PINC Premier Inc

Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal-year 2024 fourth quarter and full year ended June 30, 2024.

"I would like to thank our employees for another year of dedication to our mission and their ongoing efforts to enable our healthcare provider members to care for the communities they serve," said Michael J. Alkire, Premier President and CEO. "Our fourth-quarter and full-year results for revenue and profitability exceeded our expectations as consolidated net revenue increased from the prior-year period driven by increases in both our Supply Chain Services and Performance Services segments. As we look ahead, we remain disciplined in our approach and believe we remain well positioned with a flexible balance sheet to enable our ability to continue to advance our strategy, drive the future performance of the company and return capital to stockholders. In addition, I'm pleased to report that our Board of Directors approved execution of another $200 million of Class A common shares under our previously announced $1 billion share repurchase authorization."

Consolidated Financial Highlights

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

(in thousands, except per share data)

 

2024

 

 

2023

 

% Change

 

 

2024

 

 

2023

 

% Change

Net revenue:

 

 

 

 

 

 

 

Supply Chain Services:

 

 

 

 

 

 

 

Net administrative fees

$

165,422

 

$

158,165

 

5

%

 

$

620,831

 

$

611,035

 

2

%

Software licenses, other services and support

 

13,796

 

 

8,298

 

66

%

 

 

51,750

 

 

44,261

 

17

%

Services and software licenses

 

179,218

 

 

166,463

 

8

%

 

 

672,581

 

 

655,296

 

3

%

Products

 

50,766

 

 

61,593

 

(18

%)

 

 

213,722

 

 

244,659

 

(13

%)

Total Supply Chain Services

 

229,984

 

 

228,056

 

1

%

 

 

886,303

 

 

899,955

 

(2

%)

Performance Services

 

120,357

 

 

112,317

 

7

%

 

 

460,329

 

 

436,177

 

6

%

Total segment net revenue

 

350,341

 

 

340,373

 

3

%

 

 

1,346,632

 

 

1,336,132

 

1

%

Eliminations

 

(73

)

 

(9

)

711

%

 

 

(271

)

 

(37

)

632

%

Net revenue

$

350,268

 

$

340,364

 

3

%

 

$

1,346,361

 

$

1,336,095

 

1

%

 

 

 

 

 

 

 

 

Net income

$

60,605

 

$

18,905

 

221

%

 

$

106,719

 

$

174,887

 

(39

%)

Net income attributable to stockholders

$

60,676

 

$

21,463

 

183

%

 

$

119,544

 

$

175,026

 

(32

%)

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to stockholders

$

0.57

 

$

0.18

 

217

%

 

$

1.04

 

$

1.46

 

(29

%)

Consolidated Financial Highlights

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

(in thousands, except per share data)

 

2024

 

 

2023

 

% Change

 

 

2024

 

 

2023

 

% Change

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Supply Chain Services

$

123,445

 

$

126,688

 

(3

%)

 

$

466,931

 

$

483,666

 

(3

%)

Performance Services

 

33,672

 

 

36,266

 

(7

%)

 

 

113,440

 

 

123,556

 

(8

%)

Total segment adjusted EBITDA

 

157,117

 

 

162,954

 

(4

%)

 

 

580,371

 

 

607,222

 

(4

%)

Corporate

 

(38,424

)

 

(31,894

)

(20

%)

 

 

(134,529

)

 

(123,507

)

(9

%)

Adjusted EBITDA

$

118,693

 

$

131,060

 

(9

%)

 

$

445,842

 

$

483,715

 

(8

%)

Adjusted net income

$

72,708

 

$

80,716

 

(10

%)

 

$

270,403

 

$

288,107

 

(6

%)

Adjusted earnings per share (EPS)

$

0.69

 

$

0.67

 

3

%

 

$

2.36

 

$

2.40

 

(2

%)

 

 

 

 

 

 

 

 

* Refer to "Premier's Use and Definition of Non-GAAP Measures" below and the supplemental financial information at the end of this release for information on the company's use of non-GAAP measures and a reconciliation of reported GAAP results to non-GAAP results.

Fiscal 2025 Guidance

Certain statements in this release, including without limitation, those in this section, are forward-looking statements. For additional information regarding the use and limitations of such statements, refer to "Cautionary Note Regarding Forward-Looking Statements" below.

Please note the following changes compared to how guidance has been presented historically:

• As a result of the company's previously announced plan to divest majority interests in the Contigo Health and S2S Global businesses, guidance is being presented excluding financial contributions from these businesses.

• In conjunction with the evolution of the company’s digital supply chain strategy to more tightly align the Remitra business’ strategic and operational capabilities with the group purchasing organization (“GPO”), the company has determined it is more appropriate to report the Remitra business as part of the Supply Chain Services segment beginning in fiscal 2025.

• As a result of the sale of the company's non-healthcare GPO in fiscal 2024, our non-GAAP financial profitability measures will be updated in fiscal 2025 to exclude the impact of the OMNIA transaction including associated revenues sold, imputed interest expense and cash taxes paid on proceeds received. Guidance is being presented consistent with the change.

Based on its current outlook and the realization of the assumptions outlined below, the company expects the following:

• Supply Chain Services segment revenue that is lower than the prior year primarily resulting from the expected increase in aggregate blended member fee share in the GPO from approximately 54% in fiscal 2024 to the low-60% range for fiscal 2025 on a full year basis as well as the exclusion of direct sourcing products revenue.
• Performance Services segment revenue that is lower than the prior year primarily resulting from the exclusion of revenue from the Contigo Health and Remitra businesses as well as the timing of new bookings in fiscal 2025 related to fiscal 2024 finishing better than expected.
• Together, these result in total expected net revenue that is lower than the prior year.
• Adjusted EBITDA and adjusted EPS that are lower than the prior year primarily resulting from the aforementioned increase in aggregate blended member fee share in the GPO, the impact associated with fiscal 2024 terminated GPO members, and the exclusion of the impact of the OMNIA transaction including associated revenues sold, imputed interest expense and cash taxes paid on proceeds received.

Guidance Metric

Fiscal 2025 Guidance Range** (as of August 20, 2024)

Segment Net Revenue:

Supply Chain Services Excluding S2S Global

Performance Services Excluding Contigo Health

 

$560 million to $610 million

$370 million to $410 million

Total Net Revenue Excluding Contigo Health and S2S Global

$930 million to $1.02 billion

Adjusted EBITDA

$235 million to $255 million

Adjusted EPS

$1.16 to $1.28

Fiscal 2025 guidance is based on the realization of the following key assumptions:

• Net administrative fees revenue of $495 million to $525 million, which includes $60 million to $75 million in revenue related to non-healthcare member purchasing

• Supply Chain Services segment software licenses, other services and support revenue of $65 million to $85 million

• Capital expenditures of $90 million to $100 million

• Effective income tax rate in the range of 25% to 27%

• Cash income tax rate of less than 5%

• Free cash flow of 45% to 55% of adjusted EBITDA

• Does not include the impact of any significant acquisitions or share repurchases

** Adjusted EBITDA, adjusted EPS and free cash flow presented in this financial guidance are forward-looking non-GAAP measures. Refer to "Premier's Use and Definition of Non-GAAP Measures" below for information on the company's use of non-GAAP measures. Premier, Inc. does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Total Net Revenue Excluding Contigo Health and S2S Global is also a forward-looking non-GAAP measure. Refer to "Premier's Use of Forward-Looking Non-GAAP Measures" below for additional explanation.

Results of Operations for the Three Months Ended June 30, 2024 (As compared with the three months ended June 30, 2023)

GAAP net revenue of $350.3 million increased 3% from $340.4 million in the prior-year period. Refer to "Supply Chain Services" and "Performance Services" sections below for further discussion on the factors that impacted each segment during the quarter.

GAAP net income of $60.6 million increased 221% from $18.9 million in the prior-year period primarily due to the prior-year Contigo Health goodwill impairment and a decrease in interest expense as a result of there being no outstanding balance on the company's revolving credit facility in the current-year period. This increase in GAAP net income for the current-year period was partially offset by an increase in employee-related expenses driven by increased headcount, primarily to support growth in our supply chain co-management business, and higher performance-related compensation expense as compared to the prior-year period which resulted from significantly lower prior-year performance against expectations.

GAAP diluted EPS of $0.57 increased 217% from $0.18 in the prior-year period due to the aforementioned drivers affecting GAAP net income and a decrease in the diluted weighted average shares outstanding as a result of the $400 million accelerated share repurchase transaction ("ASR") announced in the third quarter of fiscal 2024.

Adjusted EBITDA of $118.7 million decreased 9% from $131.1 million in the prior-year period. Refer to "Supply Chain Services" and "Performance Services" sections below for further discussion on the factors that impacted each segment during the quarter.

Adjusted net income of $72.7 million decreased 10% from $80.7 million in the prior-year period primarily as a result of the same factors that impacted adjusted EBITDA as well as an increase in our effective income tax rate partially offset by a decrease in interest expense in the current-year period. Adjusted EPS of $0.69 increased 3% from $0.67 in the prior-year period primarily due to a decrease in the diluted weighted average shares outstanding as a result of the ASR partially offset by the aforementioned drivers affecting adjusted net income.

Segment Results (For the fiscal fourth quarter of 2024 as compared with the fiscal fourth quarter of 2023)

Supply Chain Services

Supply Chain Services segment net revenue of $230.0 million increased 1% from $228.1 million in the prior-year period, primarily reflecting higher net administrative fees revenue and software license, other services and support revenue, partially offset by a decrease in products revenue.

Net administrative fees revenue of $165.4 million increased 5% from $158.2 million in the prior-year period driven by one-time contractual payments received from certain GPO members due to early termination in breach of their contracts and continued growth in member purchasing in both the acute and Continuum of Care GPO programs partially offset by an expected increase in the aggregate blended member fee share to the high-50% range in the quarter.

Products revenue of $50.8 million decreased 18% from $61.6 million in the prior-year period primarily due to lower pricing for and demand for certain products.

Segment adjusted EBITDA of $123.4 million decreased 3% from $126.7 million in the prior-year period primarily due to an increase in expenses in support of growth in the supply chain co-management business and higher performance-related compensation in the current-year period, the increase in aggregate blended member fee share in the GPO, and lower than normal logistics costs in the prior-year period, partially offset by the aforementioned increase in net revenue.

Performance Services

Performance Services segment net revenue of $120.4 million increased 7% from $112.3 million in the prior-year period, primarily due to an increase in consulting services revenue and an increase in revenue from enterprise license agreements in the current-year period compared with the prior-year period.

Segment adjusted EBITDA of $33.7 million decreased 7% from $36.3 million in the prior-year period mainly due to an increase in expenses primarily related to higher performance-related compensation in the current-year period as well as investments to support continued growth in the company's adjacent markets businesses, partially offset by the aforementioned increase in net revenue.

Result of Operations for the Year Ended June 30, 2024 (As compared with the year ended June 30, 2023)

GAAP net revenue of $1,346.4 million increased 1% from $1,336.1 million in the prior year primarily due to increases in Performance Services segment net revenue and net administrative fees revenue offset by a decrease in products revenue.

GAAP net income of $106.7 million decreased 39% from net income of $174.9 million in the prior year primarily due to a $83.3 million increase in impairment of Contigo Health goodwill and long-lived assets year-over-year as well as a decrease of $16.4 million in equity earnings in the current year compared to the prior year primarily due to the previously disclosed amendment to the company's minority investment agreement with FFF Enterprises which resulted in a change of accounting methodology for the investment.

GAAP diluted EPS of $1.04 decreased 29% from $1.46 in the prior year primarily due to the aforementioned drivers affecting GAAP net income partially offset by a decrease in the diluted weighted average shares outstanding as a result of the ASR.

Adjusted EBITDA of $445.8 million decreased 8% from $483.7 million in the prior year primarily due to decreases in each segment's adjusted EBITDA.

Adjusted net income of $270.4 million decreased 6% from $288.1 million in the prior year primarily as a result of the decrease in adjusted EBITDA as well as an increase in our effective income tax rate as a result of the $140.1 million impairment of assets partially offset by an increase in interest income in the current year. Adjusted EPS of $2.36 decreased 2% from $2.40 in the prior year primarily due to the aforementioned drivers affecting adjusted net income partially offset by a decrease in the diluted weighted average shares outstanding as a result of the ASR.

Supply Chain Services segment net revenue of $886.3 million decreased 2% from $900.0 million for the same period a year ago. Segment adjusted EBITDA of $466.9 million decreased 3% from $483.7 million for the same period a year ago.

Performance Services segment net revenue of $460.3 million increased 6% from $436.2 million for the same period a year ago. Segment adjusted EBITDA of $113.4 million decreased 8% from $123.6 million for the same period a year ago.

Cash Flows and Liquidity

Net cash provided by operating activities ("operating cash flow") for the year ended June 30, 2024 of $296.6 million decreased from $444.5 million in the prior year primarily due to $162.3 million in tax payments in the current year related to the sale of non-healthcare GPO operations and an increase in expenses to support continued growth in certain areas of the Supply Chain Services and Performance Services segments. These decreases to cash were partially offset by lower fiscal 2023 performance-related compensation payments during the fiscal first quarter compared to the fiscal 2022 payments in the prior year and increased cash inflows from continued growth in the Performance Services business.

Net cash used in investing activities for the year ended June 30, 2024 of $68.5 million decreased from the prior year primarily due to the cash outlay for fiscal 2023 acquisitions and cash received in the current year for the sale of PQS partially offset by an increase in purchases of property and equipment. Net cash used in financing activities in fiscal 2024 of $192.7 million increased from the prior year primarily driven by the $400.0 million ASR and a decrease in net borrowings under the company's revolving credit facility. These uses of cash were partially offset by net proceeds from the sale of the company's non-healthcare GPO operations in the current year. As of June 30, 2024, cash and cash equivalents were $125.1 million compared with $89.8 million as of June 30, 2023, and the company's five-year, $1.0 billion revolving credit facility had no outstanding balance.

Free cash flow for the year ended June 30, 2024 was $115.7 million compared with $264.4 million in the prior year. The decrease was primarily due to the same factors that impacted operating cash flow, including the aforementioned $162.3 million in tax payments. Refer to "Premier's Use and Definition of Non-GAAP Measures" below and the supplemental financial information at the end of this release for information on the company's use of this and other non-GAAP financial measures and a reconciliation of reported GAAP results to non-GAAP results.

During the year ended June 30, 2024, the company paid aggregate dividends of $95.2 million to holders of its Class A common stock.

Conference Call and Webcast

Premier will host a conference call to provide additional detail around the company's performance and outlook today at 8:00 a.m. ET. The call will be webcast live from the company's website and, along with the accompanying presentation, will be available at the following link: Premier Events. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company's website at https://investors.premierinc.com.

For those parties who do not have internet access, the conference call may be accessed by calling one of the below telephone numbers and asking to join the Premier, Inc. call:

Domestic participant dial-in number (toll-free):

(833) 953-2438

International participant dial-in number:

(412) 317-5767

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,350 U.S. hospitals and health systems and approximately 325,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com, as well as X, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.

Premier’s Use and Definition of Non-GAAP Measures

Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow. These are non-GAAP financial measures that are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP financial measures used by other companies. We include these non-GAAP financial measures to facilitate a comparison of the company’s operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with its results prepared in accordance with GAAP, we believe allow for a more complete understanding of factors and trends affecting the company’s business than GAAP measures alone. Management believes EBITDA, adjusted EBITDA and segment adjusted EBITDA assist the company’s board of directors, management and investors in comparing the company’s operating performance on a consistent basis from period to period by removing the impact of the company’s asset base (primarily depreciation and amortization) and items outside the control of management (taxes), as well as other non-cash (impairment of intangible assets and purchase accounting adjustments) and non-recurring items, from operating results. Adjusted EBITDA and segment adjusted EBITDA are supplemental financial measures used by the company and by external users of the company’s financial statements.

Management considers adjusted EBITDA an indicator of the operational strength and performance of the company’s business. Adjusted EBITDA allows management to assess performance without regard to financing methods and capital structure and without the impact of other matters that management does not consider indicative of the operating performance of the business. Segment adjusted EBITDA is the primary earnings measure used by management to evaluate the performance of the company’s business segments.

Management believes free cash flow is an important measure because it represents the cash that the company generates after payment of tax distributions to limited partners, payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Agreement (“Unit Exchange Agreement") in connection with our August 2020 restructuring and purchases of property and equipment 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. Free cash flow is important because it enables the company to seek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related or complimentary businesses and/or debt reduction.

Non-recurring items are 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 stock-based compensation, acquisition- and disposition-related expenses, strategic initiative- and financial restructuring-related expenses, remeasurement of TRA liabilities, loss on disposal of long-live assets, gain or loss on FFF put and call rights, income and expense that has been classified as discontinued operations and other expense.

Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

EBITDA is defined 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.

Adjusted EBITDA is defined as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash or non-operating items.

Segment adjusted EBITDA is defined as the segment’s net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition-related expenses and non-recurring or non-cash items. 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.

Adjusted net income is defined as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the effect of non-recurring or non-cash items, including certain strategic initiative- and financial restructuring-related expenses, (iv) 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 and (v) excluding the equity in net income of unconsolidated affiliates.

Adjusted earnings per share is Adjusted Net Income divided by diluted weighted average shares.

Free cash flow is defined as net cash provided by operating activities from continuing operations less distributions and Tax Receivable Agreement 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. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.

To properly and prudently evaluate our business, readers are urged to review the reconciliation of these non-GAAP financial measures, as well as the other financial tables, included at the end of this release. Readers should not rely on any single financial measure to evaluate the company’s business. In addition, the non-GAAP financial measures used in this release are susceptible to varying calculations and may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

The Company has revised the definitions for Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Net Income from the definitions reported in the 2023 Annual Report. Adjusted EBITDA and segment Adjusted EBITDA definitions were revised to exclude the impact of equity earnings in unconsolidated affiliates. The Adjusted Net Income definition was revised (1) remove the exclusion of the impact of adjustment of redeemable limited partners’ capital to redemption amount, (2) remove the impact of the exchange of all Class B common units for shares of Class A common stock for periods prior to our August 2020 Restructuring and the resulting elimination of non-controlling interest in Premier LP, and (3) add the exclusion of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions in the above section.

Further information on Premier’s use of non-GAAP financial measures is available in the “Our Use of Non-GAAP Financial Measures” section of Premier’s Form 10-K for the year ended June 30, 2024, expected to be filed with the SEC shortly after this release, and which will also be made available on Premier's website at investors.premierinc.com.

Premier's Use of Forward-Looking Non-GAAP Measures

The company does not meaningfully reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for the more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders and non-GAAP adjusted earnings per share without unreasonable effort. This is due to the fact that future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, items included in the supplemental financial information for reconciliation of reported GAAP results to non-GAAP results. Such items include, but are not limited to, strategic and acquisition related expenses for professional fees; mark to market adjustments for put options and contingent liabilities; gains and losses on stock-based performance shares; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the company believes to be non-indicative of its ongoing operations. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains/losses or other items that may not directly correlate to the underlying performance of our business operations. The exact amount of these adjustments is not currently determinable but may be significant.

As noted above in this release, as a result of the company's previously announced plan to divest majority interests in the Contigo Health and S2S Global businesses, the forward-looking guidance presented in this release (including Total Net Revenue Excluding Contigo Health and S2S Global, Adjusted EBITDA, Adjusted EPS, and free cash flow) excludes the financial contributions from these businesses, in addition to any applicable adjustments for non-GAAP financial measures described above under "Premier's Use and Definition of Non-GAAP Measures."

Also as noted above in this release, as a result of the sale of the company's non-healthcare GPO in fiscal 2024, our non-GAAP financial profitability measures will be updated in fiscal 2025 to exclude the impact of the OMNIA transaction including associated revenues sold, imputed interest expense and cash taxes paid on proceeds received. The forward-looking guidance presented in this release (including Adjusted EBITDA, Adjusted EPS, and free cash flow) reflects these adjustments in addition to any applicable adjustments for non-GAAP financial measures described above under "Premier's Use and Definition of Non-GAAP Measures."

Cautionary Note Regarding Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, including, but not limited to those related to our ability to advance our long-term strategies and develop innovations for, transform and improve healthcare, our ability to find partners for our S2S Global and Contigo Health businesses and the potential benefits thereof, our ability to fund and conduct share repurchases pursuant to the outstanding share repurchase authorization and the potential benefits thereof, the payment of dividends at current levels or at all, guidance on expected future financial performance and assumptions underlying that guidance, and our expected effective income tax rate, 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 the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the 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 Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to risks and uncertainties, many of which are outside Premier’s control. More information on risks and uncertainties that could affect Premier’s business, achievements, performance, financial condition, and 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” sections of Premier’s periodic and current filings with the SEC, including the information in those sections of Premier’s Form 10-K for the year ended June 30, 2024, expected to be filed with the SEC shortly after the date of this release. Premier's periodic and current filings with the SEC are made available on Premier’s website at investors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

June 30,

 

June 30,

 

 

2024

 

2023

 

 

 

2024

 

 

2023

 

Net revenue:

 

 

 

 

 

Net administrative fees

$

165,422

$

158,165

 

 

$

620,831

 

$

611,035

 

Software licenses, other services and support

 

134,080

 

120,606

 

 

 

511,808

 

 

480,401

 

Services and software licenses

 

299,502

 

278,771

 

 

 

1,132,639

 

 

1,091,436

 

Products

 

50,766

 

61,593

 

 

 

213,722

 

 

244,659

 

Net revenue

 

350,268

 

340,364

 

 

 

1,346,361

 

 

1,336,095

 

Cost of revenue:

 

 

 

 

 

Services and software licenses

 

68,427

 

54,659

 

 

 

268,885

 

 

218,087

 

Products

 

46,027

 

53,212

 

 

 

189,464

 

 

221,719

 

Cost of revenue

 

114,454

 

107,871

 

 

 

458,349

 

 

439,806

 

Gross profit

 

235,814

 

232,493

 

 

 

888,012

 

 

896,289

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative

 

143,320

 

185,389

 

 

 

709,651

 

 

601,554

 

Research and development

 

663

 

1,564

 

 

 

3,115

 

 

4,540

 

Amortization of purchased intangible assets

 

9,794

 

12,687

 

 

 

47,274

 

 

48,102

 

Operating expenses

 

153,777

 

199,640

 

 

 

760,040

 

 

654,196

 

Operating income

 

82,037

 

32,853

 

 

 

127,972

 

 

242,093

 

Equity in net income (loss) of unconsolidated affiliates

 

1,344

 

1,521

 

 

 

(295

)

 

16,068

 

Interest income (expense), net

 

411

 

(2,711

)

 

 

1,281

 

 

(14,470

)

Other income, net

 

2,332

 

2,587

 

 

 

20,832

 

 

6,307

 

Other income, net

 

4,087

 

1,397

 

 

 

21,818

 

 

7,905

 

Income before income taxes

 

86,124

 

34,250

 

 

 

149,790

 

 

249,998

 

Income tax expense

 

25,519

 

15,345

 

 

 

43,071

 

 

75,111

 

Net income

 

60,605

 

18,905

 

 

 

106,719

 

 

174,887

 

Net loss attributable to non-controlling interest

 

71

 

2,558

 

 

 

12,825

 

 

139

 

Net income attributable to stockholders

$

60,676

$

21,463

 

 

$

119,544

 

$

175,026

 

 

 

 

 

 

 

Calculation of GAAP Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

Numerator for basic and diluted earnings per share:

 

 

 

 

 

Net income attributable to stockholders

$

60,676

$

21,463

 

 

$

119,544

 

$

175,026

 

 

 

 

 

 

 

Denominator for earnings per share:

 

 

 

 

 

Basic weighted average shares outstanding

 

104,838

 

119,064

 

 

 

113,791

 

 

118,767

 

Effect of dilutive securities:

 

 

 

 

 

Stock options

 

—

 

14

 

 

 

—

 

 

81

 

Restricted stock units

 

758

 

540

 

 

 

553

 

 

524

 

Performance share awards

 

—

 

443

 

 

 

64

 

 

517

 

Diluted weighted average shares

 

105,596

 

120,061

 

 

 

114,408

 

 

119,889

 

 

 

 

 

 

 

Earnings per share attributable to stockholders:

 

 

 

 

 

Basic

$

0.58

$

0.18

 

 

$

1.05

 

$

1.47

 

Diluted

$

0.57

$

0.18

 

 

$

1.04

 

$

1.46

 

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

 

June 30, 2024

June 30, 2023

Assets

 

 

Cash and cash equivalents

$

125,146

 

$

89,793

 

Accounts receivable (net of $1,455 and $2,878 allowance for credit losses, respectively)

 

126,694

 

 

115,295

 

Contract assets (net of $1,248 and $885 allowance for credit losses, respectively)

 

335,831

 

 

299,219

 

Inventory

 

79,799

 

 

76,932

 

Prepaid expenses and other current assets

 

80,546

 

 

60,387

 

Total current assets

 

748,016

 

 

641,626

 

Property and equipment (net of $742,063 and $662,554 accumulated depreciation, respectively)

 

205,711

 

 

212,308

 

Intangible assets (net of $295,955 and $265,684 accumulated amortization, respectively)

 

269,259

 

 

430,030

 

Goodwill

 

995,852

 

 

1,012,355

 

Deferred income tax assets

 

776,202

 

 

653,629

 

Deferred compensation plan assets

 

54,422

 

 

50,346

 

Investments in unconsolidated affiliates

 

228,562

 

 

231,826

 

Operating lease right-of-use assets

 

20,635

 

 

29,252

 

Other assets

 

102,790

 

 

110,115

 

Total assets

$

3,401,449

 

$

3,371,487

 

 

 

 

Liabilities and stockholders' equity

 

Accounts payable

$

60,361

 

$

54,375

 

Accrued expenses

 

65,567

 

 

47,113

 

Revenue share obligations

 

292,792

 

 

262,288

 

Accrued compensation and benefits

 

101,366

 

 

60,591

 

Deferred revenue

 

19,642

 

 

24,311

 

Current portion of notes payable to former limited partners

 

101,523

 

 

99,665

 

Line of credit and current portion of long-term debt

 

1,008

 

 

216,546

 

Current portion of liability related to the sale of future revenues

 

51,798

 

 

—

 

Other current liabilities

 

52,506

 

 

50,574

 

Total current liabilities

 

746,563

 

 

815,463

 

Long-term debt, less current portion

 

—

 

 

734

 

Notes payable to former limited partners, less current portion

 

—

 

 

101,523

 

Deferred compensation plan obligations

 

54,422

 

 

50,346

 

Operating lease liabilities, less current portion

 

11,170

 

 

21,864

 

Liability related to the sale of future revenues, less current portion

 

599,423

 

 

—

 

Other liabilities

 

27,640

 

 

47,202

 

Total liabilities

 

1,439,218

 

 

1,037,132

 

 

 

 

Commitments and contingencies

 

 

Stockholders' equity:

 

 

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 111,456,454 shares issued and 105,027,079 shares outstanding at June 30, 2024 and 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023

 

1,115

 

 

1,256

 

Treasury stock, at cost; 6,429,375 shares at both June 30, 2024 and June 30, 2023

 

(250,129

)

 

(250,129

)

Additional paid-in capital

 

2,105,684

 

 

2,178,134

 

Retained earnings

 

105,590

 

 

405,102

 

Accumulated other comprehensive loss

 

(29

)

 

(8

)

Total stockholders' equity

 

1,962,231

 

 

2,334,355

 

Total liabilities and stockholders' equity

$

3,401,449

 

$

3,371,487

 

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

Year Ended June 30,

 

 

2024

 

 

2023

 

Operating activities

 

 

Net income

$

106,719

 

$

174,887

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

129,002

 

 

133,793

 

Equity in net loss (income) of unconsolidated affiliates

 

295

 

 

(16,068

)

Deferred income taxes

 

(122,573

)

 

71,403

 

Stock-based compensation

 

23,290

 

 

13,734

 

Impairment of assets

 

140,053

 

 

56,718

 

Other, net

 

(4,518

)

 

6,501

 

Changes in operating assets and liabilities, net of the effects of acquisitions:

 

 

Accounts receivable

 

(11,399

)

 

477

 

Contract assets

 

(39,265

)

 

(41,088

)

Inventory

 

(2,867

)

 

42,720

 

Prepaid expenses and other assets

 

(5,920

)

 

21,056

 

Accounts payable

 

8,717

 

 

7,415

 

Revenue share obligations

 

30,504

 

 

16,893

 

Accrued expenses, deferred revenue and other liabilities

 

44,522

 

 

(43,898

)

Net cash provided by operating activities

$

296,560

 

$

444,543

 

Investing activities

 

 

Purchases of property and equipment

$

(81,189

)

$

(82,302

)

Sale of investment in unconsolidated affiliates

 

12,753

 

 

—

 

Acquisition of businesses and equity method investments, net of cash acquired

 

—

 

 

(187,750

)

Investment in unconsolidated affiliates

 

(30

)

 

(2,060

)

Other

 

—

 

 

(1,510

)

Net cash used in investing activities

$

(68,466

)

$

(273,622

)

Financing activities

 

 

Payments on notes payable

$

(100,937

)

$

(100,859

)

Proceeds from credit facility

 

—

 

 

470,000

 

Payments on credit facility

 

(215,000

)

 

(405,000

)

Proceeds from sale of future revenues

 

681,427

 

 

—

 

Payments on liability related to the sale of future revenues

 

(31,535

)

 

—

 

Cash dividends paid

 

(95,207

)

 

(100,233

)

Repurchase of Class A common stock

 

(400,000

)

 

—

 

Payments on deferred consideration related to acquisition of business

 

(27,187

)

 

(27,927

)

Proceeds from exercise of stock options under equity incentive plan

 

—

 

 

6,078

 

Other, net

 

(4,281

)

 

(9,325

)

Net cash used in financing activities

$

(192,720

)

$

(167,266

)

Effect of exchange rate changes on cash flows

 

(21

)

 

(5

)

Net increase in cash and cash equivalents

 

35,353

 

 

3,650

 

Cash and cash equivalents at beginning of year

 

89,793

 

 

86,143

 

Cash and cash equivalents at end of period

$

125,146

 

$

89,793

 

Supplemental Financial Information

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(Unaudited)

(In thousands)

 

 

 

 

Year Ended

June 30,

 

 

2024

 

 

2023

 

Net cash provided by operating activities

$

296,560

 

$

444,543

 

Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)

 

(99,665

)

 

(97,806

)

Purchases of property and equipment

 

(81,189

)

 

(82,302

)

Free Cash Flow

$

115,706

 

$

264,435

_________________________________

(a)

 

Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with Premier's August 2020 restructuring are presented in the Consolidated Statements of Cash Flows under “Payments made on notes payable." During the year ended June 30, 2024, the company paid $102.7 million to members including imputed interest of $3.0 million which is included in net cash provided by operating activities. During the year ended June 30, 2023, the company paid $102.7 million to members, including imputed interest of $4.9 million which is included in net cash provided by operating activities.

 

 

Supplemental Financial Information

Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA

Reconciliation of Operating Income to Segment Adjusted EBITDA

Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

 

2024

 

 

2023

 

Net income

$

60,605

 

$

18,905

 

 

$

106,719

 

$

174,887

 

Interest (income) expense, net

 

(411

)

 

2,711

 

 

 

(1,281

)

 

14,470

 

Income tax expense

 

25,519

 

 

15,345

 

 

 

43,071

 

 

75,111

 

Depreciation and amortization

 

20,636

 

 

20,538

 

 

 

81,728

 

 

85,691

 

Amortization of purchased intangible assets

 

9,794

 

 

12,687

 

 

 

47,274

 

 

48,102

 

EBITDA

 

116,143

 

 

70,186

 

 

 

277,511

 

 

398,261

 

Stock-based compensation

 

205

 

 

(2,504

)

 

 

23,876

 

 

14,355

 

Acquisition- and disposition-related expenses

 

4,117

 

 

5,559

 

 

 

12,612

 

 

17,151

 

Strategic initiative and financial restructuring-related expenses

 

(119

)

 

2,843

 

 

 

2,850

 

 

13,831

 

Equity in net (income) loss of unconsolidated affiliates

 

(1,344

)

 

(1,521

)

 

 

295

 

 

(16,068

)

Gain on sale of investment in unconsolidated affiliates

 

—

 

 

—

 

 

 

(11,046

)

 

—

 

Impairment of assets

 

—

 

 

56,718

 

 

 

140,053

 

 

56,718

 

Other reconciling items, net

 

(309

)

 

(221

)

 

 

(309

)

 

(533

)

Adjusted EBITDA

$

118,693

 

$

131,060

 

 

$

445,842

 

$

483,715

 

 

 

 

 

 

 

Income before income taxes

$

86,124

 

$

34,250

 

 

$

149,790

 

$

249,998

 

Equity in net (income) loss of unconsolidated affiliates

 

(1,344

)

 

(1,521

)

 

 

295

 

 

(16,068

)

Interest (income) expense, net

 

(411

)

 

2,711

 

 

 

(1,281

)

 

14,470

 

Other income, net

 

(2,332

)

 

(2,587

)

 

 

(20,832

)

 

(6,307

)

Operating income

 

82,037

 

 

32,853

 

 

 

127,972

 

 

242,093

 

Depreciation and amortization

 

20,636

 

 

20,538

 

 

 

81,728

 

 

85,691

 

Amortization of purchased intangible assets

 

9,794

 

 

12,687

 

 

 

47,274

 

 

48,102

 

Stock-based compensation

 

205

 

 

(2,504

)

 

 

23,876

 

 

14,355

 

Acquisition- and disposition-related expenses

 

4,117

 

 

5,559

 

 

 

12,612

 

 

17,151

 

Strategic initiative and financial restructuring-related expenses

 

(119

)

 

2,843

 

 

 

2,850

 

 

13,831

 

Deferred compensation plan expense

 

1,400

 

 

2,274

 

 

 

8,769

 

 

5,422

 

Impairment of assets

 

—

 

 

56,718

 

 

 

140,053

 

 

56,718

 

Other reconciling items, net

 

623

 

 

92

 

 

 

708

 

 

352

 

Adjusted EBITDA

$

118,693

 

$

131,060

 

 

$

445,842

 

$

483,715

 

 

 

 

 

 

 

SEGMENT ADJUSTED EBITDA

 

 

 

 

 

Supply Chain Services

$

123,445

 

$

126,688

 

 

$

466,931

 

$

483,666

 

Performance Services

 

33,672

 

 

36,266

 

 

 

113,440

 

 

123,556

 

Corporate

 

(38,424

)

 

(31,894

)

 

 

(134,529

)

 

(123,507

)

Adjusted EBITDA

$

118,693

 

$

131,060

 

 

$

445,842

 

$

483,715

 

 

 

 

 

 

 

Net income attributable to stockholders

$

60,676

 

$

21,463

 

 

$

119,544

 

$

175,026

 

Income tax expense

 

25,519

 

 

15,345

 

 

 

43,071

 

 

75,111

 

Amortization of purchased intangible assets

 

9,794

 

 

12,687

 

 

 

47,274

 

 

48,102

 

Stock-based compensation

 

205

 

 

(2,504

)

 

 

23,876

 

 

14,355

 

Acquisition- and disposition-related expenses

 

4,117

 

 

5,559

 

 

 

12,612

 

 

17,151

 

Strategic initiative and financial restructuring-related expenses

 

(119

)

 

2,843

 

 

 

2,850

 

 

13,831

 

Equity in net (income) loss of unconsolidated affiliates

 

(1,344

)

 

(1,521

)

 

 

295

 

 

(16,068

)

Gain on sale of investment in unconsolidated affiliates

 

—

 

 

—

 

 

 

(11,046

)

 

—

 

Impairment of assets

 

—

 

 

56,718

 

 

 

140,053

 

 

56,718

 

Other reconciling items, net

 

752

 

 

(1,514

)

 

 

(8,114

)

 

5,108

 

Adjusted income before income taxes

 

99,600

 

 

109,076

 

 

 

370,415

 

 

389,334

 

Income tax expense on adjusted income before income taxes

 

26,892

 

 

28,360

 

 

 

100,012

 

 

101,227

 

Adjusted net income

$

72,708

 

$

80,716

 

 

$

270,403

 

$

288,107

 

Supplemental Financial Information

Reconciliation of GAAP EPS to Adjusted EPS

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

Net income attributable to stockholders

$

60,676

 

$

21,463

 

 

$

119,544

 

$

175,026

 

Income tax expense

 

25,519

 

 

15,345

 

 

 

43,071

 

 

75,111

 

Amortization of purchased intangible assets

 

9,794

 

 

12,687

 

 

 

47,274

 

 

48,102

 

Stock-based compensation

 

205

 

 

(2,504

)

 

 

23,876

 

 

14,355

 

Acquisition- and disposition-related expenses

 

4,117

 

 

5,559

 

 

 

12,612

 

 

17,151

 

Strategic initiative and financial restructuring-related expenses

 

(119

)

 

2,843

 

 

 

2,850

 

 

13,831

 

Equity in net (income) loss of unconsolidated affiliates

 

(1,344

)

 

(1,521

)

 

 

295

 

 

(16,068

)

Gain on sale of investment in unconsolidated affiliates

 

—

 

 

—

 

 

 

(11,046

)

 

—

 

Impairment of assets

 

—

 

 

56,718

 

 

 

140,053

 

 

56,718

 

Other reconciling items, net

 

752

 

 

(1,514

)

 

 

(8,114

)

 

5,108

 

Adjusted income before income taxes

 

99,600

 

 

109,076

 

 

 

370,415

 

 

389,334

 

Income tax expense on adjusted income before income taxes

 

26,892

 

 

28,360

 

 

 

100,012

 

 

101,227

 

Adjusted net income

$

72,708

 

$

80,716

 

 

$

270,403

 

$

288,107

 

 

 

 

 

 

 

Weighted average:

 

 

 

 

 

Basic weighted average shares outstanding

 

104,838

 

 

119,064

 

 

 

113,791

 

 

118,767

 

Dilutive shares

 

758

 

 

997

 

 

 

617

 

 

1,122

 

Weighted average shares outstanding - diluted

 

105,596

 

 

120,061

 

 

 

114,408

 

 

119,889

 

 

 

 

 

 

 

Basic earnings per share attributable to stockholders

$

0.58

 

$

0.18

 

 

$

1.05

 

$

1.47

 

Income tax expense

 

0.24

 

 

0.13

 

 

 

0.38

 

 

0.63

 

Amortization of purchased intangible assets

 

0.09

 

 

0.11

 

 

 

0.42

 

 

0.41

 

Stock-based compensation

 

—

 

 

(0.02

)

 

 

0.21

 

 

0.12

 

Acquisition- and disposition-related expenses

 

0.04

 

 

0.05

 

 

 

0.11

 

 

0.14

 

Strategic initiative and financial restructuring-related expenses

 

—

 

 

0.02

 

 

 

0.03

 

 

0.12

 

Equity in net (income) loss of unconsolidated affiliates

 

(0.01

)

 

(0.01

)

 

 

—

 

 

(0.14

)

Gain on sale of investment in unconsolidated affiliates

 

—

 

 

—

 

 

 

(0.10

)

 

—

 

Impairment of assets

 

—

 

 

0.48

 

 

 

1.23

 

 

0.48

 

Other reconciling items, net

 

0.01

 

 

(0.02

)

 

 

(0.08

)

 

0.04

 

Impact of corporation taxes

 

(0.26

)

 

(0.24

)

 

 

(0.88

)

 

(0.85

)

Impact of dilutive shares

 

—

 

 

(0.01

)

 

 

(0.01

)

 

(0.02

)

Adjusted earnings per share

$

0.69

 

$

0.67

 

 

$

2.36

 

$

2.40

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240820981707/en/

Investor contact: Ben Krasinski Senior Director, Investor Relations 704.816.5644 ben_krasinski@premierinc.com

Media contact: Amanda Forster Vice President, Public Relations 202.879.8004 amanda_forster@premierinc.com