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    PINC   US74051N1028

PREMIER, INC.

(PINC)
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Premier : Reports Fiscal-Year 2021 Third-Quarter Results and Raises Fiscal Year 2021 Guidance

05/06/2021 | 12:32pm EDT

Premier, Inc. Reports Fiscal-Year 2021 Third-Quarter Results

and Raises Fiscal Year 2021 Guidance

CHARLOTTE, N.C., May 4, 2021 - Premier, Inc. (NASDAQ: PINC) today reported financial results for the fiscal year (FY) 2021 third quarter ended March 31, 2021 and raised its fiscal 2021 financial guidance.

'I am excited to take the reins as Premier's new CEO and am pleased with our fiscal 2021 third quarter performance. Our results demonstrate our continued focus on execution and the differentiated solutions we deliver to our members and other customers that help them deliver and provide access to higher quality, more cost-effective healthcare,' said Michael J. Alkire, Premier's president and CEO. 'Products revenue grew significantly quarter-over-quarter and helped mitigate the impact on our net administrative fees revenue from ongoing lower utilization as a result of the COVID-19 pandemic.'

Alkire continued, 'Based on our third quarter results and our outlook for the remainder of fiscal 2021, we are raising our fiscal 2021 guidance. As we look ahead, we believe we are well-positioned to continue executing our strategy, while at the same time helping our members navigate the challenges of the pandemic, to drive long-term, sustainable growth and value to all our stakeholders.'

Fiscal Third-Quarter 2021 Results and Recent Highlights:

(Financial comparisons are for fiscal third quarter of 2021 vs. fiscal third quarter of 2020)

GAAP net revenue increased 40% to $469.9 million from $334.8 million a year ago.

Supply Chain Services segment revenue increased 56% to $371.2 million from $238.6 million a year ago.

Performance Services segment revenue increased 3% to $98.7 million from $96.2 million a year ago.

GAAP net income of $51.4 million decreased from $73.2 million a year ago.

GAAP diluted earnings per share (EPS) of $0.39 compared to $0.54 per share a year ago.

Adjusted EBITDA* of $121.2 million decreased 22% from $155.9 million a year ago primarily as a result of the impact of the amended GPO agreements that were effective on July 1, 2020 and the Acurity/Nexera asset acquisition.

Adjusted net income* of $78.5 million decreased 12% from $88.9 million a year ago and adjusted EPS* decreased 12% to $0.64 from $0.73 a year ago.

On March 1, 2021, Premier acquired substantially all the assets and certain liabilities of Invoice Delivery Services, LP for $80 million.

On April 23, 2021, Premier's Board of Directors declared a quarterly cash dividend of $0.19 per share, payable on June 15, 2021, to stockholders of record as of June 1, 2021.

On May 1, 2021, Michael J. Alkire assumed the chief executive officer role at Premier.

*

Descriptions of consolidated and segment adjusted (non-GAAP) financial measures and non-GAAP free cash flow are provided below under 'Use and Definition of Non-GAAP Financial Measures,' and reconciliations are provided in the tables at the end of this release.

All results presented in this press release reflect continuing operations following completion of the sale and exit of the Specialty Pharmacy business on June 7, 2019.

1

Consolidated Fiscal 2021 Third Quarter Financial Highlights

Consolidated Third-Quarter Financial Highlights
Three Months Ended March 31, Nine Months Ended March 31,
(in thousands, except per share data) 2021 2020 % Change 2021 2020 % Change

Net Revenue:

Supply Chain Services:

Net administrative fees

$ 146,553 $ 174,049 (16 )% $ 424,537 $ 518,566 (18 )%

Other services and support

8,630 3,396 154 % 18,307 8,439 117 %

Services

155,183 177,445 (13 )% 442,844 527,005 (16 )%

Products

215,995 61,183 253 % 511,080 167,344 205 %

Total Supply Chain Services

371,178 238,628 56 % 953,924 694,349 37 %

Performance Services

98,745 96,195 3 % 285,713 262,490 9 %

Total

$ 469,923 $ 334,823 40 % $ 1,239,637 $ 956,839 30 %

Net income from continuing operations

$ 51,444 $ 73,212 (30 )% $ 277,033 $ 235,726 18 %

Net income from continuing operations attributable to stockholders

$ 48,321 $ 340,726 nm $ 234,445 $ 620,262 nm

Adjusted net income from continuing operations

$ 48,321 $ 66,145 nm $ 234,445 $ 205,719 nm

NON-GAAP FINANCIAL MEASURES*:

Adjusted EBITDA:

Supply Chain Services

$ 117,949 $ 149,212 (21 )% $ 339,538 $ 447,081 (24 )%

Performance Services

35,950 34,634 4 % 109,675 84,977 29 %

Total segment adjusted EBITDA

153,899 183,846 (16 )% 449,213 532,058 (16 )%

Corporate

(32,692 ) (27,957 ) 17 % (92,445 ) (87,508 ) 6 %

Total

$ 121,207 $ 155,889 (22 )% $ 356,768 $ 444,550 (20 )%

Adjusted net income

$ 78,535 $ 88,908 (12 )% $ 232,023 $ 265,668 (13 )%

Earnings per share on adjusted net income - diluted

$ 0.64 $ 0.73 (12 )% $ 1.89 $ 2.14 (12 )%
*

Refer to the supplemental financial information at the end of this release for reconciliation of reported GAAP results to non-GAAP results.

Fiscal 2021 Outlook and Guidance

The statements in this section are forward-looking statements. For additional information regarding the use and limitations of such statements, refer to 'Forward-Looking Statements' below and 'Risk Factors' section of the company's most recent Form 10-K filed with the Securities and Exchange Commission ('SEC'), as updated from time to time in the company's other filings with the SEC.

Premier increased its financial guidance for fiscal year 2021. The company expects total net revenue to be in the range of $1.671 billion to $1.711 billion, adjusted EBITDA to be in the range of $460 million to $475 million, and adjusted EPS to be in the range of $2.42 to $2.51. The company also reiterated that, adjusted for the impact of the COVID-19 pandemic, beginning in fiscal year 2022, it expects to target a multi-year, compound annual growth rate in the mid-to-high single digits for consolidated net revenue, adjusted EBITDA and adjusted EPS.

Refer to the table below for specific fiscal 2021 guidance metrics and related footnotes. In addition, refer to the 'Premier's Use and Definition of Non-GAAP Numbers' and 'Premier's Use of Forward-Looking Non-GAAP Measures' at the end of this release for descriptions of consolidated and adjusted (non-GAAP) financial measures.

2

Guidance Metric

Fiscal 2021 Guidance Range*

(as of May 4, 2021)

Previous Fiscal 2021 Guidance Range

(as of February 2, 2021)

Segment Net Revenue:

Supply Chain Services

$1.300 billion to $1.330 billion $1.242 billion to $1.272 billion

Performance Services

$371 million to $381 million $366 million to $381 million
Total Net Revenue $1.671 billion to $1.711 billion $1.608 billion to $1.653 billion
Adjusted EBITDA $460 million to $475 million $445 million to $465 million
Adjusted EPS $2.42 to $2.51 $2.26 to $2.39

Fiscal 2021 guidance assumes the realization of the following key assumptions:

Net administrative fees revenue of $565 million to $580 million

Direct sourcing products revenue of $700 million to $720 million

Capital expenditures of $100 million to $105 million

Effective tax rate of 22%

Does not include the effect of any potential future significant acquisitions

*

The company 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. Refer to 'Use of Forward-Looking Non-GAAP Measures' below for additional explanation.

Results of Operations for the Three Months Ended March 31, 2021

(As compared with the three months ended March 31, 2020)

GAAP net revenue of $469.9 million increased 40% from $334.8 million for the same period a year ago.

GAAP net income of $51.4 million decreased from $73.2 million a year ago primarily related to lower net administrative fees revenue as a result of the amended GPO agreements and non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition, partially offset by a reduction in the loss on certain put and call rights in the current period associated with Premier's minority investment in FFF Enterprises.

Adjusted EBITDA of $121.2 million decreased 22% from $155.9 million for the same period a year ago primarily as a result of the impact of the aforementioned amended GPO agreements and the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition.

Adjusted net income of $78.5 million decreased 12% from $88.9 million for the same period a year ago. Adjusted earnings per share decreased 12% to $0.64 from $0.73 for the same period a year ago.

Segment Results

(For the fiscal third quarter of 2021 as compared with the fiscal third quarter of 2020)

Supply Chain Services

Supply Chain Services segment net revenue of $371.2 million increased 56% from $238.6 million for the same quarter a year ago.

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Net administrative fees revenue of $146.6 million decreased $27.5 million, or 16%, from $174.0 million a year ago, primarily due to the amended GPO agreements, the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition and the ongoing impact of the COVID-19 pandemic. These decreases were partially offset by the addition of new members and further penetration of existing member spend.

Products revenue of $216.0 million increased $154.8 million, or 253%, from $61.2 million a year ago, primarily driven by growth in commodity products and aggregated purchasing of certain other products as well as the company's ongoing efforts to provide certain personal protective equipment (PPE) and other high-demand supplies for its members as a result of the COVID-19 pandemic.

Segment adjusted EBITDA of $117.9 million decreased 21% from $149.2 million for the same period a year ago, primarily as a result of the previously mentioned decline in net administrative fees revenue related to the amended GPO agreements and the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition.

Performance Services

Performance Services segment net revenue of $98.7 million increased 3% from $96.2 million for the same quarter a year ago, primarily driven by incremental revenue in the Contigo Health business related to the acquisition of Health Design Plus in May 2020, growth in life sciences business and growth in the cost management and performance improvement consulting businesses. These increases were partially offset by lower revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period which included significant revenue from enterprise analytics license agreements entered into during the prior year quarter. In addition, the increases were partially offset by lower revenue as a result of the Centers for Medicare and Medicaid Services (CMS) planned discontinuation of the company's former CMS government contract as part of the overall Hospital Improvement Innovation Network program that ended on March 31, 2020.

Segment adjusted EBITDA of $36.0 million increased 4% from $34.6 million for the same period a year ago primarily due to the aforementioned increase in revenue.

Results of Operations for the Nine Months Ended March 31, 2021

(As compared with the nine months ended March 31, 2020)

GAAP net revenue of $1,239.6 million increased 30% from $956.8 million for the same period a year ago.

GAAP net income was $277.0 million, an increase of 18%, compared with $235.7 million a year ago. In accordance with GAAP, fiscal 2021 and 2020 nine-month net income attributable to stockholders includes non-cash adjustments of $(26.7) million and $516.7 million, respectively, to reflect the change in the redemption value of limited partners' Class B common unit ownership at the end of each period. These non-cash adjustments resulted primarily from changes in the number of Class B common units outstanding and the company's stock price between periods and do not reflect results of the company's business operations. The adjustment for nine months ended March 31, 2021 reflects the change in the redemption value of limited partners' Class B common unit ownership for the period from July 1, 2020 through July 31, 2020, due to the Board of Directors being comprised of a majority of independent directors on July 31, 2020. As a result, Premier will no longer make this adjustment in subsequent periods.

After the previously mentioned non-cash adjustments, the company reported net income attributable to stockholders of $234.4 million compared with net income of $620.3 million a year ago. On a diluted per share basis, net income was $2.03 compared with $1.66 for the same period a year ago. See 'Calculation of GAAP Earnings per Share' in the income statement section of this press release.

4

Adjusted EBITDA of $356.8 million decreased 20% from $444.6 million for the same period the prior year. Adjusted net income of $232.0 million decreased 13% from $265.7 million for the same period a year ago. Adjusted earnings per share decreased 12% to $1.89 from $2.14 for the same period a year ago.

Supply Chain Services segment net revenue of $953.9 million increased 37% from $694.3 million for the same quarter a year ago. Supply Chain Services segment adjusted EBITDA of $339.5 million decreased 24% from $447.1 million for the same period a year ago.

Performance Services segment net revenue of $285.7 million increased 9% from $262.5 million for the same quarter a year ago. Performance Services segment adjusted EBITDA of $109.7 million increased 29% from $85.0 million for the same period a year ago.

Cash Flows and Liquidity

Net cash provided by operating activities for the nine months ended March 31, 2021 was $192.4 million compared with $248.1 million for the same period last year. The decrease was primarily driven by lower net administrative fees revenue as a result of the amended GPO agreements and the impact of the COVID-19 pandemic. In addition, changes in working capital, including higher levels of inventory, primarily driven by the impact of aggregated purchasing of PPE as a result of the COVID-19 pandemic impacted net cash provided by operating activities.

Net cash used in investing activities and net cash provided by financing activities for the nine months ended March 31, 2021 were $149.3 million and $9.8 million, respectively. At March 31, 2021, cash and cash equivalents was $132.6 million compared with $99.3 million at June 30, 2020, and the company's five-year, $1.0 billion revolving credit facility had an outstanding balance of $200.0 million, of which $75 million was repaid in April 2021.

Free cash flow for the nine months ended March 31, 2021 was $91.3 million compared with $213.9 million for the same period a year ago. The decrease was primarily due to the same factors that impacted net cash provided by operating activities as well as payments made to former limited partners of Premier LP in connection with the termination of the Tax Receivable Agreement as part of the company's restructure in August 2020. These factors were partially offset by the elimination of tax distributions to limited partners also as a result of the restructure.

Conference Call

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 will be available at the following link: Premier Webcast Link. 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 providing conference ID number 6698593:

Domestic participant dial-in number (toll-free): (844) 296-7719
International participant dial-in number: (574) 990-1041

Premier's presentation that will accompany the conference call and webcast can be accessed via the following link: Premier Events.

5

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,100 U.S. hospitals and health systems and approximately 200,000 other providers and organizations to transform healthcare. 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 Twitter, Facebook, LinkedIn, YouTube and Instagram 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 (historically referred to as 'adjusted fully distributed net income'), adjusted earnings per share (historically referred to as 'adjusted fully distributed earnings per share'), and free cash flow 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, 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 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. Free cash flow is important because it allows the company to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related or complimentary businesses and/or debt reduction.

In addition, adjusted fully distributed net income and adjusted fully distributed earnings per share eliminate the variability of non-controlling interest as a result of member owner exchanges of Class B common units and corresponding Class B common stock into shares of Class A common stock and other potentially dilutive equity transactions which are outside of management's control. These measures 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 and non-recurring items and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units into shares of Class A common stock.

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, 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.

6

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, 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 and including equity in net income of unconsolidated affiliates.

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 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.

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 impact of adjustment of redeemable limited partners' capital to redemption amount, (iv) excluding the effect of non-recurring or non-cash items, including certain strategic and financial restructuring expenses, (v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and (vi) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items.

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 TRA payments to limited partners 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.

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, 2020 filed with the Securities and Exchange Commission ('SEC'), as may be updated in subsequent filings with the SEC.

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 strategic and acquisition related expenses for

7

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 are not currently determinable but may be significant.

Cautionary Note Regarding Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, such as those related to the timing and continuing impact of COVID-19, the ability to execute our strategy and drive long-term, sustainable growth and value to all our stakeholders, the statements related to fiscal 2021 outlook and guidance and the key assumptions underlying such guidance, and expected target multi-year, compound annual growth rate in the mid-to-high single digits for consolidated net revenue, adjusted EBITDA and adjusted EPS beginning in fiscal year 2022 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 uncertainties, many of which are outside Premier's control. More information on potential factors that could affect Premier's 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 those discussed under the 'Risk Factors' and 'Cautionary Note Regarding Forward-Looking Statements' section of Premier's Form 10-K for the year ended June 30, 2020 as well as the Form 10-Q for the quarter ended March 31, 2021, expected to be filed with the SEC shortly after the date of this release, and also 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.

Contacts:

Investor contact:

Media contact:

Angie McCabe

Amanda Forster

Vice President, Investor Relations

Vice President, Public Relations

704.816.3888

202.879.8004

angie_mccabe@premierinc.com

amanda_forster@premierinc.com

8

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020

Net revenue:

Net administrative fees

$ 146,553 $ 174,049 $ 424,537 $ 518,566

Other services and support

107,375 99,591 304,020 270,929

Services

253,928 273,640 728,557 789,495

Products

215,995 61,183 511,080 167,344

Net revenue

469,923 334,823 1,239,637 956,839

Cost of revenue:

Services

46,980 49,007 125,852 143,965

Products

211,136 54,121 496,286 150,415

Cost of revenue

258,116 103,128 622,138 294,380

Gross profit

211,807 231,695 617,499 662,459

Operating expenses:

Selling, general and administrative

134,502 115,289 388,453 315,311

Research and development

715 628 2,013 1,808

Amortization of purchased intangible assets

10,400 13,966 33,864 38,948

Operating expenses

145,617 129,883 424,330 356,067

Operating income

66,190 101,812 193,169 306,392

Equity in net income of unconsolidated affiliates

5,524 4,442 16,023 11,038

Interest and investment loss, net

(3,225 ) (9,966 ) (8,742 ) (9,849 )

(Loss) gain on FFF put and call rights

(5,195 ) (13,906 ) (21,621 ) 8,477

Other income (expense), net

1,594 (5,005 ) 10,167 (1,996 )

Other (expense) income, net

(1,302 ) (24,435 ) (4,173 ) 7,670

Income before income taxes

64,888 77,377 188,996 314,062

Income tax expense (benefit)

13,444 4,165 (88,037 ) 78,336

Net income from continuing operations

51,444 73,212 277,033 235,726

Income from discontinued operations, net of tax

- 5 - 1,009

Net income

51,444 73,217 277,033 236,735

Net income from continuing operations attributable to non-controlling interest

(3,123 ) (35,055 ) (15,903 ) (132,189 )

Net income from discontinued operations attributable to non-controlling interest

- (3 ) - (480 )

Net income attributable to non-controlling interest

(3,123 ) (35,058 ) (15,903 ) (132,669 )

Adjustment of redeemable limited partners' capital to redemption amount

- 302,569 (26,685 ) 516,725

Net income attributable to stockholders

$ 48,321 $ 340,728 $ 234,445 $ 620,791

Calculation of GAAP Earnings per Share

Numerator for basic earnings per share:

Net income from continuing operations attributable to stockholders

$ 48,321 $ 340,726 $ 234,445 $ 620,262

Net income from discontinued operations attributable to stockholders

- 2 - 529

Net income attributable to stockholders

$ 48,321 $ 340,728 $ 234,445 $ 620,791

Numerator for diluted earnings per share:

Net income from continuing operations attributable to stockholders

$ 48,321 $ 340,726 $ 234,445 $ 620,262

Adjustment of redeemable limited partners' capital to redemption amount

- (302,569 ) - (516,725 )

Net income from continuing operations attributable to non-controlling interest

- 35,055 - 132,189

Net income from continuing operations

$ 48,321 $ 73,212 $ 234,445 $ 235,726

Tax effect on Premier, Inc. net income

- (7,067 ) - (30,007 )

9

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020

Adjusted net income from continuing operations

$ 48,321 $ 66,145 $ 234,445 $ 205,719

Net income from discontinued operations attributable to stockholders

$ - $ 2 $ - $ 529

Net income from discontinued operations attributable to non-controlling interest in Premier LP

- 3 - 480

Adjusted net income from discontinued operations

$ - $ 5 $ - $ 1,009

Adjusted net income

$ 48,321 $ 66,150 $ 234,445 $ 206,728

Denominator for basic earnings per share:

Weighted average shares

122,254 69,451 114,596 65,582

Denominator for diluted earnings per share:

Weighted average shares

122,254 69,451 114,596 65,582

Effect of dilutive securities:

Stock options

325 232 300 357

Restricted stock

373 216 336 239

Performance share awards

164 197 133 66

Class B shares outstanding

- 52,374 - 57,786

Weighted average shares and assumed conversions

123,116 122,470 115,365 124,030

Earnings per share attributable to stockholders:

Basic earnings per share attributable to stockholders

$ 0.40 $ 4.91 $ 2.05 $ 9.46

Diluted earnings per share attributable to stockholders

$ 0.39 $ 0.54 $ 2.03 $ 1.66

10

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

March 31, 2021 June 30, 2020

Assets

Cash and cash equivalents

$ 132,584 $ 99,304

Accounts receivable (net of $2,137 and $731 allowance for doubtful accounts, respectively)

188,519 135,063

Contract assets

259,331 215,660

Inventory

225,231 70,997

Prepaid expenses and other current assets

83,527 97,338

Total current assets

889,192 618,362

Property and equipment (net of $503,189 and $452,609 accumulated depreciation, respectively)

223,689 206,728

Intangible assets (net of $279,023 and $245,160 accumulated amortization, respectively)

407,531 417,422

Goodwill

999,777 941,965

Deferred income tax assets

821,439 430,025

Deferred compensation plan assets

55,952 49,175

Investments in unconsolidated affiliates

153,747 133,335

Operating lease right-of-use assets

50,556 57,823

Other assets

80,082 93,680

Total assets

$ 3,681,965 $ 2,948,515

Liabilities, redeemable limited partners' capital and stockholders' equity

Accounts payable

$ 100,348 $ 54,841

Accrued expenses

64,255 53,500

Revenue share obligations

216,054 145,777

Limited partners' distribution payable

- 8,012

Accrued compensation and benefits

80,234 73,262

Deferred revenue

35,933 35,446

Current portion of tax receivable agreements

- 13,689

Current portion of notes payable to members

95,483 -

Line of credit and current portion of long-term debt

203,964 79,560

Other liabilities

56,574 31,987

Total current liabilities

852,845 496,074

Long-term debt, less current portion

5,333 4,640

Tax receivable agreements, less current portion

- 279,981

Notes payable to members, less current portion

323,156 -

Deferred compensation plan obligations

55,952 49,175

Deferred tax liabilities

- 17,508

Deferred consideration, less current portion

83,700 112,917

Operating lease liabilities, less current portion

45,654 52,990

Other liabilities

100,758 75,658

Total liabilities

1,467,398 1,088,943

Commitments and contingencies

Redeemable limited partners' capital

- 1,720,309

Stockholders' equity:

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,268,758 shares issued and outstanding at March 31, 2021 and 71,627,462 shares issued and outstanding at June 30, 2020

1,223 716

Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively

- -

Additional paid-in-capital

2,046,836 138,547

Retained earnings

166,508 -

Total stockholders' equity

2,214,567 139,263

Total liabilities, redeemable limited partners' capital and stockholders' equity

$ 3,681,965 $ 2,948,515

11

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended March 31,
2021 2020

Operating activities

Net income

$ 277,033 $ 236,735

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

Income from discontinued operations, net of tax

- (1,009 )

Depreciation and amortization

89,768 114,638

Equity in net income of unconsolidated affiliates

(16,023 ) (11,038 )

Deferred income taxes

(123,307 ) 60,394

Stock-based compensation

27,601 19,048

Remeasurement of tax receivable agreement liabilities

- (24,584 )

Impairment of held to maturity investments

- 8,500

Loss (gain) on FFF put and call rights

21,621 (8,477 )

Other

537 2,078

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

Accounts receivable, inventories, prepaid expenses and other assets

(181,263 ) (95,953 )

Contract assets

(43,733 ) (28,909 )

Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities

140,131 (23,341 )

Net cash provided by operating activities from continuing operations

192,365 248,082

Net cash provided by operating activities from discontinued operations

- 9,338

Net cash provided by operating activities

$ 192,365 $ 257,420

Investing activities

Purchases of property and equipment

$ (66,911 ) $ (69,326 )

Acquisition of businesses, net of cash acquired

(81,152 ) (96,346 )

Investments in unconsolidated affiliates

- (10,165 )

Other

(1,228 ) 3,883

Net cash used in investing activities

$ (149,291 ) $ (171,954 )

Financing activities

Payments made on notes payable

$ (31,692 ) $ (2,046 )

Proceeds from credit facility

225,000 375,000

Payments on credit facility

(100,000 ) (150,000 )

Distributions to limited partners of Premier LP

(9,949 ) (39,590 )

Payments to limited partners of Premier LP related to tax receivable agreements

(24,218 ) (17,425 )

Cash dividends paid

(69,647 ) -

Repurchase of Class A common stock (held as treasury stock)

- (150,093 )

Other

712 (633 )

Net cash (used in) provided by financing activities

$ (9,794 ) $ 15,213

Net increase in cash and cash equivalents

33,280 100,679

Cash and cash equivalents at beginning of year

99,304 141,055

Cash and cash equivalents at end of period

$ 132,584 $ 241,734

12

Supplemental Financial Information

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

(Unaudited)

(In thousands)

Nine Months Ended March 31,
2021 2020

Net cash provided by operating activities from continuing operations (a)

$ 192,365 $ 340,228

Purchases of property and equipment

(66,911 ) (69,326 )

Distributions to limited partners of Premier LP

(9,949 ) (39,590 )

Payments to limited partners of Premier LP related to tax receivable agreements

(24,218 ) (17,425 )

Free Cash Flow

$ 91,287 $ 213,887
(a)

Net cash provided by operating activities from continuing operations excludes the impact of the prepaid contract administrative fee share for one-time rebates to certain Acurity, Inc. members, as agreed to by Acurity, Inc. prior to entering into the Purchase Agreement, which was excluded from the purchase price of the Acurity and Nexera asset acquisition.

13

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 March 31, Nine Months Ended March 31,
2021 2020 2021 2020

Net income from continuing operations

$ 51,444 $ 73,212 $ 277,033 $ 235,726

Interest and investment loss, net

3,225 9,966 8,742 9,849

Income tax expense (benefit)

13,444 4,165 (88,037 ) 78,336

Depreciation and amortization

19,337 25,777 55,904 75,690

Amortization of purchased intangible assets

10,400 13,966 33,864 38,948

EBITDA

97,850 127,086 287,506 438,549

Stock-based compensation

13,180 7,668 27,970 19,358

Acquisition and disposition related expenses

4,126 7,287 14,889 16,263

Remeasurement of tax receivable agreement liabilities

- (902 ) - (24,584 )

Loss (gain) on FFF put and call rights

5,195 13,906 21,621 (8,477 )

Other expense

856 844 4,782 3,441

Adjusted EBITDA

$ 121,207 $ 155,889 $ 356,768 $ 444,550

Income before income taxes

$ 64,888 $ 77,377 $ 188,996 $ 314,062

Equity in net income of unconsolidated affiliates

(5,524 ) (4,442 ) (16,023 ) (11,038 )

Interest and investment loss, net

3,225 9,966 8,742 9,849

Loss (gain) on FFF put and call rights

5,195 13,906 21,621 (8,477 )

Other (income) expense

(1,594 ) 5,005 (10,167 ) 1,996

Operating income

66,190 101,812 193,169 306,392

Depreciation and amortization

19,337 25,777 55,904 75,690

Amortization of purchased intangible assets

10,400 13,966 33,864 38,948

Stock-based compensation

13,180 7,668 27,970 19,358

Acquisition and disposition related expenses

4,126 7,287 14,889 16,263

Remeasurement of tax receivable agreement liabilities

- (902 ) - (24,584 )

Equity in net income of unconsolidated affiliates

5,524 4,442 16,023 11,038

Deferred compensation plan income (expense)

1,521 (5,476 ) 9,231 (2,484 )

Other expense

929 1,315 5,718 3,929

Adjusted EBITDA

$ 121,207 $ 155,889 $ 356,768 $ 444,550

SEGMENT ADJUSTED EBITDA

Supply Chain Services

$ 117,949 $ 149,212 $ 339,538 $ 447,081

Performance Services

35,950 34,634 109,675 84,977

Corporate

(32,692 ) (27,957 ) (92,445 ) (87,508 )

Adjusted EBITDA

$ 121,207 $ 155,889 $ 356,768 $ 444,550

Net income attributable to stockholders

$ 48,321 $ 340,728 $ 234,445 $ 620,791

Adjustment of redeemable limited partners' capital to redemption amount

- (302,569 ) 26,685 (516,725 )

Net income attributable to non-controlling interest

3,123 35,058 15,903 132,669

Income from discontinued operations, net of tax

- (5 ) - (1,009 )

Income tax expense (benefit)

13,444 4,165 (88,037 ) 78,336

Amortization of purchased intangible assets

10,400 13,966 33,864 38,948

Stock-based compensation

13,180 7,668 27,970 19,358

Acquisition and disposition related expenses

4,126 7,287 14,889 16,263

Remeasurement of tax receivable agreement liabilities

- (902 ) - (24,584 )

Loss (gain) on FFF put and call rights

5,195 13,906 21,621 (8,477 )

Other expense

2,897 844 10,126 3,441

Adjusted income before income taxes

100,686 120,146 297,466 359,011

Income tax expense on adjusted income before income taxes

22,151 31,238 65,443 93,343

Adjusted Net Income

$ 78,535 $ 88,908 $ 232,023 $ 265,668

14

Supplemental Financial Information

Reconciliation of GAAP EPS to Adjusted EPS

(Unaudited)

(In thousands, except per share data)

Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020

Net income attributable to stockholders

$ 48,321 $ 340,728 $ 234,445 $ 620,791

Adjustment of redeemable limited partners' capital to redemption amount

- (302,569 ) 26,685 (516,725 )

Net income attributable to non-controlling interest

3,123 35,058 15,903 132,669

Income from discontinued operations, net of tax

- (5 ) - (1,009 )

Income tax expense (benefit)

13,444 4,165 (88,037 ) 78,336

Amortization of purchased intangible assets

10,400 13,966 33,864 38,948

Stock-based compensation

13,180 7,668 27,970 19,358

Acquisition and disposition related expenses

4,126 7,287 14,889 16,263

Remeasurement of tax receivable agreement liabilities

- (902 ) - (24,584 )

Loss (gain) on FFF put and call rights

5,195 13,906 21,621 (8,477 )

Other expense

2,897 844 10,126 3,441

Adjusted income before income taxes

100,686 120,146 297,466 359,011

Income tax expense on adjusted income before income taxes

22,151 31,238 65,443 93,343

Adjusted Net Income

$ 78,535 $ 88,908 $ 232,023 $ 265,668

Weighted average:

Common shares used for basic and diluted earnings per share

122,254 69,451 114,596 65,582

Potentially dilutive shares

862 645 769 662

Conversion of Class B common units

- 52,374 - 57,786

GAAP weighted average shares outstanding - diluted

123,116 122,470 115,365 124,030

Conversion of potentially dilutive shares

- - - -

Conversion of Class B common units

- - 7,511 -

Weighted average shares outstanding - diluted

123,116 122,470 122,876 124,030

GAAP earnings per share

$ 0.40 $ 4.91 $ 2.05 $ 9.47

Adjustment of redeemable limited partners' capital to redemption amount

- (4.36 ) 0.23 (7.88 )

Net income attributable to non-controlling interest

0.03 0.50 0.14 2.02

Income from discontinued operations, net of tax

- - - (0.02 )

Income tax expense (benefit)

0.11 0.06 (0.77 ) 1.19

Amortization of purchased intangible assets

0.09 0.20 0.30 0.59

Stock-based compensation

0.11 0.11 0.24 0.30

Acquisition and disposition related expenses

0.03 0.10 0.13 0.25

Remeasurement of tax receivable agreement liabilities

- (0.01 ) - (0.37 )

Loss (gain) on FFF put and call rights

0.04 0.20 0.19 (0.13 )

Other expense, net

0.02 0.01 0.09 0.05

Impact of corporation taxes

(0.19 ) (0.45 ) (0.57 ) (1.42 )

Impact of dilutive shares

- (0.54 ) (0.14 ) (1.91 )

Adjusted EPS

$ 0.64 $ 0.73 $ 1.89 $ 2.14

15

Disclaimer

Premier Inc. published this content on 05 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2021 16:31:14 UTC.


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Financials (USD)
Sales 2021 1 688 M - -
Net income 2021 303 M - -
Net Debt 2021 354 M - -
P/E ratio 2021 13,5x
Yield 2021 2,22%
Capitalization 4 185 M 4 185 M -
EV / Sales 2021 2,69x
EV / Sales 2022 3,11x
Nbr of Employees 2 500
Free-Float 99,2%
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Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 38,50 $
Last Close Price 34,23 $
Spread / Highest target 34,4%
Spread / Average Target 12,5%
Spread / Lowest Target -9,44%
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Managers and Directors
NameTitle
Michael J. Alkire President, Chief Executive Officer & Director
Craig S. McKasson Chief Financial & Administrative Officer, SVP
Terry D. Shaw Chairman
Scott Weingarten Chief Clinical & Innovation Officer
Richard J. Statuto Independent Director
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