost of revenue	Cost of revenue	40,439		38,016		2,423		6%			Cost of revenue	42,900		45,860		(2,960)		(6)%	125,854		123,225		2,629		2%
Gross profit	Gross profit	47,892		55,219		(7,327)		(13)%			Gross profit	54,003		52,885		1,118		2%	167,108		162,488		4,620		3%
Operating expenses:	Operating expenses:										Operating expenses:
Selling, general and administrative	Selling, general and administrative	38,800		34,159		4,641		14%			Selling, general and administrative	43,354		34,517		8,837		26%	124,617		102,488		22,129		22%
Research and development	Research and development	830		558		272		49%			Research and development	761		643		118		18%	2,366		1,814		552		30%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	2,752		5,204		(2,452)		(47)%			Amortization of purchased intangible assets	3,059		2,249		810		36%	8,545		9,659		(1,114)		(12)%
Operating expenses	Operating expenses	42,382		39,921		2,461		6%			Operating expenses	47,174		37,409		9,765		26%	135,528		113,961		21,567		19%
Operating income	Operating income	5,510		15,298		(9,788)		nm			Operating income	6,829		15,476		(8,647)		(56)%	31,580		48,527		(16,947)		(35)%
Depreciation and amortization	Depreciation and amortization	13,357		14,553							Depreciation and amortization	13,104		15,947					39,804		46,104
Amortization of purchased intangible assets	Amortization of purchased intangible assets	2,752		5,204							Amortization of purchased intangible assets	3,059		2,249					8,545		9,659
Acquisition related expenses	Acquisition related expenses	1,868		1,961							Acquisition related expenses	3,295		2,073					8,854		5,205
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	228		36							Equity in net income of unconsolidated affiliates	265		205					494		116
Other expense	Other expense	—		64							Other expense	—		—					—		64
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	23,715	$	37,116	$	(13,401)	(36)%			Segment Adjusted EBITDA	$	26,552	$	35,950	$	(9,398)	(26)%	$	89,277	$	109,675	$	(20,398)	(19)%

Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 to 2021 ~~to 2020~~

Net Revenue

Net revenue in our Performance Services segment decreased by ~~$4.9~~$1.8 million, or 5%2%, during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020.~~March 31, 2021. The decrease was primarily ~~driven by lower~~attributable to a decrease in technology services under our PINC AI platform due to timing of revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year ~~period~~period. This decrease was partially offset by growth in consulting services under our PINC AI platform and our Contigo Health business ~~and~~as well as incremental revenue ~~associated with~~from our Remitra business.

Cost of Revenue

Performance Services segment cost of revenue decreased by $3.0 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to higher incremental expenses in the prior year period associated with the Contigo Health business.

Operating Expenses

Performance Services segment operating expenses increased by $9.8 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to an increase of $8.8 million in selling, general and administrative expenses driven by increases in professional fees, and personnel costs in our Remitra and Contigo

Health businesses and a decrease in capitalized labor costs as well as an increase of $0.8 million in amortization of purchased intangible assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by $9.4 million, or 26%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to the aforementioned decrease in revenue and increase in operating expenses.

Comparison of the Nine Months Ended March 31, 2022 to 2021

Net Revenue

Net revenue in our Performance Services segment increased by $7.2 million, or 3%, during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021. The increase was primarily driven by growth in consulting services under our PINC AI platform and our Contigo Health business as well as incremental revenue from our Remitra business. These increases were partially offset by a decrease in technology services under our PINC AI platform due to timing of revenue associated with enterprise analytics license agreements.

Cost of Revenue

Performance Services segment cost of revenue increased by ~~$2.4~~$2.6 million during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, 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 ~~$2.5~~$21.6 million during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021. The increase was primarily due to an increase of ~~$4.6~~$22.1 million in selling, general and administrative expenses driven by increases in personnel costs and professional fees associated with a decrease in capitalized labor costs as well as an increase in acquisition- and disposition-related expenses. These increases were partially offset by ~~$2.5~~$1.1 million of lower amortization of purchased intangible assets. ~~The increase in selling, general and administrative expenses was primarily due to a decrease in capitalized labor costs.~~

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by ~~$13.4~~$20.4 million, or ~~36%~~19%, during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020~~March 31, 2021 primarily due to the aforementioned ~~decrease in revenue and~~ increases in cost of revenue and operating ~~expenses.~~expenses as well as the decrease in technology services under our PINC AI platform revenue partially offset by the aforementioned revenue growth in consulting services under our PINC AI platform.

Corporate

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


		Three Months Ended September 30,								Three Months Ended March 31,								Nine Months Ended March 31,
Corporate	Corporate	2021		2020		Change			Corporate	2022		2021		Change				2022	2021		Change
Operating expenses:	Operating expenses:										Operating expenses:
Selling, general and administrative	Selling, general and administrative	$	40,970	$	45,371	$	(4,401)	(10)%			Selling, general and administrative	$	50,376	$	50,271	$	105	—%	$	147,279	$	141,454	$	5,825	4%

Operating expenses	Operating expenses	40,970		45,371		(4,401)		(10)%			Operating expenses	50,376		50,271		105		—%	147,279		141,454		5,825		4%
Operating loss	Operating loss	(40,970)		(45,371)		4,401		(10)%			Operating loss	(50,376)		(50,271)		(105)		—%	(147,279)		(141,454)		(5,825)		4%
Depreciation and amortization	Depreciation and amortization	2,232		2,119							Depreciation and amortization	2,282		2,152					6,705		6,397
Stock-based compensation	Stock-based compensation	7,751		7,375							Stock-based compensation	14,149		13,180					38,229		27,970
Deferred compensation plan (income) expense		(318)		2,907
Deferred compensation plan (expense) income											Deferred compensation plan (expense) income	(3,992)		1,521					(1,922)		9,231
Other expense, net	Other expense, net	24		3,948							Other expense, net	5,539		726					9,311		5,411
Adjusted EBITDA	Adjusted EBITDA	$	(31,281)	$	(29,022)	$	(2,259)	(8)%			Adjusted EBITDA	$	(32,398)	$	(32,692)	$	294	1%	$	(94,956)	$	(92,445)	$	(2,511)	(3)%

Comparison of the Three Months Ended ~~September 30,~~March 31, 2022 to 2021 ~~to 2020~~

Operating Expenses

Corporate operating expenses ~~decreased~~increased by ~~$4.4~~$0.1 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020,~~March 31, 2021, primarily due to ~~costs incurred~~an increase in professional fees related to strategic initiative and financial restructuring-related activities partially offset by a decrease in deferred compensation plan expense due to market changes.

Adjusted EBITDA

Adjusted EBITDA increased by $0.3 million, or 1%, during the ~~prior year~~three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to an decrease in ~~connection with our August 2020 Restructuring.~~employee-related expenses.

Comparison of the Nine Months Ended March 31, 2022 to 2021

Operating Expenses

Corporate operating expenses increased by $5.8 million during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, primarily due to increases in stock-based compensation expense due to higher achievement of performance share awards, professional fees related to strategic initiative and financial restructuring-related activities and employee-related expenses, including employee travel and meeting expenses as travel and meeting limitations due to the COVID-19 pandemic began to subside. These increases were partially offset by a decrease in deferred compensation plan expense due to market changes.

Adjusted EBITDA

Adjusted EBITDA decreased by ~~$2.3~~$2.5 million, or 8%3%, during the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020,~~March 31, 2021, primarily due to an increase in professional fees and ~~incremental costs related to increased headcount.~~employee-related expenses, including employee travel and meeting expenses.

Off-Balance Sheet Arrangements

As of ~~September 30, 2021,~~March 31, 2022, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has been 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)~~in 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~~include 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 ~~September 30, 2021~~March 31, 2022 and June 30, 2021, we had cash and cash equivalents of ~~$184.4~~$179.5 million and $129.1 million, respectively. As of ~~September 30, 2021~~March 31, 2022 and June 30, 2021, there were ~~$175.0~~$250.0 million and $75.0 million, respectively, of outstanding borrowings under our Credit Facility. During the ~~three~~nine months ended ~~September 30, 2021,~~March 31, 2022, we borrowed ~~$175.0~~$300.0 million and repaid ~~$75.0~~$125.0 million of borrowings under our Credit Facility, which ~~was~~were used for other general corporate purposes. In ~~October 2021,~~April 2022, we repaid ~~$50.0~~$75.0 million of outstanding borrowings under ~~our~~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 Pandemic, Variants Thereof, Recurrences or Similar Pandemics

The COVID-19 global pandemic ~~continued~~and its variants continue to ~~spread~~create challenges throughout the United States and much of the rest of the world. The full extent to which the COVID-19 pandemic 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 and treat its impact, including the success of the COVID-19 vaccination program, or recurrences of COVID-19, variants thereof or similar pandemics. As discussed in Item 1A. “Risk Factors” in our 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 supplies directly related to the 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 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’ ability to travel to our 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 foreseen and unforeseen events and circumstances, all of which could negatively impact us.

•In response to COVID-19 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.

Russia-Ukraine War

In February 2022, Russia invaded Ukraine. As military activity proceeds and sanctions, export controls and other measures are imposed against Russia, Belarus and specific areas of Ukraine, the war is increasingly affecting the global economy and financial markets, as well as exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption. We will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See “Risk Factors — Risks Related to Our Business” below.

Discussion of Cash Flows for the ~~Three~~Nine Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

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

Three Months Ended September 30,
2021 2020
Net cash provided by (used in):
Operating activities $ 55,187 $ 30,782
Investing activities (47,050) (24,953)
Financing activities 47,143 15,283
Net increase in cash and cash equivalents $ 55,280 $ 21,112


	Nine Months Ended March 31,
	2022		2021
Net cash provided by (used in):
Operating activities	$	334,789	$	192,365
Investing activities	(113,061)		(149,291)
Financing activities	(171,369)		(9,794)
Net increase in cash and cash equivalents	$	50,359	$	33,280

Net cash provided by operating activities increased by ~~$24.4~~$142.4 million primarily due to ~~an increase~~a decrease of ~~$14.3~~$317.9 million in cash paid for cost of revenue and a decrease of $8.8 million in miscellaneous payments including income taxes and interest. This change was partially offset by a decrease of $128.0 million in cash received from net revenues and ~~a decrease of $71.0 million in cash paid for cost of revenue. These increases were partially offset by an~~ increase of ~~$44.4~~$56.4 million in payments of operating ~~expenses and a decrease of $14.6 million in net income tax refunds.~~expenses.

Net cash used in investing activities ~~increased~~decreased by ~~$22.1~~$36.2 million for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~decrease in net cash used in investing activities was primarily due ~~to an increase~~higher cash outlay in the prior year for the fiscal 2021 acquisition of ~~$26.0 million in~~IDS compared to cash paid by ExPre in current year for an ownership interest in Exela Holdings, Inc. ~~This~~and our investment in Qventus, Inc. The decrease in net cash used in investing activities was ~~partially offset~~also driven by a ~~$3.9~~$5.9 million reduction in purchases of property and equipment. These decreases were partially offset by an increase in other investing activities.

Net cash ~~provided by~~used in financing activities increased by ~~$31.9~~$161.6 million for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020.~~March 31, 2021. The increase in net cash ~~provided by~~used in financing activities was primarily driven by ~~a $25.0~~$250.0 million for repurchases of Class A common stock under the fiscal 2022 stock repurchase program and an increase of $43.4 million in primarily for payments made on notes payable to former LPs, net of discount. The increase in net ~~borrowings~~cash used in financing activities was partially offset by an increase of $50.0 million in net proceeds under our Credit Facility, an increase of $37.4 million in proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options, a 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 both distributions and payments were eliminated in connection with the August 2020 Restructuring and ~~a $39.0~~an increase of $13.6 million ~~increase~~ in other financing activities. Other financing activities ~~including net~~is primarily driven by proceeds from ~~the issuance of Class A common stock in connection with the exercise of outstanding stock options and proceeds from the~~member health systems that acquired membership interests in ExPre held by 11 member health systems. These increases were partially offset by $38.2 million for repurchases of Class A common stock under the fiscal year 2022 stock repurchase program and an increase of $26.5 million in payments primarily on the outstanding notes payable to members (see Note 8 - Debt and Notes Payable).ExPre.

Discussion of Non-GAAP Free Cash Flow for the ~~Three~~Nine Months Ended ~~September 30,~~March 31, 2022 and 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 does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt 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):


		Three Months Ended September 30,					Nine Months Ended March 31,
		2021		2020			2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	55,187	$	30,782	Net cash provided by operating activities	$	334,789	$	192,365
Purchases of property and equipment	Purchases of property and equipment	(21,050)		(24,982)		Purchases of property and equipment	(61,061)		(66,911)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)						Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)	(71,786)		(20,328)
Distributions to limited partners of Premier LP	Distributions to limited partners of Premier LP	—		(9,949)		Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)		Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)		(23,813)		—
Non-GAAP Free Cash Flow	Non-GAAP Free Cash Flow	$	10,324	$	(28,367)	Non-GAAP Free Cash Flow	$	201,942	$	70,959

(a)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.” WeDuring the nine months ended March 31, 2022, we paid $77.0 million to members including imputed interest of $5.2 million which is included in net cash provided by operating activities. During the nine months ended March 31, 2021, we paid $25.7 million to members including imputed interest of ~~$1.9~~$5.3 million which is included in net cash provided by operating activities. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

Non-GAAP Free Cash Flow increased by ~~$38.7~~$131.0 million for the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~three~~nine months ended ~~September 30, 2020.~~March 31, 2021. The increase in Non-GAAP Free Cash Flow was driven by the aforementioned ~~$24.4~~$142.4 million increase in net cash provided by operating activities, ~~a decrease in purchases of property and equipment of $3.9 million and~~ no distributions to limited partners of Premier LP or payments to limited partners of Premier LP related to tax receivable agreements in the ~~three~~nine months ended ~~September 30, 2021~~March 31, 2022 as both were eliminated in connection with the August 2020 ~~Restructuring.~~restructuring and a decrease of $5.9 million in purchases of property and equipment. These increases in Non-GAAP Free Cash Flow were partially offset by ~~$23.8~~$51.5 million of early termination payments to certain former limited partners in connection with the August 2020 ~~Restructuring.~~Restructuring as quarterly payments commenced during the quarter ended March 31, 2021.

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

4147

Contractual Obligations

Notes Payable to ~~Members~~Former Limited Partners

At ~~September 30, 2021, $385.1~~March 31, 2022, $333.7 million remains to be paid without interest in 1513 equal quarterly installments to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended June 30, 2025. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

Other Notes Payable

At ~~September 30, 2021,~~March 31, 2022, we had commitments of ~~$5.7~~$5.3 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 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

Credit Facility

We maintain an unsecured 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 $350.0 million, subject to certain conditions (the “Credit Facility”). The Credit Facility matures on November 9, 2023, subject to up to two one-year extensions which require the approval of a majority of the lenders under the Credit Facility.

Outstanding borrowings under the Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information) bear interest on a variable rate structure with borrowings bearing interest at either the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from 1.000% to 1.500% or the prime lending rate plus an applicable margin ranging from 0.000% to 0.500%. We pay a commitment fee ranging from 0.100% to 0.200% for unused capacity under the Credit Facility. At ~~September 30, 2021,~~March 31, 2022, the interest rate on outstanding borrowings under the Credit Facility was ~~1.090%~~1.303% and the commitment fee was 0.100%.

The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants. We were in compliance with all such covenants at ~~September 30, 2021.~~March 31, 2022. 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, in place from time to time, dividend payments, if and when declared, and other general corporate activities. At ~~September 30, 2021,~~March 31, 2022, we had outstanding borrowings of ~~$175.0~~$250.0 million under the Credit Facility with ~~$824.9~~$749.9 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. In ~~October 2021,~~April 2022, we repaid ~~$50.0~~$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 to~~10.1 in our quarterly report for the ~~2020 Annual Report.~~period ended December 31, 2021. See also Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.

Cash Dividends

OnIn each of September ~~15,~~ 2021, December 2021, and March 2022, we paid a cash dividend of $0.20 per share on outstanding shares of Class A common ~~stock to stockholders of record on September 1, 2021.~~stock. On ~~October~~April 21, ~~2021,~~2022, our Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on ~~December~~June 15, ~~2021~~2022 to stockholders of record on ~~December~~June 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

~~2021,~~March 31, 2022, we had completed our stock repurchase program and purchased approximately ~~1.1~~6.4 million shares of Class A common stock at an average price of ~~$39.04~~$38.88 per share for a total purchase price of ~~$42.6~~$250.0 million.

Impact of Inflation

The ~~purchase authorization may be suspended, delayed, or discontinued at any time at~~U.S. economy is experiencing the ~~discretion~~highest rates of inflation since the 1980s. Historically, we have not experienced significant inflation risk in our ~~Board of Directors. Repurchases are subject~~business arising from fluctuations in market prices across our diverse product portfolio. However, our ability to ~~compliance with applicable federal securities laws and~~raise our ~~management may, at its discretion, suspend, delay, or discontinue repurchases at any time, based~~selling prices depends on market conditions ~~alternate uses~~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 ~~capital, or other factors.~~our contracts. In our Direct Sourcing business, we have been able to partially offset increases in cost through temporary adjustments to selling prices and through various cost reduction initiatives while ensuring our products remain competitively priced.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market risk 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 ~~September 30, 2021,~~March 31, 2022, we had ~~$175.0~~$250.0 million outstanding borrowings under our Credit Facility. ~~At September 30, 2021,~~Based on the weighted average interest rate charged on outstanding borrowings under our Credit Facility at March 31, 2022, a one-percent change in the weighted average interest rate charged on outstanding borrowings ~~under our Credit Facility~~ would increase or decrease interest expense over the next twelve months by ~~$1.8~~$2.5 million.

We invest our excess cash in a portfolio of individual cash equivalents. We do not hold 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 mitigate default, market, and investment risks of our invested funds 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 ~~September 30, 2021.~~March 31, 2022.

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 ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4349

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We 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.

On March 4, 2022, a shareholder derivative complaint captioned City of Warren General Employees’ Retirement System v. Michael Alkire, et al., Case No. 2022-0207-JTL, purportedly brought on behalf of Premier, was filed in the Delaware Court of Chancery against our current and former Chief Executive Officers and certain current and former directors. We are named as a nominal defendant in the complaint. The lawsuit alleges that the named officers and directors breached their fiduciary duties by approving agreements between Premier and certain of the former LPs that provided for accelerated payments as consideration for the early termination of the TRA with such LPs. The complaint asserts that the aggregate early termination payment amounts of $473.5 million exceeded the alleged value of the tax assets underlying the TRA by approximately $225.0 million.

The complaint seeks unspecified damages, costs and expenses, including attorney fees, and declaratory and other equitable relief. Since the lawsuit is purportedly brought on behalf of Premier, and we are only a nominal defendant, the alleged damages were allegedly suffered by us. We and the individual defendants deny the allegations in the complaint and intend to vigorously defend the litigation. In light of the fact that the lawsuit is in an early stage and the claims do not specify an amount of damages, we cannot predict the ultimate outcome of the suit.

Additional information relating to certain legal proceedings in which we are involved is included in Note 14 - 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 ~~September 30, 2021,~~March 31, 2022, there were no material changes to the risk factors disclosed in Item 1A. “Risk Factors” in the 2021 Annual Report except as set forth below. The risk factor set forth below supplements and should be read in conjunction with the risk factors discussed under the heading “Risk Factors” under Item 1A of our 2021 Annual Report.

Risks Related to Our Business

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business. In addition, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional capital.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

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. All repurchases of our Class A common stock were recorded as treasury shares. As of March 31, 2022, the Company completed its stock repurchase program.

The following table summarizes information relating to repurchases of our Class A common stock for the quarter ended ~~September 30, 2021.~~March 31, 2022.

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)
July 1 through July 31, 2021 — $ — — $ 250
August 1 through August 31, 2021 — — — 250
September 1 through September 30, 2021 1,091,362 39.04 1,091,362 207
Total 1,091,362 1,091,362 $ 207


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)
January 1 through January 31, 2022	935,628	$	38.79	935,628	$	38
February 1 through February 28, 2022	825,862	36.84		825,862	7
March 1 through March 31, 2022	199,603	36.79		199,603	—
Total	1,961,093			1,961,093	$	—

(a)Average price per share excludes fees and commissions.

(b)From the stock repurchase program's inception through ~~September 30, 2021,~~March 31, 2022, we purchased approximately ~~1.1~~6.4 million shares of Class A common stock at an average price of ~~$39.04~~$38.88 per share for a total of ~~$42.6~~$250.0 million.

Item 5. Other Information

On January 20, 2022, our Board of Directors adopted resolutions to amend and restate our bylaws to reduce the maximum number of members constituting the full Board from 18 to 11 directors.

The foregoing summary and description of the provisions of the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Item 6. Exhibits


Exhibit No.						Description
3.2						Amended and Restated Bylaws of Premier, Inc., effective as of ~~October 21, 2021 (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on October 21, 2021~~January 20, 2022).*
10.1						Form of Special Restricted Stock Unit Agreement under the Amended and Restated Premier, Inc. 2013 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on ~~August 5, 2021)+~~April 26, 2022)
~~10.2~~						Consulting Agreement, effective September 1, 2021, between Stephen R. D’Arcy and Premier, Inc. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 7, 2021)
~~10.3~~						~~Consulting Agreement, effective September 1, 2021, between David H. Langstaff and Premier, Inc.(Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on September 7, 2021)~~
~~10.4~~						~~Consulting Agreement, effective September 1, 2021, between William E. Mayer and Premier, Inc.(Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on September 7, 2021)~~
~~10.5~~						~~Form of Restricted Stock Unit Agreement for Consultants(Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on September 7, 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 ~~September 30, 2021,~~March 31, 2022, 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 ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL (included in Exhibit 101).*

* Filed herewith.

+ Indicates a management contract or compensatory plan or arrangement

‡ Furnished herewith.

4552

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:

~~November 2, 2021~~May 3, 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

4653


		Page
PART I. FINANCIAL INFORMATION		6
Item 1.	Financial Statements	6
	Condensed Consolidated Balance Sheets (Unaudited)	6
	Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	8
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	9
	Condensed Consolidated Statements of Cash Flows (Unaudited)	1011
	Notes to Condensed Consolidated Financial Statements (Unaudited)	1112
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2527
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4349
Item 4.	Controls and Procedures	4349
PART II. OTHER INFORMATION		4450
Item 1.	Legal Proceedings	4450
Item 1A.	Risk Factors	4450
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4451
Item 5.	O ther Information	51
Item 6.	Exhibits	4552
	Signatures	4653