~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington, D.C. 20549~~

~~__________________________________________________________________________________________~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~__________________________________________________________________________________________~~

~~(Mark One)~~

(Mark One)

☒

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

For the quarterly period ended March 31, ~~2022~~2023

☐

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)~~

~~___________________________________________________________________________________________~~

Premier, Inc.

(Exact name of registrant as specified in its charter)


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

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

(704) 357-0022

(Registrant’s telephone number, including area code)

~~__________________________________________________________________________________________~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 Par Value

PINC

NASDAQ Global Select Market

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of April ~~28, 2022,~~27, 2023, there were ~~117,986,674~~119,078,357 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~~Quarterly Report on Form 10-Q for the nine months ended March 31, ~~2022~~2023 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 and/or other pandemics, ~~and~~ associated supply chain disruptions and inflation;

•global economic and political instability and conflicts, such as the ongoing 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;

•continued consolidation in the healthcare industry;

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

•the impact ~~on us~~to our business 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;~~payors;

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

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

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

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

•risks and expenses related to future acquisition opportunities ~~and~~and/or 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 and/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 and/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~~and/or effectively 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 decline in demand or 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~~liabilities 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 and pandemic-related public health and reimbursement measures;

•our compliance with complex international, federal and state laws, rules and regulations 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 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 orand regulations adopted by the Food &and Drug Administration applicable to our software applications that may be considered medical devices;

•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 (as defined below) on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under those notes payable;

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

•failure to maintain an effective system of internal controls over financial reporting and/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~~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~~2022 (the ~~“2021~~“2022 Annual Report”), filed with the Securities and Exchange Commission (“SEC”) and this Quarterly ~~Report on Form 10-Q.~~Report.

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/~~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 to “member owners” are references to participants in our GPO programs that were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”), sometimes referred to as ~~“LPs,~~“LPs” or “former limited partners,” 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 to “members” are references to health systems and other customers that ~~participate in our GPO programs, or~~ utilize any of our programs or services, some of which were formerly member owners.

References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure through an exchange under which member owners converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our Class A common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our ~~2021~~ Annual ~~Report.~~Report on Form 10-K for the fiscal year ended June 30, 2021.

References to the “Subsidiary Reorganization” are references to an internal legal ~~organization~~reorganization 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 on Form 10-Q for the period ended December 31, 2021.

References to “Prior Premier GP” are references to our former wholly owned subsidiary Premier Services, LLC, which was merged with and into Premier, Inc., with Premier, Inc. being the surviving entity as part of the Subsidiary Reorganization.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


		March 31, 2022		June 30, 2021			March 31, 2023		June 30, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	179,503	$	129,141	Cash and cash equivalents	$	91,493	$	86,143
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)		255,693		266,173
Accounts receivable (net of $2,747 and $2,043 allowance for credit losses, respectively)						Accounts receivable (net of $2,747 and $2,043 allowance for credit losses, respectively)	115,289		114,129
Contract assets (net of $808 and $755 allowance for credit losses, respectively)						Contract assets (net of $808 and $755 allowance for credit losses, respectively)	290,824		260,061
Inventory	Inventory	130,275		176,376		Inventory	94,431		119,652
Prepaid expenses and other current assets	Prepaid expenses and other current assets	64,897		68,049		Prepaid expenses and other current assets	59,091		65,581
Total current assets	Total current assets	756,000		782,296		Total current assets	651,128		645,566
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)		373,752		396,642
Property and equipment (net of $642,684 and $578,644 accumulated depreciation, respectively)						Property and equipment (net of $642,684 and $578,644 accumulated depreciation, respectively)	206,687		213,379
Intangible assets (net of $252,997 and $217,582 accumulated amortization, respectively)						Intangible assets (net of $252,997 and $217,582 accumulated amortization, respectively)	442,718		356,572
Goodwill	Goodwill	999,913		999,913		Goodwill	1,069,073		999,913
Deferred income tax assets	Deferred income tax assets	744,899		781,824		Deferred income tax assets	722,949		725,032
Deferred compensation plan assets	Deferred compensation plan assets	53,914		59,581		Deferred compensation plan assets	47,699		47,436
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	209,205		153,224		Investments in unconsolidated affiliates	230,300		215,545
Operating lease right-of-use assets	Operating lease right-of-use assets	41,764		48,199		Operating lease right-of-use assets	31,658		39,530
Other assets	Other assets	113,429		76,948		Other assets	110,305		114,154
Total assets	Total assets	$	3,515,459	$	3,522,898	Total assets	$	3,512,517	$	3,357,127

Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Accounts payable	Accounts payable	$	53,720	$	85,413	Accounts payable	$	53,486	$	44,631
Accrued expenses	Accrued expenses	58,129		48,144		Accrued expenses	63,372		40,968
Revenue share obligations	Revenue share obligations	240,152		226,883		Revenue share obligations	258,112		245,395
Accrued compensation and benefits	Accrued compensation and benefits	79,621		100,713		Accrued compensation and benefits	59,088		93,638
Deferred revenue	Deferred revenue	33,755		34,058		Deferred revenue	27,880		30,463
Current portion of notes payable to former limited partners	Current portion of notes payable to former limited partners	97,342		95,948		Current portion of notes payable to former limited partners	99,200		97,806
Line of credit and current portion of long-term debt	Line of credit and current portion of long-term debt	253,053		78,295		Line of credit and current portion of long-term debt	236,272		153,053
Other current liabilities	Other current liabilities	47,403		47,330		Other current liabilities	102,922		47,183
Total current liabilities	Total current liabilities	863,175		716,784		Total current liabilities	900,332		753,137
Long-term debt, less current portion	Long-term debt, less current portion	2,280		5,333		Long-term debt, less current portion	1,008		2,280
Notes payable to former limited partners, less current portion	Notes payable to former limited partners, less current portion	225,814		298,995		Notes payable to former limited partners, less current portion	126,614		201,188
Deferred compensation plan obligations	Deferred compensation plan obligations	53,914		59,581		Deferred compensation plan obligations	47,699		47,436

Deferred consideration, less current portion	Deferred consideration, less current portion	57,762		56,809		Deferred consideration, less current portion	29,189		28,702
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	35,678		43,102		Operating lease liabilities, less current portion	25,468		32,960
Other liabilities	Other liabilities	43,234		112,401		Other liabilities	46,416		42,574
Total liabilities	Total liabilities	1,281,857		1,293,005		Total liabilities	1,176,726		1,108,277
Commitments and contingencies (Note 14)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)


		March 31, 2022		June 30, 2021			March 31, 2023		June 30, 2022
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
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		(250,129)		—
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 125,309,682 shares issued and 118,880,307 shares outstanding at March 31, 2023 and 124,481,610 shares issued and 118,052,235 shares outstanding at June 30, 2022						Class A common stock, $0.01 par value, 500,000,000 shares authorized; 125,309,682 shares issued and 118,880,307 shares outstanding at March 31, 2023 and 124,481,610 shares issued and 118,052,235 shares outstanding at June 30, 2022	1,253		1,245
Treasury stock, at cost; 6,429,375 shares at both March 31, 2023 and June 30, 2022						Treasury stock, at cost; 6,429,375 shares at both March 31, 2023 and June 30, 2022	(250,129)		(250,129)
Additional paid-in capital	Additional paid-in capital	2,150,313		2,059,194		Additional paid-in capital	2,175,048		2,166,047
Retained earnings	Retained earnings	332,171		169,474		Retained earnings	409,630		331,690
Accumulated other comprehensive income		3		—
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(11)		(3)
Total stockholders' equity	Total stockholders' equity	2,233,602		2,229,893		Total stockholders' equity	2,335,791		2,248,850
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,515,459	$	3,522,898	Total liabilities and stockholders' equity	$	3,512,517	$	3,357,127

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		March 31,				March 31,					March 31,				March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net revenue:	Net revenue:									Net revenue:
Net administrative fees	Net administrative fees	$	148,396	$	146,553	$	448,261	$	424,537	Net administrative fees	$	148,441	$	148,396	$	452,870	$	448,261
Other services and support		105,808		107,375		320,109		304,020
Services		254,204		253,928		768,370		728,557
Software licenses, other services and support										Software licenses, other services and support	116,579		105,808		359,795		320,109
Services and software licenses										Services and software licenses	265,020		254,204		812,665		768,370
Products	Products	93,629		215,995		323,825		511,080		Products	57,212		93,629		183,066		323,825
Net revenue	Net revenue	347,833		469,923		1,092,195		1,239,637		Net revenue	322,232		347,833		995,731		1,092,195
Cost of revenue:	Cost of revenue:									Cost of revenue:
Services		46,735		46,980		136,326		125,852
Services and software licenses										Services and software licenses	54,149		46,735		163,428		136,326
Products	Products	88,621		211,136		294,916		496,286		Products	49,013		88,621		168,507		294,916
Cost of revenue	Cost of revenue	135,356		258,116		431,242		622,138		Cost of revenue	103,162		135,356		331,935		431,242
Gross profit	Gross profit	212,477		211,807		660,953		617,499		Gross profit	219,070		212,477		663,796		660,953
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	143,676		134,502		418,330		388,453		Selling, general and administrative	143,587		143,676		416,165		418,330
Research and development	Research and development	826		715		2,666		2,013		Research and development	1,001		826		2,976		2,666
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,151		10,400		32,890		33,864		Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Operating expenses	Operating expenses	155,653		145,617		453,886		424,330		Operating expenses	156,504		155,653		454,556		453,886
Operating income	Operating income	56,824		66,190		207,067		193,169		Operating income	62,566		56,824		209,240		207,067
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	3,991		5,524		17,165		16,023		Equity in net income of unconsolidated affiliates	4,630		3,991		14,547		17,165
Interest expense, net	Interest expense, net	(2,804)		(3,225)		(8,465)		(8,742)		Interest expense, net	(4,269)		(2,804)		(11,759)		(8,465)
(Loss) gain on FFF Put and Call Rights		—		(5,195)		64,110		(21,621)
Other (expense) income, net		(4,248)		1,594		(2,176)		10,167
Other (expense) income, net		(3,061)		(1,302)		70,634		(4,173)
Gain on FFF Put and Call Rights										Gain on FFF Put and Call Rights	—		—		—		64,110
Other income (expense), net										Other income (expense), net	2,954		(4,248)		3,720		(2,176)
Other income (expense), net										Other income (expense), net	3,315		(3,061)		6,508		70,634
Income before income taxes	Income before income taxes	53,763		64,888		277,701		188,996		Income before income taxes	65,881		53,763		215,748		277,701
Income tax expense (benefit)		14,694		13,444		40,094		(64,880)
Income tax expense										Income tax expense	17,232		14,694		59,766		40,094
Net income	Net income	39,069		51,444		237,607		253,876		Net income	48,649		39,069		155,982		237,607
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	(654)		(3,123)		(1,643)		(15,903)		Net income attributable to non-controlling interest	(1,848)		(654)		(2,419)		(1,643)
Adjustment of redeemable limited partners' capital to redemption amount		—		—		—		(26,685)

Net income attributable to stockholders	Net income attributable to stockholders	$	38,415	$	48,321	$	235,964	$	211,288	Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964

Comprehensive income:	Comprehensive income:									Comprehensive income:
Net income	Net income	$	39,069	$	51,444	$	237,607	$	253,876	Net income	$	48,649	$	39,069	$	155,982	$	237,607
Comprehensive income attributable to non-controlling interest	Comprehensive income attributable to non-controlling interest	(654)		(3,123)		(1,643)		(15,903)		Comprehensive income attributable to non-controlling interest	(1,848)		(654)		(2,419)		(1,643)
Foreign currency translation gain		4		—		3		—
Foreign currency translation gain (loss)										Foreign currency translation gain (loss)	1		4		(8)		3
Comprehensive income attributable to stockholders	Comprehensive income attributable to stockholders	$	38,419	$	48,321	$	235,967	$	237,973	Comprehensive income attributable to stockholders	$	46,802	$	38,419	$	153,555	$	235,967

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	118,697		122,254		120,957		114,596		Basic	118,872		118,697		118,668		120,957
Diluted	Diluted	119,813		123,116		122,302		115,365		Diluted	119,816		119,813		119,832		122,302

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:									Earnings per share attributable to stockholders:
Basic	Basic	$	0.32	$	0.40	$	1.95	$	1.84	Basic	$	0.39	$	0.32	$	1.29	$	1.95
Diluted	Diluted	$	0.32	$	0.39	$	1.94	$	1.83	Diluted	$	0.39	$	0.32	$	1.28	$	1.94

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Stockholders' Equity

Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

(Unaudited)

(In thousands)


		Class A Common Stock			Treasury Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings				Total Stockholders' Equity		Class A Common Stock									Treasury Stock		Additional Paid-In Capital	Retained Earnings			Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
		Shares	Amount			Shares			Amount									Shares				Amount						Amount				Total Stockholders' Equity
Balance at June 30, 2021		122,533	$	1,225		—	$	—		$	2,059,194			$	—				$	169,474			$	2,229,893
Balance at June 30, 2022																					Balance at June 30, 2022	118,052			$	1,245			6,429				$	(250,129)			$	2,166,047			$	331,690			$	(3)	$	2,248,850
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	694			7				—	—			637		—				—				644
Treasury stock		(1,091)	—			1,091	(42,628)			—		—				—			(42,628)
Stock-based compensation expense		—	—			—	—			7,554		—				—			7,554
Repurchase of vested restricted units for employee tax-withholding		—	—			—	—			(9,171)		—				—			(9,171)
Net income		—	—			—	—			—		—				121,306			121,306
Net loss attributable to non-controlling interest		—	—			—	—			(698)		—				698			—
Dividends ($0.20 per share)		—	—			—	—			—		—				(24,877)			(24,877)
Non-controlling interest related to acquisition		—	—			—	—			23,145		—				—			23,145
Balance at September 30, 2021		122,681	1,238			1,091	(42,628)			2,102,875		—				266,601			2,328,086
Issuance of Class A common stock under equity incentive plan		579	5			—	—			14,398		—				—			14,403
Issuance of Class A common stock under employee stock purchase plan		52	1			—	—			1,976		—				—			1,977
Treasury stock		(3,377)	—			3,377	(133,396)			—		—				—			(133,396)

Stock-based compensation expense	Stock-based compensation expense	—	—			—	—			16,234		—				—			16,234		Stock-based compensation expense	—			—				—	—			7,136		—				—				7,136
Repurchase of vested restricted units for employee tax-withholding	Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(1,495)		—				—			(1,495)		Repurchase of vested restricted units for employee tax-withholding	—			—				—	—			(13,089)		—				—				(13,089)
Net income	Net income	—	—			—	—			—		—				77,232			77,232		Net income	—			—				—	—			—		42,959				—				42,959
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	—	—			—	—			1,687		—				(1,687)			—		Net income attributable to non-controlling interest	—			—				—	—			243		(243)				—				—
Change in ownership of consolidated entity	Change in ownership of consolidated entity	—	—			—	—			12		—				—			12		Change in ownership of consolidated entity	—			—				—	—			26		—				—				26
Dividends ($0.20 per share)		—	—			—	—			—						(24,250)			(24,250)
Dividends ($0.21 per share)																					Dividends ($0.21 per share)	—			—				—	—			—		(25,097)				—				(25,097)

Foreign currency translation adjustment																					Foreign currency translation adjustment	—			—				—	—			—		—				(10)				(10)
Balance at September 30, 2022																					Balance at September 30, 2022	118,746			1,252				6,429	(250,129)			2,161,000		349,309				(13)				2,261,419
Issuance of Class A common stock under equity incentive plan																					Issuance of Class A common stock under equity incentive plan	54			—				—	—			60		—				—				60
Issuance of Class A common stock under employee stock purchase plan																					Issuance of Class A common stock under employee stock purchase plan	67			1				—	—			2,267		—				—				2,268

Stock-based compensation expense																					Stock-based compensation expense	—			—				—	—			2,679		—				—				2,679
Repurchase of vested restricted units for employee tax-withholding																					Repurchase of vested restricted units for employee tax-withholding	—			—				—	—			(41)		—				—				(41)
Net income																					Net income	—			—				—	—			—		64,374				—				64,374
Net income attributable to non-controlling interest																					Net income attributable to non-controlling interest	—			—				—	—			328		(328)				—				—
Change in ownership of consolidated entity																					Change in ownership of consolidated entity	—			—				—	—			26		—				—				26
Dividends ($0.21 per share)																					Dividends ($0.21 per share)	—			—				—	—			—		(25,303)				—				(25,303)

Foreign currency translation loss		—	—			—	—			—		(1)				—			(1)
Balance at December 31, 2021		119,935	1,244			4,468	(176,024)			2,135,687		(1)				317,896			2,278,802
Foreign currency translation adjustment																					Foreign currency translation adjustment	—			—				—	—			—		—				1				1
Other																					Other	—			—				—	—			590		—				—				590
Balance at December 31, 2022																					Balance at December 31, 2022	118,867			1,253				6,429	(250,129)			2,166,909		388,052				(12)				2,306,073
Issuance of Class A common stock under equity incentive plan	Issuance of Class A common stock under equity incentive plan	12	—			—	—			118		—				—			118		Issuance of Class A common stock under equity incentive plan	13			—				—	—			—		—				—				—

Treasury stock		(1,961)	—			1,961	(74,105)			—		—				—			(74,105)

Stock-based compensation expense	Stock-based compensation expense	—	—			—	—			14,004		—				—			14,004		Stock-based compensation expense	—			—				—	—			6,560		—				—				6,560
Repurchase of vested restricted units for employee tax-withholding	Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(174)		—				—			(174)		Repurchase of vested restricted units for employee tax-withholding	—			—				—	—			(297)		—				—				(297)
Net income	Net income	—	—			—	—			—		—				39,069			39,069		Net income	—			—				—	—			—		48,649				—				48,649
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	—	—			—	—			654		—				(654)			—		Net income attributable to non-controlling interest	—			—				—	—			1,848		(1,848)				—				—
Change in ownership of consolidated entity	Change in ownership of consolidated entity	—	—			—	—			24		—				—			24		Change in ownership of consolidated entity	—			—				—	—			28		—				—				28
Dividends ($0.20 per share)		—	—			—	—			—		—				(24,140)			(24,140)
Dividends ($0.21 per share)																					Dividends ($0.21 per share)	—			—				—	—			—		(25,223)				—				(25,223)

Foreign currency translation gain		—	—			—	—			—		4				—			4
Balance at March 31, 2022		117,986	$	1,244		6,429	$	(250,129)		$	2,150,313	$	3			$	332,171		$	2,233,602
Foreign currency translation adjustment																					Foreign currency translation adjustment	—			—				—	—			—		—				1				1
Balance at March 31, 2023																					Balance at March 31, 2023	118,880			$	1,253			6,429	$	(250,129)		$	2,175,048	$	409,630			$	(11)			$	2,335,791

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


	Class A Common Stock			Treasury Stock		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
	Shares	Amount			Shares			Amount
Balance at June 30, 2021	122,533	$	1,225		—	$	—		$	2,059,194	$	169,474	$	—	$	2,229,893
Issuance of Class A common stock under equity incentive plan	1,239	13			—	—			22,851		—		—		22,864

Treasury stock	(1,091)	—			1,091	(42,628)			—		—		—		(42,628)
Stock-based compensation expense	—	—			—	—			7,554		—		—		7,554
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(9,171)		—		—		(9,171)
Net income	—	—			—	—			—		121,306		—		121,306
Net loss attributable to non-controlling interest	—	—			—	—			(698)		698		—		—

Dividends ($0.20 per share)	—	—			—	—			—		(24,877)		—		(24,877)



Non-controlling interest related to acquisition	—	—			—	—			23,145		—		—		23,145


Balance at September 30, 2021	122,681	1,238			1,091	(42,628)			2,102,875		266,601		—		2,328,086
Issuance of Class A common stock under equity incentive plan	579	5			—	—			14,398		—		—		14,403
Issuance of Class A common stock under employee stock purchase plan	52	1			—	—			1,976		—		—		1,977
Treasury stock	(3,377)	—			3,377	(133,396)			—		—		—		(133,396)
Stock-based compensation expense	—	—			—	—			16,234		—		—		16,234
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(1,495)		—		—		(1,495)
Net income	—	—			—	—			—		77,232		—		77,232
Net income attributable to non-controlling interest	—	—			—	—			1,687		(1,687)		—		—
Change in ownership of consolidated entity	—	—			—	—			12		—		—		12
Dividends ($0.20 per share)	—	—			—	—			—		(24,250)		—		(24,250)





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

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





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

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,					Nine Months Ended March 31,
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	237,607	$	253,876	Net income	$	155,982	$	237,607
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	95,764		89,768		Depreciation and amortization	100,568		95,764
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	(17,165)		(16,023)		Equity in net income of unconsolidated affiliates	(14,547)		(17,165)
Deferred income taxes	Deferred income taxes	36,926		(100,150)		Deferred income taxes	2,083		36,926
Stock-based compensation	Stock-based compensation	37,792		27,601		Stock-based compensation	16,375		37,792
(Gain) loss on FFF call/put rights		(64,110)		21,621
Other		4,578		537
Gain on FFF Put and Call Rights						Gain on FFF Put and Call Rights	—		(64,110)
Other, net						Other, net	3,066		4,578
Changes in operating assets and liabilities, net of the effects of acquisitions:	Changes in operating assets and liabilities, net of the effects of acquisitions:					Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets	Accounts receivable, inventories, prepaid expenses and other assets	91,418		(181,263)		Accounts receivable, inventories, prepaid expenses and other assets	47,389		91,418
Contract assets	Contract assets	(39,139)		(43,733)		Contract assets	(31,975)		(39,139)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	(48,882)		140,131		Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	52,237		(48,882)
Net cash provided by operating activities	Net cash provided by operating activities	334,789		192,365		Net cash provided by operating activities	331,178		334,789
Investing activities	Investing activities					Investing activities
Purchases of property and equipment	Purchases of property and equipment	(61,061)		(66,911)		Purchases of property and equipment	(58,464)		(61,061)
Acquisition of businesses and equity method investments, net of cash acquired	Acquisition of businesses and equity method investments, net of cash acquired	(26,000)		(81,152)		Acquisition of businesses and equity method investments, net of cash acquired	(187,750)		(26,000)
Investment in unconsolidated affiliates	Investment in unconsolidated affiliates	(16,000)		—		Investment in unconsolidated affiliates	(2,060)		(16,000)
Other	Other	(10,000)		(1,228)		Other	(1,510)		(10,000)
Net cash used in investing activities	Net cash used in investing activities	(113,061)		(149,291)		Net cash used in investing activities	(249,784)		(113,061)
Financing activities	Financing activities					Financing activities
Payments made on notes payable	Payments made on notes payable	(75,082)		(31,692)		Payments made on notes payable	(76,024)		(75,082)
Proceeds from credit facility	Proceeds from credit facility	300,000		225,000		Proceeds from credit facility	350,000		300,000
Payments on credit facility	Payments on credit facility	(125,000)		(100,000)		Payments on credit facility	(265,000)		(125,000)
Proceeds from exercise of stock options under equity incentive plan						Proceeds from exercise of stock options under equity incentive plan	704		37,385
Cash dividends paid	Cash dividends paid	(72,861)		(69,647)		Cash dividends paid	(75,227)		(72,861)
Repurchase of Class A common stock (held as treasury stock)	Repurchase of Class A common stock (held as treasury stock)	(250,129)		—		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
Other, net						Other, net	(10,489)		14,318
Net cash used in financing activities	Net cash used in financing activities	(171,369)		(9,794)		Net cash used in financing activities	(76,036)		(171,369)
Effect of exchange rate changes on cash flows	Effect of exchange rate changes on cash flows	3		—		Effect of exchange rate changes on cash flows	(8)		3
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	50,362		33,280		Net increase in cash and cash equivalents	5,350		50,362
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	129,141		99,304		Cash and cash equivalents at beginning of period	86,143		129,141
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	179,503	$	132,584	Cash and cash equivalents at end of period	$	91,493	$	179,503

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. ~~Following the Subsidiary Reorganization, the~~The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Healthcare Solutions, Inc., a Delaware corporation (“PHSI”). The Company conducts substantially all of its business operations through PHSI and its other consolidated ~~subsidiaries, including Premier LP.~~subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians, employers, product suppliers, service providers, and other healthcare providers and organizations to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare 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 ~~provide~~provides 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 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 2two business segments: Supply Chain Services and Performance Services. See Note 1514 - 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, purchased services and direct sourcing activities. The Performance Services segment consists of 3three 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 and managed 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-to-employer business which provides ~~third party~~third-party administrator services and management of ~~health benefit~~health-benefit programs that allow employers to contract directly with healthcare ~~providers;~~providers as well as partner with healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and RemitraTM, the Company’s digital invoicing and payables automation business which provides financial support 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~~2022 Annual Report.

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the nine months ended March 31, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Nine Months Ended March 31,
2022 2021
Supplementary non-cash investing and financing activities:
Non-cash additions to property and equipment $ 129 $ —
Accrued dividend equivalents 738 513
Increase in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease in stockholders' equity — 26,685
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners — (2,437)
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments — 331
Net increase in deferred tax assets related to final exchange by member owners — 284,852
Reclassification of redeemable limited partners' capital to additional paid in capital — 1,754,607
Decrease in additional paid-in capital related to notes payable to former limited partners, net of discounts — 438,967
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments — 37,319
Increase in additional paid-in capital related to final exchange by member owners — 517,526


	Nine Months Ended March 31,
	2023		2022
Supplemental schedule of non-cash investing and financing activities:

Non-cash additions to property and equipment	$	5	$	129
Non-cash investment in unconsolidated affiliates	7,800		—
Accrued dividend equivalents	778		738

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, software licenses, 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~~2022 Annual Report.

Recently ~~Issued~~Adopted 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. The Company adopted ASU 2021-08 ~~will be effective for~~during the ~~Company for~~second quarter of fiscal 2023. The standard did not have a material impact on 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 consolidatedCompany’s financial statements ~~and~~nor its related disclosures.

(3) BUSINESS ACQUISITIONS

Acquisition of ~~Invoice Delivery Services, LP~~TRPN Direct Pay, Inc. and Devon Health, Inc. Assets

On ~~March 1, 2021,~~October 13, 2022, the Company, ~~acquired,~~ through its ~~indirect, wholly owned~~consolidated subsidiary ~~Premier IDS,~~Contigo Health, LLC ~~substantially all~~(“Contigo Health”), acquired certain assets (the “TRPN Transferred Assets”) of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”), including contracts with more than 900,000 providers (collectively, the ~~assets~~“Assumed Contracts”), and ~~assumed~~agreed to assume certain liabilities and obligations of ~~Invoice Delivery Services, LP (“IDS”~~TRPN with regard to the Assumed Contracts (referred to as the “TRPN acquisition”) ~~for an adjusted~~. The TRPN Transferred Assets relate to businesses of TRPN focused on improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with network providers, including acute-care hospitals, surgery centers, physicians and other non-acute providers in the United States. Contigo Health also agreed to license proprietary cost containment technology of TRPN.

The purchase price paid by the Company to complete the TRPN acquisition consisted of ~~$80.7~~

cash of $177.5 million, ~~subject to certain adjustments, of which $80.0 million was paid at closing~~funded with borrowings under the Company’s Credit Facility (as defined in Note 8 - Debt and Notes Payable). and cash on hand, of which $17.8 million was placed in escrow to satisfy indemnification obligations of TRPN to Contigo Health and its affiliates and other parties related thereto under the purchase agreement governing the TRPN acquisition.

The Company has accounted for the ~~IDS~~TRPN 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~~$116.6 million, consisting primarily of ~~developed technology.~~the provider network.

The ~~IDS~~TRPN acquisition resulted in the recognition of ~~$57.7~~$60.9 million of goodwill attributable to the anticipated profitability of TRPN, based on the purchase price paid in the acquisition compared to the fair value of the ~~tangible~~net assets acquired. The ~~IDS~~TRPN 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 ~~was finalized during~~for the ~~three months ended March 31, 2022. IDS has been~~TRPN acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed. TRPN is being integrated within Premier under ~~the brand name Remitra~~TMContigo Health and is reported as part of the Performance Services ~~segment.~~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~~historical consolidated financial statements.

(4) INVESTMENTS

Investments in Unconsolidated Affiliates

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


																			Equity in Net Income
		Carrying Value				Equity in Net Income													Three Months Ended				Nine Months Ended
						Three Months Ended March 31,				Nine Months Ended March 31,					Carrying Value				March 31,				March 31,
		March 31, 2022		June 30, 2021		2022		2021		2022		2021			March 31, 2023		June 30, 2022		2023		2022		2023		2022
FFF	FFF	$	132,384	$	120,548	$	2,437	$	806	$	11,836	$	8,387	FFF	$	136,584	$	137,162	$	1,370	$	2,437	$	9,075	$	11,836
Exela	Exela	27,504		—		501		—		1,504		—		Exela	31,368		27,733		2,865		501		3,635		1,504
Qventus														Qventus	16,000		16,000		—		—		—		—
Prestige	Prestige	14,566		14,478		935		4,436		3,272		7,082		Prestige	16,206		15,597		139		935		610		3,272
Qventus		16,000		—		—		—		—		—
Other investments	Other investments	18,751		18,198		118		282		553		554		Other investments	30,142		19,053		256		118		1,227		553
Total investments	Total investments	$	209,205	$	153,224	$	3,991	$	5,524	$	17,165	$	16,023	Total investments	$	230,300	$	215,545	$	4,630	$	3,991	$	14,547	$	17,165

The Company, through 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 March 31, ~~2022~~2023 and June 30, ~~2021. On July 29, 2021, the~~2022. The Company accounts for its investment in FFF ~~shareholders’ agreement was amended resulting in the termination~~as part of the ~~FFF put right, which had previously provided~~Supply Chain Services segment.

On March 3, 2023, the Company and the majority shareholder of FFF amended the FFF shareholders’ agreement and in lieu of a ~~right to require~~distribution, the Company received an increase of $24.8 million to ~~purchase such shareholder’s interest~~the its liquidation preferences on the Class B common stock in FFF, ~~on an all~~bringing the Company’s total liquidation preference in FFF to $32.3 million. In the event of liquidation or ~~nothing basis, on or after April 15, 2023 (“~~dissolution of FFF, ~~Put Right”). The termination~~the Company will receive the liquidation preference of $32.3 million prior to any pro rata distribution of FFF’s proportional equity value between the Company and the majority shareholder of FFF. As a result of the increase to the liquidation preference and priority of the Company’s Class B common stock in FFF ~~Put Right resulted~~ in the ~~derecognition~~event of liquidation or dissolution of FFF, the Company will no longer account for its investment in FFF using the equity method of accounting. As of the date of the amendment, the Company will account for its investment in FFF ~~Put Right liability and the recognition of a corresponding non-cash gain of $64.1 million~~at cost less impairments, if any, plus or minus any observable changes in ~~the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (see Note 5 - Fair Value Measurements for additional information).~~fair value.

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 March 31, ~~2022.~~2023. At March 31, ~~2022,~~2023, the Company 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, through its consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through its ownership of Prestige limited partnership units at March 31, ~~2022.~~2023. At March 31, ~~2022,~~2023, the Company 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 investments in ~~FFF,~~ Exela and Prestige using the equity method of accounting and includes each investment as part of the Supply Chain Services segment.

~~On January 31, 2022, the~~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)
March 31, 2022
March 31, 2023										March 31, 2023
Cash equivalents	Cash equivalents	$	75	$	75	$	—	$	—	Cash equivalents	$	76	$	76	$	—	$	—
Deferred compensation plan assets	Deferred compensation plan assets	59,803		59,803		—		—		Deferred compensation plan assets	52,787		52,787		—		—
Total assets	Total assets	59,878		59,878		—		—		Total assets	52,863		52,863		—		—

Earn-out liabilities	Earn-out liabilities	23,194		—		—		23,194		Earn-out liabilities	27,174		—		—		27,174

Total liabilities	Total liabilities	$	23,194	$	—	$	—	$	23,194	Total liabilities	$	27,174	$	—	$	—	$	27,174

June 30, 2021
June 30, 2022										June 30, 2022
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	52,718		52,718		—		—
Total assets	Total assets	65,126		65,126		—		—		Total assets	52,793		52,793		—		—

Earn-out liabilities	Earn-out liabilities	24,249		—		—		24,249		Earn-out liabilities	22,789		—		—		22,789
FFF put right		64,110		—		—		64,110

Total liabilities	Total liabilities	$	88,359	$	—	$	—	$	88,359	Total liabilities	$	22,789	$	—	$	—	$	22,789

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($~~5.9~~5.1 million and ~~$5.5~~$5.3 million at March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, 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 and Call Rights

On July 29, 2021, the FFF shareholders’ agreement was amended resulting in the termination of the FFF Put Right 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 180 calendar days after the date of a Key Man Event (the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, 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 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 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.

~~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 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

AnAt March 31, 2023, earn-out ~~liability was~~liabilities have been established in connection with certain of our acquisitions, including 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.~~2020 as well as other immaterial acquisitions. The ~~earn-out~~earnout liability related to the Acurity and Nexera asset acquisition was based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company and Greater New York Hospital Association based on prevailing market conditions in December 2023. Earn-out liabilities are classified as Level 3 of the fair value hierarchy.

Acurity and Nexera Earn-out (a)

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 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 ~~1.1%~~1.8% at March 31, ~~2022~~2023 and ~~0.9%~~1.6% at June 30, ~~2021.~~2022. As of March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, the undiscounted range of outcomes is between $0 and $30.0 million. A significant decrease in the probability could result in a significant decrease in the value of the earn-out liability. The fair value of the Acurity and Nexera earn-out liability at March 31, ~~2022~~2023 and June 30, ~~2021~~2022 was ~~$23.2~~$23.0 million and ~~$24.2~~$22.8 million, respectively.

~~Acurity and Nexera Earn-out~~ ~~(a)~~


Input assumptions	Input assumptions	As of March 31, 2022		As of June 30, 2021		Input assumptions	As of March 31, 2023		As of June 30, 2022
Probability of transferred member renewal percentage < 50%	Probability of transferred member renewal percentage < 50%	5.0	%	5.0	%	Probability of transferred member renewal percentage < 50%	5.0	%	5.0	%
Probability of transferred member renewal percentage between 50% and 65%	Probability of transferred member renewal percentage between 50% and 65%	10.0	%	10.0	%	Probability of transferred member renewal percentage between 50% and 65%	10.0	%	10.0	%
Probability of transferred member renewal percentage between 65% and 80%	Probability of transferred member renewal percentage between 65% and 80%	25.0	%	25.0	%	Probability of transferred member renewal percentage between 65% and 80%	25.0	%	25.0	%
Probability of transferred member renewal percentage > 80%	Probability of transferred member renewal percentage > 80%	60.0	%	60.0	%	Probability of transferred member renewal percentage > 80%	60.0	%	60.0	%
Credit spread	Credit spread	1.1	%	0.9	%	Credit spread	1.8	%	1.6	%

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

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


											Beginning Balance		Purchases (Settlements)(a)		(Gain)/Loss (b)		Ending Balance
Three Months Ended March 31, 2023										Three Months Ended March 31, 2023
Earn-out liabilities										Earn-out liabilities	$	24,098	$	—	$	3,076	$	27,174

Total Level 3 liabilities										Total Level 3 liabilities	$	24,098	$	—	$	3,076	$	27,174
		Beginning Balance		Purchases (Settlements) (a)(b)		(Gain)/Loss (c)		Ending Balance
Three Months Ended March 31, 2022	Three Months Ended March 31, 2022									Three Months Ended March 31, 2022
Earn-out liabilities	Earn-out liabilities	$	24,139	$	—	$	(945)	$	23,194	Earn-out liabilities	$	24,139	$	—	$	(945)	$	23,194

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

Three Months Ended March 31, 2021
Nine Months Ended March 31, 2023										Nine Months Ended March 31, 2023
Earn-out liabilities	Earn-out liabilities	$	22,700	$	—	$	(1,254)	$	23,954	Earn-out liabilities	$	22,789	$	1,460	$	2,925	$	27,174
FFF put right		53,184		—		(5,195)		58,379

Total Level 3 liabilities	Total Level 3 liabilities	$	75,884	$	—	$	(6,449)	$	82,333	Total Level 3 liabilities	$	22,789	$	1,460	$	2,925	$	27,174

Nine Months Ended March 31, 2022	Nine Months Ended March 31, 2022									Nine Months Ended March 31, 2022
Earn-out liabilities	Earn-out liabilities	$	24,249	$	—	$	(1,055)	$	23,194	Earn-out liabilities	$	24,249	$	��	$	(1,055)	$	23,194
FFF put right	FFF put right	64,110		(64,110)		—		—		FFF put right	64,110		(64,110)		—		—
Total Level 3 liabilities	Total Level 3 liabilities	$	88,359	$	(64,110)	$	(1,055)	$	23,194	Total Level 3 liabilities	$	88,359	$	(64,110)	$	(1,055)	$	23,194

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

(a)Purchases ~~(Settlements)~~for the nine months ended March 31, 2023 includes an earn-out which has not been earned or paid as of March 31, 2023. Settlements for the nine months ended 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 nine months ended March 31, 2021 includes the Medpricer earnout, which had been earned but not yet paid as of March 31, 2021, and the Stanson earnout, which was paid in full as of March 31, 2021.

~~(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~~As a result of the ~~nine months ended March 31, 2022,~~August 2020 Restructuring, the Company recorded non-interest bearing notes payable to former limited partners ~~as a result of~~during the ~~August 2020 Restructuring.~~three months ended September 30, 2020. Although these notes are non-interest bearing, they include a Level 2 input associated with ~~the~~an implied fixed annual interest rate of 1.8% ~~and are calculated as of August 11, 2020.~~ (see Note 8 - Debt and Notes Payable). As of March 31,

2023 and June 30, 2022, the notes payable to former limited partners were recorded net of discounts of $5.2 million and $9.1 million, respectively.

During the nine months ended March 31, ~~2022,~~2023, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The preliminary fair values of the acquired intangible assets resulting from the TRPN acquisition were determined using the income approach (see Note 3 - Business Acquisitions).

Financial Instruments For Which Fair Value Only is Disclosed

The fair values of non-interest bearing notes payable, classified as Level 2, were equal to the carrying value at March 31, 2023 and $0.1 million less than ~~their~~the carrying value ~~by $0.1 million~~ at ~~both March 31, 2022 and~~ June 30, ~~2021~~2022 based on an assumed market interest ~~rates~~rate 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 nine months ended March 31, ~~2022~~2023 that was included in the opening balance of deferred revenue at June 30, ~~2021~~2022 was ~~$24.2~~$25.5 million, which is a result of satisfying certain performance obligations.

Performance Obligations

A performance obligation is a ~~promise~~contractual obligation 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~~agreement to transfer individual goods or services is not separately identifiable from other ~~promises~~contractual obligations 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~~SaaS subscription fees, maintenance and support fees, and professional fees for consulting services)~~, including certain performance guarantees.~~.

Refer to the Company’s significant accounting policies in the ~~2021~~2022 Annual Report for discussion of revenue recognition on contracts with customers.

Net revenue of $5.4 million and $3.9 million was recognized during the three and nine months ended March 31, 2023, respectively, from certain performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $6.1 million and $6.6 million, respectively, in net administrative fees revenue related to under-forecasted cash receipts received in the current period. These increases were partially offset by a reduction of $0.7 million and $2.7 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

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

Net revenue of $8.5 million was recognized during the three months ended March 31, 2021 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by a $11.4 million increase in net administrative fees revenue related to under-forecasted cash receipts received in the current period partially offset by a reduction of $2.9 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 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 March 31, ~~2022,~~2023, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$614.0~~$701.7 million. The Company expects to recognize approximately ~~46%~~40% of the remaining performance obligations over the next 12 months and an additional ~~27%~~23% over the following 12 months, with the remainder recognized thereafter.

(7) GOODWILL AND INTANGIBLE ASSETS

Goodwill

~~At March 31, 2022~~Goodwill consisted of the following (in thousands):


	Supply Chain Services		Performance Services		Total
June 30, 2022	$	388,502	$	611,411	$	999,913
Acquisition of businesses and assets	—		69,160		69,160
March 31, 2023	$	388,502	$	680,571	$	1,069,073

Goodwill increased primarily due to the TRPN acquisition (see Note 3 - Business Acquisitions). The initial purchase price allocation for the TRPN acquisition is preliminary and ~~June 30, 2021,~~subject to change in the ~~Company had goodwill balances recorded at Supply Chain Services~~valuation of the assets acquired and ~~Performance Services of $388.5 million and $611.4 million, respectively.~~

the liabilities assumed.

Intangible Assets, Net

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


		Useful Life	March 31, 2022		June 30, 2021			Useful Life	March 31, 2023		June 30, 2022
Member relationships	Member relationships	14.7 years	$	386,100	$	386,100	Member relationships	14.7 years	$	386,100	$	386,100
Provider network							Provider network	15.0 years	106,500		—
Technology	Technology	6.1 years	186,017		186,017		Technology	7.1 years	99,317		98,017
Customer relationships	Customer relationships	9.6 years	70,830		70,830		Customer relationships	9.4 years	57,930		47,830
Non-compete agreements							Non-compete agreements	5.2 years	17,715		17,315
Trade names	Trade names	7.4 years	24,610		24,610		Trade names	6.7 years	18,920		17,210
Non-compete agreements		5.2 years	21,315		11,315
Other (a)	Other (a)	10.2 years	7,682		7,682		Other (a)	9.3 years	9,233		7,682
Total intangible assets	Total intangible assets		696,554		686,554		Total intangible assets		695,715		574,154
Accumulated amortization	Accumulated amortization		(322,802)		(289,912)		Accumulated amortization		(252,997)		(217,582)
Total intangible assets, net	Total intangible assets, net		$	373,752	$	396,642	Total intangible assets, net		$	442,718	$	356,572

(a)Includes a $1.0 million indefinite-lived asset.

The net carrying value of intangible assets by segment was as follows (in thousands):


	March 31, 2023		June 30, 2022
Supply Chain Services	$	277,641	$	301,611
Performance Services (a)	165,077		54,961
Total intangible assets, net	$	442,718	$	356,572

(a)Includes a $1.0 million indefinite-lived asset.

Total intangible assets increased primarily due to the TRPN acquisition (see Note 3 - Business Acquisitions). As part of the TRPN acquisition, the total fair value assigned to intangible assets acquired was $116.6 million, consisting primarily of the provider network of $106.5 million. The weighted average useful life of the acquired intangible assets is 14.1 years, with the provider network having a useful life of 15.0 years.

Intangible asset amortization was ~~$32.9~~$11.9 million and ~~$33.9~~$11.2 million for the three months ended March 31, 2023 and 2022, respectively, and $35.4 million and $32.9 million for the nine months ended March 31, 2023 and 2022, respectively.

The estimated amortization expense for each of the next five fiscal years and ~~2021, respectively.~~thereafter is as follows (in thousands):


2023 (a)	$	12,688
2024	49,761
2025	48,136
2026	46,892
2027	44,240
Thereafter	240,001
Total amortization expense	$	441,718

(a)As of March 31, 2023, estimated amortization expense is for the period from April 1, 2023 to June 30, 2023.

(8) DEBT AND NOTES PAYABLE

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


		March 31, 2022		June 30, 2021			March 31, 2023		June 30, 2022
Credit facility	Credit facility	$	250,000	$	75,000	Credit facility	$	235,000	$	150,000
Notes payable to members, net of discount	Notes payable to members, net of discount	323,156		394,943		Notes payable to members, net of discount	225,814		298,994
Other notes payable	Other notes payable	5,333		8,628		Other notes payable	2,280		5,333
Total debt and notes payable	Total debt and notes payable	578,489		478,571		Total debt and notes payable	463,094		454,327
Less: current portion	Less: current portion	(350,395)		(174,243)		Less: current portion	(335,472)		(250,859)
Total long-term debt and notes payable	Total long-term debt and notes payable	$	228,094	$	304,328	Total long-term debt and notes payable	$	127,622	$	203,468

Credit Facility

PHSI, along with its consolidated subsidiaries, Premier LP and PSCI ~~as Co-Borrowers, Prior Premier GP~~(“Co-Borrowers”), and certain domestic subsidiaries of the Co-Borrowers, as guarantors, entered into an unsecured Amended and Restated Credit ~~Facility,~~Agreement, dated as of ~~November 9, 2018~~December 12, 2022 (the “Credit Facility”). OnThe Credit Facility has a maturity date of December ~~1, 2021,~~12, 2027, subject to up to two one-year extensions at the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in ~~connection with~~ the ~~Subsidiary Reorganization,~~revolving commitments under the Credit Facility, ~~was amended~~together up to ~~remove Prior~~an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increase. The Credit Facility contains an unconditional and irrevocable guaranty of all obligations of Co-Borrowers under the Credit Facility by the current and future guarantors. Premier ~~GP as a guarantor. Premier, Inc.~~ is not a guarantor under the Credit Facility.

~~Outstanding~~The Credit Facility refinanced the Credit Agreement, dated as of November 9, 2018, as amended (the “Prior Loan Agreement”), and the Prior Loan Agreement, which was scheduled to mature on November 9, 2023, was terminated on December 12, 2022. The Prior Loan Agreement included a $1.0 billion unsecured revolving credit facility. At the time of its termination, outstanding borrowings, accrued interest and fees and expenses under the Prior Loan Agreement totaled $331.3 million, which was repaid with cash on hand and borrowings under the Credit Facility.

At the Company’s option, committed loans under the Credit Facility may be in the form of secured overnight financing rate loans (“SOFR Loans”) or base rate loans. SOFR Loans bear interest at Term SOFR plus an adjustment of 0.100% (“Adjusted Term SOFR”) plus the Applicable Rate (defined as a margin based on ~~a variable~~the Consolidated Total Net Leverage Ratio (as defined in the Credit Facility)). Base rate ~~structure with borrowings bearing~~loans bear interest at ~~either London Interbank Offered~~the Base Rate ~~(“LIBOR”) plus an applicable margin ranging from 1.000% to 1.500% or~~(defined as the highest of the prime ~~lending~~rate announced by the administrative agent, the federal funds effective rate plus ~~an applicable margin ranging~~0.500%, the one-month Adjusted Term SOFR plus 1.000%, and 0.000%), plus the Applicable Rate. The Applicable Rate ranges from ~~0.000%~~1.250% to ~~0.500%.~~1.750% for SOFR Loans and 0.250% to 0.750% for base rate loans. At March 31, ~~2022,~~2023, the interest rates for SOFR Loans and base rate loans were 6.152% and 8.250%, respectively. Co-Borrowers are required to pay a commitment fee ranging from 0.125% to 0.225% per annum on the actual daily unused amount of commitments under the Credit Facility. At March 31, 2023, the weighted average interest rate on outstanding borrowings under the Credit Facility was ~~1.303%~~6.195% and the annual commitment fee, based on the actual daily unused amount of commitments under the Credit Facility, was ~~0.100%~~0.125%.

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. The Company was in compliance with all such covenants at March 31, ~~2022.~~2023. 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 ~~$250.0~~$235.0 million in outstanding borrowings under the Credit Facility at March 31, ~~2022~~2023 with ~~$749.9~~$765.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. For the nine months ended March 31, ~~2022,~~2023, the Company borrowed ~~$300.0~~$285.0 million and repaid ~~$125.0~~$135.0 million of outstanding borrowings under the Prior Loan Agreement. For the nine months ended March 31, 2023, the Company borrowed $65.0 million and repaid $130.0 million of outstanding borrowings under the Credit Facility. In April ~~2022,~~2023, the Company repaid ~~$75.0~~$60.0 million of outstanding borrowings under the Credit Facility.

Notes Payable

Notes Payable to Former Limited Partners

At March 31, ~~2022,~~2023, the Company had ~~$323.2~~$225.8 million of notes payable to former LPs, net of discounts on notes payable of ~~$10.6~~$5.2 million, of which ~~$97.3~~$99.2 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. At June 30, ~~2021,~~2022, the Company had ~~$394.9~~$299.0 million of notes payable to former LPs, net of discounts on notes payable of ~~$15.8~~$9.1 million, of which ~~$95.9~~$97.8 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to former LPs were issued in connection with the early termination of the TRA as part of the August 2020 Restructuring. Although the notes payable to former LPs are non-interest bearing, pursuant to GAAP requirements, they were recorded net of imputed interest at a fixed annual rate of 1.8%.

Other

At March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, the Company had ~~$5.3~~$2.3 million and ~~$8.6~~$5.3 million in other notes payable, respectively, of which ~~$3.1~~$1.3 million and ~~$3.3~~$3.1 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 nine months ended March 31, 2022.

For the nine months ended 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 from September 30, 2020 to March 31, 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 March 31, ~~2022,~~2023, there were ~~117,985,944~~118,880,307 shares of the ~~Company's~~Company’s Class A common stock, par value $0.01 per share, outstanding.

~~On August 5, 2021,~~During 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

nine months ended March 31, ~~2022,~~2023, the Company completed its stock repurchase program and purchased approximately 6.4 million shares of Class A common stock at an average price of $38.88 per share for a total purchase price of $250.0 million.

~~The~~ Company paid cash dividends of ~~$0.20~~$0.21 per share on outstanding shares of Class A common stock to stockholders on each of September 15, ~~2021,~~2022, December 15, ~~2021,~~2022 and March 15, ~~2022.~~2023. On April ~~21, 2022,~~27, 2023, the Board of Directors declared a quarterly cash dividend of ~~$0.20~~$0.21 per share, payable on June 15, ~~2022~~2023 to stockholders of record on June 1, ~~2022.~~2023.

~~(11)~~(10) 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 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.

2120

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 March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
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)	$	38,415	$	48,321	$	235,964	$	211,288	Net income attributable to stockholders (a)	$	46,801	$	38,415	$	153,563	$	235,964

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)	$	38,415	$	48,321	$	235,964	$	211,288	Net income attributable to stockholders (a)	$	46,801	$	38,415	$	153,563	$	235,964

Net income attributable to non-controlling interest		—		—		1,643		—
Net loss attributable to non-controlling interest										Net loss 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	Net income for diluted earnings per share	$	46,801	$	38,415	$	153,563	$	237,607

Denominator for earnings per share:	Denominator for earnings per share:									Denominator for earnings per share:
Basic weighted average shares outstanding (b)	Basic weighted average shares outstanding (b)	118,697		122,254		120,957		114,596		Basic weighted average shares outstanding (b)	118,872		118,697		118,668		120,957
Effect of dilutive securities: (c)	Effect of dilutive securities: (c)									Effect of dilutive securities: (c)
Stock options	Stock options	98		325		225		300		Stock options	76		98		103		225
Restricted stock	Restricted stock	465		373		499		336		Restricted stock	528		465		519		499
Performance share awards	Performance share awards	553		164		621		133		Performance share awards	340		553		542		621
Diluted weighted average shares and assumed conversions	Diluted weighted average shares and assumed conversions	119,813		123,116		122,302		115,365		Diluted weighted average shares and assumed conversions	119,816		119,813		119,832		122,302

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:									Earnings per share attributable to stockholders:
Basic	Basic	$	0.32	$	0.40	$	1.95	$	1.84	Basic	$	0.39	$	0.32	$	1.29	$	1.95
Diluted	Diluted	$	0.32	$	0.39	$	1.94	$	1.83	Diluted	$	0.39	$	0.32	$	1.28	$	1.94

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

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Net income $ 39,069 $ 51,444 $ 237,607 $ 253,876
Net income attributable to non-controlling interest (654) (3,123) (1,643) (15,903)
Adjustment of redeemable limited partners’ capital to redemption amount — — — (26,685)
Net income attributable to stockholders $ 38,415 $ 48,321 $ 235,964 $ 211,288


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net income	$	48,649	$	39,069	$	155,982	$	237,607
Net income attributable to non-controlling interest	(1,848)		(654)		(2,419)		(1,643)
Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964

(b)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 and nine months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

(c)The effect of 0.3 million stock options and restricted stock units were excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect for both the three and nine months ended March 31, 2023. Additionally, for the three and nine months ended March 31, 2023, the effect of 0.4 million and 0.3 million performance share awards, respectively, 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 March 31, 2022, the effect of 0.3 million and 0.6 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect.

~~For~~ Additionally, for the nine months ended March 31, 2022, the effect of 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 March 31, 2021, the effect of 0.4 million and 1.5 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect. Additionally, the effect of 0.7 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)~~(11) 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 tax rate of 26% for the nine months ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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 1312 - Income Taxes for further information.

2221

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


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Pre-tax stock-based compensation expense	Pre-tax stock-based compensation expense	$	14,004	$	13,056	$	37,792	$	27,601	Pre-tax stock-based compensation expense	$	6,560	$	14,004	$	16,375	$	37,792
Deferred tax benefit (a)		3,288		2,521		8,013		4,641
Less: deferred tax benefit (a)										Less: deferred tax benefit (a)	2,400		3,288		4,407		8,013
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax	$	10,716	$	10,535	$	29,779	$	22,960	Total stock-based compensation expense, net of tax	$	4,160	$	10,716	$	11,968	$	29,779

(a)For the three and nine months ended March 31, ~~2022,~~2023, the deferred tax benefit was reduced by ~~$0.4~~$0.7 million and ~~$1.8~~$0.2 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the “2013 Equity Incentive Plan”) provides for grants of up to 14.8 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. As of March 31, ~~2022,~~2023, there were ~~4.7~~3.9 million shares available for grant under the 2013 Equity Incentive Plan.

The following table includes information related to restricted stock, performance share awards and stock options for the nine months ended March 31, ~~2022:~~2023:


		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		990,301	$	35.27	1,731,002	$	35.56	2,163,006	$	30.32
Outstanding at June 30, 2022											Outstanding at June 30, 2022	1,201,130	$	35.59	1,578,795	$	33.66	896,354	$	30.38
Granted	Granted	624,256	37.79		651,392	37.22		—	—		Granted	419,519	36.69		823,009	35.34		—	—
Vested/exercised	Vested/exercised	(293,691)	40.19		(588,142)	43.74		(1,239,656)	30.18		Vested/exercised	(257,571)	36.37		(826,743)	36.35		(24,351)	32.84
Forfeited	Forfeited	(139,811)	33.80		(199,985)	32.06		(12,025)	36.54		Forfeited	(72,268)	35.81		(81,350)	33.41		(2,906)	35.65
Outstanding at March 31, 2022		1,181,055	$	35.55	1,594,267	$	33.66	911,325	$	30.44
Outstanding at March 31, 2023											Outstanding at March 31, 2023	1,290,810	$	35.78	1,493,711	$	33.09	869,097	$	30.30

Stock options outstanding and exercisable at March 31, 2022								911,325	$	30.44
Stock options outstanding and exercisable at March 31, 2023											Stock options outstanding and exercisable at March 31, 2023							869,097	$	30.30

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 generally vest in equal annual installments over three years. 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 the Company or 90 days after an employee’s termination with the Company, depending on the termination circumstances. ~~Stock options generally vest in equal annual installments over three years.~~

Unrecognized stock-based compensation expense at March 31, ~~2022~~2023 was as follows (in thousands)~~. At 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	$	~~24,950~~23,381	~~2.1~~1.8 years
Performance share awards	~~23,590~~22,830		~~1.7~~1.8 years
Total unrecognized stock-based compensation expense	$	~~48,540~~46,211	~~1.9~~1.8 years

At March 31, 2023, there was no unrecognized stock-based compensation expense for outstanding stock options.

The aggregate intrinsic value of stock options at March 31, ~~2022~~2023 was as follows (in thousands):


	Intrinsic Value of Stock Options
Outstanding and exercisable	$	~~4,727~~2,325



Exercised during the ~~year~~nine months ended March 31, ~~2022~~2023	$		~~9,716~~78

~~(13)~~(12) INCOME TAXES

Income tax expense for the three months ended March 31, 2023 and 2022 ~~and 2021~~ was ~~$14.7~~$17.2 million and ~~$13.4~~$14.7 million, respectively, which reflects effective tax rates of ~~27%~~26% and ~~21%~~27%, respectively. The change in the effective tax rate for the three months ended March 31, ~~2022~~2023 is primarily ~~attributable~~related to ~~the Subsidiary Reorganization which was completed on December 1, 2021.~~changes in stock-based compensation expense.

Income tax expense for the nine months ended March 31, 2023 and 2022 was $59.8 million and $40.1 million, respectively, which reflects an effective tax ~~rate~~rates of 28% and 14% ~~compared to an income tax benefit of $64.9 million for the nine months ended March 31, 2021 which reflects an effective tax rate of (34)%.~~, respectively. The change in the effective tax rate for the nine months ended March 31, ~~2022~~2023, 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.~~Subsidiary Reorganization. Excluding the ~~one-time deferred tax benefit,~~valuation allowance release, the effective tax rate would have been ~~23%~~25% for the nine months ended March 31, ~~2021.~~

~~During~~2022 with the ~~first quarter of fiscal year 2022, the Company assessed the future realization of its deferred tax assets as a result of its plan~~remaining difference primarily related to ~~complete~~repricing due to the Subsidiary Reorganization ~~by the end~~and state legislative changes.

As 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 $32.3March 31, 2023, total tax liabilities included $52.3 million of deferred tax asset valuation allowance primarily related to finite-lived net operating losses and research and development credit carryforwards. As a result of the Subsidiary Reorganization, the Company has included $10.6 million of tax benefit in its annualized effective tax rate calculation based on the amount that is expected to offset ordinary income during fiscal year 2022. The remaining $21.7 million of valuation allowance expected to be released relates to carryforwards expected to be utilized in future years and is being recognized as a discrete itemwithin other current liabilities in the ~~nine months ended March 31, 2022.~~accompanying Condensed Consolidated Balance Sheets.

~~(14)~~(13) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for both the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 was $2.5 ~~million and $2.6 million, respectively.~~million. Operating lease expense for the nine months ended March 31, 2023 and 2022 ~~and 2021~~ was ~~$7.6~~$7.5 million and ~~$8.2~~$7.6 million, respectively. As of March 31, ~~2022,~~2023, the weighted average remaining lease term was ~~4.1~~3.1 years, and the weighted average discount rate was 4%.

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


		March 31, 2022		June 30, 2021			March 31, 2023		June 30, 2022
2022 (a)		$	3,017	$	11,738
2023		12,131		12,012
2023 (a)						2023 (a)	$	2,406	$	12,131
2024	2024	12,267		12,145		2024	12,381		12,267
2025	2025	12,301		12,177		2025	12,389		12,301
2026	2026	9,005		8,878		2026	9,005		9,005
Thereafter		1,323		1,293
2027						2027	1,324		1,323
Total future minimum lease payments	Total future minimum lease payments	50,044		58,243		Total future minimum lease payments	37,505		47,027
Less: imputed interest	Less: imputed interest	3,885		5,289		Less: imputed interest	2,281		3,445
Total operating lease liabilities (b)	Total operating lease liabilities (b)	$	46,159	$	52,954	Total operating lease liabilities (b)	$	35,224	$	43,582

(a)As of March 31, ~~2022,~~2023, future minimum lease payments are for the period from April 1, ~~2022~~2023 to June 30, ~~2022.~~2023.

(b)As of March 31, ~~2022,~~2023, total operating lease liabilities included ~~$10.5~~$9.8 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. 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)~~

(14) SEGMENTS

The Company delivers its solutions and manages its business through 2two 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, purchased services and direct sourcing activities. The Performance Services segment consists of 3three sub-brands: PINC AITM, the Company’s technology and services platform; Contigo Health®, the Company’s direct-to-employer business; and RemitraTM, the Company’s digital invoicing and payables automation business.

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


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net revenue:	Net revenue:									Net revenue:
Segment net revenue
Supply Chain Services	Supply Chain Services									Supply Chain Services
Net administrative fees	Net administrative fees	$	148,396	$	146,553	$	448,261	$	424,537	Net administrative fees	$	148,441	$	148,396	$	452,870	$	448,261
Other services and support		8,914		8,630		27,165		18,307
Services		157,310		155,183		475,426		442,844
Software licenses, other services and support										Software licenses, other services and support	11,032		8,914		35,963		27,165
Services and software licenses										Services and software licenses	159,473		157,310		488,833		475,426
Products	Products	93,629		215,995		323,825		511,080		Products	57,212		93,629		183,066		323,825
Total Supply Chain Services (a)	Total Supply Chain Services (a)	250,939		371,178		799,251		953,924		Total Supply Chain Services (a)	216,685		250,939		671,899		799,251
Performance Services (a)		96,903		98,745		292,962		285,713
Performance Services										Performance Services
Software licenses, other services and support										Software licenses, other services and support
SaaS-based products subscriptions										SaaS-based products subscriptions	44,685		49,347		142,097		144,357
Consulting services										Consulting services	22,087		16,342		57,963		46,440
Software licenses										Software licenses	14,400		12,169		51,197		44,033
Other(b)										Other(b)	24,384		19,045		72,603		58,132
Total Performance Services (a)										Total Performance Services (a)	105,556		96,903		323,860		292,962
Total segment net revenue	Total segment net revenue	347,842		469,923		1,092,213		1,239,637		Total segment net revenue	322,241		347,842		995,759		1,092,213
Eliminations (a)	Eliminations (a)	(9)		—		(18)		—		Eliminations (a)	(9)		(9)		(28)		(18)
Net revenue	Net revenue	$	347,833	$	469,923	$	1,092,195	$	1,239,637	Net revenue	$	322,232	$	347,833	$	995,731	$	1,092,195

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

(b)Includes revenue from Contigo Health, Remitra and other PINC AI revenue.

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


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Depreciation and amortization expense (a):	Depreciation and amortization expense (a):									Depreciation and amortization expense (a):
Supply Chain Services	Supply Chain Services	$	14,114	$	9,389	$	40,710	$	27,608	Supply Chain Services	$	13,002	$	14,114	$	40,862	$	40,710
Performance Services	Performance Services	16,163		18,196		48,349		55,763		Performance Services	17,189		16,163		53,407		48,349
Corporate	Corporate	2,282		2,152		6,705		6,397		Corporate	2,000		2,282		6,299		6,705
Total depreciation and amortization expense	Total depreciation and amortization expense	$	32,559	$	29,737	$	95,764	$	89,768	Total depreciation and amortization expense	$	32,191	$	32,559	$	100,568	$	95,764

Capital expenditures:	Capital expenditures:									Capital expenditures:
Supply Chain Services	Supply Chain Services	$	6,740	$	2,486	$	22,212	$	8,061	Supply Chain Services	$	6,571	$	6,740	$	19,586	$	22,212
Performance Services	Performance Services	10,926		18,835		34,312		54,118		Performance Services	13,311		10,926		38,576		34,312
Corporate	Corporate	735		726		4,537		4,732		Corporate	166		735		302		4,537
Total capital expenditures	Total capital expenditures	$	18,401	$	22,047	$	61,061	$	66,911	Total capital expenditures	$	20,048	$	18,401	$	58,464	$	61,061


		March 31, 2022		June 30, 2021			March 31, 2023		June 30, 2022
Total assets:	Total assets:					Total assets:
Supply Chain Services	Supply Chain Services	$	1,507,056	$	1,550,300	Supply Chain Services	$	1,355,552	$	1,406,108
Performance Services	Performance Services	1,065,974		1,043,608		Performance Services	1,261,241		1,054,687
Corporate	Corporate	942,431		928,939		Corporate	896,047		896,336
Total assets	Total assets	3,515,461		3,522,847		Total assets	3,512,840		3,357,131
Eliminations (b)	Eliminations (b)	(2)		51		Eliminations (b)	(323)		(4)
Total assets, net	Total assets, net	$	3,515,459	$	3,522,898	Total assets, net	$	3,512,517	$	3,357,127

(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,~~acquisition-related expense 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~~Management's Discussion and Analysis of Financial Condition and Results of Operations.

2625

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


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Income before income taxes	Income before income taxes	$	53,763	$	64,888	$	277,701	$	188,996	Income before income taxes	$	65,881	$	53,763	$	215,748	$	277,701
Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	(3,991)		(5,524)		(17,165)		(16,023)		Equity in net income of unconsolidated affiliates (a)	(4,630)		(3,991)		(14,547)		(17,165)
Interest and investment loss, net		2,804		3,225		8,465		8,742
Loss (gain) on FFF Put and Call Rights (b)		—		5,195		(64,110)		21,621
Other (income) expense		4,248		(1,594)		2,176		(10,167)
Interest expense, net										Interest expense, net	4,269		2,804		11,759		8,465
Gain on FFF Put and Call Rights (b)										Gain on FFF Put and Call Rights (b)	—		—		—		(64,110)
Other (income) expense, net										Other (income) expense, net	(2,954)		4,248		(3,720)		2,176
Operating income	Operating income	56,824		66,190		207,067		193,169		Operating income	62,566		56,824		209,240		207,067
Depreciation and amortization	Depreciation and amortization	21,408		19,337		62,874		55,904		Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,151		10,400		32,890		33,864		Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation (c)	Stock-based compensation (c)	14,149		13,180		38,229		27,970		Stock-based compensation (c)	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889		Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses										Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Equity in net income of unconsolidated affiliates (a)	Equity in net income of unconsolidated affiliates (a)	3,991		5,524		17,165		16,023		Equity in net income of unconsolidated affiliates (a)	4,630		3,991		14,547		17,165
Deferred compensation plan (expense) income (d)		(3,994)		1,521		(1,923)		9,231
Other expense, net		5,544		929		9,323		5,718
Deferred compensation plan expense (income) (d)										Deferred compensation plan expense (income) (d)	2,859		(3,994)		3,148		(1,923)
Other reconciling items, net										Other reconciling items, net	95		4		260		9
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768	Non-GAAP Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

Segment Non-GAAP Adjusted EBITDA:	Segment Non-GAAP Adjusted EBITDA:									Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (e)	Supply Chain Services (e)	$	118,034	$	117,949	$	381,586	$	339,538	Supply Chain Services (e)	$	122,040	$	118,034	$	371,228	$	381,586
Performance Services (e)	Performance Services (e)	26,552		35,950		89,277		109,675		Performance Services (e)	25,018		26,552		87,587		89,277
Corporate	Corporate	(32,398)		(32,692)		(94,956)		(92,445)		Corporate	(29,772)		(32,398)		(91,613)		(94,956)
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	112,188	$	121,207	$	375,907	$	356,768	Non-GAAP Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

(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 $0.1 million for both the three months ended March 31, 2023 and 2022 and ~~2021~~$0.5 million and $0.4 million for ~~both~~ the nine months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

(d)Represents realized and unrealized gains and ~~losses~~(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~~2022 (the ~~“2021~~“2022 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).

Business Overview

Our Business

Premier, Inc. (“~~Premier”,~~Premier,” the ~~“Company”,~~“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, employers, product suppliers, service providers, payers and other healthcare providers and organizations

with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial,

operational and value-based care software-as-a-service (“SaaS”) as well as ~~licensed-based~~ clinical ~~analytics products,~~and enterprise analytics licenses, consulting services, performance improvement collaborative programs, third-party administrator services, access to our centers of excellence program and cost containment and wrap network and digital invoicing and payment automation processes for healthcare providers and ~~vendors and~~suppliers. We also 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 March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net revenue	Net revenue	$	347,833	$	469,923	$	1,092,195	$	1,239,637	Net revenue	$	322,232	$	347,833	$	995,731	$	1,092,195
Net income	Net income	39,069		51,444		237,607		253,876		Net income	48,649		39,069		155,982		237,607
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	112,188		121,207		375,907		356,768		Non-GAAP Adjusted EBITDA	117,286		112,188		367,202		375,907

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~~clinical intelligence, margin improvement and ~~population health management~~value-based care through two business segments: Supply Chain Services and Performance Services.

Segment net revenue for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 was as follows (in thousands):


		Three Months Ended March 31,				Change				% of Net Revenue					Three Months Ended March 31,								% of Net Revenue
Net revenue:	Net revenue:	2022		2021		2022		2021		2022		2021		Net revenue:	2023		2022		Change				2023		2022
Supply Chain Services	Supply Chain Services	$	250,939	$	371,178	$	(120,239)	(32)	%	72	%	79	%	Supply Chain Services	$	216,685	$	250,939	$	(34,254)	(14)	%	67	%	72	%
Performance Services	Performance Services	96,903		98,745		(1,842)		(2)	%	28	%	21	%	Performance Services	105,556		96,903		8,653		9	%	33	%	28	%
Net revenue		$	347,842	$	469,923	$	(122,081)	(26)	%	100	%	100	%
Segment net revenue														Segment net revenue	$	322,241	$	347,842	$	(25,601)	(7)	%	100	%	100	%

Segment net revenue for the nine months ended March 31, ~~2022~~2023 and ~~2021~~2022 was as follows (in thousands):


		Nine Months Ended March 31,				Change				% of Net Revenue					Nine Months Ended March 31,								% of Net Revenue
Net revenue:	Net revenue:	2022		2021		2022		2021		2022		2021		Net revenue:	2023		2022		Change				2023		2022
Supply Chain Services	Supply Chain Services	$	799,251	$	953,924	$	(154,673)	(16)	%	73	%	77	%	Supply Chain Services	$	671,899	$	799,251	$	(127,352)	(16)	%	67	%	73	%
Performance Services	Performance Services	292,962		285,713		7,249		3	%	27	%	23	%	Performance Services	323,860		292,962		30,898		11	%	33	%	27	%
Net revenue		$	1,092,213	$	1,239,637	$	(147,424)	(12)	%	100	%	100	%
Segment net revenue														Segment net revenue	$	995,759	$	1,092,213	$	(96,454)	(9)	%	100	%	100	%

Our Supply Chain Services segment includes one of the largest healthcare group purchasing organization (“GPO”) programs in the United States, serving acute, non-acute and non-healthcare sites and providing supply chain co-management, purchased services 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~~goods and services purchased by our members and other customers, service fees from supply chain co-management, subscription fees from purchased services and ~~through~~ product sales in connection with our direct sourcing activities.

Our Performance Services segment consists of three sub-brands: PINC AITM, 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 and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, life sciences and ~~payer~~payor markets; Contigo Health®, our direct-to-employer business which provides ~~third party~~third-party administrator services and management of health benefit programs that

allow employers to contract directly with healthcare ~~providers;~~providers as well as partner with the healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and RemitraTM, our digital invoicing and payables automation business which provides financial support 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 and Divestitures

Acquisition of ~~Invoice Delivery Services, LP~~TRPN Direct Pay, Inc. and Devon Health, Inc. Assets

On ~~March 1, 2021,~~October 13, 2022, we acquired, through our ~~indirect, wholly owned~~consolidated subsidiary, ~~Premier IDS,~~Contigo Health, LLC ~~substantially all the~~(“Contigo Health”), certain assets and assumed certain liabilities of ~~Invoice Delivery Services, LP (“IDS”~~TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”) for an adjusted purchase price of ~~$80.7~~$177.5 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) and cash on hand, of which $17.8 million was placed in escrow to satisfy indemnification obligations of TRPN to Contigo Health and its affiliates and other parties related thereto under the purchase agreement governing the transaction (“TRPN acquisition”). ~~IDS has been~~TRPN is being integrated within Premier under ~~the brand name Remitra~~TM Contigo Health and is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

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~~2022 Annual Report.

Trends in the U.S. healthcare market as well as the broader U.S. and global economy 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 inflation on the broader economy, the significant increase to input costs in healthcare, including the rising cost of labor, and 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~~legislation. Implementation of ~~a change of party control in Congress. Actions related to the ACA~~healthcare legislation 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,~~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.

Impact of Inflation

The U.S. economy is experiencing the highest rates of inflation since the 1980s. Through March 31, 2023, we have continued to limit the impact of inflation on our members, and maintain significantly lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, rising interest rates and inflation continue to pressure supplier pricing as well as apply significant pressure on our margin.

We continue to evaluate the contributing factors, specifically transportation and freight, raw materials, and labor, that led to temporary adjustments to selling prices. We have begun to see logistics costs normalize to pre-pandemic levels as well as some reductions in the costs of specific raw materials; however, the cost of labor remains high. We are continuously working to lower these price increases as market conditions change. The impact of inflation to our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio, as well as price reductions in certain product categories such as pharmaceuticals.

Furthermore, as the Federal Reserve seeks to curb rising inflation, market interest rates have steadily risen, and may continue to rise, increasing the cost of borrowing under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.

Russia-Ukraine War

In February 2022, Russia invaded Ukraine which resulted in sanctions, export controls and other measures imposed against Russia, Belarus and specific areas within Ukraine. As the war endures, it continues to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs and global supply-chain disruption. We continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and prepare for any implications that the war may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See Item 1A. “Risk Factors” in our 2022 Annual Report.

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:

•Overall economic and capital markets decline. The impact of the COVID-19 pandemic and variants thereof and associated supply chain disruptions could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for many 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.

•Changes in the demand for our products and ~~services~~services. . We experienced and may continue to experience demand uncertainty from both material increases and decreases in demand and pricing for our products and services as ~~a result~~our members continue to recover from the impact of the COVID-19 ~~pandemic.~~pandemic and subsequent financial challenges. 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. In the second half of fiscal 2022 through the current period of fiscal 2023, demand and pricing for PPE, drugs and other supplies decreased due to members’ excess inventory levels resulting in a decline in revenue relative to the previous two fiscal years. Patients, hospitals and other medical facilities ~~have deferred and~~may continue to defer some elective procedures and routine medical visits ~~during the crisis~~ due to ongoing and continuing ~~volatility~~uncertainty from COVID-19 outbreaks or variants thereof, or as ~~the~~a result of restrictive government orders or advisories. ~~This created a material decline in the~~While demand for many supplies and services not related to COVID-19 ~~during 2020, 2021~~may continue to decline in fiscal 2023, rolling shortages of products and drugs needed for routine procedures, such as contrast media and flush syringes, could have an impact on demand for hospital services and the ~~first half~~financial conditions of ~~2022,~~providers, particularly those forced to procure such products through resellers.

•Increased labor costs. Labor shortages and ~~such lower demand~~the resulting increases to the cost of labor are an ongoing challenge to the healthcare providers we serve. Limited availability of staff resources and rolling staff shortages may continue ~~through~~to impair the ~~remainder~~ability of ~~fiscal 2022~~existing staff to manage product and ~~beyond if COVID-19 vaccine protection wanes due to COVID-19 variants. In addition, as a result of~~service procurement. While our ~~members’ focus on managing the effects of COVID-19 on patients~~non-acute and ~~their~~non-healthcare businesses, we continue to experience constraints in demand for our consulting and other performance service engagements. Furthermore, 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~~customers, experienced a rebound in fiscal 2022, the recovery may be hampered by future COVID-19 outbreaks or ~~operated on a limited or reduced basis. These facilities have 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~~variants, 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.

•Limited access to our members’ facilities that impacts our ability to fulfill our contractual requirements. ~~Our member hospitals and non-acute care sites~~While some of our hospital customers have ~~experienced, and continue~~allowed increased access to ~~experience, reduced or limited access for~~their facilities by non-patients, including our field teams, consultants and other professionals, ~~and~~there are many that still are not permitting onsite access outside of their staff. Hospital imposed travel restrictions ~~have impacted our employees’~~are also impacting some customers’ ability to ~~travel~~participate in face-to-face events with us, such as committee meetings and conferences, which limits our ability to ~~our members’ facilities and our performance under our existing contracts.~~build on customer relationships. 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 negatively affect ~~our~~the 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,~~ rapidly escalating shipping costs, ~~and~~raw material availability, material logistical delays due to port ~~congestion. Border closings~~congestion and general labor constraints. Stay-at-home orders and other restrictions in response to the COVID-19 pandemic, particularly ~~regarding~~in China, have impacted and continue to impact our access to products for our members. Staffing or personnel shortages due to ~~shelter-in-place~~stay-at-home 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 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~~environment.~~. In~~ On April 10, 2023, the Biden administration signed legislation to end the national emergency for COVID-19. Additional federal, state and local governments’ rules, regulations, orders and advisories, which were issued 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.~~also expected to expire. 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~~2022 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~~2023 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~~2022 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~~software licenses, other services and support revenue, and 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 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 our Supply Chain Services segment.

Supply Chain Services

Supply Chain Services revenue ~~consists of GPO~~ is comprised of:

•net administrative fees ~~(gross~~revenue which consists of gross administrative fees received from suppliers, reduced by the amount of revenue share paid to ~~members),~~members;

•software licenses, other services and support revenue which consist of supply chain co-management and purchased services revenue; and ~~direct sourcing revenue.~~

•products revenue which consists of inventory sales.

The success of our Supply Chain Services revenue streams ~~are~~is 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, 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~~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:~~is comprised of the following software licenses, other services and support revenue:

•~~health care~~healthcare information technology license and SaaS-based clinical intelligence, margin improvement and value-based care products subscriptions, license fees, professional fees for consulting services, performance improvement collaborative and other service subscriptions and ~~professional~~insurance services management fees ~~for consulting services~~and commissions from endorsed commercial insurance programs under our PINC AI technology and services platform;

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

•third-party administrator fees, fees from the centers of excellence program, and cost containment and wrap network fees pursuant to the TRPN acquisition for ~~our~~ Contigo ~~Health direct to employer business;~~Health; and

•~~customer~~ fees from healthcare product suppliers and service providers for ~~our Remitra digital invoicing and payables business.~~Remitra.

Our Performance Services growth will depend upon the expansion of our PINC AI technology and advisory 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 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 revenue due to the conversion to an enterprise analytics license, ~~and~~ expansion into new ~~markets.~~markets and expansion of our Contigo Health and Remitra businesses to new and existing members.

Cost of Revenue

Cost of revenue consists of cost of ~~service~~services and software licenses revenue and cost of products revenue.

Cost of ~~service~~services and software licenses revenue includes expenses related to employees, ~~(including~~consisting of compensation and ~~benefits)~~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 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 including costs related to implementing SaaS informatics tools. Cost of ~~service~~services and software licenses 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 products revenue consists of purchase and shipment costs for direct sourced medical and commodity ~~products. Our cost of~~ products ~~revenue~~and 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~~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 (“SG&A”) expenses, research and development expenses and amortization of purchased intangible assets.

~~Selling, general and administrative~~SG&A 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~~SG&A expenses primarily consist of ~~compensation~~compensation- and ~~benefits related costs,~~benefits-related costs; travel-related ~~expenses,~~expenses; business development expenses, including costs for business acquisition ~~opportunities,~~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”). At March 31, 2023, our investment in FFF Enterprises, Inc. (“FFF”) was no longer accounted for under the equity method of accounting as a result of the March 3, 2023 amendment. Prior to the March 3, 2023 amendment, our investment in FFF was accounted for as an equity method investment and a pro rata portion of the equity in net income was included in other income, net (see Note 4 - Investments). Other ~~(expense)~~ income, net, also includes, but is not limited to, the fiscal ~~2021 change in the fair value of the FFF Put and Call Rights and the fiscal~~year 2022 gain recognized 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 assets or held-to-maturity investments.

Income Tax Expense ~~(Benefit)~~

~~Adjusted Net~~See Note 12 - Income ~~a Non-GAAP financial measure as defined below in “Our Use~~Taxes for discussion 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 24% and 22% for the nine months ended March 31, 2022 and 2021, respectively. The change in the tax rate used to compute Adjusted Net Income is due to our Subsidiary Reorganization resulting in the release of $32.3 million of valuation allowance of our deferred tax asset in the fiscal year ending June 30, 2022.

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

During the first quarter of fiscal 2022, we made substantial progress on the Subsidiary Reorganization and as we expected to complete it prior to December 31, 2021, we released the valuation allowance. On December 1, 2021, we completed the Subsidiary Reorganization. On March 31, 2022, we reassessed the portion of the valuation allowance benefited through fiscal 2022 ordinary income and the portion included as a discrete item. Of the $32.3 million valuation allowance expected to be released, $10.6 million is included in the estimated annual effective tax rate calculation to the extent such carryforwards are projected to offset fiscal 2022 ordinary income. The remaining $21.7 million of valuation allowance expected to be released has been included as a discrete item in the nine months ended March 31, 2022.expense.

Net Income Attributable to Non-Controlling Interest

We recognize net income attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method ~~investments.~~investments (see Note 4 - Investments). At March 31, ~~2022,~~2023, we recognized net income attributable to non-controlling ~~interest for~~interests held by member health systems or their affiliates in the consolidated subsidiaries holding our equity method investments, including but not limited to the 74%~~, 79%~~ and 85% interest held in PRAM Holdings, LLC (“PRAM”)~~, DePre Holdings, LLC (“DePre”)~~ and ExPre Holdings, LLC (“ExPre”), ~~respectively, by~~respectively. In partnership with our member health systems or their ~~affiliates. PRAM, DePre and ExPre~~affiliates, these investments 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 March 31, ~~2022,~~2023, we owned ~~94%~~93% of the equity interest in Contigo Health and recognized net income attributable to non-controlling interest for the 4%7% of equity ~~held by an affiliate of a member health 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~~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-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~~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-related expenses, (v) assuming, for periods prior to our August 2020 Restructuring, 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 1110 - 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,~~(i) 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 (ii) 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-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-related expenses), and eliminate the variability of non-controlling interest that ~~results~~primarily resulted 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 in connection with our August 2020 Restructuring and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow allows us to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.

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

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

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

We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net

Income, Adjusted Earnings per Share and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

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

Income tax expense on adjusted income

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 group for tax purposes with all of our subsidiaries’ activities included. The tax rate used to compute the Adjusted Net Income was 26% for the three and nine months ended March 31, 2023 and 24% for the three and nine months ended March 31, 2022, respectively. The 24% tax rate in fiscal year 2022 was primarily due to the benefit from the release of $32.3 million of valuation allowance of our deferred tax asset as a result of the Subsidiary Reorganization.

Of the $32.3 million valuation allowance released in fiscal year 2022, $10.6 million was included in the estimated annual effective tax rate calculation to the extent such carryforwards were projected to offset fiscal year 2022 ordinary income. The remaining $21.7 million of valuation allowance released was included as a discrete item in the nine months ended March 31, 2022.

Stock-based compensation

In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million for both the three months ended March 31, 2023 and 2022 and ~~2021~~$0.5 million and $0.4 million for ~~both~~ the nine months ended

March 31, 2023 and 2022, ~~and 2021~~respectively (see Note 1211 - Stock-Based Compensation to the accompanying condensed consolidated financial statements).

Acquisition- and disposition-related expenses

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

Strategic initiative and financial restructuring-related expenses

Strategic initiative and financial restructuring-related expenses include legal, accounting and other expenses related to strategic initiative and financial restructuring-related activities.

Gain ~~on or loss~~ on FFF Put and Call Rights

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

Other ~~expense~~reconciling items

Other ~~expense includes,~~reconciling items include, but isare 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.~~assets and imputed interest on notes payable to former limited partners.

3534

Results of Operations

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


		Three Months Ended March 31,						Nine Months Ended March 31,							Three Months Ended March 31,						Nine Months Ended March 31,
		2022			2021			2022			2021				2023			2022			2023			2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
Net revenue:	Net revenue:													Net revenue:
Net administrative fees	Net administrative fees	$	148,396	43%	$	146,553	31%	$	448,261	41%	$	424,537	34%	Net administrative fees	$	148,441	46%	$	148,396	43%	$	452,870	45%	$	448,261	41%
Other services and support		105,808		30%	107,375		23%	320,109		29%	304,020		25%
Services		254,204		73%	253,928		54%	768,370		70%	728,557		59%
Software licenses, other services and support														Software licenses, other services and support	116,579		36%	105,808		30%	359,795		36%	320,109		30%
Services and software licenses														Services and software licenses	265,020		82%	254,204		73%	812,665		82%	768,370		70%
Products	Products	93,629		27%	215,995		46%	323,825		30%	511,080		41%	Products	57,212		18%	93,629		27%	183,066		18%	323,825		30%
Net revenue	Net revenue	347,833		100%	469,923		100%	1,092,195		100%	1,239,637		100%	Net revenue	322,232		100%	347,833		100%	995,731		100%	1,092,195		100%
Cost of revenue:	Cost of revenue:													Cost of revenue:
Services		46,735		13%	46,980		10%	136,326		12%	125,852		10%
Services and software licenses														Services and software licenses	54,149		17%	46,735		13%	163,428		16%	136,326		12%
Products	Products	88,621		25%	211,136		45%	294,916		27%	496,286		40%	Products	49,013		15%	88,621		25%	168,507		17%	294,916		27%
Cost of revenue	Cost of revenue	135,356		39%	258,116		55%	431,242		39%	622,138		50%	Cost of revenue	103,162		32%	135,356		39%	331,935		33%	431,242		39%
Gross profit	Gross profit	212,477		61%	211,807		45%	660,953		61%	617,499		50%	Gross profit	219,070		68%	212,477		61%	663,796		67%	660,953		61%
Operating expenses	Operating expenses	155,653		45%	145,617		31%	453,886		42%	424,330		34%	Operating expenses	156,504		49%	155,653		45%	454,556		46%	453,886		42%
Operating income	Operating income	56,824		16%	66,190		14%	207,067		19%	193,169		16%	Operating income	62,566		19%	56,824		16%	209,240		21%	207,067		19%
Other (expense) income, net		(3,061)		(1)%	(1,302)		—%	70,634		6%	(4,173)		—%
Other income (expense), net														Other income (expense), net	3,315		1%	(3,061)		(1)%	6,508		1%	70,634		6%
Income before income taxes	Income before income taxes	53,763		15%	64,888		14%	277,701		25%	188,996		15%	Income before income taxes	65,881		20%	53,763		15%	215,748		22%	277,701		25%
Income tax expense (benefit)		14,694		4%	13,444		3%	40,094		4%	(64,880)		(5)%
Income tax expense														Income tax expense	17,232		5%	14,694		4%	59,766		6%	40,094		4%
Net income	Net income	39,069		11%	51,444		11%	237,607		22%	253,876		20%	Net income	48,649		15%	39,069		11%	155,982		16%	237,607		22%
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	(654)		��%	(3,123)		(1)%	(1,643)		—%	(15,903)		(1)%	Net income attributable to non-controlling interest	(1,848)		(1)%	(654)		—%	(2,419)		—%	(1,643)		—%
Adjustment of redeemable limited partners’ capital to redemption amount		—		—%	—		—%	—		—%	(26,685)		(2)%
Net income attributable to stockholders	Net income attributable to stockholders	$	38,415	nm	$	48,321	nm	$	235,964	nm	$	211,288	nm	Net income attributable to stockholders	$	46,801	15%	$	38,415	11%	$	153,563	15%	$	235,964	22%

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:													Earnings per share attributable to stockholders:
Basic	Basic	$	0.32		$	0.40		$	1.95		$	1.84		Basic	$	0.39		$	0.32		$	1.29		$	1.95
Diluted	Diluted	$	0.32		$	0.39		$	1.94		$	1.83		Diluted	$	0.39		$	0.32		$	1.28		$	1.94

~~nm = Not meaningful~~

~~The~~For the following ~~table provides certain~~ Non-GAAP financial measures ~~for~~and reconciliations of our performance derived in accordance with GAAP to the ~~periods presented (in thousands, except per share data). Refer~~Non-GAAP financial measures, 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.~~EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share.

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Certain Non-GAAP Financial Data: Amount % of Net Revenue Amount % of Net Revenue Amount % of Net Revenue Amount % of Net Revenue
Adjusted EBITDA $ 112,188 32% $ 121,207 26% $ 375,907 34% $ 356,768 29%
Non-GAAP Adjusted Net Income 68,098 20% 78,535 17% 235,444 22% 232,023 19%
Non-GAAP Adjusted Earnings Per Share 0.57 nm 0.64 nm 1.93 nm 1.89 nm
The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data):


	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022
Certain Non-GAAP Financial Data:	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
Adjusted EBITDA	$	117,286	36%	$	112,188	32%	$	367,202	37%	$	375,907	34%
Non-GAAP Adjusted Net Income	69,488		22%	68,098		20%	217,650		22%	235,444		22%
Non-GAAP Adjusted Earnings Per Share	0.58		nm	0.57		nm	1.82		nm	1.93		nm

nm = Not meaningful

3635

The following tables provide the reconciliation of net income to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (in thousands)~~. Refer~~:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net income	$	48,649	$	39,069	$	155,982	$	237,607
Interest expense, net	4,269		2,804		11,759		8,465
Income tax expense	17,232		14,694		59,766		40,094
Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
EBITDA	102,341		89,126		328,075		381,930
Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other reconciling items, net (a)	—		258		(312)		262
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

Income before income taxes	$	65,881	$	53,763	$	215,748	$	277,701
Equity in net income of unconsolidated affiliates	(4,630)		(3,991)		(14,547)		(17,165)
Interest expense, net	4,269		2,804		11,759		8,465
Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other (income) expense, net	(2,954)		4,248		(3,720)		2,176
Operating income	62,566		56,824		209,240		207,067
Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Equity in net income of unconsolidated affiliates	4,630		3,991		14,547		17,165
Deferred compensation plan expense (income)	2,859		(3,994)		3,148		(1,923)
Other reconciling items, net (b)	95		4		260		9
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Segment Adjusted EBITDA:
Supply Chain Services	$	122,040	$	118,034	$	371,228	$	381,586
Performance Services	25,018		26,552		87,587		89,277
Corporate	(29,772)		(32,398)		(91,613)		(94,956)
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

(a)Other reconciling items, net is primarily attributable to ~~“Our Use~~(gain) loss on disposal of ~~Non-GAAP Financial Measures” for further information regarding~~long-lived assets.

(b)Other reconciling items, ~~excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.~~net is attributable to other miscellaneous expenses.

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Net income $ 39,069 $ 51,444 $ 237,607 $ 253,876
Interest expense, net 2,804 3,225 8,465 8,742
Income tax expense (benefit) 14,694 13,444 40,094 (64,880)
Depreciation and amortization 21,408 19,337 62,874 55,904
Amortization of purchased intangible assets 11,151 10,400 32,890 33,864
EBITDA 89,126 97,850 381,930 287,506
Stock-based compensation 14,149 13,180 38,229 27,970
Acquisition- and disposition-related expenses 3,115 4,126 10,282 14,889
Loss (gain) on FFF Put and Call Rights — 5,195 (64,110) 21,621
Other expense, net 5,798 856 9,576 4,782
Adjusted EBITDA $ 112,188 $ 121,207 $ 375,907 $ 356,768
Income before income taxes $ 53,763 $ 64,888 $ 277,701 $ 188,996
Equity in net income of unconsolidated affiliates (3,991) (5,524) (17,165) (16,023)
Interest expense, net 2,804 3,225 8,465 8,742
Loss (gain) on FFF Put and Call Rights — 5,195 (64,110) 21,621
Other expense (income), net 4,248 (1,594) 2,176 (10,167)
Operating income 56,824 66,190 207,067 193,169
Depreciation and amortization 21,408 19,337 62,874 55,904
Amortization of purchased intangible assets 11,151 10,400 32,890 33,864
Stock-based compensation 14,149 13,180 38,229 27,970
Acquisition- and disposition-related expenses 3,115 4,126 10,282 14,889
Equity in net income of unconsolidated affiliates 3,991 5,524 17,165 16,023
Deferred compensation plan (expense) income (3,994) 1,521 (1,923) 9,231
Other expense, net 5,544 929 9,323 5,718
Adjusted EBITDA $ 112,188 $ 121,207 $ 375,907 $ 356,768

Three Months Ended March 31, Nine Months Ended March 31,
2022 2021 2022 2021
Segment Adjusted EBITDA:
Supply Chain Services $ 118,034 $ 117,949 $ 381,586 $ 339,538
Performance Services 26,552 35,950 89,277 109,675
Corporate (32,398) (32,692) (94,956) (92,445)
Adjusted EBITDA $ 112,188 $ 121,207 $ 375,907 $ 356,768

3736

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


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income attributable to stockholders	Net income attributable to stockholders	$	38,415	$	48,321	$	235,964	$	211,288	Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964
Adjustment of redeemable limited partners’ capital to redemption amount		—		—		—		26,685
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	654		3,123		1,643		15,903		Net income attributable to non-controlling interest	1,848		654		2,419		1,643
Income tax expense (benefit)		14,694		13,444		40,094		(64,880)
Income tax expense										Income tax expense	17,232		14,694		59,766		40,094
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,151		10,400		32,890		33,864		Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	Stock-based compensation	14,149		13,180		38,229		27,970		Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	3,115		4,126		10,282		14,889		Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Loss (gain) on FFF Put and Call Rights		—		5,195		(64,110)		21,621
Other expense, net		7,425		2,897		14,803		10,126
Strategic initiative and financial restructuring-related expenses										Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Gain on FFF Put and Call Rights										Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other reconciling items, net (a)										Other reconciling items, net (a)	1,161		1,885		3,520		5,489
Non-GAAP adjusted income before income taxes	Non-GAAP adjusted income before income taxes	89,603		100,686		309,795		297,466		Non-GAAP adjusted income before income taxes	93,903		89,603		294,122		309,795
Income tax expense on adjusted income before income taxes ~~(a)~~(b)	Income tax expense on adjusted income before income taxes ~~(a)~~(b)	21,505		22,151		74,351		65,443		Income tax expense on adjusted income before income taxes ~~(a)~~(b)	24,415		21,505		76,472		74,351
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	$	68,098	$	78,535	$	235,444	$	232,023	Non-GAAP Adjusted Net Income	$	69,488	$	68,098	$	217,650	$	235,444

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	118,697		122,254		120,957		114,596		Basic weighted average shares outstanding	118,872		118,697		118,668		120,957
Dilutive securities	Dilutive securities	1,116		862		1,345		769		Dilutive securities	944		1,116		1,164		1,345

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	119,813		123,116		122,302		115,365		Weighted average shares outstanding - diluted	119,816		119,813		119,832		122,302

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

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets and imputed interest on notes payable to former limited partners.

(b)Reflects income tax expense at an estimated effective income tax rate of 26% of non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2023 and 24% of non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, ~~2022 and 22% of non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2021.~~2022.

~~(b)~~For the nine months ended March 31, 2021, the effect of 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 7.5 million Class B common shares was included in the non-GAAP diluted weighted average shares outstanding.

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.~~presented:


		Three Months Ended March 31,				Nine Months Ended March 31,					Three Months Ended March 31,				Nine Months Ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Earnings per share attributable to stockholders		$	0.32	$	0.40	$	1.95	$	1.84
Adjustment of redeemable limited partners’ capital to redemption amount		—		—		—		0.23
Basic earnings per share attributable to stockholders										Basic earnings per share attributable to stockholders	$	0.39	$	0.32	$	1.29	$	1.95
Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	0.01		0.03		0.01		0.14		Net income attributable to non-controlling interest	0.02		0.01		0.02		0.01
Income tax expense (benefit)		0.12		0.11		0.33		(0.56)
Income tax expense										Income tax expense	0.14		0.12		0.50		0.33
Amortization of purchased intangible assets	Amortization of purchased intangible assets	0.09		0.09		0.27		0.30		Amortization of purchased intangible assets	0.10		0.09		0.30		0.27
Stock-based compensation	Stock-based compensation	0.12		0.11		0.32		0.24		Stock-based compensation	0.06		0.12		0.14		0.32
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	0.03		0.03		0.09		0.13		Acquisition- and disposition-related expenses	0.05		0.03		0.10		0.09
Loss (gain) on FFF Put and Call Rights		—		0.04		(0.53)		0.19
Other expense, net		0.06		0.02		0.12		0.09
Strategic initiative and financial restructuring-related expenses										Strategic initiative and financial restructuring-related expenses	0.02		0.05		0.09		0.08
Gain on FFF Put and Call Rights										Gain on FFF Put and Call Rights	—		—		—		(0.53)
Other reconciling items, net (a)										Other reconciling items, net (a)	0.01		0.02		0.04		0.04
Impact of corporation taxes ~~(a)~~(b)	Impact of corporation taxes ~~(a)~~(b)	(0.18)		(0.19)		(0.61)		(0.57)		Impact of corporation taxes ~~(a)~~(b)	(0.21)		(0.18)		(0.64)		(0.61)
Impact of dilutive shares ~~(b)~~	Impact of dilutive shares ~~(b)~~	—		—		(0.02)		(0.14)		Impact of dilutive shares ~~(b)~~	—		(0.01)		(0.02)		(0.02)
Non-GAAP Adjusted Earnings Per Share		$	0.57	$	0.64	$	1.93	$	1.89
Non-GAAP Adjusted Earnings per Share										Non-GAAP Adjusted Earnings per Share	$	0.58	$	0.57	$	1.82	$	1.93

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets and imputed interest on notes payable to former limited partners.

~~(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 nine months ended March 31, 2021 for Class A common stock.

Consolidated Results - Comparison of the Three Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

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 ~~$122.1~~$25.6 million during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, due to ~~decreases~~a decrease of ~~$122.4 million and $1.6~~$36.4 million in products revenue, ~~and other services and support revenue, respectively,~~ partially offset by an increase of ~~$1.9~~$10.8 million in ~~net administrative fees~~software licenses and other services and support revenue.

Cost of Revenue

Cost of revenue decreased by ~~$122.7~~$32.2 million during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to ~~decreases~~a decrease of ~~$122.5 million and $0.2~~$39.6 million in cost of products revenue, ~~and~~partially offset by an increase of $7.4 million in cost of services ~~revenue, respectively.~~and software licenses.

Operating Expenses

Operating expenses were flat for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Other Income (Expense), Net

Other income (expense), net increased by ~~$10.1~~$6.4 million during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to ~~increases of $9.2 million and $0.8 million in selling, general and administrative expenses and amortization of purchased intangible assets, respectively.~~

~~Other (Expense) Income, Net~~

~~Other (expense) income, net decreased by $1.8 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due~~ an increase in ~~expense~~income of ~~$5.8~~$7.2 million in other income (expense), ~~income,~~ net, and ~~the decrease~~an increase of ~~$1.5~~$0.6 million in equity in net income of unconsolidated affiliates. These ~~decreases~~increases were partially offset by ~~loss on the FFF Put Right~~an increase of $1.5 million 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).interest expense, net.

Income Tax Expense

For the three months ended March 31, 2023 and 2022, we recorded tax expense of $17.2 million and $14.7 million, ~~compared to tax expense of $13.4 million recorded during the three months ended March 31, 2021.~~respectively. The tax expense recorded during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 resulted in effective tax rates of ~~27.3%~~26% and ~~20.7%~~27%, respectively. The change in the effective tax rate

is primarily attributable to the impact of ~~the Subsidiary Reorganization.~~a decrease in stock-based compensation expense. (See Note 1312 - Income Taxes to the accompanying condensed consolidated financial statements for more information.)

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest ~~decreased~~increased by ~~$2.4~~$1.1 million during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to an ~~decrease~~increase in the portion of net income attributable to non-controlling interests in ~~PRAM, DePre, ExPre and Contigo Health.~~our consolidated subsidiaries.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, ~~decreased~~increased by ~~$9.0~~$5.1 million during the three months ended March 31, ~~2022,~~2023, compared to the three months ended March 31, ~~2021. The decrease was~~2022, primarily driven ~~by a decrease of $9.4 million in Performance Services Adjusted EBITDA partially offset~~ by increases of ~~$0.1~~$4.0 million and ~~$0.3~~$2.6 million in Supply Chain Services and Corporate Adjusted EBITDA, ~~respectively.~~respectively, partially offset by a decrease of $1.6 million in Performance Services Adjusted EBITDA.

Consolidated Results - Comparison of the Nine Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

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~~$96.5 million during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022, due to a decrease of ~~$187.3~~$140.7 million in products revenue, partially offset by increases of ~~$23.8 million and $16.1~~$39.7 million in ~~net administrative fees revenue and~~software licenses, other services and support revenue ~~respectively.~~and $4.6 million in net administrative fees.

Cost of Revenue

Cost of revenue decreased by ~~$190.9~~$99.3 million during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022, due to a decrease of ~~$201.4~~$126.4 million in cost of products revenue, partially offset by an increase of ~~$10.5~~$27.1 million in cost of services ~~revenue.~~and software licenses.

Operating Expenses

Operating expenses ~~increased~~were flat for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.

Other Income, Net

Other income, net decreased by ~~$29.6~~$64.1 million during the nine months ended March 31, ~~2022~~2023 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~~prior year ~~period~~ gain of $64.1 million 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~~fiscal 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.2022.

Income Tax Expense ~~(Benefit)~~

For the nine months ended March 31, 2023 and 2022, we recorded tax expense of $59.8 million and $40.1 million, ~~compared to a~~respectively. The tax ~~benefit of $64.9 million~~expense recorded during the nine months ended March 31, ~~2021. The tax expense~~2023 and ~~benefit recorded during the nine months ended March 31,~~ 2022 ~~and 2021~~ resulted in effective tax rates of ~~14.4%~~28% and ~~(34.3)%~~14%, respectively. The change in the effective tax rate is primarily attributable to the impact of the Subsidiary Reorganization on the prior year ~~one-time deferred~~effective tax ~~benefit associated with the remeasurement of the deferred tax asset and valuation allowance release as a result of the August 2020 Restructuring.~~rate. (See Note 1312 - Income Taxes to the accompanying condensed consolidated financial ~~statements for more information.~~statements.)

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest ~~decreased by $14.3 million during~~was flat for the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021, primarily due to the August 2020 Restructuring, whereby net income attributable to non-controlling interest in Premier LP was not recorded after August 11, 2020.~~2022.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, ~~increased~~decreased by ~~$19.1~~$8.7 million during the nine months ended March 31, ~~2022,~~2023, compared to the nine months ended March 31, ~~2021~~2022, primarily driven by ~~an increase~~decreases of ~~$42.1~~$10.4 million and $1.7 million in Supply Chain Services ~~Adjusted EBITDA~~and Performance Services, respectively. These decreases were partially offset by ~~decreases~~an increase of ~~$20.4 million and $2.6~~$3.4 million in ~~Performance Services and~~ Corporate Adjusted ~~EBITDA, respectively.~~EBITDA.

Segment Results

Supply Chain Services

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


		Three Months Ended March 31,							Nine Months Ended March 31,									Three Months Ended March 31,							Nine Months Ended March 31,
Supply Chain Services		2022		2021		Change			2022		2021		Change
																		2023		2022		Change			2023		2022		Change
Net revenue:	Net revenue:																Net revenue:
Net administrative fees	Net administrative fees	$	148,396	$	146,553	$	1,843	1%	$	448,261	$	424,537	$	23,724	6	%	Net administrative fees	$	148,441	$	148,396	$	45	—%	$	452,870	$	448,261	$	4,609	1%
Other services and support		8,914		8,630		284		3%	27,165		18,307		8,858		48	%
Services		157,310		155,183		2,127		1%	475,426		442,844		32,582		7	%
Software licenses, other services and support																	Software licenses, other services and support	11,032		8,914		2,118		24%	35,963		27,165		8,798		32%
Services and software licenses																	Services and software licenses	159,473		157,310		2,163		1%	488,833		475,426		13,407		3%
Products	Products	93,629		215,995		(122,366)		(57)%	323,825		511,080		(187,255)		(37)	%	Products	57,212		93,629		(36,417)		(39)%	183,066		323,825		(140,759)		(43)%
Net revenue	Net revenue	250,939		371,178		(120,239)		(32)%	799,251		953,924		(154,673)		(16)	%	Net revenue	216,685		250,939		(34,254)		(14)%	671,899		799,251		(127,352)		(16)%
Cost of revenue:	Cost of revenue:																Cost of revenue:
Services		3,835		1,120		2,715		242%	10,472		2,627		7,845		299	%
Services and software licenses																	Services and software licenses	4,134		3,835		299		8%	13,731		10,472		3,259		31%
Products	Products	88,621		211,136		(122,515)		(58)%	294,916		496,286		(201,370)		(41)	%	Products	49,013		88,621		(39,608)		(45)%	168,507		294,916		(126,409)		(43)%
Cost of revenue	Cost of revenue	92,456		212,256		(119,800)		(56)%	305,388		498,913		(193,525)		(39)	%	Cost of revenue	53,147		92,456		(39,309)		(43)%	182,238		305,388		(123,150)		(40)%
Gross profit	Gross profit	158,483		158,922		(439)		—%	493,863		455,011		38,852		9	%	Gross profit	163,538		158,483		5,055		3%	489,661		493,863		(4,202)		(1)%
Operating expenses:	Operating expenses:																Operating expenses:
Selling, general and administrative	Selling, general and administrative	49,954		49,714		240		—%	146,453		144,511		1,942		1	%	Selling, general and administrative	52,033		49,954		2,079		4%	151,848		146,453		5,395		4%
Research and development	Research and development	65		72		(7)		(10)%	301		199		102		51	%	Research and development	77		65		12		18%	322		301		21		7%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,093		8,151		(58)		(1)%	24,344		24,205		139		1	%	Amortization of purchased intangible assets	7,931		8,093		(162)		(2)%	23,970		24,344		(374)		(2)%
Operating expenses	Operating expenses	58,112		57,937		175		—%	171,098		168,915		2,183		1	%	Operating expenses	60,041		58,112		1,929		3%	176,140		171,098		5,042		3%
Operating income	Operating income	100,371		100,985		(614)		(1)%	322,765		286,096		36,669		13	%	Operating income	103,497		100,371		3,126		3%	313,521		322,765		(9,244)		(3)%
Depreciation and amortization	Depreciation and amortization	6,021		1,238					16,365		3,403						Depreciation and amortization	5,071		6,021					16,892		16,365
Amortization of purchased intangible assets	Amortization of purchased intangible assets	8,093		8,151					24,345		24,205						Amortization of purchased intangible assets	7,931		8,093					23,970		24,345
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	(180)		2,053					1,428		9,684						Acquisition- and disposition-related expenses	907		(180)					2,417		1,428
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	3,726		5,319					16,672		15,907						Equity in net income of unconsolidated affiliates	4,566		3,726					14,250		16,672
Other expense		3		203					11		243
Other reconciling items, net																	Other reconciling items, net	68		3					178		11
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	118,034	$	117,949	$	85	—%	$	381,586	$	339,538	$	42,048	12	%	Segment Adjusted EBITDA	$	122,040	$	118,034	$	4,006	3%	$	371,228	$	381,586	$	(10,358)	(3)%

Comparison of the Three Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Net Revenue

Supply Chain Services segment net revenue decreased by ~~$120.2~~$34.3 million, or ~~32%~~14%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021. The~~2022 driven by a decrease ~~in net revenue was primarily due to a decline~~of $36.4 million in products revenue, partially offset by an increase of ~~$122.4~~$2.1 million ~~driven~~in software licenses, other services and support revenue.

Net Administrative Fees

Net administrative fees were flat for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Products Revenue

Products revenue decreased by $36.4 million, or 39%, during the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily a result of lower demand for ~~and pricing of personal protective equipment (“PPE”)~~commodity products and other previously high-demand supplies ~~as a result~~due to members’ and other customers’ elevated inventory levels and continued utilization of ~~the state of~~excess inventory purchased during the COVID-19 pandemic. ~~As the COVID-19 pandemic continues to subside and~~

4140

~~become more manageable, we expect further stabilization of~~Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue increased by $2.1 million, or 24%, during 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~~three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily due to an increase in ~~net administrative~~purchased services revenue and growth in service fees ~~of $1.8 million primarily driven by an increase in the demand for supplies and services, increased utilization of~~associated with our ~~contracts by our existing members and the addition of new categories and suppliers.~~committed purchasing programs.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by ~~$119.8~~$39.3 million, or 43%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022. The decrease was primarily ~~due~~attributable to the ~~aforementioned decline~~decrease in products revenue and the corresponding decrease in cost of products revenue of $39.6 million due to the prior year increase in demand as well as ~~fluctuations~~lower logistics costs 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.current period.

Operating Expenses

Supply Chain Services segment operating expenses increased by ~~$0.2~~$1.9 million, or 3%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 driven by an increase in SG&A expenses primarily due to ~~an increase~~restructuring charges as a result of ~~$0.2 million in selling, general~~the cost-savings plan enacted during the current year period 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.~~expenses primarily due to the change in the fair value of the Acurity and Nexera earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements).

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by ~~$0.1~~$4.0 million during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to ~~the aforementioned increase~~higher equity earnings from our investments in ~~net administrative fees revenue partially offset by a decrease~~unconsolidated affiliates as well as lower logistics costs in ~~equity in net income~~cost of ~~unconsolidated affiliates.~~products revenue.

Comparison of the Nine Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Net Revenue

Supply Chain Services segment net revenue decreased by ~~$154.7~~$127.4 million, or 16%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021. The~~2022 driven by a decrease ~~in net revenue was primarily due to a decrease~~of $140.8 million 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~~increases of $8.8 million in ~~commodity products under our PREMIERPRO~~® ~~brand. As the COVID-19 pandemic continues to subside~~software licenses, other services and ~~become more manageable, we expect further stabilization of the market for some of these products~~support revenue and ~~accordingly, a decrease in period-over-period products revenue growth rates.~~

~~The decrease in products revenue was partially offset by an increase~~$4.6 million in net administrative fees.

Net Administrative Fees

Net administrative fees ~~of $23.7~~increased by $4.6 million, or 1%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The net increase was driven by ~~an increase in the demand for supplies and services,~~ increased utilization of our contracts by ~~our~~ existing members ~~and the addition~~in our Continuum of ~~new categories and suppliers which was~~Care Program partially offset by an increase in revenue share paid to ~~members.~~members primarily as a result of the increased utilization.

~~In addition,~~Products Revenue

Products revenue decreased by $140.8 million, or 43%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The decrease was ~~partially offset by an increase~~primarily a result of ~~$8.9 million in~~lower demand for commodity products and other previously high-demand supplies due to members’ and other customers’ elevated inventory levels and continued utilization of excess inventory purchased during the COVID-19 pandemic.

Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue increased by $8.8 million, or 32%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, primarily due to an increase in purchased services revenue and supply chain co-management ~~fees.~~fees as well as growth in service fees associated with our committed purchasing programs.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by ~~$193.5~~$123.2 million, or 40%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021~~2022 primarily attributable to the decrease in cost of products revenue of $126.4 million in relation to the decrease in products revenue due to the prior year increase in demand ~~as well as~~partially offset by fluctuations in product ~~costs. The~~costs and higher logistics costs in the current year period. This decrease ~~in cost of products revenue~~ was partially offset by ~~escalating shipping~~an increase in personnel costs ~~due to continued global supply chain issues~~ as well as consulting services expenses associated with the ~~aforementioned~~ increase in ~~other~~purchased services ~~and support~~ 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.

Operating Expenses

Supply Chain Services segment operating expenses increased by ~~$2.2~~$5.0 million, or 3%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021~~2022 driven by an increase in SG&A expenses primarily due to ~~an increase in selling, general~~restructuring charges as a result of the cost-savings plan enacted during the current year period, increased headcount and ~~administrative~~employee travel and meeting expenses

as a result of ~~$1.9 million driven by increases in depreciation and amortization expense and personnel costs partially offset by a decrease in acquisition- and disposition-related expenses.~~the easing of pandemic-related travel restrictions during the current year period.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA ~~increased~~decreased by ~~$42.0~~$10.4 million ~~or 12%,~~ during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022, primarily due to the aforementioned ~~increase~~decrease in ~~net administrative fees~~products revenue and ~~favorable product mix~~corresponding decrease in cost of products revenue, higher operating expenses due to increased headcount and employee travel and meeting expenses as pandemic-related travel restrictions were lifted and a decrease in equity earnings from our ~~direct sourcing activities business.~~investments in unconsolidated affiliates.

Performance Services

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


		Three Months Ended March 31,							Nine Months Ended March 31,								Three Months Ended March 31,							Nine Months Ended March 31,
Performance Services		2022		2021		Change			2022		2021		Change
																	2023		2022		Change			2023		2022		Change
Net revenue:	Net revenue:															Net revenue:
Other services and support		$	96,903	$	98,745	$	(1,842)	(2)%	$	292,962	$	285,713	$	7,249	3%
Software licenses, other services and support																Software licenses, other services and support
SaaS-based products subscriptions																SaaS-based products subscriptions	$	44,685	$	49,347	$	(4,662)	(9)%	142,097		144,357		$	(2,260)	(2)%
Consulting services																Consulting services	22,087		16,342		5,745		35%	57,963		46,440		11,523		25%
Software licenses																Software licenses	14,400		12,169		2,231		18%	51,197		44,033		7,164		16%
Other																Other	24,384		19,045		5,339		28%	72,603		58,132		14,471		25%
Net revenue	Net revenue	96,903		98,745		(1,842)		(2)%	292,962		285,713		7,249		3%	Net revenue	105,556		96,903		8,653		9%	323,860		292,962		30,898		11%
Cost of revenue:	Cost of revenue:															Cost of revenue:
Services		42,900		45,860		(2,960)		(6)%	125,854		123,225		2,629		2%
Services and software licenses																Services and software licenses	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%
Cost of revenue	Cost of revenue	42,900		45,860		(2,960)		(6)%	125,854		123,225		2,629		2%	Cost of revenue	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%
Gross profit	Gross profit	54,003		52,885		1,118		2%	167,108		162,488		4,620		3%	Gross profit	55,541		54,003		1,538		3%	174,163		167,108		7,055		4%
Operating expenses:	Operating expenses:															Operating expenses:
Selling, general and administrative	Selling, general and administrative	43,354		34,517		8,837		26%	124,617		102,488		22,129		22%	Selling, general and administrative	48,281		43,354		4,927		11%	135,438		124,617		10,821		9%
Research and development	Research and development	761		643		118		18%	2,366		1,814		552		30%	Research and development	924		761		163		21%	2,654		2,366		288		12%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	3,059		2,249		810		36%	8,545		9,659		(1,114)		(12)%	Amortization of purchased intangible assets	3,985		3,059		926		30%	11,445		8,545		2,900		34%
Operating expenses	Operating expenses	47,174		37,409		9,765		26%	135,528		113,961		21,567		19%	Operating expenses	53,190		47,174		6,016		13%	149,537		135,528		14,009		10%
Operating income		6,829		15,476		(8,647)		(56)%	31,580		48,527		(16,947)		(35)%
Operating (loss) income																Operating (loss) income	2,351		6,829		(4,478)		(66)%	24,626		31,580		(6,954)		(22)%
Depreciation and amortization	Depreciation and amortization	13,104		15,947					39,804		46,104					Depreciation and amortization	13,204		13,104					41,962		39,804
Amortization of purchased intangible assets	Amortization of purchased intangible assets	3,059		2,249					8,545		9,659					Amortization of purchased intangible assets	3,985		3,059					11,445		8,545
Acquisition related expenses		3,295		2,073					8,854		5,205
Acquisition- and disposition-related expenses																Acquisition- and disposition-related expenses	5,387		3,295					9,175		8,854
Equity in net income of unconsolidated affiliates	Equity in net income of unconsolidated affiliates	265		205					494		116					Equity in net income of unconsolidated affiliates	64		265					297		494
Other expense		—		—					—		64
Other reconciling items, net																Other reconciling items, net	27		—					82		—
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	26,552	$	35,950	$	(9,398)	(26)%	$	89,277	$	109,675	$	(20,398)	(19)%	Segment Adjusted EBITDA	$	25,018	$	26,552	$	(1,534)	(6)%	$	87,587	$	89,277	$	(1,690)	(2)%

Comparison of the Three Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Net Revenue

Net revenue in our Performance Services segment ~~decreased~~increased by ~~$1.8~~$8.7 million, or 2%9%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The ~~decrease~~increase was primarily attributable to ~~a decrease in technology services under our PINC AI platform due to timing~~growth of ~~revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period. This decrease was partially offset by growth~~$5.7 million in consulting services under our PINC AI platform, an increase of $5.3 million in other revenue driven by growth in Contigo

Health primarily as a result of the TRPN acquisition and ~~our Contigo Health business as well as incremental~~growth of $2.2 million in software licenses driven by an increased number of enterprise analytics license agreements entered into during the current year period. These increases were partially offset by a decrease in SaaS-based products subscription revenue ~~from our Remitra business.~~due to the conversion of SaaS-based products to licensed-based products.

Cost of Revenue

Performance Services segment cost of revenue ~~decreased~~increased by ~~$3.0~~$7.1 million, or 17%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to an increase in consulting services expenses as well as higher ~~incremental expenses~~costs associated with increased headcount to support revenue growth in the ~~prior year period associated with the~~area of clinical intelligence within our PINC AI platform and Contigo Health business.

Operating Expenses

Performance Services segment operating expenses increased by ~~$9.8~~$6.0 million, or 13%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The increase was driven by an increase of $4.9 million in SG&A expenses primarily due to higher costs associated with increased headcount in our PINC AI platform and Contigo Health business and an increase ~~of $8.8~~in acquisition- and disposition-related expenses. In addition, operating expenses increased by $0.9 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~~due to amortization of purchased intangible ~~assets.~~assets primarily associated with the TRPN acquisition.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by ~~$9.4~~$1.5 million, or ~~26%~~6%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 primarily due to the aforementioned ~~decrease~~higher cost of revenue driven by increases in consulting services and higher operating expenses related to increased headcount to support revenue growth. These decreases to adjusted EBITDA were partially offset by revenue growth in PINC AI and ~~increase in operating expenses.~~Contigo Health.

Comparison of the Nine Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Net Revenue

Net revenue in our Performance Services segment increased by ~~$7.2~~$30.9 million, or 3%11%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021.~~2022. The increase was primarily attributable to growth of $14.5 million in other revenue driven by growth in Contigo Health as well as incremental revenue from the TRPN acquisition, growth of $11.5 million in consulting services under our PINC AI platform and ~~our Contigo Health business as well as incremental revenue from our Remitra business.~~growth of $7.2 million in software licenses driven by an increased number of enterprise analytics license agreements entered into during the current year period. These increases were partially offset by a decrease in ~~technology services under our PINC AI platform~~SaaS-based products subscription revenue due to ~~timing~~the conversion of ~~revenue associated with enterprise analytics license agreements.~~SaaS-based products to licensed-based products.

Cost of Revenue

Performance Services segment cost of revenue increased by ~~$2.6~~$23.8 million, or 19%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022, primarily due to an increase in ~~personnel~~consulting services as well as higher costs ~~related~~associated with increased headcount to support revenue growth in our PINC AI platform and Contigo Health ~~business and incremental expenses associated with our Remitra~~ business.

Operating Expenses

Performance Services segment operating expenses increased by ~~$21.6~~$14.0 million, or 10%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021.~~2022. The increase was ~~primarily due to~~driven by an increase of ~~$22.1~~$10.8 million in ~~selling, general and administrative~~SG&A expenses ~~driven by increases in personnel~~due to higher costs ~~and professional fees~~ associated with increased headcount primarily in our PINC AI business and increased employee travel and meeting expenses as a ~~decrease in capitalized labor costs~~result of the easing of pandemic-related travel restrictions during the current year period. In addition, operating expense increased by $2.9 million as ~~well as an increase in acquisition- and disposition-related expenses. These increases were partially offset by $1.1 million~~a result of ~~lower~~higher amortization of purchased intangible ~~assets.~~assets primarily attributable to the TRPN acquisition.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by ~~$20.4~~$1.7 million, or ~~19%~~2%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021~~2022 primarily due to the aforementioned ~~increases in~~higher cost of revenue driven by increases in consulting services and increases in operating expenses ~~as well as the decrease in technology services under our PINC AI platform revenue~~due to costs associated with increased headcount, partially offset by ~~the aforementioned~~ revenue growth in ~~consulting services under our~~ PINC AI ~~platform.~~and Contigo Health.

Corporate

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

Three Months Ended March 31, Nine Months Ended March 31,
Corporate 2022 2021 Change 2022 2021 Change
Operating expenses:
Selling, general and administrative $ 50,376 $ 50,271 $ 105 —% $ 147,279 $ 141,454 $ 5,825 4%
Operating expenses 50,376 50,271 105 —% 147,279 141,454 5,825 4%
Operating loss (50,376) (50,271) (105) —% (147,279) (141,454) (5,825) 4%
Depreciation and amortization 2,282 2,152 6,705 6,397
Stock-based compensation 14,149 13,180 38,229 27,970
Deferred compensation plan (expense) income (3,992) 1,521 (1,922) 9,231
Other expense, net 5,539 726 9,311 5,411
Adjusted EBITDA $ (32,398) $ (32,692) $ 294 1% $ (94,956) $ (92,445) $ (2,511) (3)%


	Three Months Ended March 31,							Nine Months Ended March 31,
	2023		2022		Change			2023		2022		Change
Operating expenses:
Selling, general and administrative	$	43,282	$	50,376	$	(7,094)	(14)%	$	128,907	$	147,279	$	(18,372)	(12)%

Operating expenses	43,282		50,376		(7,094)		(14)%	128,907		147,279		(18,372)		(12)%
Operating loss	(43,282)		(50,376)		7,094		(14)%	(128,907)		(147,279)		18,372		(12)%
Depreciation and amortization	2,000		2,282					6,299		6,705
Stock-based compensation	6,709		14,149					16,859		38,229
Strategic initiative and financial restructuring-related expenses	1,942		5,539					10,988		9,311
Deferred compensation plan expense (income)	2,859		(3,992)					3,148		(1,922)

Adjusted EBITDA	$	(29,772)	$	(32,398)	$	2,626	8%	$	(91,613)	$	(94,956)	$	3,343	4%

Comparison of the Three Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Operating Expenses

Corporate operating expenses ~~increased~~decreased by ~~$0.1~~$7.1 million, or 14%, during the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022, primarily due to ~~an increase~~a decrease in performance-related compensation expense, a decrease in stock-based compensation expense due to lower forecasted achievement and lower professional fees related to strategic initiative and financial restructuring-related ~~activities~~activities. These decreases were partially offset by a ~~decrease~~net increase in expenses as a result of the cost-savings plan enacted during the current year period and an increase in deferred compensation plan expense ~~due to~~in the current period as a result of market changes.

Adjusted EBITDA

~~Adjusted~~Corporate adjusted EBITDA increased by ~~$0.3~~$2.6 million, or 1%8%, ~~during~~for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021,~~2022 primarily ~~due~~as a result of decreases in performance-related compensation and stock-based compensation expenses partially offset by increases attributed to ~~an decrease in employee-related expenses.~~the aforementioned cost-savings plan.

Comparison of the Nine Months Ended March 31, ~~2022~~2023 to ~~2021~~2022

Operating Expenses

Corporate operating expenses ~~increased~~decreased by ~~$5.8~~$18.4 million, or 12%, during the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022, primarily due to ~~increases~~a decrease in performance-related compensation expense, a decrease in stock-based compensation expense due to ~~higher~~lower forecasted achievement of performance share awards and a net decrease in expenses as a result of the cost-savings plan enacted during the current year period. These decreases were partially offset by increases in deferred compensation plan expense as a result of market changes and 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.activities.

Adjusted EBITDA

~~Adjusted~~Corporate adjusted EBITDA ~~decreased~~increased by ~~$2.5~~$3.3 million, or 3%4%, ~~during~~for the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021,~~2022 primarily ~~due~~as a result of decreases in performance-related compensation and stock-based compensation expenses partially offset by increases attributed to ~~an increase in professional fees and employee-related expenses, including employee travel and meeting expenses.~~the aforementioned cost-savings plan.

Off-Balance Sheet Arrangements

As of March 31, ~~2022,~~2023, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has been primarily 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 in Note 8 - Debt and Notes Payable to the

accompanying condensed consolidated financial ~~statements for more information)~~statements) as a source of liquidity. Our primary cash requirements 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 March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$179.5~~$91.5 million and ~~$129.1~~$86.1 million, respectively. As of March 31, ~~2022~~2023 and June 30, ~~2021,~~2022, there ~~were $250.0~~was $235.0 million and ~~$75.0~~$150.0 million, respectively, of outstanding borrowings under our Credit Facility. During the nine months ended March 31, ~~2022,~~2023, we borrowed ~~$300.0~~$285.0 million and repaid ~~$125.0~~$135.0 million ~~of borrowings~~ under our Prior Loan Agreement (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) and borrowed $65.0 million and repaid $130.0 million under the Credit Facility. Our Credit Facility ~~which~~may be used for acquisitions and related business investments as well as general corporate activities. Borrowings for the nine months ended March 31, 2023 under the Prior Loan Agreement were used to partially fund the TRPN acquisition (see Note 3 - Business Acquisitions for ~~other general corporate purposes.~~further information). In April ~~2022,~~2023, we repaid ~~$75.0~~$60.0 million of outstanding borrowings under the Credit Facility.

We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, notes payable, including notes payable to former LPs, 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.~~time and to fund business acquisitions. 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.

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

The COVID-19 global pandemic and its variants continue to create challenges throughout the United States and much of the rest of the world. The full extent to which the COVID-19 pandemic 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 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 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 materially disrupted due to personnel shortages associated with ongoing COVID-19 rates of infection, stay-at-home orders, border closings, rapidly escalating shipping 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 Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

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


		Nine Months Ended March 31,					Nine Months Ended March 31,
		2022		2021			2023		2022
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	334,789	$	192,365	Operating activities	$	331,178	$	334,789
Investing activities	Investing activities	(113,061)		(149,291)		Investing activities	(249,784)		(113,061)
Financing activities	Financing activities	(171,369)		(9,794)		Financing activities	(76,036)		(171,369)
Effect of exchange rate changes on cash flows						Effect of exchange rate changes on cash flows	(8)		3
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	$	50,359	$	33,280	Net increase in cash and cash equivalents	$	5,350	$	50,362

Net cash provided by operating activities increased by $142.4 million primarily due to a decrease of $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 increase of $56.4 million in payments of operating expenses.

~~Net cash used in investing activities~~ decreased by ~~$36.2~~$3.6 million for the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021.~~2022. The decrease in net cash provided by operating activities was due to a decrease of $163.7 million in cash receipts from members and other customers driven by higher prior year products revenue to support member and other customer needs during the COVID-19 pandemic and an increase in revenue share paid to members. These were partially offset by a decrease of $150.5 million in cash paid primarily due to a decrease in inventory purchases to support prior year products revenue growth and lower operating expenses driven by our cost-savings plan enacted during the current year period. Additionally, net operating cash flows increased by $9.6 million in miscellaneous cash receipts primarily due to dividends received on our investments in unconsolidated affiliates.

Net cash used in investing activities increased by $136.7 million for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The increase in net cash used in investing activities was primarily due ~~higher~~to the TRPN acquisition in the current year period, partially offset by the cash outlay in the prior year period for the ~~fiscal 2021 acquisition of IDS compared to cash paid by ExPre in current year for an ownership interest~~investment in Exela Holdings, Inc. ~~and our investment~~ in ~~Qventus, Inc. The decrease~~the nine months ended March 31, 2022 as well as decreases in ~~net cash used in~~other investing activities ~~was also driven by a $5.9 million reduction~~and in purchases of property and equipment. ~~These decreases were partially offset by an increase in other investing activities.~~

Net cash used inby financing activities ~~increased~~decreased by ~~$161.6~~$95.3 million for the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021.~~2022. The ~~increase~~decrease in net cash used inby financing activities was primarily driven by ~~$250.0~~the prior year

period cash outflow of $250.1 million for ~~repurchases~~the repurchase of Class A common stock under ~~the~~our fiscal 2022 stock repurchase program and ~~an increase~~a decrease of ~~$43.4~~$90.0 million in ~~primarily for payments made on notes payable to former LPs,~~ net ~~of discount. The increase in net cash used in financing activities was~~borrowings under our Credit Facility. These changes were partially offset by ~~an increase of $50.0~~$36.7 million ~~in net proceeds under our Credit Facility, an increase of $37.4 million in~~less proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options in the current year period as compared to the prior year period as well as a ~~reduction~~decrease of $34.2 million 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 an increase of $13.6$24.8 million in other financing activities. ~~Other~~The change in other financing activities iswas primarily driven by fiscal 2022 proceeds from member health systems that acquired membership interests in ~~ExPre.~~ExPre in fiscal year 2022.

Discussion of Non-GAAP Free Cash Flow for the Nine Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

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 is as follows (in thousands):


		Nine Months Ended March 31,					Nine Months Ended March 31,
		2022		2021			2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	334,789	$	192,365	Net cash provided by operating activities	$	331,178	$	334,789
Purchases of property and equipment	Purchases of property and equipment	(61,061)		(66,911)		Purchases of property and equipment	(58,464)		(61,061)
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)		Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)	(73,180)		(71,786)
Distributions to limited partners of Premier LP		—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements		—		(24,218)
Non-GAAP Free Cash Flow	Non-GAAP Free Cash Flow	$	201,942	$	70,959	Non-GAAP Free Cash Flow	$	199,534	$	201,942

(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.” During the nine months ended March 31, ~~2022,~~2023, we paid $77.0 million to members including imputed interest of ~~$5.2~~$3.8 million which is included in net cash provided by operating activities. During the nine months ended March 31, ~~2021,~~2022, we paid ~~$25.7~~$77.0 million to members including imputed interest of ~~$5.3~~$5.2 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~~decreased by ~~$131.0~~$2.4 million for the nine months ended March 31, ~~2022~~2023 compared to the nine months ended March 31, ~~2021.~~2022. The ~~increase~~decrease in Non-GAAP Free Cash Flow was ~~driven by~~primarily due to the aforementioned ~~$142.4~~$3.6 million ~~increase~~decrease in net cash provided by operating activities no distributions to limited partners of Premier LP or payments to limited partners of Premier LP related to tax receivable agreements in the nine months ended March 31, 2022 as both were eliminated in connection with the August 2020 restructuring andpartially offset by a decrease ~~of $5.9 million~~ in purchases of property and ~~equipment. These increases~~equipment of $2.6 million. The increase of $1.4 million in ~~Non-GAAP Free Cash Flow were partially offset by $51.5 million of~~the early termination payments to certain former limited partners in connection with the August 2020 Restructuring is related to an increase in the principal payment on the outstanding note payable as ~~quarterly payments commenced during~~noted in footnote (a) to the ~~quarter ended March 31, 2021.~~Non-GAAP Free Cash Flow reconciliation (imputed interest on the note payable is included in net cash provided by operating activities).

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

Contractual Obligations

Notes Payable to Former Limited Partners

At March 31, ~~2022, $333.7~~2023, $231.0 million remains to be paid without interest in 13nine 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 March 31, ~~2022,~~2023, we had commitments of ~~$5.3~~$2.3 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

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~~secured overnight financing rate (“~~LIBOR”~~SOFR”) plus an adjustment of 0.100% plus an applicable margin ranging from ~~1.000%~~1.250% to ~~1.500%~~1.750% or the prime lending rate plus an applicable margin ranging from ~~0.000%~~0.250% to ~~0.500%~~0.750%. We pay a commitment fee ranging from ~~0.100%~~0.125% to ~~0.200%~~0.225% for unused capacity under the Credit Facility. At March 31, ~~2022,~~2023, the interest rate on outstanding borrowings under the Credit Facility was ~~1.303%~~6.195% and the commitment fee was ~~0.100%~~0.125%.

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 March 31, ~~2022.~~2023. 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 March 31, ~~2022,~~2023, we had outstanding borrowings of ~~$250.0~~$235.0 million under the Credit Facility with ~~$749.9~~$765.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. In April ~~2022,~~2023, we repaid ~~$75.0~~$60.0 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 10.1 ~~in our~~to this quarterly ~~report for the period ended December 31, 2021.~~report. See also Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.

Cash Dividends

In each of September ~~2021,~~2022 and December ~~2021, and March~~ 2022, we paid a cash dividend of ~~$0.20~~$0.21 per share on outstanding shares of Class A common stock. On April ~~21, 2022,~~27, 2023, our Board of Directors declared a quarterly cash dividend of ~~$0.20~~$0.21 per share, payable on June 15, ~~2022~~2023 to stockholders of record on June 1, ~~2022.~~2023.

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

~~Stock Repurchase Program~~

On August 5, 2021, our Board of Directors authorized the repurchase of up to $250.0 million of our outstanding Class A common stock during fiscal year 2022 through open market purchases or privately negotiated transactions. At March 31, 2022, we had completed our stock repurchase program and purchased approximately 6.4 million shares of Class A common stock at an average price of $38.88 per share for a total purchase price of $250.0 million.

Fiscal 2023 Developments

Impact of Inflation

The U.S. economy is experiencing the highest rates of inflation since the 1980s. ~~Historically,~~Through March 31, 2023, we have ~~not experienced significant~~continued to limit the impact of inflation ~~risk in~~on our ~~business arising from fluctuations in market prices~~members, and maintain significantly lower inflation impacts across our diverse product ~~portfolio.~~portfolio than national levels. However, ~~our ability to raise our selling prices depends on market conditions and there may be periods during which we are unable to fully recover increases~~ in ~~our costs. Our GPO business has largely been unaffected by pricing inflation as we use our members’ aggregated purchasing power to negotiate firm prices in many~~certain areas of our ~~contracts. In~~business, there is still some level of risk and uncertainty for our ~~Direct Sourcing business, we have been able~~members and other customers as labor costs, raw material costs and availability, rising interest rates and inflation continue to ~~partially offset increases in cost through~~pressure supplier pricing as well as apply significant pressure on our margin.

We continue to evaluate the contributing factors, specifically transportation and freight, raw materials, and labor, that led to temporary adjustments to selling ~~prices~~prices. We have begun to see logistics costs normalize to pre-pandemic levels as well as some reductions in the costs of specific raw materials; however, the cost of labor remains high. We are continuously working to lower these price increases as market conditions change. The impact of inflation to our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio, as well as price reductions in certain product categories such as pharmaceuticals.

Furthermore, as the Federal Reserve seeks to curb rising inflation, market interest rates have steadily risen, and ~~through various~~may continue to rise, increasing the cost ~~reduction initiatives while ensuring~~of borrowing under our ~~products remain competitively priced.~~Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.

Russia-Ukraine War

markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs and global supply-chain disruption. Refer to Item 1A. “Risk Factors” in our 2022 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion.

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

The COVID-19 global pandemic and its variants continue to create challenges throughout the United States and 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 COVID-19 vaccination programs, or recurrences of COVID-19, variants thereof or similar pandemics. Refer to Item 1A. “Risk Factors” in our 2022 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion of the material risks we face.

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 March 31, ~~2022,~~2023, we had ~~$250.0~~$235.0 million outstanding borrowings under our Credit Facility. Based on the weighted average interest rate charged on outstanding borrowings under our Credit Facility at March 31, ~~2022,~~2023, a one-percent change in the weighted average interest rate charged on outstanding borrowings would increase or decrease interest expense over the next twelve months by ~~$2.5~~$2.4 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 of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2022.~~2023.

Management’s quarterly evaluation of the disclosure controls and procedures did not include an assessment of and conclusion on the effectiveness of disclosure controls and procedures for certain assets of TRPN, which was acquired during the nine months ended March 31, 2023 and is included in our condensed consolidated financial statements as of March 31, 2023 and for the period from the acquisition date through March 31, 2023. The aggregate assets and total net revenues of TRPN accounted for 5.2% and 0.6%, respectively, of the condensed consolidated financial statements as of and for the nine months ended March 31, 2023.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART ~~II—~~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.

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 and committed corporate waste 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 1413 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which information is incorporated herein by reference.

Item 1A. Risk Factors

During the quarter ended March 31, ~~2022,~~2023, there were no material changes to the risk factors disclosed in Item 1A. “Risk Factors” in the ~~2021~~2022 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 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)
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 March 31, 2022, we purchased approximately 6.4 million shares of Class A common stock at an average price of $38.88 per share for a total of $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 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 April 26, 2022).+
31.1						Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2						Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1						Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
32.2						Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
101						Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022,~~2023, formatted in iXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
101.SCH						Inline XBRL Taxonomy Extension Schema Document.*
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104						The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022,~~2023, formatted in Inline XBRL (included in Exhibit 101).*

* Filed herewith.

+ Indicates a management contract or compensatory plan or ~~arrangement~~arrangement.

‡ Furnished herewith.

5251

SIGNATURES

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

PREMIER, INC.

Date:

May ~~3, 2022~~2, 2023

By:

/s/ Craig S. McKasson

Name:

Craig S. McKasson

Title:

Chief Administrative and Financial Officer and Senior Vice President

~~Signing on~~On behalf of the registrant and as principal financial ~~officer~~ and ~~principal~~ accounting officer

5352


		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)	11
	Notes to Condensed Consolidated Financial Statements (Unaudited)	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4948
Item 4.	Controls and Procedures	4948
PART II. OTHER INFORMATION		50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	51
~~Item~~ 5.	O ~~ther Information~~	51
~~Item~~ 6.	Exhibits	5251
	Signatures	5352


	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


	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	$	—	$	—	$	—


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	$	—