Premier, Inc. Reports Fiscal-Year 2023 Fourth-Quarter and Full-Year Results

CHARLOTTE, N.C.--()--Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal year 2023 fourth quarter and full year ended June 30, 2023.

"I would like to express my gratitude to our employees for their hard work and ongoing commitment as we continue to serve our vital role as a trusted and embedded partner for our healthcare provider members and other customers as they navigate a very challenging market environment," said Michael J. Alkire, Premier's President and CEO. "Leveraging our unique vantage point at the intersection of providers, suppliers, employers, government agencies and other stakeholders, we continued to focus on innovating around the capabilities that our members and other customers will need in the future as they deliver high-quality, cost-effective healthcare to the communities they serve."

"Our Board of Directors and management team continue to make progress related to our ongoing evaluation of potential strategic alternatives and I am pleased to announce that we closed on the sale of our non-healthcare GPO operations," Alkire continued. "Through this transaction we were able to unlock substantial value for our stockholders by selling a non-core asset and we plan to evaluate the highest return opportunities for deploying the proceeds, including reinvesting in the business, acquisitions that enhance the value of our business and/or the potential to return capital to stockholders."

Consolidated Financial Highlights

 

 

 

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

(in thousands, except per share data)

 

2023

 

 

 

2022

 

 

% Change

 

 

2023

 

 

 

2022

 

 

% Change

Net revenue:

 

 

 

 

 

 

Supply Chain Services:

 

 

 

 

 

 

Net administrative fees

$

158,165

 

$

152,867

 

3

%

$

611,035

 

$

601,128

 

2

%

Software licenses, other services and support

 

8,298

 

 

10,146

 

(18

%)

 

44,261

 

 

37,312

 

19

%

Services and software licenses

 

166,463

 

 

163,013

 

2

%

 

655,296

 

 

638,440

 

3

%

Products

 

61,593

 

 

69,681

 

(12

%)

 

244,659

 

 

393,506

 

(38

%)

Total Supply Chain Services

 

228,056

 

 

232,694

 

(2

%)

 

899,955

 

 

1,031,946

 

(13

%)

Performance Services

 

112,317

 

 

108,021

 

4

%

 

436,177

 

 

400,983

 

9

%

Total segment net revenue

 

340,373

 

 

340,715

 

%

 

1,336,132

 

 

1,432,929

 

(7

%)

Eliminations

 

(9

)

 

(9

)

%

 

(37

)

 

(28

)

32

%

Net revenue

$

340,364

 

$

340,706

 

%

$

1,336,095

 

$

1,432,901

 

(7

%)

 

 

 

 

 

 

 

Net income

$

18,905

 

$

30,711

 

(38

%)

$

174,887

 

$

268,318

 

(35

%)

Net income attributable to stockholders

$

21,463

 

$

29,903

 

(28

%)

$

175,026

 

$

265,867

 

(34

%)

 

 

 

 

 

 

 

Diluted earnings per share attributable to stockholders

$

0.18

 

$

0.25

 

(28

%)

$

1.46

 

$

2.19

 

(33

%)

Consolidated Financial Highlights

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

(in thousands, except per share data)

 

2023

 

 

 

2022

 

 

% Change

 

 

2023

 

 

 

2022

 

 

% Change

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Supply Chain Services

$

128,203

 

$

119,269

 

7

%

 

$

499,431

 

$

500,854

 

%

Performance Services

 

36,272

 

 

37,661

 

(4

%)

 

 

123,859

 

 

126,938

 

(2

%)

Total segment adjusted EBITDA

 

164,475

 

 

156,930

 

5

%

 

 

623,290

 

 

627,792

 

(1

%)

Corporate

 

(31,894

)

 

(34,155

)

7

%

 

 

(123,507

)

 

(129,110

)

4

%

Total

$

132,581

 

$

122,775

 

8

%

 

$

499,783

 

$

498,682

 

%

Adjusted net income

$

81,680

 

$

73,490

 

11

%

 

$

299,330

 

$

302,738

 

(1

%)

Adjusted earnings per share (EPS)

$

0.68

 

$

0.61

 

11

%

 

$

2.50

 

$

2.49

 

%

 

 

 

 

 

 

 

 

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

Results of Operations for the Three Months Ended June 30, 2023

(As compared with the three months ended June 30, 2022)

GAAP net revenue of $340.4 million was flat compared to $340.7 million in the year-ago period. GAAP net revenue was impacted by a decline in direct sourcing products revenue as a result of the impact of excess market supply and members' and other customers' inventory levels and the continued normalization of COVID-19 pandemic-driven demand and pricing for personal protective equipment (PPE) and other related supplies partially offset by growth in net administrative fees and Performance Services segment revenue.

GAAP net income of $18.9 million decreased 38% from $30.7 million in the prior-year period primarily due to the increase in impairment of assets as a result of the goodwill impairment in the current year period primarily attributable to Contigo Health. This decrease in net income was partially offset by lower stock-based compensation expense resulting from lower achievement of performance share awards, lower cost of revenue in the company's direct sourcing business, primarily driven by logistics costs and reduction of inventory reserves, and the impact of the cost-savings plan enacted in the third quarter of fiscal 2023.

GAAP diluted EPS of $0.18 decreased 28% from $0.25 in the same period a year ago due to the aforementioned drivers affecting GAAP net income quarter-over-quarter growth.

Adjusted EBITDA of $132.6 million increased 8% from $122.8 million for the same period a year ago primarily due to an increase in Supply Chain Services adjusted EBITDA and lower corporate expenses partially offset by a decrease in Performance Services adjusted EBITDA. 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 $81.7 million increased 11% from $73.5 million for the same period a year ago. Adjusted EPS of $0.68 increased 11% from $0.61 for the same period a year ago primarily as a result of the same factors that impacted adjusted EBITDA.

Segment Results

(For the fiscal fourth quarter of 2023 as compared with the fiscal fourth quarter of 2022)

Supply Chain Services

Supply Chain Services segment net revenue of $228.1 million decreased 2% from $232.7 million for the same quarter a year ago, primarily reflecting lower products revenue that was partially offset by higher net administrative fees revenue in the fourth quarter of fiscal 2023, as described below.

Net administrative fees revenue of $158.2 million increased 3% from the year ago quarter driven by growth in both Premier's acute and non-acute, or "Continuum of Care," group purchasing organization ("GPO") programs primarily due to recovery of member volumes and further penetration of existing member spend. These increases were partially offset by the following factors: the continued normalization of demand and pricing across certain categories; continued regional variation in patient utilization trends affecting member purchasing; and an increase in aggregate blended member fee share due to market dynamics, including the impact from recent consolidation of certain member health systems.

Products revenue of $61.6 million decreased 12% from $69.7 million in the year-ago period primarily due to continued excess market supply and members' and other customers' inventory levels which contributed to lower demand and pricing in the current year period.

Segment adjusted EBITDA of $128.2 million increased 7% from $119.3 million in the same period a year ago primarily due to an increase in net administrative fees revenue and lower logistics costs in the company's direct sourcing business compared to the prior year period.

Performance Services

Performance Services segment net revenue of $112.3 million increased 4% from $108.0 million for the same quarter a year ago, primarily due to growth in the company's consulting services and certain of its adjacent markets businesses, including revenue contributions from the company's acquisition of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, "TRPN") in October 2022.

Segment adjusted EBITDA of $36.3 million decreased 4% from $37.7 million for the same period a year ago mainly due to higher expenses as the company continued to invest in growth and scalability, primarily in the adjacent markets businesses.

Results of Operations for the Year Ended June 30, 2023

(As compared with the year ended June 30, 2022)

GAAP net revenue of $1,336.1 million decreased 7% from $1,432.9 million for the same period a year ago. The decrease was primarily due to a decline in direct sourcing products revenue, which the company expected, as a result of the impact of excess market supply and members' and other customers' inventory levels and the continued normalization of pandemic-driven demand and pricing for PPE and other related supplies in fiscal 2023 as compared with the prior year. The decrease was partially offset by increases to Performance Services consulting services revenue and revenue contributions from TRPN.

GAAP net income of $174.9 million decreased 35% from $268.3 million in the same period a year ago primarily due to the following factors:

  1. a one-time gain of $64.1 million on the FFF put right in the prior-year period as a result of the termination and corresponding derecognition of the FFF Put Right liability in fiscal year 2022;
  2. a $16.5 million increase in income tax expense primarily attributable to the prior year valuation allowance release resulting from the company's subsidiary reorganization on the fiscal-year 2022 GAAP effective tax rate; and
  3. a $37.9 million increase in impairment of assets as a result of a goodwill impairment in the current year period offset by the prior year impairment of certain capitalized software assets as well as certain intangible assets; partially offset by
  4. a $32.5 million decrease in stock-based compensation expense as a result of lower achievement of performance share awards.

GAAP diluted EPS of $1.46 decreased 33% from $2.19 in the same period a year ago mainly due to the aforementioned decrease in net income.

Adjusted EBITDA of $499.8 million compared to $498.7 million in the same period a year ago.

Adjusted net income of $299.3 million decreased 1% from $302.7 million for the same period a year ago. Adjusted EPS of $2.50 compared to $2.49 for the same period a year ago. The company noted that adjusted net income and adjusted EPS reflect income tax expense at an effective rate of 26% for both fiscal 2023 and 2022.

Supply Chain Services segment net revenue of $900.0 million decreased 13% from $1,031.9 million for the same period a year ago. Segment adjusted EBITDA of $499.4 million compared to $500.9 million for the same period a year ago.

Performance Services segment net revenue of $436.2 million increased 9% from $401.0 million for the same period a year ago. Segment adjusted EBITDA of $123.9 million decreased 2% from $126.9 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, 2023 of $444.5 million was flat compared with the prior year.

Net cash used in investing activities and net cash used in financing activities for the year ended June 30, 2023, were $273.6 million and $167.3 million, respectively. As of June 30, 2023, cash and cash equivalents were $89.8 million compared with $86.1 million as of June 30, 2022, and the company's five-year, $1.0 billion revolving credit facility had an outstanding balance of $215.0 million, of which the full outstanding balance was repaid in July and August 2023.

Free cash flow for the year ended June 30, 2023 was $264.4 million compared with $260.8 million for the same period a year ago. The increase was primarily due to a decrease in purchases of property and equipment.

During fiscal 2023, the company paid aggregate dividends of $100.2 million to holders of its Class A common stock.

Fiscal-2024 Guidance

As previously announced and considering its ongoing strategic review, the company will not be providing fiscal-2024 guidance at this time.

Sale of Non-Healthcare GPO Operations

As previously announced, the company entered into an equity purchase agreement with OMNIA Partners, a leading non-healthcare GPO, under which Premier will sell the contracts pursuant to which substantially all of our non-healthcare GPO members participate in our GPO program, for an estimated purchase price of approximately $800.0 million, subject to certain adjustments, including a true-up adjustment to the purchase price to be paid within approximately eight months following the closing date. On July 25, 2023, the transaction closed and the company subsequently received $689.2 million in cash consideration which includes $151.0 million in escrow subject to release upon certain members agreeing to consents.

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 300,000 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, 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 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, 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 allows the company to enhance 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 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 initiative- and financial restructuring-related expenses, (v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and (vi) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items.

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.

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, 2023, 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 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.

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 multi-year growth strategy, the payment of dividends at current levels, or at all, 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 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, 2023, 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.

 

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

June 30,

 

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net revenue:

 

 

 

 

 

Net administrative fees

$

158,165

 

$

152,867

 

 

$

611,035

 

$

601,128

 

Software licenses, other services and support

 

120,606

 

 

118,158

 

 

 

480,401

 

 

438,267

 

Services and software licenses

 

278,771

 

 

271,025

 

 

 

1,091,436

 

 

1,039,395

 

Products

 

61,593

 

 

69,681

 

 

 

244,659

 

 

393,506

 

Net revenue

 

340,364

 

 

340,706

 

 

 

1,336,095

 

 

1,432,901

 

Cost of revenue:

 

 

 

 

 

Services and software licenses

 

54,659

 

 

47,658

 

 

 

218,087

 

 

183,984

 

Products

 

53,212

 

 

68,962

 

 

 

221,719

 

 

363,878

 

Cost of revenue

 

107,871

 

 

116,620

 

 

 

439,806

 

 

547,862

 

Gross profit

 

232,493

 

 

224,086

 

 

 

896,289

 

 

885,039

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative

 

185,389

 

 

158,549

 

 

 

601,554

 

 

576,879

 

Research and development

 

1,564

 

 

1,485

 

 

 

4,540

 

 

4,151

 

Amortization of purchased intangible assets

 

12,687

 

 

11,046

 

 

 

48,102

 

 

43,936

 

Operating expenses

 

199,640

 

 

171,080

 

 

 

654,196

 

 

624,966

 

Operating income

 

32,853

 

 

53,006

 

 

 

242,093

 

 

260,073

 

Equity in net income of unconsolidated affiliates

 

1,521

 

 

6,340

 

 

 

16,068

 

 

23,505

 

Interest expense, net

 

(2,711

)

 

(2,677

)

 

 

(14,470

)

 

(11,142

)

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

64,110

 

Other income (expense), net

 

2,587

 

 

(7,470

)

 

 

6,307

 

 

(9,646

)

Other income (expense), net

 

1,397

 

 

(3,807

)

 

 

7,905

 

 

66,827

 

Income before income taxes

 

34,250

 

 

49,199

 

 

 

249,998

 

 

326,900

 

Income tax expense

 

15,345

 

 

18,488

 

 

 

75,111

 

 

58,582

 

Net income

 

18,905

 

 

30,711

 

 

 

174,887

 

 

268,318

 

Net loss (income) attributable to non-controlling interest

 

2,558

 

 

(808

)

 

 

139

 

 

(2,451

)

Net income attributable to stockholders

$

21,463

 

$

29,903

 

 

$

175,026

 

$

265,867

 

 

 

 

 

 

 

Calculation of GAAP Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

Numerator for earnings per share:

 

 

 

 

 

Net income attributable to stockholders

$

21,463

 

$

29,903

 

 

$

175,026

 

$

265,867

 

 

 

 

 

 

 

Denominator for earnings per share:

 

 

 

 

 

Basic weighted average shares outstanding

 

119,064

 

 

118,001

 

 

 

118,767

 

 

120,220

 

Effect of dilutive securities:

 

 

 

 

 

Stock options

 

14

 

 

150

 

 

 

81

 

 

206

 

Restricted stock

 

540

 

 

544

 

 

 

524

 

 

510

 

Performance share awards

 

443

 

 

1,065

 

 

 

517

 

 

732

 

Diluted weighted average shares and assumed conversions

 

120,061

 

 

119,760

 

 

 

119,889

 

 

121,668

 

 

 

 

 

 

 

Earnings per share attributable to stockholders:

 

 

 

 

 

Basic

$

0.18

 

$

0.25

 

 

$

1.47

 

$

2.21

 

Diluted

$

0.18

 

$

0.25

 

 

$

1.46

 

$

2.19

 

 

Consolidated Balance Sheets

(In thousands, except share data)

 

 

 

 

June 30, 2023

 

June 30, 2022

Assets

 

 

Cash and cash equivalents

$

89,793

 

$

86,143

 

Accounts receivable (net of $2,878 and $2,043 allowance for credit losses, respectively)

 

115,295

 

 

114,129

 

Contract assets (net of $885 and $755 allowance for credit losses, respectively)

 

299,219

 

 

260,061

 

Inventory

 

76,932

 

 

119,652

 

Prepaid expenses and other current assets

 

60,387

 

 

65,581

 

Total current assets

 

641,626

 

 

645,566

 

Property and equipment (net of $662,554 and $578,644 accumulated depreciation, respectively)

 

212,308

 

 

213,379

 

Intangible assets (net of $265,684 and $217,582 accumulated amortization, respectively)

 

430,030

 

 

356,572

 

Goodwill

 

1,012,355

 

 

999,913

 

Deferred income tax assets

 

653,629

 

 

725,032

 

Deferred compensation plan assets

 

50,346

 

 

47,436

 

Investments in unconsolidated affiliates

 

231,826

 

 

215,545

 

Operating lease right-of-use assets

 

29,252

 

 

39,530

 

Other assets

 

110,115

 

 

114,154

 

Total assets

$

3,371,487

 

$

3,357,127

 

 

 

 

Liabilities and stockholders' equity

 

Accounts payable

$

54,375

 

$

44,631

 

Accrued expenses

 

47,113

 

 

40,968

 

Revenue share obligations

 

262,288

 

 

245,395

 

Accrued compensation and benefits

 

60,591

 

 

93,638

 

Deferred revenue

 

24,311

 

 

30,463

 

Current portion of notes payable to former limited partners

 

99,665

 

 

97,806

 

Line of credit and current portion of long-term debt

 

216,546

 

 

153,053

 

Other current liabilities

 

50,574

 

 

47,183

 

Total current liabilities

 

815,463

 

 

753,137

 

Long-term debt, less current portion

 

734

 

 

2,280

 

Notes payable to former limited partners, less current portion

 

101,523

 

 

201,188

 

Deferred compensation plan obligations

 

50,346

 

 

47,436

 

Deferred consideration, less current portion

 

 

 

28,702

 

Operating lease liabilities, less current portion

 

21,864

 

 

32,960

 

Other liabilities

 

47,202

 

 

42,574

 

Total liabilities

 

1,037,132

 

 

1,108,277

 

 

 

 

Commitments and contingencies

 

 

Stockholders' equity:

 

 

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023 and 124,481,610 shares issued and 118,052,235 shares outstanding at June 30, 2022

 

1,256

 

 

1,245

 

Treasury stock, at cost; 6,429,375 shares at both June 30, 2023 and June 30, 2022

 

(250,129

)

 

(250,129

)

Additional paid-in capital

 

2,178,134

 

 

2,166,047

 

Retained earnings

 

405,102

 

 

331,690

 

Accumulated other comprehensive loss

 

(8

)

 

(3

)

Total stockholders' equity

 

2,334,355

 

 

2,248,850

 

Total liabilities and stockholders' equity

$

3,371,487

 

$

3,357,127

 

 

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

 

Year Ended June 30,

 

 

2023

 

 

 

2022

 

Operating activities

 

 

Net income

$

174,887

 

$

268,318

 

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

 

 

Depreciation and amortization

 

133,793

 

 

129,107

 

Equity in net income of unconsolidated affiliates

 

(16,068

)

 

(23,505

)

Deferred income taxes

 

71,403

 

 

56,792

 

Stock-based compensation

 

13,734

 

 

46,229

 

Impairment of assets

 

56,718

 

 

18,829

 

Gain on FFF Put and Call Rights

 

 

 

(64,110

)

Other, net

 

6,501

 

 

5,803

 

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

 

 

Accounts receivable, inventories, prepaid expenses and other assets

 

64,253

 

 

124,659

 

Contract assets

 

(41,088

)

 

(47,219

)

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

 

(19,590

)

 

(70,669

)

Net cash provided by operating activities

$

444,543

 

$

444,234

 

Investing activities

 

 

Purchases of property and equipment

$

(82,302

)

$

(87,440

)

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

 

(187,750

)

 

(26,000

)

Investment in unconsolidated affiliates

 

(2,060

)

 

(16,000

)

Other

 

(1,510

)

 

(10,000

)

Net cash used in investing activities

$

(273,622

)

$

(139,440

)

Financing activities

 

 

Payments made on notes payable

$

(100,859

)

$

(99,243

)

Proceeds from credit facility

 

470,000

 

 

325,000

 

Payments on credit facility

 

(405,000

)

 

(250,000

)

Cash dividends paid

 

(100,233

)

 

(96,455

)

Payments on deferred consideration related to acquisition of business

 

(27,927

)

 

(28,586

)

Proceeds from exercise of stock options under equity incentive plan

 

6,078

 

 

37,766

 

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

 

 

 

(250,129

)

Other, net

 

(9,325

)

 

13,858

 

Net cash used in financing activities

$

(167,266

)

$

(347,789

)

Effect of exchange rate changes on cash flows

 

(5

)

 

(3

)

Net increase (decrease) in cash and cash equivalents

 

3,650

 

 

(42,998

)

Cash and cash equivalents at beginning of year

 

86,143

 

 

129,141

 

Cash and cash equivalents at end of period

$

89,793

 

$

86,143

 

 

Supplemental Financial Information

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

(Unaudited)

(In thousands)

 

 

 

 

Year Ended June 30,

 

 

2023

 

 

 

2022

 

Net cash provided by operating activities

$

444,543

 

$

444,234

 

Purchases of property and equipment

 

(82,302

)

 

(87,440

)

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

 

(97,806

)

 

(95,948

)

Free Cash Flow

$

264,435

 

$

260,846

 

(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 Condensed Consolidated Statements of Cash Flows under “Payments made on notes payable." 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. During the year ended June 30, 2022, the company paid $102.7 million to members, including imputed interest of $6.7 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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

18,905

 

$

30,711

 

 

$

174,887

 

$

268,318

 

Interest expense, net

 

2,711

 

 

2,677

 

 

 

14,470

 

 

11,142

 

Income tax expense

 

15,345

 

 

18,488

 

 

 

75,111

 

 

58,582

 

Depreciation and amortization

 

20,538

 

 

22,297

 

 

 

85,691

 

 

85,171

 

Amortization of purchased intangible assets

 

12,687

 

 

11,046

 

 

 

48,102

 

 

43,936

 

EBITDA

 

70,186

 

 

85,219

 

 

 

398,261

 

 

467,149

 

Stock-based compensation

 

(2,504

)

 

8,580

 

 

 

14,355

 

 

46,809

 

Acquisition- and disposition-related expenses

 

5,559

 

 

1,171

 

 

 

17,151

 

 

11,453

 

Strategic initiative and financial restructuring-related expenses

 

2,843

 

 

8,691

 

 

 

13,831

 

 

18,005

 

Impairment of assets

 

56,718

 

 

18,829

 

 

 

56,718

 

 

18,829

 

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

(64,110

)

Other reconciling items, net

 

(221

)

 

285

 

 

 

(533

)

 

547

 

Adjusted EBITDA

$

132,581

 

$

122,775

 

 

$

499,783

 

$

498,682

 

 

 

 

 

 

 

Income before income taxes

$

34,250

 

$

49,199

 

 

$

249,998

 

$

326,900

 

Equity in net income of unconsolidated affiliates

 

(1,521

)

 

(6,340

)

 

 

(16,068

)

 

(23,505

)

Interest expense, net

 

2,711

 

 

2,677

 

 

 

14,470

 

 

11,142

 

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

(64,110

)

Other (income) expense, net

 

(2,587

)

 

7,470

 

 

 

(6,307

)

 

9,646

 

Operating income

 

32,853

 

 

53,006

 

 

 

242,093

 

 

260,073

 

Depreciation and amortization

 

20,538

 

 

22,297

 

 

 

85,691

 

 

85,171

 

Amortization of purchased intangible assets

 

12,687

 

 

11,046

 

 

 

48,102

 

 

43,936

 

Stock-based compensation

 

(2,504

)

 

8,580

 

 

 

14,355

 

 

46,809

 

Acquisition- and disposition-related expenses

 

5,559

 

 

1,171

 

 

 

17,151

 

 

11,453

 

Strategic initiative and financial restructuring-related expenses

 

2,843

 

 

8,691

 

 

 

13,831

 

 

18,005

 

Equity in net income of unconsolidated affiliates

 

1,521

 

 

6,340

 

 

 

16,068

 

 

23,505

 

Deferred compensation plan expense (income)

 

2,274

 

 

(7,478

)

 

 

5,422

 

 

(9,401

)

Impairment of assets

 

56,718

 

 

18,829

 

 

 

56,718

 

 

18,829

 

Other reconciling items, net

 

92

 

 

293

 

 

 

352

 

 

302

 

Adjusted EBITDA

$

132,581

 

$

122,775

 

 

$

499,783

 

$

498,682

 

 

 

 

 

 

 

SEGMENT ADJUSTED EBITDA

 

 

 

 

 

Supply Chain Services

$

128,203

 

$

119,269

 

 

$

499,431

 

$

500,854

 

Performance Services

 

36,272

 

 

37,661

 

 

 

123,859

 

 

126,938

 

Corporate

 

(31,894

)

 

(34,155

)

 

 

(123,507

)

 

(129,110

)

Adjusted EBITDA

$

132,581

 

$

122,775

 

 

$

499,783

 

$

498,682

 

 

 

 

 

 

 

Net income attributable to stockholders

$

21,463

 

$

29,903

 

 

$

175,026

 

$

265,867

 

Net income attributable to non-controlling interest

 

(2,558

)

 

808

 

 

 

(139

)

 

2,451

 

Income tax expense

 

15,345

 

 

18,488

 

 

 

75,111

 

 

58,582

 

Amortization of purchased intangible assets

 

12,687

 

 

11,046

 

 

 

48,102

 

 

43,936

 

Stock-based compensation

 

(2,504

)

 

8,580

 

 

 

14,355

 

 

46,809

 

Acquisition- and disposition-related expenses

 

5,559

 

 

1,171

 

 

 

17,151

 

 

11,453

 

Strategic initiative and financial restructuring-related expenses

 

2,843

 

 

8,691

 

 

 

13,831

 

 

18,005

 

Impairment of assets

 

56,718

 

 

18,829

 

 

 

56,718

 

 

18,829

 

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

(64,110

)

Other reconciling items, net

 

825

 

 

1,795

 

 

 

4,345

 

 

7,284

 

Adjusted income before income taxes

 

110,378

 

 

99,311

 

 

 

404,500

 

 

409,106

 

Income tax expense on adjusted income before income taxes

 

28,698

 

 

25,821

 

 

 

105,170

 

 

106,368

 

Adjusted Net Income

$

81,680

 

$

73,490

 

 

$

299,330

 

$

302,738

 

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

Net income attributable to stockholders

$

21,463

 

$

29,903

 

 

$

175,026

 

$

265,867

 

Net income attributable to non-controlling interest

 

(2,558

)

 

808

 

 

 

(139

)

 

2,451

 

Income tax expense

 

15,345

 

 

18,488

 

 

 

75,111

 

 

58,582

 

Amortization of purchased intangible assets

 

12,687

 

 

11,046

 

 

 

48,102

 

 

43,936

 

Stock-based compensation

 

(2,504

)

 

8,580

 

 

 

14,355

 

 

46,809

 

Acquisition- and disposition-related expenses

 

5,559

 

 

1,171

 

 

 

17,151

 

 

11,453

 

Strategic initiative and financial restructuring-related expenses

 

2,843

 

 

8,691

 

 

 

13,831

 

 

18,005

 

Impairment of assets

 

56,718

 

 

18,829

 

 

 

56,718

 

 

18,829

 

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

(64,110

)

Other reconciling items, net

 

825

 

 

1,795

 

 

 

4,345

 

 

7,284

 

Adjusted income before income taxes

 

110,378

 

 

99,311

 

 

 

404,500

 

 

409,106

 

Income tax expense on adjusted income before income taxes

 

28,698

 

 

25,821

 

 

 

105,170

 

 

106,368

 

Adjusted Net Income

$

81,680

 

$

73,490

 

 

$

299,330

 

$

302,738

 

 

 

 

 

 

 

Weighted average:

 

 

 

 

 

Common shares used for basic and diluted earnings per share

 

119,064

 

 

118,001

 

 

 

118,767

 

 

120,220

 

Potentially dilutive shares

 

997

 

 

1,759

 

 

 

1,122

 

 

1,448

 

Weighted average shares outstanding - diluted

 

120,061

 

 

119,760

 

 

 

119,889

 

 

121,668

 

 

 

 

 

 

 

Basic earnings per share attributable to stockholders

$

0.18

 

$

0.25

 

 

$

1.47

 

$

2.21

 

Net income attributable to non-controlling interest

 

(0.02

)

 

0.01

 

 

 

 

 

0.02

 

Income tax expense

 

0.13

 

 

0.16

 

 

 

0.63

 

 

0.49

 

Amortization of purchased intangible assets

 

0.11

 

 

0.09

 

 

 

0.41

 

 

0.37

 

Stock-based compensation

 

(0.02

)

 

0.07

 

 

 

0.12

 

 

0.39

 

Acquisition- and disposition-related expenses

 

0.05

 

 

0.01

 

 

 

0.14

 

 

0.10

 

Strategic initiative and financial restructuring-related expenses

 

0.02

 

 

0.07

 

 

 

0.12

 

 

0.15

 

Impairment of assets

 

0.48

 

 

0.16

 

 

 

0.48

 

 

0.16

 

Gain on FFF Put and Call Rights

 

 

 

 

 

 

 

 

(0.53

)

Other reconciling items, net

 

0.01

 

 

0.02

 

 

 

0.04

 

 

0.06

 

Impact of corporation taxes

 

(0.24

)

 

(0.22

)

 

 

(0.89

)

 

(0.88

)

Impact of dilutive shares

 

(0.02

)

 

(0.01

)

 

 

(0.02

)

 

(0.05

)

Adjusted EPS

$

0.68

 

$

0.61

 

 

$

2.50

 

$

2.49

 

 

Contacts

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

Contacts

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